Chapter 12

Business Essentials, Canadian Edition, 9e (Ebert)
Chapter 12 Understanding Marketing Principles and Developing Products
12.1 Multiple Choice Questions
1) ________ is the process of planning and executing the development, pricing, promotion, and
distribution of ideas, goods, and services to create exchanges that satisfy individual and
organizational objectives.
A) Promotion
B) Relationship marketing
C) Marketing
D) Market strategy
E) Market segmentation
Answer: C
Diff: 1 Type: MC Page Ref: 262
Skill: Knowledge
Objective: 12.1
2) According to the marketing concept,

A) the firm must coordinate its marketing and non-marketing activities.
B) customer satisfaction is the firm's only objective.
C) maximum short-run profit is the firm's only objective.
D) the marketing department should function independently of the rest of the firm.
E) the finance area becomes critically important because ways must be found to pay for all the
marketing research activity that is necessary.
Answer: A
Skill: Comprehension
Objective: 12.1
3) Value is determined by comparing a product's ________; the formula requires dividing

________.
A) costs and benefits; benefits by costs
B) price and quality; price by quality
C) price and durability; durability by price
D) quality and durability; quality by durability
E) availability and price; price by availability
Answer: A
Objective: 12.1
1
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4) A product's benefits include all of the following except which?
A) The emotional satisfaction associated with owning the product
B) The satisfaction associated with experiencing the product
C) The time required to purchase the product
D) The functions of the product
E) The acceptance by a peer group
Answer: C
Objective: 12.1
5) The process of planning and executing the conception, pricing, promotion, and distribution of
ideas, goods, and services to create exchanges that satisfy individual and organizational
objectives is called
A) publicity.
B) marketing.
C) relationship marketing.
D) idea promotion.
E) advertising.
Answer: B
Skill: Knowledge
Objective: 12.1
6) Products which are purchased by end users for their personal use are ________ goods, while
products which are purchased by companies for production purposes are ________ goods.
A) industrial; consumer
B) capital; accessory
C) consumer; industrial
D) high utility; low utility
E) none of these
Answer: C
Skill: Knowledge
Objective: 12.1
7) What type of goods includes raw materials and integrated circuits?

A) Substitute products
B) Industrial goods
C) Consumer goods
D) Marketing goods
E) Disposable goods
Answer: B
Skill: Knowledge
Objective: 12.1
2
8) Quinn Clothes is a successful business selling fashionable and athletic swimwear. The
marketing staff has said that the company's plan to develop and market waterproof perfumes
might be hindered by a lack of experience in the perfume field. Which of the following is the
best response to that weakness?
A) Hire a chemist to develop the fragrances
B) Seek product ideas from existing staff
C) Employ new graphic designers to develop a new logo
D) Ensure that the perfume can be sold in the same retail stores as the swimwear
E) Rethink the company's promotional approach to selling products
Answer: A
Skill: Knowledge
Objective: 12.1
9) Hydraulics Inc. makes filters for manufacturing companies. What kind of marketing is it
engaged in?
A) Consumer marketing
B) Disaggregate marketing
C) Market planning
D) Industrial marketing
E) Product differentiation
Answer: D
Objective: 12.1
10) Starbucks's Card Rewards attracts return customers with free coffee refills and other extras.
This is an example of
A) industrial marketing.
B) relationship marketing.
C) consumer marketing.
D) marketing research.
E) international marketing.
Answer: B
Objective: 12.1
3
11) Which phrase best captures the essence of relationship marketing?
A) Emphasis on quality
B) Emphasis on intensive distribution
C) Emphasis on long-term relationships with customers
D) Emphasis on exclusive distribution
E) Emphasis on profitable operations
Answer: C
Objective: 12.1
12) Which of the following terms describes the kind of products marketed by insurance
companies, airlines, investment counsellors, health clinics, and public accountants?
A) Personal goods
B) Services
C) Industrial goods
D) Psychographics
E) Reseller goods
Answer: B
Objective: 12.1
13) Advertising to make people more aware of the hazards of drinking and driving is an example
of
C) service marketing.
D) idea marketing.
E) consumer marketing.
Answer: D
Objective: 12.1
14) What kind of business activity is a grocery store engaged in when it sells meat to a
homemaker?
A) Consumer marketing
B) Disaggregate marketing
C) Product differentiation
D) Industrial marketing
E) Market planning
Answer: A
Objective: 12.1
4
15) Harley-Davidson offers social incentives through the Harley Owners Group (H.O.G.), the
largest motorcycle club in the world. This is an example of
D) marketing research.
E) international marketing.
Answer: B
Objective: 12.1
16) What is data warehousing?

A) A marketing strategy that creates sales agreements that stipulate product delivery
B) The process of dividing a market into categories of customer types
C) The study of consumer needs and wants and the way in which sellers can best meet them
D) The process of collecting, storing, and retrieving data in electronic files
E) A customer identification strategy that targets potential buyers
Answer: D
Objective: 12.1
17) If Brighten Your World Inc. sells its light bulbs to the Jacobs Motor Company to be used in
all their cars as headlights, Brighten Your World is engaging in what type of marketing activity?
A) Marketing research
B) Consumer marketing
C) Relationship marketing
D) Aggregate marketing
E) Industrial marketing
Answer: E
Objective: 12.1
18) When Toronto-based Fairmont Resort Hotels used data mining to find out what kinds of
vacations their customers preferred, and then placed ads where they were more likely to reach
those customers, this was an example of
A) consumer relationship management.
B) product differentiation.
C) data warehousing.
D) aggregate marketing.
E) industrial marketing.
Answer: A
Objective: 12.1
5
19) Single parent families, food preferences, and the number of women entering the workforce
are all external environmental factors marketing managers must consider when analyzing the
________ environment.
A) public relations
B) legal
C) produce
D) economic
E) socio-cultural
Answer: E
Skill: Knowledge
Objective: 12.1
20) The five major environmental factors in the marketing environment are
A) political-legal, socio-cultural, technological, infrastructure, and competitive.
B) political-legal, economic, intellectual, socio-cultural, and competitive.
C) political-legal, socio-cultural, technological, economic, and competitive.
D) infrastructure, socio-cultural, technological, climatic, and competitive.
E) political-legal, intellectual, technological, economic, and competitive.
Answer: C
Skill: Knowledge
Objective: 12.1
21) A company decides to introduce a line of crackers made with organically grown grains and
vegetables. What environmental trend is the company responding to?
A) Competitive
B) Socio-cultural
C) Political-legal
D) Economic
E) Technological
Answer: B
Skill: Knowledge
Objective: 12.1
22) Smartphones are an example of what kind of factor in the business environment?
A) Economic
B) Technological
C) Global
D) Competitive
E) Socio-cultural
Answer: B
Skill: Knowledge
Objective: 12.1
6
23) Cholesterol levels may be controlled with either a physical-fitness program or a drug
regimen. The fitness program and the drugs are examples of
A) dissimilar products.
B) contrary products.
C) international products.
D) brand-name competitive products.
E) substitute products.
Answer: E
Objective: 12.1
24) Who has the responsibility for developing the plan to introduce a new product, service, or
idea?
A) Quality assurance manager
B) Marketing manager
C) Production manager
D) Planning manager
E) Warehouse manager
Answer: B
Skill: Knowledge
Objective: 12.2
25) The 4 P's of marketing include all the following except

A) product.
B) place.
C) price.
D) promotion.
E) profit.
Answer: E
Skill: Knowledge
Objective: 12.2
26) The ________ is a good, service, or idea that is marketed to fill consumer needs and wants.
A) product
B) place
C) profit
D) promotion
E) price
Answer: A
Skill: Knowledge
Objective: 12.2
7
27) A TD Canada Trust advertisement that emphasizes non-traditional extended banking hours is
an example of
A) product differentiation.
B) market research.
C) industrial marketing.
D) relationship marketing.
E) market segmentation.
Answer: A
Objective: 12.2
28) What is the fundamental goal of product differentiation?

A) To increase profit margins
B) To set the company's products apart from competitive products in the market
C) To maximize market share
D) To more effectively market to industrial consumers
E) To more effectively market to certain demographic segments of the market
Answer: B
Objective: 12.2
29) A detailed and focused strategy for gearing marketing activities to meet consumer needs and
wants is called a
A) promotion plan.
B) product positioning.
C) sales plan.
D) marketing plan.
E) marketing mix.
Answer: D
Skill: Knowledge
Objective: 12.2
30) When Maytag created the perception that its products were more reliable (by showing a
lonely repair person with nothing to do) it was using a(n) ________ strategy.
A) product differentiation
B) promotion
C) everyday low prices
D) new product development
E) market segmentation
Answer: A
Objective: 12.2
8
31) What results are expected from a successful product differentiation program?
A) The manner in which the product functions must be changed.
B) Differentiation requires that prices be mid-level in order to generate a high volume of sales.
C) Customer response to the product will change.
D) Differentiation requires that prices be high in order to generate a high volume of sales.
E) Promotional plans will not change.
Answer: C
Objective: 12.2
32) ________ must support the firm's operating costs, administrative costs, research costs, and
marketing costs such as advertising and sales salaries.
A) Product differentiation
B) Price
C) Product
D) Place
E) Promotion
Answer: B
Skill: Knowledge
Objective: 12.2
33) Which element of the marketing mix is illustrated by using premiums and coupons to
encourage consumers to buy more of a product?
A) Price
B) Promotion
C) Production
D) Place
E) Productivity improvements
Answer: B
Objective: 12.2
34) ________ is the most highly visible component of the marketing mix.
A) Promotion
B) Place
C) Profit
D) Product
E) Price
Answer: A
Skill: Knowledge
Objective: 12.2
9
35) Hansen Trucking Company transports detergent from a loading dock in Toronto to a
supermarket shelf in Sherbrooke. This is a(n) ________ element of the marketing mix.
A) ownership
B) form
C) time
D) product
E) place
Answer: E
Objective: 12.2
36) The four elements in the marketing mix are

A) advertising, sales promotion, publicity, and public relations.
B) marketing managers, a marketing plan, relationship marketing, and profit.
C) price, place, promotion, and product.
D) profit, price, place, and promotion.
E) demographics, psychographics, geographics, and product use.
Answer: C
Diff: 1 Type: MC Page Ref: 266-267
Skill: Knowledge
Objective: 12.2
37) Which of the following is correct with regard to the elements in the marketing mix?
A) Of the four elements, "product" is generally least important.
B) The elements are all equally important, regardless of the product being sold.
C) Price plays a small role in fresh meat, but a relatively larger role in selling newspapers.
D) Distribution is not very important in marketing gasoline, but it is important for lumber.
E) Promotion is vital in selling toys, but much less important in selling nails.
Answer: E
Objective: 12.2
38) Which of the following is correct with regard to price?

A) It refers only to the actual amount of money that consumers pay for a product.
B) It is generally the second-most important element in the marketing mix.
C) In some cases, high prices will actually attract customers by implying that the product is
unusually good.
D) It is more important for industrial goods than it is for consumer goods.
E) All of these
Answer: C
Objective: 12.2
10
39) If you were the manager for a local bulldozer dealer, which promotion tool would likely be
the best method to sell high-priced bulldozer?
A) Product placement
B) Price placement
C) Product differentiation
D) Personal selling
E) New product development
Answer: D
Objective: 12.2
40) Which term is used to identify the division of a market into categories of customer types?
A) Industrial marketing
B) Marketing mix
C) Customer marketing
D) Market segmentation
E) Market de-categorization
Answer: D
Skill: Knowledge
Objective: 12.3
41) The importance of ________ in marketing can be seen in the example of the introduction of
"Crayola IQ" colour pencils because crayons were seen as too "babyish" by 8 to 12-year olds.
A) language
B) geography
C) demographics
D) history
E) psychology
Answer: C
Objective: 12.3
42) Groups of people with similar wants and needs that can be expected to show interest in the
same products are called
A) customers.
B) prospects.
C) homogeneous segments.
D) potential customers.
E) target markets.
Answer: E
Skill: Knowledge
Objective: 12.3
11
43) When Reader's Digest identified and classified its readers into young adults, computer
owners, and professionals/managers, it was using
A) prospect identification.
B) potential customer categorizing.
C) customer identification.
D) product differentiation.
Answer: E
Objective: 12.3
44) Purple Moon markets adventure software to pre-teen girls. This is an example of
A) relationship marketing.
B) mass customization.
C) product differentiation.
D) customer identification.
Answer: E
Objective: 12.3
45) What does the process of "positioning" involve?

