Essentials of Marketing 15th Edition by William Perreault Jr – Test Bank
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Sample Test
Chapter 03 Evaluating Opportunities in the Changing Market
Environment Answer Key
True / False Questions
|
1. |
The external marketing environment is
shaped by these four areas: economics, technology, politics/law, and
culture/society. Answer: TRUE Feedback: The external market environment includes four major
areas: economic environment, technological environment, political/legal
environment, and cultural/social environment. |
|
AACSB: Reflective Thinking |
|
2. |
The direct market environment includes
customers, competitors, and the IRS. Answer: FALSE Feedback: The direct market environment includes customers,
the company, and competitors. |
|
AACSB: Reflective Thinking Level of Difficulty: 1 Easy |
|
3. |
The marketing manager can control the variables
in the market environment. Answer: FALSE Feedback: Managers can’t alter the variables of the market
environment. |
|
AACSB: Reflective Thinking Level of Difficulty: 2 Medium |
|
4. |
Company objectives should shape the
direction and operation of the whole business. Answer: TRUE Feedback: The objectives of a company should shape the
direction and operation of the whole business. |
|
AACSB: Reflective Thinking |
|
5. |
Objectives should set the firm’s
course. Answer: FALSE Feedback: A company must decide where it’s going, or it may
fall into the trap expressed so well by the quotation: “Having lost sight of
our objective, we redoubled our efforts.” Company objectives should shape the
direction and operation of the whole business. |
|
AACSB: Reflective Thinking |
|
6. |
A mission statement sets out the
organization’s basic purpose for being. Answer: TRUE Feedback: Many firms develop a mission statement, which sets
out the organization’s basic purpose for being. |
|
AACSB: Reflective Thinking |
|
7. |
A mission statement should focus on
just the key goals for the organization. Answer: TRUE Feedback: A mission statement should focus on a few key goals
rather than embracing everything. |
|
AACSB: Reflective Thinking Level of Difficulty: 1 Easy |
|
8. |
A mission statement can help a manager
decide which opportunities to pursue and which to screen out. Answer: TRUE Feedback: A mission statement should supply guidelines that
help managers determine which opportunities to pursue. |
|
AACSB: Reflective Thinking Level of Difficulty: 1 Easy |
|
9. |
A mission statement sets out the
strengths and weaknesses of a firm as well as the opportunities and threats
that it faces. Answer: FALSE Feedback: A mission statement is not a substitute for more
specific objectives that provide guidance in screening possible
opportunities. |
|
AACSB: Reflective Thinking
|
|
10. |
A mission statement substitutes for
more specific objectives. Answer: FALSE Feedback: A mission statement is not a substitute for
more specific objectives. |
|
AACSB: Reflective Thinking Level of Difficulty: 2 Medium |
|
11. |
Trying to maximize short-run return on
investment may not be compatible with a company’s other objectives. Answer: TRUE Feedback: When there are a number of specific objectives
stated by top management, it is critical that they be compatible. |
|
AACSB: Reflective Thinking Level of Difficulty: 1 Easy |
|
12. |
Company objectives should lead to a
hierarchy of marketing objectives. Answer: TRUE Feedback: Firms need a hierarchy of objectives, moving
from company objectives to marketing department objectives. |
|
AACSB: Reflective Thinking |
|
13. |
The objectives of a firm should direct
the operation of the marketing department, but aren’t important to the rest
of the business. Answer: FALSE Feedback: Firms need a hierarchy of objectives, moving from
company objectives to marketing department objectives. Firms also need
objectives for each of the four Ps. |
|
AACSB: Reflective Thinking Level of Difficulty: 1 Easy |
|
14. |
Good marketing objectives should be
ambitious and almost impossible to achieve. Answer: FALSE Feedback: Marketing objectives should be realistic and
achievable. Overly ambitious objectives are useless if the firm lacks the
resources to achieve them. |
|
AACSB: Reflective Thinking |
