Entrepreneurship 10th Edition Hisrich Test Bank

Entrepreneurship 10th Edition Hisrich
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Chapter 08 - The Marketing Plan
Chapter 08
The Marketing Plan
True / False Questions
1. (p. 211) Neal Blumenthal is the founder of Warby Parker a company that sells prescription
eyeglasses over the internet.
TRUE
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Difficulty: Medium
2. (p. 212) When preparing the industry analysis section of the business plan, using secondary
sources is not appropriate.
FALSE

Difficulty: Medium
3. (p. 213) The first step in conducting a competitive analysis is to document the pricing strategy
of each competitor.
FALSE

Difficulty: Medium
4. (p. 214) Marketing research involves the gathering of information in order to determine who
will buy the product and what the most effective promotion strategy would be.
TRUE

Difficulty: Medium
8-1
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McGraw-Hill Education.
5. (p. 214) An effective way to begin defining the purpose of a marketing plan, is to make a list
of all the information needed to prepare the marketing plan.
TRUE

Difficulty: Medium
6. (p. 214) Defining the purpose or objectives of marketing research is often the most difficult
stage for an entrepreneur.
TRUE

Difficulty: Hard
7. (p. 214) Marketing information that already exists is called secondary data.
TRUE

Difficulty: Easy
8. (p. 214) The Internet is a good source for primary information, but does not provide many
secondary sources.
FALSE

Difficulty: Medium
9. (p. 215) Private data sources, such as Information Resources, Inc. and Nielsen Indexes, are a
low-cost secondary data source.
FALSE

Difficulty: Hard
8-2
10. (p. 215) Networking can be used as an informal method of gathering primary data.
TRUE

Difficulty: Medium
11. (p. 215-216) The simplest approach to gathering primary information is by developing a
questionnaire.
FALSE

Difficulty: Medium
12. (p. 215) Interviewing or surveying is the most common approach used to gather primary
market data.
TRUE

Difficulty: Medium
13. (p. 215) Interviewing is less expensive than observation.

FALSE

Difficulty: Easy
14. (p. 218) Personal, face-to-face, surveys are the most effective and most expensive.
TRUE

Difficulty: Medium
8-3
15. (p. 218) Telephone surveys have the poorest response rate.
FALSE

Difficulty: Medium
16. (p. 218) Focus groups are an informal method for gathering in-depth marketing information.
TRUE

Difficulty: Medium
17. (p. 218) Focus groups should be led by the entrepreneur.

FALSE

Difficulty: Medium
18. (p. 218) Focus groups typically consist of 10-12 potential customers.
TRUE

Difficulty: Hard
19. (p. 220) The marketing plan is designed to answer three basic questions: where have we
been, where do we want to go, and how do we get there?
TRUE

Difficulty: Medium
8-4
20. (p. 221) Management needs to look at the marketing plan as a guide for implementing
marketing decision making and not as a generalized, superficial document.
TRUE

Difficulty: Medium
21. (p. 221) A marketing plan need not provide for the use of existing resources, allocation of all
equipment, financial resources, and human resources, since this is part of a production plan.
FALSE

Difficulty: Hard
22. (p. 221) An updated marketing plan should be prepared by the entrepreneur every two years.
FALSE

Difficulty: Medium
23. (p. 222) The marketing system identifies the major interacting components, both internal and
external to the firm.
TRUE

Difficulty: Medium
24. (p. 223) The management team and the venture's company mission are examples of external
environmental factors.
FALSE

Difficulty: Easy
8-5
25. (p. 223) The marketing mix consists of the following variables: external environmental
factors, internal environmental factors, and marketing strategy.
FALSE

Difficulty: Medium
26. (p. 224) The situation analysis describes past and present business achievements of the new
venture.
TRUE

Difficulty: Medium
27. (p. 225) The first step in preparing the marketing plan is to define the target market.
FALSE

Difficulty: Medium
28. (p. 225) The process of dividing the market into smaller homogeneous groups is called
market segmentation.
TRUE

Difficulty: Easy
29. (p. 228) It is a good idea to have several marketing goals, since it provides better clarity to
the entrepreneur.
FALSE

