Marketing: An Introduction, 6e (Armstrong et al.

)
Chapter 1 Marketing: Creating and Capturing Customer Value

1) Which of the following is most essential to even the simplest definition of marketing?
A) demand management
B) the production concept
C) customer relationships
D) making a sale
E) making a profit
Answer: C
Diff: 1 Type: MC Page Ref: 5
Skill: Concept
Objective: 1-1

2) Which of the following is an accurate description of modern marketing today?

A) Marketing is the creation of products for customers.
B) Marketing is managing profitable customer relationships.
C) Selling and advertising are synonymous with marketing.
D) Marketing involves satisfying producers' needs first.
E) Marketing is used by for-profit organizations only.
Answer: B
Diff: 1 Type: MC Page Ref: 5
Skill: Concept
Objective: 1-1

3) According to management guru Peter Drucker, "The aim of marketing is to ________."

A) create customer demands
B) identify customer demands
C) make selling unnecessary
D) set realistic customer expectations
E) sell products
Answer: C
Diff: 1 Type: MC Page Ref: 6
Skill: Concept
Objective: 1-1

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4) ________ is defined as a social and managerial process by which individuals and
organizations obtain what they need and want through creating and exchanging value with
others.
A) Selling
B) Advertising
C) Bartering
D) Marketing
E) Negotiating
Answer: D
Diff: 2 Type: MC Page Ref: 6
Skill: Concept
Objective: 1-1

5) The ________ steps of the five-step marketing process are about understanding customers,
creating customer value, and building strong customer relationships.
A) first two
B) first three
C) first four
D) last three
E) last four
Answer: C
Diff: 2 Type: MC Page Ref: 7
Skill: Concept
Objective: 1-2

6) According to the simple five-step model of the marketing process, a company needs to
________ before designing a customer-driven marketing strategy.
A) determine how to deliver superior value
B) build profitable relationships with customers
C) use customer relationship management to create full partnerships with key customers
D) understand the marketplace and customer needs and wants
E) construct key components of a marketing program
Answer: D
Diff: 1 Type: MC Page Ref: 7
Skill: Concept
Objective: 1-2

7) ________ are human needs as shaped by individual personality and culture.

A) Deprivations
B) Wants
C) Demands
D) Values
E) Exchanges
Answer: B
Diff: 1 Type: MC Page Ref: 7
Skill: Concept
Objective: 1-2
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8) When backed by buying power, wants become ________.
A) social needs
B) demands
C) physical needs
D) self-esteem needs
E) exchanges
Answer: B
Diff: 1 Type: MC Page Ref: 7
Skill: Concept
Objective: 1-2

9) Which of the following best encompasses market offerings?

A) products
B) people, places, and ideas
C) products and information
D) products and experiences
E) persons, places, organizations, information, and ideas
Answer: E
Diff: 1 Type: MC Page Ref: 8
Skill: Concept
Objective: 1-2

10) ________ refers to sellers that pay more attention to their own products than to the benefits
and experiences produced by these products.
A) Selling myopia
B) Marketing management
C) Value proposition
D) Marketing myopia
E) The product concept
Answer: D
Diff: 1 Type: MC Page Ref: 8
Skill: Concept
Objective: 1-2

11) When marketers set low expectations for a market offering, they are most likely to run the
risk of which of the following?
A) disappointing loyal buyers
B) decreasing buyers satisfaction
C) failing to attract enough buyers
D) failing to understand their buyers' needs
E) incorrectly identifying a target market
Answer: C
Diff: 2 Type: MC Page Ref: 9
Skill: Concept
Objective: 1-2

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12) ________ is the act of obtaining a desired object from someone by offering something in
return.
A) A value proposition
B) Exchange
C) Bribery
D) Value
E) Donation
Answer: B
Diff: 1 Type: MC Page Ref: 9
Skill: Concept
Objective: 1-2

13) In addition to attracting new customers and creating transactions, the goal of marketing is to
________ customers and grow the company's business.
A) reward loyal
B) sell more to
C) build relationships with
D) recognize loyal
E) educate new
Answer: C
Diff: 2 Type: MC Page Ref: 9
Skill: Concept
Objective: 1-2

14) ________ is the set of actual and potential buyers of a product.

A) A market
B) An audience
C) A group
D) A segment
E) An exchange
Answer: A
Diff: 1 Type: MC Page Ref: 9
Skill: Concept
Objective: 1-2

15) Consumer research, product development, communication, distribution, pricing, and service
are all most accurately described as core ________ activities.
A) exchange
B) marketing
C) management
D) production
E) customer relationship management
Answer: B
Diff: 1 Type: MC Page Ref: 9
Skill: Concept
Objective: 1-2

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16) When it comes to communicating with customers, marketers have traditionally asked the
question, "How can we influence our customers?" Effective marketers now ask, ________.
A) "How can we apply the production concept?"
B) "How can our customers influence us?"
C) "How can we apply the selling concept?"
D) "How can we apply the selling concept using social media?"
E) "How can we apply the product concept?"
Answer: B
Diff: 2 Type: MC Page Ref: 9
Skill: Concept
Objective: 1-2

17) Which of the following is the most likely result of a marketing strategy that attempts to serve
all customers?
A) All customers will be delighted.
B) Customer-perceived value will be increased.
C) Customer evangelists will become unpaid salespersons for the service or product.
D) Perhaps no customers will be satisfied.
E) The company will likely need to follow up with a demarketing campaign.
Answer: D
Diff: 2 Type: MC Page Ref: 10
Skill: Concept
Objective: 1-3

18) The art and science of choosing target markets and building profitable relationships with
them is called ________.
A) marketing management
B) positioning
C) segmentation
D) selling
E) societal marketing
Answer: A
Diff: 1 Type: MC Page Ref: 10
Skill: Concept
Objective: 1-3

19) Selecting which segments of a population of customers to serve is called ________.

A) market segmentation
B) positioning
C) customization
D) target marketing
E) choosing a value proposition
Answer: D
Diff: 1 Type: MC Page Ref: 10
Skill: Concept
Objective: 1-3

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20) Dollarama stores focus on serving buyers who have relatively modest means. This is an
example of ________.
A) convenience
B) value pricing
C) market segmentation
D) target marketing
E) value packing
Answer: D
Diff: 1 Type: MC Page Ref: 10
Skill: Concept
Objective: 1-3

21) ________ is the set of benefits or values a company promises to deliver to its consumers to
satisfy their needs.
A) A money-back guarantee
B) Low pricing
C) Good customer service
D) A value proposition
E) An attribute
Answer: D
Diff: 1 Type: MC Page Ref: 11
Skill: Concept
Objective: 1-3

22) An effective value proposition answers the question ________.

A) "Why should I buy your brand rather than a competitor's?"
B) "How does your brand benefit me and society?"
C) "What are the costs and benefits of your brand?"
D) "What kind of experience will I have with products and services associated with this brand?"
E) "What are the benefits of being a loyal consumer of your brand?"
Answer: A
Diff: 2 Type: MC Page Ref: 11
Skill: Concept
Objective: 1-3

23) Which of the following marketing management orientations focuses primarily on improving
efficiencies along the supply chain?
A) production concept
B) product concept
C) selling concept
D) marketing concept
E) societal marketing concept
Answer: A
Diff: 3 Type: MC Page Ref: 11
Skill: Concept
Objective: 1-3

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24) Which one marketing management concept, if the only one adopted, can lead manufacturers
to develop marketing myopia?
A) customer-driven marketing
B) customer-driving marketing
C) societal marketing
D) selling
E) product concept
Answer: E
Diff: 2 Type: MC Page Ref: 12
Skill: Concept
Objective: 1-3

25) Which of the following marketing management concepts is most closely aligned with the
philosophy of continuous product improvement and the belief that customers will choose
products that offer high quality, performance, and innovative features?
A) product
B) production
C) customer
D) marketing
E) promotion
Answer: A
Diff: 2 Type: MC Page Ref: 11
Skill: Concept
Objective: 1-3

26) The product concept says that a company should ________.

