Marketing Final Fall 2010 Instructions This document contains the questions for the Fall 2010 Marketing

Final. The final is open book and open note, but collaboration is strictly prohibited. Strict monitoring is in place to detect collaboration, and all potential issues will be submitted to the appropriate ethics committees. Note that students have failed MKTG 101 in the past for cheating on the final. By submitting your answer key, you will confirm that you have not collaborated with anyone and that you took the exam in accordance with the code of Academic Integrity. Given the nature of the take-home exam, TAs will not be available to answer any questions during the course of the exam. If needed, state your assumptions. To submit your answers, you must upload you answer key file into your personal exam WebCafe folder (the same folder in which you downloaded this file). The Answer Key When you pressed the start timed exam button in WebCafe to download this file, you also downloaded an answer key .doc file. You should input all your answers into this word document. When you save the file before uploading your answers, please Save As... and use the following naming convention (dont actually type the bracket symbols): [Section_number]-[students_last_name].doc For example: 215-Jones.doc Turning in Your Exam Please adhere to all length restrictions presented in the answer key, and submit your exam no later than 8:00 PM EST. A late penalty will be assigned for every late minute. You should anticipate that Webcafe will be receiving significant traffic at 8pm, so you may want to submit your exam a couple minutes early to avoid being late. Finally, please make sure to submit/upload your answers to Webcafe only once. If you have trouble with WebCafe, you may email your exam to your TA as a backup. Good luck!

Multiple Choice (50 pts total, 1 pt each) For the following 50 questions, please select the best answer.
1) 2) True or False: The aggregate internet advertising spending in the U.S. is less than the aggregate direct mail advertising spending in the U.S. When defining its market, Hallmark aims at the personal expression rather than the greeting card market because: a. This makes the narrowing-down process to define its markets easier. b. The greeting card market is too competitive. c. The customer segments in the greeting card market are unprofitable. d. This segmentation approach leads to more opportunities for Hallmark. e. Hallmark cannot find homogenous customer groups in the greeting card market.

3)

Distribution is often considered the most strategic of the 4 Ps. Why? a. It is easiest to change b. It has the longest lasting impact c. It is complicated d. It is regulated e. It has clearly described pathways The theory of disconfirmation is highly correlated with satisfaction and describes satisfaction as a function of: a. the difference between actual value and actual performance b. the sum of actual value and actual performance c. the difference between perceived performance and expected performance d. the sum of actual performance and perceived performance

4)

5)

Which of the following statements about "hierarchy of needs" is false? a. As soon as lower level needs are reasonably satisfied, those at higher levels become more dominant b. A higher level need may develop before lower level needs are satisfied c. The order in which needs are satisfied always follows a definite pattern--with lower level needs being satisfied first d. A particular product may satisfy more than one need at a time e. All of the above are true

6)

True or False. Laggards, who adopt products at the very end of the PLC, account for the majority of adopters of a product since people tend to be skeptical of embracing new innovations. Which of the following is not true regarding products? a. Products can be physical goods b. Products refer to what the firm offers to satisfy needs c. A product is always tangible d. Consumers see a product in terms of the total satisfaction delivered e. Some products are sold before being produced

7)

8)

In SABRE, you are trying to decide which consumer segment you should target with a new product launch, which bundle of reports would be most helpful in making a decision? a. Competitive Advertising Estimates, Conjoin Study & Perceptual Map b. Product Attribute Perceptions, Conjoint Study, & Perceptual Map c. Segment Purchase Intentions, Market Forecast and Sales Force Effectiveness d. Perceptual Map, Conjoint Study & Segment Media Preferences

9)

Which of the following is least likely to be in the "Something of Value" part of the "price equation" for channel members? a. Repair facilities b. Rebates c. Price-level guarantees d. Promotion aimed at customers e. Convenient packaging for handling

10)

Which of the following statements about packaging is (are) true? a. Better packaging almost always increases total distribution cost b. A package should satisfy not only the needs of final consumers but also those of middlemen customers c. A package doesn't have much promotion impact at retail stores d. A good package can aid in the promotion effort, but it's not as effective as advertising e. All of the above are true

11)

If you are using a skim strategy, in the introduction phase you will have _________ selling effort and _____________ price; and in the growth phase you will usually have ______________ selling effort and ________________ price. a. Low, high; high, low b. Low, low; high, low c. High, high; high, low d. Low, high; low, low e. Low, high; low, high

12)