Difficulty: Hard
8-6
30. (p. 228) It is recommended that the entrepreneur limit the number of marketing goals to no
more than four.
FALSE

Difficulty: Medium
31. (p. 228) A marketing strategy and action plan is defined as specific activities outlined to meet
the venture's business plan goals and objectives.
TRUE

Difficulty: Medium
32. (p. 228) All marketing goals and objectives should be quantifiable in physical units, time
units, or price units.
FALSE

Difficulty: Medium
33. (p. 229) When making decisions about pricing strategy, the entrepreneur should consider
only costs directly associated with the product and ignore overhead.
FALSE

Difficulty: Medium
34. (p. 229) When products cannot be easily differentiated, the entrepreneur is forced to charge a
lower price than the competition.
FALSE

Difficulty: Medium
8-7
35. (p. 230) It is harder to charge a high price if the company operates in a differentiated product
market.
FALSE

Difficulty: Medium
36. (p. 230) The final price of a product or service is the sum of total cost plus profit margin.
TRUE

Difficulty: Easy
37. (p. 230) Major considerations in channel of distribution selection include degree of
directness and number of channel members.
TRUE

Difficulty: Medium
38. (p. 230) Middlemen such as wholesalers have lower distribution costs because they operate
with economies of scale.
TRUE

Difficulty: Easy
39. (p. 231) Manufacturer's agents take title to products and resell them.
FALSE

Difficulty: Medium
8-8
40. (p. 232) Promotion using television is more expensive than promotion using the Internet and
direct mail.
TRUE

Difficulty: Easy
41. (p. 234) The marketing plan is not meant to be a commitment by the entrepreneur to a
specific strategy.
FALSE

Difficulty: Medium
42. (p. 234) Unrealistic goals are a common reason for failure of the marketing plan.
TRUE

Difficulty: Easy
Multiple Choice Questions
43. (p. 211) Warby Parker was started by:

A. Neal Blumenthal
B. Sergy Bryn
C. Mark Zuckerberg
D. Google

Difficulty: Medium
8-9
44. (p. 212) Which of the following statements is(are) not true?
A. Primary focus of an industry analysis is to provide sufficient knowledge of the
environment that can affect marketing strategy decision-making.
B. Industry analysis needs to be conducted using only primary research data.
C. Industry analysis begins with the broadest-based assessment of environmental and industry
trends.
D. The information-seeking process of industry analysis is known as an upside-down
pyramid.

Difficulty: Easy
45. (p. 213) Competitor analysis begins with:

A. gathering samples of the competitors product(s).
B. discovering each competitors advertising budget.
C. documenting the current strategy of each primary competitor.
D. identifying which competitors are most successful.

Difficulty: Hard
46. (p. 214) _____ is the process of gathering information in order to determine who will buy the
product and what is the most appropriate distribution channel.
A. Market segmentation
B. Marketing planning
C. Market mixing
D. Marketing research

Difficulty: Medium
8-10
47. (p. 214) Marketing research begins with:

A. setting the advertising budget.
B. definition of objectives or purpose.
C. identifying direct marketing strategy.
D. collecting a list of primary and secondary sources of information.

Difficulty: Medium
48. (p. 214) Which stage of marketing research is considered to be the most difficult for an
entrepreneur due to lack of knowledge or experience in marketing?
A. Analyzing and interpreting the results
B. Gathering data from primary sources
C. Gathering data from secondary sources
D. Defining the purpose or objectives

Difficulty: Hard
49. (p. 214) Information that already exists is called:

A. secondary data.
B. primary data.
C. marketing data.
D. target data.

Difficulty: Medium
50. (p. 215) Observation, interviewing, and focus groups are examples of collecting:
A. marketing data.
B. primary data.
C. secondary data.
D. target data.

Difficulty: Medium
8-11
51. (p. 215) The simplest approach to gathering primary information is:
A. observation.
B. focus groups.
C. experimentation.
D. interviewing.

Difficulty: Medium
52. (p. 215) The most common approach to gathering primary information is:
A. observation.
B. focus groups.
C. experimentation.
D. interviewing.

