Marketing Management, 15e (Kotler)

Chapter 22 Managing Personal Communications: Direct and Database Marketing and

Personal Selling

1) The catalog you receive from a large apparel store, displaying their new summer collection, is
an example of ________ marketing.
A) buzz
B) direct
C) virtual
D) word-of-mouth
E) interactive
Answer: B
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

2) A salesperson sends e-mails to persuade prospects to buy the products of his company. This is
a type of ________ marketing.
A) buzz
B) virtual
C) word-of-mouth
D) direct
E) viral
Answer: D
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

3) Market demassification has resulted in ________.

A) niche market creation
B) product standardization
C) mass production practices
D) intrinsic marketing channels
E) just-in-time production
Answer: A
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

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4) Which of the following is an example of a company that serves a niche market?
A) a large apparel manufacturing company that produces a wide range of products for different
segments
B) a software company that creates standardized supply chain applications for manufacturers
C) a manufacturer who creates tools such as bolts, latches, door handles etc. for left-handed
individuals
D) a large multinational manufacturer of consumer products, FMCG products, and consumer
electronics
E) a company that manufactures denim pants for men and women of all ages
Answer: C
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Analytical thinking; Application of knowledge

5) Which of the following is NOT one of the advantages of direct mail?

A) The cost per thousand is lower than for mass media.
B) It permits target market selectivity.
C) It can be personalized.
D) It allows early testing and response measurement.
E) It is flexible.
Answer: A
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

6) Greta is attempting to get as many orders as possible. Which direct marketing tool is generally
associated with the highest order response rate?
A) e-mail to an internal company list
B) direct mail to an internal company list
C) e-mail to a general list
D) direct mail to a general list
E) banner advertising on the company's Web site
Answer: B
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Application of knowledge

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7) Greta is marketing a product that is technologically advanced and requires a great deal of
explanation. Which direct response tool should she use?
A) direct mail
B) e-mail
C) infomercial
D) inbound telemarketing
E) outbound telemarketing
Answer: C
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Application of knowledge

8) OrdOnline, a pure click company offering online auctioning, decides to launch a promotional
program to increase its sales. The company identifies customers who have made at least three
purchases and spent at least $150 in the past six months and offers discount coupons to these
customers. Which of the following strategies is used here for targeting customers?
A) viral marketing
B) objective screening
C) internal targeting
D) catalog marketing
E) RFM formula targeting
Answer: E
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Analytical thinking; Application of knowledge

9) Which of the following is a major advantage of using direct mail?

A) Direct mail permits target market selectivity.
B) It is the best suited tool for selling complex products.
C) Campaign testing is not needed for direct mail.
D) Direct mail has very high conversion rates.
E) It is the best method to sell industrial products.
Answer: A
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

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10) Which of the following is a factor considered when a customer is evaluated based on the
RFM formula?
A) the amount of time passed after the customer's last visit
B) the product categories purchased by the customer
C) the mode of payment used by the customer
D) the location from which the customer has bought goods
E) the type of feedback provided by the customer
Answer: A
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

11) Which of the following is an element of an offer strategy?

A) the medium used for delivery
B) the number of customers in the locality
C) the vision of the company
D) the skills required for production
E) the details of customer order received
Answer: A
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

12) In 2010, three top B-to-B ________ were Thermo Scientific lab and research supplies ($10.8
billion), Henry Schien dental, medical, and vet supplies ($7.5 billion) and WESCO International
electrical and industry maintenance supplies ($5 billion).
A) inbound telemarketers
B) catalog sellers
C) outbound telemarketers
D) infomercial marketers
E) mobile marketers
Answer: B
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Application of knowledge

13) In 2010, the three top B-to-C ________ were Dell ($52 billion), Staples ($9.8 billion), and
CDW ($8.8 billion).
A) inbound telemarketers
B) catalog sellers
C) outbound telemarketers
D) infomercial marketers
E) mobile marketers
Answer: B
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Application of knowledge
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14) The practice of using call centers, where employees receive calls from customers and
provide service by taking orders and answering queries, is called ________.
A) customer response marketing
B) guerilla marketing
C) reactive marketing
D) internal marketing
E) inbound telemarketing
Answer: E
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

15) In outbound telemarketing, the call center employees ________.

A) sell high-involvement products
B) initiate calls from a location closer to prospects
C) offer huge discounts to customers
D) initiate calls to prospects and customers
E) answer the queries of consumers who call for information
Answer: D
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

16) The management of Raleigh Bicycles observes that the company's selling costs are affected
by the increased number of visits that salespeople make to meet dealers. The company decides to
reduce its personal selling costs by making sales calls to dealers via telephone. This marketing
strategy used by Raleigh is an example of ________.
A) inbound telemarketing
B) search marketing
C) internal marketing
D) outbound telemarketing
E) paid-search marketing
Answer: D
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Analytical thinking; Application of knowledge

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Copyright © 2016 Pearson Education, Inc.
17) Which of the following is a disadvantage of direct marketing?
A) invasion of privacy
B) inability to build brand awareness
C) low chances of customers avoiding messages
D) inability to control marketing communication
E) inability to maintain information security
Answer: A
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

18) Catalog marketing and telemarketing are examples of indirect marketing.

