Chapter 7: Establishing Objectives and Budgeting for the

Promotional Program

1. In terms of what is spent on advertising,:

a. it is simple to measure the direct impact of advertising
b. only one specific type of evaluation method should be used for each type of
advertising
c. advertising experts and marketing consultants both agree on the ability of advertising
to demonstrate a positive ROI
d. advertising experts and marketing consultants both agree on the fundamental ability
of advertising to create a quality image
e. none of the above is true

2. The purpose of setting specific advertising goals and objectives is to:

a. provide a standard against which performance can be measured
b. put constraints on the creative department
c. have a method of determining when to delete products from the product line
d. forecast the market share level that can be attained by good advertising
e. protect all investors and debt holders

3. To many marketing managers, the only goal of their company's advertising

and promotional program is to:
a. position the company and its brands
b. create a positive corporate image
c. generate sales
d. create memorable advertising
e. create awareness of the company

4. Which of the following is NOT given as a realistic reason for setting specific
objectives for an integrated marketing communications program?
a. Specific objectives serve as communication devices and facilitate coordination of
various groups working on the campaign.
b. Specific objectives serve as a guide for planning and decision making.
c. Specific objectives provide a benchmark against which success or failure of a
campaign can be measured.
d. Specific objectives help specify a method and criteria for assessing how well the
promotional program is working.
e. Specific objectives provide specific ideas on how to develop more creative
and effective advertising.

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5. The more specific the firm's advertising objectives, the:
a. easier it becomes to measure advertising effectiveness
b. more difficult it is for competitor's advertising to be effective
c. easier it is to measure the advertising-sales response function
d. smaller the funding needed to meet advertising goals
e. more difficult it is for a competitor to use competitive parity budgeting

6. Companies that develop integrated marketing communications (IMC)

programs that do not contain specific objectives:
a. will often have too many benchmark measures against which the success or failure
of their programs can be assessed
b. will never be successful
c. may find it difficult to facilitate coordination of the efforts of various groups
working on a promotional campaign since the various groups may not
understand what goal they are working toward
d. will be able to save money since they won't spend too much time worrying about
what they are trying to do
e. be more successful than companies that develop IMC programs with specific
objectives

7. Before setting objectives for advertising and promotion, an organization

should:
a. conduct a situation analysis to identify marketing and promotional issues
facing the firm
b. develop its media objectives
c. develop creative objectives
d. develop communication goals
e. create a creative mission statement

8. Arden's task is to determine what was accomplished by his company's

advertising and promotional program for a vinyl siding cleanser. You are able
to tell him that:
a. his task is impossible
b. all he needs is sales results to determine what the program accomplished
c. his task is easier if specific communications objectives were set
d. all he needs is post-promotional consumer awareness levels to determine what the
program accomplished
e. this is the easiest task his company has ever asked him to perform if the company
did not set specific objectives

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9. _____ objectives are types of objectives that are usually stated in terms of
specific, measurable outcomes such as sales volume, market share, or return
on investment.
a. Sales
b. Marketing
c. Communication
d. Advertising
e. Organizational

10. Which of the following statements best describes the relationship between
marketing and communications objectives?
a. Marketing objectives and communications objectives are synonymous.
b. Marketing objectives evolve from communication objectives.
c. Communications objectives are derived from marketing objectives.
d. For a successful campaign, communications objectives can be developed before or
after the development of marketing objectives.
e. There is no relationship between the two.

11. Ace computer has an objective of increasing its share of the home segment
of the personal computer market by 5 percent during the upcoming year. This
is an example of a(n) _____ objective.
a. marketing
b. organizational
c. advertising
d. functional
e. communication

12. Pace Foods had a goal of expanding its business beyond its traditional Texas
market base. This goal is an example of a _____ objective while the goal of
establishing a position of authenticity and making Mexican food seem fun is
an example of a(n) _____ objective:
a. communication; marketing
b. communication; positioning
c. marketing; communication
d. positioning; organizational
e. advertising; functional

13. According to the text, which of the following industries is launching a billion-
dollar IMC program in an economy in which many other companies are
slashing their advertising budgets?
a. video games
b. airline
c. real estate
d. landscaping

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e. furniture

14. The primary _____ for Microsoft Xbox is to transform the video game from a
niche market to as common an activity as watching television or going to the
movies.
a. direct sales objective
b. production objective
c. integrated marketing communications objective
d. relationship marketing objective
e. internal marketing goal

15. To develop integrated marketing communications objectives, managers need

the situation analysis to provide them with information on:
a. demographics and purchase motives of target markets
b. the main features, advantages and benefits of the product to be promoted
c. competitors' brands
d. how the brand should be positioned
e. all of the above

