Chapter 1: Marketing in Today's Economy

MULTIPLE CHOICE 1. Among the fundamental changes to marketing and business practice in todays economy is the dramatic increase in the availability of information. This increase in information has created a shift in the balance of power in the supply chain. Who now holds most of the power in todays economy? a. retailers d. manufacturers b. wholesalers e. market research firms c. customers AN ! " #. $$$$$ is the curse of mature markets whereby products lack any real means of differentiation and customers see competing products as offering roughly the same benefits. a. peciali%ation d. &rice 'evaluation b. "ommoditi%ation e. (arket )omogeneity c. (aturation AN ! * +. Which of the following changes occurring in todays economy has not been caused by the growth of the ,nternet? a. ,ncrease in product selection d. -ising prices for most products b. hifting demand patterns e. Audience and media fragmentation c. &rivacy and security concerns AN ! ' .. Although mass media audiences are becoming increasingly fragmented/ media fragmentation does have a ma0or advantage. What is this advantage? a. ,t now costs less to reach a mass audience. b. ,t is much easier to measure feedback from mass media audiences. c. ,t is now easier to reach small/ highly targeted audiences. d. "onsumers are now much more receptive to television advertising. e. "onsumers are now highly susceptible to online advertising. AN ! " 1. "hanging value propositions in todays economy 2 such as changes caused by the growth in e2 commerce 2 have forced marketers to learn a tough lesson about customers. What is that lesson? a. "ustomers will always seek the best value regardless of 3uality. b. "ustomers will always turn to the most recogni%ed brand. c. "ustomers would rather perform service for themselves to save money. d. "ustomers will turn to the most convenient/ least e4pensive alternative in situations where they see goods and services as commodities. e. "ustomers will always seek the best 3uality regardless of price. AN ! ' 5. 6ne of the ma0or difficulties of conducting business in todays economy concerns the unclear legal 0urisdiction surrounding many business transactions. The issue is especially keen for marketers who do business in!
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a. international markets b. domestic/ interstate markets c. business2to2business markets AN ! A

