Chapter 5

Student: ___________________________________________________________________________

1. In a _____ approach, a central person or persons take the responsibility for forecasting and
prepare an overall sales forecast.

A. top-down
B. linear

C. nonlinear
D. bottom-up

2. Which of the following approaches is used to prepare a sales forecast in decentralized firms?

A. A top-down approach
B. A linear approach

C. A non-linear approach
D. A bottom-up approach

3. Which of the following is true of a statistical forecasting method?

A. It directly observes what real consumers do in the product-market.

B. It is a good technique to forecast sales for new products.

C. It generally assumes that the future will look very much like the past.
D. It surveys suppliers and consumers to estimate market potential.
4. RobustTires is an established tire manufacturer in Topeka. Every major brand of car uses its
tires. It plans to open a branch in Buffalo City for which it intends to use time series analysis to
forecast sales and the market potential. Which of the following methods is exemplified by
RobustTires?

A. Analogy method

B. Statistical method
C. Observation method

D. Survey method

5. Which of the following is true of surveys?

A. A survey of buyer's intention helps in forecasting sales of a prototype.

B. A survey of salesforce opinion is conducted for buyers to forecast sales.

C. A survey method is superior to a statistical or observational method.

D. A survey has the limitation that whoever is surveyed is knowledgeable.

6. HoneyDew, a well-known confectionery, plans to introduce a walnut fudge candy. It asks some of
its regular customers to sample the candy and offer their opinions. This way the management
hopes to estimate the likely number of buyers for the product, if introduced in its store. Which of
the following techniques did HoneyDew use to forecast sales?

A. Observation
B. Statistical technique

C. Survey
D. Analogy
7. Which of the following methods is best suited to forecast sales of new products?

A. Statistical method

B. Survey
C. Observation

D. Analogy

8. When major television manufacturers introduced high-definition televisions, they had to account
for characteristics like picture quality, the levels of which were unprecedented. They used data
collected from the introduction of color television when only black and white television was
prevalent. Which of the following methods of forecasting was used here?

A. Survey

B. Analogy
C. Observation

D. Judgment

9. Which of the following is true of an analogy forecasting method?

A. It is a useful approach for entrepreneurs to forecast sales of a new business.

B. It is best suited to forecast sales of established products than that of new products.
C. It is purely based on observations on what people actually do.

D. It conducts surveys to estimate market potential or forecast sales.

10. Which of the following is true of a live test market?

A. It does not protect a firm from competitors who use marketing tactics that mislead the company
conducting the tests.
B. It is the cheapest method to forecast sales.

C. It is more prevalent than experimental test markets.

D. It does not let a firm's competitors to buy the checkout scanner data without bearing test
marketing expenses.

11. _____ is an example of a mathematically-driven approach to forecast sales.

A. Observation
B. Conjoint analysis

C. Judgment
D. Focus group

12. Which of the following statements is true of an adoption process?

A. Social media hardly influences the speed of the adoption process.

B. Legitimacy of the new product is irrelevant to the adoption process.
C. The speed of the adoption process depends on the relative simplicity of a new product.
D. The adoption process always resembles an inverted V-curve when plotted on a cumulative
basis.
13. Which of the following adopters forms the smallest group in the diffusion of innovation curve?

A. Innovators

B. Laggards
C. Early adopters

D. Late majority

14. Which of the following characteristics is true of adopter groups?

A. Innovators are not receptive to new ideas and tend to adopt a product late.

B. Laggards are more venturesome than later adopters.

C. Late majority adopt a new product for either economic or social reasons.

D. Early adopters want to be sure that a new product will prove successful before adoption.

15. Which of the following statements is true of forecasting?

A. Forecasts are not immune to anchoring biases.

B. Capacity constraints can never be misinterpreted as forecasts.

C. A good forecasting technique encourages implicit assumptions.

D. The technique of sandbagging aids in effective forecasting.

16. BizWear Inc. is a retail chain specializing in business wear for women. A detailed report on the
fastest-selling and the slowest-moving items of the previous week is prepared by every BizWear
outlet. It includes sales information about garments sold in terms of style, color, store, location
and region, and various time periods. This helps BizWear to keep pace with daily developments.
Which of the following market knowledge systems is employed by the retail chain?