16. Many marketing managers approach promotion from a(n) _____ perspective
and believe the objective of advertising and other promotional mix elements
is to relay information about a product to customers.
a. informational
b. communications
c. sales-oriented
d. segmentation
e. product development

17. Many marketing managers prefer sales-oriented objectives for advertising

because they believe:
a. the reason a company spends money on advertising and promotion is to sell its
products or service
b. money spent on advertising and promotion should show measurable results
c. sales-oriented objectives help get everyone involved in the promotional program to
think about how advertising and promotion will influence sales
d. objectives should be based on the achievement of sales results
e. all of the above are true

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18. Financially oriented managers who view marketing communications as an
expense rather than an investment are likely to prefer _____ objectives for
advertising and other promotional areas.
a. sales-oriented
b. communication
c. positioning
d. image
e. functional

19. From 1986 to 1992, sales of luxury cars in the U.S. declined from 1.6 million
to 1.2 million while several new competitors entered this segment of the
market, such as Lexus, Acura and Infiniti. How should this decline in overall
sales have affected a company such as BMW that wanted to determine how
its advertising impacted its sales?
a. The decline should really have meant very little if the company had a very good
advertising campaign.
b. BMW would have found that it is difficult to measure the impact of its
advertising in terms of sales when the overall market was declining, and
competition was increasing.
c. BMW should have used sales as the primary method for determining advertising
effectiveness since it was important to generate sales under these conditions.
d. BMW would have needed a totally new advertising campaign since the overall
market was declining.
e. None of the above statements described how a decline in overall sales would have
affected a company such as BMW that wanted to determine how its advertising
impacted sales.

20. In addition to advertising and promotion, _____ might also influence a

company's sales.
a. product quality
b. price
c. economic factors
d. distribution
e. all of the above

21. The concept of advertising expenditures producing long term as well as

immediate results is known as:
a. the carry-over effect
b. the communication effect
c. the low-involvement effect
d. the halo effect
e. DAGMAR

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22. The carryover effect:
a. has no impact on sales objectives
b. has no effect on the relationship between advertising and sales
c. encourages the use of nonspecific objectives
d. is particularly apparent‫ واضح‬with mature‫ناضج‬, low-priced, and frequently
purchased products
e. is accurately described by all of the above

23. Which of following is a likely problem for a manager who uses sales as a
measure of advertising effectiveness?
a. Sales results offer little guidance or direction to those responsible for
planning and developing the advertising program.
b. There is a short, often unmeasurable, time period between when advertising is run
and when sales actually occur.
c. Sales results are affected by no marketing mix variable other than price and
promotion.
d. No internal environmental variables have any significant influence on sales results.
e. With the correctly selected promotion variables, no external environmental variables
have any significant influence on sales results.

24. Which of following is a likely problem for a manager who uses sales as a
measure of advertising effectiveness?
a. Sales results offer little guidance or direction to those responsible for planning and
developing the advertising program.
b. There is often a long period between when advertising is run and when sales
actually occur.
c. Other marketing mix variables besides advertising can affect sales results.
d. The marketing and competitive environment can influence sales.
e. All of the above are likely problems for a manager who uses sales as a
measure of advertising effectiveness.

25. The use of sales as an advertising objective can be difficult due to:
a. how difficult it is to isolate the effects of advertising on sales
b. the fact there is often a lagged effect whereby the effect of advertising on sales is
not immediate
c. the fact advertising objectives emphasizing sales are generally not good operational
guides to decision making
d. the fact they offer little guidance for those responsible for planning and developing
promotional programs
e. all of the above

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26. Heinz developed a sales promotion program called "All About Family." It
offered a coupon good for free Halloween candy when you purchased any of
five different participating Heinz brands. Cents-off coupons for the
participating brands were placed in newspaper inserts. The campaign also
featured a contest called the "Ultimate Family Night" sweepstakes. Heinz
management most likely used _____ objectives to measure the effectiveness
of this sales promotion.
a. communication persuasiveness
b. short-term sales
c. long-term sales
d. brand inquiry
e. information parameters

27. For which of the following would an advertiser be most likely to use a sales-
oriented objective?
a. a direct response ad for a record album
b. a commercial for a new type of electric-powered automobile
c. a political announcement
d. an anti-drug public service announcement
e. a commercial comparing MCI to AT&T

28. Direct-response advertisers generally set objectives and measure success in

terms of:
a. brand awareness
b. brand attitudes
c. purchase intentions
d. sales response generated by an ad
e. brand equity

29. Sales-oriented objectives are appropriate for:

a. all Internet marketing
b. retail ‫بيع بالتجزئه‬advertising promoting a sale or special event
c. products that have been introduced in a highly volatile market
d. any advertising campaign aimed at maintaining brand awareness
e. all of the above

