Module 1 - The Marketing Management Process

Question 1

Define marketing

Answer 1

Marketing is a social process involving the activities necessary to enable individuals and organisations to obtain what they need and want through exchanges with others and to develop ongoing exchange relationships.

Question 2

What conditions are necessary for an exchange to take place?

Answer 2

• Identifying exchange partners –who Are the CUStoMERS
• What needs and wants do partners try to satisfy through exchange and what is the difference between the two
• What is exchanged – product, SeRvice OR BOTH
• How does the exchange create value? Why is a buyer better off and more satisfied following an exchange
• How do potential exchange partners become a market for a good or service?

Question 3

Distinguish between a need and a want.

Answer 3

An unsatisfied need is a gap between a person’s actual and desired state on some physical or psychological dimension.

Wants reflect a person’s desires or preferences for specific ways of satisfying a basic need.

Marketers cannot create needs deriving from biological and emotional imperatives of human nature. Instead, marketers influence wants

Question 4

What is a market?

Answer 4

A market consists of:

• Individuals and organisations who are…

• …interested and willing to buy a particular product to obtain benefits that will satisfy a specific need or want, and who…
• …have the resources (time, money) to engage in such a transaction

Some markets are sufficiently homogenous that a company can practice a undifferentiated marketing in them. However the target market for a particular product category is often fragmented into several distinct market segments – each containing people who are relatively homogenous in their needs, wants and product benefits they seek.

Question 5

What does strategic marketing involve?

Answer 5

Strategic Marketing Management involves a seller trying to determine the following points in an effort to define the target market:

• Which customer needs and wants are not being satisfied by competitive marketing offerings
• How desired benefits and choice criteria vary amongst potential customers and how to identify the resulting segments by demographic variables such as sex. lifestyle or some other criteria
• Which segments to target, and which product offerings and marketing programmes appeal most to customers in those segments
• How to position the product to differentiate it from competitor’s offerings and give the firm a sustainable advantage

Question 6

What flows are necessary for an exchange transaction to take place?

Answer 6

Question 7

A society cannot reap the full benefits of specialisation until it develops the means to facilitate:

A. importation of essentials from other societies.
B. production of essentials by each member of society.
C. the trade and exchange of surpluses among its members.
D. countertrade with other societies.
E. production of services in addition to goods.

Answer 7

C

Question 8

‘A social process involving the activities necessary to enable individuals and organisations to obtain what they need and want through exchanges with others’ is a definition of:

A. distribution.
B. marketing. C. barter.
D. countertrade.
E. industrialisation.

Answer 8

B

Question 9

The core functional focus of marketing is the ____ of goods and services.

A. creation.

B. distribution.

C. pricing.

D. promoting. E. exchange.

Answer 9

E

Question 10

The utilisation of marketing approaches by hospitals, theatres, universities and nonprofit organisations:

A. has not changed compared to practices in the past.
B. has increased substantially in the past decade.
C. is outside the domain of marketing per se.
D. is only appropriate in for-profit situations.
E. has decreased substantially in the past decade.

Answer 10

B

Question 11

Those who buy goods and services for their own personal use or the use of others in their immediate household are:

A. utilitarian consumers.

B. organisational customers.

C. intermediaries.

D. industrial customers.

E. ultimate consumers.

Answer 11

E

Question 12

Those who buy goods and services for resale, as inputs to production of other goods or services, or for use in the day-to-day operations of the organisation are:

A. intermediaries.

B. ultimate consumers.

C. organisational customers.

D. utilitarian consumers.

E. countertraders.

Answer 12

C

Question 13

A gap between a person’s actual and desired state on some physical or psychological dimension is a(n):

A. unsatisfied need.

B. want state.

C. market inefficiency.

D. demand function.

E. intermediary.

Answer 13

A

Question 14

Factors not created by marketers or other social forces, but flowing from basic biological and psychological human makeup, are:

A. needs.

B. wants.

C. demands.

D. urges.

E. requirements.

Answer 14

A

Question 15

The desire to drink a Coke instead of orange juice is an example of a(n):

A. urge.

B. need.

C. demand.

D. want.

E. requirement.

Answer 15

D

Question 16

For some brand-loyal customers what does wearing Levi’s 501 jeans provide that other jeans cannot?

A. need fulfilment.

B. need creation.

C. need recognition.

D. want satisfaction.

E. either B or C above.

Answer 16

D

Question 17

In addition to being provided with physical objects, people’s needs may be satisfied in a less tangible form through:

A. differential forms.

B. products.

C. goods.

D. services.

E. product modifications.

Answer 17

D

Question 18

Whether the product actually lives up to expectations and delivers the anticipated benefits determines the customer’s ultimate:

A. satisfaction.

B. credence qualities.

C. salience.

D. demand function.

E. choice criteria.

Answer 18

A

Question 19

Studies have shown that, if their complaint is handled satisfactorily, ____ per cent of those who complain would do business with the same company again.

