Test Bank For Advertising and Promotion An Integrated Marketing Communications Perspective 12th Edition George Belch Michael Belch Download

Test Bank for Advertising and Promotion: An Integrated Marketing Communications Perspective,
Test Bank for Advertising and Promotion: An

Integrated Marketing Communications Perspective,
12th Edition, George Belch Michael Belch
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Multiple Choice Questions
1. Many marketers are uncertain as to what the integrated marketing communications should
contribute to the marketing program. 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.
2. Generally, companies that develop Integrated Marketing Communications (IMC) programs

which do not contain specific objectives:
A. will 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 towards.
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.
3. One important 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.
7-1
4. 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.
5. 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 plan and allocate the budget to each media.
C. evaluate the effectiveness of the advertising and promotional strategies.
D. conduct test marketing to check the effectiveness of the marketing strategies developed for
the current products and services.
E. set its advertising and promotional budgets.
6. Arden's task is to determine what was accomplished by his company's advertising and
promotional program for a vinyl siding cleanser. You can tell him that:
A. his task is impossible.
B. all he needs is the sales results to determine what the program accomplished.
C. his task could be made easier by setting specific communication objectives.
D. he just requires the 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.
7. _____ 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
7-2
8. Ace Computer has an objective of increasing its share of the home 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
9. 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. Communications objectives can be developed before or after the development of marketing
objectives.
E. There is no relationship between the two.
10. Pace Foods has 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
11. To be effective, marketing objectives need to be:

A. realistic and attainable.
B. erudite and challenging.
C. philosophical and fungible.
D. long-term and qualitative.
E. reasonable and elaborate.
7-3
12. Marketing goals defined in terms of sales, profits or market share increases are:
A. situational response objectives.
B. usually not appropriate for promotional objectives.
C. integrated marketing communications objectives.
D. relationship marketing objectives.
E. communication objectives.
13. 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
14. 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. the objective of advertising and other promotional mix elements is usually to communicate
information or a selling message about a product or service.
C. the primary role of an integrated marketing communications program is to communicate.
D. the objectives should be based on the achievement of communication objectives.
E. they must provide relevant information and create favorable predispositions toward the
brand before purchase behavior will occur.
15. 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
7-4
16. The concept of advertising expenditures producing long term rather than 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.
17. 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 with mature, low-priced, and frequently purchased products.
E. helps in determining the precise relationship between advertising and sales.
18. 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 immeasurable, 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.
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19. Heinz developed a sales promotion program called "All About Family." It offered a
coupon of a free Halloween candy when one 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
20. 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 Verizon to AT&T
21. 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.
22. Sales-oriented objectives are appropriate for:

A. all Internet marketing.
B. retail advertising 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. creating favorable attitudes and images for a brand or a product before purchase could
occur.
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23. Which of the following statements is true regarding the relationship between advertising
and promotion, and sales performance?
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. Managers prefer sales-oriented objectives because they provide operational guidelines for
those involved in planning, developing, and executing the advertising and promotional
program.
24. 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.
25. 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.
7-7
26. Managers who use the communications effects pyramid to set objectives believe that:
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.
27. In 2007, Cingular acquired AT&T but renamed itself using AT&T. The choice of the
name reflected consumers' awareness and recognition of an established brand. Advertising to
make consumers aware of new combined firm would more than likely have _____ objectives.
A. sales-oriented
B. market-oriented
C. product development
D. communications
E. product penetration
28. Which of the following is at the top of the communication effects pyramid?
A. awareness
B. knowledge
C. liking
D. preference
E. purchase/repurchase
29. "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
D. communications
7-8
30. Which of the following statements is true about the communications objectives?
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 programs.
D. Marketing managers do not recognize the value of setting communications objectives.
E. Precise formulas are to be followed when translating sales goals into specific
communications objectives.
31. Which of the following statements is true about communications objectives?

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. Communication objectives are used particularly where the advertiser seeks an immediate
response.
32. 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.
33. _____ 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
7-9
34. In 2007, Cingular acquired AT&T but renamed itself as AT&T itself. The choice of the
name reflected consumers' awareness and recognition of an established brand. To determine
how successful it was in making consumers aware of its name change and its new positioning
strategy, the firm could have used:
A. zero-based communications planning.
B. a benchmark orientation.
C. DAGMAR.
D. the carryover effect.
E. the recency effect.
35. A stereo speaker manufacturer developed 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 ambience 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.
36. 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.
37. 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
7-10
38. 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 in 6 months."
C. "Increase the number of customers mentioning the brand name when asked for brand
preference from 40 percent to 50 percent in one year."
D. "Increase awareness of the brand in one year."
E. "Increase sales revenue by 10 percent."
39. 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.
40. According to the DAGMAR model, which of the following is a characteristic of a good
objective?
A. A good objective is elaborative in nature.
B. A good objective specifies the target audience.
C. A good objective includes both positive and negative points.
D. A good objective specifies the current market share.
E. A good objective is based on sales results.
41. Determining a target market's present level of awareness, knowledge and liking towards a
product often requires _____ measures.
A. benchmark
B. sales interval
C. qualitative awareness
D. quantitative awareness
E. reach and frequency
7-11
42. 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. This was done to:
A. communicate advertising goals.
B. communicate tasks.
C. establish benchmark measures.
D. communicate DAGMAR objectives to the audience.
E. establish marketing research goals.
43. An airline company set the following objective for its new advertising campaign: "To
increase the percentage of consumers who know our fares are lower than the competitors' 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.
44. 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.
7-12
45. For which of the following advertising communication tasks should the specified time
period 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
46. In January 2003, Philip-Morris Companies, Inc., and Kraft Foods became the Altria
Group. The change in name 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 most likely 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.
47. The DAGMAR approach to setting objectives:

A. has 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.
7-13
48. 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 that DAGMAR ignores sales results.
D. setting benchmark measures.
E. creating measurable communications objectives.
49. Which of the following is an example of a common criticism of DAGMAR?

