Principles of Marketing Ist Edition By Mcgrahill Education - Test Bank

Principles of Marketing Ist Edition By Mcgrahill Education – Test Bank

 

Instant Download – Complete Test Bank With Answers

 

 

Sample Questions Are Posted Below

 

Connect Master: Marketing, 1e (McGraw-Hill)

Chapter 5   The Marketing Environment

 

1) A situation in which products that perform the same function compete against one another is referred to as

1. A) lateral competition.
2. B) direct competition.
3. C) functional competition.
4. D) primary competition.
5. E) indirect competition.

 

Answer:  B

Explanation:  Also called category competition or brand competition, direct competition is where products that perform the same function compete against one another.

Difficulty: 1 Easy

Topic:  The Impact of Competitive Changes on Marketing Decisions

Learning Objective:  Explain how competitive changes affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

2) Compare the following product offerings. Which is the best example of direct competition?

1. A) Burger King and Subway
2. B) carpet cleaning stores and hardware stores that rent carpet cleaners
3. C) a pizza restaurant and a fried chicken restaurant
4. D) Google and Yahoo
5. E) Coca-Cola and Arizona Iced Tea

 

Answer:  D

Explanation:  Google and Yahoo perform the same function in that they are both Internet search engines. This fits the definition of direct competition because the products perform the same function and compete against each other.

Difficulty: 3 Hard

Topic:  The Impact of Competitive Changes on Marketing Decisions

Learning Objective:  Explain how competitive changes affect marketing decisions.

Bloom’s:  Analyze

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

3) Indirect competition occurs when

1. A) consumers purchase products that they did not intend to buy.
2. B) consumers choose between two products that perform the same function.
3. C) products are marketed to a new consumer segment.
4. D) a company introduces a new product to its product line.
5. E) products provide alternate solutions to the same market.

 

Answer:  E

Explanation:  Indirect competition is a process in which products provide alternative solutions to the same market.

Difficulty: 2 Medium

Topic:  The Impact of Competitive Changes on Marketing Decisions

Learning Objective:  Explain how competitive changes affect marketing decisions.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

4) Compare the following product offerings. Which is an example of indirect competition?

1. A) Burger King and Subway
2. B) Crest and Colgate toothpaste
3. C) Coca-Cola and Pepsi
4. D) Sirius XM radio and Pandora
5. E) Dunkin’ Donuts and Krispy Kreme Doughnuts

 

Answer:  A

Explanation:  Indirect competition occurs when products provide alternate solutions to the same market. In this example, both Burger King and Subway are part of the same fast food market, but they provide alternate choices within that market.

Difficulty: 3 Hard

Topic:  The Impact of Competitive Changes on Marketing Decisions

Learning Objective:  Explain how competitive changes affect marketing decisions.

Bloom’s:  Analyze

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

5) Monitoring developments outside of the firm’s control with the goal of detecting and responding to threats and opportunities is called

1. A) data mining.
2. B) environmental scanning.
3. C) competitive analysis.
4. D) brand positioning.
5. E) market assessment.

 

Answer:  B

Explanation:  The act of monitoring developments outside of the firm’s control with the goal of detecting and responding to threats and opportunities is a process known as environmental scanning.

Difficulty: 1 Easy

Topic:  The Importance of Understanding Marketing Environments

Learning Objective:  Explain why marketing environments are important.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

6) A firm that is engaged in environmental scanning is monitoring developments outside of the firm’s control in order to detect and respond to

1. A) the strengths of the firm.
2. B) environmental issues associated with the firm’s operations.
3. C) market opportunities associated with environmental concerns.
4. D) the weaknesses of the firm.
5. E) threats and opportunities.

 

Answer:  E

Explanation:  Marketing does not occur in a vacuum. Unforeseen developments external to the firm can directly impact the success of its marketing strategy. For this reason, marketing professionals continually scan and analyze the external environment to detect and respond to threats and opportunities, a process known as environmental scanning.

Difficulty: 2 Medium

Topic:  The Importance of Understanding Marketing Environments

Learning Objective:  Explain why marketing environments are important.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

 

 

7) The six major external factors that influence the marketing environment of a firm are: economic, demographic, sociocultural, technological, legal, and

1. A) environmental.
2. B) international.
3. C) domestic.
4. D) political.
5. E) financial.

 

Answer:  D

Explanation:  There are six major external factors that influence the marketing environment of a firm. They are: economic, demographic, sociocultural, technological, legal, and political.