A) Hiring only employees who have the strongest credentials
B) Designing a company's products to appeal to target customers
C) Focusing on only one component of the marketing mix
D) Disregarding customers' reactions to a company's products
E) Reorganizing employees according to seniority
Answer: B
Objective: 12.3
46) What is a target market?

A) Teenagers ages 13 to 18 who enjoy fast food
B) Men who are taller and heavier than average
C) The percent of market share the firm wants to achieve
D) A group of people with similar wants who are expected to show interest in the same products
E) The percentage of total revenue generated by one product
Answer: D
Objective: 12.3
12
47) The best way to segment the market for umbrellas is probably by
A) geographic variables.
B) behavioural segmentation.
C) psychographic variables.
D) geo-demographic variables.
E) demographic variables.
Answer: A
Objective: 12.3
48) The best segmentation for small drug stores or dry cleaners would be
A) geographic.
B) demographic.
C) geo-demographic.
D) product use.
E) psychographic.
Answer: A
Objective: 12.3
49) ________ is segmentation by such traits as age, income, gender, ethnicity, and marital status.
A) Random selection
B) Demographics
C) Psychographics
D) Product use
E) Geographics
Answer: B
Skill: Knowledge
Objective: 12.3
50) Which segmentation approach considers consumer characteristics such as their attitudes,
interests, and opinions?
A) Consumographic
B) Geographic
C) Psychographic
D) Behavioural
E) Demographic
Answer: C
Skill: Knowledge
Objective: 12.3
13
51) People with similar wants and needs constitute ________, which clearly requires ________.
A) a demographic market segment; market segmentation
B) a target market; market segmentation
C) a target market; relationship marketing
D) a geographic market segment; relationship marketing
E) a psychographic market segment; relationship marketing
Answer: B
Objective: 12.3
52) Multicultural marketing is part of market segmentation by

A) psychographics.
B) demographics.
C) geography.
D) product use.
E) attitudes.
Answer: B
Skill: Knowledge
Objective: 12.3
53) Which of the following should be considered in the demographic variables for market
segmentation?
A) How the product will be used (e.g., athletic footwear vs. dress shoes)
B) Interests, attitudes, and opinions of consumers
C) Income levels, marital status
D) Trends in population shifts
E) Where people live
Answer: C
Skill: Knowledge
Objective: 12.3
54) ________ are particularly important to marketers because marketers can, through marketing
efforts, sway consumers' likes and dislikes.
A) Demographics
B) Geographics
C) Marital status and age
D) Psychographics
E) Product uses
Answer: D
Skill: Knowledge
Objective: 12.3
14
55) The Chevrolet Spark is promoted to consumers based on fuel-efficiency and economy, while
a Porsche is promoted based on high performance. This is an example of
A) relationship marketing.
C) product differentiation.
D) mass customization.
E) psychographic segmentation.
Answer: B
Objective: 12.3
56) A company that sells environmentally-friendly, zero-impact products would likely use
________ segmentation to reach out to people that match their lifestyle approach and attitudes
towards nature.
A) intrinsic
B) psychographic
C) demographic
D) geographic
E) product-use variables
Answer: B
Objective: 12.3
57) Primary data are

A) data gathered for primary areas of the firm, like marketing and production.
B) based on facts gathered from library research.
C) based on data newly collected for a specific research purpose.
D) any of the above, depending upon why the marketer is doing the research.
E) gathered by consulting Statistics Canada publications.
Answer: C
Objective: 12.4
58) Assume that you went to a shopping mall to determine people's attitudes toward a new
peanut butter and pickle flavoured ice cream. You would be collecting ________ data.
A) census
B) interview
C) primary
D) psychographic
E) secondary
Answer: C
Objective: 12.4
15
59) The study of what buyers need and how best to meet those needs is known as
A) marketing.
B) market research.
C) psychographics.
D) market segmentation.
E) market stimulation.
Answer: B
Skill: Knowledge
Objective: 12.4
60) When is market research used most frequently?

A) When a new or altered product is being considered
B) When a product is out of stock
C) When the promotional campaign is first under way
D) When the product is fully stocked in each of the distribution centres
E) When determining the reason for a product's failure
Answer: A
Objective: 12.4
61) The information that Statistics Canada provides on the Canadian economy is an example of
A) secondary data.
B) statistical variance analysis.
C) primary data.
D) a demographic variable.
E) product research.
Answer: A
Skill: Knowledge
Objective: 12.4
62) Rondell Corp. is involved in a market research program. They have already studied the
current situation to discover customer needs and what is being done to meet those needs. What
should they do next?
A) Collect data
B) Select a research method
C) Analyze the data
D) Conduct a focus group
E) Prepare a report
Answer: B
Skill: Application
Objective: 12.4
16
63) Sherrie wants to complete a research project; unfortunately, she has no idea where to begin.
You advise her to begin by
A) designing a questionnaire.
B) collecting data.
C) selecting a research method.
D) studying the current situation.
E) analyzing data.
Answer: D
Skill: Application
Objective: 12.4
64) Secondary data are

A) statistics and information that are available as a result of previous research.
B) based on data newly collected for a specific research purpose.
C) based on information gathered by someone else, but not yet published.
D) any of the above, depending upon why the marketer is doing the research.
E) data gathered for secondary areas of the firm like marketing research and accounting.
Answer: A
Objective: 12.4
65) Sherrie wants to save money and time on her research project. You recommend she use
A) observation.
B) focus groups.
C) primary data she collects herself.
D) secondary data.
E) experiments.
Answer: D
Objective: 12.4
66) While Sylvia has not asked teenage consumers any questions, she has noted that they tend to
purchase green nail polish, as opposed to purple. Which research method has Sylvia used?
A) Nominal scaling
B) Focus groups
C) Observation
D) Survey
E) Experimentation
Answer: C
Objective: 12.4
17
67) When UPS asked customers how the company could improve its service, UPS was using
A) video mining.
B) observation.
C) experimentation.
D) focus groups.
E) surveys.
Answer: E
Objective: 12.4
68) The heart of any survey is the ________ which must be carefully designed to give the
company honest answers about specific research issues.
A) observation
B) questionnaire
C) experimentation
D) secondary data
E) consumer scan
Answer: B
Objective: 12.4
69) Many firms use ________, in which 6 to 15 people are brought together to talk about a
product. A moderator leads a discussion, and employees from the sponsoring company may
observe the proceedings from behind a one-way mirror. People's comments are taped, and
researchers go through the data looking for common themes.
A) observation
B) secondary data scanning
C) experimentation
D) visual survey
E) focus groups
Answer: E
Objective: 12.4
18
70) Sally spent the day in the local grocery store passing out free samples of a new potato chip
brand. Sally gave every second customer the new chip with dip and every other customer the
new chip without dip. What type of research was Sally conducting?
A) Observation
B) Primary and secondary data collection
C) Experimentation
D) Survey
E) Focus groups
Answer: C
Objective: 12.4
71) Garrett is in the business of selling baseball bats. He decides to employ focus groups to
determine which bats will likely be bestsellers. Which of the following groups will he be least
likely to invite as participants?
A) Players from a professional baseball team
B) Local college and high school baseball coaches
C) Administrators of the local Little League baseball program
D) Spectators at a baseball tournament
E) Amateur players
Answer: D
Objective: 12.4
72) ________ is an example of a rational motive, whereas ________ is an example of an

emotional motive when buying a new pair of pants.
A) Quality; aesthetics
B) Cost; quality
C) Aesthetics; Quality
D) Quality; Usefulness
E) Sociability; imitation of others
Answer: A
Skill: Knowledge
Objective: 12.5
19
73) ________ is the study of the decision process by which customers come to purchase and
consume products.
A) Customer buying logic
B) Purchase decision model
C) End-user purchase behaviour
D) Consumer behaviour
E) Buyer behaviour
Answer: D
Skill: Knowledge
Objective: 12.5
74) The influence category which includes "lifestyle" is ________, while the category that
includes an individual's "motivations" is ________.
A) personal; psychological
B) psychological; social
C) cultural; social
D) social; cultural
E) social; psychological
Answer: A
Skill: Knowledge
Objective: 12.5
75) Which category of influences on consumer behaviour includes ethnic groups, social class,
occupation, and income?
A) Past experience
B) Psychological
C) Social
D) Cultural
E) Personal
Answer: D
Skill: Knowledge
Objective: 12.5
76) In consumer behaviour, what is the name for the influences that include the "way of living"
that distinguishes one large group from another and one ethnic group from another?
A) Psychological
B) Personal
C) Social
D) Domestic
E) Cultural
Answer: E
Skill: Knowledge
Objective: 12.5
20
77) Based on a product review in a magazine, Rob decided which product to buy. He is
demonstrating the impact of
A) psychological influences.
B) cultural influences.
C) past experience influences.
D) social influences.
E) personal influences.
Answer: D
Objective: 12.5
78) Arun is a conservative computer programmer. He prefers coulors like grey, black, blue, and
white. He certainly does not like chasing fashion fads or wearing flashy clothes. This is an
example of
A) past experience influences.
B) cultural influences.
C) social influences.
D) personal influences.
E) psychological influences.
Answer: D
Objective: 12.5
79) Ming has a strong work ethic. He has worked his way up the ladder and would be considered
upper middle class, which is reflected in his recent purchases. This is an example of
A) psychological influences.
B) social influences.
C) personal influences.
D) cultural influences.
E) past experience influences.
Answer: D
Objective: 12.5
21
80) On the first day of your new job, you notice that your wardrobe is not up to company
standards. You are at the ________ stage of the consumer buying process.
A) problem recognition
B) purchase decision
C) post-purchase evaluation
D) information seeking
E) evaluation of alternatives
Answer: A
Objective: 12.5
81) It is January 15th and the temperature is -20 Celsius. You have been waiting in a frigid bus
shelter, but the bus is nowhere to be found even after 45 minutes of waiting. You have been
thinking about buying a used car and have been saving money for a purchase in the spring. At
that moment, you decide to finally make the move to buy a car. That evening you go online and
browse, and you also call up your cousin Gerry, who is a mechanic, and ask him what type of car
he recommends. You are now in the ________ stage of the consumer buying process.
A) information seeking
B) post-purchase evaluation
C) problem recognition
D) purchase decision
Answer: A
Objective: 12.5
82) To help you decide which new suit to purchase for your job interview, you ask a trusted
friend to give you her opinion on each of the suits you're looking at. You are in the ________
stage of the consumer buying process.
A) post-purchase evaluation
B) purchase decision
C) evaluation of alternatives
E) problem recognition
Answer: C
Objective: 12.5
22
83) Michael decides that he cannot afford the cost of a new set of tires for his car until after
payday. Which state of the consumer buying process stages is he in?
A) Problem recognition
B) Evaluation of alternatives
C) Purchase decision
D) Information seeking
E) Post-purchase evaluation
Answer: C
Objective: 12.5
84) Before making your final decision on that new computer, you write down all the features,
prices, and warrantees of the different products you've seen. You are in the ________ stage of
the consumer buying process.
B) post-purchase evaluation
C) purchase decision
Answer: E
Objective: 12.5
85) Rob has decided to buy a new computer based on the relatively low costs, the features he can
get, the warranty that comes with the computer, and the overall usefulness it will provide. He has
made his decision based on
A) rational motives.
B) irrational motives.
C) subjective motives.
D) analytical motives.
E) emotional motives.
Answer: A
Objective: 12.5
23
86) As Bill enters the store, he notices a shirt that he likes and decides to buy it even though he
came into the store looking for pants. He has made a(n) ________ decision.
A) rational
B) emotional
C) illogical
D) subjective
E) logical
Answer: B
Objective: 12.5
87) As you are driving down the road in your brand-new Chevrolet, you notice that a new Ford
has stopped beside the road and has its hazard lights blinking. You smile but decide to stop
anyway to help. You are in the ________ stage of the consumer buying process.
B) information seeking
C) purchase decision
D) evaluation of alternatives
E) post-purchase evaluation
Answer: E
Objective: 12.5
88) An individual's motivations, perceptions, ability to learn, and attitudes are part of which
influence on consumer behaviour?
A) Personal
B) Social
C) Cultural
D) Past experience
E) Psychological
Answer: E
Skill: Knowledge
Objective: 12.5
24
89) You and your spouse decide that the sports car you currently own is not going to be suitable
for travelling with your new baby, Amy. You are in what stage of the consumer buying process?
A) Purchase decision
B) Post-purchase evaluation
C) Problem recognition
D) Information seeking
E) Evaluation of alternatives
Answer: C
Objective: 12.5
90) If you are in the market for a new set of skis, you probably have some idea of who provides
the best skis and how they differ. You may have accumulated some of this knowledge during the
information-seeking stage and combined it with what you knew before. The next stage for you is
to
A) evaluate alternatives.
B) seek information.
C) buy a new pair of skis.
D) recognize the problem.
E) evaluate post-purchase.
Answer: A
Objective: 12.5
91) Which of the following is correct with regard to rational and emotional purchase motives?
A) Emotional purchase motives generally lead to post-purchase unhappiness.
B) Rational motives are normally used for industrial goods purchases, while emotional motives
are normally used for consumer goods purchases.
C) Research shows that rational motives are more commonly used by men, while emotional
motives are more commonly used by women.
D) Emotional motives are used when purchasing services, while rational motives are used when
purchasing goods.
E) None of these is correct.
Answer: E
Objective: 12.5
25
92) Boilers Inc. sells 100% of its boilers to churches to improve their energy efficiency and to
decrease their heating costs. The company is involved in
A) charitable marketing.
B) industrial marketing.
D) quality assurance marketing.
E) institutional marketing.
Answer: E
Objective: 12.6
93) The Delivery Company has an extensive distribution network in Canada. They buy products
directly from manufacturers and distribute them to small retailers with a small mark-up. What
market do they belong to?
A) Institutional market
B) Demand-driven market
C) Industrial market
D) Primary market
E) Reseller market
Answer: E
Objective: 12.6
94) Westminster Office Products buys paper products from Boise Cascade for sale in its retail
stores. Westminster Office Products purchases paper products in the ________ market.
A) retail
B) government
C) industrial
D) reseller
E) institutional
Answer: D
Objective: 12.6
95) Which of the following is the best example of a B2B market transaction?
A) A college student buys dorm furniture from an on-campus store.
B) A group of teenage girls buy new clothes for the upcoming school year.
C) A high school coach borrows sports equipment from a neighbouring school.
D) A dentist provides free toothbrushes to patients.
E) A chain of ice cream parlours regularly purchases napkins from the same supplier.
Answer: E
Objective: 12.6
26
96) Which of the following is true with regard to the concept of the value package?
A) The physical characteristics of the product are the primary focus for the consumer.
B) The price of the product is the primary focus of the consumer.
C) The value package includes both tangible and intangible attributes of the product.
D) The value package cannot be high if the price of the product is high.
E) The value package concept applies to physical products, but not intangible services.
Answer: C
Objective: 12.7
97) Milk, newspapers, bread, and batteries are examples of ________ goods.
A) specialty
B) shopping
C) convenience
D) coincidental
E) impulse
Answer: C
Objective: 12.7
98) Melissa was visiting San Francisco. When she arrived at Fisherman's Wharf, she decided to
purchase a souvenir T-shirt for her boyfriend back home. Since there are about 40 T-shirt
retailers in that area, Melissa spent the rest of the day searching for the shirt that would convey
just the right meaning to her boyfriend. For Melissa, the shirt was a(n) ________ good.
A) specialty
B) convenience
C) shopping
D) accessory
E) industrial
Answer: C
Objective: 12.7
99) Which of the following is a convenience service?