Difficulty: Medium
53. (p. 218) Which survey method is the fastest method for obtaining data?
A. Telephone
B. Mail
C. Personal
D. Internet

Difficulty: Medium
54. (p. 218) Which survey method results in the most in-depth information and the best response
rate?
A. Telephone
B. Mail
C. Personal
D. Internet

Difficulty: Medium
8-12
55. (p. 218) Which survey method results in the worst response rate?
A. Telephone
B. Mail
C. Personal
D. Internet

Difficulty: Medium
56. (p. 218) Which survey method is the most expensive?

A. Telephone
B. Mail
C. Personal
D. Internet

Difficulty: Medium
57. (p. 218) A focus group should consist of:

A. 6-8 potential customers
B. 10-12 potential customers
C. 14-16 potential customers
D. 18-20 potential customers

Difficulty: Hard
58. (p. 218) Focus groups:

A. should be led by the entrepreneur.
B. consist of 20 to 30 potential customers.
C. discuss information in a formal and standardized procedure.
D. are an informal method of gathering market information.

Difficulty: Medium
8-13
59. (p. 220) Which of the following is not a major question that should be addressed by the
marketing plan?
A. Where have we been?
B. Where do we want to go in the short term?
C. Where do we want to go in the long term?
D. How do we get there?

Difficulty: Medium
60. (p. 220) The _________ is the written statement of marketing objectives, strategies, and
activities to be followed in the business plan.
A. marketing plan
B. marketing mix
C. marketing system
D. marketing structure

Difficulty: Medium
61. (p. 222) The major interacting components that enable a firm to successfully provide
products to the marketplace are called the:
A. marketing plan.
B. marketing mix.
C. marketing system.
D. marketing structure.

Difficulty: Hard
8-14
62. (p. 223) Generally speaking, entrepreneurs see the external environment as:
A. marginally influential.
B. uncontrollable.
C. largely influential.
D. predictable.

Difficulty: Medium
63. (p. 223) Which of the following is an internal environmental variable?

A. The economy
B. Technology
C. Industry demand
D. Financial resources

Difficulty: Medium
64. (p. 222-223) Financial resources and the management team are both examples of the:
A. external environment.
B. marketing mix decision variables.
C. internal environment.
D. feedback system.

Difficulty: Medium
65. (p. 223) The four variables that affect short-term marketing decisions are referred to as the:
A. marketing mix.
B. market segment.
C. marketing plan.
D. marketing system.

Difficulty: Medium
8-15
66. (p. 224) The marketing mix consists of:

A. product, price, research, and promotion.
B. product, research, distribution, and promotion.
C. product, price, distribution, and promotion.
D. product, price, distribution, and research.

Difficulty: Medium
67. (p. 225) The __________ is the specific group of potential customers toward which a venture
aims its marketing plan.
A. target market
B. external environmental factor
C. channel of distribution
D. consumer market

Difficulty: Medium
68. (p. 225) Which is the first step in preparing a marketing plan?
A. Identifying strengths and weaknesses
B. Defining the target market
C. Establishing goals and objectives
D. Defining the business situation

Difficulty: Medium
69. (p. 226) Market segmentation is the process of:

A. describing market conditions.
B. dividing the market into smaller homogeneous groups.
C. presenting future opportunities.
D. exploring new market opportunities.

Difficulty: Medium
8-16
70. (p. 228) Once the marketing goals and objectives have been established, the entrepreneur can
begin to develop the __________ and __________ to achieve them.
A. marketing plan; industry analysis
B. marketing mix; consumer research
C. marketing strategy; action plan
D. market research; industry analysis

Difficulty: Medium
71. (p. 228) In establishing goals and objectives, it is important to:

A. quantify all aspects of the goals.
B. limit the number of goals.
C. set standards that are ideal.
D. measure it for control purposes.