Difficulty: 1 Easy

Topic:  The Impact of the External Environment on Marketing Decisions

Learning Objective:  Summarize the external environmental forces that influence the marketing environment.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

8) A sudden drop in the average consumer income would be an example of which external force affecting the marketing environment?

1. A) technological
2. B) economic
3. C) political
4. D) sociocultural
5. E) legal

 

Answer:  B

Explanation:  Economic conditions impact consumer willingness and ability to buy products. A sudden drop in the average consumer income would impact how much consumers will buy.

Difficulty: 1 Easy

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

9) A measure of the market value of all officially recognized final goods and services produced within a country in a given period is referred to as

1. A) purchasing power parity.
2. B) gross domestic product.
3. C) the balance of trade.
4. D) the currency exchange rate.
5. E) the consumer price index.

 

Answer:  B

Explanation:  Gross domestic product (GDP) paints a simple picture of the economic health of a nation. It refers to the market value of all officially recognized final goods and services produced within a country in a given period.

Difficulty: 1 Easy

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

10) Overall GDP is the most common gauge of

1. A) the overall expansion or contraction of an economy.
2. B) the balance of trade between countries.
3. C) fluctuations in currency exchange rates.
4. D) unemployment and future job forecasting.
5. E) the consumer price index and purchasing power parity.

 

Answer:  A

Explanation:  Gross domestic product (GDP) paints a simple picture of the economic health of a nation. Overall GDP is the most common gauge of the overall expansion or contraction of an economy.

Difficulty: 1 Easy

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

11) Which of the following is the accurate cause of a recession?

1. A) The unemployment rate declines for two or more consecutive quarters.
2. B) Inflation and unemployment both rise consecutively.
3. C) GDP declines for two or more consecutive quarters.
4. D) The consumer price index falls below the average yearly standard.
5. E) Inflation rises for two or more consecutive quarters.

 

Answer:  C

Explanation:  A recession occurs when GDP declines for two or more consecutive quarters.

Difficulty: 1 Easy

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

12) Compare the following statements to determine which one accurately depicts how income is distributed across the U.S. population.

1. A) Income for the middle class in the United States has consistently grown faster than any other wage earning bracket.
2. B) Over the past several decades, there has been a robust shift in the lowest wage earners moving upward to the middle class.
3. C) The top wage earners of the U.S. population are earning only a small percentage of the country’s adjusted gross income.
4. D) Over the past several decades, there has been little shift in any of the wage earning brackets of the U.S. population.
5. E) Over the past several decades, income for the highest wage earners grew at a much quicker pace than for households in the bottom wage earning bracket.

 

Answer:  E

Explanation:  Data shows that while income for all household segments increased, income for the highest wage earners grew at a much quicker pace than for households in the bottom wage earning bracket.

Difficulty: 3 Hard

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Analyze

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

13) Which of the following is the correct definition of inflation?

1. A) The rise in the rate of unemployment due to a slowing economy
2. B) An increase in the general level of prices of products in an economy over a period of time
3. C) A decline in gross domestic product for two or more consecutive quarters
4. D) The rise in the amount of goods and services that can be purchased for a specific amount of money
5. E) A decline in consumer confidence about the overall state of the economy and their own personal finances

 

Answer:  B

Explanation:  Inflation is an increase in the general level of prices of products in an economy over a period of time.

Difficulty: 1 Easy

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

14) Daniel is looking to buy a hybrid vehicle because he is noticing that the price of gasoline continues to rise compared to years past. The rise in the price of gasoline is most likely a result of

1. A) deflation.
2. B) a recession.
3. C) a rise in GDP.
4. D) inflation.
5. E) an increase in purchasing power.

 

Answer:  D

Explanation:  Inflation is an increase in the general level of prices of products in an economy over a period of time.

Difficulty: 2 Medium

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

 

 

15) If the cost of groceries goes up by 10 percent this year, the amount of groceries you can buy for $50 decreases by that same 10 percent. This is an example of

1. A) deflation.
2. B) a recession.
3. C) a rise in GDP.
4. D) a decline in GDP.
5. E) a decrease in purchasing power.

 

Answer:  E

Explanation:  Purchasing power is the amount of goods and services that can be purchased for a specific amount of money. When the cost of goods goes up, purchasing power declines.

Difficulty: 2 Medium

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

16) A measure of how optimistic consumers are about the overall state of the economy and their own personal finances is referred to as

1. A) consumer confidence.
2. B) purchasing power.
3. C) market confidence.
4. D) purchasing confidence.
5. E) consumer expectations.

