Small Business Management Longenecker 17th Edition Test Bank

Small Business Management Longenecker 17th Edition Test Bank
Small Business Management Longenecker 17th

Edition Test Bank
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Chapter 7—The Marketing Plan
TRUE/FALSE
1. Small business marketing is best defined as the performance of distribution activities that affect the
flow of goods and services from producer to consumer or user.
ANS: F
Small business marketing involves numerous activities, many of which occur even before a product is
created or made ready for distribution or sale.
PTS: 1 DIF: Difficulty: Moderate REF: p. 171

OBJ: LO: 7-1 NAT: BUSPROG: Reflective Thinking STA: DISC: Value Creation
KEY: Bloom’s: Knowledge
2. In order to achieve market success, a firm should concentrate on either providing an excellent product
and/or service or devising an insightful marketing strategy.
ANS: F
As suggested by the consumer-oriented philosophy, a firm must also pursue customer satisfaction if it
is to be successful.

OBJ: LO: 7-1a NAT: BUSPROG: Reflective Thinking STA: DISC: Value Creation
KEY: Bloom’s: Comprehension
3. Regardless of the type of business, the consumer-oriented marketing philosophy is the best choice
among the competing alternatives.
ANS: T PTS: 1 DIF: Difficulty: Easy

REF: p. 172 OBJ: LO: 7-1a NAT: BUSPROG: Reflective Thinking
STA: DISC: Value CreationKEY: Bloom’s: Comprehension
4. Because many small business owners have strong production skills, they often attend mostly to the
marketing side of the business to compensate.
ANS: F
Many small business owners have strong production skills and are weak in marketing ability, and
therefore they attend primarily to production considerations.
PTS: 1 DIF: Difficulty: Easy REF: p. 173

OBJ: LO: 7-1b NAT: BUSPROG: Reflective Thinking STA: DISC: Dynamics
5. If an entrepreneur anticipates several target markets, each individual segment must have its own
corresponding customer profile.

6. A detailed analysis of competitors is an important part of a firm's formal marketing plan.

REF: p. 175 OBJ: LO: 7-2b NAT: BUSPROG: Reflective Thinking
7. The marketing strategy section provides the most detailed information in a formal marketing plan.
ANS: T PTS: 1 DIF: Difficulty: Moderate

REF: p. 175 OBJ: LO: 7-2c NAT: BUSPROG: Reflective Thinking
STA: DISC: Value CreationKEY: Bloom’s: Knowledge
8. It is best to write a marketing plan before collecting marketing research data.
ANS: F
A marketing plan is stronger with marketing research as a foundation.

OBJ: LO: 7-3 NAT: BUSPROG: Reflective Thinking STA: DISC: Data Analysis
9. Marketing research is defined as the gathering, processing, reporting, and interpreting of marketing
information.

10. Small businesses typically conduct less marketing research than big businesses, partly because they
lack an understanding of the basic marketing research process.

11. Researchers typically achieve higher response rates from mail and telephone surveys than from
personal interviews.
ANS: F
Personal interviews and telephone surveys typically achieve higher response rates than mail surveys.

OBJ: LO: 7-3b NAT: BUSPROG: Reflective Thinking STA: DISC: Value Creation
12. Because of the considerable cost, time, and effort, pre-testing is generally considered necessary only in
the case of extensive, complex questionnaires.
ANS: F
A questionnaire should be pre-tested by administering it to a small, but representative, sample of
respondents.

OBJ: LO: 7-3b NAT: BUSPROG: Reflective Thinking STA: DISC: Data Analysis
13. Personal interview surveys are attractive as a marketing research method because these are
inexpensive to conduct.
ANS: F
Personal interview surveys are expensive, especially compared to alternatives such as mail and
telephone surveys.

OBJ: LO: 7-3b NAT: BUSPROG: Reflective Thinking STA: DISC: Data Analysis
14. Small business owners can now buy inexpensive personal computer software that can perform
statistical calculations and generate report-quality graphics.

REF: p. 183 OBJ: LO: 7-3b NAT: BUSPROG: Technology
STA: DISC: Data Analysis KEY: Bloom’s: Knowledge
15. Marketing research is an effective supplement, but not a replacement, for the intuitive judgment of
entrepreneurs.

16. A market is best defined as a geographical area that is of commercial interest to the entrepreneur.
ANS: F
A market is a group of customers or potential customers who have purchasing power and unsatisfied
needs.

OBJ: LO: 7-4 NAT: BUSPROG: Reflective Thinking
STA: DISC: Economic Environments KEY: Bloom’s: Comprehension
17. Determining market potential is the process of locating and investigating buying units that have
purchasing power and needs that can be satisfied with the product and/or service being offered.

REF: p. 183 OBJ: LO: 7-4 NAT: BUSPROG: Reflective Thinking
18. When a strategist divides the total market for a product and/or service into groups with similar needs,
so that each group is likely to respond to the same marketing strategy, he or she is engaging in a
practice called market segmentation.

19. Because of the relatively inconsequential amount of sales conducted by a typical small business, the
majority of entrepreneurs need not be concerned with formulating accurate sales forecasts.
ANS: F
A sales forecast is a critical component of the business plan: therefore, entrepreneurs should engage in
forecasting and do so with great care.