A. It ignores communications objectives.
B. It is difficult to implement.
C. It is useful only for small companies that have a small advertising budget.
D. It offers little guidance to those responsible for planning and developing the promotional
program.
E. It concentrates only on creativity and does not pay much attention to other objectives.
50. You are working in the advertising department of a large consumer products company.
You have suggested that the company use the DAGMAR approach for setting advertising
goals. Which of the following is an example of an argument that you are likely to hear against
the use of the DAGMAR approach to setting advertising goals?
A. Communication should be the measure of advertising effectiveness rather than sales -
oriented goals.
B. DAGMAR approach is too creative and hence, leads to difficulty in understanding.
C. DAGMAR can be quite expensive due to research costs and is therefore suitable only for
large companies.
D. DAGMAR is too quantitative for most managers to understand.
E. DAGMAR is appropriate only in case of direct - response advertising.
51. Creative executives from the advertising industry 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.
7-14
52. 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 or her 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.
53. Outside-in planning:

marketer believes are important to his brand, and the media form the marketer wants to use.
program.
54. _____ 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. Refutation planning
7-15
55. 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
56. To more fully appreciate the value of advertising and promotion, managers should treat
the communications budget as a(n):
A. variable cost.
B. expense.
C. liability.
D. investment.
E. fixed cost.
57. _____ 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
58. According to Robert Steiner, which of the following terms is 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
7-16
59. In the case of marginal analysis approach, profits are shown to be a result of:
A. advertising expenditure minus sales.
B. sales minus advertising expenditures.
C. gross margin minus advertising expenditures.
D. gross margin minus sales.
E. net worth minus sales.
60. Which of the following statements describes a weakness inherent in the use of the
marginal analysis model for establishing an advertising budget?
A. It is unsuitable as a basis for budgeting in case of direct response advertising.
B. Only environmental factors that are considered by the model will affect the effectiveness of
the promotional program.
C. Budgetary amount is often set by fiat.
D. The budget is determined by management solely on the basis of what is felt to be
necessary.
E. It is very illogical and virtually no theoretical base is used to determine the budgets.
61. 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
62. 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.
7-17
63. 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 method.
B. the objective and task method.
C. competitive parity method.
D. an S-shaped response function.
E. rapidly diminishing returns.
64. 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.
65. 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.
66. 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.
7-18
67. According to the S-shaped response curve,
products.
68. The S-shaped response curve suggests that:

A. advertising effectiveness will not be related to spending.
B. very low advertising budgets will not work.
C. advertising effectiveness will vary inversely with the 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.
69. Which of the following is a factor that influences the setting of the advertising budget?
A. The use of communications or sales objectives.
B. The corporate structure.
C. The basis for product differentiation.
D. The extent of selective retention.
E. The recruitment plans.
70. 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
7-19
71. The _____ method of budgeting is being employed when expenditure is allocated by an
analysis of expenditure 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
72. 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."
C. ROI
73. Which top-down budgeting method is being employed when expenditure is allocated by
assigning a budget based on gut feelings?
C. affordable method
D. payout planning
74. Which of the following is an advantage of the arbitrary allocation method?

A. By using the arbitrary allocation method, the company can be sure of not getting into any
financial problems.
B. It keeps the ad spending within reasonable limits.
C. It uses a logical basis for determining the budgets.
D. This method of budgeting is generally stable.
E. The arbitrary allocation approach has no obvious advantages.
7-20
75. The most commonly utilized method of budget determination by large firms is:
A. competitive parity method.
B. objective and task method.
C. percentage of sales method.
D. arbitrary allocation method.
E. the affordable method.
76. 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.
C. objective and task
77. In the _____ method to budgeting, sales are projected for the coming year based on the
marketing manager's estimates.
A. competitive parity
B. objective and task method
C. unit cost production
D. straight-projected sales
E. arbitrary method
78. 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 method.
B. Competitive parity and payout planning method.
C. Payout planning and percent of sales method.
D. Percent of sales and objective and task method.
E. Payout planning and arbitrary allocation method.
7-21
79. Which of the following budgeting procedures would be used if a firm wanted a method
that is simple to understand and financially safe?
B. marginal analysis
C. percentage of sales
D. objective and task
E. arbitrary method
80. The _____ method of budgeting uses advertising/sales ratio data.

A. objective and task
B. affordable
C. percent of sales
D. ROI
E. arbitrary allocation
81. The major problem associated with the _____ budgeting method is that it reverses the
cause and effect relationship between advertising and sales.
A. percent of sales
C. competitive parity
D. S-shaped response
E. rapidly diminishing returns
82. The _____ budgetary allocation method is designed to promote stability and minimize
marketing warfare as well as take advantage of the collective wisdom of the industry.
A. ROI
B. arbitrary allocation
D. competitive parity
E. objective and task
7-22
83. 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.
84. Which of the following methods of determining a budget requires a marketing department
manager to use input from a clipping service?
A. ROI method
B. Arbitrary allocation method
C. Percentage of sales method
D. Competitive parity method
E. Objective and task method
85. The _____ method of budgeting is being employed when expenditures are allocated based
on information about industry averages for advertising. The budget is set to maintain a level
consistent with industry spending.
86. Which of the following is an advantage of the competitive parity method?