 

Answer:  A

Explanation:  The amount consumers spend is often based on their confidence in the stability of their future income. As a result, consumer confidence can provide an effective measure of the health of the economy.

Difficulty: 1 Easy

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

17) The description of human populations based on characteristics such as age, gender, ethnicity, and education level is referred to as

1. A) statistical analysis.
2. B) sociocultural analysis.
3. C) psychographics.
4. D) demographics.
5. E) consumer group profiling.

 

Answer:  D

Explanation:  Demographics are the characteristics of human populations that can be used to identify consumer markets. They include such things as age, gender, ethnicity, and education level.

Difficulty: 1 Easy

Topic:  The Impact of Demographic Changes on Marketing Decisions

Learning Objective:  Explain how changes in demographics affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

18) Which of the following demographic groups in the U.S. is expected to double in size in the next 50 years?

1. A) Males and females 65 years and over
2. B) Females and males between 5 and 18 years of age
3. C) Females between 30 and 45 years of age
4. D) Males between 18 and 25 years of age
5. E) Females and males 30 years and over

 

Answer:  A

Explanation:  The percentage of Americans aged 65 and older is expected to almost double over the next 50 years, making seniors the fastest growing demographic group.

Difficulty: 1 Easy

Topic:  The Impact of Demographic Changes on Marketing Decisions

Learning Objective:  Explain how changes in demographics affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

19) The generation of children born between 1946 and 1964 comprises which demographic group?

1. A) Millennials
2. B) Generation x
3. C) Generation y
4. D) Digital natives
5. E) Baby boomers

 

Answer:  E

Explanation:  Baby boomers make up the demographic group born between 1946 and 1964.

Difficulty: 1 Easy

Topic:  The Impact of Demographic Changes on Marketing Decisions

Learning Objective:  Explain how changes in demographics affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

20) Marketers are particularly interested in targeting Baby Boomers because they typically possess two things that marketing professionals seek

1. A) higher education levels and disposable income.
2. B) higher paying jobs and greater interest in leisure activities.
3. C) greater purchasing power and more consumer confidence.
4. D) disposable income and free time.
5. E) higher paying jobs and higher education levels.

 

Answer:  D

Explanation:  Baby boomers typically possess two things that marketing professionals seek: disposable income, which is the amount of spending money available to households after paying taxes (baby boomers represent the wealthiest generation in U.S. history), and the free time to spend it.

Difficulty: 2 Medium

Topic:  The Impact of Demographic Changes on Marketing Decisions

Learning Objective:  Explain how changes in demographics affect marketing decisions.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

 

 

21) The amount of spending money available to households after paying taxes is called

1. A) discretionary income.
2. B) unaccountable income.
3. C) disposable income.
4. D) tax-free income.
5. E) at-will income.

 

Answer:  C

Explanation:  Disposable income is the amount of spending money available to households after paying taxes.

Difficulty: 1 Easy

Topic:  The Impact of Demographic Changes on Marketing Decisions

Learning Objective:  Explain how changes in demographics affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

22) A marketer that uses social media sites to engage potential customers is most likely targeting which demographic group?

1. A) Generation Z
2. B) Generation X
3. C) Silent Generation
4. D) Millennials
5. E) Baby Boomers

 

Answer:  D

Explanation:  Millennials generally have the greatest familiarity with and most use for digital communication, social media, and other forms of technology. Marketers trying to reach this large consumer group increasingly deliver their messages using channels, like the Internet, that are most likely to be used by this market.

Difficulty: 2 Medium

Topic:  The Impact of Demographic Changes on Marketing Decisions

Learning Objective:  Explain how changes in demographics affect marketing decisions.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

 

 

23) Currently, females account for what percentage of all consumer purchases in the United States?

1. A) 5 percent
2. B) 12 percent
3. C) 35 percent
4. D) 60 percent
5. E) 85 percent

 

Answer:  E

Explanation:  Today women take on the role of decision maker across a large and expanding variety of products. Female consumers now account for 85 percent of all consumer purchases in the United States, including everything from cars to groceries to health care.

Difficulty: 1 Easy

Topic:  The Impact of Demographic Changes on Marketing Decisions

Learning Objective:  Explain how changes in demographics affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

24) Compare the following statements and select the one that reflects your text’s assertion as to why educated consumers are prime targets for marketing strategies.