OBJ: LO: 7-5a NAT: BUSPROG: Reflective Thinking STA: DISC: Data Analysis
20. Sales forecasts are typically expressed in dollars or units.

21. Because sales forecasts revolve around specific target markets, the market should be defined as
precisely as possible.

22. The forecasting process can be characterized by the point at which the process is started and the nature
of the predicting variable.
ANS: T PTS: 1 DIF: Difficulty: Moderate

23. A buildup process requires a small business to identify all potential buyers in a target market's
submarkets and then combine these estimates to determine the calculated demand.

24. A chain-ratio method of sales forecasting, or a buildup process, is frequently used for consumer
products forecasting.
ANS: F
Another term for the chain-ratio method of sales forecasting is the breakdown process, not the buildup
process.
PTS: 1 DIF: Difficulty: Challenging REF: p. 188

OBJ: LO: 7-5c NAT: BUSPROG: Reflective Thinking STA: DISC: Data Analysis
25. When prior sales information is available, indirect forecasting is the best method to predict future
sales.
ANS: F PTS: 1 DIF: Difficulty: Easy

MULTIPLE CHOICE
1. Small business marketing involves a number of activities, including

a. creating, developing, preparing, communicating, and delivering a bundle of satisfaction to
a target market.
b. planning for optimal production efficiency.
c. identifying alternative technologies.
d. establishing a sales-oriented marketing philosophy.
ANS: A PTS: 1 DIF: Difficulty: Moderate
REF: p. 171 OBJ: LO: 7-1 NAT: BUSPROG: Communication
2. When Abigail buys salt, the core product and the actual product are:
a. seasoning for her food and the salt itself.
b. the salt itself and seasoning for her food.
c. not related.
d. the same.
3. Andrew is considering two models of cars. The size, price, and options are identical. However, one
model gets better gas mileage. This fact would be considered a(n):
a. core product.
b. actual product.
c. augmented product.
d. ancillary product.
ANS: C PTS: 1 DIF: Difficulty: Moderate
KEY: Bloom’s: Application
4. Joel recently opened a neighborhood grocery. He chats briefly with each customer, carefully bags or
boxes their purchases, and offers to load them into the customers’ cars. Joel has learned that:
a. a business provides a bundle of satisfaction to its customers, not just the product they have
bought.
b. customer relationships are more important than profits.
c. how his customers feel is just as important as their satisfaction with their purchases.
d. keeping customers is easier than finding new ones.
ANS: A PTS: 1 DIF: Difficulty: Challenging
REF: p. 172 OBJ: LO: 7-1 NAT: BUSPROG: Analytic
5. A firm's marketing philosophy determines how strategic marketing activities are used to achieve
a. efficiency.
b. customer response.
c. desirable thought patterns.
d. business goals.
ANS: D PTS: 1 DIF: Difficulty: Moderate
REF: p. 172 OBJ: LO: 7-1a NAT: BUSPROG: Ethics
6. Traditionally, marketing philosophies have been categorized as
a. consumer-oriented and market-oriented.
b. consumer-oriented, product-oriented, market-oriented, and volume-oriented.
c. consumer-oriented, market-oriented, sales-oriented, and process-oriented.
d. consumer-oriented, production-oriented, and sales-oriented.
REF: p. 172 OBJ: LO: 7-1a NAT: BUSPROG: Analytic
7. In recent years, the emphasis in U.S. businesses has been on

a. consumers.
b. production.
c. sales.
d. time-honored values.
ANS: A PTS: 1 DIF: Difficulty: Easy
REF: p. 172 OBJ: LO: 7-1a NAT: BUSPROG: Communication
STA: DISC: Economic Environments KEY: Bloom’s: Knowledge
8. The ____ marketing philosophy is the preferred approach for all businesses.
a. product-oriented
b. market-oriented
c. sales-oriented
d. consumer-oriented
ANS: D PTS: 1 DIF: Difficulty: Easy
9. Koldpak has focused principally on the development of revolutionary new ways of containerizing fresh
produce for grocery stores. The firm’s marketing philosophy is
a. consumer-oriented.
b. market-oriented.
c. production-oriented.
d. sales-oriented.
ANS: C PTS: 1 DIF: Difficulty: Easy
STA: DISC: Value CreationKEY: Bloom’s: Analysis
10. Creators Plus, a modest-size manufacturer of quality crafts, expends considerable resources to ensure
that its products are created in the most efficient manner. According to the owner, distribution and
promotion are secondary considerations to managing an expedient production process. Creators Plus
subscribes to the ____ marketing philosophy.
a. process-oriented
b. market-oriented
c. sales-oriented
d. production-oriented
REF: p. 172 OBJ: LO: 7-1a NAT: BUSPROG: Communication
11. The consumer-oriented approach to marketing
a. is just one more business philosophy.
b. focuses on “pushing the product”.
c. recognizes first and foremost the need for attaining production efficiency goals.
d. is the recommended philosophy for all types of businesses.
12. Every day, associates of Sewell Motors, a Dallas-based auto retailer, strive to exceed the company's
expectations of treating the customer as its number one priority. Every action, policy, and ultimate sale
is conducted professionally, with consumers' needs in mind. Sewell Motors subscribes to the ____
marketing philosophy.
a. consumer-oriented
b. market-oriented
c. sales-oriented
d. product-oriented
13. The decision to produce flavored spring water ice cubes in response to requests from its customers
reflects Norway Ice Company’s ____ marketing philosophy.
a. production-oriented
b. sales-oriented
c. consumer-oriented
d. response-oriented
14. U.S. businesses have recently shifted their focus toward a ____ orientation.
a. market
b. consumer
c. production
d. sales
ANS: B PTS: 1 DIF: Difficulty: Moderate
REF: p. 172-173 OBJ: LO: 7-1b NAT: BUSPROG: Communication
STA: DISC: Economic Environments KEY: Bloom’s: Analysis
15. Adopting a consumer-oriented marketing philosophy is most consistent with