Answer: FALSE
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

19) During the 2012 election, much of the $690 million raised online by the Obama campaign
resulted from carefully targeted and tested e-mails.
Answer: TRUE
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Application of knowledge

20) Direct marketing has not been growing as fast as US retail sales.
Answer: FALSE
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

21) Direct marketing produced $2.05 trillion in sales in 2012, accounting for approximately 8.7
percent of GDP.
Answer: TRUE
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

22) A direct marketer must consider returned merchandise and bad debts when s/he determines
the needed break-even response rate for direct mail.
Answer: TRUE
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

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23) If a specific campaign does not break even in the short run, it will not be profitable in the
long run if we factor in customer lifetime value by calculating the average customer longevity,
average customer annual expenditure, and average gross margin, minus the average cost of
customer acquisition and maintenance (discounted for the opportunity cost of money).
Answer: FALSE
Diff: 3
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

24) One of the shortcomings of direct marketing is that the firm cannot easily measure the
response.
Answer: FALSE
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

25) Direct mail permits target market selectivity and allows early testing and response
measurement.
Answer: TRUE
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

26) A company's best prospects are customers who have never bought its products.
Answer: FALSE
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

27) Direct marketing has the ability to test different elements of an offer strategy under real
marketplace conditions.
Answer: TRUE
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

28) Although it varies with product category, price, and the nature of the offering, in general,
average response rates for e-mails is higher than order-response rates for letter-sized direct mail.
Answer: FALSE
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

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Copyright © 2016 Pearson Education, Inc.
29) Direct mail can produce prospect leads, strengthen customer relationships, inform and
educate customers, remind customers of offers, and reinforce recent customer purchase
decisions.
Answer: TRUE
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

30) Points are established for varying RFM levels; the more points, the more attractive the
customer.
Answer: TRUE
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

31) The Internet and catalog retailing industry includes 20,000 companies with combined annual
revenue of $350 billion.
Answer: TRUE
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

32) Direct marketers use the RFM formula to select customers according to how much time has
passed since their last purchase, how many times they have purchased, and how much they have
spent since becoming a customer.
Answer: TRUE
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

33) If a company exaggerates the features of its products in its product catalogue, it can be
classified as deception.
Answer: TRUE
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Ethical understanding and reasoning

34) Business-to-business telemarketing is increasing.

Answer: TRUE
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

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35) Business-to-consumer telemarketing is increasing.
Answer: FALSE
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

36) What is direct marketing? What are the various channels that direct marketers use?
Answer: Direct marketing is the use of consumer-direct (CD) channels to reach and deliver
goods and services to customers without using marketing middlemen. Direct marketers can use a
number of channels to reach individual prospects and customers: direct mail, catalog marketing,
telemarketing, interactive TV, kiosks, Web sites, and mobile devices. They often seek a
measurable response, typically a customer order, through direct-order marketing.
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

37) How did the Obama campaign use direct marketing during the 2012 election?
Answer: Much of the $690 million raised online by the Obama campaign resulted from carefully
targeted and tested e-mails. Every day, the campaign used small groups of supporters to test as
many as 18 different versions of e-mails varying in subject line, amounts requested, and sender.
The winning combination went to the broad base of tens of millions of supporters. Campaign
analysts found that a casual tone (such as the word hey) was often effective in subject lines and
that supporters seemed to never tire of the e-mails.
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Application of knowledge

38) How have consumers benefited from market demassification?

Answer: Consumers short of time and tired of traffic and parking headaches appreciate toll-free
phone numbers, always-open Web sites, next-day delivery, and direct marketers' commitment to
customer service. In addition, many chain stores have dropped slower-moving specialty items,
creating an opportunity for direct marketers to promote these to interested buyers instead.
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

9
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39) How have sellers benefited from market demassification?
Answer: Direct marketers can buy a list containing the names of almost any group: left-handed
people, overweight people, or millionaires. They can customize and personalize messages and
build a continuous relationship with each customer. New parents will receive periodic mailings
describing new clothes, toys, and other goods as their child grows. Direct marketing can reach
prospects at the moment they want a solicitation and therefore be noticed by more highly
interested prospects. It lets marketers test alternate media and messages to find the most cost-
effective approach. Direct marketing also makes the company's offer and strategy less visible to
competitors. Finally, direct marketers can measure responses to their campaigns to decide which
have been the most profitable.
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

40) How do successful direct marketers view customer interactions?

Answer: Successful direct marketers view a customer interaction as an opportunity to up-sell,
cross-sell, or just deepen a relationship. They make sure they know enough about each customer
to customize and personalize offers and messages and develop a plan for lifetime marketing to
each valuable customer, based on their knowledge of life events and transitions. They also
carefully orchestrate each element of their campaigns.
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

41) Why is direct mail popular among marketers? What are its weaknesses?
Answer: Direct mail is a popular medium because it permits target market selectivity, can be
personalized, is flexible, and allows early testing and response measurement. Although the cost
per thousand is higher than for mass media, the people reached are much better prospects. Direct
mail can produce prospect leads, strengthen customer relationships, inform and educate
customers, remind customers of offers, and reinforce recent customer purchase decisions. The
success of direct mail, however, has also become its liability — so many marketers are sending
out direct-mail pieces that mailboxes are becoming stuffed, leading some consumers to disregard
the blizzard of solicitations they receive.
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

10
Copyright © 2016 Pearson Education, Inc.
42) What are the elements of a direct mail offer? How can each be tested?
Answer: The offer strategy has five elements — the product, the offer, the medium, the
distribution method, and the creative strategy. Fortunately, all can be tested. The direct-mail
marketer also must choose five components of the mailing itself: the outside envelope, sales
letter, circular, reply form, and reply envelope. A common direct marketing strategy is to follow
up direct mail with an e-mail. The different elements of an offer strategy, such as products,
product features, copy platform, mailer type, envelope, prices, or mailing lists, can be tested
under real market conditions.
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

43) How do direct mail response rates relate to a campaign's long-term impact? Provide an
example.
Answer: Response rates typically understate a campaign's long-term impact. Suppose only 2
percent of the recipients who receive a direct-mail piece advertising Samsonite luggage place an
order. A much larger percentage became aware of the product (direct mail has high readership),
and some percentage may have formed an intention to buy at a later date (either by mail or at a
retail outlet). Some may mention Samsonite luggage to others as a result of the direct-mail piece.
To better estimate a promotion's impact, some companies measure the impact of direct marketing
on awareness, intention to buy, and word of mouth.
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Application of knowledge

44) Most direct marketers apply the RFM formula to select customers. Explain this formula and
how it is used to select customers.
Answer: Most direct marketers apply the RFM (recency, frequency, monetary amount) formula
to select customers according to how much time has passed since their last purchase, how many
times they have purchased, and how much they have spent since becoming a customer. Suppose
a company is offering leather jackets. It might make this offer to the most attractive customers,
those who made their last purchase between 30 and 60 days ago, who make three to six
purchases a year, and who have spent at least $100 since becoming customers. Points are
established for varying RFM levels; the more points, the more attractive the customer.
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

45) Why do companies use infomercials?