A) A limousine ride from the restaurant to senior prom
B) Catering for a wedding reception
C) A haircut at one of Great Clips' 3000 quick-service salons
D) A hotel room next door to the convention you're attending
E) The daily newspaper
Answer: C
Objective: 12.7
27
100) Which of the following would most likely be considered a shopping good?
A) A package of chewing gum
B) A Bic pen
C) A ream of typing paper
D) A birthday gift for your mother
E) A loaf of bread
Answer: D
Objective: 12.7
101) Stereos, tires, business suits, and furniture are examples of ________ goods.
A) convenience
B) impulse
C) coincidental
D) shopping
E) specialty
Answer: D
Objective: 12.7
102) Goods which are very important, expensive, and rarely purchased are ________ goods.
A) shopping
B) impulse
C) convenience
D) coincidental
E) specialty
Answer: E
Skill: Knowledge
Objective: 12.7
103) Bread is an example of a(n) ________, while the catering for a wedding reception is an
example of a(n) ________.
A) shopping good; shopping service
B) convenience good; specialty good
C) specialty good; specialty service
D) convenience good; specialty service
E) shopping good; shopping good
Answer: D
Objective: 12.7
28
104) Pencils, brooms, and gloves are examples of ________, while factories, water towers, and
airplanes are examples of ________.
A) capital items; expense items
B) supplies; installations
C) services; capital items
D) expense items; capital items
E) capital items; supplies
Answer: D
Objective: 12.7
105) Coffee, potato chips, and AA batteries are examples of ________, while tires are an
example of ________.
A) shopping goods; shopping services
B) convenience goods; shopping goods
C) specialty goods; specialty services
D) convenience goods; specialty services
E) shopping goods; shopping goods
Answer: B
Objective: 12.7
106) Diamond rings, Rolex watches, Godiva chocolates, and Rolls Royces are examples of
A) a product mix.
B) convenience goods.
C) shopping goods.
D) a product line.
E) specialty goods.
Answer: E
Objective: 12.7
107) Light bulbs, pencils, pads of paper, and lubricating oils for machines are examples of
________ purchased by companies that make other goods.
A) capital items
B) fixed expense goods
C) expense items
D) depreciation goods
E) impulse items
Answer: C
Objective: 12.7
29
108) Buildings, manufacturing equipment, computers, and desks are examples of ________
purchased by companies that make other goods.
A) impulse items
B) capital items
C) current expenses
D) fixed expenses
E) expense items
Answer: B
Objective: 12.7
109) Black & Decker makes toasters, vacuum cleaners, electric drills, and a variety of other
appliances and tools. This is Black & Decker's
A) product blend.
B) product offering.
C) product mix.
D) product line.
E) multiple product lines.
Answer: C
Objective: 12.7
110) Which of the following is correct regarding the product mix and product line concepts?
A) A product line is broader than a product mix.
B) The product mix refers to the group of products a company has available for sale.
C) The product line concept applies to physical products, while the product mix concept applies
only to services.
D) A product line focuses on convenience goods, while a product mix focuses on shopping
goods.
E) A product line is almost always more expensive than a product mix.
Answer: B
Objective: 12.7
30
111) Ford offers four different models of the Escort which run the gamut from the three-door
sport model to the five-door sedan. This represents
A) a product offering.
B) multiple product lines.
C) a product line.
D) a product blend.
E) a product mix.
Answer: C
Objective: 12.7
112) Which defining word or phrase below best captures the meaning of capital items?
A) Bulk loads
B) Directly used in the production process
C) To the consumer within a year
D) Permanent
E) Governmental purchase
Answer: D
Objective: 12.7
113) Which of the following is correct with regard to the concept of a "product"?
A) The product is made up of the visible features and benefits.
B) When consumers buy a product, they are also buying an image and a reputation.
C) Products are normally classified into two basic groups: those that are consumed in a short
period of time and those that last a long time.
D) The value package is the objective features of the product.
E) For a computer, most items in the value package are tangible.
Answer: B
Objective: 12.7
114) Advertisements for the Swatch Chrono watch remind consumers that they don't get just
"real" features like shock and water resistance when they buy the product. This is an example of
A) the value package.
B) emotional advertising.
C) institutional advertising.
E) focusing on the visible features of a product.
Answer: A
Objective: 12.7
31
115) For many years, ServiceMaster focused on residential customers, but now it has added
business and industry services. This is an example of
A) product mortality.
C) multiple product lines.
E) the product mix.
Answer: C
Objective: 12.7
116) Why are businesses interested in the development of new products?

A) The federal government encourages every product manufacturer to spend 1 percent of
revenue on new product development.
B) New products are necessary to stay in business.
C) New products keep the warranty and service departments busy.
D) New products provide the fun that marketing managers need.
E) Product development provides an opportunity for large tax write-offs.
Answer: B
Objective: 12.8
117) You are asked to come up with a new widget. What would your first step be?
A) Idea screening
B) Idea generation
C) Commercialization
D) Business analysis
E) Test marketing
Answer: B
Skill: Application
Objective: 12.8
118) Assuming a company has been gathering ideas for new products, what is the next step in the
development process?
A) Test marketing
B) Prototype development
C) Business analysis
D) Concept testing
E) Screening
Answer: E
Skill: Application
Objective: 12.8
32
119) What is the purpose of the screening stage of the product development process?
A) To identify potential production problems
B) To identify the benefits which consumers want
C) To actively seek out ideas for new products
D) To eliminate all ideas that do not mesh with the firm's objectives, abilities, or expertise
E) To compare costs and benefits of the proposed product
Answer: D
Skill: Knowledge
Objective: 12.8
120) Suppose you work for a firm that manufactures and sells pet accessories. As part of your
job, you frequently visit city parks and observe how people interact with their pets. You also talk
to the staff members of veterinary clinics to discover how people relate to their pets. This activity
is consistent with the ________ phase of new product development.
A) idea generation
B) business analysis
C) prototype development
D) screening
E) product testing
Answer: A
Objective: 12.8
121) In which stage of the new product development process is a preliminary version of the
product produced?
A) Product test run
B) Screening
C) Prototype development
D) Concept testing
E) Test marketing
Answer: C
Skill: Knowledge
Objective: 12.8
122) In which stage of product development does market research have a major role?
A) Prototype development
B) Commercialization
C) Business analysis
D) Product testing
E) Concept testing
Answer: E
Skill: Knowledge
Objective: 12.8
33
123) You are asked to justify market research for a new product. You explain that it is required
A) to determine if the product will meet performance requirements.
B) to ensure that the new product will mesh with the firm's objectives.
C) to identify future production problems.
D) to identify benefits to be provided by the product.
E) to determine whether there will be a market for the product.
Answer: D
Objective: 12.8
124) It takes ________ new product ideas to generate just 1 new product that reaches the market,
and then only ________ out of 10 new products on the market succeeds.
A) 100; 1
B) 200; 3
C) 50; 1
D) 30; 4
E) 20; 6
Answer: C
Skill: Knowledge
Objective: 12.8
125) If a company requires consumer response to a new product under real conditions, which
phase of the product development process would the company use?
A) Business analysis
B) Concept testing
C) Commercialization
D) Screening
E) Product testing and test marketing
Answer: E
Objective: 12.8
126) Batson Corp. marketing staff have developed a long list of possible new product ideas. In
terms of the new product development process, what should they do next?
B) Screening
C) Product testing
D) Concept testing
E) Prototype development
Answer: B
Skill: Application
Objective: 12.8
34
127) Lexington Corp. has been involved in a new product development process for several
months. They have completed several preliminary tasks, the most recent of which was estimating
costs and benefits for a proposed new product. What should they do next?
B) Test marketing
C) Product testing
D) Concept testing
E) Prototype development
Answer: E
Skill: Application
Objective: 12.8
128) How does the product life cycle mesh with the product development process?
A) Product commercialization is the start of the introduction stage of the life cycle.
B) Commercialization indicates that the product has become a "star."
C) Prototype development is the start of the introduction stage of a life cycle.
D) Product testing and test marketing take place during the growth stage of the life cycle.
E) The two do not mesh.
Answer: A
Objective: 12.8
129) The ________ is a natural process in which products are born, grow in stature, mature, and
finally decline and die.
A) product life stages
B) profit life cycle
C) product life cycle
D) product profit stages
E) profit life stages
Answer: C
Skill: Knowledge
Objective: 12.8
35
130) The new product that Bellson Corp. introduced last year is now experiencing rapidly
increasing sales, and the product has begun to show a profit. But Bellson notices that two
competitors have recently introduced similar products. This is what happens in the ________
stage of a product's life cycle.
A) growth
B) maturity
C) decline
D) development
E) introduction
Answer: A
Objective: 12.8
131) During this stage of a product's life cycle marketers focus on making potential consumers
aware of the product and its benefits. Profits are non-existent or small. This is the ________
stage.
A) decline
B) growth
C) maturity
D) development
E) introduction
Answer: E
Skill: Knowledge
Objective: 12.8
132) Solar-powered cars are in the ________ stage of their product life cycles.
A) growth
B) decline
C) introduction
D) maturity
E) development
Answer: C
Objective: 12.8
36
133) Automobiles and Flat Screen TVs are in the ________ stage of their product life cycle.
A) introduction
B) growth
C) decline
D) maturity
E) development
Answer: D
Objective: 12.8
134) Land-line phones and DVD players are both in the ________ stage of the product life cycle.
A) growth
B) decline
C) development
D) introduction
E) maturity
Answer: B
Objective: 12.8
135) During the ________ stage of the product life cycle, heavy promotion is often required to
build brand preference over the competition.
A) introduction
B) decline
C) maturity
D) growth
E) development
Answer: D
Skill: Knowledge
Objective: 12.8
136) Coca-Cola, Pepsi-Cola, Kleenex, and Chevrolet are examples of