a. quickly gaining highly profitable market returns.
b. eventually achieving long-term market success.
c. the revenue stabilizing effect of large market shares.
d. focusing on the single most profitable consumer segment.
REF: p. 172-173 OBJ: LO: 7-1b NAT: BUSPROG: Analytic
16. A firm's marketing mix consists of ____ activities.

a. pricing, promotion, and distribution
b. product, pricing, and promotion
c. product, promotion, and distribution
d. product, pricing, promotion, and distribution
17. XYZ Corporation faces little competition for its product and can barely keep up with demand. The
marketing philosopy most likely in place at XYZ is the ____________ philosophy.
b. sales-oriented
d. efficiency-oriented
REF: p. 173 OBJ: LO: 7-1b NAT: BUSPROG: Analytic
KEY: Bloom’s: Analysis
18. Bennett left his job as production manager and launched his own company because he was sure his
methods of making the same type product would be more profitable and efficient. Bennett is likely to
employ the __________ marketing philosophy.
a. efficiency-oriented
b. sales-oriented
c. production-oriented
d. consumer-oriented
19. Wilson is so confident of the benefits of his product, he is sure people will line up to buy it if only they
knew about it. Wilson will most likely subscribe to the _______________ marketing philosophy.
b. sales-oriented
d. promotion-oriented
20. The areas of marketing strategy that should be addressed within the marketing plan are
a. promotional, pricing, distribution, and product and/or service plans.
b. promotional and pricing plans.
c. promotional and distribution plans.
d. promotional, pricing, and distribution plans.
REF: p. 173 OBJ: LO: 7-1b NAT: BUSPROG: Communication
21. The market analysis section of the marketing plan should include
a. sales options.
b. a customer profile.
c. a statement of marketing tendencies.
d. a summary of market philosophies.
22. The description of potential customers in a target market is commonly called a

a. customer profile.
b. demographic detailing.
c. Simpkins matrix.
d. target picture.
23. In the analysis of a market, the customer profile should include a

a. description of consumer weaknesses.
b. summary of production plans.
c. a detailed discussion of major customer benefits provided by the product and/or service.
d. a profile of major markets not targeted.
24. Irene, owner of a small retail shop, is evaluating her customer profile. Which item is the most critical
for her for her customer profile?
a. the financial ratios to see how much her product costs the customer
b. whether the marketing research was completed with primary or secondary information
c. the customer benefits to verify they are consistent with the customer needs
d. the customer demographics to determine new customers
25. Spira Footwear, Inc. produces running and walking shoes with a patented technology. Therefore the
company’s profile should concentrate the most on
a. the features the shoes offer the customer.
b. the uniqueness of the product.
c. the benefits to the customers.
d. All of the above are equally important.
26. In preparing a sales forecast, it is desirable to have forecasts covering the “most likely”, “best case”
and “_____ case” scenarios.
a. rapidly shifting
b. pessimistic
c. predominant
d. worst
27. Allison is gathering information about other producers in her industry for inclusion in the
______________ section of her marketing plan.
a. market analysis
b. marketing research
c. SWOT analysis
d. competition
28. The most detailed and scrutinized section of a formal marketing plan is the
a. competitor analysis.
b. marketing strategy.
c. market analysis.
d. consumer analysis.
29. The name of a new business should be:

a. simple, memorable, and descriptive of the benefits.
b. simple, memorable, and descriptive of the product.
c. the family name of the founder and descriptive of the product.
d. simple, memorable, and include the name of the founder.
30. Special consideration should be given to the selection of the ____________ and the logic of this
selection should be explained in the marketing plan.
a. company logo
b. company name
c. company slogan
d. company philosophy
31. John, a car repair shop owner, is developing the warranty and repair policies for his business. What
area of the marketing strategy is he addressing?
a. Promotional plan
b. Product and/or Service plan
c. Distribution plan
d. Pricing plan
STA: DISC: Value CreationKEY: Bloom’s: Application
32. Brenda is creating the marketing plan for her bakery. Many of the recipes she will use were handed
down through her family and she would like to keep them secret. These recipes will be considered:
a. patent-protected.
b. copyrighted.
c. intellectual property.
d. family heirlooms.
33. Miguel is deciding how to get his product to his customers. His options include a fixed location, a
mobile location, working out of his home, and the Internet. Miguel is making the ___________
decision.
a. product
b. place
c. price
d. promotion
ANS: B PTS: 1 DIF: Difficulty: Easy
REF: p. 177-178 OBJ: LO: 7-2c NAT: BUSPROG: Reflective Thinking
34. In her marketing plan, Candace is describing the laws of a foreign country and comments about the
exchange rate. It is likely Candace is considering ______________ as a method of distribution.
a. importation
b. exportation
c. Internet marketing
d. air transport
STA: DISC: Economic Environments KEY: Bloom’s: Application
35. At a minimum, the price of a product or service must cover:

a. the owner’s expected return on investment.
b. the cost of bringing it to customers.
c. all costs of the business plus the profit margin.
d. production and distribution costs.
36. At minimum, the price of a product and/or service

a. must cover the cost of bringing it to market.
b. must demonstrate a substantial profit.
c. must be at or below the competition.
d. must be based exclusively on a break-even analysis.
37. The price of an item should be :

a. based solely on the break-even analysis.
b. less than what the competition is charging.
c. what purchasers are willing to pay.
d. total costs plus a margin of profit.
ANS: C PTS: 1 DIF: Difficulty: Challenging
38. The risk of being the lower-cost producer of a good or service is:
a. your business will fail more quickly.
b. your business will generate excess cash and will incur higher taxes.
c. your business will have problems keeping up with demand.
d. customers will abandon your business when someone else offers a lower price.
ANS: D PTS: 1 DIF: Difficulty: Challenging
REF: p. 178 OBJ: LO: 7-2c
NAT: BUSPROG: Reflective Thinking | BUSPROG: Analytic KEY: Bloom’s: Application
39. The section of the marketing plan which describes the entrepreneur’s approach to creating customer
awareness of the product or service is the
a. product and/or service section.
b. promotion section.
c. distribution section.
d. pricing section.
40. Why would a small business conduct less marketing research than a larger, established firm?
a. The entrepreneur can rely on intuition and observations.
b. Marketing research is expensive.
c. Marketing research is not necessary for the start-up business.
d. Data is not generally available for new business ideas.
41. The initial step in the marketing research process is to

a. select a data collection method.
b. identify consumer/business segments of interest.
c. identify informational needs.
d. conduct a preliminary information search.
42. To determine credit card average purchases, managers of Component City Stereo and Appliances
reviewed credit card sales receipts from the previous three months. Managers are conducting
marketing research by collecting and analyzing
a. primary data.
b. observational data.
c. questioning data.
d. secondary data.
STA: DISC: Data Analysis KEY: Bloom’s: Application
43. Caution is advised whenrelying on blogs for secondary data because:

a. bloggers are very opinionated.
b. information in blogs may not be factually correct.
c. blogs may be outdated.
d. blogs may be censored.
44. Which source of data would be the least helpful for secondary data use?
a. libraries of higher education
b. the Small Business Administration
c. blogs
d. the Internet
STA: DISC: Data Analysis KEY: Bloom’s: Analysis
45. Techniques used to collect primary data are often classified as ____ and ____ methods.
a. internal/external
b. observational/questioning
c. exploratory/descriptive
d. focus/comprehensive
46. Mary, owner of Delany Salsas, is curious to know whether the new packaging for her line of salsas is
being noticed by supermarket consumers. To collect information, she passively watches shopper
reactions as they pass by the Delany Salsas display. Mary is collecting ____ data through ____
methods.
a. secondary/observational
b. primary/questioning
c. primary/observational
d. secondary/questioning
47. The _____ method is probably the oldest form of research in existence.
a. questioning
b. secondary research
c. observational
d. interpretive
48. ___________ and ____________ are questioning methods that involve contact with respondents.
a. Questionnaires, telemarketing
b. Observations, surveys
c. mystery shopping, surveys
d. Surveys, experimentation
49. The basic instrument used to guide the researcher and the respondent when surveys are taken is known
as a:
a. questionnaire.
b. questioning form.
c. interview outline.
d. guide form.
50. Marta’s job involves asking shoppers in the mall about their experience with specific products. She
works from a list given to her by the products’ producers. Marta is using the _________ method to
gather ____________ data.
a. observational, secondary
b. questioning, primary
c. observational, primary
d. questioning, secondary
51. Ned was just about ready to begin his market research when an unknown rival launched a similar
product in the market. Ned’s best course of action would be:
a. to go ahead with the research to support future decisions.
b. to wait and see how well the rival’s product sells.
c. to dispense with the research and launch his own product.
d. to scrap his original product idea and come up with something else.
52. Nardella has completed her market research but now feels overwhelmed by the large amount of data.
It might be helpful to her to :
a. use a program like Excel to help her interpret the data.
b. use a program like PowerPoint to create a slide show for her investors.
c. hire a consultant to summarize the data.
d. work with college students to sort the data.
53. Marketing research should be viewed as a supplement to, not a replacement for _____.
a. the observational method.
b. questionnaires.
c. mail surveys.
d. intuitive judgement.
54. A ____ is defined as a group of customers or potential customers who have purchasing power and
unsatisfied needs.
a. consumer segment
b. target market
c. market
d. consumer market
55. In order to be appropriately considered a market, a group of customers or potential customers must
have
a. purchasing power.
b. market power.
c. satisfied needs.
d. correlated needs.
56. Odessa is writing the marketing plan for her bed and breakfast. She has written that her market
inlcudes everyone from infants to the elderly. This is incorrect because:
a. customers must have purchasing power.
b. the elderly are not likely to have unsatisfied needs.
c. infants cannot write.
d. infants do not make buying decisions.
57. Oliver figured if people were willing to pay for bottled water, they would also be willing to pay for
bottled air. Oliver has forgotten that customers will buy only if they have:
a. correlated needs.
b. inversely related needs.
c. unsatisfied needs.
d. unrecognized needs.
58. Paul is a CPA (certified public accountant). He offers a variety of services depending on the needs of
his customers. Some hire him to perform bookkeeping activities; others have him prepare their tax
return. Pau’s market is segmented based on:
a. benefit variables.
b. demographic variables.
c. income levels.
d. basic needs.
59. Rhoda describes her typical customer as female between the ages of 22 and 35 with at least two years
of college and a household income above $50,000 annually. Rhoda is using _________ to describe
her customers.
a. numeric variables
b. benefit variables
c. demographic variables
d. psychographic variables
60. Morton sells salt; Domino sells sugar. The best strategy for either of these products would be:
a. the unsegmented strategy.
b. the multi-segmented strategy.
c. a differentiated strategy.
d. a single-segment strategy
61. Meredith is opening a high end shoe store specializing in designer shoes. Which approach is probably
the wisest strategy for the marketing efforts of this company?
a. Unsegmented strategy since everyone wears shoes.
b. Multi-segment strategy since she could concentrate on persons wanting shoes for different
reasons.
c. Single-segment strategy since only women with high disposable incomes would be a
prospective customer.
d. Bi-segment Strategy since the company won’t be able to sell to just one segment to
survive.
REF: p. 184-185 OBJ: LO: 7-4b NAT: BUSPROG: Analytic
62. In considering its marketing strategy a new venture will typically concentrate on
a. mass marketing.
b. a multi-segmented market.
c. a single-segment approach.
d. the Internet.
63. People of all backgrounds, occupations, and income levels wear watches but Rolex focuses only on the
high-income portion of the market. Rolex uses a(n) ____________ strategy.
a. mass marketing
b. multi-segment
c. unsegmented
d. single-segment
64. A ____ estimates how much of a product and/or service will be purchased within a market over a
defined period of time.
a. market forecast
b. market analysis
c. sales forecast
d. sales analysis
65. Richard is trying to figure out how many of his product his new business could reasonably expect to
sell in its first year. Richard is working on the:
a. production schedule.
b. marketing researchq
c. inventory policy.
d. sales forecast.
66. Entrepreneurs should base their market assessments, production schedules, inventory policies, and
personnel decisions on
a. techniques of observation.
b. qualitative analysis.
c. intuition alone.
d. the sales forecast.
STA: DISC: Data Analysis KEY: Bloom’s: Comprehension
67. Forecasting sales for a new venture will be the most difficult when
a. the owner is unfamiliar with quantitative analysis.
b. the owner is unfamiliar with qualitative analysis.
c. the owner is starting another business in a new industry.
d. All of the above are equally difficult.
68. Because he lacks strong forecasting skills, Stan should:

a. become a member of his trade association.
b. subscribe to trade journals.
c. read magazines focused on small businesses.
d. all of the above.
69. Shiloh has begun the sales forecasting procedure with a variable that has a very large scope and then
systematically is working down to the sales forecast. Shiloh is using the:
a. breakdown process.
b. buildup process.
c. chain-linkage method.
d. bottom-up method.
70. Theodore has identified all the buyers in a market's submarkets and then totaled the estimated demand
for all the submarkets. Theodore used the:
a. breakdown process
b. buildup process
c. chain-ratio method
d. bottom-up
71. Ideas Unlimited is a consulting firm that provided retailers with information about regional sales
trends. To estimate demand in the market for its services, the firm's marketing department identifies all
buyers in each category of retailers and determines how much business is possible. The market
demand estimate is based on the
a. aggregate forecasting process.
b. breakdown forecasting process.
c. buildup forecasting process.
d. indirect forecasting process.
72. What determines whether the sales forecasting process is direct or indirect?
a. the industry orientation of the firm
b. the nature of the predicting variable
c. the ultimate goal of the entrepreneur
d. the marketing philosophy of the company
ANS: B PTS: 1 DIF: Difficulty: Challenging
73. Using the number of births in a historical record to predict the number of driver licenses issued in
subsequent years is an example of the use of a(n) ____ variable in forecasting.
a. approximating
b. indirect
c. surrogate
d. terminating
74. Sheena is using her last three years’ sales to forecast next year’s sales. Sheena is using the
_________ method.
a. direct
b. indirect
c. variable
d. primary
REF: p. 189 OBJ: LO: 7-5c NAT: BUSPROG: Analytic
75. Sullivan just bought a new pickup truck with a snow plow. He contacted the National Weather
Service to get information about snowfalls to help prepare his sales forecast. Sullivan is using:
a. primary market research.
b. secondary data.
c. a surrogate variable.
d. direct forecasting
REF: p. 189 OBJ: LO: 7-5c NAT: BUSPROG: Analytic
MATCHING
For each definition, select the term that best fits.