A. Marketing databases

B. Competitive intelligence systems

C. Internal records systems

D. Client contact systems

17. Which of the following ways of collecting information best illustrates a marketing database?

A. "Cookies" or electronic signatures placed at a customer's personal computer

B. Detailed sales and inventory about the fastest-selling items in a particular store
C. Companies' annual and financial reports and government documents

D. Customer information captured from salespersons

18. A(n) _____ refers to the margins that a buyer generates over a lifetime less the cost of serving the
customer.

A. product lifetime value

B. inventory index

C. customer lifetime value

D. chain ratio
19. Which of the following is true of competitive intelligence systems?

A. It is an outlawed approach of analyzing information about competitors' activities.

B. It involves analyzing the inventory and detailed sales reports of stores.

C. It uses online databases and government documents as its source of information.

D. It allows the effective capture of customer intelligence from salespeople.

20. The design, collection, analysis, and reporting of study intended to gather data pertinent to a
particular marketing challenge or situation is referred to as _____.

A. benchmarking
B. marketing research

C. marketing myopia
D. marketing mix

21. What is the first step in the marketing research process?

A. Reporting results to the decision maker

B. Identifying managerial problem and establishing research objectives

C. Collecting and analyzing data

D. Determining data sources, types of data, and research approaches required
22. Discuss the limitations of statistical methods, observations, and surveys.

23. Briefly explain the adoption process and the rate of adoption.

24. What are the major issues to be considered while designing marketing databases?
 Chapter 5 Key

1. In a _____ approach, a central person or persons take the responsibility for forecasting and
(p. 117)
prepare an overall sales forecast.

A. top-down

B. linear
C. nonlinear

D. bottom-up

Level of Difficulty: 1 Easy

Walker - Chapter 05 #1

2. Which of the following approaches is used to prepare a sales forecast in decentralized firms?
(p. 117)

A. A top-down approach
B. A linear approach

C. A non-linear approach
D. A bottom-up approach

Level of Difficulty: 1 Easy

Walker - Chapter 05 #2
3. Which of the following is true of a statistical forecasting method?
(p. 118)

A. It directly observes what real consumers do in the product-market.

B. It is a good technique to forecast sales for new products.

C. It generally assumes that the future will look very much like the past.
D. It surveys suppliers and consumers to estimate market potential.

Level of Difficulty: 2 Medium

Walker - Chapter 05 #3

4. RobustTires is an established tire manufacturer in Topeka. Every major brand of car uses its
(p. 118)
tires. It plans to open a branch in Buffalo City for which it intends to use time series analysis to
forecast sales and the market potential. Which of the following methods is exemplified by
RobustTires?

A. Analogy method

B. Statistical method
C. Observation method

D. Survey method

Level of Difficulty: 2 Medium

Walker - Chapter 05 #4

5. Which of the following is true of surveys?

(p. 119)

A. A survey of buyer's intention helps in forecasting sales of a prototype.

B. A survey of salesforce opinion is conducted for buyers to forecast sales.

C. A survey method is superior to a statistical or observational method.

D. A survey has the limitation that whoever is surveyed is knowledgeable.

Level of Difficulty: 2 Medium

Walker - Chapter 05 #5
6. HoneyDew, a well-known confectionery, plans to introduce a walnut fudge candy. It asks some
(p. 119)
of its regular customers to sample the candy and offer their opinions. This way the
management hopes to estimate the likely number of buyers for the product, if introduced in its
store. Which of the following techniques did HoneyDew use to forecast sales?

A. Observation

B. Statistical technique
C. Survey

D. Analogy

Level of Difficulty: 2 Medium

Walker - Chapter 05 #6

7. Which of the following methods is best suited to forecast sales of new products?
(p. 120)

A. Statistical method

B. Survey
C. Observation

D. Analogy

Level of Difficulty: 1 Easy

Walker - Chapter 05 #7
8. When major television manufacturers introduced high-definition televisions, they had to
(p. 120)
account for characteristics like picture quality, the levels of which were unprecedented. They
used data collected from the introduction of color television when only black and white
television was prevalent. Which of the following methods of forecasting was used here?