Answer: Infomercials combine the selling power of television commercials with the draw of
information and entertainment. Infomercials promote products that are complicated or
technologically advanced or that require a great deal of explanation.
Diff: 1
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

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46) Describe the darker side of direct marketing solicitations.
Answer:
• Irritation. Many people don't like hard-sell direct marketing solicitations. Firms have been
popping up to help block unwanted junk mail.
• Unfairness. Some direct marketers take advantage of impulsive or less sophisticated buyers
or prey on the vulnerable, especially the elderly.
• Deception and fraud. Some direct marketers design mailers and write copy intended to
mislead or exaggerate product size, performance claims, or the "retail price." The Federal Trade
Commission receives thousands of complaints each year about fraudulent investment scams and
phony charities.
• Invasion of privacy. It seems that almost every time consumers order products by mail or
telephone, apply for a credit card, or take out a magazine subscription, their names, addresses,
and purchasing behavior may be added to several company databases.
Diff: 3
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Ethical understanding and reasoning

47) DB Bank is launching a new investment product targeting senior citizens in the United
States. The company decides to use direct marketing for selling the product. What direct
marketing strategy would allow the company early testing and response measurement of the
product?
Answer: The company can use direct mail to communicate with prospects. It permits target
market selectivity, can be personalized, is flexible, and allows early testing and response
measurement.
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Analytical thinking

48) What are the five elements of an offer strategy?

Answer: The five elements of the offer strategy are the product, the offer, the medium, the
distribution method, and the creative strategy.
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Reflective thinking

49) Integron Inc., a company that manufactures office furniture, has recently observed a dip in its
profitability. Salespeople visit an average prospect at least six times before closing a deal. What
suggestion can you give the company to reduce this expense of direct marketing and increase its
profitability?
Answer: Student answers will vary. The company can replace some of the sales calls with
telemarketing. This would help them reduce the costs and increase profitability.
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Analytical thinking; Application of knowledge

12
Copyright © 2016 Pearson Education, Inc.
50) Roler Telecom, a leading mobile telephone operator in Asia, engages in aggressive
marketing promotions. The company sends promotional messages to customers and makes
promotional calls on a regular basis. However, these aggressive promotion efforts often irritate
its customers. What could be the likely outcome of this?
Answer: Many people don't like hard-sell, direct marketing solicitations from marketers. The
given scenario is one example of this. This issue, if left unattended, will lead to increasingly
negative consumer attitudes, lower response rates, and calls for greater state and government
regulation.
Diff: 2
LO: 22.1: How can companies conduct direct marketing for competitive advantage?
AACSB: Analytical thinking; Application of knowledge

51) The Internet provides marketers and consumers with opportunities for much greater
interaction and ________ than do other marketing channels.
A) control
B) data security
C) high involvement selling
D) order conversion
E) individualization
Answer: E
Diff: 1
LO: 22.2: What are the pros and cons of database marketing?
AACSB: Reflective thinking

52) The offer strategy has five elements: the product, the offer, the medium, the distribution
method, and the ________.
A) outside envelope
B) creative strategy
C) sales letter
D) circular
E) reply form
Answer: B
Diff: 2
LO: 22.2: What are the pros and cons of database marketing?
AACSB: Reflective thinking

53) The darker side of direct marketing, from a consumer perspective, includes all of the
following EXCEPT ________.
A) irritation
B) unfairness
C) deception and fraud
D) federal regulation
E) invasion of privacy
Answer: D
Diff: 3
LO: 22.2: What are the pros and cons of database marketing?
AACSB: Reflective thinking
13
Copyright © 2016 Pearson Education, Inc.
54) Which of the following is NOT conducive to database marketing?
A) Rushbury Theater relies on the generosity of donors to keep functioning.
B) Kenilworthy retails luxury handbags and leather accessories to a select clientele.
C) 2Wheels sells its most profitable products to repeat customers.
D) Uncle Jim's sells its range of snacks in stores throughout the country.
E) PetZone offers obedience classes, a doggie daycare, and other services for pets in the
Manhattan area.
Answer: D
Diff: 3
LO: 22.2: What are the pros and cons of database marketing?
AACSB: Analytical thinking; Application of knowledge

55) In which of the following cases is building a database worthwhile for the company?
A) Clare's creates personalized sculptures for special occasions.
B) Sales of Clarity soap have fallen over the past few months in all regions.
C) 2Wheels sells its most profitable products to repeat customers.
D) Uncle Jim's sells its range of snacks in stores throughout the country.
E) Ready-to-wear clothes brand Zeep targets the teen and tween market throughout the United
States.
Answer: C
Diff: 3
LO: 22.2: What are the pros and cons of database marketing?
AACSB: Analytical thinking; Application of knowledge

56) In which of the following cases is building a database worthwhile for the company?
A) where the product is a once-in-a-lifetime purchase
B) where customers show little loyalty to a brand
C) where the company has a long relationship with its customers
D) where the unit sale is very small
E) where the cost of gathering the information is high
Answer: C
Diff: 2
LO: 22.2: What are the pros and cons of database marketing?
AACSB: Reflective thinking

57) Which of the following is most likely to use database marketing?