d. metamarkets e. peer2to2peer transactions

:. ,n #881/ the American (arketing Association changed the definition of marketing that had stood for #8 years. The ma0or changes in the definition included a shift from delivering the . &s ;product/ price/ place/ promotion< to delivering $$$$$ and a shift from creating e4changes to creating $$$$$. a. satisfaction= customer relationships d. value= satisfaction b. value= customer relationships e. 3uality= value c. 3uality= transactions AN ! * >. A cluster of closely related goods and services that center around a specific consumption activity is referred to as a! a. marketspace d. marketing channel b. market e. metamarket c. metamediary AN ! ? @. ?dmunds.com provides a collection of online services and information pertaining to the automotive market. ?dmunds offers reviews/ free pricing reports/ discussion boards/ and links to a variety of car manufacturers/ dealers/ insurance companies/ and finance companies. What role does ?dmunds.com play in todays economy? a. distributor d. metamarket b. marketspace e. electronic broker c. metamediary AN ! " 18. Which of the following IS OT one of the five conditions of e4change in marketing? a. There must be at least two parties to the e4change b. ?ach party has something of value to offer the other party c. ?ach party must be free to accept or re0ect the e4change d. ?ach party must be capable of immediate delivery e. ?ach party believes that it is desirable to e4change with the other party AN ! ' 11. A customers decision to purchase one product or group of products over another is primarily a function of! a. the convenience of ac3uiring the product or group of products. b. how well that choice will fulfill that persons needs and satisfy his or her wants. c. the products features relative to competing products. d. the products price. e. the availability of the product or group of products. AN ! * 1#. A product that provides the utmost in convenience is said to offer e4ceptional! a. time and place utility d. form and time utility b. place and possession utility e. form and place utility
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c. time and possession utility AN ! A 1+. (arketers who offer supplemental services such as financing/ home delivery/ or installation do so in an effort to increase what type of utility? a. time utility d. form utility b. place utility e. psychological utility c. possession utility AN ! " 1.. What type of planning concerns itself with specific markets or market segments and the development of marketing programs that will fulfill the needs of customers in those markets? a. market planning d. lower2level planning b. strategic planning e. tactical planning c. local planning AN ! ? 11. $$$$$ involves the analysis of economic/ political/ legal/ technological/ and cultural events and trends that may affect the future of the organi%ation and its marketing efforts. a. "ompetitive intelligence d. (arketing research b. ?nvironmental scanning e. ?4ternal analysis c. Tactical planning AN ! * 15. (any firms attempt to distinguish or differentiate their product offerings through the use of $$$$$ strategies. This involves establishing a mental image of the product offering relative to competing offerings in the minds of target buyers. a. product positioning d. image marketing b. branding e. comparative c. perceptual marketing AN ! A 1:. Which of the following statements about pricing decisions in marketing strategy is T!UE? a. &rice is one of two elements of the marketing mi4 that leads to revenue. b. &rice has a direct connection with customer demand. c. &ricing is the least manipulated element of the marketing mi4. d. &ricing is the most difficult element of the marketing mi4 to change. e. "ustomers will always e3uate higher prices with higher 3uality products. AN ! * 1>. ,n the traditional transactional marketing approach/ the ultimate goal of marketing is to! a. serve customers needs and wants. b. develop long2term customer relationships. c. create value in the buyer2seller relationship. d. ac3uire new customers and complete a large number of e4changes. e" All of the above are goals of transactional marketing. AN ! '
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1@. All of the following are reasons for the general decline in customer satisfaction over the past #8 years E#CEPT! a. "ustomers are much less brand loyal than in the past. b. Todays customers are very price sensitive. c. Todays customers are e4ceptionally demanding. d. &roduct 3uality is much lower now than at any time in the past. e. "ustomers are more cynical/ have more information/ and have more attitude than ever before. AN ! ' #8. ,n the airline industry/ companies like American/ 'elta/ and Anited have a difficult time competing because their industry has become commoditi%ed. What does this mean for firms in the airline industry? a. Airline firms compete in a declining industry. b. Airline customers have become increasingly demanding. c. There is very little differentiation among product offerings in the industry. d. The industry e4periences very little change over time. e. Airlines have been forced to develop partnerships to remain competitive. AN ! " ESS$% 1. The te4t discusses seven challenges and opportunities associated with marketing in todays economy. ,dentify these issues and discuss how they are related. What is the common thread that ties all seven issues together? AN ! The seven issues are! 1< &ower hift to "ustomers/ #< (assive ,ncrease in &roduct election/ +< Audience and (edia Bragmentation/ .< "hanging Calue &ropositions/ 1< hifting 'emand &atterns/ 5< &rivacy/ ecurity/ and ?thical "oncerns/ and :< Anclear 9egal Durisdiction. The common thread that ties them together is the increase in information and choices made available by the ,nternet. #. 'iscuss the different views or interpretations of marketing as a function of business/ including the A(As recent change in the definition of marketing. Why do you think the A(A changed the definition after #8 years? AN ! (any people/ especially those not employed in marketing/ see marketing as a function of business. As a business function/ the goal of marketing is to connect the organi%ation to its customers. 6ther individuals/ particularly those working in marketing 0obs/ tend to see marketing as a process of managing the flow of products from the point of conception to the point of consumption. A final way to think about marketing relates to meeting human and social needs. This broad view links marketing with our standard of living/ not only in terms of enhanced consumption and prosperity but also in terms of societys well2being. The A(A changed the definition of marketing to better reflect the realities of competing in todays marketplace. The new definition stresses two critical success factors in marketing today! value and customer relationships. Whereas the former definition of marketing had a decidedly transactional focus/ the new definition emphasi%es long2term relationships that provide value for both customers and the firm.
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+. *riefly e4plain and discuss the five types of utility discussed in "hapter 1. Which type;s< of utility is the most important and why? AN ! The five types of utility are! 1. Borm Atility 2 &roducts high in form utility have attributes or features that set them apart from the competition. #. Time Atility 2 &roducts high in time utility are available when customers want them. +. &lace Atility 2 &roducts high in place utility are available where customers want them/ which is typically wherever the customer happens to be at that moment or where the product needs to be at that moment. .. &ossession Atility 2 &ossession utility deals with the transfer of ownership or title from marketer to customer. &roducts higher in possession utility are more satisfying because marketers make them easier to ac3uire. 1. &sychological Atility 2 &roducts high in psychological utility deliver positive e4periential or psychological attributes that customers find satisfying. "onversely/ a product might offer e4ceptional psychological utility because it lacks negative e4periential or psychological attributes. 6ne type of utility is not necessarily more important than the others. ,n reality/ all five types are complementary and overlap to a great degree. 6ne could argue that form utility is the most important/ however/ because customers tend to choose products that offer certain features. Bor routinely purchased products ;gasoline/ bread</ time and place utility are likely to be more important. Bor uni3ue types of products ;vacations/ lu4ury goods</ psychological utility might be relatively more important. .. With respect to the strategic planning process/ why has social responsibility and marketing ethics become important today? ,s it really necessary to consider these issues in strategic planning? )ow can a firm plan to be socially responsible? AN ! 6ur society still reverberates from the effects of corporate scandals at ?nron/ World"om/ and ,m"lone/ among others. Although these scandals make for interesting reading/ many innocent individuals have suffered the conse3uences from these companies unethical behavior. ocial responsibility refers to an organi%ations obligation to ma4imi%e its positive impact on society while minimi%ing its negative impact. ,n terms of marketing strategy/ social responsibility addresses the total effect of an organi%ations marketing activities on society. A ma0or part of this responsibility is marketing ethics/ or the principles and standards that define acceptable conduct in marketing activities. ?thical marketing can build trust and commitment and is a crucial ingredient in building long2term relationships with all stakeholders. Another ma0or component of any firms impact on society is the degree to which it engages in philanthropic activities. (any firms now make philanthropy a key strategic activity. *ecause efforts to be socially responsible involve the allocation of human and financial resources/ these activities must be planned 0ust like traditional marketing activities. 1. 'iscuss the challenges and opportunities associated with planning and developing marketing strategy in todays economy. Why is marketing strategy both e4citing and challenging? AN !

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6ne of the greatest frustrations and opportunities in marketing is changeEcustomers change/ competitors change/ and even the marketing organi%ation changes. trategies that are highly successful today will not work tomorrow. "ustomers will buy products today that they will have no interest in tomorrow. These are truisms in marketing. Although frustrating/ challenges like these also make marketing e4tremely interesting and rewarding. Another fact about marketing strategy is that it is inherently people driven. (arketing strategy is about people ;inside an organi%ation< trying to find ways to deliver e4ceptional value by fulfilling the needs and wants of other people ;customers/ shareholders/ business partners/ society at large</ as well as the needs of the organi%ation itself. The combination of continual change and the people2driven nature of marketing makes developing and implementing marketing strategy a challenging task. A perfect strategy that is e4ecuted perfectly can still fail. This happens because there are very few rules for how to do marketing in specific situations. ,n other words/ it is impossible to say that given Fthis customer needG and these FcompetitorsG and this Flevel of government regulationG that &roduct A/ &rice */ &romotion "/ and 'istribution ' should be used. (arketing simply doesnt work that way. The lack of rules and the ever2changing economic/ sociocultural/ competitive/ technological/ and politicalHlegal landscapes make marketing strategy a terribly fascinating sub0ect.

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