A) improve marketing of its best products
B) market only those products with high customer appeal
C) focus on the target market and make products that meet those customers' demands
D) devote its energy to making continuous product improvements
E) make promoting products the top priority
Answer: D
Diff: 2 Type: MC Page Ref: 11
Skill: Concept
Objective: 1-3

27) "Build a better mousetrap and the world will beat a path to your door" reflects the ________
concept.
A) production
B) marketing
C) selling
D) product
E) target marketing
Answer: D
Diff: 2 Type: MC Page Ref: 12
Skill: Concept
Objective: 1-3
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28) The ________ concept calls for aggressive selling and promotion effort.
A) marketing
B) production
C) product
D) selling
E) societal marketing
Answer: D
Diff: 1 Type: MC Page Ref: 12
Skill: Concept
Objective: 1-3

29) The ________ concept holds that achieving organizational goals depends on knowing the
needs and wants of target markets and delivering the desired satisfaction better than competitors
do.
A) product
B) production
C) selling
D) equity
E) marketing
Answer: E
Diff: 1 Type: MC Page Ref: 12
Skill: Concept
Objective: 1-3

30) According to the authors of your text, the ________ concept is a "sense and respond"
philosophy rather than a "make and sell" philosophy.
A) product
B) production
C) marketing
D) retailing
E) societal marketing
Answer: C
Diff: 2 Type: MC Page Ref: 12
Skill: Concept
Objective: 1-3

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31) Which of the following consumer products would likely be marketed using the selling
concept?
A) laundry detergent
B) funeral services
C) chocolate bars
D) hair stylist services
E) computer tablets
Answer: B
Diff: 3 Type: MC Page Ref: 12
Skill: Concept
Objective: 1-3

32) Which of the following reflects the marketing concept philosophy?

A) "We don't have a marketing department, we have a customer department."
B) "We're in the business of making and selling superior products."
C) "We build them so you can buy them."
D) "When it's profits versus customers' needs, profits will always win out."
E) "You won't find a better deal anywhere."
Answer: A
Diff: 2 Type: MC Page Ref: 12
Skill: Concept
Objective: 1-3

33) Customer-driven marketing is most likely to work well when ________ and when customers
________.
A) a clear need exists; are difficult to identify
B) customers do not know what they want; have limited budgets
C) there are few competitors; are concerned about their long-run welfare
D) a clear need exists; know what they want
E) a want exists; cannot afford it
Answer: D
Diff: 2 Type: MC Page Ref: 13
Skill: Concept
Objective: 1-3

34) When customers don't know what they want or don't even know what's possible, the most
effective strategy is ________ marketing.
A) customer-driven
B) customer-driving
C) societal
D) production
E) product
Answer: A
Diff: 2 Type: MC Page Ref: 13
Skill: Concept
Objective: 1-3

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35) The societal marketing concept seeks to establish a balance between consumer short-run
wants and consumer ________.
A) short-run costs and profits
B) short-run ethics
C) long-run welfare
D) immediate health
E) value propositions
Answer: C
Diff: 2 Type: MC Page Ref: 13
Skill: Concept
Objective: 1-3

36) The ________ concept holds that firms must strive to deliver value to customers in a way
that maintains or improves both the consumer's and society's well being.
A) marketing
B) selling
C) product
D) societal marketing
E) equity
Answer: D
Diff: 1 Type: MC Page Ref: 13
Skill: Concept
Objective: 1-3

37) The three areas of consideration that should be balanced in the societal marketing concept are
consumer wants, society's interests, and ________.
A) human welfare
B) want satisfaction
C) company profits
D) short-run wants
E) long-term needs
Answer: C
Diff: 2 Type: MC Page Ref: 14
Skill: Concept
Objective: 1-3

38) The set of marketing tools a firm uses to implement its marketing strategy is called the
________.
A) promotion mix
B) product mix
C) marketing mix
D) TQM
E) marketing effort
Answer: C
Diff: 2 Type: MC Page Ref: 14
Skill: Concept
Objective: 1-3
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39) The authors of the text would argue that ________ is the most fundamental concept of
modern marketing.
A) customer relationship management
B) social media
C) broadcast advertising
D) properly trained sales people
E) low prices
Answer: A
Diff: 2 Type: MC Page Ref: 14
Skill: Concept
Objective: 1-4

40) Building and maintaining profitable value-laden relationships with satisfied customers of a
company is called ________.
A) customer lifetime value
B) customer perceived value
C) customer relationship management
D) database marketing
E) societal marketing
Answer: C
Diff: 2 Type: MC Page Ref: 15
Skill: Concept
Objective: 1-4

41) Which of the following is determined by a customer's personal evaluation of the benefits and
costs of a market offering relative to those of competing offers?
A) customer-perceived value
B) customer satisfaction
C) customer-perceived performance
D) customer relationship management
E) market segmentation
Answer: A
Diff: 2 Type: MC Page Ref: 15
Skill: Concept
Objective: 1-4

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42) It is most accurate to say that a customer will buy from the company that offers the highest
________.
A) value for the dollar
B) customer-perceived value
C) level of customer satisfaction
D) company image
E) concern for society's interests
Answer: B
Diff: 2 Type: MC Page Ref: 15
Skill: Concept
Objective: 1-4

43) FedEx offers its customers fast and reliable package delivery. When FedEx customers weigh
these aforementioned benefits against the monetary and psychic costs of using the service, they
are acting upon ________.
A) loyalty
B) relationship marketing
C) customer-perceived value
D) social relationships
E) a societal marketing campaign
Answer: C
Diff: 3 Type: MC Page Ref: 15
Skill: Concept
Objective: 1-4

44) Which of the following is the term for customers who make repeat purchases and tell others
about their positive experiences with a product or service?
A) satisfied customers
B) customer evangelists
C) butterflies
D) full partners
E) social customers
Answer: B
Diff: 1 Type: MC Page Ref: 15
Skill: Concept
Objective: 1-4

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45) Which of the following strategies would a company most likely use to increase customer
satisfaction?
A) decreasing variety of services offered
B) lengthening the supply chain
C) lowering prices or increasing its services
D) "firing" unprofitable customers
E) limiting experiences with a brand
Answer: C
Diff: 2 Type: MC Page Ref: 18
Skill: Concept
Objective: 1-4

46) Frequent flyer programs offered by airlines are an example of a ________.

A) frequency marketing program
B) basic customer relationship
C) club marketing program
D) consumer-generated marketing program
E) structural benefit provided for top customers
Answer: A
Diff: 1 Type: MC Page Ref: 18
Skill: Concept
Objective: 1-4

47) Which of the following best explains why consumers have greater power and control in
today's marketplace?
A) The production concept and competition have lowered prices.
B) Implementation of the product concept has resulted in continually improving products.
C) Customer-driving marketing creates products and services that meet customers' future needs.
D) More companies are implementing societal marketing and weighing long-run costs and
benefits.
E) Through new communication technologies, customers have more access to information and
more methods of sharing their opinions with other customers.
Answer: E
Diff: 2 Type: MC Page Ref: 19
Skill: Concept
Objective: 1-4

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48) The marketing world is embracing ________ because consumers can wield greater power
and control in the marketplace through communication technologies.
A) partner relationship management
B) supply chain management
C) customer-managed relationships
D) market segmentation
E) target marketing
Answer: C
Diff: 2 Type: MC Page Ref: 19
Skill: Concept
Objective: 1-4

49) Which of the following is an example of consumer-generated marketing?

