Chap 2

Question 1

it is the process of the companies to uncover and unearth marketing weaknesses and the
company’s examination of its marketing
environment.

Answer 1

Marketing Audit

Question 2

Marketing audit examines six major marketing components:

Answer 2

1. The MAcro Environment and Task
   Environment
2. Marketing strategy
3. Marketing organizations
4. Marketing systems
5. Marketing productivity
   6 MArketing functions

Question 3

marketing audit’s four characteristics:

Answer 3

1. Comprehensive
2. Systematic
3. Independent
4. Periodic

Question 4

covers all the major marketing activities of a business

Answer 4

Comprehensive

Question 5

an orderly examination of the organization’s macro and micromarketing
environment

Answer 5

Systematic

Question 6

can be conducted in different ways independently

Answer 6

Independent

Question 7

initiated only after sales have turn down or sales force has fallen

Answer 7

Periodic

Question 8

• business must monitor key macro environment
(demographic economic, technological,
political-legal, and social-cultural)
• must also monitor the micro environment
(customers, competitors, distributors, and
suppliers
• opportunities can be classified to their
attractiveness and to thier success probability.
• threats should be classified according to
seriousness and probability of occurence.

Answer 8

External Environment Analysis

Question 9

Models/tools to assess external environment
PESTEL ANALYSIS

Answer 9

1. Political Factors
2. Economic Factors
3. Socio-cultural Factors
4. Technological Factors
5. Environmental
6. LEgislative Environmental

Question 10

Models/tools to assess external
environment
PORTER’S 5 FORCES

Answer 10

1. Threat of New Entrant
2. Bargaining Power of the Suppliers
3. Intensity of Rivalry
4. Bargaining Power of Buyers
5. Threat of Substitute

Question 11

Internal Environment Analysis

The 7’S Mc Kinsey

Answer 11

1. Shared VAlues
2. Structure
3. Style
4. Systems
5. Staff
6. Strategy
7. Skills

Question 12

Marketing Coast and Financial
Analysis

Answer 12

• By identifying the fixed and variable
components of cost and by distinguising
between direct and indirect costs, managers will be able to examine some of the profitability implications of pricing and
marketing expenditures decisions.

• By understanding the profitability structure from a product, managers can identify cost- volume-profit relationships and implicationsfor marketing budgets.

Question 13

is the process of estimating the impact on
sales of the change in price or in
marketing expenditures; that is the change
in sales resulting from given change ina
marketing program indicates how
productive that marketing program is.

Answer 13

Productivity Analysis

Question 14

are used to represent relationships between price or a marketing expenditure and sales.

Answer 14

sales-response functions

Question 15

costs, such as product-specific
advertising, taht are incurred on behalf of
a specific or service are known

Answer 15

direct fixed cost

Question 16

costs such as institutional advertising,
incurred to support the total business

Answer 16

indirect-fixed cost

Question 17

are indirect costs that can be allocated to various products on some non-arbitrary basis.

Answer 17

traceable cost

Question 18

•the purpose of distinguising the various
types of fixed costs is to provide a basis
for evaluating the contributions made by
different products or services to the
overall profitability of the firm.

•the profitability of individual products or
services can be measured onced the
management has separated the fixed cost.

Answer 18

Productivity Analysis

Question 19

• in an organization, the large portion of the total operating cost is essentially fixed.

• with this, managers will generally pursue
policies that will take advantage of
economies of scale.

Answer 19

Cost-Volume-Profit Relationship

Question 20

• also known as step-variable cost represents
a potential limitation to economies of scale.

• semi-fixed costs are costs that donot vary
automatically on a per unit basis (as
variable cost do) but may change if
substantial increases in volume occur.

Answer 20

Semi-fixed Cost

Question 21

in addition to evaluating the impact of
margins and direct fixed costs on
profitability, retailers must assess the
amount of space (physical assets) or
inventory investment (financial assets) that
is appropriate for a given product, product
line, or department.

Answer 21

Special Profitability Issues for the Retailers

Question 22

3 basic measures- Special Profitability Issues for the Retailers

Answer 22

1. inventory turnover
2. sales per square foot
3. gross-margin return on inventory
   investment

Question 23

the ratio of the product’s sales to the average dollar value of the inventory held for that product.

Answer 23

Inventory turnover

Question 24

equivalent to sales per square foor multiplied by gross profit margin percentage.

Answer 24

sales per square foot

Question 25

measures the profit return rather than the sales return on inventory investment

Answer 25

gross-margin return on inventory
investment

Question 26

Implications for Marketing Budgets

Answer 26

• managers should have an understanding
of the product objectives and an industry
sales forecast in order to develop a
budget.

• managers must have some estimate of the productivity of a proposed price and
marketing expenditure level in generating
company sales.

• however, assuming that management has
developed these estimates of productivity

Question 27

the budgeting process can proceed in
either of two ways:

Answer 27

the direct approach or
the indirect approach.

Question 28

the budgeting process can proceed in
either of two ways:

Answer 28

the direct approach or
the indirect approach.