A) an airline
B) a candy bar manufacturer
C) a fast-food chain
D) a toothpaste manufacturer
E) a hairstylist
Answer: A
Diff: 2
LO: 22.2: What are the pros and cons of database marketing?
AACSB: Analytical thinking; Application of knowledge

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Copyright © 2016 Pearson Education, Inc.
58) Which of the following statements demonstrates behavioral loyalty toward a brand?
A) 2Wheels has very customer-friendly return policies for its products.
B) I always buy 2Wheels products when I'm looking for bike accessories.
C) Most of my friends agree that 2Wheels is the best place for durable biking gear.
D) 2Wheels has the friendliest customer service people I've ever met.
E) I think that 2Wheels products are the highest-quality products in their price range.
Answer: B
Diff: 2
LO: 22.2: What are the pros and cons of database marketing?
AACSB: Analytical thinking; Application of knowledge

59) Which of the following is a positive factor when considering the development of a customer
database?
A) The product is a once-in-a-lifetime purchase.
B) There is no contact between the buyer and seller.
C) There is a lot of customer churn.
D) The unit sale is very small.
E) Customer lifetime value is high.
Answer: E
Diff: 2
LO: 22.2: What are the pros and cons of database marketing?
AACSB: Reflective thinking

60) Database marketing is ideal when a company does not have direct contact with its customers.
Answer: FALSE
Diff: 2
LO: 22.2: What are the pros and cons of database marketing?
AACSB: Reflective thinking

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61) What are the five main challenges associated with database marketing?
Answer: The five main challenges associated with database marketing include:
1. Some situations are just not conducive to database marketing. Building a customer database
may not be worthwhile when: (1) the product is a once-in-a-lifetime purchase (a grand piano);
(2) customers show little loyalty to a brand (there is a lot of customer churn); (3) the unit sale is
very small (a candy bar) so customer lifetime value is low; (4) the cost of gathering information
is too high; and (5) there is no direct contact between the seller and ultimate buyer.
2. Building and maintaining a customer database require a large investment. Computer
hardware, database software, analytical programs, communication links, and skilled staff can be
costly. It's difficult to collect the right data, especially to capture all the occasions of company
interaction with individual customers. Sometimes companies mistakenly concentrate on
customer contact processes without making corresponding changes in internal structures and
systems.
3. Employees may resist becoming customer-oriented and using the available information.
Employees find it far easier to carry on traditional transaction marketing than to practice CRM.
Effective database marketing requires managing and training employees as well as dealers and
suppliers.
4. Not all customers want a relationship with the company. Some may resent knowing the
company has collected that much personal information about them. Online companies should
explain their privacy policies and give consumers the right not to have their information stored.
European countries do not look favorably on database marketing and are protective of
consumers' private information. The European Union passed a law handicapping the growth of
database marketing in its 27 member countries.
5. The assumptions behind CRM may not always hold true. High-volume customers often know
their value to a company and can leverage it to extract premium service and/or price discounts,
so it may not cost the firm less to serve them. Loyal customers may also be jealous of attention
lavished on other customers. Loyal customers also may not necessarily be the best ambassadors
for the brand. One study found those who scored high on behavioral loyalty and bought a lot of a
company's products were less active word-of-mouth marketers than customers who scored high
on attitudinal loyalty and expressed greater commitment to the firm.
Diff: 3
LO: 22.2: What are the pros and cons of database marketing?
AACSB: Analytical thinking; Application of knowledge

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Copyright © 2016 Pearson Education, Inc.
62) In general, what are the five ways companies use database marketing?
Answer: In general, companies can use their databases in five ways:
1. To identify prospects — Many companies generate sales leads by advertising their product or
service and including a response feature, such as a link to a home page, a business reply card, or
a toll-free phone number, and building a database from customer responses. The company sorts
through the database to identify the best prospects, then contacts them by mail, e-mail, or phone
to try to convert them into customers.
2. To decide which customers should receive a particular offer — Companies interested in
selling, up-selling, and cross-selling set up criteria describing the ideal target customer for a
particular offer. Then they search their customer databases for those who most closely resemble
the ideal. By noting response rates, a company can improve its targeting precision. Following a
sale, it can set up an automatic sequence of activities: One week later e-mail a thank-you note;
five weeks later e-mail a new offer; 10 weeks later (if the customer has not responded) e-mail an
offer of a special discount.
3. To deepen customer loyalty — Companies can build interest and enthusiasm by
remembering customer preferences and sending appropriate gifts, discount coupons, and
interesting reading material.
4. To reactivate customer purchases — Automatic mailing programs (automatic marketing) can
send out birthday or anniversary cards, holiday shopping reminders, or off-season promotions.
The database can help the company make attractive or timely offers.
5. To avoid serious customer mistakes — A major bank confessed to a number of mistakes it
had made by not using its customer database well. In one case, the bank charged a customer a
penalty for late payment on his mortgage, failing to note he headed a company that was a major
depositor in this bank. The customer quit the bank. In a second case, two different staff members
of the bank phoned the same mortgage customer offering a home equity loan at different prices.
Neither knew the other had made the call. In a third case, the bank gave a premium customer
only standard service in another country.
Diff: 3
LO: 22.2: What are the pros and cons of database marketing?
AACSB: Analytical thinking; Application of knowledge

63) What situations are not conducive to database marketing?

Answer: Building a customer database may not be worthwhile when:
• the product is a once-in-a-lifetime purchase (a grand piano)
• customers show little loyalty to a brand (there is a lot of customer churn)
• the unit sale is very small (a candy bar) so customer lifetime value is low
• the cost of gathering information is too high
• there is no direct contact between the seller and ultimate buyer
Diff: 2
LO: 22.2: What are the pros and cons of database marketing?
AACSB: Reflective thinking

17
Copyright © 2016 Pearson Education, Inc.
64) The original and oldest form of direct marketing is ________.
A) billboards
B) banner advertising
C) mail campaigns
D) outbound telemarketing calls
E) field sales calls
Answer: E
Diff: 1
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Reflective thinking

65) A salesperson performing over-the-counter sales in a medical store can be referred to as a(n)
________.
A) order taker
B) demand creator
C) solution vendor
D) phisher
E) missionary
Answer: A
Diff: 1
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Reflective thinking