A) Toyota's presence in online communities
B) Nike's Nike Plus running Web site
C) H. J. Heinz's use of brand-related consumer videos posted on video-sharing websites
D) Neiman Marcus's InCircle Rewards program for its best customers
E) The Lexus Covenant aimed at creating customer delight
Answer: C
Diff: 2 Type: MC Page Ref: 20
Skill: Concept
Objective: 1-4

50) Through ________, many companies today are strengthening their connections to all
partners, from providers of raw materials and components to final buyers who purchase final
products.
A) supply chain management
B) direct marketing
C) partnership relationship marketing
D) customized marketing
E) deviated marketing
Answer: A
Diff: 1 Type: MC Page Ref: 23
Skill: Concept
Objective: 1-4

51) The final step in the marketing process is ________.

A) capturing value from customers
B) creating customer loyalty
C) creating customer lifetime value
D) understanding the marketplace
E) designing a customer-driven marketing strategy
Answer: A
Diff: 1 Type: MC Page Ref: 23
Skill: Concept
Objective: 1-4

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52) When the economy tightens, customer loyalty and customer retention become ________ for
marketers.
A) even more important
B) less important
C) impossible
D) long-term but not short-term goals
E) short-term but not long-term goals
Answer: A
Diff: 2 Type: MC Page Ref: 23
Skill: Concept
Objective: 1-4

53) Stew Leonard, owner/operator of supermarkets, reacts adversely to losing a single customer
sale. He feels that this amounts to losing the entire stream of future purchases that a customer is
likely to make if he or she remains in the area. This is an illustration of ________.
A) share of customer
B) market share
C) profitability
D) customer lifetime value
E) market share maintenance
Answer: D
Diff: 2 Type: MC Page Ref: 24
Skill: Concept
Objective: 1-4

54) Phil just started a new habit of eating once a week at Mr. Sub restaurants. On average, he
spends about $10 per meal. Phil says, "I'm 20 years old and I plan on eating at Mr. Sub until I am
50 years old." Phil's lifetime value at Mr. Sub could be best estimated by which calculation?
A) $10 50
B) $10 20
C) $10 52 50
D) $10 52 30
E) $10 52 20
Answer: D
Diff: 2 Type: MC Page Ref: 24
Skill: Concept
Objective: 1-4

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55) When an airline goes after a "share of travel" from its customers, it is attempting to increase
________.
A) its value proposition
B) share of customer
C) target markets
D) customer variety
E) customer ownership
Answer: B
Diff: 2 Type: MC Page Ref: 24
Skill: Concept
Objective: 1-4

56) Amazon.com leverages relationships with its 35 million customers by offering them music,
videos, gifts, toys, consumer electronics, and office products, among other product items. Based
on previous purchase history, the company recommends related CDs, books, or videos that might
be of interest. This helps Amazon.com capture a greater ________.
A) value proposition
B) customer ownership
C) share of customer
D) social network
E) customer base
Answer: C
Diff: 2 Type: MC Page Ref: 24
Skill: Concept
Objective: 1-4

57) ________ is the total combined customer lifetime values of all the company's current and
potential customers.
A) Share of customer
B) Customer lifetime value
C) Customer equity
D) Profitability
E) Share of market
Answer: C
Diff: 1 Type: MC Page Ref: 25
Skill: Concept
Objective: 1-4

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58) The ultimate aim of customer relationship management is to produce ________.
A) customer delight
B) customer satisfaction
C) steady sales volume
D) a reliable database
E) sustainable business
Answer: A
Diff: 2 Type: MC Page Ref: 23
Skill: Concept
Objective: 1-4

59) According to the authors, a highly profitable, short-term customer is a ________.

A) true friend
B) butterfly
C) stranger
D) barnacle
E) true believer
Answer: B
Diff: 2 Type: MC Page Ref: 26
Skill: Concept
Objective: 1-4

60) The authors of your text classify customers into four relationship groups, according to the
customers' profitability and projected loyalty. ________ are the customers with the highest profit
potential and strong loyalty.
A) Barnacles
B) Strangers
C) Butterflies
D) True friends
E) Big fish
Answer: D
Diff: 1 Type: MC Page Ref: 26
Skill: Concept
Objective: 1-4

61) Which of the following has contributed to the deeper, more interactive nature of today's
customer relationships?
A) digital technologies
B) television advertising
C) newspaper ads
D) radio advertising
E) outdoor ads
Answer: A
Diff: 2 Type: MC Page Ref: 27
Skill: Concept
Objective: 1-5

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62) As the economy emerges from the recent recession and heads into the post-recession era, one
dominant consumer trend that has taken shape is ________.
A) ultra-spending
B) sensible consumption
C) purchase reticence
D) "keeping up with the Jones'" consumption
E) conspicuous consumption
Answer: B
Diff: 2 Type: MC Page Ref: 29
Skill: Concept
Objective: 1-5

63) Which of the following statements is true about social media as a marketing tool?
A) Social media is a clumsy way to collect consumer research.
B) Social media is a relatively inexpensive way to collect market research.
C) Social media is a challenging tool to engage with customers.
D) Social media usage is declining.
E) Social media cannot be employed by government organizations, and non-profit organizations.
Answer: B
Diff: 1 Type: MC Page Ref: 28
Skill: Concept
Objective: 1-5

64) Which of the following trends is part of the changing marketing landscape?
A) decline in not-for-profit marketing
B) a halt in globalization
C) growing conspicuous consumption
D) consumer desire for more sustainable marketing practices
E) decline in digital/online marketing
Answer: D
Diff: 1 Type: MC Page Ref: 26-32
Skill: Concept
Objective: 1-5

65) Which of the following is currently the fastest growing form of marketing?
A) consumer-generated marketing
B) mobile marketing
C) mass media marketing
D) promotional sampling
E) word-of-mouth marketing
Answer: B
Diff: 2 Type: MC Page Ref: 28
Skill: Concept
Objective: 1-5

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66) It is most accurate to say that today almost every company, small and large, is affected in
some way by which of the following?
A) the societal marketing concept
B) customer relationship management
C) global competition
D) not-for-profit marketing
E) customer-generated marketing
Answer: C
Diff: 2 Type: MC Page Ref: 31
Skill: Concept
Objective: 1-5

67) As part of the rapid globalization of today's economy, companies are selling more locally
produced goods in international markets and ________.
A) taking a local view of their industry
B) purchasing more supplies abroad
C) reducing competition within their industry
D) downplaying concerns for social responsibility
E) competing solely in traditional marketplaces
Answer: B
Diff: 2 Type: MC Page Ref: 31
Skill: Concept
Objective: 1-5

68) The social-responsibility and environmental movements are expected to ________ in the
future.
A) demand more from companies
B) demand less from companies
C) move away from sustainable marketing
D) move toward partner relationship management
E) move away from using social networking
Answer: A
Diff: 2 Type: MC Page Ref: 32
Skill: Concept
Objective: 1-5

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69) Ben & Jerry's challenges all stakeholders, including employees, top management, and even
ice cream scoopers in their stores, to consider individual and community welfare in their day-to-
day decisions. Actions such as this by companies seizing the opportunity to do well by doing
good reflects ________.
A) virtual marketing
B) caring capitalism
C) profit marketing
D) sustainable marketing
E) myopia
Answer: B
Diff: 2 Type: MC Page Ref: 32
Skill: Concept
Objective: 1-5

70) A church targeting different demographic groups to increase attendance is an example of