Difficulty: Hard
72. (p. 228) The number of goals and objectives in the marketing plan should be:
A. 2-4
B. 4-6
C. 6-8
D. 8-10

Difficulty: Hard
73. (p. 229) Which of the following is(are) not a key element in the pricing strategy?
A. Cost
B. Margin or markup
C. Competition
D. Distribution

Difficulty: Easy
8-17
74. (p. 229) When products cannot be easily differentiated:

A. there is little room for price variations from the competition.
B. a skimming price strategy is appropriate.
C. a higher price can be charged.
D. the lowest possible price must be charged.

Difficulty: Hard
75. (p. 230) The _________ element of the marketing mix involves decisions as to what is the
most appropriate channel.
A. product
B. price
C. distribution
D. promotion

Difficulty: Easy
76. (p. 231) Market conditions, product attributes, cost benefits and venture attributes are all part
of which major consideration in channel selection?
A. Degree of directness
B. Number of channel members
C. Criteria in selection of channel members
D. Number of channels

Difficulty: Medium
8-18
77. (p. 231) Intensive, selective and exclusive are all part of which major consideration in
channel selection?
A. Degree of directness
B. Number of channel members
C. Criteria in selection of channel members
D. Number of channels

Difficulty: Medium
78. (p. 231) Manufacturer's representatives are marketing middlemen that:

A. take title and physical possession of the product.
B. take physical possession of the product.
C. work exclusively for the entrepreneur.
D. are paid a commission when a sale is made.

Difficulty: Medium
79. (p. 232) Which form of promotion is too expensive for most entrepreneurs to use?
A. TV
B. Print Ads
C. Radio
D. Webpage

Difficulty: Easy
80. (p. 232) Business-to-business marketing involves:

A. sales to households for personal consumption.
B. a more direct channel of distribution than consumer markets.
C. selling products such as household furniture.
D. selling products and services through certified representatives.

Difficulty: Medium
8-19
81. (p. 232) In business-to-business which advertising and promotion method would be the least
likely to be used?
A. Trade magazines
B. Direct sales
C. Trade shows
D. TV ads

Difficulty: Medium
82. (p. 234) Which of the following is true of implementing a market plan?
A. It is meant to be a tentative plan by the entrepreneur to a specific strategy.
B. It need not be assigned to an individual for coordinating and implementing the plan.
C. It is a formality that serves as a superficial document to outside financial supporters or
suppliers.
D. It is a commitment to make adjustments as needed or dictated by market conditions.

Difficulty: Medium
83. (p. 234) If the entrepreneur is constantly faced with significant changes in the marketing
strategy, then it is likely that:
A. there is insufficient monitoring of the plan.
B. the plan was not prepared properly.
C. the business marketing effort does not support the strategy.
D. there have been too many external factors that were difficult to predict.