A) private label.
B) brand names.
C) product names.
D) product line names.
E) public label.
Answer: B
Objective: 12.8
37
137) What type of brand is Coca-Cola?
A) Generic brand
B) National brand
C) Off-the-shelf brand
D) Copyrighted brand
E) Private brand
Answer: B
Skill: Knowledge
Objective: 12.8
138) Harley-Davidson's famous logo is emblazoned on products such as boots, eyewear, gloves,
purses, lighters, and watches, and the motorcycle maker receives more than $200 million
annually from fees it receives. This is an example of a ________ brand.
A) national
B) licensed
C) generic
D) private
E) value-added
Answer: B
Objective: 12.8
139) Life products (Shoppers Drug Mart), and President's Choice (Loblaws) are all examples of
________ brands.
A) national
B) licensed
C) generic
D) private
E) value-added
Answer: D
Objective: 12.8
38
140) Brilliant Solutions applies LED technology to create specialized lighting systems for
cellphone towers, drilling rigs, airport runways, and other specialized uses. It sells to businesses
that are willing to pay for superior products that are durable, so their lighting systems remain
safe, endure harsh conditions, and last for years. All of Brilliant Solutions' products are packaged
in boxes prominently displaying the Brilliant Solutions brand. Why would this brand be valuable
to the company?
A) It signals the high quality of the product and helps customers remember it.
B) It helps customers classify the products correctly.
C) It is a product feature that contributes to the value package.
D) It allows Brilliant Solutions to present the products as capital items.
E) It enables Brilliant Solutions to extend its product lines.
Answer: A
Objective: 12.8
141) Which brands are often widely recognized by consumers because of campaigns for products
produced and distributed by the manufacturer?
A) Private brands
B) National brands
C) Licensed brands
D) Launched brands
E) Generic brands
Answer: B
Skill: Knowledge
Objective: 12.8
142) The process of using symbols to communicate the qualities of a product made by a
particular producer is called
A) branding.
B) product differentiation.
C) promotion.
D) publicity.
E) advertising.
Answer: A
Skill: Knowledge
Objective: 12.8
39
143) ________ can be defined as the added value a brand name provides to a product beyond its
basic functional benefits.
A) Product positioning
B) Product differentiation.
C) Brand equity
D) Publicity
E) Brand placement
Answer: C
Skill: Knowledge
Objective: 12.8
144) Which of the following is correct with regard to packaging?

A) Fresh fruit and structural steel do not really need much packaging.
B) The function of packaging is limited to product protection.
C) Packaging does not provide advertising or promotion for products.
D) Packaging costs can be as high as 50 percent of the total cost to make a product.
E) All of these are correct.
Answer: A
Objective: 12.8
145) ________ marketing relies on word of mouth to build momentum and interest for a a
product or idea.
A) Buzz
B) Social
C) Brand equity
D) Niche
E) Psychographic
Answer: A
Objective: 12.8
40
146) 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 stakeholders is which of the following?
A) Retailing
B) Managing
C) Customer service
D) Marketing
E) Consulting
Answer: D
Skill: Knowledge
Objective: 12.1
ESL: Alternate/ESL
147) What is the ability of a product to satisfy a human want or need called?
A) Purpose
B) Value
C) Function
D) Usefulness
E) Utility
Answer: E
Skill: Knowledge
Objective: 12.1
ESL: Alternate/ESL
148) What is a relative comparison of a product's benefits versus its costs called?
A) Browsing
B) Appraisal
C) Value
D) Evaluating
E) Assessment
Answer: C
Skill: Knowledge
Objective: 12.1
ESL: Alternate/ESL
41
149) Which of the following are physical products purchased by consumers for personal use?
A) Industrial goods
B) Consumer goods
C) Shopping goods
D) Exclusive goods
E) Convenience goods
Answer: B
Skill: Knowledge
Objective: 12.1
ESL: Alternate/ESL
150) What are physical products purchased by companies to produce other products called?
A) Reseller goods
B) Work-in-progress goods
C) Consumer goods
D) Industrial goods
E) Transition goods
Answer: D
Skill: Knowledge
Objective: 12.1
ESL: Alternate/ESL
151) Which of the following is a detailed strategy for focusing marketing efforts on consumers'
needs and wants?
A) Customer plan
B) Promotion plan
C) Marketing plan
D) Sales plan
E) Advertising plan
Answer: C
Skill: Knowledge
Objective: 12.2
ESL: Alternate/ESL
42
152) What are all the marketing programs and activities that will be used to achieve the
marketing goals called?
A) Marketing method
B) Marketing plan
C) Marketing mission
D) Marketing game plan
E) Marketing strategy
Answer: E
Skill: Knowledge
Objective: 12.2
ESL: Alternate/ESL
153) The part of the marketing mix concerned with getting products from producers to
consumers is called
A) place.
B) logistics.
C) product.
D) channels of distribution.
E) shipping.
Answer: A
Skill: Knowledge
Objective: 12.2
ESL: Alternate/ESL
154) The aspect of the marketing mix concerned with the most effective techniques for
communicating information about products is
A) place.
B) advertising.
C) publicity.
D) promotion.
E) public relations.
Answer: D
Skill: Knowledge
Objective: 12.2
ESL: Alternate/ESL
43
155) Which of the following is a group of people who have similar wants and needs and can be
expected to show interest in the same products?
A) Purchaser pocket
B) Target segment
C) Buyer segment
D) Shopper cluster
E) Target market
Answer: E
Skill: Knowledge
Objective: 12.3
ESL: Alternate/ESL
156) What are characteristics of populations that may be considered in developing a

segmentation strategy called?
A) Psychographic variables
B) Demographic variables
C) Behaviour variables
D) Purchaser variables
E) Income variables
Answer: A
Skill: Knowledge
Objective: 12.3
ESL: Alternate/ESL
157) What is the study of what customers need and want and how best to meet those needs and
wants called?
A) Consumer behaviour
B) Customer analysis
C) Marketing research
D) Shopper observation
E) Buyer attitude studies
Answer: C
Skill: Knowledge
Objective: 12.4
ESL: Alternate/ESL
44
158) A market research technique based on questioning a representative sample of consumers
about purchasing attitudes and practices is which of the following?
A) Audit
B) Inquiry
C) Survey
D) Analysis
E) Investigation
Answer: C
Skill: Knowledge
Objective: 12.4
ESL: Alternate/ESL
159) Which of the following is the study of the decision process by which people buy and
consume products?
A) Buyer behaviour
B) Consumer behaviour
C) Purchaser behaviour
D) Shopper behaviour
E) Prospect behaviour
Answer: B
Skill: Knowledge
Objective: 12.5
ESL: Alternate/ESL
160) What is an organizational market consisting of firms that buy goods that are either
converted into products or used during production called?
A) Reseller market
B) Institutional market
C) Corporate market
D) Industrial market
E) Intermediary market
Answer: D
Skill: Knowledge
Objective: 12.6
ESL: Alternate/ESL
45
161) Which of the following is an organizational market consisting of such non-governmental
buyers of goods and services as hospitals, religious organizations, museums, and charitable
organizations?
A) Charity market
B) Institutional market
C) Industrial market
D) Corporate market
E) Nonprofit market
Answer: B
Skill: Knowledge
Objective: 12.6
ESL: Alternate/ESL
162) What is an inexpensive good or service purchased and consumed rapidly and regularly
called?
A) Convenience good
B) Impulse good
C) Shopping good
D) Bargain good
E) Instinct good
Answer: A
Skill: Knowledge
Objective: 12.7
ESL: Alternate/ESL
163) What is a moderately expensive, infrequently purchased good or service called?

A) Impulse good
B) Convenience good
C) Occasional good
D) Shopping good
E) Luxury good
Answer: D
Skill: Knowledge
Objective: 12.7
ESL: Alternate/ESL
46
164) Which of the following is a group of products that are closely related because they function
in a similar manner or are sold to the same customer group who will use them in similar ways?
A) Product mix
B) Product cousins
C) Demographic products
D) Segmented products
E) Product line
Answer: B
Skill: Knowledge
Objective: 12.7
ESL: Alternate/ESL
165) What is a series of stages in an item's commercial life called?