1. A) Educated consumers are more likely to earn significantly more money throughout the course of their lifetime.
2. B) Educated consumers are more willing to spend money than uneducated consumers.
3. C) Educated consumers typically have more access to various forms of media and therefore are easier to target as a consumer group.
4. D) Educated consumers know that in order to keep the economy moving, people must spend money.
5. E) Educated consumers typically have less free time and therefore spend money on products that save them time and make their lives easier.

 

Answer:  A

Explanation:  Educated consumers are likely to earn significantly more money throughout the course of their lifetime and comprehend an advertiser’s message more readily, making them prime targets for marketing strategies.

Difficulty: 3 Hard

Topic:  The Impact of Demographic Changes on Marketing Decisions

Learning Objective:  Explain how changes in demographics affect marketing decisions.

Bloom’s:  Analyze

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

25) The external marketing factor that refers to the combination of social and cultural factors that affect individual development is

1. A) demographics.
2. B) human nature.
3. C) sociocultural.
4. D) ethnicity.
5. E) culturalism.

 

Answer:  C

Explanation:  The society and culture we live in helps to shape our beliefs, values, and norms, which, in turn, define our tastes and purchasing habits. Sociocultural refers to the combination of social and cultural factors that affect individual development.

Difficulty: 1 Easy

Topic:  The Impact of the External Environment on Marketing Decisions

Learning Objective:  Summarize the external environmental forces that influence the marketing environment.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

26) What has been one of the biggest sociocultural changes in the United States over the past half century?

1. A) The immigration of Hispanics into the country
2. B) The decline of females as the primary purchasers of products
3. C) The gradual increase of college graduates in the workplace
4. D) The increased use of the Internet for purchasing consumer products
5. E) The shift from one-income families to two-income and single-parent households

 

Answer:  E

Explanation:  One of the biggest sociocultural changes in the United States over the past half century has been the shift from a nation of primarily one-income families, where one spouse stayed home to raise children, to one in which two-income families and single-parent households predominate.

Difficulty: 2 Medium

Topic:  The Impact of Sociocultural Changes on Marketing Decisions

Learning Objective:  Explain how changes in sociocultural trends affect marketing decisions.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

 

 

27) Which regulation was passed to eliminate monopolies and guarantee competition?

1. A) the Robinson-Patman Act (1936)
2. B) the Wheeler-Lea Act (1938)
3. C) the Sherman Antitrust Act (1890)
4. D) the Fair Packaging and Labeling Act (1966)
5. E) the Telephone Consumer Protection Act (1991)

 

Answer:  C

Explanation:  The Sherman Antitrust Act (1890) combats anticompetitive practices, reduces market domination by individual corporations, and preserves unfettered competition as the rule of trade.

Difficulty: 1 Easy

Topic:  The Impact of Political/Legal Changes on Marketing Decisions External Marketing Environment

Learning Objective:  Explain how political/legal changes affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

28) The Consumer Protection Agency for the United States is the

1. A) Consumer Protection Commission.
2. B) Federal Communications Commission.
3. C) Food and Drug Administration.
4. D) Federal Trade Commission.
5. E) Bureau of Consumer Financial Protection.

 

Answer:  D

Explanation:  The Federal Trade Commission (FTC) serves as the consumer protection agency for the United States. The FTC collects complaints about organizations that violate regulations, which can lead to investigations and prosecutions.

Difficulty: 1 Easy

Topic:  The Impact of Political/Legal Changes on Marketing Decisions External Marketing Environment

Learning Objective:  Explain how political/legal changes affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

29) What was the purpose of the Wheeler-Lea Act (1938)?

1. A) It eliminated monopolies and guaranteed competition.
2. B) It made deceptive and misleading advertising illegal.
3. C) It guaranteed that product packages are labeled correctly.
4. D) It banned unfair credit card rate increases.
5. E) It established the Federal Trade Commission.

 

Answer:  B

Explanation:  The Wheeler-Lea Act (1938) authorizes the Federal Trade Commission to restrict unfair or deceptive acts and broadened Federal Trade Commission powers to include protection of consumers from false advertising practices. It is also called the Advertising Act.

Difficulty: 1 Easy

Topic:  The Impact of Political/Legal Changes on Marketing Decisions External Marketing Environment

Learning Objective:  Explain how political/legal changes affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

30) Of all the external factors that affect the marketing environment, which one represents the most significant challenges, as well as the most significant opportunities, for marketing professionals?