66) Alduro Chemicals, a manufacturer of detergents, delivers chemicals used for commercial
washing to various hoteliers in the United States. Most of the company's revenue comes from
routine orders from its existing customers. The company uses unskilled salespeople to collect
requirements from its customers. These unskilled customers are known as ________.
A) demand creators
B) deliverers
C) missionaries
D) order takers
E) solution vendors
Answer: D
Diff: 2
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Analytical thinking; Application of knowledge

18
Copyright © 2016 Pearson Education, Inc.
67) Gordron Inc. manufactures and markets medical equipment. To ensure that its salespeople
are knowledgeable enough to answer all product queries, the company hires only those
individuals who have a good understanding of both the medical profession and the mechanics of
the equipment used. Which of the following is the most accurate classification of Gordron's
salesforce?
A) technicians
B) demand creators
C) deliverers
D) order takers
E) missionaries
Answer: A
Diff: 2
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Analytical thinking; Application of knowledge

68) Robert is hired as a sales representative for a company that manufactures fire extinguishers.
His job description reads as follows: "The key duty of the sales representative is to unravel the
customer's problems using the company's products." Which of the following positions would
best describe Robert's profile?
A) deliverer
B) technical salesperson
C) missionary salesperson
D) order taker
E) solution vendor
Answer: E
Diff: 2
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Application of knowledge

69) A sales representative whose expertise is in unraveling customers' problem is called a(n)
________.
A) order taker
B) missionary
C) technician
D) solution vendor
E) demand creator
Answer: D
Diff: 1
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Application of knowledge

19
Copyright © 2016 Pearson Education, Inc.
70) A salesperson who relies on creative methods for selling a company's tangible or intangible
offerings is called a(n) ________.
A) demand creator
B) deliverer
C) order taker
D) missionary
E) solution vendor
Answer: A
Diff: 1
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Application of knowledge

71) Which of the following tasks of the salesforce refers to conducting market research and
doing intelligence work?
A) servicing
B) communicating
C) targeting
D) prospecting
E) information gathering
Answer: E
Diff: 1
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Reflective thinking

72) US firms spend more on sales forces and sales force materials than on any other promotional
method.
Answer: TRUE
Diff: 2
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Reflective thinking

73) In 2012, more than 20 percent of the total workforce worked full time in sales occupations,
both nonprofit and for profit.
Answer: FALSE
Diff: 2
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Reflective thinking

74) A salesperson calling on supermarkets to take repeat orders is called an order taker.
Answer: TRUE
Diff: 2
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Reflective thinking

20
Copyright © 2016 Pearson Education, Inc.
75) To manage costs, most companies are choosing a leveraged sales force that focuses reps on
selling the company's more complex and customized products to large accounts and uses inside
salespeople and online ordering for low-end selling.
Answer: TRUE
Diff: 1
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Reflective thinking

76) Demand creators are not permitted to take an order but expected rather to build goodwill or
educate the actual or potential user.
Answer: FALSE
Diff: 2
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Reflective thinking

77) Targeting refers to the process of deciding which customers will get scarce products during
product shortages.
Answer: FALSE
Diff: 2
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Reflective thinking

78) Information gathering refers to the act of conducting market research and doing intelligence
work.
Answer: TRUE
Diff: 2
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Reflective thinking

79) The term sales representative covers a broad range of positions, tasks, and responsibilities.
List and briefly describe each of the positions.
Answer: The positions include:
• deliverer: the major task is the delivery of a product
• order taker: who acts predominantly as an inside order taker or outside order taker
• missionary: a salesperson who is not expected or permitted to take an order but whose major
task is to build goodwill or to educate the actual or potential user
• technician: a salesperson with a high level of technical knowledge
• demand creator: one who relies on creative methods for selling tangible products
• solution vendor: one whose expertise is in the solving of a customers' problems.
Diff: 2
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Reflective thinking

21
Copyright © 2016 Pearson Education, Inc.
80) Briefly explain the various tasks that the salespeople of an organization perform.
Answer: The following are the basic tasks that salespeople perform:
• prospecting: searching for new leads or prospects
• targeting: deciding how to allocate time among prospects and customers
• communicating: communicating information about the company's products and services
• selling: approaching, presenting, answering questions, overcoming objections, and closing
sales
• servicing: providing various services to the customers — consulting on problems, rendering
technical assistance, arranging financing, expediting delivery
• information gathering: conducting market research and doing intelligence work
• allocating: deciding which customers will get scarce products during product shortages
Diff: 2
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Reflective thinking

81) Jack is the sales representative of a company that designs and installs modular kitchens. The
company's salesforce is trained to customize their offerings as per customer requirements. After
analyzing factors such as the space available and the budget, Jack provides personalized designs
to individual customers. What kind of a salesperson is Jack? Briefly explain your answer.
Answer: A salesperson whose expertise is solving a customer's problem, often with a system of
the company's products and services is called a solution vendor. Here, Jack is providing different
solutions to different customers after analyzing their problems. Jack can be called a solution
vendor.
Diff: 2
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Analytical thinking; Application of knowledge

82) You are appointed as the B-to-B sales representative of a manufacturing company. What are
the various tasks that you will have to perform as a B-to-B salesperson?
Answer: The following activities have to be performed by a salesperson:
• prospecting
• targeting
• communicating
• selling
• servicing
• information gathering
• allocating
Diff: 2
LO: 22.3: What decisions do companies face in designing a sales force?
AACSB: Reflective thinking

22
Copyright © 2016 Pearson Education, Inc.
83) You are the sales manager of a company that manufactures and markets server computers.
The company's products require high-involvement from the sellers and require salespeople to
provide complex and technical information. What kind of a compensation structure do you select
for your sales representatives?
Answer: The salespeople in the given scenario should have a pay structure that gives
prominence to fixed pay. Fixed compensation is common in jobs with a high ratio of nonselling
to selling duties, and jobs where the selling task is technically complex and requires teamwork.
Diff: 2
LO: 22.3: What decisions do companies face in designing a sales force?