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30. Which of the following statements regarding the relationship between
advertising and promotion and sales performance is true?
a. In mature markets where other marketing mix variables are stable, it is impossible to
determine the relationship between advertising and/or sales promotion and sales.
b. The repositioning of brands is often done with a goal of improving sales or
market share.
c. When sales expectations are not being met, experienced managers are not very
likely to consider changes in their advertising and sales promotion programs.
d. Marketing and brand managers are often under pressure to show sales results and
thus may take long-term perspective in evaluating advertising and promotion
programs.
e. All of the above statements regarding the relationship between advertising and
promotion and sales performance are true.

31. Various response hierarchy variables such as awareness, knowledge,

interest, attitudes, and intention are the basis for:
a. marketing objectives
b. sales-oriented objectives
c. image objectives
d. communications objectives
e. the carry-over effects

32. Advocates of communication-based objectives for advertising propose using

_____ as a basis for setting these objectives.
a. sales
b. market share
c. stages of a hierarchical response model
d. carry-over effects
e. market behavior

33. Which of the following is at the top of the communication effects pyramid‫?هرم‬
a. awareness
b. knowledge
c. liking
d. preference
e. purchase/repurchase

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34. Managers who use the communications effects pyramid‫ هرم‬to set objectives
believe:
a. lower-level objectives such as purchase and reuse form the foundation of the
communications program
b. the foundation of the communications program is set by accomplishing lower-
level objectives such as awareness, knowledge, and comprehension
c. advertising and promotion should first accomplish lower-level objectives such as trial
and purchase
d. advertising and promotion should first accomplish higher-order objectives such as
trial and purchase and then create awareness and brand knowledge
e. advertising and promotion cannot accomplish lower-order objectives

35. In January 2003, Philip-Morris Companies, Inc., and Kraft Foods became the
Altria Group. The name change reflected the fact the company has changed
itself structurally, behaviorally, and culturally. The new name was designed to
focus attention on the company's superior performance, financial strength,
and its commitment to integrity and corporate responsibility. Advertising to
make consumers aware of the name change would more than likely have
_____ objectives.
a. sales-oriented
b. market-oriented
c. product development
d. communications
e. product penetration

36. "Encouraging current drinkers of Coca-Cola to drink more of the beverage,"

would be an example of a(n) _____ objective.
a. sales-oriented
b. market-oriented
c. product development
d. communications
e. product penetration

37. Which of the following statements about communications objectives is true?

a. It is easy to translate sales goals into communications objectives.
b. It can be difficult to determine the relationship between communications
objectives and sales performance.
c. Communications objectives cannot serve as operational guidelines to the planning,
execution, and evaluation of the promotional program.
d. Marketing managers do not recognize the value of setting communications
objectives.
e. There are precise formulas to use when translating sales goals into specific
communications objectives.

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38. Which of the following statements about communications objectives is true?
a. When setting objectives using the communications effect pyramid, the last step
reached is trial.
b. Sales goal cannot be translated into communications objectives.
c. Marketing and advertising managers do not rely on experience and intuition when
setting communications goals.
d. Communications objectives are the criteria used in the DAGMAR approach to
setting advertising goals.
e. All of the above statements about communications objectives are true.

39. DAGMAR is:

a. a philosophy of advertising goal setting
b. a model of consumer behavior
c. a method of setting sales objectives
d. the most often used method of setting objectives
e. an attitude measurement device

40. _____ is an approach to setting advertising goals and objectives, which

states that communication effects are the logical basis for advertising goals
and objectives against which success or failure should be measured.
a. The carryover effect
b. The hierarchy of effects model
c. Zero based communications planning
d. Inside-out communications planning
e. DAGMAR

41. In January 2003, Philip-Morris Companies, Inc., and Kraft Foods became the
Altria Group. The name change reflected the fact the company has changed
itself structurally, behaviorally, and culturally. The new name was designed to
focus attention on the company's superior performance, financial strength,
and its commitment to integrity and corporate responsibility. To determine
how successful, it was in making consumers aware of its name change and
its new positioning strategy, the Altria Group could have used:
a. zero-based communications planning
b. a benchmark orientation
c. DAGMAR
d. the carryover effect
e. the recency effect

42. According to DAGMAR, the basic function of advertising is to:

a. create sales
b. communicate
c. increase market share
d. generate action
e. change behavior

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43. Under the DAGMAR model, a(n) _____ can be performed by, and attributed to,
advertising rather than a combination of marketing factors.
a. advertising hierarchical plan
b. functional communication change
c. communications task
d. marketing task
e. advertising benchmark