A. It makes use of the buildup approach to establishment of promotional budgets.
B. It leads to stability in the marketplace by minimizing marketing warfare.
C. It is based on the fact that advertising and promotions are designed to accomplish specific
objectives by addressing certain problems and opportunities.
D. It gives due recognition to the contributions of creative executions and/or media
allocations.
E. Under this method, the budget is driven by the objectives to be attained.
7-23
87. 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
E. payout planning
88. In the _____ method of budget determination advertising is considered an investment,

similar to plant and equipment.
A. payout planning
B. objective and task
C. ROI budgeting
E. percentage of sales
89. 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.
90. 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
D. build-up
E. trickle up
7-24
91. 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.
B. payout planning
C. ROI
92. Which of the following is an example of a budgeting allocation method that uses a build-
up approach?
A. ROI
B. competitive parity
D. arbitrary allocation
93. 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.
94. 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 twice 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. Its advertising budget should be less than that needed to maintain the desired market share.
7-25
95. 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.
96. _____ 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
97. During the first months of a new product introduction, a useful budgeting technique to
determine a ballpark figure for setting feasible objectives is the _____ method.
A. payout planning
B. percent of sales
D. 401k
E. marginal analysis
98. As a tool for budget allocation, multiple regression analysis is most often employed in
budget models using:
A. computer simulation
C. arbitrary allocation
D. percentage of sales
E. a top-down approach
7-26
99. 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
D. a concave-downward response
E. multiple advertising channels
100. 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 higher advertising rates than smaller advertisers.
C. accrue the disadvantages of advertising several products jointly.
D. have higher average costs of production.
E. can spend more money on advertising and realize a better return.
101. 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. can accrue the advantages of advertising several products jointly.
7-27
Chapter 07 Establishing Objectives and Budgeting for the Promotional Program
Answer Key
Multiple Choice Questions
1. (p. 216) Many marketers are uncertain as to what the integrated marketing communications
should contribute to the marketing program. 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.
Many marketers are uncertain as to what integrated marketing communications should

contribute to the marketing program. The goal of their company's advertising and promotional
program is simple: to generate sales. They fail to recognize the specific tasks that advertising
and other promotional mix variables must perform in preparing customers to buy a particular
product or service.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 07-01 To recognize the importance and value of setting specific objectives for advertising and promotion.
Topic: Measurement and Evaluation of Results
7-28
2. (p. 217) Generally, companies that develop Integrated Marketing Communications (IMC)
programs which do not contain specific objectives:
A. will 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 towards.
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.
Specific objectives for the IMC program facilitate coordination of the various groups working
on the campaign.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Topic: Communications
7-29
3. (p. 218) One important 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.
An important reason for setting specific objectives is that they provide a benchmark against
which the success or failure of the promotional campaign can be measured.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
4. (p. 218) 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.
By setting specific and meaningful objectives, the promotional planner provides a measure(s)
that can be used to evaluate the effectiveness of the marketing communications program.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
7-30
5. (p. 218) 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 plan and allocate the budget to each media.
C. evaluate the effectiveness of the advertising and promotional strategies.
D. conduct test marketing to check the effectiveness of the marketing strategies developed for
the current products and services.
E. set its advertising and promotional budgets.
Integrated marketing communications objectives should be based on a thorough situation

analysis that identifies the marketing and promotional issues facing the company or a brand.
The situation analysis is the foundation on which marketing objectives are determined and the
marketing plan is developed.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 07-02 To understand the role objectives play in the IMC planning process and the relationship of promotional
objectives to marketing objectives.
Topic: Determining Integrated Marketing Communications Objectives
6. (p. 218) Arden's task is to determine what was accomplished by his company's advertising and
promotional program for a vinyl siding cleanser. You can tell him that:
A. his task is impossible.
B. all he needs is the sales results to determine what the program accomplished.
C. his task could be made easier by setting specific communication objectives.
D. he just requires the 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.
An important reason for setting specific objectives is that they provide a benchmark against
which the success or failure of the promotional campaign can be measured. By setting specific
and meaningful objectives, the promotional planner provides a measure(s) that can be used to
evaluate the effectiveness of the marketing communications program.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
7-31
7. (p. 218) _____ 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
Marketing objectives are generally stated in the firm's marketing plan and are statements of
what is to be accomplished by the overall marketing program within a given time period.
Marketing objectives are usually defined in terms of specific, measurable outcomes such as
sales volume, market share, profits, or return on investment.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Topic: Marketing versus Communication Objectives
8. (p. 218) Ace Computer has an objective of increasing its share of the home 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
Good marketing objectives are quantifiable; they delineate the target market and note the time
frame for accomplishing the goal (often one year). For example, a copy machine company
may have as its marketing objective "to increase sales by 10 percent in the small-business
segment of the market during the next 12 months."
AACSB: Reflective Thinking

Bloom's: Analyze
Difficulty: Hard
7-32
9. (p. 219) 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. Communications objectives can be developed before or after the development of marketing
objectives.
E. There is no relationship between the two.
Managers must be able to translate general marketing goals into communications goals and
specific promotional objectives.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
10. (p. 219) Pace Foods has 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
Some firms have marketing objectives to expand distribution and sales of their product in
certain market areas. Companies often have secondary marketing objectives that are related to
actions they must take to solve specific problems and thus achieve their primary objectives.