84) The process of deciding how to allocate company's time among prospects and customers is
called ________.
A) targeting
B) prospecting
C) allocating
D) dispersing
E) delegating
Answer: A
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Reflective thinking

85) Which of the following refers to the process of deciding which customers will get scarce
products during product shortages?
A) delegating
B) prospecting
C) allocating
D) dispersing
E) targeting
Answer: C
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Reflective thinking

86) A company uses sales representatives for selling the company's more complex and
customized products to large accounts, while using inside salespeople and Web ordering for low-
end selling. Which of the following describes the company's sales force best?
A) demand creators
B) direct marketing force
C) missionary sellers
D) technical salesforce
E) leveraged salesforce
Answer: E
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Application of knowledge

23
Copyright © 2016 Pearson Education, Inc.
87) Your company has customer-service representatives who provide you with leads, write up
proposals, fulfill orders, and provide post-sales support. Your responsibilities are to concentrate
on the larger accounts with more complex and customized needs. Your company most likely has
a ________ salesforce.
A) distributive
B) territory based
C) leveraged
D) decentralized
E) parallel
Answer: C
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Application of knowledge

88) A medical "detailer" that represents an ethical pharmaceutical house, who builds goodwill or
educates the actual or potential user but is not permitted to take an order, is an example of a
________.
A) missionary salesperson
B) technician
C) demand creator
D) solution vendor
E) deliverer
Answer: A
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Application of knowledge

89) Consulting on problems, rendering technical assistance, arranging financing, and expediting
delivery are examples of the ________ task in the selling context.
A) information gathering
B) targeting
C) communicating
D) servicing
E) allocating
Answer: D
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Application of knowledge

24
Copyright © 2016 Pearson Education, Inc.
90) ________ sales force consists of manufacturers' reps, sales agents, and brokers who earn a
commission based on sales.
A) Virtual
B) Domestic
C) Contingent
D) Contractual
E) Decentralized
Answer: D
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Reflective thinking

91) Part-time paid employees who work exclusively for the company are a part of the ________
sales force.
A) direct
B) virtual
C) contractual
D) implicit
E) brokered
Answer: A
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Reflective thinking

92) Fixed compensation receives more emphasis in sales rep jobs with ________.
A) a high ratio of selling to nonselling duties
B) a high requirement for individual initiatives
C) an intensive focus on selling activities
D) very little need for teamwork
E) technical complexities
Answer: E
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Application of knowledge

93) Identify the first step in the workload approach to establish sales force size.
A) grouping customers into size classes according to annual sales volume
B) establishing desirable call frequencies for each customer class
C) determining the total workload for the country in terms of sales calls per year
D) determining the average number of calls a sales representative can make per year
E) calculating the total number of sales reps needed
Answer: A
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Reflective thinking

25
Copyright © 2016 Pearson Education, Inc.
94) Which of the following sales positions is most likely to have fixed compensation?
A) an FMCG salesperson selling to supermarkets
B) a salesperson who handles the industrial customers
C) an insurance agent who works part time
D) a service representative in charge of handling incoming customer queries
E) a telemarketer calling up existing customers to bring in additional sales
Answer: B
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Reflective thinking

95) Which of the following is NOT a main part of managing the sales force?
A) recruiting and selecting sales representatives
B) identifying prospects for sales representatives
C) training sales representatives
D) motivating sales representatives
E) evaluating sales representatives
Answer: B
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Reflective thinking

96) ________ helps sales representatives understand how they spend their time and how they
might increase their productivity.
A) Time-and-duty analysis
B) A sales quota
C) A feed-forward approach
D) An expense allowance
E) A norm for prospect calls
Answer: A
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Reflective thinking

97) Kate is coaching members of her field sales team to help them understand how they spend
their time and how they might increase their productivity. She is using ________ to provide them
with feedback.
A) time-and-duty analysis
B) a sales quota
C) a feed-forward approach
D) an expense allowance
E) a norm for prospect calls
Answer: A
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Application of knowledge

26
Copyright © 2016 Pearson Education, Inc.
98) Key indicators of sales performance include all of the following EXCEPT ________.
A) average number of sales calls per salesperson per day
B) average revenue per sales call
C) advanced marketing cost per sales call
D) average cost per sales call
E) entertainment cost per sales call
Answer: C
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Application of knowledge

99) Which of the following is NOT one of the advantages of inside selling?
A) Inside selling is less expensive than in-person selling.
B) Inside salespeople spend more time checking inventory.
C) Inside salespeople spend more time following up orders.
D) Inside salespeople spend more time phoning smaller accounts.
E) All of the above are advantages.
Answer: E
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Reflective thinking

100) Which of the following statements about technology support for salespeople is NOT true?
A) Computer-based decision support systems have been created for sales manager and sales
representatives.
B) A Web site can help define a firm's relationships with individual accounts and identify those
whose business warrants a personal sales call.
C) Social media is useful in front-end prospecting and lead qualification.
D) Social media is useful in back-end relationship building and management.
E) All of the above are true.
Answer: E
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Information technology

101) Compensation plans may need to vary depending on the type of salespersons. Which type
of salesperson benefits from no ceiling or caps on commissions, overachievement commissions
for exceeding quotas, and prize structures that allow multiple winners?
A) stars
B) core performers
C) dogs
D) cash cows
E) laggards
Answer: A
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Interpersonal relations and teamwork
27
Copyright © 2016 Pearson Education, Inc.
102) Randi is most motivated when there is no ceiling or caps on her commissions, she can earn
overachievement commissions for exceeding quotas, and benefits from prize structures that
allow multiple winners. She is probably a ________.
A) star
B) core performer
C) dog
D) cash cow
E) laggard
Answer: A
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Application of knowledge

103) Compensation plans may need to vary depending on the type of salespersons. Which type
of salesperson benefits from multi-tier targets that serve as stepping stones for achievement and
sales contests with prizes that vary in nature and value?
A) stars
B) core performers
C) dogs
D) cash cows
E) laggards
Answer: B
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Interpersonal relations and teamwork

104) Compensation plans may need to vary depending on the type of salespersons. Which type
of salesperson benefits from consistent quarterly bonuses and social pressure?
A) stars
B) core performers
C) dogs
D) cash cows
E) laggards
Answer: E
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Interpersonal relations and teamwork