A. 10.
B. 30.
C. 50.
D. 70.
E. 90.

Answer 19

C

Question 20

‘Individuals and organisations who are interested in buying and willing to buy a particular product to obtain benefits that will satisfy a specific need or want, and who have the resources to engage in such a transaction’ is the definition of a(n):

A. industrial buyer.

B. segment.
C. opportunity.
D. focus group.
E. market.

Answer 20

E

Question 21

When a company is attempting to define its ‘niche’ in the market as part of its strategic management planning activities, which of the following is it attempting to define?

A. Why its competitors have not already exploited this niche.

B. What is the best promotion vehicle for this market.

C. Which segments to target.

D. How to position the product. E. Its distribution strategy.

Answer 21

C

Question 22

Avon’s marketing of cosmetics through thousands of part-time door-to-door sales representatives and IBM’s marketing of mainframe computers are examples of:

A. vertically integrated distribution systems, in that they involve manufacturers who sell their own product lines direct.

B. horizontally integrated distribution systems, in that the same product is sold in the same setting throughout the areas in which it is available.

C. wheel-and-spoke distribution systems, in that a central manufacturer ‘spins out’ the product from a central point to surrounding distribution points.

D. cohesive distribution systems, in that the distribution network is bound
together through a common control framework.

E. pyramid selling systems, in that these marketers reply upon a system of ‘others enlisting others’ to increase sales.

Answer 22

A

Question 23

Groups of institutions or middlemen that distribute goods are known as:

A. pyramid distribution systems.
B. cartels.
C. horizontal distribution systems.
D. wheel-and-spoke distribution systems.
E. marketing channels.

Answer 23

E

Question 24

A manufacturer’s representative for General Electric is an example of which type of ‘middleman’?

A. Retailers.
B. Agent middlemen.
C. Merchant wholesalers.
D. Facilitating agents. E. Commissioned agents.

Answer 24

B

Question 25

All of the following are examples of facilitating agencies EXCEPT:

A. marketing research firms.
B. advertising agencies.
C. accounts receivable collection agencies.
D. public relations firms.
E. All of the above are examples of facilitating agencies.

Answer 25

E

Question 26

Those who sell goods and services directly to final consumers for their personal nonbusiness use are:

A. retailers.

B. agent middlemen.
C. merchant wholesalers.
D. facilitating agents.
E. commissioned agents.

Answer 26

A

Question 27

About what percentage of the retail price of consumer products consists of the costs of marketing and distribution of these products?

A. 10 per cent.

B. 30 per cent.

C. 50 per cent.

D. 70 per cent.

E. 90 per cent.

Answer 27

C

Question 28

Because manufacturers and their agents can perform exchange activities at a lower cost than individual consumers, we say that they have achieved:

A. price efficiency.
B. functional efficiency.
C. transaction efficiency.
D. vertical integration.

E. horizontal integration.

Answer 28

B

Question 29

When a consumer purchases a product at a convenient location and when she is ready to use the product, we say that the product has achieved ____ utility and ____ utility, respectively.

A. time; place. B. place; time.
C. possession; place.
D. possession; functional.
E. time; possession.

Answer 29

B

Question 30

Which of the following BEST summarises the way marketing managers communicate to potential customers about their offerings?

A. Advertising.

B. Pricing.
C. The product’s features.
D. Publicity.

E. The marketing mix.

Answer 30

E

Question 31

Advertising, personal selling, point-of-purchase displays and publicity are related to which elements of the marketing mix?
A. Place.
B. Product.
C. Price.
D. Promotion.
E. Personnel.

Answer 31

D

Question 32

Quality, features, style, options, brand name, packaging, guarantees and warranties and service are related to which element of the marketing mix?

A. Place.
B. Price.
C. Product.
D. Promotion.
E. Personnel

Answer 32

C

Question 33

You have just made a substantial monetary contribution to a well-known charitable organisation. Was this an exchange transaction? If so, what was exchanged? What need(s) or want(s) did you satisfy by making your contribution? Which marketing activities do managers of charitable organisations engage in to facilitate a transaction?

Answer 33

This was an exchange – money for recognition and a feeling of having done a good deed for some worthwhile cause. Charitable organisations typically build up the need for your support by explaining what it will accomplish, providing recognition
and status, and using volunteers to encourage others to support the charity. For an exchange to occur, the following must happen: (1) there must be at least two parties involved; (2) both parties must offer something of value; (3) both parties must be aware of the existence of the other, and be capable of communication and
delivery; (4) both parties must be free to accept or reject the other’s offer; and (5) both parties must be willing and able to negotiate terms of exchange that they find acceptable (i.e., both must believe that the exchange creates benefits or values).