Bloom's: Analyze
Difficulty: Hard
7-33
11. (p. 219) To be effective, marketing objectives need to be:
A. realistic and attainable.
B. erudite and challenging.
C. philosophical and fungible.
D. long-term and qualitative.
E. reasonable and elaborate.
Good marketing objectives are quantifiable; they delineate the target market and note the time
frame for accomplishing the goal (often one year). To be effective, objectives must also be
realistic and attainable.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
12. (p. 219) Marketing goals defined in terms of sales, profits or market share increases are:
A. situational response objectives.
B. usually not appropriate for promotional objectives.
C. integrated marketing communications objectives.
D. relationship marketing objectives.
E. communication objectives.
Marketing goals defined in terms of sales, profit, or market share increases are usually not
appropriate promotional objectives. They are objectives for the entire marketing program, and
achieving them depends on the proper coordination and execution of all the marketing-mix
elements, including not just promotion but product planning and production, pricing, and
distribution.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-34
13. (p. 219) 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
Many planners approach promotion from a communications perspective and believe the
objective of advertising and other promotional mix elements is usually to communicate
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
14. (p. 219) 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. the objective of advertising and other promotional mix elements is usually to communicate
C. the primary role of an integrated marketing communications program is to communicate.
D. the objectives should be based on the achievement of communication objectives.
E. they must provide relevant information and create favorable predispositions toward the
brand before purchase behavior will occur.
To many managers, the only meaningful objective for their promotional program is sales.
They take the position that the basic reason a firm spends money on advertising and
promotion is to sell its product or service.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 07-03 To know the differences between sales and communications objectives and the issues regarding the use of each.
Topic: Sales Oriented Objectives
7-35
15. (p. 219) 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
To many managers, the only meaningful objective for their promotional program is sales.
They take the position that the basic reason a firm spends money on advertising and
promotion is to sell its product or service.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 07-03 To know the differences between sales and communications objectives and the issues regarding the use of each.
16. (p. 220) The concept of advertising expenditures producing long term rather than 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.
Many experts recognize that advertising has a lagged or carryover effect; monies spent on
advertising do not necessarily have an immediate impact on sales.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 07-04 To recognize some problems marketers encounter in setting objectives for their IMC programs.
7-36
17. (p. 220) 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 with mature, low-priced, and frequently purchased products.
E. helps in determining the precise relationship between advertising and sales.
A review of econometric studies that examined the duration of cumulative advertising effects
found that for mature, frequently purchased, low-priced products, advertising's effect on sales
lasts up to nine months.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
18. (p. 221) 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 immeasurable, 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.
One problem with sales objectives is that they offer little guidance to those responsible for
planning and developing the promotional program.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-37
19. (p. 221) Heinz developed a sales promotion program called "All About Family." It offered a
coupon of a free Halloween candy when one 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
Certain types of promotion efforts are direct action in nature; they attempt to induce an
immediate behavioral response from the prospective customer. A major objective of most
sales promotion programs is to generate short-term increases in sales.

Bloom's: Analyze
Difficulty: Hard
20. (p. 221) 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 Verizon to AT&T
Certain types of promotion efforts are direct action in nature; they attempt to induce an
immediate behavioral response from the prospective customer. A major objective of most
sales promotion programs is to generate short-term increases in sales.

Bloom's: Analyze
Difficulty: Hard
7-38
21. (p. 221) 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.
Direct-response advertising is one type of advertising that evaluates its effectiveness on the
basis of sales. The direct-response advertiser generally sets objectives and measures success
in terms of the sales response generated by the ad.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
22. (p. 222) Sales-oriented objectives are appropriate for:

A. all Internet marketing.
B. retail advertising 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. creating favorable attitudes and images for a brand or a product before purchase could
occur.
Retail advertising, which accounts for a significant percentage of all advertising expenditures,
is one area where the advertiser often seeks an immediate response, particularly when sales or
special events are being promoted.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-39
23. (p. 222) Which of the following statements is true regarding the relationship between
advertising and promotion, and sales performance?
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. Managers prefer sales-oriented objectives because they provide operational guidelines for
those involved in planning, developing, and executing the advertising and promotional
program.
Retailers may allocate advertising and promotional dollars to image-building campaigns

designed to create and enhance favorable perceptions of their stores.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
24. (p. 223) 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.
Advertising and other promotional efforts are designed to achieve communications such as
brand knowledge and interest, favorable attitudes and image, and purchase intentions.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Topic: Communications Objectives
7-40
25. (p. 223) 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.
Advocates of communications-based objectives generally use some form of hierarchical

models when setting advertising and promotion objectives.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
26. (p. 223) Managers who use the communications effects pyramid to set objectives believe
that:
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.
Advertising and promotion perform communications tasks in the same way that a pyramid is
built, by first accomplishing lower-level objectives such as awareness and knowledge or
comprehension.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-41
27. (p. 223) In 2007, Cingular acquired AT&T but renamed itself using AT&T. The choice of
the name reflected consumers' awareness and recognition of an established brand. Advertising
to make consumers aware of new combined firm would more than likely have _____
objectives.
A. sales-oriented
B. market-oriented
D. communications
Advertising and promotion perform communications tasks in the same way that a pyramid is
built, by first accomplishing lower-level objectives such as awareness and knowledge or
comprehension.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
28. (p. 224) Which of the following is at the top of the communication effects pyramid?
A. awareness
B. knowledge
C. liking
D. preference
E. purchase/repurchase
The initial stages, at the base of the pyramid, are easier to accomplish than those toward the
top, such as trial and repurchase or regular use. (Refer Figure 7-2).
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-42
29. (p. 224) "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
D. communications
Sales oriented objectives include: 1) Increasing the percentage of consumers in the target
market who associate specific features, benefits, or advantages with our brand, 2)
Encouraging current users of the product to use it more frequently or in more situations etc.
AACSB: Analytic
Bloom's: Apply
Difficulty: Hard
30. (p. 224) Which of the following statements is true about the communications objectives?
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 programs.
D. Marketing managers do not recognize the value of setting communications objectives.
E. Precise formulas are to be followed when translating sales goals into specific
communications objectives.
Not all marketing and advertising managers accept communications objectives; some say it is
too difficult to translate a sales goal into a specific communications objective.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-43
31. (p. 226) Which of the following statements is true about communications objectives?
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. Communication objectives are used particularly where the advertiser seeks an immediate
response.
Communications objectives are the criteria used in the DAGMAR approach to setting
advertising goals and objectives, which has become one of the most influential approaches to
the advertising planning process.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
32. (p. 226) 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.
The major thesis of the DAGMAR model is that communications effects are the logical basis
for advertising goals and objectives against which success or failure should be measured.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Topic: DAGMAR: An Approach to Setting Objectives
7-44
33. (p. 226) _____ 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
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
34. (p. 226) In 2007, Cingular acquired AT&T but renamed itself as AT&T itself. The choice of
the name reflected consumers' awareness and recognition of an established brand. To
determine how successful it was in making consumers aware of its name change and its new
positioning strategy, the firm could have used:
A. zero-based communications planning.
B. a benchmark orientation.
C. DAGMAR.
D. the carryover effect.
E. the recency effect.
In 1961, Russell Colley prepared a report for the Association of National Advertisers titled
Defining Advertising Goals for Measured Advertising Results (DAGMAR). In it, Colley
developed a model for setting advertising objectives and measuring the results of an ad
campaign.