|
15. |
Attractive opportunities should make
use of a firm’s resources and its unique strengths. Answer: TRUE Feedback: Every firm has some unique resources, and
opportunities come from making use of these strengths. |
|
AACSB: Reflective Thinking Level of Difficulty: 1 Easy |
|
16. |
A large producer with economies of
scale always has a competitive advantage over smaller firms. Answer: FALSE Feedback: Smaller firms can be at a great cost disadvantage if
they try to win business from larger competitors. On the other hand, new or
smaller firms sometimes have the advantage of flexibility. |
|
AACSB: Reflective Thinking Level of Difficulty: 1 Easy |
|
17. |
If the cost of production per unit goes
down as the quantity produced increases, small producers can be at a great
cost disadvantage. Answer: TRUE Feedback: Smaller firms can be at a great cost disadvantage
when the cost of producing and selling each unit decreases as the quantity
increases. |
|
AACSB: Reflective Thinking
|
|
18. |
As compared to larger competitors,
smaller firms benefit from lower unit costs which they achieve with lower
sales volumes. Answer: FALSE Feedback: Smaller firms can be at a great cost disadvantage if
they try to win business from larger competitors when the cost of producing
and selling each unit decreases as the quantity increases. |
|
AACSB: Reflective Thinking |
|
19. |
Smaller producers always have a great
advantage in competing with larger producers because of their flexibility. Answer: FALSE Feedback: Firms, new or smaller, have the advantage of
flexibility, sometimes but not always. |
|
AACSB: Reflective Thinking Learning Objective: 3-3 |
|
20. |
The opportunities a firm decides to
pursue may depend on its resources and capabilities. Answer: TRUE Feedback: The opportunities a firm decides to pursue may
depend on its resources and capabilities. |
|
AACSB: Reflective Thinking Level of Difficulty: 1 Easy |
|
21. |
Good relations with intermediaries,
good locations, and good salespeople are some of the many resources of a firm
that should be evaluated when searching for new opportunities. Answer: TRUE Feedback: When introducing new products, good relations with
wholesalers and retailers can also be an important resource. |
|
AACSB: Analytical Thinking Level of Difficulty: 1 Easy |
|
22. |
The competitive environment has no
relationship with the number and types of competitors the marketing manager
must face and how they may behave. Answer: FALSE Feedback: The number and types of competitors the marketing
manager must face and how they may behave is affected by the competitive
environment. |
|
AACSB: Reflective Thinking |
|
23. |
Although the marketing manager cannot
control the competitive environment, he can choose strategies that will avoid
head-on situations. Answer: TRUE Feedback: Although marketing managers usually can’t control
the competitive environment factors, they can choose strategies that avoid
head-on competition. |
|
AACSB: Reflective Thinking Blooms: Remember Level of Difficulty: 1 Easy |
|
24. |
When the competitive environment moves
toward pure competition, producers offer very different products that
consumers do not perceive as substitutes for each other. Answer: FALSE Feedback: When most product-markets head toward pure
competition, competitors offer very similar products that consumers see as
close substitutes. |
|
AACSB: Reflective Thinking
|
|
25. |
Over the long run, most product-markets
tend toward monopolistic competition. Answer: FALSE Feedback: Most product-markets head toward pure competition or
oligopoly over the long run. |
|
AACSB: Reflective Thinking
|
|
26. |
In market-directed economies,
unregulated monopolies are rare. Answer: TRUE Feedback: Monopoly situations, in which one firm completely
controls a broad product-market, are rare in market-directed economies. |
|
AACSB: Analytical Thinking Level of Difficulty: 1 Easy |
|
27. |
In monopolistic competition, one firm
completely controls a broad product-market. Answer: FALSE Feedback: In monopolistic competition, each competitor tries
to get control in its own target market. But competition still exists because
some customers see the various alternatives as substitutes. |