Question 34

What is the difference between a customer’s need and a customer’s want? State which needs (or benefits) might be met by each of the following:

a. Toujours Moi perfume.
b. A BMW car.
c. A physical examination at a local hospital.
d. A mainframe computer.

Answer 34

A customer’s needs refer to the gap between a person’s actual and desired state, in terms of some physical or psychological condition. Needs are not created by marketers or other social forces; they flow from the basic biological and psychological makeup of human beings.
A customer’s wants refer to a person’s desires or preferences for specific ways of satisfying a basic need; that is, the particular products, brands, or services sought to fulfil an unsatisfied want. Thus, different people may have very different wants to satisfy the same need (e.g., some people may want an electric blanket while others may want a down comforter to satisfy the need for warmth). Needs or benefits that might be met by the following products include:

Toujours Moi perfume

Physical need: to smell good.
Psychological need: self-esteem.

Benefits: physical attractiveness, status, feel good about self.

BMW car

Physical need: transportation for self and others.

Psychological need: self-esteem.

Benefits: transport status, self-esteem, power.

Physical examination

Physical need: reduce fear/anxiety.

Psychological need: security.

Benefits: health maintenance, psychological security.

Mainframe

Psychological need: security, esteem, self-fulfilment.

Benefits (for the organisation): computational ability (i.e. data processing); service.

Benefits (for individual buyer): security in making correct purchasing decision, job enhancement.

Question 35

An important characteristic of marketing as a business function is its focus on:

A. interfunctional responsibilities.

B. customer needs.

C. barter exchange requirements.

D. production efficiencies.

E. technological trends.

Answer 35

B

1.1.1 The Importance of the Top Line In the financial markets it is a company’s bottom line – its profitability – that is most important. In the long run, all firms – even Internet start-ups – must make a profit to survive. But as the managers at RedEnvelope are well aware, there can never be a positive bottom line – nor financing, employees, or anything else – without the ability to build and sustain a healthy top line: sales revenue. As a wise observer once said, nothing happens until somebody sells something. Or to paraphrase management guru Peter Drucker, everything a company does internally is a cost centre. The only profit centre is a customer whose cheque doesn’t bounce. That is why the customer focus inherent in the marketing function is important. When properly implemented, a customer focus enables firms to enjoy success by exploiting changes in the marketplace, by developing products and services that have superiority over what is currently available, and by taking a more focused and integrated cross-functional approach to their overall operations. RedEnvelope, for example, started down the road to bottom line success by developing a unique and appealing line of gift products and backing them up with a user-friendly website and quick and reliable delivery. All the firm’s activities were focused on satisfying its target market because, as Hilary Billings points out, ‘Success … lies in creating a memorable experience for the customer.’[3]

Question 36

For some brand loyal customers what does wearing Levi’s 501 jeans provide that other jeans cannot?

A. Need fulfilment.

B. Need creation.

C. Need recognition.

D. Want satisfaction.

E. Either B or C.

Answer 36

D

Question 37

In general, marketers:

A. create wants.

B. create needs.

C. satisfy existing needs or wants.

D. do all of the above.

E. only influence how existing needs or wants are satisfied.

Answer 37

E

Question 38

When people buy products to satisfy their wants and needs, instead of buying the products per se, they are buying:

A. performance features.
B. product attributes.
C. benefits.
D. physical attributes.
E. goods.

Answer 38

C

Question 39

When the market is sufficiently homogeneous, a company can practise marketing approaches that are:

A. pre-emptive.
B. differentiated.
C. segmented.
D. situational.
E. undifferentiated.

Answer 39

E

Question 40

When the total market for a given product category is fragmented into several groups of people having relatively homogeneous needs, wants and sought-after benefits, these groups are termed:

A. market fragmentation.
B. a differentiated market.
C. a counter-market.
D. a market segment.
E. market homogenisation.

Answer 40

D

Question 41

When a company is attempting to differentiate its products to distinguish them from competitors’ products, in which aspect of strategic management planning is the company engaged?

A. Its market segmentation strategy.
B. Its distribution strategy.
C. Its targeting strategy.
D. Its pricing strategy.
E. Its positioning strategy.

Answer 41

E

Question 42

The psychological or financial costs that occur as the result of a buyer having to forgo other activities in order to purchase a particular product are known as:

A. transaction costs.
B. opportunity costs.
C. cost of goods sold.
D. hidden costs.
E. amortised costs.

Answer 42

B

See section Who Markets and Who Buys?