44. A manufacturer of stereo speakers developed a statement of advertising

objectives, which stated that the goal of the company's new ad campaign is
"To communicate our ability to create an environment of total audio
ambiance in the home." This statement could serve as an example of a:
a. target audience delineation
b. benchmark measure
c. communications task
d. sales objective
e. short-term promotional objective

45. According to the criteria outlined in DAGMAR, which of the following is the
best statement of a quantitative communications objective?
a. "Increase product users to 40 percent of the total market."
b. "Win new customers and increase sales volume by 15 percent."
c. "Increase the number of customers mentioning the brand name when asked
for brand preference from 40 percent to 50 percent."
d. "Increase awareness of the brand."
e. "Increase sales revenue by 10 percent."

46. Using the DAGMAR approach, which of the following is NOT a stage of
commercial communication?
a. awareness
b. comprehension
c. conviction
d. action
e. sales

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47. According to DAGMAR, advertising objectives should be written in
measurable terms that specify:
a. a communications task, a target market, a benchmark starting point, a time
period, and degree of change sought
b. a budget, a message strategy, a media plan, and the degree of carryover effect
desired
c. the reach, frequency, and point of wearout for advertising messages
d. the purchase motives, demographic composition, and buying habits of the target
market
e. sales potentials, market share, return on investment, and budget forecasts

48. Successful communications objectives must:

a. be concrete and measurable
b. specify a time period for accomplishing the objective
c. specify well-defined target market
d. have benchmark measures as starting points
e. be all of the above

49. According the DAGMAR model, which of the following is NOT a characteristic
of a good objective?
a. A good objective is concrete and measurable.
b. A good objective specifies the target audience.
c. A good objective includes benchmark positions and the degree of change sought.
d. A good objective specifies a time period for accomplishment.
e. A good objective is based on sales results.

50. According to the DAGMAR model, a good communications objective does

NOT:
a. target an aggregated market
b. specify a time period during which the objective must be accomplished
c. indicate a benchmark starting point
d. specify degree of change sought
e. specify a specific target audience

51. Determining a target market's present level of awareness, knowledge, and

liking toward a product often requires the taking of _____ measures.
a. benchmark
b. sales interval
c. qualitative awareness
d. quantitative awareness
e. reach and frequency

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52. Before beginning its new advertising campaign, Landmark Bank conducted a
study to determine consumers' level of awareness and knowledge of the
bank and its services as well as consumers' perceptions of the bank's image.
These are examples of:
a. advertising goals
b. communication tasks
c. benchmark measures
d. DAGMAR objectives
e. marketing research goals

53. Assume the Greyhound Bus Company runs a six-month advertising

campaign promoting its convenient bus routes and excellent on-time service
without conducting any sort of marketing research. At the end of the six-
month period, Greyhound conducts a study and finds 80 percent of its
frequent travelers agree the bus company has convenient bus routes and
excellent on-time service. Greyhound can conclude that:
a. the campaign was successful in changing perceptions regarding its fares
b. the campaign was successful in changing perceptions regarding its service
c. the campaign was not successful since it should have nearly 90 percent of riders
agreeing that it offers convenient bus routes and excellent on-time service
d. its advertising is working
e. without benchmark measures, it will never know if the campaign was a
success or a failure

54. For which of the following advertising communication tasks should the
specified time period required be the longest?
a. creating brand awareness
b. increasing brand awareness levels
c. creating knowledge regarding a brand attribute
d. increasing knowledge levels about a brand attribute
e. repositioning a brand

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55. In January 2003, Philip-Morris Companies, Inc., and Kraft Foods became the
Altria Group. The name change reflected the fact the company has changed
itself structurally, behaviorally, and culturally. The new name was designed to
focus attention on the company's superior performance, financial strength,
and its commitment to integrity and corporate responsibility. Which of the
following statements about the communications objectives the company
would have used as part of this repositioning strategy is true?
a. The communications objectives established with this strategy would need to be
abstract.
b. It would be impossible for the company to have any benchmark measures for
determining whether it reached its communications objectives.
c. A communications objective concerning the repositioning of the Altria Group
would take longer to accomplish than an objective designed to create brand
awareness.
d. The target audience could not be specifically defined in the communications
objective.
e. Quantitative benchmarks would be impossible due to the fact the Altria Group
markets new products.