Bloom's: Analyze
Difficulty: Hard
7-45
35. (p. 226) A stereo speaker manufacturer developed 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 ambience 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.
Under the DAGMAR approach, an advertising goal involves a communications task that is
specific and measurable. It should be based on a hierarchical model of the communications
process with four stages that is awareness, comprehension, conviction, and action.

Bloom's: Analyze
Difficulty: Hard
36. (p. 227) 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.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Topic: Characteristics of Objectives
7-46
37. (p. 227) 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
Under the DAGMAR approach, an advertising goal involves a communications task that is
specific and measurable. A communications task, as opposed to a marketing task, can be
performed by, and attributed to, advertising rather than to a combination of several marketing
factors.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
38. (p. 227) 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 in 6 months."
C. "Increase the number of customers mentioning the brand name when asked for brand
preference from 40 percent to 50 percent in one year."
D. "Increase awareness of the brand in one year."
E. "Increase sales revenue by 10 percent."
Colley, the founder of DAGMAR, argued that advertising objectives should be stated in terms
of concrete and measurable communications tasks, specify a target audience, indicate a
benchmark starting point and the degree of change sought, and specify a time period for
accomplishing the objective(s).

Bloom's: Analyze
Difficulty: Hard
7-47
39. (p. 227) 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.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
40. (p. 227) According to the DAGMAR model, which of the following is a characteristic of a
good objective?
A. A good objective is elaborative in nature.
B. A good objective specifies the target audience.
C. A good objective includes both positive and negative points.
D. A good objective specifies the current market share.
E. A good objective is based on sales results.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-48
41. (p. 227) Determining a target market's present level of awareness, knowledge and liking
towards a product often requires _____ measures.
A. benchmark
B. sales interval
C. qualitative awareness
D. quantitative awareness
E. reach and frequency
Determining the target market's present position regarding the various response stages
requires benchmark measures.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
42. (p. 227) 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. This was done to:
A. communicate advertising goals.
B. communicate tasks.
C. establish benchmark measures.
D. communicate DAGMAR objectives to the audience.
E. establish marketing research goals.
Determining the target market's present position regarding the various response stages
requires benchmark measures. It often involves conducting a market research study to
determine prevailing levels of the response hierarchy.

Bloom's: Analyze
Difficulty: Hard
7-49
43. (p. 227) An airline company set the following objective for its new advertising campaign:
"To increase the percentage of consumers who know our fares are lower than the competitors'
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.
Colley argued that advertising objectives should be stated in terms of concrete and measurable
communications tasks, specify a target audience, indicate a benchmark starting point and the
degree of change sought, and specify a time period for accomplishing the objective(s).
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
44. (p. 228) 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.
Quantitative benchmarks are not only valuable in establishing communications goals and
objectives but essential for determining whether the campaign was successful. Objectives
provide the standard against which the success or failure of a campaign is measured.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
7-50
45. (p. 228) For which of the following advertising communication tasks should the specified
time period 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
Awareness levels for a brand can be created or increased fairly quickly through an intensive
media schedule of widespread, repetitive advertising to the target audience. Repositioning of a
product requires a change in consumers' perceptions and takes much more time.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
46. (p. 228) In January 2003, Philip-Morris Companies, Inc., and Kraft Foods became the Altria
Group. The change in name 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 most likely 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.
Awareness levels for a brand can be created or increased fairly quickly through an intensive
media schedule of widespread, repetitive advertising to the target audience. Repositioning of a
product requires a change in consumers' perceptions and takes much more time.

Bloom's: Apply
Difficulty: Hard
7-51
47. (p. 228) The DAGMAR approach to setting objectives:
A. has 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.
DAGMAR also focused advertisers' attention on the value of using communications-based

rather than sales-based objectives to measure advertising effectiveness and encouraged the
measurement of stages in the response hierarchy to assess a campaign's impact.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Topic: Assessment of DAGMAR
48. (p. 228; 229) 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 that DAGMAR ignores sales results.
D. setting benchmark measures.
E. creating measurable communications objectives.
A major criticism of the DAGMAR approach is its reliance on the hierarchy of effects model.
DAGMAR MOD II recognizes that the appropriate response model depends on the situation
and emphasizes identifying the sequence of decision-making steps that apply in a buying
situation.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
7-52
49. (p. 229) Which of the following is an example of a common criticism of DAGMAR?
A. It ignores communications objectives.
B. It is difficult to implement.
C. It is useful only for small companies that have a small advertising budget.
D. It offers little guidance to those responsible for planning and developing the promotional
program.
E. It concentrates only on creativity and does not pay much attention to other objectives.
One criticism of DAGMAR concerns the difficulties involved in implementing it. Money
must be spent on research to establish quantitative benchmarks and measure changes in the
response hierarchy. This is costly and time-consuming and can lead to considerable
disagreement over method, criteria, measures, and so forth.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
50. (p. 229) You are working in the advertising department of a large consumer products
company. You have suggested that the company use the DAGMAR approach for setting
advertising goals. Which of the following is an example of an argument that you are likely to
hear against the use of the DAGMAR approach to setting advertising goals?
A. Communication should be the measure of advertising effectiveness rather than sales -
oriented goals.
B. DAGMAR approach is too creative and hence, leads to difficulty in understanding.
C. DAGMAR can be quite expensive due to research costs and is therefore suitable only for
large companies.
D. DAGMAR is too quantitative for most managers to understand.
E. DAGMAR is appropriate only in case of direct - response advertising.
One criticism of DAGMAR concerns the difficulties involved in implementing it. Money
must be spent on research to establish quantitative benchmarks and measure changes in the
response hierarchy. This is costly and time-consuming and can lead to considerable
disagreement over method, criteria, measures, and so forth.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
7-53
51. (p. 229) Creative executives from the advertising industry 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.
One criticism of DAGMAR is that it inhibits advertising creativity by imposing too much
structure on the people responsible for developing the advertising.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
52. (p. 230) Inside-out planning:

marketer believes are important to his or her brand, and the media form the marketer wants to
use.
program.
Inside-out planning focuses on what the marketer wants to say, when the marketer wants to
say it, about things the marketer believes are important about his or her brand, and in the
media forms the marketer wants to use.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Topic: Setting Objectives for the IMC Program
7-54
53. (p. 230) Outside-in planning:
marketer believes are important to his brand, and the media form the marketer wants to use.
program.
Schultz advocates an outside-in planning process for IMC that starts with the customer and
builds backward to the brand.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
54. (p. 230) _____ 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. Refutation planning
Zero-based communications planning involves determining what tasks need to be done and
which marketing communications functions should be used and to what extent.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-55
55. (p. 230) 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
Zero based communications planning approach focuses on the task to be done and searches
for the best ideas and media to accomplish it. The promotional planner should determine what
role various sales promotion techniques, publicity and public relations, direct marketing, the
Internet, and personal selling will play in the overall marketing program.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
56. (p. 233) To more fully appreciate the value of advertising and promotion, managers should
treat the communications budget as a(n):
A. variable cost.
B. expense.
C. liability.
D. investment.
E. fixed cost.
Unfortunately, many managers fail to realize the value of advertising and promotion. They
treat the communications budget as an expense rather than an investment.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 07-05 To understand the process of budgeting for IMC.
Topic: Establishing the Budgets
7-56
57. (p. 233) _____ 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
Contribution margin is the difference between the total revenue generated by a brand and its
total variable costs.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
58. (p. 233) According to Robert Steiner, which of the following terms is 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
Robert Steiner says, marginal analysis and contribution margin are essentially synonymous
terms.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-57
59. (p. 235) In the case of marginal analysis approach, profits are shown to be a result of:
A. advertising expenditure minus sales.
B. sales minus advertising expenditures.
C. gross margin minus advertising expenditures.
D. gross margin minus sales.
E. net worth minus sales.
According to the concept of marginal analysis, as advertising/promotional expenditures

increase, sales and gross margins also increase to a point, but then they level off. Profits are
shown to be a result of the gross margin minus advertising expenditures.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 07-06 To understand theoretical issues involved in budget setting.
60. (p. 236) Which of the following statements describes a weakness inherent in the use of the
marginal analysis model for establishing an advertising budget?
A. It is unsuitable as a basis for budgeting in case of direct response advertising.
B. Only environmental factors that are considered by the model will affect the effectiveness of
the promotional program.
C. Budgetary amount is often set by fiat.
D. The budget is determined by management solely on the basis of what is felt to be
necessary.
E. It is very illogical and virtually no theoretical base is used to determine the budgets.
Marginal analysis approach assumes that sales are determined solely by advertising and
promotion. However, it ignores the fact that environmental factors may also affect the
promotional program, leading the marketing manager to assume the advertising was or was
not effective when some other factor may have helped or hindered the accomplishment of the
desired objectives.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-58
61. (p. 236) 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
According to the concave-downward function model, the effects of advertising budgets follow
the microeconomic law of diminishing returns.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
62. (p. 236) 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.
According to the concave-downward function model, the effects of advertising budgets follow
the microeconomic law of diminishing returns.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-59
63. (p. 236) 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 method.
B. the objective and task method.
C. competitive parity method.
D. an S-shaped response function.
E. rapidly diminishing returns.
As per the S - shaped response function, initial outlays of the advertising budget have little
impact. After a certain budget level has been reached, advertising and promotional efforts
begin to have an effect, as additional increments of expenditures result in increased sales.

Bloom's: Analyze
Difficulty: Hard
64. (p. 237) 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.
impact.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-60
65. (p. 236) 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.
Almost all advertisers subscribe to one of two models of the advertising/sales response
function: the concave-downward function or the S-shaped response curve.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
66. (p. 237) According to the concave-downward model,

products.
According to the concave-downward function model, the effects of advertising quickly begin
to diminish. The logic is that those with the greatest potential to buy will likely act on the first
(or earliest) exposures, while those less likely to buy are not likely to change as a result of the
advertising.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-61
67. (p. 237) According to the S-shaped response curve,
products.
impact.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
68. (p. 237) The S-shaped response curve suggests that:

A. advertising effectiveness will not be related to spending.
B. very low advertising budgets will not work.
C. advertising effectiveness will vary inversely with the 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.
The S-shaped response model suggests a small advertising budget is likely to have no impact
beyond the sales that may have been generated through other means such as word of mouth.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-62
69. (p. 237) Which of the following is a factor that influences the setting of the advertising
budget?
A. The use of communications or sales objectives.
B. The corporate structure.
C. The basis for product differentiation.
D. The extent of selective retention.
E. The recruitment plans.
See Table 7-9
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
70. (p. 238) 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
In case of top-down approaches, the budgetary amount is established (usually at an executive

level) and then the monies are passed down to the various departments.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 07-07 To know various methods of budget setting.
Topic: Budgeting Approaches
7-63
71. (p. 238) The _____ method of budgeting is being employed when expenditure is allocated by
an analysis of expenditure for all aspects of producing and marketing the product. The ad
budget is determined by making sure a certain amount is not exceeded.
C. affordable
In the affordable method, the firm determines the amount to be spent in various areas such as
production and operations. Then it allocates what's left to advertising and promotion,
considering this to be the amount it can afford.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
72. (p. 239) 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."
C. ROI
Perhaps an even weaker method than the affordable method for establishing a budget is
arbitrary allocation, in which virtually no theoretical basis is considered and the budgetary
amount is often set by fiat. That is, the budget is determined by management solely on the
basis of what is felt to be necessary.