a. actual product/service e. buildup process
b. augmented product/service f. core product/service
c. benefit variables g. customer-oriented philosophy
d. breakdown process h. customer profile
1. The basic product and/or service that delivers customer benefits
2. The fundamental benefit or solution sought by customers
3. A forecasting method that begins with a large-scope variable and works down to the sales forecast
4. The basic product and/or service plus any extra or unsolicited benefits to the consumer that may
prompt a purchase
5. A description of potential customers in a target market
6. A forecasting method in which all potential buyers in a target market’s submarkets are identified and
the estimated demand is added up
7. Specific characteristics that describe customers, their purchasing power, their consumption patterns,
and other factors
1. ANS: A PTS: 1 DIF: Difficulty: Moderate

REF: p. 172-188 OBJ: LO: 7-1 to 7-5c
NAT: BUSPROG: Reflective Thinking KEY: Bloom’s: Knowledge
2. ANS: F PTS: 1 DIF: Difficulty: Moderate
REF: p. 172-188 OBJ: LO: 7-1 to 7-5c
3. ANS: D PTS: 1 DIF: Difficulty: Moderate
REF: p. 172-188 OBJ: LO: 7-1 to 7-5c
4. ANS: B PTS: 1 DIF: Difficulty: Moderate
REF: p. 172-188 OBJ: LO: 7-1 to 7-5c
5. ANS: H PTS: 1 DIF: Difficulty: Moderate
REF: p. 172-188 OBJ: LO: 7-1 to 7-5c
6. ANS: E PTS: 1 DIF: Difficulty: Moderate
REF: p. 172-188 OBJ: LO: 7-1 to 7-5c
7. ANS: C PTS: 1 DIF: Difficulty: Moderate
REF: p. 172-188 OBJ: LO: 7-1 to 7-5c
Match the term with its definition. Not all terms will be used.
a. demographic variables e. intellectual property
b. direct forecasting f. market
c. focus strategy g. market analysis
d. indirect forecasting h. marketing mix
8. A marketing strategy in which cost-and differentiation-based advantages are achieved within narrow
market segments
9. The process of locating and describing potential customers
10. A forecasting method in which variables related to sales are used to project future sales
11. Specific characteristics that describe customers, their purchasing power, their consumption patterns,
and other factors
12. A group of customers or potential customers who have purchasing power and unsatisfied needs
13. The combination of productservice, pricing, promotion, and distribution activities
14. A forecasting method in which sales is the estimated variable

REF: p. 172-189 OBJ: LO: 7-1 to 7-5c
9. ANS: G PTS: 1 DIF: Difficulty: Moderate
REF: p. 172-189 OBJ: LO: 7-1 to 7-5c
REF: p. 172-189 OBJ: LO: 7-1 to 7-5c
REF: p. 172-189 OBJ: LO: 7-1 to 7-5c
REF: p. 172-189 OBJ: LO: 7-1 to 7-5c
REF: p. 172-189 OBJ: LO: 7-1 to 7-5c
REF: p. 172-189 OBJ: LO: 7-1 to 7-5c
a. marketing research e. production-oriented philosophy
b. market segmentatoin f. sales forecast
c. multi-segment strategy g. sales-oriented philosophy
d. primary data h. secondary data
15. A prediction of how much of a product or service will be purchased within a given market during a
specified time period
16. A strategy that recognizes different preferences of individual market segments and develops a unique
marketing mix for each
17. The division of a market into several smaller groups with similar needs
18. Market information that has been previously compiled
19. The gathering, processing, interpreting, and reporting of market information
20. New market information that is gathered by the firm conducint the research.
21. An emphasis on “pushing the product” to customers

REF: p. 172-189 OBJ: LO: 7-1 to 7-5c
REF: p. 172-189 OBJ: LO: 7-1 to 7-5c
REF: p. 172-189 OBJ: LO: 7-1 to 7-5c
REF: p. 172-189 OBJ: LO: 7-1 to 7-5c
REF: p. 172-189 OBJ: LO: 7-1 to 7-5c
REF: p. 172-189 OBJ: LO: 7-1 to 7-5c
REF: p. 172-189 OBJ: LO: 7-1 to 7-5c
a. chain-ratio metod e. segmentation variables
b. customer-oriented philosophy f. single-segment strategy
c. intellectual property g. small business marketing
d. productoin-oriented philosophy h. unsegmented strategy
22. Emphasizing the product as the single most important part of the business
23. A strategy that recognizes the existence of several distinct market segments but focuses on only the
most profitable segment
24. A strategy that defines the total market as the target market
25. The belief that production and sales center on the consumer and his/her needs
26. Business activities that direct the creation, development, and delivery of a bundle of satisfaction from
the creator to the targeted user
27. The parameters used to distinguish one form of market behavior from another
28. Trade secrets