56. The DAGMAR approach to setting objectives:

a. has had little effect on the advertising planning process
b. has focused advertisers' attention on the value of using communications
objectives rather than sales objectives
c. has never been criticized because it focuses on the hierarchy of effects model
d. has increased the degree of subjectivity used in the selection of objectives toward
which planners' efforts should be directed
e. has been successful because it is easy to implement

57. DAGMAR MOD II was developed to alleviate problems with:

a. the response hierarchy used in the original DAGMAR model
b. the costs of using DAGMAR
c. the fact DAGMAR ignores sales results
d. setting benchmark measures
e. creating measurable communications objectives

58. Which of the following is NOT an example of a common criticism of

DAGMAR?
a. It ignores communications objectives.
b. It is difficult to implement.
c. It is a costly and time-consuming process.
d. It runs counter to the belief that the function of advertising is to create sales.
e. It inhibits creativity.

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59. You are working in the advertising department of a large consumer products
company. You have suggested the company use the DAGMAR approach to
setting advertising goals. Which of the following is NOT an example of an
argument that you are likely to hear against the use of the DAGMAR
approach to set advertising goals?
a. Sales should be the measure of advertising effectiveness rather than communication
goals.
b. DAGMAR inhibits creativity in advertising.
c. DAGMAR can be quite expensive due to research costs and is thus good only for
large companies.
d. DAGMAR is too quantitative for most managers to understand.
e. It is difficult to show the relationship between the communications objectives
advocated by DAGMAR and sales.

60. Why might a small company with limited resources NOT want to use the
DAGMAR approach to setting objectives?
a. DAGMAR does not support the use of communications objectives.
b. DAGMAR requires managers to use more subjectivity in setting objectives than
other methods.
c. Small companies are unlikely to want to spend money on marketing research
to develop benchmark measures and track advertising effects.
d. Small companies often cannot identify their real target audience.
e. All of the above are reasons why a small company with limited resources may not
want to use the DAGMAR approach to setting objectives.

61. Midwest Express airlines set the following objective for its new advertising
campaign: "To increase the percentage of consumers who know our fares are
lower than the competitors' from 55 percent to 75 percent over the next six
months." Using the criteria associated DAGMAR approach to setting
objective, what is wrong with this objective?
a. It is not a concrete statement of what message the airline wants to communicate.
b. It does not contain a benchmark measure and statement of the degree of change
sought.
c. It does not specify a specific time period for accomplishing the objective.
d. It does not specify a well-defined target audience.
e. Nothing is wrong with this objective; it satisfies all of the criteria specified in the
DAGMAR model.

62. Advertising creative people might oppose the DAGMAR approach to setting
objectives because it:
a. inhibits their creativity by putting too much emphasis on numbers and the
quantitative assessment of an advertising campaign
b. requires that speculative presentations be created and used to set benchmark
measures
c. is only successful if it produces the desired sales results
d. does not provide any type of communication guidelines
e. is too concerned with qualitative assessments of the finished campaign

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63. Many companies fail to set appropriate integrated marketing communications
objectives because:
a. they cannot determine which benchmark measures to use
b. subjectivity is as important as creativity in a successful advertising campaign
c. top management has only an abstract idea of what the firm's IMC program is
supposed to do
d. they want to target several different target markets
e. corporate culture supports abstract objectives and not the concrete type needed for
a successful IMC program

64. Inside-out planning:

a. focuses on what the marketer wants to say, when the marketer wants to say it,
things the marketer believes are important to his brand, and the media form
the marketer wants to use
b. is another term for zero-based communications planning
c. starts with the customer and builds backward to the brand when developing an IMC
program
d. is a method of implementing DAGMAR objectives
e. is used to forecast the validity of DAGMAR objectives

65. Outside-in planning:

a. focuses on what the marketer wants to say, when the marketer wants to say it,
things the marketer believes are important to his brand, and the media form the
marketer wants to use
b. is another term for zero-based communications planning
c. starts with the customer and builds backward to the brand when developing
an IMC program
d. is a method of implementing DAGMAR objectives
e. is used to forecast the validity of DAGMAR objectives

66. _____ is an approach to integrated marketing communications planning that

involves determining what tasks need to be done and which marketing
communications planning functions should be used to accomplish them.
a. The objective/task pyramid
b. DAGMAR
c. Inside out planning
d. Zero-based communications planning
e. Refutational planning

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67. According to Duncan's zero-based marketing communications planning
approach,:
a. advertising should always be the main tool for accomplishing marketing
communications objectives
b. sales promotion is usually the best tool for accomplishing marketing communications
objectives
c. big ideas for a promotional campaign can be based on public relations,
advertising, sales promotion, or media advertising
d. integrated marketing communications programs should lead with the promotional
function that least effectively addresses a company's communication problem or
opportunity
e. managers should focus on what the customer wants and work backward to the
brand

68. To more fully appreciate the value of advertising and promotion, managers
should treat the communications budget as a(n):
a. asset
b. expense
c. liability
d. investment
e. fixed cost