1. A) economic
2. B) demographic
3. C) technological
4. D) sociocultural
5. E) political

 

Answer:  C

Explanation:  Of all the external factors, rapidly evolving technology arguably represents one of the most significant challenges, as well as one of the most significant opportunities, for marketing professionals. Technology influences how consumers satisfy their needs and wants, the basic concept underlying all marketing activities.

Difficulty: 2 Medium

Topic:  The Impact of the External Environment on Marketing Decisions

Learning Objective:  Summarize the external environmental forces that influence the marketing environment.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

 

 

31) While shopping for back-to-school clothes, Josie uses apps on her smartphone to comparison shop, and to obtain coupons and fashion advice. What external factor affecting the marketing environment does this represent?

1. A) economic
2. B) demographic
3. C) legal
4. D) sociocultural
5. E) technological

 

Answer:  E

Explanation:  In addition to affecting how consumers use products, technology changes the way firms promote their products. The use of high quality smartphones make it possible for marketers to know where a customer is and to communicate directly to him or her with an offer for that moment and location.

Difficulty: 2 Medium

Topic:  The Impact of Technology Changes on Marketing Decisions

Learning Objective:  Explain how changes in technology affect marketing decisions.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

32) Compare the following statements to determine which one is accurate regarding marketing on a global scale versus marketing domestically?

1. A) There is no difference between how products are marketed globally versus domestically.
2. B) The external marketing factors that are considered when marketing domestically do not apply when marketing products globally.
3. C) Most U.S. firms do not need to consider the global marketing environment in any context.
4. D) Environmental scanning on a global scale is more complex than it is in the domestic environment.
5. E) Small businesses are not affected by global trends like large corporations are.

 

Answer:  D

Explanation:  In theory, the key external factors that impact a firm in the international space do not differ substantially from the domestic space. In practice, though, environmental scanning on a global scale often has added layers of complexity.

Difficulty: 3 Hard

Topic:  The Importance of Understanding Marketing Environments

Learning Objective:  Explain why marketing environments are important.

Bloom’s:  Analyze

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

33) What provides the most reliable picture of a country’s purchasing power?

1. A) an appreciating currency value
2. B) its income distribution
3. C) its level of gross domestic product
4. D) a stable rate of currency fluctuation
5. E) a high level of consumer confidence

 

Answer:  B

Explanation:  As noted in your text, income distribution often provides the most reliable picture of the purchasing power of a country.

Difficulty: 2 Medium

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

34) A nation’s purchasing capability tends to increase when the proportion of

1. A) lower-income households increase.
2. B) upper-income households increase.
3. C) top wage earners increase.
4. D) middle-income households increase.
5. E) top wage earners decreases.

 

Answer:  D

Explanation:  As noted in your text, marketers are particularly attracted to countries with a growing middle class, since a nation’s purchasing capability tends to increase as the proportion of middle-income households increases.

Difficulty: 2 Medium

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

 

 

35) When a hospital displays a digital recognition system in its front lobby listing donors of all sizes in order to foster pride and enthusiasm in donors about how their efforts improve the lives of others, it is most likely attempting to overcome which external marketing factor?

1. A) sociocultural
2. B) political
3. C) demographic
4. D) legal
5. E) economic

 

Answer:  E

Explanation:  During periods of economic recessions, nonprofit marketers must adapt to reduced charitable giving by coming up with alternative ways to recognize existing donors for their contributions.

Difficulty: 2 Medium

Topic:  The Impact of the External Environment on Marketing Decisions

Learning Objective:  Summarize the external environmental forces that influence the marketing environment.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

36) When marketers use Facebook to increase awareness and enhance relationships with donors, they are responding to which external force in the marketing environment?

1. A) demographics
2. B) economic
3. C) legal
4. D) sociocultural
5. E) technological

 

Answer:  E

Explanation:  Many nonprofit organizations utilize new technology to increase awareness and enhance relationships with donors. The rise of social media gives nonprofit organizations substantial advantages when it comes to organizing activists, conducting charity campaigns, or simply influencing communities and stakeholders.

Difficulty: 1 Easy

Topic:  The Impact of the External Environment on Marketing Decisions

Learning Objective:  Summarize the external environmental forces that influence the marketing environment.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

 

 

37) In a competitive environment, the situation in which products that perform the same function compete against one another is referred to as ________.