28
Copyright © 2016 Pearson Education, Inc.
105) Company call center executives provide procedural information to clients who call in about
the specifications and operation of the product. These call center employees can be called
________.
A) technical support people
B) sales assistants
C) telemarketers
D) deliverers
E) consultants
Answer: A
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Reflective thinking

106) A contractual sales force consists of part-time employees who work exclusively for the
company.
Answer: FALSE
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Reflective thinking

107) A company that sells one product line to one end-using industry with customers in many
locations would use product or market structure for its salesforce.
Answer: FALSE
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Reflective thinking

108) The first step in the workload approach for designing salesforce size is to establish desirable
call frequencies for each customer class.
Answer: TRUE
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Reflective thinking

109) The fixed amount in a salesperson's salary is primarily designed to stimulate and reward
efforts from salespeople.
Answer: FALSE
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Reflective thinking

110) Variable compensation is common in jobs where the selling task is technically complex and
requires teamwork.
Answer: FALSE
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Reflective thinking
29
Copyright © 2016 Pearson Education, Inc.
111) What key indicators of sales performance do sales managers extract from call reports?
Answer: These reports provide raw data from which sales managers can extract key indicators
of sales performance:
• average number of sales calls per salesperson per day
• average sales call time per contact
• average revenue per sales call
• average cost per sales call
• entertainment cost per sales call
• percentage of orders per hundred sales calls
• number of new customers per period
• number of lost customers per period
• sales force cost as a percentage of total sales
Diff: 2
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Reflective thinking

30
Copyright © 2016 Pearson Education, Inc.
112) What can you learn from John Smith from the sales report reflected in the table?

31
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Answer: The sales manager can learn many things about rep John Smith from this table. Total
sales increased every year (line 3). This does not necessarily mean Smith is doing a better job.
The product breakdown shows he has been able to push the sales of product B further than the
sales of product A (lines 1 and 2), though A is more profitable for the company. Given his quotas
for the two products (lines 4 and 5), Smith could be increasing product B sales at the expense of
product A sales. Although he increased total sales by $1,100 between 2013 and 2014 (line 3),
gross profits on total sales actually decreased by $580 (line 8).
Sales expense (line 9) shows a steady increase, though total expense as a percentage of total sales
seems to be under control (line 10). The upward trend in total dollar expense does not seem to be
explained by any increase in the number of calls (line 11), though it might be related to success
in acquiring new customers (line 14). Perhaps in prospecting for new customers, this rep is
neglecting present customers, as indicated by an upward trend in the annual number of lost
accounts (line 15). The last two lines show the level and trend in sales and gross profits per
customer. These figures become more meaningful when compared with overall company
averages. If Smith's average gross profit per customer is lower than the company's average, he
could be concentrating on the wrong customers or not spending enough time with each customer.
A review of annual number of calls (line 11) shows he might be making fewer annual calls than
the average salesperson. If distances in the territory are similar to those in other territories, he
might not be putting in a full workday, might be poor at sales planning and routing, or might be
spending too much time with certain accounts.
Diff: 3
LO: 22.4: What are the challenges of managing a sales force?
AACSB: Application of knowledge

113) Today's customers expect a salesperson to have extensive product knowledge, to be

efficient and reliable, and to provide ideas to improve the customer's operations. These demands
are forcing companies to make higher investments in ________.
A) sales training
B) internal selling
C) management controls
D) advertising
E) sales promotions
Answer: A
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

32
Copyright © 2016 Pearson Education, Inc.
114) ________ questions ask about the consequences of the buyer's problems.
A) Situation
B) Problem
C) Implication
D) Need-payoff
E) Solution
Answer: C
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

115) Jackson, the sales representative of a European manufacturer of commercial heavy duty
washing machines, calls on the hotels in California. During a sales call, he asks the housekeeping
manager of a hotel "How many bed sheets do you wash in a day, on average?" This question can
be classified as a(n) ________ question.
A) situation
B) problem
C) implication
D) need-payoff
E) consequence
Answer: A
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Analytical thinking; Application of knowledge

116) Which of the following is an example of a problem question?

A) What system are you using to invoice your customers?
B) How does this problem affect your people's productivity?
C) What parts of the system create errors?
D) How much would you save if our company could help reduce errors by 80 percent?
E) Which operating system have you installed in your personal computer?
Answer: C
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?

33
Copyright © 2016 Pearson Education, Inc.
117) Which of the following types of questions directly enquires about the value or usefulness of
a proposed solution?
A) situation questions
B) problem questions
C) implication questions
D) consequence questions
E) need-payoff questions
Answer: E
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

118) Which of the following is the first step in the process of personal selling?
A) prospecting and qualifying
B) sales preapproach
C) sales presentation
D) unearthing objections
E) demonstrating advantages
Answer: A
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

119) A salesperson who is contacting possible buyers by mail or phone to assess their level of
interest and financial capacity is in the ________ step of the selling process.
A) preapproach
B) prospecting
C) qualifying
D) following up
E) objection handling
Answer: B
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

34
Copyright © 2016 Pearson Education, Inc.
120) "How does this problem affect your people's productivity?" is an example of a(n) ________
question.
A) situation
B) implication
C) problem
D) need-payoff
E) challenge
Answer: B
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Application of knowledge

121) In which of the following stages of personal selling does a salesperson tell the product story
to the buyer?
A) preapproach
B) prospecting
C) presentation
D) closing
E) objection handling
Answer: C
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

122) Representatives who are taught the SPIN method to build long-term relationships may ask
each of the following types of questions EXCEPT ________.
A) situation
B) speculation
C) problem
D) need-payoff
E) implication
Answer: B
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

35
Copyright © 2016 Pearson Education, Inc.
123) When Saul asks his client, "What system are you using to invoice your customers?" he is
asking a ________ question.
A) situation
B) speculation
C) problem
D) need-payoff
E) implication
Answer: A
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Application of knowledge

124) When Shen asks his client, "How much would you save if our company could help you
reduce errors by 80 percent?" he is asking a ________ question.
A) situation
B) speculation
C) problem
D) need-payoff
E) implication
Answer: D
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Application of knowledge

125) IBM uses the BANT acronym during which stage of the sales process?
A) prospecting and qualifying
B) sales preapproach
C) sales presentation
D) unearthing objections
E) demonstrating advantages
Answer: A
Diff: 3
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Application of knowledge

36
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126) In IBM's BANT acronym, B stands for ________.
A) budget
B) background
C) baseline
D) benchmark
E) basic
Answer: A
Diff: 3
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Application of knowledge

127) In IBM's BANT acronym, A stands for ________.