________.
A) for-profit marketing
B) not-for-profit marketing
C) mindless marketing
D) ethics in marketing
E) societal marketing
Answer: B
Diff: 2 Type: MC Page Ref: 30-31
Skill: Concept
Objective: 1-5

71) The first four steps of the marketing process focus on ________.
A) understanding the market
B) delivering customer service
C) creating value for customers
D) understanding customer demands and needs
E) finding value from customers
Answer: C
Diff: 2 Type: MC Page Ref: 33
Skill: Concept
Objective: 1-5

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72) Greg Williams now has the buying power to purchase the computer system he has wanted for
the last six months. Greg's want now has become a ________.
A) need
B) necessity
C) demand
D) satisfier
E) transaction
Answer: C
Diff: 1 Type: MC Page Ref: 7
Skill: Application
Objective: 1-2

73) Henry Ford's philosophy was to perfect the Model-T so that its cost could be reduced further
for increased consumer affordability. This reflects the ________.
A) product concept
B) marketing concept
C) societal marketing concept
D) production concept
E) selling concept
Answer: D
Diff: 3 Type: MC Page Ref: 11
Skill: Application
Objective: 1-3

74) Railroads were once operated based on the thinking that users wanted trains rather than
transportation, overlooking the challenge of other modes of transportation. This reflects the
________.
A) product concept
B) production concept
C) selling concept
D) marketing concept
E) societal marketing concept
Answer: A
Diff: 3 Type: MC Page Ref: 11
Skill: Application
Objective: 1-3

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75) Jolene's firm believes that consumers will not buy enough of its products unless the firm
undertakes a large-scale selling and promotion effort. Jolene's firm is practicing the ________.
A) production concept
B) marketing concept
C) selling concept
D) relationship concept
E) social advertising campaign
Answer: C
Diff: 1 Type: MC Page Ref: 12
Skill: Application
Objective: 1-3

76) Which of the following phrases reflects the marketing concept?

A) The supplier is king.
B) Marketing should be viewed as hunting and not gardening.
C) This is what I make, won't you please buy it?
D) This is what I want, won't you please make it?
E) This is better than the competition, won't you please buy it?
Answer: D
Diff: 3 Type: MC Page Ref: 12
Skill: Application
Objective: 1-3

77) Marie Ortiz enjoys her work at Futuristic Designs, Inc. Her organization understands and
anticipates customer needs even better than customers themselves do and creates products and
services to meet current and future wants and demands. Marie's firm practices ________
marketing.
A) shared value
B) customer-driven
C) societal
D) donor
E) product
Answer: B
Diff: 2 Type: MC Page Ref: 13
Skill: Application
Objective: 1-3

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78) Some fast-food restaurants offer tasty and convenient food at affordable prices, but in doing
so they contribute to a national obesity epidemic and environmental problems. These fast-food
restaurants overlook the ________ philosophy.
A) marketing concept
B) product concept
C) production concept
D) societal marketing concept
E) selling concept
Answer: D
Diff: 2 Type: MC Page Ref: 13
Skill: Application
Objective: 1-3

79) The Niketown running club that organizes twice weekly evening runs for Nike customers is
an example of a ________.
A) frequency marketing program
B) basic customer relationship
C) club marketing program
D) consumer-generated marketing program
E) structural benefit provided for top customers
Answer: C
Diff: 2 Type: MC Page Ref: 18
Skill: Application
Objective: 1-4

80) You have just taken a new position in an organization and you're learning about the job
functions of your new colleagues. You observe that your marketing manager is heavily involved
in the process of building and maintaining profitable customer relationships. Your marketing
manager frequently speaks about the need to deliver superior customer value and satisfaction.
Your manager is concerned with which one of the following?
A) database management
B) website hits
C) the societal marketing concept
D) not-for-profit marketing
E) customer relationship management
Answer: E
Diff: 1 Type: MC Page Ref: 15
Skill: Application
Objective: 1-4

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81) Sally purchased Brand X lotion. In comparing her perception of how the lotion performed to
her expectations for Brand X lotion, Sally was measuring her level of ________.
A) customer-perceived value
B) customer satisfaction
C) exchange
D) demand
E) customer lifetime value
Answer: A
Diff: 2 Type: MC Page Ref: 15
Skill: Application
Objective: 1-4

82) Tommy Gray attempts to deliver customer satisfaction every day in his Audio Expressions
installation business. The key to this goal is to match the customer-perceived performance of his
product with ________.
A) company-perceived performance
B) customer values
C) customer expectations
D) relationship levels
E) company expectations
Answer: C
Diff: 2 Type: MC Page Ref: 15
Skill: Application
Objective: 1-4

83) Shania works hard to foster an emotional relationship between her Internet customers and the
beauty products and services that she and her staff sell. By promoting a company culture that
values exceptional value and service, Shania aims to create ________ by going beyond the
expected.
A) customer delight
B) customer satisfaction
C) customer equity
D) customer value
E) customer loyalty
Answer: A
Diff: 2 Type: MC Page Ref: 17-18
Skill: Application
Objective: 1-4

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84) You are an assistant marketing director for a firm in a market with many low-margin
customers. What type of relationship would it be most profitable for you to develop with these
customers?
A) full partnerships
B) basic relationships
C) club programs
D) selective relationships
E) community relationships
Answer: B
Diff: 2 Type: MC Page Ref: 18
Skill: Application
Objective: 1-4

85) Pete Sanchez, a recent graduate of business school, has a different approach than his
marketing manager, who believes in keeping customers at arm's length and using television
advertising. Pete knows that today few successful firms still practice this type of true ________
and are instead turning to selective relationship management.
A) club marketing
B) frequency marketing
C) mass marketing
D) customer satisfaction
E) marketing segmenting
Answer: C
Diff: 2 Type: MC Page Ref: 19
Skill: Application
Objective: 1-4

86) A large department store segments its customers into 4 categories (butterflies, true friends,
strangers, and barnacles) in order to evaluate customers on ________.
A) profitability and revenue
B) revenue and customer loyalty
C) profitability and customer loyalty
D) revenue and communications costs
E) profit and communications costs
Answer: C
Diff: 3 Type: MC Page Ref: 23-24
Skill: Application
Objective: 1-4

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87) Elisandra, a marketing manager at a regional chain restaurant, has decided to create a contest
calling for customers to create commercials for the restaurant. Winning entries will be posted on
the organization's home page. Elisandra's plan is an example of ________.
A) consumer-generated marketing
B) partner relationship management
C) customer lifetime value
D) community development around a brand
E) share of customer
Answer: A
Diff: 2 Type: MC Page Ref: 20
Skill: Application
Objective: 1-4

88) The concept of "saving money by firing your customers" refers to which type of customer?
A) customers that lay complaints
B) unprofitable customers
C) old customers
D) new customers
E) no customer should ever be fired
Answer: B
Diff: 2 Type: MC Page Ref: 26
Skill: Application
Objective: 1-4

89) At Gina's Nails, the posted policy is "Without our customers, we don't exist." Gina and her
staff aim to delight each customer, and they are quick to offer discounts or extra services
whenever a customer is anything less than satisfied. Instead of focusing on each individual
transaction, Gina and her staff put a priority on ________.
A) maintaining customer-perceived value
B) managing partner relationships
C) attracting "butterflies"
D) converting "strangers"
E) capturing customer lifetime value
Answer: E
Diff: 2 Type: MC Page Ref: 23
Skill: Application
Objective: 1-4

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90) Afia, a team leader in charge of customer relationship management, is planning strategies for
improving the profitability of her firm's least profitable but loyal customers. She is also
examining methods for "firing" customers in this group who cannot be made profitable. To
which of the following customer relationship groups do these customers belong?
A) butterflies
B) true friends
C) strangers
D) barnacles
E) short-term customers
Answer: D
Diff: 2 Type: MC Page Ref: 26
Skill: Application
Objective: 1-4

91) Your local department of education has budgeted a significant amount of money for a radio,
print, television, and online advertising campaign emphasizing the long-term benefits, both
educational and professional, of reading every day. This is an example of a(n) ________
campaign.
A) ethical
B) social marketing
C) for-profit
D) consumer-generated
E) differentiated
Answer: B
Diff: 2 Type: MC Page Ref: 30
Skill: Application
Objective: 1-5

92) All advertising is part of marketing, but not all marketing efforts are advertising.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 6
Skill: Communication
Objective: 1-1

93) Selling is managing profitable customer relationships.