|
AACSB: Reflective Thinking
|
|
28. |
In monopolistic competition, managers sometimes
try to differentiate very similar products by relying on promotion or other
elements of the marketing mix. Answer: TRUE Feedback: In monopolistic competition, marketing managers
sometimes try to differentiate very similar products by relying on other
elements of the marketing mix. |
|
AACSB: Reflective Thinking Learning Objective: 3-4
|
|
29. |
In a competitor analysis, a current (or
planned) target market and marketing mix is compared with what competitors
are currently doing (or are likely to do). Answer: TRUE Feedback: The basic approach to competitor analysis is to
compare the strengths and weaknesses of the current (or planned) target
market and marketing mix with what competitors are currently doing or are
likely to do. |
|
AACSB: Analytical Thinking Level of Difficulty: 1 Easy |
|
30. |
Competitor analysis is an organized
approach for evaluating the strengths and weaknesses of current or potential
competitors’ marketing strategies. Answer: TRUE Feedback: The basic approach to competitor analysis is to
compare the strengths and weaknesses of the current target market. |
|
AACSB: Analytical Thinking Level of Difficulty: 1 Easy |
|
31. |
The major shortcoming of competitor
analysis is that it focuses on the weaknesses of competitors-but ignores
their strengths. Answer: FALSE Feedback: Competitor analysis is an organized approach for
evaluating the strengths and weaknesses of competitors’ marketing strategies. |
|
AACSB: Analytical Thinking
|
|
32. |
The first step in a competitor analysis
is to identify potential competitors. Answer: TRUE Feedback: The initial step in competitor analysis is to
identify potential competitors. |
|
AACSB: Analytical Thinking
|
|
33. |
Competitive rivals are always easy to
identify. Answer: FALSE Feedback: Competitive rivals offering similar products are
usually easy to identify but not always. |
|
AACSB: Reflective Thinking Level of Difficulty: 1 Easy |
|
34. |
The Internet is a powerful way to get
information about competitors. Answer: TRUE Feedback: A powerful way to search for information about
competitors is through the Internet, which sometimes raises ethical issues. |
|
AACSB: Technology Level of Difficulty: 1 Easy |
|
35. |
The Internet is an important aspect of
the technological environment, but it isn’t very useful for getting
information about competitors. Answer: FALSE Feedback: A powerful way to search for information about
competitors is through the Internet. |
|
AACSB: Technology Level of Difficulty: 1 Easy |
|
36. |
Many people think that it is unethical
to spy on competitors to obtain their trade secrets, but it is perfectly
legal. Answer: FALSE Feedback: Beyond the moral issues, spying on competitors to
obtain trade secrets is illegal. |
|
AACSB: Ethics Learning Objective: 3-4 Level of Difficulty: 1 Easy |
|
37. |
Spying on competitors to obtain trade
secrets raises moral issues but is not illegal. Answer: FALSE Feedback: Beyond the moral issues, spying on competitors to
obtain trade secrets is illegal. |
|
AACSB: Ethics Level of Difficulty: 2 Medium |
|
38. |
The technological environment includes
such things as national income, economic growth, and inflation. Answer: FALSE Feedback: The economic environment refers to macro-economic
factors which include national income, economic growth, and inflation. |
|
AACSB: Analytical Thinking
|
|
39. |
Interest rates usually decrease during
periods of inflation. Answer: FALSE Feedback: Interest rates usually increase during periods of
inflation. |
|
AACSB: Analytical Thinking |
|
40. |
The inflation rate experienced by the
United States in recent years was just about the highest in the world. Answer: FALSE Feedback: In some Latin American countries, inflation has
exceeded 400 percent a year in recent years. In contrast, recent U.S. levels,
3 to 20 percent, seem low. |
|
AACSB: Analytical Thinking
|
|
41. |
Compared to some countries in Latin
America, the rate of inflation in the U.S. is low. Answer: TRUE Feedback: In some Latin American countries, inflation has
exceeded 400 percent a year in recent years. In contrast, recent U.S. levels,
3 to 20 percent, seem low. |