REF: p. 171-189 OBJ: LO: 7-1 to 7-5c
REF: p. 171-189 OBJ: LO: 7-1 to 7-5c
REF: p. 171-189 OBJ: LO: 7-1 to 7-5c
REF: p. 171-189 OBJ: LO: 7-1 to 7-5c
REF: p. 171-189 OBJ: LO: 7-1 to 7-5c
27. ANS: E PTS: 1 DIF: Difficulty: Moderate
REF: p. 171-189 OBJ: LO: 7-1 to 7-5c
REF: p. 171-189 OBJ: LO: 7-1 to 7-5c
ESSAY
1. After identifying the three levels of a product and/or service’s benefit, provide an example for the US
Postal Service.
ANS:
Using the US Postal Service, an example of the three levels would be as follows.
1. The core product/service (fundamental benefit or solution sought by customers) is the
delivery of information.
2. The actual product/service (basic physical product and/or service that delivers those
benefits) is the actual placing that information into a mailbox.
3. The augmented product/service (the basic product and/or service plus any extra or
unsolicited benefits) is the convenience of that information being at a person’s home mailbox
or at a box close to them.

OBJ: LO: 7-1 NAT: BUSPROG: Communication STA: DISC: Value Creation
2. Compare and contrast the three marketing philosophies discussed in the text. Give supporting
evidence on why one method is stronger than the others.
ANS:
The three marketing perspectives are the production-oriented, sales-oriented, and consumer-oriented
philosophies.
*A production-oriented philosophy emphasizes the product and concentrates resources on developing
the product or service in the most efficient manner, even if other marketing activities are not treated
equally. It is used most often by entrepreneurs who have a manufacturing or technology expertise.
*A sales-oriented philosophy is know for pushing a product with achieving sales goals as a major
objective for the company. It reemphasizes production and customer preferences. This approach is
often used by new owners with a high knowledge of sales.
* A consumer-oriented philosophy believes that all aspects of the marketing and company should
concentrate on the consumer’s needs. This approach is be used by more companies who realize the
customer is critical to the companies long-term success.

OBJ: LO: 7-1a NAT: BUSPROG: Communication STA: DISC: Value Creation
3. Identify and discuss the three components of the marketing plan and the three marketing activities used
to generate information for the marketing plan. Based on the book’s chapter spotlight, Mayan
Pigments, analyze what the company completed for each component and supporting activity..
ANS:
Mayan Pigments completed the following items for their marketing plan.
Marketing Plan
*market analysis (locating and describing potential customers): Initially industrial manufacturers.
Later moved to being a supplier so customer became Clementine Art
*competition (other companies in the market):Initially larger more established customers. With
move to being a supplier, competition became much smaller.
*marketing strategy (Product/Service, Distribution, Promotion, Pricing): Obtained patents on
pigments to protect their competitive advantage of product. Used website as an effective promotional
tool
Supporting Activities
*marketing research (gathering information): Did research on pigment colors and stability.
Gathered information on competition and their market share
*market segmentation (selection of market groups): Initially had segments of printing inks, paints,
coatings, plastics, textiles, leathers, paper, paperboard. Later moved to customers with a benefit
variable of “natural and green” and more niche segments.
*sales forecasting (predicting sales): Initially used secondary data for global and domestic markets.
With move to Clementine Art, thought sales might be smaller but increased due to international
growth.
PTS: 1 DIF: Difficulty: Challenging REF: p. 174-178

OBJ: LO: 7-02 NAT: BUSPROG: Analytic | BUSPROG: Communication
4. What are problems with secondary data use? How can a new entrepreneur neutralize these problems?
ANS:
Problems include:
* Secondary data can quickly become dated and thereby less useful.
* The units of measure used in the research may not match the a new entrepreneur
needs. For example, sales reported in dollars may need to be stated in units or in
euros.
* Some sources of secondary data are less trustworthy than others.
A new entrepreneur should:
* Compare many different secondary sources to see if the sources are reporting similar
results.
* Concentrate on sources that have a solid reputation such as the SBA or academic
organizations.
* Check the identify of all sources.

OBJ: LO: 7-03 NAT: BUSPROG: Communication STA: DISC: Value Creation
KEY: Bloom’s: Analysis | Bloom’s: Comprehension
5. What techniques used in collecting primary data? Give examples to support the answer.
ANS:
*Observational Methods: Learning by observing while avoiding interpersonal contact between
respondents and researcher. Examples include counting customers in a store or observing reactions to
products
*Questioning Methods: Learning by conducting surveys or performing experiments which involve

interaction between the respondents and researcher. Examples include mail, Internet or telephone
surveys or personal interviews.

OBJ: LO: 7-3b NAT: BUSPROG: Communication STA: DISC: Value Creation
KEY: Bloom’s: Knowledge | Bloom’s: Comprehension
6. What are some of the guidelines that should be followed in developing a questionnaire?
ANS:
• Ask questions that relate to the issue under consideration.
• Select the form of question that is appropriate for the subject and the conditions of
the survey; open-ended and multiple-choice forms are two popular options.
• Consider the order of the questions carefully to reduce biases.
• Ask the more sensitive questions near the end of the questionnaire.
• Select the words of each question carefully. They should be as simple, clear, and
objective as possible.
• Pre-test the questionnaire using a small representative sample of respondents.