Answer: FALSE
Diff: 2 Type: TF Page Ref: 6
Skill: Concept
Objective: 1-1

94) Marketing is managing profitable customer relationships.

Answer: TRUE
Diff: 1 Type: TF Page Ref: 5
Skill: Concept
Objective: 1-1

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95) The twofold goal of marketing is to attract new customers by promising superior value and to
keep and grow current customers by delivering satisfaction.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 5
Skill: Concept
Objective: 1-1

96) Human needs are shaped by culture and individual personality.

Answer: FALSE
Diff: 2 Type: TF Page Ref: 7
Skill: Concept
Objective: 1-2

97) The difference between human needs and wants is that needs are not influenced by culture.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 7
Skill: Concept
Objective: 1-2

98) When backed by buying power, needs become wants.

Answer: FALSE
Diff: 1 Type: TF Page Ref: 7
Skill: Concept
Objective: 1-2

99) Market offerings are limited to physical products.

Answer: FALSE
Diff: 2 Type: TF Page Ref: 8
Skill: Concept
Objective: 1-2

100) Market offerings can include products, services, information, or experiences offered to a
market to satisfy a need or want.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 8
Skill: Concept
Objective: 1-2

101) When sellers focus on existing needs and lose sight of underlying customer wants, they
suffer from marketing myopia.
Answer: FALSE
Diff: 3 Type: TF Page Ref: 8
Skill: Concept
Objective: 1-2

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102) Marketers should look beyond the attributes of the products and services they sell to also
create brand experiences for consumers.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 8
Skill: Concept
Objective: 1-2

103) Only sellers of products, services, and ideas practice marketing, whereas buyers do not.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 9
Skill: Concept
Objective: 1-2

104) Market segmentation is the process of seeking fewer customers and reduced demand for
profit maximization.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 10
Skill: Concept
Objective: 1-3

105) Marketing management is interested in serving all customers in every way to remain
competitive in today's markets.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 10
Skill: Concept
Objective: 1-3

106) Two important questions underlying marketing strategy are "Who is our target market?" and
"What's our value proposition?"
Answer: TRUE
Diff: 3 Type: TF Page Ref: 10
Skill: Concept
Objective: 1-3

107) The production concept and product concept are orientations that can lead to marketing
myopia.
Answer: TRUE
Diff: 3 Type: TF Page Ref: 12
Skill: Concept
Objective: 1-3

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108) Amy's law office has developed a new format and wording for wills. The staff believes they
offer the most in quality, performance, and innovative features. Her law office is practicing the
production concept.
Answer: FALSE
Diff: 3 Type: TF Page Ref: 11
Skill: Application
Objective: 1-3

109) The selling concept holds that consumers will not buy enough of the firm's products unless
it undertakes a large-scale selling and promotion effort.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 12
Skill: Concept
Objective: 1-3

110) The major difference between the selling concept and the marketing concept is that the
selling concept considers only existing needs.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 12
Skill: Application
Objective: 1-3

111) The societal marketing concept calls on marketers to balance consumer wants and desires,
company profits, and society's interest.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 13
Skill: Concept
Objective: 1-3

112) In its broadest sense, customer relationship management (CRM) is a customer data
management activity.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 15
Skill: Concept
Objective: 1-4

113) Delivering superior customer value and customer satisfaction are the two keys to building
lasting customer relationships.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 15
Skill: Concept
Objective: 1-4

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114) Customer-perceived value is defined as the customer's evaluation of the perceived
difference between all the benefits and all the costs of a marketing offer relative to those of
competing offers.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 15
Skill: Concept
Objective: 1-4

115) Customer-perceived value depends on the product's perceived performance relative to a

buyer's expectations.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 15
Skill: Concept
Objective: 1-4

116) New communication technologies create challenges as well as advantages for marketers.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 19
Skill: Concept
Objective: 1-4

117) Consumer-generated marketing will have little impact as a marketing force.

Answer: FALSE
Diff: 2 Type: TF Page Ref: 22
Skill: Concept
Objective: 1-4

118) Every functional area of an organization, not only a marketing department, can and should
interact with customers.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 23
Skill: Concept
Objective: 1-4

119) It is cheaper for a company to acquire new customers than to maintain relationships with
current customers.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 23
Skill: Concept
Objective: 1-4

120) According to marketing theory, growing share of customer is certain if you build the best
product in the market.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 24
Skill: Concept
Objective: 1-4
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121) Since customers are the source of revenue for a firm, all customers are profitable.
Answer: FALSE
Diff: 1 Type: TF Page Ref: 25
Skill: Concept
Objective: 1-4

122) Before the marketing mix is developed, marketers need to understand the wants and needs
of customers.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 32
Skill: Communication
Objective: 1-5

123) Many company websites also serve as online brand communities.

Answer: TRUE
Diff: 1 Type: TF Page Ref: 27
Skill: Communication
Objective: 1-5

124) Social media spending by companies is at a maximum today.

Answer: FALSE
Diff: 2 Type: TF Page Ref: 28
Skill: Communication
Objective: 1-5

125) Mobile marketing is slowly taking off.

Answer: FALSE
Diff: 2 Type: TF Page Ref: 28
Skill: Communication
Objective: 1-5

126) Briefly compare and contrast the concepts of needs, wants, and demands, giving an
example of each. Discuss how these concepts relate to marketing practices.
Answer: Human needs are states of felt deprivation. Needs are part of the human make-up; they
are not created by external forces. Humans have a basic physical need for food, clothing,
warmth, and safety; a basic social need for belonging and affection; and a basic individual need
for knowledge and self-expression. Unlike needs, wants are not innate; instead, wants are needs
shaped by culture, society, and individual personality. For example, a Canadian needs food but
wants a Big Mac and a soft drink. A Canadian with ten dollars needs food, wants a Big Mac and
soft drink, and demands lunch at McDonalds. Wants become demands when they are backed by
consumers' buying power. Marketers conduct extensive research to understand customers' wants
and demands. They then attempt to fulfill customers' wants and demands through their market
offerings.
Diff: 2 Type: ES Page Ref: 7
Skill: Application
Objective: 1-2
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127) Explain how and why marketers go beyond selling a product or service to create brand
experiences.
Answer: Sellers are most effective when they focus on the benefits and experiences produced by
their products and services rather than on the specific products and services themselves. Smart
marketers focus on creating a brand experience, incorporating several products and services for
their customers. By doing so, marketers hope to increase customer satisfaction, creating a body
of customers who will repeatedly purchase their market offerings and recommend those offerings
to friends.
Diff: 2 Type: ES Page Ref: 8
Skill: Application
Objective: 1-2