A) Commodity life cycle
B) Merchandise evolution
C) Brand stages
D) Product life cycle
E) Product progression
Answer: D
Skill: Knowledge
Objective: 12.8
ESL: Alternate/ESL
166) A process of using symbols to communicate the qualities of a product made by a particular
producer is
A) labelling.
B) promoting.
C) publicizing.
D) branding.
E) advertising.
Answer: D
Skill: Knowledge
Objective: 12.8
ESL: Alternate/ESL
47
167) What is the added value a name provides to a product beyond its basic functional benefits
called?
A) Logo equity
B) Reputation equity
C) Brand equity
D) Label equity
E) Trademark equity
Answer: C
Skill: Knowledge
Objective: 12.8
ESL: Alternate/ESL
168) Which of the following is marketing that relies on word of mouth to spread information
about a particular product or idea?
A) Viral marketing
B) Rumour marketing
C) Social marketing
D) Gossip marketing
E) Buzz marketing
Answer: E
Skill: Knowledge
Objective: 12.8
ESL: Alternate/ESL
169) What are no-frills products sold under the general category name rather than a specific
company name called?
A) National brands
B) Private brands
C) Manufacturer brands
D) Generic brands
E) Category brands
Answer: D
Skill: Knowledge
Objective: 12.8
ESL: Alternate/ESL
48
170) The part of a product's packaging that identifies the product's name, its contents and
sometimes its benefits is the
A) label.
B) logo.
C) brand.
D) trade name.
E) packaging.
Answer: A
Skill: Knowledge
Objective: 12.8
ESL: Alternate/ESL
12.2 Critical Thinking Questions
1) Penelope's Pizza, a local chain of restaurants, has made the decision to expand on a national
basis. It plans to open 50 new locations in 20 cities across the country within the next two years.
In order to efficiently integrate all the tools and company resources to maximize the impact on
new customers, Penelope's Pizza is considering using an integrated marketing strategy to
promote a coherent national brand perception. The account manager argues that an integrated
marketing strategy is the way to go, but the CEO argues that each local community is different,
and the needs, values, and norms of the host cities should drive the marketing campaign.
Which of the following practices would support the CEO's argument?
A) Penelope's Pizza decides to pursue a co-branding partnership with either Pepsi or Coke.
B) Penelope's Pizza employees all must wear the same uniform.
C) Penelope's corporate website has links to individual stores for ordering pizza online.
D) All Penelope's Pizza restaurants have an art deco interior design.
E) Penelope's Pizza encourages individual stores to create their own menu options and pricing
structure.
Answer: E
Diff: 3 Type: MC
Skill: Analysis
49
Penelope's Pizza also wants to be at the forefront of current trends and changes in the practice of
advertising. The account manager wants to focus on consumer generated advertising via
YouTube, Twitter, Instagram and Facebook, whereas the CEO prefers to focus on mainstream
media. Which of the following, if true, would support the position of the account manager?
A) The number of TV channels has skyrocketed in recent years.
B) Over the same time, the four major television networks suffered a 20 percent decrease in
viewership, leading to a reduction in advertising rates.
C) The emphasis on effectiveness and accountability has lowered the production costs for a 30-
second television commercial.
D) Television networks are seeking to ban the feature in recording devices that allows viewers to
record television shows while deleting all commercial messages.
E) Young adults, under the age of 30, consume the largest amount of pizza per capita and are the
greatest users of social media.
Answer: E
Diff: 3 Type: MC
Skill: Analysis
50
After becoming a successful national brand, Penelope's Pizza has made the decision to expand
overseas and enter the global market. Using a globally integrated marketing plan, Penelope's
plans to enter the pizza market in Germany, Japan, and India. The CEO wants to use an
adaptation plan in the new markets, and thus offer kielbasa pizza in Germany, sushi pizza in
Japan, and vegetarian pizza in India. The advertising firm recommends a standardization
approach as being more cost efficient and brand identifiable. Which statement, if true, supports
the CEO's argument?
A) Traditionally, all three markets are slow to adapt to the idea of fast food and prefer meals with
known ingredients that are familiar to them.
B) The cost of introducing new ingredients to the menu will increase the price of pizza by 15
percent.
C) Marketing surveys show that the under-30 generation in each of the three countries is
increasingly eager to consume fast food as a status symbol of increasing wealth.
D) The current economic slump has decreased the volume of sales for all fast foods on a global
basis.
E) Obtaining vendors for new pizza toppings would require the hiring of additional translators in
each country.
Answer: A
Diff: 3 Type: MC
Skill: Analysis
4) Snazzy Sodas is known for its variety of all-natural sodas as well as its efforts toward social
responsibility. The company has decided to produce a new line of energy drinks, and while it
does not have the resources to promote its product widely, it can make a sizeable impact with a
carefully chosen market segment. The CEO favours marketing the product primarily to young
males, but the VP of operations recommends targeting female professionals.
Which of the following, if true, would support the CEO's position?
A) Snazzy decided that producing a line of energy drinks would be more profitable than
attempting to penetrate international markets.
B) Young males, as a group, consume more energy drinks than any other market segment.
C) Energy drinks cost more per ounce than other popular beverages.
D) Energy drink manufacturers have recently tried to associate their product with positive social
causes.
E) Different companies define "young" differently.
Answer: B
Diff: 3 Type: MC
Skill: Analysis
51
Which of the following, if true, would weaken the CEO's position?
A) Young males have shown strong brand loyalty to the current market leader in energy drinks.
B) Young males are especially likely to be opinion leaders on many lifestyle issues.
C) Clothing companies typically segment more precisely than beverage companies.
D) Even effective targeting does not guarantee success when it is followed by ineffective
positioning.
E) As compared to other groups, young males spend a high percentage of their income on
discretionary purchases.
Answer: A
Diff: 3 Type: MC
Skill: Analysis
Which of the following, if true, would most strongly support the VP of operation's position?
A) Industry-leading companies tend to target as wide a market as possible.
B) Female professionals are more likely to stay with a known brand for expensive items such as
cars.
C) Female professionals tend to have a strongly positive opinion of Snazzy's current products.
D) Young females consume more energy drinks per person than the general population.
E) Male professionals often report a lack of energy while at work.
Answer: C
Diff: 3 Type: MC
Skill: Analysis
52
Which of the following, if true, would weaken the VP of operation's position?
A) Success in the energy drink market was an important goal mentioned in the company's annual
report.
B) Young males have demonstrated low awareness of many soda brands.
C) Professionals tend to have more disposable income than nonprofessionals.
D) Concern over social responsibility is rising across a wide variety of market segments.
E) Professionals are more likely than nonprofessionals to be concerned about the long-term
health effects of energy drinks.
Answer: E
Diff: 3 Type: MC
Skill: Analysis
Which of the following questions is least relevant to Snazzy Sodas's evaluation of the
desirability of the young male market segment?
A) What is the percentage of young males in the general population?
B) What attitudes do members of this group likely have about Snazzy Sodas?
C) How does the consumption of energy drinks by young males compare to the consumption
patterns of other groups?
D) Would Snazzy Sodas be likely to target young males if it were producing a different product?
E) Are young males likely to consider a company's reputation for social responsibility when they
purchase energy drinks?
Answer: D
Diff: 3 Type: MC
Skill: Analysis
53
9) Macmoo Real Estate is beginning to use data-driven processes to determine the value that it
gets from different marketing activities. Macmoo's website lists available properties and allows
customers to request information. Macmoo tends to advertise in local newspapers and
specialized real estate periodicals. The marketing director believes that Macmoo's traditional
spring advertising campaign, which runs during the month of March, is an effective use of
advertising resources. When pressed for evidence, the marketing director points out that revenues
in March have consistently been higher than revenues in February.
Which of the following, if true about the real estate industry in general, would weaken the
marketing director's argument?
A) The demand for houses is higher than it was last year.
B) The supply of houses for sale is lower than it was last year.
C) Sales are generally higher in March than in February.
D) Sales are generally higher in April than in March.
E) In February, home loan interest rates dropped.
Answer: C
Diff: 3 Type: MC
Skill: Analysis
10) Macmoo Real Estate is beginning to use data-driven processes to determine the value that it
gets from different marketing activities. Macmoo's website lists available properties and allows
customers to request information. Macmoo tends to advertise in local newspapers and
specialized real estate periodicals. The marketing director believes that Macmoo's traditional
spring advertising campaign, which runs during the month of March, is an effective use of
advertising resources. When pressed for evidence, the marketing director points out that revenues
in March have consistently been higher than revenues in February.
During 2018, Macmoo completed fewer real estate transactions than it did during any similar
time period during the last five years. Still, the marketing director claims that its marketing
efforts led to very positive financial results for Macmoo. Which of the following, if true, would
resolve this seeming discrepancy?
A) In 2018, Macmoo spent more on advertising than it did in 2017.
B) In 2018, Macmoo diverted marketing efforts to support several corporate social responsibility
initiatives.
C) Sales projections completed in 2015 predicted even lower sales volume in 2016.
D) In 2018, marketing efforts focused on sales of very expensive properties.
E) In 2018, Macmoo's principal competitors cut back on their marketing expenditures.
Answer: D
Diff: 3 Type: MC
Skill: Analysis
54
11) Hilltel sells smartphones and other electronic devices. The company has decided to sell its
products internationally and is considering using a standardized marketing approach wherever it
sells its products.
Hilltel's CEO thinks that having a standardized marketing strategy will enable the company to
control and plan production better. Which of the following, if true about using a single marketing
approach, would strengthen her case?
A) It means the company will sell in the same way to countries regardless of culture.
B) It allows for simplifying inventory and quality control processes.
C) It means that more employees will need to be hired at the company's headquarters.
D) It locks the company into one marketing strategy for the long term.
E) It means that more extensive managerial oversight in sales will be needed.
Answer: B
Diff: 3 Type: MC
Skill: Analysis
12) Hilltel sells smartphones and other electronic devices. The company has decided to sell its
products internationally and is considering using a standardized marketing approach wherever it
sells its products.
Hilltel's head of marketing thinks that a standardized marketing strategy will allow the company
to portray a consistent global brand. Which of the following, if true about using a single
marketing approach, would strengthen his case?
A) The company would face more competition overseas than otherwise.
B) The company's products would need to be of the most recent technology.
C) The prices of the company's products will be the same everywhere in the world.
D) An international marketing team would need to be hired to craft an appropriate strategy.
E) The company's products could be standardized accordingly.
Answer: E
Diff: 3 Type: MC
Skill: Analysis
55
13) Dinasonic manufactures and markets consumer kitchen products. The company is preparing
to introduce its products to international markets. The company's director of marketing wants the
company to adapt its marketing approach to the various markets in different countries that the
company is looking to enter. He needs to defend the proposal for his recommended marketing
strategy to the rest of the executive team.
The director of marketing argues that Dinasonic should use an adaptation strategy for its
marketing because its products will need to be adapted to different markets. Which of the
following, if true, would strengthen this position?
A) Dinasonic's products have consistently had the most competitive prices in the Canadian
market.
B) For the kinds of products that Dinasonic makes, preferences for their use vary between
different cultures.
C) Dinasonic will not face much competition in the countries in which it plans to sell its
products.
D) Dinasonic will have a limited advertising budget for its international marketing efforts.
E) Dinasonic has consistently gained in market share in Canada over the last several years.
Answer: B
Diff: 3 Type: MC
Skill: Analysis
14) Dinasonic manufactures and markets consumer kitchen products. The company is preparing
to introduce its products to international markets. The company's director of marketing wants the
company to adapt its marketing approach to the various markets in different countries that the
company is looking to enter. He needs to defend the proposal for his recommended marketing
strategy to the rest of the executive team.
The director of marketing argues that Dinasonic should alter its marketing strategy in different
countries by adapting its methods of advertising. Which of the following, if true, would support
this position?
A) Dinasonic has won awards for its advertising campaigns.
B) Consumers in most countries are attracted to Canadian consumer goods.
C) Laws regulating advertising vary between different countries.
D) Dinasonic has several sales managers experienced in international sales.
E) The company is planning to subcontract some of its international sales operations.
Answer: C
Diff: 3 Type: MC
Skill: Analysis
56
15) Otto's Office Products is a large national company selling office supplies to businesses and
everyday consumers. It is compiling an in-house data warehouse in order to identify customers
and build relationships with them.
The IT department has recommended that Otto's use data mining to build customer profiles and
prepare business models to predict future purchasing behaviour. Otto's CEO is not in favour of
data mining and argues that it shouldn't be used. Which of the following statements, if true,
would support the CEO's argument for not using data mining?
A) Data mining can build profiles of Otto's best customers and then use behavioural
characteristics to identify new customers.
B) Data mining is helpful to salespeople as it can identify customers that would benefit from an
individual sales call or provide them with buying reminders for particular products.
C) Data mining can be used to track online behaviour of the customers by the use of cookies and
identify customer interests and business needs.
D) A privacy paradox exists whereby mining personal information is intrusive, but also leads to
better targeting.
E) Data mining can help spot trends and patterns in customer purchases and enable the marketing
department to shape advertising around these trends.
Answer: D
Diff: 3 Type: MC
Skill: Analysis
16) Leif designs and sells surfboards. Although his sales are declining, he decides to keep his
prices constant. Which of the following statements, if true, would support Leif's decision?
A) Surfboards at other shops in the region are priced lower.
B) Customers rate Leif's surfboards as being of about average quality.
C) Demand for surfboards has been declining for several years.
D) Leif offers a much wider variety of surfboards than his competitors do.
E) Leif has calculated that lowering prices would reduce profits.
Answer: E
Diff: 3 Type: MC
Skill: Analysis
57
17) ComicalYou is a new social media service in which participants create avatars to represent
themselves, describe their lives, and interact with one another. All the postings are graphical,
presenting the messages in the form of comic panels and strips. The service's software easily
converts ideas into whimsical images. The site's creators, Ginny and RJ, believe that
ComicalYou will be especially appealing to young people because it is so effective in conveying
emotional content with a lighthearted appeal. They, along with a team of six employees, have
completed the software, tested it on two dozen of their closest friends, and are eager to open their
site to users. What steps in the development process should Ginny and RJ complete before they
commercialize ComicalYou?
A) Business analysis and test marketing
B) Product ideas and screening
C) Screening and prototype development
D) Product ideas and prototype development
E) Concept testing and prototype development
Answer: A
Diff: 3 Type: MC
Skill: Analysis
completed the software, tested it on two dozen of their closest friends, and are eager to open up
their site to users. What will make the product testing and test marketing stage challenging for an
online product such as ComicalYou?
A) Putting a software service on a Web site is very expensive.
B) Consumers are reluctant to try out new forms of social media.
C) Research and development is expensive, and many new products fail.
D) If word about the service spreads quickly, it will be difficult to confine the testing to a limited
market.
E) If users in the test market are dissatisfied, it will be difficult to change the product after it is
online.
Answer: D
Diff: 3 Type: MC
Skill: Analysis
58
site to users. As ComicalYou reaches the introduction stage of the product life cycle, what
marketing strategy is most appropriate?
A) Lower price slightly to increase sales.
B) Focus on making customers aware of the product and its benefits.
C) Cut prices in response to increased competition.
D) Increase advertising in response to greater competition.
E) Develop product adaptations to extend the product's life.
Answer: B
Diff: 3 Type: MC
Skill: Analysis
site to users. Ginny and RJ are correct: ComicalYou becomes a hit with young people, even with
a $5 per month subscription fee. Within two years, it becomes the number one online destination
for people in their teens and twenties, and usage soars. An online social network introduces a
comics creation tool to compete with ComicalYou for 10 cents per message. What marketing
strategy is most appropriate for this stage of the product life cycle?
A) Reintroduce the product in new markets to avoid the decline stage.
B) Reduce or end promotional support because people already know about ComicalYou.
C) Focus on making customers aware of the product and its benefits.
D) Lower prices slightly and continue promotional expenditures to build preference and keep
demand growing.
E) Develop product adaptations to extend the product's life.
Answer: D
Diff: 3 Type: MC
Skill: Analysis
59
12.3 True/False Questions
1) The value of a product, service, or idea to a consumer is based on the formula "costs divided
by benefits."
Answer: FALSE
Diff: 1 Type: TF Page Ref: 262
Skill: Knowledge
Objective: 12.1
2) The marketing concept means that the marketing function in a business is more important than
either production or finance.
Answer: FALSE
Skill: Knowledge
Objective: 12.1
3) Marketing plays a role in creating time, place, and ownership utility, but not in creating form
utility (which is the job of the production area).
Answer: FALSE
Objective: 12.1
4) The primary way to distinguish consumer goods from industrial goods is by considering the
"place" element of the marketing mix.
Answer: FALSE
Objective: 12.1
5) Marketing focuses largely on consumer goods and less on consumer services.