Which of the following is not considered a brand personality? a. Sincerity b. Ruggedness c. Smart d. Excitement e. Sophistication Which of the following is a condition favorable to branding? a. Low demand, high supply b. Low demand, low supply c. High demand, high supply d. High demand, low supply e. None of the above matter

13)

14)

A high stockturn rate: a. Is only possible with a low markup percent b. Is likely to result in low profits c. Reduces the inventory investment and can improve profits d. Increases the space needed for inventory e. None of the above is true True or False: Private labels increase negotiating power for retailers with other national brand manufacturers When a firms average variable cost is constantno matter how much is producedthen the firms: a. Average cost will increase as the quantity produced increases b. Fixed cost must be zero c. Average cost will also be constant d. Average fixed cost will also be constant e. Average cost will decrease as the quantity produced increases

15) 16)

17)

Company XYZs product has stable sales, however, competition keeps getting tougher and the industry is seeing a general decline in profits. This is an example of a. Declining market b. Top Quality Management c. Market maturity d. Continuous improvement

18)

Which of the following are benefits to modeling the PLC curve? I. It allows you to forecast future sales II. It allows you to better allocate resources and choose your strategy III. It allows you to innovate new products IV. It allows you tap into new markets a. I, II, III, & IV b. I & II only c. III, & IV only d. II, III & IV only

19)

Which is most important when selecting a targeting strategy? a. Segment size b. Companys ease of entry into a segment c. Number and strength of competitors d. Similarity of customer buying behavior e. Stage of product life cycle

20)

Push money allowances, or spiffs, are not used for the following type of items: a. Faster-moving items b. New items c. Slower-moving items d. Consumer electronics e. Higher-margin items Flagship stores for brands (e.g. Nike Town) are often: a. Used as a marketing tool and serve as loss leaders for the company b. The most profitable stores for the company c. Reduce the sales of the brands products at surrounding retail locations d. None of the above Persuasive promotion is especially important in which of the following product life cycle stages? a. Market maturity b. Market penetration c. Market introduction d. Sales decline e. Market growth

21)

22)

23)

Which pricing policy would be the best for a company attempting to maximize profit on a new product with a very inelastic curve? a. Competition pricing b. Penetration pricing c. Introductory price dealing d. Flexible pricing e. Skimming pricing

24)

Which of the following is not a media planning metric? a. CPM b. Reach c. Size d. Frequency e. ROI Distribution through every reasonable outlet in a market describes: a. Robust Coverage b. Exclusive Coverage c. Intelligent Coverage d. Intensive Coverage e. Selective Coverage

25)

26)

Regarding types of wholesalers, which of the following has the highest operating expenses as a percent of sales? a. Manufacturers' sales branches (with stock) b. Merchant wholesalers c. Brokers d. Manufacturers' agents e. Agent middlemen

27)

All of the following are examples of logistical channel functions except: a. Storing b. Breaking Bulk c. Transporting d. Securing e. Creating Assortments True or False: Consumers of publicly consumed products typically undertake a more extensive information search. Cumulative quantity discounts: a. Encourage buyers to buy earlier than present demand requires b. Do not tie a buyer to a seller after purchase c. Apply only to individual orders d. Encourage repeat buying e. Tend to even out sales over the year f. Push money allowances, or spiffs, are NOT used for the following type of items.

28) 29)

30)

As outlined in the textbook, a ___________ can help focus further research or even eliminate the need for it entirely a. Situation analysis b. Research proposal c. Technical Expert d. Good Book The greater the _____________ of a new product, the more ________________ its sales will grow a. Ease of use; steadily b. Compatibility; slowly c. Comparative advantage; rapidly d. Price; haphazardly

31)

32)

A large U.S. firm produces potato chips, shortening, dishwashing detergent, laundry detergent, shampoo, disposable diapers, and facial tissues. These are the firm's a. Product classes b. Product assortment c. Individual products d. Marketing mix e. Product line

33)

Which of the following retailers does not use an exclusive brand strategy? a. Target b. Macys c. H&M d. None of the above Which of the following statements about segmenting and combining is TRUE? a. Combiners usually have more sales potential than segmenters. b. A combiner tries to meet the demand in several segments. c. Segmenters try to develop a marketing mix that will have general appeal for several market segments to obtain economies of scale. d. A segmenter assumes that a broad product-market consists of a fairly homogeneous group of customers. e. Both segmenters and combiners try to satisfy some people very well rather than a lot of people fairly well.