69. _____ is the difference between total revenue generated by a brand and its
total variable costs.
a. Contribution margin
b. Aggregated cost
c. Promotional result
d. Net worth
e. Return on investment

70. According to Robert Steiner, which of the following terms is essentially

synonymous with contribution margin?
a. total revenue generated by a product
b. net worth
c. financial optimization
d. marginal analysis
e. total profit generated by a product

71. In marginal analysis all of the following should be considered EXCEPT:

a. sales
b. fixed costs of advertising
c. advertising expenditures and other variable costs
d. gross margin
e. net worth

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72. Which of the following statements describes a weakness inherent in the use
of the marginal analysis model for establishing an advertising budget?
a. Using this model, it is difficult to demonstrate the effects of advertising and
promotions on sales.
b. Environmental factors not considered by the model may affect the effectiveness of
the promotional program.
c. Product quality, pricing, and distribution may also contribute to sales.
d. Awareness, interest, and attitude change are also goals of the promotional effort.
e. All of the above describe a weakness inherent in the use of the marginal
analysis model for establishing an advertising budget.

73. The _____ function model is based on the microeconomics law of

diminishing returns.
a. concave-upward
b. S-shaped demand
c. S-shaped response
d. marginal utility
e. concave-downward

74. The concave-downward function model is based on:

a. the microeconomics law of diminishing returns
b. the economic law of supply and demand
c. price elasticity of demand quotients
d. the change in contribution margins as item price is changed
e. perceptual mapping results

75. The S-shaped response function implies that:

a. initial advertising expenditures will have little impact on sales
b. advertising expenditures will have major impact on sales
c. sales effects will follow the microeconomic law of diminishing returns
d. sales will immediately increase then decrease
e. sales will immediately decrease then increase

76. The two models that are commonly used to explain the relationship between
advertising and sales are the:
a. concave-downward function and the S-shaped response function
b. S-shaped response function and the concave-upward function
c. marginal utility function and the S-shaped demand function
d. S-shaped demand function and the convex-downward function
e. concave-upward function and the S-shaped demand function

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77. Well known brand name products do not receive incremental advantages
from increased dollar expenditures on advertising. Once the ad hits the
market, subsequent budget increases result in little or no incremental gains.
This might best be explained by:
a. arbitrary allocation
b. the objective and task method
c. competitive parity
d. an S-shaped response
e. rapidly diminishing returns

78. According to the concave-downward model,:

a. the effects of advertising quickly begin to diminish
b. the carryover effect is especially true for low-priced, frequently purchased consumer
products
c. sales decrease rapidly if the price is too high
d. initial outlays of the advertising budget have little impact on sales
e. sales are not directly related to the size of the advertising budget

79. According to the S-shaped response curve,:

a. the effects of advertising quickly begin to diminish
b. the carryover effect is especially true for low-priced, frequently purchased consumer
products
c. sales decrease rapidly if the price is too high
d. initial outlays of the advertising budget have little impact on sales
e. sales are not directly related to the size of the advertising budget

80. A marketing firm decides to purchase media time in an attempt to sell its new
product. After purchasing approximately $1 million dollars of time, it has
noticed no impact on the sales of the product. However, at $3 million, a
substantial increase is shown. This might best be explained by:
a. arbitrary allocation
b. the objective and task method
c. competitive parity
d. an S-shaped response
e. rapidly diminishing returns

81. The S-shaped response curve suggests:

a. advertising effectiveness will not be related to spending
b. very low spending levels will not work
c. advertising effectiveness will vary directly according to spending levels
d. the carryover effect is especially true for low-priced, frequently purchased consumer
products
e. sales and spending on advertising are not directly related

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82. Which of the following is a factor that influences the setting of the
advertising budget?
a. what stage of its life cycle the product is in
b. whether competition is active or concentrated
c. whether the marketer is a pioneer in the market
d. the cost of the product
e. all of the above

83. Which of the following is a factor that influences the setting of the
advertising budget?
a. whether the company uses communications or sales objectives
b. corporate structure
c. the basis for product differentiation
d. the extent of selective retention
e. all of the above

84. When higher-level executives determine the budget amounts to be allocated

for each department's advertising expenditures, a _____ approach is being
used:
a. bottom-up
b. marginal contribution
c. top-down
d. Delphi
e. contribution forecast

85. All of the following are considered top-down approaches to determining

budgets EXCEPT:
a. the objective and task method
b. the affordable method
c. the percentage of sales method
d. arbitrary allocation
e. the competitive parity method

86. Which of the following is NOT a top-down approach to budget setting?

a. the affordable method
b. percentage of sales
c. competitive parity
d. return on investment
e. payout planning