Bloom's: Analyze
Difficulty: Hard
7-64
73. (p. 239) Which top-down budgeting method is being employed when expenditure is allocated
by assigning a budget based on gut feelings?
C. affordable method
D. payout planning
Perhaps an even weaker method than the affordable method for establishing a budget is
arbitrary allocation, in which virtually no theoretical basis is considered and the budgetary
amount is often set by fiat. That is, the budget is determined by management solely on the
basis of what is felt to be necessary.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
74. (p. 239) Which of the following is an advantage of the arbitrary allocation method?
A. By using the arbitrary allocation method, the company can be sure of not getting into any
financial problems.
B. It keeps the ad spending within reasonable limits.
C. It uses a logical basis for determining the budgets.
D. This method of budgeting is generally stable.
E. The arbitrary allocation approach has no obvious advantages.
The arbitrary allocation approach has no obvious advantages. No systematic thinking has
occurred, no objectives have been budgeted for, and the concept and purpose of advertising
and promotion have been largely ignored.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-65
75. (p. 240) The most commonly utilized method of budget determination by large firms is:
A. competitive parity method.
B. objective and task method.
C. percentage of sales method.
D. arbitrary allocation method.
E. the affordable method.
Perhaps the most commonly used method for budget setting (particularly in large firms) is the
percentage-of-sales method, in which the advertising and promotions budget is based on sales
of the product.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
76. (p. 240) 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.
In case of the percentage of sales method, management determines the budget amount by
either (1) taking a percentage of the sales dollars or (2) assigning a fixed amount of the unit
product cost to promotion and multiplying this amount by the number of units sold.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-66
77. (p. 240) In the _____ method to budgeting, sales are projected for the coming year based on
the marketing manager's estimates.
C. unit cost production
D. straight-projected sales
E. arbitrary method
In the straight-percentage method, sales are projected for the coming year based on the
marketing manager's estimates.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
78. (p. 240; 243) 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 method.
B. Competitive parity and payout planning method.
C. Payout planning and percent of sales method.
D. Percent of sales and objective and task method.
E. Payout planning and arbitrary allocation method.
taking a percentage of the sales dollars. In case of competitive parity method, marketing
managers set their advertising and promotions budgets on the basis of what their competitors
allocate.

Bloom's: Analyze
Difficulty: Hard
7-67
79. (p. 240) Which of the following budgeting procedures would be used if a firm wanted a
method that is simple to understand and financially safe?
B. marginal analysis
E. arbitrary method
Proponents of the percentage-of-sales method cite a number of advantages. It is financially

safe and keeps ad spending within reasonable limits. The percentage-of-sales method is
simple, straightforward, and easy to implement.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
80. (p. 240) The _____ method of budgeting uses advertising/sales ratio data.
A. objective and task
B. affordable
C. percent of sales
D. ROI
E. arbitrary allocation
taking a percentage of the sales dollars. In case of competitive parity method, marketing
managers set their advertising and promotions budgets on the basis of what their competitors
allocate.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-68
81. (p. 240) The major problem associated with the _____ budgeting method is that it reverses
the cause and effect relationship between advertising and sales.
A. percent of sales
D. S-shaped response
E. rapidly diminishing returns
The percentage-of-sales method has some serious disadvantages; including letting the level of
sales determine the amount of advertising and promotions dollars to be spent that reverses the
cause-and-effect relationship between advertising and sales.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
82. (p. 243) The _____ budgetary allocation method is designed to promote stability and
minimize marketing warfare as well as take advantage of the collective wisdom of the
industry.
A. ROI
B. arbitrary allocation
In the competitive parity method, managers establish budget amounts by matching the
competition's percentage-of-sales expenditures. The argument is that setting budgets in this
fashion takes advantage of the collective wisdom of the industry. It also takes the competition
into consideration, which leads to stability in the marketplace by minimizing marketing
warfare.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-69
83. (p. 243) 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.
fashion takes advantage of the collective wisdom of the industry.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
84. (p. 243) Which of the following methods of determining a budget requires a marketing
department manager to use input from a clipping service?
A. ROI method
B. Arbitrary allocation method
C. Percentage of sales method
D. Competitive parity method
E. Objective and task method
In case of competitive parity method, smaller companies often use a clipping service, which
clips competitors' ads from local print media, allowing the company to work backward to
determine the cumulative costs of the ads placed.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-70
85. (p. 243) The _____ method of budgeting is being employed when expenditures are allocated
based on information about industry averages for advertising. The budget is set to maintain a
level consistent with industry spending.
fashion takes advantage of the collective wisdom of the industry.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
86. (p. 243) Which of the following is an advantage of the competitive parity method?
A. It makes use of the buildup approach to establishment of promotional budgets.
B. It leads to stability in the marketplace by minimizing marketing warfare.
C. It is based on the fact that advertising and promotions are designed to accomplish specific
objectives by addressing certain problems and opportunities.
D. It gives due recognition to the contributions of creative executions and/or media
allocations.
E. Under this method, the budget is driven by the objectives to be attained.
The Competitive Parity method, takes the competition into consideration, which leads to
stability in the marketplace by minimizing marketing warfare.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-71
87. (p. 243) 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
E. payout planning
One of the main disadvantages of the competitive parity method is that it assumes that
because firms have similar expenditures, their programs will be equally effective.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
88. (p. 245) In the _____ method of budget determination advertising is considered an
investment, similar to plant and equipment.
A. payout planning
B. objective and task
C. ROI budgeting
In the ROI budgeting method, advertising and promotions are considered investments, like
plant and equipment.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-72
89. (p. 246) 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.
Tradition and top management's desire for control are probably the major reasons why top-
down methods continue to be popular.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
90. (p. 246) 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
D. build-up
E. trickle up
The objective and task method of budget setting uses a buildup approach.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-73
91. (p. 246) 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.
B. payout planning
C. ROI
The objective and task method of budget setting uses a buildup approach consisting of three
steps: (1) defining the communications objectives to be accomplished, (2) determining the
specific strategies and tasks needed to attain them, and (3) estimating the costs associated with
performance of these strategies and tasks.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
92. (p. 246) Which of the following is an example of a budgeting allocation method that uses a
build-up approach?
A. ROI
D. arbitrary allocation
The objective and task method of budget setting uses a buildup approach.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-74
93. (p. 246) 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.
The first step in the objective and task method of budget setting is to isolate the objectives.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
94. (p. 247) 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 twice 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. Its advertising budget should be less than that needed to maintain the desired market share.
After studying more than 40 years of Nielsen figures, James O. Peckham estimated that the
average share of advertising to sales ratio necessary to launch a new product successfully is
approximately 1.5:2.0. This means that a new entry should be spending at approximately
twice the desired market share.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-75
95. (p. 247) 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.
The objective and task method offers advantages over methods discussed earlier but is more
difficult to implement when there is no track record for the product.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
96. (p. 247) _____ 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
To determine how much to spend, marketers often develop a payout plan that determines the
investment value of the advertising and promotion appropriation.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-76
97. (p. 247) During the first months of a new product introduction, a useful budgeting technique
to determine a ballpark figure for setting feasible objectives is the _____ method.
A. payout planning
B. percent of sales
D. 401k
E. marginal analysis
To determine how much to spend, marketers often develop a payout plan that determines the
investment value of the advertising and promotion appropriation. The basic idea is to project
the revenues the product will generate, as well as the costs it will incur, over two to three
years.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
98. (p. 249) As a tool for budget allocation, multiple regression analysis is most often employed
in budget models using:
A. computer simulation
C. arbitrary allocation
D. percentage of sales
E. a top-down approach
Computer simulation models involve statistical techniques such as multiple regression