Answer: FALSE
Objective: 12.1
6) The marketing concept says that profitability is more important than any other criterion.
Answer: FALSE
Objective: 12.1
60
7) A few marketing powerhouses like Coca-Cola and Procter & Gamble can develop their
marketing strategies without too much concern about the external marketing environment, but
most companies must pay a lot of attention to the external marketing environment.
Answer: FALSE
Objective: 12.1
8) Marketing plans, decisions, and strategies are not determined unilaterally by any business.
Rather, they are strongly influenced by powerful environmental forces.
Answer: TRUE
Skill: Knowledge
Objective: 12.1
9) Changing social values have forced companies to develop and promote new products for
individual consumers, but industrial customers have not been affected nearly as much.
Answer: FALSE
Objective: 12.1
10) Since a person's cholesterol level can be controlled with either a physical-fitness program or
a drug regimen, this means that fitness programs and cholesterol drugs compete as substitute
products.
Answer: TRUE
Objective: 12.1
11) Customer relationship management (CRM) focuses on building better information

connections with clients.
Answer: TRUE
Objective: 12.1
12) The four P's of the marketing mix are product, pricing, promotion, and place.
Answer: TRUE
Skill: Knowledge
Objective: 12.2
61
13) With respect to the 4 P's, "price" refers only to the actual amount of money that consumers
must pay for a product or service.
Answer: FALSE
Objective: 12.2
14) The term "product" in the marketing mix includes physical goods but not services.
Answer: FALSE
Objective: 12.2
15) The marketing plan identifies the marketing objectives stating what marketing will
accomplish in the future.
Answer: TRUE
Skill: Knowledge
Objective: 12.2
16) Target markets are first defined by customers, then by product.

Answer: TRUE
Skill: Knowledge
Objective: 12.3
17) Market segmentation and product differentiation are almost identical concepts, except that
market segmentation puts more emphasis on "price" while product differentiation puts more
emphasis on "promotion."
Answer: FALSE
Objective: 12.3
18) Market segmentation is a strategy for analyzing consumers, not products.

Answer: TRUE
Skill: Knowledge
Objective: 12.3
19) When marketers segment markets based on demographics, they are doing so on the basis of
"quantitative" factors like age, education, family size, and income, but not on the basis of
"qualitative" factors like nationality, race, and religion.
Answer: FALSE
Skill: Knowledge
Objective: 12.3
62
20) Psychographics, like demographics and geographics, are seldom changed by marketing
efforts.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 268-269
Objective: 12.3
21) Campbell's Soup has discovered that millennials are buying less soup than the population as
a whole. This is an illustration of the importance of demographic variables in marketing.
Answer: TRUE
Objective: 12.3
22) Burberry, whose plaid-lined gabardine raincoats have been a symbol of British tradition
since 1856, repositioned itself as a global luxury brand like Gucci and Louis Vuitton. This is an
example of behavioural segmentation.
Answer: TRUE
Objective: 12.3
23) A car like the Chevrolet Cruze tends to be positioned based on economy, while a Porsche
tends to be positioned based on performance.
Answer: TRUE
Skill: Knowledge
Objective: 12.3
24) Product positioning is most closely related to the "place" element in the marketing mix.
Answer: FALSE
Objective: 12.3
25) A group of people may share an age category, income level, or some other segmentation
variable, but their spending habits may be quite different.
Answer: TRUE
Skill: Knowledge
Objective: 12.3
63
26) In terms of the 4 Ps, market research is useful for the product, price, and promotion aspects,
but not very useful for the distribution aspect.
Answer: FALSE
Objective: 12.4
27) Secondary data are generally more useful than primary data because they are more insightful
and accurate, more readily available, and cheaper to obtain.
Answer: FALSE
Objective: 12.4
28) Lextel Ltd. is involved in a market research study. They have already studied the current
situation to determine which needs exist. Their next step is to begin collecting data.
Answer: FALSE
Skill: Application
Objective: 12.4
29) Hostess Frito-Lay, the maker of Doritos, spent a year studying how to best reach its target
market (teenagers). The researchers hung around shopping malls, schools, and fast-food outlets
to watch teens. This is an example of primary data gathering.
Answer: TRUE
Objective: 12.4
30) When Procter & Gamble sent video crews into households in the United Kingdom, Germany,
and China to capture people's daily routines and product interaction, this was an example of
primary data gathering and the use of observation as a market research method.
Answer: TRUE
Objective: 12.4
31) Market research is the study of what buyers need and how best to meet those needs.
Answer: TRUE
Skill: Knowledge
Objective: 12.4
64
32) The first step in conducting market research is to study the current situation in order to
identify a need and to determine how that need is being met.
Answer: TRUE
Skill: Knowledge
Objective: 12.4
33) Surveys may vary widely in their accuracy.

Answer: TRUE
Skill: Knowledge
Objective: 12.4
34) Experimentation tries to compare the responses of similar individuals in different

circumstances.
Answer: TRUE
Skill: Knowledge
Objective: 12.4
35) The comments of people in a focus group are taped, and researchers go through the data
looking for common themes in participants' comments.
Answer: TRUE
Objective: 12.4
36) With respect to influences on consumer behaviour, perceptions are included in the category
"personal influences," while reference groups are included in the "social influences" category.
Answer: FALSE
Skill: Knowledge
Objective: 12.5
37) A model of the consumer buying process shows that the search for information is the first
stage of the buying process model.
Answer: FALSE
Skill: Knowledge
Objective: 12.5
65
38) Suppose that you have just obtained your first job after graduation, and you conclude that
your new income will allow you to purchase items that were once too expensive for you. You are
in the information seeking stage of the consumer buying process.
Answer: FALSE
Objective: 12.5
39) You and your spouse notice that the sports car you currently own is not going to be suitable
for travelling when the new baby comes along. You are in the problem recognition stage of the
consumer buying process.
Answer: TRUE
Objective: 12.5
40) You have just purchased a new Chevrolet. While driving, you notice that a new Ford has
stopped beside the road and has its hazard lights blinking. You smile but decide to stop to help
out. You are in the evaluation of alternatives stage of the consumer buying process.
Answer: FALSE
Objective: 12.5
41) Before buying a new smartphone, you might read about different brands, or ask a sales clerk
for a recommendation, or rely on your own experience. All of these actions illustrate that you are
in the information seeking stage of the consumer buying process.
Answer: TRUE
Objective: 12.5
42) A consumer who recognizes that he or she is thirsty during a shopping trip is in the problem
recognition stage of the buying process model.
Answer: TRUE
Objective: 12.5
43) A consumer who is dissatisfied with the first use of a product will usually try the product one
more time to give it a second chance.
Answer: FALSE
Skill: Knowledge
Objective: 12.5
66
44) B2B markets account for more than twice the sales of the B2C market.
Answer: TRUE
Objective: 12.6
45) Product "features" refer to both the tangible and intangible qualities of a product.
Answer: TRUE
Skill: Knowledge
Objective: 12.7
46) Diana is going to be married soon, and she is shopping around for a wedding gown. For
Diana, a wedding gown is a shopping good.
Answer: FALSE
Objective: 12.7
47) For industrial goods, the main difference between expense and capital items is the length of
time they are used.
Answer: TRUE
Skill: Knowledge
Objective: 12.7
48) The total variety of products a company has for sales is its product mix, while a product line
is a group of products that are closely related because they function in a similar manner or are
sold to the same customer group who will use them in similar ways.
Answer: TRUE
Skill: Knowledge
Objective: 12.7
49) A newspaper, coffee, and an Egg McMuffin at McDonald's are all consumer convenience
goods.
Answer: TRUE
Objective: 12.7
50) Specialty goods are important and expensive purchases for the buyers who decide on what
they want, and they accept no substitutes.
Answer: TRUE
Skill: Knowledge
Objective: 12.7
67
51) Multiple product lines allow a company to grow more rapidly and minimize the
consequences of slow sales in any one product line.
Answer: TRUE
Skill: Knowledge
Objective: 12.7
52) Bentley Corp. is involved in the new product development process. Their first step was to
solicit ideas for a new product from the company's sales force, the research and development
group, and the engineering department. Their next step is to use market research to solicit
consumers' input about the ideas they are working on.
Answer: FALSE
Skill: Application
Objective: 12.8
53) It is estimated that it takes 100 new product ideas to generate 1 product that finally reaches
the marketplace. Even then, only a few of those become successful products.
Answer: FALSE
Skill: Knowledge
Objective: 12.8
54) In the concept testing stage of the seven-step development process, companies use market
research to solicit consumers' input.
Answer: TRUE
Skill: Knowledge
Objective: 12.8
55) Social media like Twitter and Facebook have facilitated the generation of new product
awareness during the introduction stage of the product life cycle.
Answer: TRUE
Skill: Knowledge
Objective: 12.8
56) The product life cycle is the concept that states that products have a limited profit-producing
life.
Answer: TRUE
Skill: Knowledge
Objective: 12.8
68
57) A product typically earns its highest profit levels early in the maturity stage of the product
life cycle.
Answer: TRUE
Skill: Knowledge
Objective: 12.8
58) In Germany, a McDonald's meal includes beer. This is an example of product extension.
Answer: FALSE
Skill: Knowledge
Objective: 12.8
59) Branding is a process of using symbols to communicate the qualities of a particular product
made by a particular company.
Answer: TRUE
Skill: Knowledge
Objective: 12.8
60) A national brand name is produced and distributed by the manufacturer of the product.
Answer: TRUE
Skill: Knowledge
Objective: 12.8
61) In the 2018 BrandZ Top 100 Global Brands Ranking, the three most successful brands in the
world were Google, Apple and Amazon.
Answer: TRUE
Skill: Knowledge
Objective: 12.8
62) When a company with a well-known brand sells another company the right to place that
brand on its products, these are called private brands (e.g., the Harley-Davidson logo on gloves).
Answer: FALSE
Objective: 12.8
63) The President's Choice brand (Loblaws Companies Ltd.) and the Life brand (Shoppers Drug
Mart) are examples of private brands.
Answer: TRUE
Objective: 12.8
69
64) Generic brands are losing shelf space because brand names are so powerful.
Answer: FALSE
Skill: Knowledge
Objective: 12.8
65) Packaging serves one primary function: to protect the product during shipping.
Answer: FALSE
Skill: Knowledge
Objective: 12.8
66) Marketing is 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 stakeholders.
Answer: TRUE
Skill: Knowledge
Objective: 12.1
ESL: Alternate/ESL
67) Physical products purchased by companies to produce other products are known as consumer
goods.
Answer: FALSE
Skill: Knowledge
Objective: 12.1
ESL: Alternate/ESL
68) A combination of product, pricing, promotion, and place (distribution) strategies used to
market products is known as the marketing mix.
Answer: TRUE
Skill: Knowledge
Objective: 12.2
ESL: Alternate/ESL
69) A target market is a group of people who have similar wants and needs and can be expected
to show interest in the same products.
Answer: TRUE
Skill: Knowledge
Objective: 12.3
ESL: Alternate/ESL
70
70) The process of fixing, adapting, and communicating the nature of a product to appeal to the
selected target market is called product placement.
Answer: FALSE
Skill: Knowledge
Objective: 12.3
ESL: Alternate/ESL
71) Marketing analytics is the study of what customers need and want and how best to meet
those needs and wants.
Answer: FALSE
Skill: Knowledge
Objective: 12.4
ESL: Alternate/ESL
72) Consumer behaviour is the study of the decision process by which people buy and consume
products.
Answer: TRUE
Skill: Knowledge
Objective: 12.5
ESL: Alternate/ESL
73) An organizational market consisting of intermediaries that buy and resell finished goods is
known as the industrial market.
Answer: FALSE
Skill: Knowledge
Objective: 12.6
ESL: Alternate/ESL
74) A moderately expensive, infrequently purchased good or service is known as a specialty

good.
Answer: FALSE
Skill: Knowledge
Objective: 12.7
ESL: Alternate/ESL
75) No-frills products sold under the general category name rather than a specific company name
are known as private brands.
Answer: FALSE
Skill: Knowledge
Objective: 12.8
ESL: Alternate/ESL
71
12.4 Short Answer Questions
1) What is the ratio for value?