|
AACSB: Analytical Thinking |
|
42. |
Technology is the application of
science to convert an economy’s resources to output. Answer: TRUE Feedback: Technology is the application of science to convert
an economy’s resources to output. |
|
AACSB: Reflective Thinking
|
|
43. |
Technology affects marketing through
new products and new processes. Answer: TRUE Feedback: Technology affects marketing in two basic ways:
opportunities for new products and for new processes. |
|
AACSB: Reflective Thinking |
|
|
|
|
|
|
44. |
Technology provides new opportunities
and new challenges for marketers. Answer: TRUE Feedback: Marketing managers that anticipate changes in
technology will be in a better position to take advantage of the
opportunities that come from new technology and the ethical challenges. |
|
AACSB: Reflective Thinking Level of Difficulty: 1 Easy |
|
45. |
Nationalism may affect marketing
strategy planning by determining to whom and how much a firm may sell. Answer: TRUE Feedback: Nationalism can affect macro-marketing systems and
how marketing managers work. It can reduce sales, or even block all marketing
activity. |
|
AACSB: Reflective Thinking
|
|
46. |
Placing the interests of individual
consumers before the interests of business is nationalism. Answer: FALSE Feedback: Nationalism is placing a country’s interests before
everything else. |
|
AACSB: Reflective Thinking
|
|
47. |
Nationalism-or the emphasis on a
country’s interests before anything else-may affect the work of some
marketing managers. Answer: TRUE Feedback: Nationalism can affect how marketing managers work
as well. |
|
AACSB: Reflective Thinking |
|
48. |
Strong sentiments of nationalism
facilitate growth in importing and exporting. Answer: FALSE Feedback: Strong sentiments of nationalism can reduce sales,
or even block all marketing activity, in some international markets. |
|
AACSB: Reflective Thinking
|
|
49. |
Marketers no longer encounter
differences among European countries. Answer: FALSE Feedback: Although Europe is becoming a large unified market,
marketers will still encounter differences among European countries. |
|
AACSB: Analytical Thinking Level of Difficulty: 2 Medium |
|
50. |
The elimination of separate barriers to
inter-European trade is making Europe a large unified market. Answer: TRUE Feedback: Important dimensions of the political environment
are likely to be similar among nations that have banded together to have
common regional economic boundaries, one such example being the unification
of Europe. |
|
AACSB: Analytical Thinking |
|
51. |
Key countries in Europe have moved to
the euro, a new unified money system for the European Union. Answer: TRUE Feedback: Many of the member countries of the EU use the euro. |
|
AACSB: Analytical Thinking Level of Difficulty: 1 Easy |
|
52. |
The political environment may either
block or promote new marketing opportunities. Answer: TRUE Feedback: Political environment can affect opportunities at a
local or international level. |
|
AACSB: Analytical Thinking Level of Difficulty: 1 Easy |
|
53. |
A basic idea in the legal environment
in the United States is that attempts by business to limit competition are
considered contrary to the public interest. Answer: TRUE Feedback: American economic and legislative thinking is based
on the idea that attempts by business to limit competition are considered
contrary to the public interest. |
|
AACSB: Analytical Thinking |
|
54. |
Business and individual managers are
subject to both criminal and civil laws. Answer: TRUE Feedback: Businesses and individual managers are subject to
both criminal and civil laws. |
|
AACSB: Reflective Thinking
|
|
55. |
A manager could be fined for violating
the antimonopoly laws, but he or she could not be sent to jail. Answer: FALSE Feedback: Managers are subject to both criminal and civil laws
and where criminal law applies, jail sentences can be imposed. |
|
AACSB: Reflective Thinking
|
|
56. |
The Sherman Act deals with tying
contracts, exclusive dealing contracts, and price discrimination by
manufacturers. Answer: FALSE Feedback: As stated in Exhibit 3-4, the Sherman Act deals with
monopoly or conspiracy to control a product, distribution channels and