analysis to determine the relative contribution of the advertising budget to sales.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-77
99. (p. 252) 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
D. a concave-downward response
E. multiple advertising channels
Larger advertisers can maintain advertising shares that are smaller than their market shares
because they get better advertising rates, have declining average costs of production, and
accrue the advantages of advertising several products jointly. These advantages are known as
economies of scale.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Topic: Allocating the Budget
100. (p. 252) 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 higher advertising rates than smaller advertisers.
C. accrue the disadvantages of advertising several products jointly.
D. have higher average costs of production.
E. can spend more money on advertising and realize a better return.
Due to economies of scale, large advertisers are likely to enjoy more favorable time and space
positions, cooperation of middlepeople, and favorable publicity.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-78
Test Bank for Advertising and Promotion: An Integrated Marketing Communications Perspective,
101. (p. 252) 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. can accrue the advantages of advertising several products jointly.
Due to economies of scale, firms and/or brands maintaining a large share of the market have
an advantage over smaller competitors and thus can spend less money on advertising and
realize a better return.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
7-79
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Test Bank for Advertising and Promotion: An Integrated Marketing Communications Perspective,

Test Bank for Advertising and Promotion: An

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2. Generally, companies that develop Integrated Marketing Communications (IMC) programs

5. Before setting objectives for advertising and promotion, an organization should:

11. To be effective, marketing objectives need to be:

17. The carryover effect:

22. Sales-oriented objectives are appropriate for:

25. Advocates of communication-based objectives for advertising propose using _____ as a

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

32. DAGMAR is:

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

39. According to DAGMAR, advertising objectives should be written in measurable terms

47. The DAGMAR approach to setting objectives:

49. Which of the following is an example of a common criticism of DAGMAR?

53. Outside-in planning:

54. _____ is an approach to integrated marketing communications planning that involves

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

64. The S-shaped response function implies that:

66. According to the concave-downward model,

68. The S-shaped response curve suggests that:

74. Which of the following is an advantage of the arbitrary allocation method?

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

86. Which of the following is an advantage of the competitive parity method?

88. In the _____ method of budget determination advertising is considered an investment,

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

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

101. As a result of economies of scale, smaller advertisers:

Multiple Choice Questions

Many marketers are uncertain as to what integrated marketing communications should

Integrated marketing communications objectives should be based on a thorough situation

AACSB: Reflective Thinking

AACSB: Reflective Thinking

AACSB: Reflective Thinking

AACSB: Reflective Thinking

22. (p. 222) Sales-oriented objectives are appropriate for:

Retailers may allocate advertising and promotional dollars to image-building campaigns

Advocates of communications-based objectives generally use some form of hierarchical

32. (p. 226) DAGMAR is:

AACSB: Reflective Thinking

AACSB: Reflective Thinking

AACSB: Reflective Thinking

AACSB: Reflective Thinking

AACSB: Reflective Thinking

DAGMAR also focused advertisers' attention on the value of using communications-based

52. (p. 230) Inside-out planning:

According to the concept of marginal analysis, as advertising/promotional expenditures

62. (p. 236) The concave-downward function model is based on:

AACSB: Reflective Thinking

64. (p. 237) The S-shaped response function implies that:

66. (p. 237) According to the concave-downward model,

68. (p. 237) The S-shaped response curve suggests that:

See Table 7-9

In case of top-down approaches, the budgetary amount is established (usually at an executive

AACSB: Reflective Thinking

AACSB: Reflective Thinking

Proponents of the percentage-of-sales method cite a number of advantages. It is financially

Computer simulation models involve statistical techniques such as multiple regression

100. (p. 252) As a result of economies of scale, large advertisers:

101. (p. 252) As a result of economies of scale, smaller advertisers:

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