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87. The _____ method of budgeting is being employed when expenditures are
allocated by an analysis of expenditures for all aspects of producing and
marketing the product. The ad budget is determined by making sure a certain
amount is not exceeded.
a. arbitrary allocation
b. percentage of sales
c. affordable
d. return on investment
e. competitive parity

88. You know the _____ method of budgeting is being employed after hearing an
experienced marketing department manager respond to a new employee's
question, "How was the ad budget established last year?" by saying, "The
same way it's always been done. I just have an instinct for how much should
be budgeted where."
a. arbitrary allocation
b. percentage of sales
c. ROI
d. return on investment
e. competitive parity

89. Which top-down budgeting method is being employed when expenditures are
allocated by assigning a budget based on gut feelings?
a. arbitrary allocation
b. percentage of sales
c. affordable method
d. payout planning
e. competitive parity

90. The most commonly utilized method of budget determination by large firms
is:
a. competitive parity
b. objective and task
c. percentage of sales
d. arbitrary allocation
e. the affordable method

91. The _____ method of budgeting is being employed when expenditures are
allocated by assigning a part of the cost of the product to be allocated to
advertising. The total budget is based on units sold.
a. arbitrary allocation
b. percentage of sales
c. objective and task
d. return on investment

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e. competitive parity

92. To set an advertising budget, the marketer of filing cabinets examines

advertising to sales ratios published in trade magazines, and then allocates a
percentage of sales dollars to the advertising effort. Which two budgeting
methods are being employed?
a. competitive parity and percent of sales
b. competitive parity and payout planning
c. payout planning and percent of sales
d. percent of sales and objective and task
e. payout planning and arbitrary allocation

93. Which of the following budgeting procedures would be used if a firm wanted
a method that is simple to understand and financially safe?
a. competitive parity
b. marginal analysis
c. percentage of sales
d. objective and task
e. arbitrary method

94. The _____ method of budgeting uses advertising/sales ratio data.

a. objective and task
b. affordable
c. percent of sales
d. ROI
e. arbitrary allocation

95. The major problem associated with the _____ budgeting method is a reversal
of the cause and effect relationship.
a. percent of sales
b. objective and task method
c. competitive parity
d. S-shaped response
e. rapidly diminishing returns

96. The _____ budgetary allocation method is designed to promote stability and
minimize marketing warfare as well as taking advantage of the collective
wisdom ‫حكمة‬of the industry.
a. ROI
b. arbitrary allocation
c. percentage of sales
d. competitive parity
e. objective and task

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97. When using the competitive parity budgeting method, the firm:
a. matches its share of total industry advertising expenditures to its market
share
b. spends as much as it can
c. allocates some portion of planned sales for the period to advertising
d. spends the same total amount as its major competitors spend
e. bases its advertising and promotion expenditures on sales

98. For which of the following methods of determining budget would a marketing
department manager be most likely to use input from a clipping service?
a. ROI
b. arbitrary allocation
c. percentage of sales
d. competitive parity
e. objective and task

99. The _____ method of budgeting is being employed when expenditures are
allocated according information about industry averages for advertising. The
budget is set to maintain a level consistent with industry spending.
a. arbitrary allocation
b. percentage of sales
c. objective and task
d. return on investment
e. competitive parity

100. A disadvantage associated with the _____ method is its assumption that
because firms have similar promotional expenditures their programs will be
equally effective.
a. return on investment
b. affordable
c. competitive parity
d. objective and task
e. payout planning

101. According to the text, Monster.com uses _____ objectives.

a. communications
b. ROI
c. sales
d. product penetration
e. diversification

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102. Which of the following statements about how companies modify their
advertising in response to slumps in the economy is true?
a. Companies that perceive advertising to be an investment decrease the amount of
advertising they do.
b. Companies that perceive advertising to be an expense increase the amount of
advertising they do.
c. Companies need to realize increased advertising dollars translates into
increased market share.
d. Service providers like Monster.com must necessarily decrease their advertising
budgets.
e. All of the above statements about how companies modify their advertising in
response to slumps in the economy are true.