Difficulty: Medium
8-20
Essay Questions
84. (p. 214-220) Identify, in order, and briefly explain each step of conducting market research
giving examples where appropriate.
1. Defining purpose or objectives - The most effective way to begin is for the entrepreneur to
sit down and make a list of the information that will be needed to prepare the marketing plan.
For example, the entrepreneur may think there is a market for his or her product but not be
sure who the customers will be or even whether the product is appropriate in its present form.
Thus, one objective would be to ask people what they think of the product or service and
whether they would buy it, and to collect some background demographics and attitudes of
these individuals. Other objectives may be to determine the following:
 How much would potential customers be willing to pay for the product or service?
 Where would potential customers prefer to purchase the product or service?
 Where would the customer expect to hear about or learn about such a product or service?
2. Gather data from secondary sources - The most important purpose of reviewing secondary
sources is to obtain information that will assist the entrepreneur in making the best decisions
regarding the marketing of a product or service. Some examples include trade magazines,
newspaper articles, libraries, government agencies, and the Internet can provide much
information on the industry market and competitors. The Internet can even be used to gather
informal primary data by reviewing social media and blogs. Before considering either primary
sources or commercial sources of information, the entrepreneur should exhaust all free
secondary sources. Other specific source examples may come from table 8.2.
3. Gather data from primary sources - Information that is new is primary data. Gathering
primary data involves a data collection procedure—such as observation, networking,
interviewing, focus groups, or experimentation—and usually a data collection instrument,
such as a questionnaire. Interviewing or surveying is the most common approach used to
gather market information. It is more expensive than observation but is more likely to
generate more meaningful information.
4. Analyzing and interpreting results - Depending on the size of the sample, the entrepreneur
can hand-tabulate the results or enter them on a computer. In either case, the results should be
evaluated and interpreted in response to the research objectives that were specified in the first
step of the research process. Often, summarizing the answers to questions will give some
preliminary insights. Then data can be cross-tabulated to provide more focused results. For
example, the entrepreneur may want to compare the results to questions by different age
groups, sex, occupation, location, and so on.
Answer will vary.
Difficulty: Medium
8-21
85. (p. 220-221) Identify and explain the three basic questions a marketing plan should answer.
1. Where have we been? When used as a stand-alone document (operational plan), this would
imply some background on the company, its strengths and weaknesses, some background on
the competition, and a discussion of the opportunities and threats in the marketplace. When
the marketing plan is integrated as part of the business plan, this segment would focus on
some history of the marketplace, marketing strengths and weaknesses of the firm, and market
opportunities and threats.
2. Where do we want to go (in the short term)? This question primarily addresses the
marketing objectives and goals of the new venture in the next 12 months. In the initial
business plan, the objectives and goals often go beyond the first year because of the need to
project profits and cash needs for the first three years.
3. How do we get there? This question discusses the specific marketing strategy that will be
implemented, when it will occur, and who will be responsible for the monitoring of activities.
The answers to these questions are generally determined from the marketing research carried
out before the planning process is begun. Budgets will also be determined and used in the
income and cash flow projections.
Difficulty: Medium
86. (p. 222) List the 4 major factors of the external environment identified by the marketing
system.
Financial resources
Suppliers
Goals and objectives
Management team
Difficulty: Medium
8-22
87. (p. 228) Give examples of what types of goals should be set in the goals and objectives
section.
market share
profits
sales (by territory and region)
market penetration
number of distributors
awareness level
new product launching
pricing policy
sales promotion
advertising support
Difficulty: Medium
8-23
88. (p. 229-230) Discuss the major factors that should be considered in setting a product/service
price.
A. Costs - One of the important initial considerations in any pricing decision is to ascertain
the costs directly related to the product or service (material and labor costs or cost of product
from producer). Whether a manufacturer, retailer, or service venture, the entrepreneur would
need to ascertain the approximate costs for overhead (some examples would be utilities, rent,
promotion, insurance, and salaries).
B. Margins or Markups - In many industries the retailers of the products use a standard
markup to price goods in their stores. Given that the retailer maintains costs equivalent to the
industry standards, this markup would be expected to cover overhead costs and some profit.
Standard markups can be ascertained from trade publications or by asking suppliers. A lower
markup and hence lower profit can be accepted by the entrepreneur and is a strategy used to
increase demand in the short term (market penetration strategy) but could influence the
competition to also lower its price, thus eventually reducing the profit margins for everyone.
C. Competition - When products cannot be easily differentiated, the entrepreneur is forced to
charge the same price as the competition. A higher price may also be supported by market
research data. Innovations such as technology products or new drug products may warrant a
higher price or skimming strategy for the new venture to recover some of its high
development costs. In a non-differentiated product market, marketing research may reveal that
consumers are willing to pay more if you offer service benefits such as free home delivery,
guarantees on the life of the item, or free long-term repair. Although these services would
increase the costs to the entrepreneur, they would establish a distinctive image for the product
in a non-differentiated product category, allowing a higher price and, potentially, a higher-
quality image than that of the competition.
Answer will vary.
Difficulty: Medium
89. (p. 230) Identify the 4 major considerations in distribution channel selection.
Degree of directness of channel

Number of channel members
Criteria in selection of channel members
Number of channels
Difficulty: Medium
8-24

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True / False Questions

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13. (p. 215) Interviewing is less expensive than observation.

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17. (p. 218) Focus groups should be led by the entrepreneur.

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Multiple Choice Questions

43. (p. 211) Warby Parker was started by:

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45. (p. 213) Competitor analysis begins with:

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47. (p. 214) Marketing research begins with:

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49. (p. 214) Information that already exists is called:

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