 

Answer:  direct competition

Explanation:  The competitive environment includes direct competitors and indirect competitors seeking to acquire market share and profits. The most commonly discussed form of competition is direct competition, in which products that perform the same function compete against one another.

Difficulty: 1 Easy

Topic:  The Impact of Competitive Changes on Marketing Decisions

Learning Objective:  Explain how competitive changes affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

38) The fact that Home Depot and Lowes both cater to the home improvement segment of the marketplace by selling similar products is an example of ________ competition.

 

Answer:  direct

Explanation:  In direct competition, products that perform the same function compete against one another. Since Home Depot and Lowes cater to the same segment of the marketplace by offering similar or even identical products, they would be considered direct competitors.

Difficulty: 2 Medium

Topic:  The Impact of Competitive Changes on Marketing Decisions

Learning Objective:  Explain how competitive changes affect marketing decisions.

Bloom’s:  Apply

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

39) When products provide alternate solutions to the same market, ________ has occurred.

 

Answer:  indirect competition

Explanation:  Indirect competition occurs when products provide alternative solutions to the same market.

Difficulty: 1 Easy

Topic:  The Impact of Competitive Changes on Marketing Decisions

Learning Objective:  Explain how competitive changes affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

40) In the fast food market, Subway would be considered a(n) ________ to burger chains such as McDonald’s and Wendy’s.

 

Answer:  indirect competitor

Explanation:  Subway, McDonald’s and Wendy’s are all part of the same fast food market. However, since Subway offers an alternative to burgers, it is considered to be an indirect competitor. Wendy’s and McDonald’s are direct competitors because both offer the same product.

Difficulty: 2 Medium

Topic:  The Impact of Competitive Changes on Marketing Decisions

Learning Objective:  Explain how competitive changes affect marketing decisions.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

41) When a company monitors developments outside the control of the firm with the goal of detecting and responding to threats and opportunities, it is engaged in ________.

 

Answer:  environmental scanning

Explanation:  Marketing does not occur in a vacuum. A firm must be aware of the developments taking place outside of the firm in order to be able to detect and respond to threats and opportunities. This process is called environmental scanning.

Difficulty: 1 Easy

Topic:  The Importance of Understanding Marketing Environments

Learning Objective:  Explain why marketing environments are important.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

42) There are six major external factors that influence the marketing environment of a firm. They are: economic, demographic, technological, political, legal, and ________.

 

Answer:  sociocultural

Explanation:  The external factors that affect the marketing environment of a firm are: economic, demographic, technological, political, legal, and sociocultural.

Difficulty: 1 Easy

Topic:  The Impact of the External Environment on Marketing Decisions

Learning Objective:  Summarize the external environmental forces that influence the marketing environment.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

43) ________ is a measure of the market value of all officially recognized final goods and services produced within a country in a given period.

 

Answer:  Gross domestic product (GDP)

Explanation:  Gross domestic product paints a simple picture of the economic health of a nation and GDP per capita is often considered an indicator of a country’s standard of living.

Difficulty: 1 Easy

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

44) In the United States, GDP declined in both 2008 and 2009. Because of this fact, the U.S. economy was considered to be in a ________.

 

Answer:  recession

Explanation:  A recession occurs when gross domestic product (GDP) declines for two or more consecutive quarters.

Difficulty: 2 Medium

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Apply

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

45) In the past few years consumers have seen a steady increase in the price of gasoline. The term that describes this phenomenon is ________.

 

Answer:  inflation

Explanation:  Inflation can be described as an increase in the general level of prices of products in an economy over a period of time.

Difficulty: 2 Medium

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Apply

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

46) Carlos makes the same amount of money as he did last year, but lately he never seems to have enough money to make ends meet. Where he used to be able to save money each month, now he barely has enough to pay his bills. Carlos is experiencing a reduction in his ________.

 

Answer:  purchasing power

Explanation:  Purchasing power is a measure of the amount of goods and services that can be purchased for a specific amount of money.

Difficulty: 3 Hard

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Apply

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

47) When consumers are optimistic about the overall state of the economy, their ________ will be high and they will tend to purchase more.

 

Answer:  consumer confidence

Explanation:  Consumer confidence is a measure of how optimistic consumers are about the overall state of the economy and their own personal finances.

Difficulty: 2 Medium

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

48) Age, gender, ethnicity, and education level are all ________ that influence the products consumers buy.

 

Answer:  demographic characteristics

Explanation:  Demographics are the characteristics of human populations that can be used to identify consumer markets.