34)

35)

Which of the following were research findings regarding in store placement that private labels care about: i. Products stocked on end caps sell more ii. Private labels are usually placed to the right of national brands iii. Highly educated consumers look to the lower shelf for product purchases a. i only b. i and ii c. i and iii d. All of the above e. None of the above

36) 37) 38)

True or False. Harvest, Niche, and Promotion are 3 of the main strategies companies can follow during the decline phase. True or False: Consumer heuristics guide consumer decisions because they are primarily driven by in-depth analysis A decision support system is a. A computer program that helps a marketing manager find information that is needed b. A computer program that makes it easy for a marketing manager to get and use information in selecting between choices c. A computer program that models out your decisions d. A system for linking computers within a company

39)

Which product grouping(s) reflect(s) a product-market definition? i. Movie ticket and a CD ii. Xbox 360 and Playstation 3 iii. iPod and Google a. i only b. ii only c. iii only d. i and ii e. None of the above

40)

Which of the following was not mentioned in lecture as one of the 2008 top spenders in advertising? a. P&G b. Clorox c. AT&T d. GM e. Verizon

41)

Which of the following is not a step in the marketing research process? a. Define the problem b. Analyze the situation c. Gather benchmark data d. Interpret the data During which stage of the Product Life Cycle are positioning issues most important? a. Market introduction b. Market growth c. Market maturity d. Sales decline

42)

43)

You are Charlie and would like to target segment 4. What is most likely your best approach to achieve this?

a. Introduce a new product through R&D b. Decrease the perception of price and increase the perception of speed for Candy c. Remove Candy from the market and reintroduce it in two rounds d. Decrease the perception of speed and Increase the perception of price for Candy 44) Which of the following orderings suggests the amount of effort (from little to much) that consumers are willing to spend in searching for the "right" product? a. Heterogeneous shopping products, specialty products, unsought products b. Convenience products, homogeneous shopping products, specialty products c. Unsought products, homogeneous shopping products, convenience products d. Staples, heterogeneous shopping products, unsought products e. Homogeneous shopping products, heterogeneous shopping products, staples

45)

Which segmenting dimension did Prof. Niedermeier name as being one of the easiest and cheapest ways to find a homogenous market segment? a. Family life cycle b. Benefits sought c. Social class d. Zip code e. Family size

46)

Choose the answer that completes a true statement. Total Quality Management a. Is a visual aid that helps organize cause-and-effect relationship for things gone wrong b. Is concerned with serving customer needs by ensuring quality of all of the firms activities c. Is concerned with providing the best quality work environment for employees so they are constantly satisfied d. Is the idea that companies should strive for quality regardless of cost

47)

Branding can be powerful for consumers because it can fulfill a consumer's: a. Psychological need b. Utilitarian need c. Evoked need d. None of the above Franchise operations provide a good example of: a. Vertical integration b. Contractual vertical marketing systems c. Administered channels in which the retailers are the channel captains d. Direct-to-buyer channels e. None of the above If an advertisement has a 2.0 rating point and is shown 50 times to 30 percent of the households in the US, what is its GRP? a. 48 b. 100 c. 60 d. 150 e. 1,000

48)

49)

50)

Which of the following is not considered a basic need by marketers? a. Control b. Esteem c. Belonging d. Money

Short Answer Questions (70 pts total)

1. Name two ways that WalMart became a dominant retailer and briefly explain how these compare to other retail competition. (max 80 words, 4 pts) 2. What firm chose to use Snoopy as its spokesperson and why? (max 80 words, 4 pts)

3. Define public relations marketing and give an example: (max 80 words, 4 pts) 4. Based on the company and retail description below, indicate which store brand strategy each company is using. (5 pts) Company Walgreens Best Buy Description Puts Walgreens-brand acetaminophen right next to Tylenol Design and carry the Insignia brand of affordable, well-designed tech products. Line features a wide range of consumer electronics including TVs, Blu-ray players, etc. Puts products at the very end on the bottom shelf Offers an exclusive line of Sutton Studio cashmere sweaters for under $150 Places the more affordable B&N Classics line of 200 of the most enduring books right next to the table of summer reading or typically required books Store Brand Strategy a) b)

Aldi Grocery Stores Bloomingdales Barnes & Noble

c) d) e)

5. Which type of demand curve is shown below? Explain how this demand curve is different from normal demand curves. Why is this so? Provide an example of such a product. (max 120 words, 8 pts)

Price

Quantity

6. Genuardis, a local grocery store, is offering the below pricing strategy on its home delivery service. Please identify the strategy and explain the benefit of using such a strategy. (max 120 words, 6 pts)

