Entrepreneurship 9th Edition Hisrich Test Bank

Entrepreneurship 9th Edition Hisrich
Test Bank
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Chapter 08 - The Marketing Plan
Chapter 08 The Marketing Plan Answer Key
True / False Questions
1. Russell Rothstein is the founder of SaleSpider.com which is a free social networking site
designed to assist small businesses.
TRUE
Difficulty: Medium
p.209
2. When preparing the industry analysis section of the business plan, using secondary sources is
not appropriate.
FALSE
Difficulty: Medium
p.211
3. The first step in conducting a competitive analysis is to document the pricing strategy of each
competitor.
FALSE
Difficulty: Medium
p.211
4. 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
p.212
5. 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
p.212
6. Defining the purpose or objectives of marketing research is often the most difficult stage for
an entrepreneur.
TRUE
Difficulty: Hard
p.212
8-1
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
7. Marketing information that already exists is called secondary data.

TRUE
Difficulty: Easy
p.213
8. The Internet is a good source for primary information, but does not provide many secondary
sources.
FALSE
Difficulty: Medium
p.213
9. Private data sources, such as Information Resources, Inc. and Nielsen Indexes, are a low-cost
secondary data source.
FALSE
Difficulty: Hard
p.213
10. Networking can be used as an informal method of gathering primary data.

TRUE
Difficulty: Medium
p.213
11. The simplest approach to gathering primary information is by developing a questionnaire.

FALSE
Difficulty: Medium
p.213
12. Interviewing or surveying is the most common approach used to gather primary market
data.
TRUE
Difficulty: Medium
p.215
13. Interviewing is less expensive than observation.

FALSE
Difficulty: Easy
p.215
8-2
14. Personal, face-to-face, surveys are the most effective and most expensive.
TRUE
Difficulty: Medium
p.216
15. Telephone surveys have the poorest response rate.

FALSE
Difficulty: Medium
p.216
16. Focus groups are an informal method for gathering in-depth marketing information.
TRUE
Difficulty: Medium
p.218
17. Focus groups should be led by the entrepreneur.

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

TRUE
Difficulty: Hard
p.218
19. 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
p.219
20. 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
p.219
8-3
21. 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
p.219
22. An updated marketing plan should be prepared by the entrepreneur every two years.
FALSE
Difficulty: Medium
p.219
23. The marketing system identifies the major interacting components, both internal and
external to the firm.
TRUE
Difficulty: Medium
p.220
24. The management team and the venture's company mission are examples of external
environmental factors.
FALSE
Difficulty: Easy
p.220-221
25. The marketing mix consists of the following variables: external environmental factors,
internal environmental factors, and marketing strategy.
FALSE
Difficulty: Medium
p.221
26. The situation analysis describes past and present business achievements of the new
venture.
TRUE
Difficulty: Medium
p.223
8-4
27. The first step in preparing the marketing plan is to define the target market.
FALSE
Difficulty: Medium
p.223
28. The process of dividing the market into smaller homogeneous groups is called market
segmentation.
TRUE
Difficulty: Easy
p.223
29. It is a good idea to have several marketing goals, since it provides better clarity to the
entrepreneur.
FALSE
Difficulty: Hard
p.226
30. The recommended that the entrepreneur limit the number of marketing goals to no more
than four.
FALSE
Difficulty: Medium
p.226
31. 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
p.226
32. All marketing goals and objectives should be quantifiable in physical units, time units, or
price units.
FALSE
Difficulty: Medium
p.226
33. When making decisions about pricing strategy, the entrepreneur should consider only costs
directly associated with the product and ignore overhead.
FALSE
Difficulty: Medium
p.227
8-5
34. When products cannot be easily differentiated, the entrepreneur is forced to charge a lower
price than the competition.
FALSE
Difficulty: Medium
p.228
35. It is harder to charge a high price if the company operates in a differentiated product
market.
FALSE
Difficulty: Medium
p.228
36. The final price of a product or service is the sum of total cost plus profit margin.
TRUE
Difficulty: Easy
p.228
37. Major considerations in channel of distribution selection include degree of directness and
number of channel members.
TRUE
Difficulty: Medium
p.229
38. Middlemen such as wholesalers have lower distribution costs because they operate with
economies of scale.
TRUE
Difficulty: Easy
p.229
39. Manufacturer's agents take title to products and resell them.