prices. |
|
AACSB: Reflective Thinking
|
|
57. |
The Clayton Act deals with tying
contracts, exclusive dealing contracts, and price discrimination by
manufacturers. Answer: TRUE Feedback: As stated in Exhibit 3-4, the Clayton Act deals with
tying contracts, exclusive dealing contracts, and price discrimination by
manufacturers. |
|
AACSB: Reflective Thinking
|
|
58. |
The Clayton Act focuses on practices
which may substantially lessen competition-such as tying contracts, exclusive
dealing contracts and price discrimination by manufacturers. Answer: TRUE Feedback: As stated in Exhibit 3-4, the Clayton Act focuses on
practices which may substantially lessen competition, such as tying
contracts, exclusive dealing contracts and price discrimination by
manufacturers. |
|
AACSB: Reflective Thinking |
|
59. |
The Magnuson-Moss Act regulates product
warranties. Answer: TRUE Feedback: As stated in Exhibit 3-4, the Magnuson-Moss Act
regulates product warranties. |
|
AACSB: Reflective Thinking
|
|
60. |
Product warranties are regulated by the
Magnuson-Moss Act. Answer: FALSE Feedback: As stated in Exhibit 3-4, the Wheeler-Lea Amendment
(1938) deals with deceptive packaging or branding, deceptive ads or selling
claims, and deceptive pricing. |
|
AACSB: Reflective Thinking
|
|
61. |
Before the Pure Food and Drug Act was
passed, it was assumed that the common law and the warning “let the buyer
beware” would take care of consumers. Answer: TRUE Feedback: Before the Pure Food and Drug Act, it was assumed
that common law and the old warning “let the buyer beware” would take care of
consumers. |
|
AACSB: Reflective Thinking
|
|
62 |
Laws such as the Pure Food and Drug Act
were passed because pro-competition legislation did not protect consumers
very well in some areas. Answer: TRUE Feedback: Focusing only on competition didn’t protect
consumers very well in some areas. |
|
AACSB: Reflective Thinking |
|
63. |
The Consumer Product Safety Act
provides for the creation of safety standards but has no power to set
penalties for failure to meet these standards. Answer: FALSE Feedback: The Consumer Product Safety Act set up the Consumer
Product Safety Commission, which has the power to set safety standards and
can impose penalties for failure to meet these standards. |
|
AACSB: Reflective Thinking
|
|
64. |
The Consumer Product Safety Commission
tries to encourage safe product design, but the commission has almost no
power to deal with unsafe products. Answer: FALSE Feedback: The Consumer Product Safety Act set up the Consumer
Product Safety Commission, which has the power to set safety standards and
can impose penalties for failure to meet these standards. |
|
AACSB: Reflective Thinking |
|
|
|
65. |
In the United States, the Consumer
Product Safety Commission sets and enforces product safety standards. Answer: TRUE Feedback: The Consumer Product Safety Act set up the Consumer
Product Safety Commission, which has the power to set safety standards. |
|
AACSB: Reflective Thinking |
|
66. |
Because the Consumer Product Safety Commission
has no power to force a product off the market, safety is not a very
important consideration in product design. Answer: FALSE Feedback: The commission has the power to force a product off
the market, or require expensive recalls to correct problems, so it is
obvious that safety must be considered in product design. |
|
AACSB: Reflective Thinking |
|
67. |
Marketers should be aware of federal
legislation, as well as state and local laws, when planning marketing
strategy. Answer: TRUE Feedback: Besides federal legislation, marketers must be aware
of state and local laws. |
|
AACSB: Reflective Thinking |
|
68. |
The cultural and social environment
affects how and why people live and behave as they do. Answer: TRUE Feedback: The cultural and social environment affects how and
why people live and behave as they do. |
|
AACSB: Diversity
|
|
69. |
The cultural and social environment
refers to where people live and their income. Answer: FALSE Feedback: The cultural and social environment affects how and
why people live and behave as they do. |
|
AACSB: Diversity Level of Difficulty: 2 Medium |
|
70. |
The rate of growth of the U.S.