7. Based on the product and product description below, indicate which stage of the product life cycle the product category is currently in. Product MP3 players Luxury cars VHS Description high industry profits, some competition High competition, stable sales, declining industry profit Declining industry profits, high competition from different product categories Low sales, high promotion Stable to declining industry profits, tough competition in category Stage of PLC a) b) c)

Green Mobile Phones Luxury totes (Louis Vuitton, Gucci, etc)

d) e)

Mobile WiFi

Very high promotion, low sales slowly increasing

f)

8. Sweet Ending, Phileo, & Sprinkle Yogurt are frozen yogurt stores in Center City, South Street, and on Penns Campus that are owned by a Wharton graduate.The stores have quickly become an obsession with health and weight conscious students and young professionals in Philadelphia inspiring lines out the door all hours of the day. Their yogurt is tangy and stiff, without the overbearing sweetness that screams artificial flavoring. The stores offer fruit toppings, cut fresh on-site, including: Strawberry, Blueberry, and Kiwi. There are also a variety of dry toppings to choose from, ranging from Reeses Pieces to Mars Candy Bars and Oreo cookies. The owner of these stores understands that people want food that is healthy and low-calorie and that they will pay more money for it than you might think. The frozen yogurt is made with real milk and is about 20 calories per ounce, and a medium cup with three toppings costs $4.95. A large (13 oz.) cup costs $9.95. The owner knows that aesthetics matter. The inside of all the stores is painted in modern hues of pink and green, and the furniture is trendy and youthful. The stores, however, are not spending a lot of effort on advertising but rely more on word-of-mouth to bring in consumers. The owner currently does not have any competitors in Philadelphia and is considering expanding his stores outside Philadelphia into New York and US top 10 metropolitan areas. A. At what stage in the product life cycle would you say this product category is in the Philadelphia market? Explain your reasoning. (max 75 words, 3 pts) B. Is the owner of these stores using a skim or penetration strategy and how can you tell? (max 75 words, 3 pts) C. Do you think this strategy will be successful in the long run? (max 75 words, 3pts)

9. Before deciding where to eat dinner near campus, Howie is interested in conducting an information search. Please describe the difference between an internal and external information search. (max 50 words, 4 pts) 10. How can marketing create a need for consumers? Please give an example of need creation. (max 75 words, 5 pts)

11. In 2007 Nike Inc. restructured its organization around six sports verticals: running, basketball, football, mens training, womens training and sportswear. a. What STP concept does this reorganization demonstrate? (max 50 words, 3 pts) b. What are the advantages of such a strategy for Nike? (max 100 words, 4 pts)

12. Imagine you are working in marketing strategy for American Express on the Premier Rewards Gold project and you are asked to create a SWOT analysis. List two items for each SWOT category. (max 120 words, 8 pts).

Marketing Math (30 pts total) You are the marketing manager of Cereal Shop, a startup company on campus that sells bowls of cereal and cups of coffee to University City patrons. In 2007, the company was having problems as profits were down and bankruptcy loomed. Your investor storms into your makeshift office one day and screams, We need to find a way to save this business! Your immediate reaction is to launch a new marketing campaign. But you know that investment mistakes are common when decisions are made too quickly. You decide to do some analyses to figure out whats the smartest allocation of time and resources. You are considering two different campaigns to increase profits. Before evaluating the plan, you think of your target customer and realize you have two types of customers who frequent your shop. The first type is a Light Customer. He or she comes once per week during the 8 months of the school year. When he or she visits the shop, he or she orders one bowl of Basic Cereal and one Small Coffee. Light Customers stop shopping after one school year. The second type is a Heavy Customer. He or she comes three times per week during the 8 months of the school year. When he or she visits, he or she usually orders one bowl of Deluxe Cereal (bananas, strawberries, etc.) and one Large Coffee. Heavy Customers stop shopping at the store after two years.

With this in mind, you think through your two plans. Plan A Direct Mailer. A pack of 100,000 mailings costs $60,000 (designing, creating, shipping, etc.). 50% of people open the mail. Of those, 20% of people will visit the store. Of the resulting people who open mail and visit the store, half are Light Customers and half are Heavy Customers. Plan B TV advertisement A TV advertisement costs $250,000 (production, air time, etc.). 50,000 people who live on campus will view the ad. Of those, 60% will visit the store. Of those who visit the store, 75% are Heavy Customers and 25% are Light Customers. To think through the benefits of these plans, you know you need to think through how much you earn from your customers. Large Cups of coffee cost $1.50, Small cups of coffee cost $1.00, and the profit margin on all cups of coffee is 90%. Deluxe Bowls of cereal cost $3.50 and Basic Cereal bowls cost $2.50. The profit margin on all Deluxe Bowls of cereal is 70%, and the profit margin on Basic Bowls of cereal is 80%.