128) Compare the selling and marketing concepts, listing the key components of each
philosophy.
Answer: The selling concept reflects an inside-out philosophy, while the marketing concept
takes an outside-in perspective. The selling concept is typically practiced when an organization is
selling products or services that buyers do not normally think of purchasing, such as insurance or
blood donation. Aggressive selling focuses on creating sales transactions rather than on building
long-term relationships with customers. The aim of the selling concept is to sell what the
company makes rather than making what the customer wants. The marketing concept, on the
other hand, is based upon identifying the needs and wants of target markets and then satisfying
those needs and wants better than competitors do. In contrast to the selling concept, marketing
focuses on the customer, not the product, and aims to create long lasting relationships with
customers through customer satisfaction.
Diff: 2 Type: ES Page Ref: 12-13
Skill: Application
Objective: 1-3

129) Briefly explain the societal marketing concept. Give an example of an organization that has
effectively used the societal marketing concept.
Answer: According to this concept, firms will succeed if they take underlying consumer needs
and society's well being into account over the long term. A pure marketing concept can damage
consumers' long-run welfare by focusing exclusively on satisfying consumers' short-run wants.
Over a long period of time, this too-narrow focus can be damaging to the company. In setting
their marketing strategies, marketers today need to balance company profits, consumer wants,
and society's interests. Johnson & Johnson is an example of a company that has successfully
implemented the societal marketing concept. The organization stresses honesty, integrity, and
putting people before profits, an ethic that helped Johnson & Johnson quickly address and
recover from the poisonous tampering of Tylenol capsules in 1982.
Diff: 2 Type: ES Page Ref: 13-14
Skill: Application
Objective: 1-3

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130) One of the major developments in marketing can be summed up in one word: relationships.
Define customer relationship management and its associated tools and levels of relationships.
Answer: Customer Relationship Management (CRM) is the process of building and maintaining
profitable customer relationships by delivering superior customer value and satisfaction. A
company with mostly low-margin customers is likely to seek basic relationships, using brand-
building advertising and sales promotion. An organization with few customers and high margins,
on the other hand, will work to create key partnerships with select customers. To create stronger
bonds with customers, some marketers use tools such as financial benefits or rewards based on
frequency of purchase. Other tools include social benefits, like offering key customers the
opportunity to network and create communities through club marketing programs. To retain
current customers and remain profitable, companies today are going beyond transactional
marketing to customer relationship management. The key is to create and sustain relationships
for the long term.
Diff: 2 Type: ES Page Ref: 15-23
Skill: Application
Objective: 1-4

131) The aim of customer relationship management is to create not just customer satisfaction, but
customer delight. Explain.
Answer: Customer satisfaction cannot be taken for granted. Because brand loyalty is dependent
upon strong customer satisfaction, companies strive to retain, satisfy, and even delight current
customers. Firms create customer delight by promising only what they can deliver and then
delivering more than what they promised. They also create emotional relationships with key
customers. Delighted customers make repeated purchases and become customers for life. More
importantly, they also essentially become an unpaid sales force for the firm as "customer
evangelists" who tell other potential customers about their positive experiences with the product.
Diff: 2 Type: ES Page Ref: 15
Skill: Application
Objective: 1-4

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132) Discuss the opportunities and advantages that new communication technologies have
created for marketers.
Answer: Through the Internet and related technologies, people can now interact in direct and
surprisingly personal ways with large groups of others, from neighbors within a local community
to people across the world. With communication technologies such as email, blogs, websites,
online communities, and online social networks (from Twitter to Vine), today's marketers
incorporate interactive approaches that help build targeted, two-way customer relationships.
Marketers can create deeper consumer involvement and a sense of community surrounding a
brand, making a brand a meaningful part of consumers' conversations and lives. However, while
new communication tools create relationship-building opportunities for marketers, they also
create challenges. They give consumers a greater voice, and therefore greater power and control
in the marketplace. Today's consumers have more information about brands than ever before, and
they have a wealth of platforms for airing and sharing their brand views with other consumers.
This benefits companies when views of its products are positive, but can be damaging when
customers share stories of negative experiences with a company's products.
Diff: 2 Type: ES Page Ref: 19-20
Skill: Application
Objective: 1-4

133) Define customer equity and explain why it is important to a company.

Answer: Customer equity is the sum of the lifetime values of all a company's current and
potential customers. Customer equity is dependent upon customer loyalty from a firm's profitable
customers. Because customer equity is a reflection of a company's future, companies must
manage it carefully, viewing customers as assets that need to be maximized.
Diff: 1 Type: ES Page Ref: 25
Skill: Application
Objective: 1-4

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134) Describe and compare the four types of customers classified by their potential profitability
to an organization. Identify how an organization should manage each type of customer.
Answer: The four types of customers are strangers, butterflies, true friends, and barnacles. They
are categorized according to 2 dimensions: profitability and loyalty. "Strangers" have low
potential profitability and loyalty. A company's offerings do not fit well with a stranger's wants
and demands. Companies should not invest in building a relationship with this type of customer.
Another type of customer in which a company should not invest is the "barnacle." Barnacles are
highly loyal but not very profitable because there is a limited fit between their needs and the
company's offerings. The company might be able to improve barnacles' profitability by selling
them more, raising their fees, or reducing service to them. However, if they cannot be made
profitable, they should be "fired." Like strangers, "butterflies" are not loyal. However, they are
potentially profitable because there is a good fit between the company's offerings and their
needs. Like real butterflies, this type of customer will come and go without becoming a
permanent, loyal consumer of a company's products. Companies should use promotional blitzes
to attract these customers, create satisfying and profitable transactions with them, and then cease
investing in them until the next time around. The final type of customers is "true friends"; they
are both profitable and loyal. There is a strong fit between their needs and the company's
offerings, so the company should make continuous relationship investments in an effort to go
beyond satisfying and to delight these customers. A company should try to delight true friends so
they will tell others about their good experiences with the company.
Diff: 2 Type: ES Page Ref: 25-26
Skill: Application
Objective: 1-4

135) Discuss how the Internet, social networks and mobility have transformed business.
Answer: The Internet and social networks have changed the way business is conducted. First,
the Internet has global reach, meaning both customers and competitors can come from all over
the world. In other words, both the potential customer base and competitive base are larger than
ever before. Second, every customer has a virtual "trumpet" to blast his/her satisfaction or
dissatisfaction with the company. Third, customers have access to more information and referrals
(via sites like Yelp and Trip Advisor), meaning customers can be more informed about the
choices they make. This instant information is also available to customers wherever they go via
smart phones. In addition, advances like single-click purchasing have made purchasing faster and
easier. Fourth, the Internet has made it easier to find hard-to-find items. Finally, as described in
this chapter, the Internet provides many opportunities for faster and easier communication with
customers ("How should they reach us?").
Diff: 1 Type: ES Page Ref: 27-29
Skill: Application
Objective: 1-5

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136) The management team at Big Burritos, a new fast-food restaurant, wants to develop a new
marketing plan. What would a marketing manager tell Big Burritos' management team their
twofold goal of marketing should be?
Answer: The twofold goal of marketing is to attract new customers by promising superior value
and to keep and grow current customers by delivering satisfaction (or delight!).
Diff: 2 Type: ES Page Ref: 5
Skill: Application
Objective: 1-1

137) Culture and individual personality shape human needs into wants. What transforms wants
into demands?
Answer: Wants become demands when they are backed by purchasing power.
Diff: 2 Type: ES Page Ref: 7
Skill: Application
Objective: 1-2

138) How might a seller avoid marketing myopia?