A. Survey

B. Analogy
C. Observation

D. Judgment

Level of Difficulty: 2 Medium

Walker - Chapter 05 #8

9. Which of the following is true of an analogy forecasting method?

(p. 120-
121)

A. It is a useful approach for entrepreneurs to forecast sales of a new business.

B. It is best suited to forecast sales of established products than that of new products.
C. It is purely based on observations on what people actually do.

D. It conducts surveys to estimate market potential or forecast sales.

Level of Difficulty: 2 Medium

Walker - Chapter 05 #9
10. Which of the following is true of a live test market?
(p. 121)

A. It does not protect a firm from competitors who use marketing tactics that mislead the
company conducting the tests.
B. It is the cheapest method to forecast sales.

C. It is more prevalent than experimental test markets.

D. It does not let a firm's competitors to buy the checkout scanner data without bearing test
marketing expenses.

Level of Difficulty: 3 Hard

Walker - Chapter 05 #10

11. _____ is an example of a mathematically-driven approach to forecast sales.

(p. 122)

A. Observation
B. Conjoint analysis

C. Judgment
D. Focus group

Level of Difficulty: 1 Easy

Walker - Chapter 05 #11

12. Which of the following statements is true of an adoption process?

(p. 123-
124)

A. Social media hardly influences the speed of the adoption process.

B. Legitimacy of the new product is irrelevant to the adoption process.

C. The speed of the adoption process depends on the relative simplicity of a new product.
D. The adoption process always resembles an inverted V-curve when plotted on a cumulative
basis.

Level of Difficulty: 2 Medium

Walker - Chapter 05 #12
13. Which of the following adopters forms the smallest group in the diffusion of innovation curve?
(p. 124-
125)

A. Innovators
B. Laggards

C. Early adopters
D. Late majority

Level of Difficulty: 1 Easy

Walker - Chapter 05 #13

14. Which of the following characteristics is true of adopter groups?

(p. 125)

A. Innovators are not receptive to new ideas and tend to adopt a product late.

B. Laggards are more venturesome than later adopters.

C. Late majority adopt a new product for either economic or social reasons.

D. Early adopters want to be sure that a new product will prove successful before adoption.

Level of Difficulty: 2 Medium

Walker - Chapter 05 #14

15. Which of the following statements is true of forecasting?

(p. 126-
127)

A. Forecasts are not immune to anchoring biases.

B. Capacity constraints can never be misinterpreted as forecasts.

C. A good forecasting technique encourages implicit assumptions.

D. The technique of sandbagging aids in effective forecasting.

Level of Difficulty: 2 Medium

Walker - Chapter 05 #15
16. BizWear Inc. is a retail chain specializing in business wear for women. A detailed report on the
(p. 130)
fastest-selling and the slowest-moving items of the previous week is prepared by every
BizWear outlet. It includes sales information about garments sold in terms of style, color, store,
location and region, and various time periods. This helps BizWear to keep pace with daily
developments. Which of the following market knowledge systems is employed by the retail
chain?

A. Marketing databases
B. Competitive intelligence systems

C. Internal records systems

D. Client contact systems

Level of Difficulty: 3 Hard

Walker - Chapter 05 #16

17. Which of the following ways of collecting information best illustrates a marketing database?
(p. 132)

A. "Cookies" or electronic signatures placed at a customer's personal computer

B. Detailed sales and inventory about the fastest-selling items in a particular store

C. Companies' annual and financial reports and government documents

D. Customer information captured from salespersons

Level of Difficulty: 2 Medium

Walker - Chapter 05 #17
18. A(n) _____ refers to the margins that a buyer generates over a lifetime less the cost of serving
(p. 134)
the customer.