Answer: Value = benefits/costs
Diff: 2 Type: SA Page Ref: 263
Skill: Knowledge
Objective: 12.1
2) Panther Shoes is a manufacturer of athletic apparel. List five possible sources of value that
consumers receive from Panther Shoes.
Answer: Student answers will vary and may include any way in which benefits are great and
costs are low. Examples include easy access to clear pre-purchase information, choices of color,
attractive prices, online mass customization ordering, security for credit card purchasing,
assurance of speedy delivery, product guarantees, and prestige of owning a pair of Panther shoes.
Skill: Knowledge
Objective: 12.1
3) What is the difference between consumer goods and industrial goods?

Answer: Consumer goods are purchased by consumers for personal use, while industrial goods
are used by companies to produce other products.
Objective: 12.1
4) What is customer relationship management (CRM)?

Answer: Customer relationship management is an organized method that an enterprise uses to
build better information connections with clients, so that stronger enterprise-client relationships
are developed.
Objective: 12.1
5) List the factors in the external environment of businesses that affect marketing activities.
Answer: Political-legal, socio-cultural, technological, economic, and competitive
Skill: Knowledge
Objective: 12.1
72
6) What are the four principal elements of marketing which managers rely on in planning and
implementing marketing strategies?
Answer: The four elements are product, pricing, promotion, and place (distribution), which are
also known as the 4 P's or the marketing mix. The idea is to supply the right product or service to
meet a consumer need, at the right price, in the right place and with the proper promotion
activities.
Skill: Knowledge
Objective: 12.2
7) What is a product?
Answer: A product is a good, service, or idea that is marketed to fill consumer needs and wants.
Objective: 12.2
8) What is a target market?

Answer: A target market is a group of buyers who have similar wants and needs and who can be
expected to show interest in the same products.
Objective: 12.3
9) List the five common methods of segmenting consumer markets.

Answer: Geographic, demographic, geo-demographic, psychographic, and behavioural
Skill: Knowledge
Objective: 12.3
10) What are the psychographic variables used in market segmentation?

Answer: Lifestyle, opinions, interests, and attitudes
Skill: Knowledge
Objective: 12.3
11) What is meant by secondary data?

Answer: Secondary data are readily available as a result of previous research.
Objective: 12.4
12) What is meant by primary data?

Answer: Primary data are data developed through new research.
Objective: 12.4
73
13) List four basic methods for collecting marketing research data.
Answer: Observation, survey, focus groups, and experimentation
Skill: Knowledge
Objective: 12.4
14) What is the first step in the consumer buying process?

Answer: Problem/need recognition
Skill: Knowledge
Objective: 12.5
15) What is the last step in the consumer buying process?

Answer: Post-purchase evaluation
Skill: Knowledge
Objective: 12.5
16) List the three industrial markets.

Answer: The three industrial markets are the reseller market (consisting of intermediaries,
including wholesalers and retailers, that buy and resell finished goods), the government market
(federal and provincial government agencies), and the institutional market (non-governmental
organizations like churches, museums, and charities).
Skill: Knowledge
Objective: 12.6
17) What is a product feature?

Answer: A feature is a tangible or intangible quality that a company builds into a product. For
example, a feature of a Swatch Chrono watch is shock and water resistance.
Objective: 12.7
18) What is a benefit?

Answer: A benefit is what the consumer gets from owning the product. Product features are
important in providing benefits.
Objective: 12.7
19) What is a value package?

Answer: The bundle of attributes which are evident in a product. Consumers obviously want
products with value, i.e., products with more benefits at a reasonable cost.
Objective: 12.7
74
20) List the three major classes of consumer goods.
Answer: Convenience goods, shopping goods, and specialty goods
Skill: Knowledge
Objective: 12.7
21) A chef visits the produce market each morning to select fruits and vegetables for use in her
restaurant's soups and salads. Explain whether the chef is buying production items or expense
items.
Answer: The chef is buying production items because they are used directly in producing the
restaurant's meals.
Skill: Knowledge
Objective: 12.7
22) A chef purchases a new oven for her restaurant's kitchen. Explain whether the chef is buying
a capital item or a production item.
Answer: The chef is buying a capital item because it is a long-lasting product. Fixed equipment
such as an oven is a major category of capital items, which are goods and services with expected
lives of more than a year.
Skill: Knowledge
Objective: 12.7
23) How does a product mix differ from a product line?

Answer: A product mix is the group of products that a firm makes available for sale. A product
line is a group of similar products intended for a similar group of buyers who will use the
product in similar ways. A company will have only one product mix but may have multiple
product lines.
Skill: Knowledge
Objective: 12.7
24) List the seven steps in the new product development process.
Answer: Product ideas, screening, concept testing, business analysis, prototype development,
product testing/test marketing, and commercialization
Skill: Knowledge
Objective: 12.8
25) List the four stages in the product life cycle.

Answer: Introduction, growth, maturity, and decline
Skill: Knowledge
Objective: 12.8
75
26) Why is product placement important?
Answer: Product placement is effective because the message is delivered in an attractive setting
that holds the consumer's interest. Product placement is a promotional activity that can be found
in movies, TV, and magazines.
Skill: Knowledge
Objective: 12.8
27) What is the basic idea behind the product life cycle?
Answer: The fundamental notion is that each product or service has a time frame in which it is
useful for the company to produce and market it. For a given product type, the time frame may
be very long (for example, beer) or relatively short.
Objective: 12.8
28) What is brand equity?

Answer: Brand equity generate greater brand awareness and loyalty on the part of consumers,
results in larger market shares than competing brands, and creates the perception of greater
quality in the minds of consumers.
Objective: 12.8
29) What are the four categories of brand names?

Answer: National, licensed, private, and generic
Skill: Knowledge
Objective: 12.8
30) What are three functions of packaging?

Answer: Packaging serves as an in-store advertisement, makes the product attractive, displays
the brand name, identifies features and benefits, and reduces the risk of damage, breakage, or
spoilage.
Objective: 12.8
76
12.5 Essay Questions
1) What is marketing?
Answer: Marketing is the process of planning and executing the conception, pricing, promotion,
and distribution of ideas, goods, and services to create exchanges that satisfy individual and
organizational objectives. Marketing can be applied to consumer and industrial goods, services,
and ideas.
Diff: 2 Type: ES Page Ref: 262
Objective: 12.1
2) What is value?
Answer: The ratio for value can be expressed as (Benefits/Costs). Value compares a product's
benefits with its costs. Benefits include not only the functions of the product, but also the
emotional satisfaction associated with owning, experiencing, or possessing it. Costs include the
price, the expenditure of the buyer's time, and the emotional costs of making a purchase decision.
Objective: 12.1
3) Explain how each of the main factors in the external environment of a business affects how
marketing is carried out.
Answer:
- Economic factors: Economic conditions influence spending patterns by consumers, businesses,
and governments, which in turn influence marketing plans for product offerings, pricing, and
promotional strategies that are developed by businesses.
- Competitive factors: In a competitive environment, marketers must convince buyers that they
should purchase their company's products rather than those of some other seller. Because both
consumers and commercial buyers have limited resources, every dollar spent on one product is
no longer available for other purchases.
- Political-legal factors: Political activities, both global and domestic, have a major influence on
marketing (e.g., environmental legislation has determined the destinies of entire industries).
- Socio-cultural factors: Changing social values force companies to develop and promote new
products.
- Technological factors: New technologies create new goods and services which make older
products obsolete.
Diff: 2 Type: ES Page Ref: 264-265
Objective: 12.1
77
4) How might economic environmental factors affect the business of Panther Shoes, a
manufacturer of athletic apparel?
Answer: Inflation rates affect prices; in turn, increased prices limit consumers' purchasing
power. Further, economic conditions influence marketing plans for product offerings, pricing,
and promotional strategies.
Objective: 12.1
5) Martin is the new director for marketing at Panther Shoes, a manufacturer of athletic apparel.
When he suggested a relationship marketing campaign, his supervisor thought there was no need
for Panther Shoes to have such a campaign. How could Panther Shoes benefit from relationship
marketing?
Answer: Relationship marketing emphasizes building lasting relationships with customers and
suppliers. Stronger relationships can result in greater long-term satisfaction and customer loyalty.
Objective: 12.1
6) Provide examples showing how the importance of the marketing mix elements varies across
different products.
Answer: All of the elements in the marketing mix are "important," but the relative importance of
the elements varies across products. For example, promotion is crucial for a product like toys,
but relatively less important for a product like nails. Price is very important for a product like
meat, but relatively less important when selling newspapers. Distribution is very important in
selling gasoline, but relatively not as important when selling lumber. The product is very
important, but probably more so for cars than for toothpaste.
Objective: 12.2
78
7) Describe the elements of the marketing mix. What is their collective role?
Answer: The elements of the marketing mix include product, price, promotion, and place. The
product portion of the marketing mix includes goods, services, or ideas designed to fill a
consumer need or want. Meeting consumer needs often means changing existing products to
keep pace with emerging markets and competition; many marketers focus on differentiating their
product(s) from those of competitors. Pricing a product involves the selection of the best price at
which to sell the product. Prices must support a variety of costs within the organization. Further,
both low- and high-price strategies can be effective in different situations. Place, or distribution,
refers to the proper placement of products in the market. Place decisions (including transporting,
warehousing, and inventory control) are all about getting the product from the producer to the
consumer. Promotion is the most highly visible component of the marketing mix; promotion
refers to the techniques for communicating information about products. Promotion involves
activities surrounding advertising, sales promotions, publicity, and public relations. Collectively,
the marketing mix allows a marketer to better relate to the identified target market; based on the
characteristics of the target market, the marketer will "build" the marketing mix elements around
the target market.
Objective: 12.2
8) Why is the role of the marketing manager and the culmination of the marketing plan critical
for the company?
Answer: The marketing manager is responsible for planning and implementing all the activities
that result in the transfer of goods and services to its customers. The marketing plan is a detailed
strategy for focusing marketing efforts on consumer needs and wants.
Objective: 12.2
9) Martin is the director of marketing at Panther Shoes. He has begun to look at product
differentiation strategies for Panther Shoes. Why is this concept important to Martin?
Answer: It is important because product differentiation is the creation of a feature or image that
makes a product different enough from existing products to attract consumers' attention. If
Martin develops a good product differentiation strategy, Panther will sell more of its shoes.
Objective: 12.2
79
10) What is a target market? Briefly explain how a well-defined target market is important to a
company.
Answer: A target market is any group of people who have similar wants and needs and may be
expected to show interest in the same product(s). Identifying target markets is important because:
- it helps focus a company's marketing mix (product characteristics, pricing, promotion, and
place)
- it gives information on consumer buying traits
- it helps marketing managers focus on the big picture, and not on an individual basis
Objective: 12.3
11) Explain how marketers identify different market segments.

Answer: In identifying market segments, researchers look at several different influences on
consumer behaviour. Some of the variables used for segmentation are geographic, demographic,
and psychographic variables. Geographic variables are geographical units that may be considered
in developing a segmentation strategy. Demographic variables describe populations, identifying
traits such as age, income, gender, etc. Psychographic variables are lifestyles, opinions, interests,
and attitudes. Two other segments include geo-demographic and behavioural segments.
Objective: 12.3
12) Discuss the effects that demographics can have on marketing strategies.
Answer: Companies have typically focused on the youth market, but in many countries the
population is aging, and companies must begin to market their products to older consumers.
Objective: 12.3
13) What is product positioning? Give examples.

Answer: Product positioning involves identifying the important attributes that consumers use to
assess products or services, and then focusing on these. The text provides the example of Tim
Hortons and Starbucks. Tim Hortons emphasizes a standardized product and provides fast
service to people in a hurry, while Starbucks provides more customized products in more
leisurely surroundings.
Objective: 12.3
14) What is market segmentation and why is it important?