Question 43

By reducing the transactions each person must engage in to obtain a desired assortment of goods and services, traders:

A. shift the demand curve upward and to the right, increasing the total aggregate demand for products.

B. increase the total number of buyer–seller contacts that must occur.

C. reduce the number of buyer–seller contacts that must occur, thus increasing the overall efficiency of exchange.

D. increase the elasticity of demand.

E. move the equilibrium price upward and to the right because of the increased potential number of transactions.

Answer 43

C

See section Customer Needs and Wants.

Question 44

‘The process of analysing, planning, implementing, co-ordinating and controlling programmes involving the conception, pricing, promotion and distribution of products, services and ideas designed to create and maintain beneficial exchanges with target markets for the purpose of achieving organisational objectives’ is a definition of:

A. marketing communications.
B. marketing management.
C. marketing strategy.
D. strategic management.
E. marketing tactics.

Answer 44

B

See section Marketing Management – A Definition.

Question 45

Which aspect of the marketing management process does environmental and competitor analysis represent?

A. Marketing programme components.
B. Implementing and controlling marketing programmes.
C. Formulating strategic marketing programmes.
D. Market opportunity analysis.
E. Strategic marketing programmes for selected situations.

Answer 45

D

See section Market Opportunity Analysis.

Question 46

What type of strategy states the company’s mission and its strengths and policies for growth?

A. Business-level strategy.
B. Functional strategy.
C. Marketing strategy.
D. Corporate strategy.
E. Segmentation strategy.

Answer 46

C

See section The Marketing Implications of Corporate Strategy Decisions.

Question 47

What type of decision is reflected in an organisation’s business-level strategy?

A. Choosing suppliers.
B. Picking an advertising slogan.
C. Deciding how to compete in its business.
D. Repositioning its products.
E. Defining its overall purpose.

Answer 47

C

See section The Marketing Implications of Corporate Strategy Decisions.

Question 48

Of the different dimensions of marketing management, which do you think would be most different for manufacturing firms pursuing sales in many countries?

A. Setting objectives.
B. Implementing the marketing plan.
C. Monitoring the exchange process.
D. Conceptualising the offering.
E. Setting the price.

Answer 48

B

See section Globalisation.

Question 49

What factor has changed in the past ten years that has made the customer service function far more important to the firm’s financial success?

A. Global population levels.
B. Global competition levels.
C. Database marketing.
D. Wireless communications.
E. Market fragmentation.

Answer 49

B

See section Increased Importance of Service.

Question 50

Rooney’s Restaurants, a San Francisco-based chain, operated 21 units in California, all of which used a western theme/design. The restaurants served a limited menu of seven items, featuring prime rib, and were a popular meeting place, not only for dinner but also for cocktails and lunch, and also served sandwiches and chuckburgers. Because of increasing competition from other theme restaurants, management was considering expanding their menu by adding several fish and poultry dishes. They have hired you as a marketing consultant. Your first task is to determine whether there is a viable demand for such a menu change. Without going into great detail about how you would obtain the necessary information, describe the various factors you would examine in evaluating the potential for such menu additions.

Assuming Rooney’s decides to go ahead with its menu changes, described above, what major decisions will have to be made concerning each component of the marketing mix as you go about developing a marketing plan to attract members of the target audience to patronise Rooney’s?

Answer 50

To determine the feasibility of expanding Rooney’s menu, the marketing consultant should, at the very least, consider the following factors:

Environmental analysis

1. Demographic – trends in the various target age and income groups.
2. Economic – trends such as employment by male and by female in areas serviced by existing restaurants.
3. Competition – trends in number and type of eating establishments in areas serviced by Rooney’s, kinds of items served at lunch and dinner and prices charged at lunch and dinner.

Customer analysis

1. Demographic – differences between Rooney’s customers and those of competitors.
2. Behavioural changes relating to attitudes both for and against certain food items and how they are prepared. Also, changing attitudes (if any) towards eating environments. Needed for Rooney’s customers and non-customers.
3. Trends in total patronage of Rooney’s restaurants by number of meals served, food items purchased, size of cheque, demographics, etc. The above to be obtained for lunch and dinner.
4. Customer satisfaction for light and heavy users.
5. Non-customer awareness of Rooney’s restaurants and their menu items. Also, their overall image of Rooney’s as a place to dine (for lunch and dinner).

The following relates to what marketing-mix components should be considered in developing a marketing plan to attract more members of the target audience to dine at Rooney’s. Note that there need to be two marketing plans: one for lunch and one for dinner. There will be an overlap between the two, especially with respect to menu items and promotion (building a similar image).

1. Product – menu items, groupings of menu items, service provided (buffet), beverages. Facilities for groups.
2. Price – à la carte versus groupings.
3. Advertising – neighbourhood newspapers, radio, flyers, television spots.
4. Promotions – coupons, happy hour, holiday specials.
5. Personal selling – training of waiters/waitresses – sales to groups for special events.