Difficulty: 1 Easy

Topic:  The Impact of Demographic Changes on Marketing Decisions

Learning Objective:  Explain how changes in demographics affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

49) Baby boomers possess two things that marketing professionals seek: free time and ________.

 

Answer:  disposable income

Explanation:  Marketing professionals would be smart to target baby boomers. This group of consumers typically has a large amount of disposable income and the free time to spend it.

Difficulty: 2 Medium

Topic:  The Impact of Demographic Changes on Marketing Decisions

Learning Objective:  Explain how changes in demographics affect marketing decisions.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

50) The amount of spending money available to households after paying taxes is referred to as ________ income.

 

Answer:  disposable

Explanation:  Disposable income is the term used for the amount of spending money available to households after paying taxes.

Difficulty: 1 Easy

Topic:  The Impact of Demographic Changes on Marketing Decisions

Learning Objective:  Explain how changes in demographics affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

51) ________ refers to the combination of social and cultural factors that affect individual development.

 

Answer:  Sociocultural

Explanation:  The society and culture we live in helps to shape our beliefs, values, and norms, which, in turn, define our tastes and purchasing habits.

Difficulty: 1 Easy

Topic:  The Impact of Sociocultural Changes on Marketing Decisions

Learning Objective:  Explain how changes in sociocultural trends affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

52) Federal, state, and local governments enact regulations for two main purposes: to ensure businesses compete fairly with each other and to ensure businesses don’t take advantage of ________.

 

Answer:  consumers

Explanation:  Federal, state, and local governments enact regulations for two main purposes: to ensure businesses compete fairly with each other and to ensure businesses don’t take advantage of consumers.

Difficulty: 2 Medium

Topic:  The Impact of Political/Legal Changes on Marketing Decisions External Marketing Environment

Learning Objective:  Explain how political/legal changes affect marketing decisions.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

53) Cecilia used to spend a lot of time clipping coupons to save money at the grocery store. Since she got a smartphone, however, she now has apps that not only bring her coupons, but also help her create grocery lists, find recipes and search for deals. This is an example of how the external factor of ________ influences the marketing environment.

 

Answer:  technology

Explanation:  Of all the external factors, rapidly evolving technology influences how consumers satisfy their needs and wants, the basic concept underlying all marketing activities. Smartphone apps are an example of a technological innovation that helps consumers satisfy their needs.

Difficulty: 2 Medium

Topic:  The Impact of Technology Changes on Marketing Decisions

Learning Objective:  Explain how changes in technology affect marketing decisions.

Bloom’s:  Understand

AACSB:  Technology

Accessibility:  Keyboard Navigation

 

54) A country’s ________ often provides the most reliable picture of its purchasing power.

 

Answer:  income distribution

Explanation:  Income distribution within a country often provides the most reliable picture of its purchasing power.

Difficulty: 2 Medium

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

55) Direct competition occurs when a product provides alternate solutions to the same market.

 

Answer:  FALSE

Explanation:  When products provide alternate solutions to the same market, indirect competition is taking place.

Difficulty: 1 Easy

Topic:  The Impact of Competitive Changes on Marketing Decisions

Learning Objective:  Explain how competitive changes affect marketing decisions.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

56) A long-time leader in the beverage industry, Coca-Cola saw soft-drink sales decline when competitors began selling juices, teas, and energy drinks. This is an example of indirect competition.

 

Answer:  TRUE

Explanation:  Juices, teas, and energy drinks, while still beverages, provide an alternative to soft drinks making this a form of indirect competition.

Difficulty: 2 Medium

Topic:  The Impact of Competitive Changes on Marketing Decisions

Learning Objective:  Explain how competitive changes affect marketing decisions.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

57) Environmental scanning involves monitoring developments within a firm’s control to evaluate the firm’s strengths and weaknesses.

 

Answer:  FALSE

Explanation:  If a firm wants to detect and respond to threats and opportunities, it needs to monitor developments outside of the firm’s control, a process called environmental scanning.

Difficulty: 1 Easy

Topic:  The Importance of Understanding Marketing Environments

Learning Objective:  Explain why marketing environments are important.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

58) Economic factors influence almost every marketing decision a firm makes.

 

Answer:  TRUE

Explanation:  External factors that influence the marketing environment exist on both the domestic and global scale but are classified as: economic, demographic, political, technological, legal, and sociocultural.