103. The _____ method of budgeting is being employed when expenditures are
allocated by looking at the revenue generated from sales of the product
during one year. The information gathered from this examination is used to
determine the next year's dollar amounts.
a. arbitrary allocation
b. ROI
c. payout planning
d. return on investment
e. competitive parity

104. In the _____ method of budget determination advertising considered an

investment, similar to plant and equipment.
a. payout planning
b. objective and task
c. ROI budgeting
d. competitive parity
e. percentage of sales

105. Top-down budgeting methods are commonly used because of:

a. their effectiveness
b. upper management's desire for control
c. the growing availability of computer simulations
d. the ease with which a manager can assess the impact of sales on ROI
e. their quantitative nature

106. The task and objective method of budgeting as well as the payout plan are
both examples of the _____ approach.
a. trading up
b. top-down
c. bottom-up

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d. build-up
e. trickle up
107. Defining the communications objectives to be accomplished and estimating
the costs associated with the performance of the necessary strategies and
activities are steps in the _____ method of budgeting.
a. competitive parity
b. payout planning
c. ROI
d. return on investment
e. objective and task

108. Which of the following is an example of a budgeting allocation method that

uses a build-up approach?
a. ROI
b. competitive parity
c. objective and task
d. arbitrary allocation
e. percentage of sales

109. All of the following are components of the objective and task method
EXCEPT:
a. a re-evaluation of objectives
b. determination of competitor's expenditures
c. isolation of objectives
d. estimation of required expenditures
e. monitoring

110. The first task in the objective and task method of budgeting is to:
a. conduct a system analysis
b. create an organizational budget
c. isolate advertising objectives
d. determine what tasks need to be accomplished
e. reevaluate objectives from previous years

111. Which of the following statements provides a good rule of thumb for setting
the advertising budget for a new product?
a. Its advertising budget should be double that needed to maintain the desired
market share.
b. Its advertising budget should be equal to that of the largest market shareholder in
the product category.
c. Its advertising budget should be as much as the firm can afford.
d. Its advertising budget should be ten percent greater than the average budget
planned for the entire payout period.
e. None of the above is a good rule of thumb for setting advertising budgets.

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112. The objective and task method is most difficult to use when:
a. the product to be promoted is intangible and in the maturity stage of its product life
cycle
b. the product to be promoted is in the decline stage of its product life cycle
c. the product to be promoted is a cash cow
d. the product to be promoted is new to the market
e. a service is being promoted

113. _____ is a method for allocating budgets designed to determine the

investment value of the advertising appropriation.
a. Payout planning
b. Percent of sales method
c. Competitive parity
d. Arbitrary allocation
e. Objective and task

114. During situation analyses, a useful budgeting technique to determine a

ballpark figure for setting feasible objectives is the _____ method.
a. payout planning
b. percent of sales
c. competitive parity
d. 401k
e. marginal analysis

115. When used in conjunction with the objective and task method, _____ is the
most useful method for establishing an advertising budge.
a. competitive parity
b. payout planning
c. the affordable method
d. concave analysis
e. qualitative distribution

116. As a tool for budget allocation, multiple regression analysis is most often
employed in budget models using:
a. computer simulation
b. competitive parity
c. arbitrary allocation
d. percentage of sales
e. a top-down approach

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117. The most commonly employed quantitative models for allocating
advertising budgets are:
a. computer simulation and regression analysis
b. competitive parity and arbitrary allocation
c. regression analysis and ROI
d. ROI and competitive parity
e. arbitrary allocation and objective and task

118. Which of the following is NOT a factor that typically influences the budget
allocation decision?
a. client/agency policies
b. market size
c. market potential
d. the ad agency's organizational structure
e. economies of scale in advertising

119. A company in the process of allocating its budget would use syndicated
services like A. C. Nielsen and Dun & Bradstreet to estimate:
a. market share goals
b. market potential
c. consumer trends
d. achievable economies of scale
e. all of the above

120. As a result of _____, large advertisers can maintain advertising expenditure

shares that are smaller than their market shares because they get lower
advertising rates and accrue the advantages of advertising several products
jointly.
a. economies of scale
b. differential advertising advantages
c. competitive parity
d. a concave-downward response
e. multiple advertising channels

121. As a result of economies of scale, large advertisers:

a. are likely to enjoy more favorable advertising time and space than smaller
advertisers
b. get lower advertising rates than smaller advertisers
c. accrue the advantages of advertising several products jointly
d. have declining average costs of production
e. benefit from all of the above

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122. As a result of economies of scale, smaller advertisers:
a. are likely to enjoy more favorable advertising time and space than large advertisers
b. have declining average costs of production
c. get higher advertising rates than large advertisers
d. can maintain advertising expenditure shares that are smaller than their market
shares
e. benefit from all of the above

123. Which of the following is an organizational characteristic that can have a

direct effect on the budget allocation process?
a. approval and negotiation channels
b. pressure from senior managers to arrive at the optimal budget
c. power and politics in the organizational hierarchy
d. whether the organization is centralized or decentralized
e. all of the above

124. Which of the following is NOT an organizational characteristic that often has
a direct effect on the budget allocation process?
a. the preferences and experiences of the decision maker
b. the degree of formalization
c. the ratio of staff to line personnel
d. the willingness to employ outside consultants
e. pressure from senior managers to arrive at the optimal budget

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