A. product lifetime value

B. inventory index

C. customer lifetime value

D. chain ratio

Level of Difficulty: 1 Easy

Walker - Chapter 05 #18

19. Which of the following is true of competitive intelligence systems?

(p. 135)

A. It is an outlawed approach of analyzing information about competitors' activities.

B. It involves analyzing the inventory and detailed sales reports of stores.

C. It uses online databases and government documents as its source of information.

D. It allows the effective capture of customer intelligence from salespeople.

Level of Difficulty: 2 Medium

Walker - Chapter 05 #19

20. The design, collection, analysis, and reporting of study intended to gather data pertinent to a
(p. 135)
particular marketing challenge or situation is referred to as _____.

A. benchmarking
B. marketing research

C. marketing myopia
D. marketing mix

Level of Difficulty: 1 Easy

Walker - Chapter 05 #20
21. What is the first step in the marketing research process?
(p. 136)

A. Reporting results to the decision maker

B. Identifying managerial problem and establishing research objectives

C. Collecting and analyzing data

D. Determining data sources, types of data, and research approaches required

Level of Difficulty: 2 Medium

Walker - Chapter 05 #21

22. Discuss the limitations of statistical methods, observations, and surveys.

(p. 118-
120)

The most important limitation of statistical methods is that they generally assume that the
future will look very much like the past. Sometimes this is not the case. If product or market
characteristics change, statistical models used without adequate judgment may not keep
pace.
For new-to-the-world products, however, observation is typically not possible, and secondary
data are not available, since the product often does not yet exist, except in concept form.
Surveys and focus groups possess important limitations, however. For one, what people say is
not always what people do. Consumer surveys of buyer intention are always heavily
discounted to allow for this fact. Second, the persons who are surveyed may not be
knowledgeable, but if asked for their opinion, they will probably provide it. Third, what people
imagine about a product concept in a survey may not be what is actually delivered once the
product is launched.

Level of Difficulty: 2 Medium

Walker - Chapter 05 #22
23. Briefly explain the adoption process and the rate of adoption.
(p. 123-
124)

The adoption process involves the attitudinal changes experienced by individuals from the
time they first hear about a new product, service, or idea until they adopt it. Not all individuals
respond alike; some tend to adopt early, some late, and some never. The time dimension is a
function of the rate at which people in the target group move through the five stages in the
adoption process. Generally, the speed of the adoption process depends heavily on the
following factors: (1) the risk (cost of product failure or dissatisfaction), (2) the relative
advantage over other products, (3) the relative simplicity of the new product, (4) its
compatibility with previously adopted ideas, and behavior, (5) the extent to which its trial can
be accomplished on a small-scale basis, and (6) the ease with which the central idea of the
new product can be communicated. Other factors, while less important, are also at work,
particularly at the individual level, including the growing influence of social media. Thought
should also be given to the legitimacy of the new product in the eyes of its stakeholders.
Legitimacy may come from associations with established firms, the success of historical
product launches or hiring a well-known name in the field. The rate at which an innovative new
product category passes through the adoption process is also a function of the actions taken
by the product's marketers. Thus, the diffusion process may be faster when there is strong
competition among competitors, when they have favorable reputations, and when they
allocate substantial sums to R&D (to improve performance) and marketing (to build
awareness).

Level of Difficulty: 2 Medium

Walker - Chapter 05 #23
24. What are the major issues to be considered while designing marketing databases?
(p. 132)

Designing marketing databases that take effective advantage of customer data that
companies are in a position to collect requires that several major issues be considered: the
cost of collecting the data, the economic benefits of using the data, the ability of the company
to keep the data current in today's mobile society, and the rapid advances in technology that
permit the data to be used to maximum advantage.
Collecting information, then storing and maintaining it, always costs money. If a company
wants to know more about the demographics and lifestyles of its best customers, in addition to
their purchasing histories, it must obtain demographic and lifestyle data about them. Doing so
is more difficult than it sounds; many people are unwilling to spend much time filling out forms
that ask nosy questions about education, income, whether they play tennis, and what kind of
car they drive. The cost of collecting such information must be weighed against its value.

Level of Difficulty: 2 Medium

Walker - Chapter 05 #24
 Chapter 5 Summary

Category # of Questions

Level of Difficulty: 1 Easy 7

Level of Difficulty: 2 Medium 15

Level of Difficulty: 3 Hard 2

Walker - Chapter 05 24