Difficulty: 2 Medium

Topic:  The Impact of the External Environment on Marketing Decisions

Learning Objective:  Summarize the external environmental forces that influence the marketing environment.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

59) In periods of inflation, the purchasing power of money declines.

 

Answer:  TRUE

Explanation:  Purchasing power is a measure of the amount of goods and services that can be purchased for a specific amount of money. When inflation occurs, the general level of prices for products increase, thus reducing the purchasing power of money.

Difficulty: 2 Medium

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

60) Compared to other generational groups, baby boomers have the greatest familiarity with and most use for digital communication, social media, and other forms of technology.

 

Answer:  FALSE

Explanation:  Millennials, the generation born between 1978 and the late twentieth century, have the greatest familiarity with and most use for digital communication, social media, and other forms of technology.

Difficulty: 2 Medium

Topic:  The Impact of Demographic Changes on Marketing Decisions

Learning Objective:  Explain how changes in demographics affect marketing decisions.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

 

 

61) One of the biggest sociocultural changes in the United States over the past half century has been the shift from a nation of primarily one-income families to one in which two-income families and single-parent households predominate.

 

Answer:  TRUE

Explanation:  The shift to two-income families and single-parent households has led to a nation with money to spend but little time to spend it.

Difficulty: 2 Medium

Topic:  The Impact of Sociocultural Changes on Marketing Decisions

Learning Objective:  Explain how changes in sociocultural trends affect marketing decisions.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

62) Explain the difference between direct and indirect competition. Provide an example of a product that you buy regularly and some of its direct and indirect competitors.

 

Answer:  A direct competitor sells products that perform the same function as your product such as Pepsi is a direct competitor of Coke. Indirect competitors provide products that perform similar functions and can be used as substitutes for your product. 7Up is an indirect competitor of Coke in that it is not a cola-flavored soft drink, but can substitute as a beverage.

Difficulty: 2 Medium

Topic:  The Impact of Competitive Changes on Marketing Decisions

Learning Objective:  Explain how competitive changes affect marketing decisions.

Bloom’s:  Create

AACSB:  Communication

 

63) What are the economic factors that influence the marketing environment? If you own a used car dealership, which economic factors do you feel are most important to understand and monitor to make your business successful?

 

Answer:  The economic factors that influence the marketing environment are Gross Domestic Product (GDP), income distribution, consumer confidence and inflation. A used car dealership should monitor all of these economic factors as they all could affect this business. GDP is a gauge of the state of the economy and whether the economy is growing or in a recession. If the economy is expanding, consumers may be in the market for vehicles, but in a recession they are less likely to make major purchases. Inflation measures general price movements and could affect how the dealership sets prices. Consumer confidence is a measurement of how optimistic consumers are and if they are optimistic they may be more likely to purchase vehicles. Also, if incomes are growing, consumers may be more likely to make major purchases.

Difficulty: 2 Medium

Topic:  The Impact of Economic Changes on Marketing Decisions

Learning Objective:  Explain how changes in the economic environment affect marketing decisions.

Bloom’s:  Create

AACSB:  Communication

 

64) You are the manager of a grocery store (supermarket) that sells a varied menu of prepared foods like pizza, wings, sandwiches, salads, sushi, hot meals, Chinese and other foods besides your other grocery items. Identify some of your indirect competitors.

 

Answer:  Your direct competition is other grocery stores and the specific businesses that sell the same prepared foods that you do, such as restaurants, delis and pizza shops. Your indirect competition could come from the consumer purchasing the elements that make up the prepared foods and who cook their meal at home, frozen or microwaveable meals, and vending machines.

Difficulty: 3 Hard

Topic:  The Impact of Competitive Changes on Marketing Decisions

Learning Objective:  Explain how competitive changes affect marketing decisions.

Bloom’s:  Create

AACSB:  Communication

 

65) Tim is 19 years old and is thinking of starting a business to target his generation—the Millennials. What are some of the demographic factors that he needs to analyze to help him determine how to market his business?

 

Answer:  Millennials are the generation born in the 1980s and 1990s. This generation is very comfortable and familiar with the use of digital communication, technology and social media. Tim needs to consider the basic demographic factors such as gender, education and ethnicity when analyzing this consumer group. His marketing should use many different methods of communication that this generation is familiar with, and his choice of business should focus on the needs and wants of this generation.

Difficulty: 2 Medium

Topic:  The Impact of Demographic Changes on Marketing Decisions

Learning Objective:  Explain how changes in demographics affect marketing decisions.

Bloom’s:  Create

AACSB:  Communication