Answer: The process of dividing a market into categories of customer types, it is key to
developing a communication link with potential buyers who will likely respond to the same
message.
Objective: 12.3
80
15) Discuss the five common methods of segmenting consumer markets.
Answer: The five common methods are geographic (based on the location of consumers),
demographic (based on factors such as age, income, gender, ethnic background, marital status,
race, religion, and social class), geo-demographic (based on a combination of demographic and
geographic characteristics of users), psychographic (based on lifestyles, opinions, interests, and
attitudes of users), and behavioural (based on variables such as the benefits that are sought from
the product, the usage rate of the product, the occasion when the product is used, and the status
of the product user).
Objective: 12.3
16) Explain the difference between demographic variables and psychographic variables.
Answer: Demographic variables describe populations by identifying traits, such as age, income,
gender, ethnic background, marital status, race, religion, and social class. Psychographic
variables are lifestyles, interests, and attitudes.
Objective: 12.3
17) Briefly discuss the steps in the market research process.

Answer: - Step one: study the current situation, and define the need and what is being done to
meet it at this point
- Step two: select a research method: observation, survey/focus group, experimentation
- Step three: collect data: secondary data and/or primary data
- Step four: analyze the data
- Step five: prepare a report, identifying alternative solutions and making recommendations for
the appropriate course of action
Objective: 12.4
18) How does an understanding of consumer behaviour help marketing managers? Include the
meaning of the major factors influencing consumer behaviour.
Answer: Market research helps marketing managers understand how common traits of a market
segment affect consumers' purchasing decisions. Marketing managers can then understand why
consumers are motivated to buy what they buy and the price they are willing to pay. By
identifying the influences on consumers (psychological, personal, social, and cultural), marketers
can better understand consumer needs and purchasing behaviour.
Objective: 12.5
81
19) Identify the five steps in the consumer buying process and explain what is involved in each
step.
Answer: The five steps in the consumer buying process are: 1) problem recognition, (2)
information seeking, (3) evaluation of alternatives, (4) purchase decision, and (5) post-purchase
evaluation. The consumer buying process begins with problem/need recognition. At this point,
the consumer likely knows that there is a product or service available in the marketplace that will
fulfill the problem or need. The consumer then seeks information. This process is not always
extensive, but before making major purchases, most people seek information from personal
sources, public sources, and experience. After seeking information, the consumer has come up
with some alternatives; the next step is to evaluate those alternatives. When making a product or
service choice, most consumers evaluate alternatives based on price, availabilities, guarantees,
etc. A list of pros and cons is often developed for each alternative. Finally, the consumer chooses
from among the alternatives when making the purchase decision. Post-purchase evaluation
includes the consumer's perceptions about the product or service after the purchase; at this point,
the consumer feels a certain level of satisfaction or dissatisfaction with the purchase.
Objective: 12.5
20) Describe the four major influences on consumer behaviour.

Answer: The four major influences on consumer behaviour are psychological, personal, social,
and cultural. Psychological influences include an individual's motivations, perceptions, ability to
learn, and attitudes. Personal influences include lifestyle, personality, and economic status.
Social influences include family, opinion leaders, friends, co-workers, and professional
associates. Cultural influences include culture, subculture, and social class.
Objective: 12.5
21) How does organizational buying behaviour differ from consumer buying behaviour?
Answer: Organizational buyers purchase in large quantities, they are professional, specialized,
and well informed. In addition, organizational buying relationships are often ongoing and
characterized by personal relationships. By contrast, consumers purchase in much smaller
quantities, they may not be well-informed about products, and they are not professionals. As
well, the buyer-seller relationship for consumers is typically impersonal and short-lived.
Objective: 12.6
22) What is the difference between consumer goods and industrial goods?
Answer: Consumer goods are products, such as cologne, cold medicine, or cars, that consumers
buy for personal or household consumption. Industrial goods are products used by companies to
produce other products. Bulldozers and machine parts are industrial goods.
Objective: 12.7
82
23) Martin has had a successful career in retail sales, industrial sales, and public relations. He
applies for the job of director for marketing at Panther Shoes, a manufacturer of athletic apparel.
Martin is not sure if Panther Shoes is selling consumer or industrial products. Can you help
Martin clarify the difference between the two types of products?
Answer: It is possible that Panther Shoes is selling either consumer or industrial products. Most
likely, they are selling their products to consumers, who are using the products for their own
personal use. As such, their product would be a consumer product. However, Panther Shoes may
be selling an industrial good. Industrial goods are those products sold to companies for use
directly or indirectly in producing other products. If Panther Shoes are sold to sports teams for
the use of their players, for example, the sale could be considered an industrial transaction.
Objective: 12.7
24) Describe the three major classes of industrial products.

Answer: Production items, expense items, and capital items are the three major classes of
industrial products. Production items are goods or services that are used directly in the
production process. Expense items are goods or services that are consumed within a year by
firms producing other goods or supplying other services. Capital items are permanent goods and
services that usually have expected lives of more than a year.
Objective: 12.7
25) How does a product mix differ from a product line?

Answer: A product mix is the group of products that a firm makes available for sale. A product
line is a group of similar products intended for a similar group of buyers who will use the
product in similar ways. A company will have only one product mix but may have multiple
product lines.
Objective: 12.7
26) What is the main factor that is used to distinguish expense items from capital items?
Answer: The distinction is largely based on time. Expense items are goods or services that are
consumed within a year by firms producing other goods or supplying other services. Capital
items are goods and services that usually have expected lives of more than a year.
Objective: 12.7
83
27) Why is product development a long and expensive process?
Answer: Faced with competition and shifting consumer preferences, no firm can count on a
single successful product to carry it forever. Even products that have been popular for decades
need ongoing renewal. The factor of constant change makes conceiving and developing new
products a challenge for marketers.
Objective: 12.8
28) Briefly explain what occurs in each stage of the new product development process.
Answer: The stages are as follows:
(1) new product ideas (search for new product ideas); (2) screening (eliminate product ideas that
don't match with the firm's abilities and expertise); (3) concept testing (use market research to get
consumers' input about promising ideas); (4) business analysis (develop estimate of costs versus
benefits for proposed new products); (5) prototype development (produce a preliminary version
of the proposed new product); (6) product testing and test marketing (begin limited production of
the new product and test its sales in limited markets); (7) commercialization (begin full-scale
production and marketing of the product).
Objective: 12.8
29) How is the screening phase of new product development different than the concept testing
phase?
Answer: In the screening phase, the emphasis is on eliminating new product ideas that don't
match the company's abilities, expertise, or objectives. By contrast, in the concept testing phase,
the emphasis is on market research to determine possible customer interest in promising new
product ideas that have already been identified as matching with the company's abilities,
expertise, and objectives.
Objective: 12.8
30) Why is it important for companies to develop new products?

Answer: To expand or diversify product lines, companies must introduce new products. Faced
with competition and shifting consumer preferences, no firm can count on a single product to
carry it forever. Even products that have been popular for decades need renewal.
Objective: 12.8
84
31) Martin is the new director of marketing at Panther Shoes, a manufacturer of sports apparel.
In Martin's first staff meeting, a heated discussion erupts over the need to develop new products.
The product manager explains that they have had a loyal following of consumers and do not need
to develop new products. Others disagree. How should Martin respond?
Answer: No matter how successful a company's current products are, it will have to cope with
the impact of new technologies, strong competition, and shifting consumer preferences. This
means that no firm can assume that its current product line will always be of interest to
consumers. Just because a product has been popular for a long time does not mean that it will
continue to be popular in the future. Martin should therefore encourage the product manager to
begin the product development process. But given the product manager's viewpoint, Martin will
have to work closely with that person to ensure that new product development work is actually
started.
Objective: 12.8
32) Briefly describe the characteristics of each of the four stages in the product life cycle.
Answer: The product life cycle is a series of stages through which a product passes during its
life. In the introductory stage, the product reaches the marketplace, but is not widely accepted
and sales increase only slowly. In the growth phase, sales start to rapidly accelerate and the
product starts to show a profit. In maturity, sales growth slows as profits decline, as increased
competition forces price cutting. In the decline stage, sales and profits continue to fall as new
products take sales away and the product declines in popularity.
Objective: 12.8
33) Product X is just beginning to generate a profit for the first time as the manufacturer lowers
prices slightly and sees a significant increase in sales. At what stage in the product life cycle is
Product X?
Answer: It is entering the growth stage. The growth stage is when sales climb, profits begin, and
marketers generally continue promotional expenditures to increase sales.
Objective: 12.8
34) Describe three strategies for extending the product life cycle.
Answer: The three strategies are product extension (an existing domestic product is marketed
globally), product adaptation (a product is modified for greater appeal in different countries), and
reintroduction (finding new market for products that are becoming obsolete in existing markets).
Objective: 12.8
85
35) Describe the four types of brand names and give an example of each.
Answer: Brand names may be national, licensed, private, and generic. National brands are
produced by, widely distributed by, and carry the name of the manufacturer. Examples of
national brands include Scotch tape, Scope mouthwash, Coke, and Pepsi. Licensed brands are
brand names for whose name the seller has purchased the right from an individual or
organization. Examples include Dilbert, the NFL, and Ferrari. Private brands are found when a
wholesaler or retailer develops a brand name and has a manufacturer place that name on the
product. Examples of private brands include Loblaw's Decadent Chocolate Chip Cookies.
Generic brands are often seen in grocery stores and simply state a category name like "bacon" or
"peanut butter."
Objective: 12.8
36) What is product placement? Why is it popular with marketing managers?

Answer: Product placement is a promotional tactic for brand exposure in which characters in
television, film, music, magazines, or video games use a real product with a brand visible to
viewers. Product placement is popular because the message is delivered in an attractive setting
that holds the customer's interest. When used in successful films and TV shows, the brand's
association with famous performers is an implied celebrity endorsement. Television product
placements are effective because of the widespread use of digital video recorders (DVRs). While
viewers can use their DVRs to skip commercials in recorded shows, product placements continue
to be seen by viewers because they are part of the program, not an advertisement that interrupts
the program.
Objective: 12.8
37) What is branding? Why do companies engage in branding?

Answer: Branding is the use of symbols to communicate the qualities of a product made by a
particular producer. Companies emphasize branding because a well-recognized brand can make
it easier for the company to encourage existing customers to make repeat purchases of the
product, or to get new customers to try the product.
Objective: 12.8
86

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What are the four stages of the product life cycle?

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Describe three strategies for extending the product life cycle.

Describe three strategies for extending the product life cycle.

Business Essentials, Canadian Edition, 9e (Ebert)

Chapter 12 Understanding Marketing Principles and Developing Products

12.1 Multiple Choice Questions

2) According to the marketing concept,

3) Value is determined by comparing a product's ________; the formula requires dividing

7) What type of goods includes raw materials and integrated circuits?

16) What is data warehousing?

25) The 4 P's of marketing include all the following except

28) What is the fundamental goal of product differentiation?

36) The four elements in the marketing mix are

38) Which of the following is correct with regard to price?

45) What does the process of "positioning" involve?

46) What is a target market?

52) Multicultural marketing is part of market segmentation by

57) Primary data are

60) When is market research used most frequently?

64) Secondary data are

72) ________ is an example of a rational motive, whereas ________ is an example of an

99) Which of the following is a convenience service?

116) Why are businesses interested in the development of new products?

136) Coca-Cola, Pepsi-Cola, Kleenex, and Chevrolet are examples of

144) Which of the following is correct with regard to packaging?

156) What are characteristics of populations that may be considered in developing a

163) What is a moderately expensive, infrequently purchased good or service called?

165) What is a series of stages in an item's commercial life called?

12.2 Critical Thinking Questions

5) Marketing focuses largely on consumer goods and less on consumer services.

11) Customer relationship management (CRM) focuses on building better information

16) Target markets are first defined by customers, then by product.

18) Market segmentation is a strategy for analyzing consumers, not products.

33) Surveys may vary widely in their accuracy.

34) Experimentation tries to compare the responses of similar individuals in different

74) A moderately expensive, infrequently purchased good or service is known as a specialty

1) What is the ratio for value?

3) What is the difference between consumer goods and industrial goods?

4) What is customer relationship management (CRM)?

8) What is a target market?

9) List the five common methods of segmenting consumer markets.

10) What are the psychographic variables used in market segmentation?

11) What is meant by secondary data?

12) What is meant by primary data?

14) What is the first step in the consumer buying process?

15) What is the last step in the consumer buying process?

16) List the three industrial markets.

17) What is a product feature?

18) What is a benefit?

19) What is a value package?

23) How does a product mix differ from a product line?

25) List the four stages in the product life cycle.

28) What is brand equity?

29) What are the four categories of brand names?

30) What are three functions of packaging?

11) Explain how marketers identify different market segments.

13) What is product positioning? Give examples.

14) What is market segmentation and why is it important?

17) Briefly discuss the steps in the market research process.

72) is an example of a rational motive, whereas is an example of an