Answer: Marketing myopia is the mistake of paying more attention to a company's offerings.
Sellers should consider the particular benefits and experiences produced by their products, rather
than focusing primarily on the specific products they offer. In addition, sellers must not lose sight
of underlying customer needs.
Diff: 2 Type: ES Page Ref: 8
Skill: Application
Objective: 1-2

139) How might a manufacturer of tents and camping equipment create brand experiences for
consumers?
Answer: A manufacturer of camping equipment might produce tents, sleeping bags, cooking
equipment, and other items that are integral to the camping experience. Then the manufacturer
might market these products and related services, such as camping communities or an
informational camping Web site, to satisfy the total camping needs of their customers.
Diff: 3 Type: ES Page Ref: 8
Skill: Application
Objective: 1-2

140) A modern marketing system relies on profitable relationships, including the relationship
sellers have with buyers, competitors and suppliers Considering this, what might Walmart rely on
in order to offer low prices?
Answer: The main elements of a marketing system include suppliers, the producer, its
competitors, marketing intermediaries like Walmart, and consumers. Each party in the system
adds value to the next level of reaching the end user. Walmart's success at building profitable
relationships depends not only on how it relates to customers, but also, how well the entire
system serves the end user. Walmart must rely on suppliers that will provide merchandise at low
costs.
Diff: 2 Type: ES Page Ref: 10
Skill: Application
Objective: 1-2
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141) The marketing team at Bead Beautiful, a line of jewellery targeted at pre-teenage girls, is
meeting to formulate the products' value proposition. What should team members consider as
they define a value proposition for Bead Beautiful?
Answer: In considering Bead Beautiful's value proposition, the marketing team should identify
the benefits and values the company promises to deliver to customers to satisfy their needs. The
value proposition should differentiate Bead Beautiful from other similar products, answering the
customer's question "Why should I buy this brand rather than a competitor's?"
Diff: 2 Type: ES Page Ref: 10
Skill: Application
Objective: 1-3

142) When demand for Beanie Babies was at its highest, manufacturers purposefully maintained
strong demand by limiting supply, which drove the price of Beanie Babies up. These
manufacturers were doing the opposite of what the production concept believes. Explain.
Answer: The production concept holds that consumers favour products that are available and
affordable. According to this concept, manufacturers work to increase production and improve
manufacturing efficiency. Beanie Babies manufacturers purposefully limited production, making
their products less available and less affordable, a technique that contradicts the philosophy of
the production concept.
Diff: 3 Type: ES Page Ref: 11
Skill: Application
Objective: 1-3

143) Company X carries organizational and office supplies and follows the selling concept.
Explain how Company X may lose sight of customer relationships with their marketing
orientation.
Answer: The selling concept holds that consumers will not buy enough products unless the seller
undertakes a large-scale selling and promotion effort. This approach focuses on creating sales
transactions rather than on building long term, profitable customer relationships. The goal is to
sell what the company makes, rather than make what the customer wants. It assumes customers
coaxed into buying the product will be happy or forget their disappointment if not satisfied.
Diff: 2 Type: ES Page Ref: 12
Skill: Application
Objective: 1-3

144) Many companies, such as WestJet Airlines, take an outside-in perspective. How do such
companies address their customers' desires?
Answer: Outside represents consumers while inside represents the seller. Companies that apply
the marketing concept, an outside-in perspective, begin with researching and understanding the
needs of a well-defined market. These companies then integrate all the marketing activities that
will affect their targeted customers, creating strong relationships based on identifying customer
needs and delivering customer value and satisfaction.
Diff: 2 Type: ES Page Ref: 12
Skill: Application
Objective: 1-3

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145) A nineteenth-century street vendor in London sang, "Who will buy my fresh, red roses?"
Did the vendor take an outside-in or inside-out perspective? Explain.
Answer: Outside represents consumers while inside represents the seller. The vendor's approach
was inside-out. The roses were picked and available, so they were an existing product. The
vendor's job was then to attract willing buyers for this existing product rather than determine
what his customers wanted and provide a product to satisfy that want.
Diff: 3 Type: ES Page Ref: 12
Skill: Application
Objective: 1-3

146) Explain why electronics and pharmaceuticals manufacturers may use customer-driven
marketing.
Answer: Customer-driven companies research customers to learn about their desires, gather new
product ideas and test product improvements. In such industries that evolve so quickly,
consumers do not know exactly what is possible or what they may want in the future. When
customers don't know what new products are available and how those products might fit their
current and future needs, companies should use customer-driven marketing to lead customers to
the products they want even if those wants are latent.
Diff: 3 Type: ES Page Ref: 13
Skill: Application
Objective: 1-3

147) Company ABC implements its marketing strategy through a well-defined and complete
marketing mix. What elements does Company ABC address in its marketing mix?
Answer: As part of its complete marketing mix, Company ABC has created a marketing offer
that satisfies an identified customer need (product), determined a selling price, decided how to
distribute (place) the offer, and communicated with the target customer about the offer
(promotion). Company ABC must blend these four P's into an integrated marketing program that
communicates and delivers the intended value to chosen customers.
Diff: 2 Type: ES Page Ref: 14
Skill: Application
Objective: 1-3

148) What determines whether sellers create basic relationships or full partnerships with
customers?
Answer: To build long lasting customer relationships a company must offer superior customer
value and satisfaction. Satisfied customers are likely to be loyal customers and give the company
a larger share of business. Companies can build customer relationships at many levels. At one
extreme are basic relationships. This is appropriate when there are many low profit customers
who are not brand loyal. At the other extreme are full partnerships with key customers. This is
appropriate when there are high profit customers who are loyal.
Diff: 2 Type: ES Page Ref: 18
Skill: Application
Objective: 1-4

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149) Explain why a supermarket owner might consider customer lifetime value when a
disgruntled customer leaves the store dissatisfied.
Answer: Customer lifetime value is the entire stream of purchases a customer would make over
a lifetime. If a supermarket customer is dissatisfied and decides to shop for his or her weekly
groceries elsewhere, the owner does not lose only the profit from one week's worth of groceries.
Instead, the owner loses the possible profit of a week's worth of groceries for each and every
weekup to the customer's lifetime of weeksthe dissatisfied customer takes his or her
business elsewhere.
Diff: 2 Type: ES Page Ref: 23
Skill: Application
Objective: 1-4

150) The Electronic Edge, a retail chain that sells all types of electronics, wants to increase its
share of customer. What steps should the company take to achieve this goal?
Answer: Share of customer is the portion of the customer's purchasing that a company gets in its
product categories. The Electronic Edge can offer greater variety to customers, encouraging them
to buy more products. Also, the company can train employees to cross-sell and up-sell in order to
market additional and more expensive products and services to existing customers.
Diff: 2 Type: ES Page Ref: 24
Skill: Application
Objective: 1-4

151) Explain what marketers can expect from individuals in the customer relationship group
classified as "butterflies."
Answer: "Butterflies" are profitable but not loyal. Marketers should enjoy this type of customer
"for the moment" because they soon flutter off. Marketers should create profitable and satisfying
transactions with "butterflies," then cease investing in them until the next time around. Marketers
can expect transactions with butterflies when conditions are optimal for the customer, but they
should not expect butterflies to become loyal customers.
Diff: 2 Type: ES Page Ref: 26
Skill: Application
Objective: 1-4

152) In what ways might even a local retailer find itself touched by global competition?
Answer: A local retailer might have global suppliers and customers. The retailer's goods may
come from abroad, or components of those goods may be produced or assembled abroad. In
addition, a local retailer may sell goods over the Internet to international customers.
Diff: 2 Type: ES Page Ref: 31
Skill: Application
Objective: 1-5

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153) If a firm practices environmentalism in its social responsibility efforts, where would the
firm place its focus?
Answer: The firm needs to develop sustainable marketing practices. Every company action can
affect customer relationships. Customers today expect companies to deliver value in a socially
and environmentally responsible way. The firm should live its beliefs and authentically live the
values that it is espousing. They view sustainable marketing as an opportunity to to do well by
doing good. They seek ways to profit by serving immediate needs and long-term interests of their
customers and communities.
Diff: 2 Type: ES Page Ref: 31-32
Skill: Application
Objective: 1-5

154) How is marketing being applied in the not-for-profit sector?