A) action
B) authority
C) activate
D) austerity
E) autonomy
Answer: B
Diff: 3
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Application of knowledge

128) In IBM's BANT acronym, N stands for ________.

A) noticeable
B) necessary
C) need
D) necessity
E) notify
Answer: C
Diff: 3
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Application of knowledge

129) In IBM's BANT acronym, T stands for ________.

A) touch
B) tempt
C) team
D) timeline
E) turn over
Answer: D
Diff: 3
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Application of knowledge
37
Copyright © 2016 Pearson Education, Inc.
130) Which company uses 150 different signals — including dozens of online data feeds — to
rate customer leads?
A) IBM
B) Avon
C) SAS
D) FABV
E) Infer
Answer: E
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Application of knowledge

131) Which of the following questions is LEAST relevant during the preapproach stage of the
sales process?
A) How is the purchasing process conducted at the company?
B) How is the purchasing department structured?
C) How can I overcome psychological resistance?
D) Is purchasing centralized?
E) What is the best contact approach?
Answer: C
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

132) In the FABV approach, ________ describe the economic, technical, service, and social
pluses delivered.
A) features
B) advantages
C) benefits
D) value
E) macroenvironment
Answer: C
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

38
Copyright © 2016 Pearson Education, Inc.
133) If Jose is describing chip processing speeds and memory capacity, he is describing the
________ of his firm's offering in the FABV approach.
A) features
B) advantages
C) benefits
D) value
E) macroenvironment
Answer: A
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Application of knowledge

134) In the FABV approach, if the salesperson is discussing the monetary terms associated with
the offering, s/he is talking about ________.
A) features
B) advantages
C) benefits
D) value
E) macroenvironment
Answer: D
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

135) ________ includes resistance to interference and a neurotic attitude toward money.
A) Psychological resistance
B) Logical resistance
C) Price sensitivity
D) Relationship inertia
E) Reactance
Answer: A
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

39
Copyright © 2016 Pearson Education, Inc.
136) If a prospective client does not want to buy from you because he has a preference for an
established supply source, you are facing an objection due to ________.
A) psychological resistance
B) logical resistance
C) price sensitivity
D) relationship inertia
E) reactance
Answer: A
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Application of knowledge

137) ________ includes objections due to proposed contract completion time, quality of goods
and services offered, purchase volume, product safety, and responsibility for financing, risk
taking, promotion, and title.
A) Psychological resistance
B) Logical resistance
C) Price sensitivity
D) Relationship inertia
E) Reactance
Answer: B
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

138) If a prospective client does not want to buy from you because she feels the price is too high,
you are facing an objection due to ________.
A) psychological resistance
B) logical resistance
C) apathy
D) relationship inertia
E) reactance
Answer: B
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Application of knowledge

139) Sales representatives who are paid mostly in commissions require more supervision than
other salespeople.
Answer: FALSE
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?

40
Copyright © 2016 Pearson Education, Inc.
140) An employee who provides clerical backup for outside salespersons, runs credit checks,
follows up on deliveries, and answers customers' business-related questions is called a sales
assistant.
Answer: TRUE
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

141) A manager is using feed-forward sales supervision when he communicates what the sales
reps should be doing and motivates them to do it.
Answer: TRUE
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

142) Implication questions ask about the consequences of a buyer's problems, difficulties, or
dissatisfactions.
Answer: TRUE
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

143) Situation questions focus on the problems, difficulties, and dissatisfaction a buyer might be
experiencing with the existing situation.
Answer: FALSE
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

144) Closing signs from the buyer include physical actions, statements or comments, and
questions.
Answer: TRUE
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

41
Copyright © 2016 Pearson Education, Inc.
145) Most companies set annual quotas. Quotas can be on dollar sales, unit volume, margin,
selling effort, or activity and product type. Compensation is often tied to the degree of quota
attainment. What problems does the setting of quotas present to both the company and to the
sales representative?
Answer: If the company underestimates and the sales reps easily achieve their quotas, the
company has overpaid its reps. If the company overestimates sales potential, the salespeople will
find it very hard to reach their quotas and be frustrated or quit. Another downside is that quotas
can drive reps to get as much business as possible — often resulting in their ignoring the service
side of the business.
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

146) What are the six steps in personal selling?

Answer: The six steps are:
1. prospecting and qualifying
2. preapproach
3. presentation and demonstration
4. overcoming objections
5. closing
6. follow-up and maintenance
Diff: 1
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

147) Which type of questions allow salespeople to understand facts or explore the buyer's present
state of affairs?
Answer: Situation questions ask about facts or explore the buyer's present situation.
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Reflective thinking

148) You work as a sales representative in a company that manufactures surgical equipment.
Before calling on an important prospect, you decide to search the Internet and find out details
about him. What step in the selling process is being carried out here? What is the importance of
this step?
Answer: This step is called preapproach. This helps to understand aspects such as how the
purchasing process is conducted at the company, how is purchasing structured, number of
purchasing departments in larger companies, and so forth. This information is useful to qualify
the prospect, gather information, or make an immediate sale.
Diff: 2
LO: 22.5: How can salespeople improve their selling, negotiating, and relationship marketing
skills?
AACSB: Analytical thinking; Application of knowledge
42
Copyright © 2016 Pearson Education, Inc.