Using this information, please answer the following questions.

a. What is the unit contribution per visit for the Light Customer? For the Heavy Customer? (4 pts)

b. What is the expected Customer Lifetime Value of the Light Customer? Of the Heavy Customer? Assume there are 4 weeks in every month. (6 pts)

c. How much profit will the Direct Mailer campaign generate? (6 pts)

d. How much profit will the TV Campaign generate? (6 pts)

e. Cereal Shop is considering selling an eco-friendly reusable cereal bowl to new Heavy customers when they first visit the store. If a Heavy Customer purchases the reusable bowl, Cereal Shop will offer the Heavy Customer a 6% discount on each bowl of cereal purchased. However this reusable bowl is quite expensive for Cereal Shop to buy. The bowls are produced by Bobbys Bowls. Bobbys Bowls incurs $2 in costs to produce each bowl. Bobbys Bowls then sells bowls to Cereal Shop at a price that gives Bobbys Bowls an 80% profit margin on each bowl. What would be the most Cereal Shop could charge its Heavy Customers and what would be the least? What do you recommend and why? (8 pts)

Essay Question (50 pts) 1. Read the following case on Zipcar, and discuss how you would respond if you were the VP of Marketing for ZipCar. Be sure to use the appropriate marketing frameworks youve learned in recitation case discussions to support your reasoning. You can write in bulletform. (max 500 words, 50 pts) Zipcar is a for-profit car-sharing company based in Cambridge, MA. Its mission is to make it as easy for urbanites to slip behind the wheel as it is to get a coffee to go. Cars, parked in locations throughout a city, are available to members thanks to Web and wireless technology. For urbanites, Zipcar is less expensive than owning, renting, or hiring a car service. There's no hassle of insurance, maintenance, or parking. You don't even pay for gas. Technology makes the usage much like actually owning a car -- no lines or paperwork. In addition to an annual membership fee, hourly usage rates range from $4.50 to $14.00 hour, dependent on car model and city, with a maximum daily cap. Members carry an encoded card that unlocks the reserved vehicle with a swipe. Usage data is tracked and wirelessly transmitted to Zipcar. Potential members apply online. Pending application approval (there's a background check of your driving record), some receive personal messages from the new New York staff, welcoming them into the family. Usage of terms such as "family" and "member" were deliberate choices. If shared cars are returned late or are dirty, the system won't work. Zipcar builds a feeling of community among members with personal messages from founder Robin Chase, an online bulletin board, and open-house events. Once approved, members can view availability of specific cars and reserve up to a year in advance. If the desired car is booked, the site tells you what's available elsewhere in the city. No explanatory detail is left unmentioned: Garage phone numbers, maps, and the vehicle's name (e.g. "Jetta Jessica") are supplied. The impression you get is that this company cares -- and it's doing all the work for you. Marketing VP Nancy Rosenzweig is building a combination of viral and guerilla marketing for the company that seems to be working. 40% of members are referred by friends, so there are incentives for referrals. "We try to be thrifty and sustainable," she says of the company's marketing philosophy. Zipcar concentrates less on marketing city to city than neighborhood by neighborhood. The member database allows Rosenzweig to know block by block where to target marketing efforts and where new cars should go. With a near-zero ad budget, Rosenzweig works on promotion and sponsorships with local media -- radio stations and city listings guides -- to target new customers. Members have pitched in beyond viral marketing. Zipcar worked with agencies to build its brand and services. So strong is the bond between company and consumer that Rosenzweig says many of the company's new hires have been members. Members vary in income but have a strong commonality: 95% are college educated. Rosenzweig says most are Gen Y-ers who want access to a hip car (the fleet is mostly Volkswagen Beetles

and Jettas) and older baby boomers who need an occasional (or second) car. A survey of Boston members found 11% sold a car upon joining and 44% deferred purchase of a car. PhillyCarShare is a local Philadelphia non-profit organization with a business model that is more or less identical to Zipcars. PhillyCarShare has enjoyed a monopoly over shared car services in Philadelphia since 2002 and, even though its prices are slightly higher than Zipcars, PhillyCar Share has achieved strong financial results over the past 7 years. Zipcar is eager to break into the growing Philadelphia market but realizes the challenges it faces as a new entrant. Imagine you are the VP of Marketing at Zipcar. What would you do about Philadelphia? Be sure to explicitly state whether or not you would choose to enter the market and support your argument with sound marketing analyses and reasoning.