7. Define the term market and explain the key ingredients of that definition.
ANS:
The word market means different things to different people. However, the textbook defines this term
as "a group of customers or potential customers who have purchasing power and unsatisfied needs."
The specifics of this definition include three key ingredients:
• The market must have buying units or customers; thus it is more than a geographic
area.
• Customers in a market must have purchasing power, since no transaction can occur
without it.
• Unsatisfied needs provide the buyer with the motivation to complete a purchase.

OBJ: LO: 7-4 NAT: BUSPROG: Communication
STA: DISC: Economic Environments KEY: Bloom’s: Knowledge | Bloom’s: Comprehension
8. Holley is starting a new business and is trying to forecast sales. She has owned two other businesses,
one of which was in the same industry as this new venture. Discuss the implications for forecasting
for the new business. What could she do to increase her forecasting success?
ANS:
Conditions that will make forecasting easier include her past experience. She should be familiar with
forecasting techniques since she has owned a business in the same industry before this proposed
operation. However, forecasting could be more difficult because the operation is new. Joining the
trade association of her industry might provide her current information. Also subscribing to a
professional forecasting service would be an option for general business knowledge,

KEY: Bloom’s: Comprehension | Bloom’s: Application
9. Melinda, an auto insurance agent, would like to forecast the number of 16-year-olds in her county who
will be eligible to apply for driver’s licenses next year. Identify three potential sources of information
and discuss the advantages and disadvantages of each.
ANS:
Melinda could use the birth data from her area 15 years ago, but there is no guarantee that all of these
babies, now teenagers, still live in the county. The advantage is this is secondary data and should be
readily available.
Melinda could canvas all the high schools in her county to determine the number of freshmen in each
then combine the numbers. This is also secondary data and easily obtained. However, some of
today’s 15-year-olds may not be freshmen so the data may not be accurate.
Melinda could send questionnaires to every household in the county asking how many 15-year-olds
live in the house. The problem here is the expense of creating the questionnaire and mailing it. The
return rate on direct mail is very low so the numbers will likely be understated.
Small Business Management Longenecker 17th Edition Test Bank
Students may generate other ideas. Each idea should include both the advantages and disadvantages
of the source of information.

OBJ: LO: 7-5c NAT: BUSPROG: Communication | BUSPROG: Reflective Thinking
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PTS: 1 DIF: Difficulty: Moderate REF: p. 171

PTS: 1 DIF: Difficulty: Moderate REF: p. 172

ANS: T PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Easy REF: p. 173

ANS: T PTS: 1 DIF: Difficulty: Easy

6. A detailed analysis of competitors is an important part of a firm's formal marketing plan.

ANS: T PTS: 1 DIF: Difficulty: Moderate

8. It is best to write a marketing plan before collecting marketing research data.

PTS: 1 DIF: Difficulty: Easy REF: p. 178

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Easy REF: p. 181

PTS: 1 DIF: Difficulty: Moderate REF: p. 181

PTS: 1 DIF: Difficulty: Easy REF: p. 181

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Moderate REF: p. 183

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Easy REF: p. 186

20. Sales forecasts are typically expressed in dollars or units.

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Moderate

ANS: T PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Challenging REF: p. 188

ANS: F PTS: 1 DIF: Difficulty: Easy

1. Small business marketing involves a number of activities, including

7. In recent years, the emphasis in U.S. businesses has been on

15. Adopting a consumer-oriented marketing philosophy is most consistent with

16. A firm's marketing mix consists of ____ activities.

22. The description of potential customers in a target market is commonly called a

23. In the analysis of a market, the customer profile should include a

29. The name of a new business should be:

35. At a minimum, the price of a product or service must cover:

36. At minimum, the price of a product and/or service

37. The price of an item should be :

41. The initial step in the marketing research process is to

43. Caution is advised whenrelying on blogs for secondary data because:

68. Because he lacks strong forecasting skills, Stan should:

For each definition, select the term that best fits.

1. ANS: A PTS: 1 DIF: Difficulty: Moderate

8. ANS: C PTS: 1 DIF: Difficulty: Moderate

15. ANS: F PTS: 1 DIF: Difficulty: Moderate

22. ANS: D PTS: 1 DIF: Difficulty: Moderate

PTS: 1 DIF: Difficulty: Challenging REF: p. 172

PTS: 1 DIF: Difficulty: Challenging REF: p. 172

PTS: 1 DIF: Difficulty: Challenging REF: p. 174-178

PTS: 1 DIF: Difficulty: Challenging REF: p. 180-181

*Questioning Methods: Learning by conducting surveys or performing experiments which involve

PTS: 1 DIF: Difficulty: Challenging REF: p. 181

PTS: 1 DIF: Difficulty: Challenging REF: p. 182

PTS: 1 DIF: Difficulty: Challenging REF: p. 183

PTS: 1 DIF: Difficulty: Challenging REF: p. 187-188

PTS: 1 DIF: Difficulty: Challenging REF: p. 188-189

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