FALSE
Difficulty: Medium
p.230
40. Promotion using television is more expensive than promotion using the Internet and direct
mail.
TRUE
Difficulty: Easy
p.230
8-6
41. The marketing plan is not meant to be a commitment by the entrepreneur to a specific
strategy.
FALSE
Difficulty: Medium
p.232
42. Unrealistic goals are a common reason for failure of the marketing plan.
TRUE
Difficulty: Easy
p.232
Multiple Choice Questions
43. SaleSpider.com was started by:
A. Russell Rothstein
B. Sergy Bryn
C. Mark Zuckerberg
D. Google
Difficulty: Medium
p.209
44. 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
p.211
45. 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
p.211
8-7
46. _____ 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
p.212
47. 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
p.212
48. 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
p.212
49. Information that already exists is called:

A. secondary data.
B. primary data.
C. marketing data.
D. target data.
Difficulty: Medium
p.213
50. Observation, interviewing, and focus groups are examples of collecting:

A. marketing data.
B. primary data.
C. secondary data.
D. target data.
Difficulty: Medium
p.213
8-8
51. The simplest approach to gathering primary information is:

A. observation.
B. focus groups.
C. experimentation.
D. interviewing.
Difficulty: Medium
p.213
52. The most common approach to gathering primary information is:

A. observation.
B. focus groups.
C. experimentation.
D. interviewing.
Difficulty: Medium
p.215
53. Which survey method is the fastest method for obtaining data?
A. Telephone
B. Mail
C. Personal
D. Internet
Difficulty: Medium
p.216
54. 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
p.216
55. Which survey method results in the worst response rate?

A. Telephone
B. Mail
C. Personal
D. Internet
Difficulty: Medium
p.216
8-9
56. Which survey method is the most expensive?

A. Telephone
B. Mail
C. Personal
D. Internet
Difficulty: Medium
p.216
57. 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
p.218
58. 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
p.218
59. 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
p.219
60. 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
p.220
61. The major interacting components that enable a firm to successfully provide products to the
marketplace are called the:
8-10
A. marketing plan.
B. marketing mix.
C. marketing system.
D. marketing structure.
Difficulty: Hard
p.220-221
62. Generally speaking, entrepreneurs see the external environment as:

A. marginally influential.
B. uncontrollable.
C. largely influential.
D. predictable.
Difficulty: Medium
p.221
63. Which of the following is an internal environmental variable?

A. The economy
B. Technology
C. Industry demand
D. Financial resources
Difficulty: Medium
p.221
64. 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
p.221
65. 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
p.222
66. 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.
8-11
Difficulty: Medium
p.222
67. 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
p.223
68. 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
p.223
69. 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
p.223
70. 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
p.226
71. 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.
8-12
Difficulty: Hard
p.226
72. 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
p.226
73. 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
p.227
74. 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
p.228
75. 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
p.228
76. 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
8-13
Difficulty: Medium
p.229
77. 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
p.229
78. 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
p.229-230
79. Which form of promotion is too expensive for most entreprenuers to use?
A. TV
B. Print Ads
C. Radio
D. Webpage
Difficulty: Easy
p.230
80. 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
p.231
8-14
81. 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
p.231
82. 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
p.232
83. 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
p.232
Short Answer/Essay Questions
84. 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
8-15
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 through chat groups. 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-Hard (depending on detail required by instructor)

p.212-218
85. 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.
8-16
Difficulty: Medium
p.219
86. List the 4 major factors of the external environment identified by the marketing system.
Financial resources
Suppliers
Goals and objectives
Management team
Difficulty: Medium
p.221
87. 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 (depending on number of examples required by instructor)
p.226
88. 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
8-17
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/Hard (depending on detail required by instructor)

p.227
89. 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
p.229
8-18

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Entrepreneurship 9th Edition Hisrich

Chapter 08 The Marketing Plan Answer Key

True / False Questions

7. Marketing information that already exists is called secondary data.

10. Networking can be used as an informal method of gathering primary data.

11. The simplest approach to gathering primary information is by developing a questionnaire.

13. Interviewing is less expensive than observation.

15. Telephone surveys have the poorest response rate.

17. Focus groups should be led by the entrepreneur.

18. Focus groups typically consist of 10-12 potential customers.

39. Manufacturer's agents take title to products and resell them.

Multiple Choice Questions

43. SaleSpider.com was started by:

44. Which of the following statements is (are) not true?

45. Competitor analysis begins with:

47. Marketing research begins with:

49. Information that already exists is called:

50. Observation, interviewing, and focus groups are examples of collecting:

51. The simplest approach to gathering primary information is:

52. The most common approach to gathering primary information is:

55. Which survey method results in the worst response rate?

56. Which survey method is the most expensive?

57. A focus group should consist of:

58. Focus groups:

62. Generally speaking, entrepreneurs see the external environment as:

63. Which of the following is an internal environmental variable?

66. The marketing mix consists of:

68. Which is the first step in preparing a marketing plan?

69. Market segmentation is the process of:

71. In establishing goals and objectives, it is important to:

74. When products cannot be easily differentiated:

78. Manufacturer's representatives are marketing middlemen that:

80. Business-to-business marketing involves:

82. Which of the following is true of implementing a market plan?

Short Answer/Essay Questions

Answer will vary.

Difficulty: Medium-Hard (depending on detail required by instructor)

Answer will vary.

Difficulty: Medium/Hard (depending on detail required by instructor)

89. Identify the 4 major considerations in distribution channel selection.

Degree of directness of channel

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