population is lower than the rate of growth of some other countries’
population. Answer: TRUE Feedback: The world’s population is growing fast, but that
population growth varies dramatically. For example, between 2013 and 2025,
population is projected to grow 35 percent in Ethiopia and Nigeria. During
this same time, growth will be about 9 percent in the United States. |
|
AACSB: Analytical Thinking Level of Difficulty: 1 Easy |
|
71. |
There are over 316 million people
living in the United States. Answer: TRUE Feedback: The United States has a current population of over
316 million people. |
|
AACSB: Analytical Thinking Level of Difficulty: 1 Easy |
|
72. |
The U.S. population is over 316 million
people and the world population is more than 7 billion people. Answer: TRUE Feedback: With a current population of over 316 million, the
United States makes up only 4.9 percent of the world’s seven billion plus
people. |
|
AACSB: Analytical Thinking Level of Difficulty: 1 Easy |
|
73. |
India has more people than the United
States, and China has more people than India. Answer: TRUE Feedback: As stated in Exhibit 3-5, India has more people than
the United States, and China has more people than India. |
|
AACSB: Analytical Thinking Level of Difficulty: 1 Easy |
|
74. |
Less-developed countries usually
experience the slowest population growth. Answer: FALSE Feedback: The world’s population is growing fast, but that
population growth varies dramatically from country to country. For example,
between 2013 and 2025, the population is projected to grow more than 35
percent in both Ethiopia and Nigeria. |
|
AACSB: Analytical Thinking
|
|
75. |
In Argentina, Israel, and Singapore,
for example, less than 20 percent of people live in urban areas. Answer: FALSE Feedback: More than 90 percent of the population in Japan,
Singapore, Israel, and Argentina live in urban areas. |
|
AACSB: Analytical Thinking Blooms: Remember Level of Difficulty: 2 Medium |
|
76. |
The concentration of people in major
cities often simplifies Place and Promotion decisions. Answer: TRUE Feedback: The extent of urbanization varies widely and the
concentration of people in major cities often simplifies Place and Promotion
decisions, prompting increased interest in international markets. |
|
AACSB: Analytical Thinking Level of Difficulty: 1 Easy |
|
77. |
When considering international markets,
income is often one of the most important demographic dimensions. Answer: TRUE Feedback: Income is often one of the most important
demographic dimensions, when considering international markets. |
|
AACSB: Analytical Thinking Level of Difficulty: 2 Medium |
|
78. |
When considering international markets,
income is usually not an important demographic dimension. Answer: FALSE Feedback: Income is often one of the most important
demographic dimensions, when considering international markets. |
|
AACSB: Analytical Thinking Level of Difficulty: 1 Easy |
|
79. |
Both GDP and GNI measures of national
income. Answer: TRUE Feedback: There are a variety of different measures of
national income; the most widely used are GDP and GNI. |
|
AACSB: Reflective Thinking Level of Difficulty: 1 Easy |
|
80. |
Gross domestic product is the total
dollar value of a country’s exports during a one year period. Answer: FALSE Feedback: Gross domestic product (GDP) is the total market
value of all goods and services provided in a country’s economy in one year. |
|
AACSB: Reflective Thinking
|
|
81. |
Gross domestic product includes foreign
income earned in a country. Answer: TRUE Feedback: Gross domestic product includes income earned by
foreigners who own resources in that nation. |
|
AACSB: Reflective Thinking
|
|
82. |
GNI is the total market value of all
goods and services provided in a country’s economy in a year by both
residents and nonresidents of that country. Answer: FALSE Feedback: Gross domestic product (GDP) is the total market
value of all goods and services provided in a country’s economy in a year by
both residents and nonresidents of that country. |
|
AACSB: Analytical Thinking Level of Difficulty: 2 Medium |
|
83. |
GDP income measures can give the
impression that people in less-developed nations have more income than they
really do. Answer: TRUE Feedback: Using GDP income measures can give the impression
that people in less-developed countries have more income than they really do. |
|
AACSB: Reflective Thinking Level of Difficulty: 1 Easy |
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