Answer: Not-for-profits today face stiff competition for support and membership. Firms in the
not-for-profit sector may use marketing to enhance their images or to attract memberships and
donors. Some organizations, such as government agencies, may design social marketing
campaigns to encourage specific causes.
Diff: 2 Type: ES Page Ref: 30-31
Skill: Application
Objective: 1-5

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Carol Veldt, owner of Seagull Terrace, watched her investment grow from a small, seaside motel
to a thriving year-round resort in just a few years. Atop a bluff overlooking the Maine coast,
Seagull Terrace had attracted thousands of visits during the summer months, but then faced a
tremendous downturn in business during the winter months. "But, given the industry in the
nearby towns, very little year-round competition, and our close proximity to Portland," Carol
added, "I couldn't understand why seasonality had to hit Seagull Terrace so hard!"

So Carol spent her first winter devising a new marketing plan. She put together a promotional
package designed to attract business travelers year-round. Carol's plan, then, involved a seasonal
promotional gimmickto be implemented from early winter to late springthat would attract
the same numbers as the large summer crowd. Her idea worked! During her second winter, Carol
greeted numerous business travelersboth satisfied repeat guests as well as new guests who had
been snagged by her promotional appeals.

"We still have a long way to go," Carol admitted. "Our delicatessen offers delicious entrees, but
we'd like to expand that. We provide health club privileges off-site, but we'd like to eventually
provide our own. These are goals I hope to achieve in a few years. Our first project, however,
included a renovation of our guest rooms and I'm quite proud of the results." Carol then added,
"Actually there are so many possibilities! With an indoor pool area, I will eventually offer
weekend getaways throughout winter."

155) Based on the marketing process, what are Carol Veldt's strengths?
Answer: The marketing process builds profitable customer relationships by creating value for
customers and capturing value in return. Although her main activities involved heavy promotion,
as well as room renovations, Carol was suffering from marketing myopia. She was focused more
on the products she offered and on existing customer wants. Carol started to develop
relationships with customers during her second season, hopefully learning about her customers'
underlying needs. In the future, Carol can be successful at delighting customers if she creates and
modifies her offerings to suit customer needs and wants.
Diff: 1 Type: ES Page Ref: 6-7
Skill: Application
Objective: 1-2

156) What is included in the marketing offering at Seagull Terrace?

Answer: Market offerings are some combination of products, services, information or
experiences offered to a market to satisfy a need or want. Seagull Terrace provides activities and
amenitiessuch as a delicatessen, offsite health club privileges, and renovated roomsthat
make the experience of a night's stay more satisfying. These various activities and amenities are
sought by two targeted groupsseasonal visitors and year-round business travelers. Seagull
Terrace also offers information when the owner greets guests.
Diff: 2 Type: ES Page Ref: 8
Skill: Application
Objective: 1-2

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157) How is Carol Veldt attempting to create a brand experience for her visitors?
Answer: Brand experiences are created by integrating several services and products for
consumers. Carol is attempting to include numerous services and amenities for her visitors from
greeting guests upon arrival, to offering delicious entrees at the delicatessen and providing offsite
health club privileges. Eventually, everything the visitors want or need will be offered at Seagull
Terrace such as an indoor pool for winter weekend getaways.
Diff: 2 Type: ES Page Ref: 8
Skill: Application
Objective: 1-2

158) Define the target market at Seagull Terrace.

Answer: A target market is a selection of market segments that a company will focus on serving.
Two types of guest are being lured: seasonal visitors during the summer and year-round business
travelers. The target market include both satisfied repeat guests as well as new guests.
Eventually, Seagull Terrace hopes to attract winter weekend getaway visitors.
Diff: 1 Type: ES Page Ref: 10
Skill: Application
Objective: 1-3

159) In what ways might Carol Veldt be implementing the product concept?
Answer: The product concept holds that customers will favour products that offer the most
quality, performance and features. Believers in this concept devote energy to continually
improving their product offerings. Carol understands that guests will favor services that offer the
most in quality and innovative features. Carol's strategy currently focuses on making continuous
improvements, such as expanding entrees at the delicatessen, renovating guest rooms, and
eventually adding an indoor pool.
Diff: 3 Type: ES Page Ref: 11
Skill: Application
Objective: 1-3

160) In what ways might Carol Veldt be implementing the selling concept?
Answer: The selling concept says that consumers will not buy enough of a firm's products unless
the firm undertakes a large-scale selling and promotion effort. Carol believed that the success of
Seagull Terrace, as she views it, requires a large-scale selling effort with promotional
"gimmicks." She put together a promotional package designed to attract business travelers year-
round. Carol's plan, then, involved a seasonal promotional gimmickto be implemented from
early winter to late springthat would attract the same numbers as the large summer crowd.
Diff: 3 Type: ES Page Ref: 12
Skill: Application
Objective: 1-3

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161) How might the marketing mix at Seagull Terrace differ between its two target markets?
Answer: A company's marketing mix is the integration of the product, price, place and
promotion in order to deliver on its value proposition. The current target markets at Seagull
Terrace are year round business travelers, and seasonal summer vacationers. Although the
product and the place are virtually the same for the two target markets, promotions and price can
differ. Business travelers may be offered a discount business rate Summer guests may pay higher
rates, but the beauty of Maine's coast and the beach, as well as Seagull Terrace's variety of
services, will be the main attractions. In addition, the placement of advertising will likely be
different to reach the two groups.
Diff: 2 Type: ES Page Ref: 14
Skill: Application
Objective: 1-3

162) How should Carol Veldt guarantee customer satisfaction?

Answer: Customer satisfaction is the extent to which a product's perceived performance matches
a buyer's expectations. First, Carol must discover what expectations her customers have.
Gathering and responding to feedback from customers is one method for determining customer
expectations and how they've been satisfied. Secondly, she should create product offerings that
exceed customer expectations. This will result in delighted customers who will not only come
back but will also act as customer "evangelists," spreading the word about their good experience
to others.
Diff: 2 Type: ES Page Ref: 15
Skill: Application
Objective: 1-4

163) Explain how Carol Veldt is engaging in partner relationship management. Explain how this
could be enhanced.
Answer: Partner relationship management is working closely with partners throughout the
company as well as outside the company to jointly bring greater value to customers. Repeat
guests, we assume, are satisfied with their experience at Seagull Terrace. This is probably
because everyone who works at Seagull is jointly working together to meet or exceed customer
expectations. Carol should ensure that food provided at the delicatessen continues to provide
delicious food and that her staff continue to provide exceptional service. Carol also has an
arrangement with an offsite health club where guests at Seagull Terrace currently receive health
club privileges. Guests during the summer could receive sailboat rentals through such
arrangements.
Diff: 3 Type: ES Page Ref: 23
Skill: Application
Objective: 1-4

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164) Which social networks should Carol Veldt use to strengthen relationships with customers
and attract new customers to Seagull Terrace?
Answer: Social networks are virtual places that customers, companies, and prospective
customers can meet and share questions and experiences. A company's website can be a social
network as well as links to social media such as Facebook, Twitter, Google+, You Tube,
Pinterest, Instagram and many others. Answers will vary. The idea here is that students will
identify social networks in which the target audience is present. Communications from Seagull
Terrace can then be sent to prospective customers. Carol can "listen" to social media
conversations and respond where appropriate. In addition, Carol should link the various social
media to her website. She should also have a blog, and or comment page from guests that she can
respond to.
Diff: 3 Type: ES Page Ref: 27-28
Skill: Application
Objective: 1-5

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