MKTG 1010 MCQ Practice

Exam 1

Which of the following correctly represents the purpose of the 5 C’s in marketing analysis?

To analyze the internal and external situation facing a firm

Which of the following best describes the link between the 5 C’s and the 4 P’s in marketing?

5 C’s guide strategic analysis; 4 P’s translate it into tactical execution.

A company that prioritizes product innovation over customer needs is most likely following which strategic orientation?

Product-focused orientation

Which of the following best distinguishes a customer-focused firm from a product-focused one?

Customer-focused firms emphasize consumer needs and lifetime relationships, not just product features.

A company once dominated by physical retail now faces new digital competitors who understand customer data better. This most directly shows how technology and competition have:

Increased the importance of customer share relative to market share.

A firm identifies new privacy laws and a growing push for sustainable packaging. Which contextual factors should it focus on according to PESTLE?

Legal and Environmental

Which of the following best defines consumer dignity in marketing ethics?

Recognizing consumers as autonomous decision-makers, not manipulable targets

A company falsifies sustainability metrics to appear eco-friendly. According to CLV-based ethics, what is the likely consequence?

Declining customer retention and firm value

Which of the following is not a pillar of consumer dignity?

Respect 

The American Marketing Association (AMA) Code of Ethics emphasizes all of the following except:

Maximizing sales through ethical considerations 

Which of the following best defines market segmentation?

Dividing a heterogeneous market into smaller, homogeneous groups with similar needs or responses.

As a company moves from mass marketing to 1-to-1 marketing, what happens to cost-efficiency and effectiveness?

Cost-efficiency decreases; effectiveness increases.

Which of the following best describes the difference between tactical and strategic segmentation?

Tactical segmentation is used for determining how to reach audiences based on consumer profile; strategic segmentation focuses on what our consumers are expected to value and the broader market trends influencing their decisions.

The degrees-of-freedom approach in segmentation ensures:

There are enough variables to capture meaningful differences without overfitting the model.

Which of the following illustrates behavioral segmentation?

Grouping consumers by their level of product usage

Why do marketers often question gender-based segmentation?

Gender is often a poor proxy for true underlying needs or motivations.

A marketer uses PRIZM data to identify clusters of consumers with similar lifestyles and buying patterns. What kind of segmentation tool is PRIZM?

Psychographic and geo-demographic database system

Which of the following best defines targeting?

Selecting the most profitable segment(s) to serve based on attractiveness and compatibility.

In the Attractiveness vs. Compatibility Matrix, a segment that is highly attractive but low in compatibility would likely require:

Further investment in building firm capabilities

Which of the following is not a component of a strong positioning statement?

Support for firm’s total market share and competitive advantage

Why might a positioning statement evolve over time?

Market trends and consumer perceptions shift, requiring updated brand relevance.

The customer funnel model primarily helps marketers understand:

How customers move from awareness to purchase and loyalty.

In the customer funnel, which of the following would most likely explain why customers “drop off” before purchase?

Lack of awareness, poor fit, or perceived risk

The consideration set refers to:

The group of brands a consumer seriously evaluates before making a purchase.

n the Customer Journey Model, marketing communications should:

Be customized for each stage to guide the customer from awareness to advocacy.

A customer sees a quick TikTok ad, feels curious, and instantly adds a product to their cart without rational evaluation. Which processing system is driving this?

System 1 — intuitive and automatic

When might marketers prefer System 2 processing from consumers?

When decisions are complex and require justification (e.g., insurance or cars)

On a 4-Quadrant Loyalty Map, customers who have high attitudinal loyalty but low behavioral loyalty (e.g., like the brand but rarely buy) fall into which quadrant?

Latent Loyalty

In the Expectancy-Disconfirmation Model, customer satisfaction depends on:

Whether perceived performance meets or exceeds expectations.

In the NPS (Net Promoter Score) model, what does a “promoter” represent?

A loyal customer who is likely to recommend the brand to others.

What does Customer Lifetime Value (CLV) represent?

The present value of all future profits expected from a customer over their entire relationship with the firm.

If a firm improves retention rate and reduces acquisition costs, what happens to CLV (assuming all else constant)?

CLV increases.

How does heterogeneity influence CLV strategy?

Recognizing customer heterogeneity helps allocate resources to the most profitable customer groups.

Which of the following best describes how CLV alters strategic priorities?

It shifts marketing investments toward segments and touchpoints with the highest long-term return.

Which of the following is not one of the six business models associated with CLV frameworks?

Segmentation models 

In the Bass Diffusion Model, a product with a high p (innovation) and low q (imitation) value would most likely:

Rely on innovators for early adoption but struggle to reach the mass market.

Why is it critical for firms to “cross the chasm” in the product life cycle?

It helps transition from early adopters to the early majority for sustained growth.

A company launching a new tech gadget chooses high initial pricing to recover R&D costs and signal exclusivity. This is an example of:

Skimming strategy

a penetration pricing strategy aims to:

Set low prices initially to build market share quickly.

Which ACCORD factor primarily reflects how easily consumers can understand a new product’s purpose?

Complexity

Which of the following is a reasonable competitive strategy in a mature market?

Focus on differentiation or cost leadership to maintain share

Which of the following best describes a “harvest” strategy in a declining market?

Maximize short-term profits by cutting marketing and investment spending.

A small firm chooses to serve a tiny, stable niche rather than compete broadly in a shrinking market. This declining-industry approach is called:

Niche strategy

Which of the following could help a firm break free of the traditional product life cycle?

Launching product-line extensions or finding new markets.

In the Starbucks case, Christine Day’s research revealed declining customer satisfaction despite strong sales. Which principle of marketing does this most directly challenge?

Customer-centricity must align with operational investment.

In the Unilever Brazil case, targeting lower-income consumers in the Northeast required which marketing adjustment?

Creating smaller, affordable packaging and local distribution models

Blue Apron struggled to maintain profitability despite high acquisition rates. Which CLV parameter was primarily responsible for this problem?

Retention

To increase customer lifetime value, Blue Apron could most effectively:

Increase subscription length through loyalty rewards or menu personalization.

Pokémon Go’s initial explosion and rapid decline illustrate which pattern in the Product Life Cycle?

Fad curve—steep growth and sharp decline

Based on John Hanke’s statements, which of the following would he least likely prioritize next for Pokémon Go?

Relying heavily on third-party mapping sites

A product sells for $100, with a variable cost of $60 and a fixed cost of $40,000. What is the break-even volume?

1,000 units

A firm’s average margin per customer is $40, and its retention rate is 80%. Using a discount rate of 10%, what is the approximate CLV (ignoring acquisition cost)?

$240

A marketing team begins by analyzing customer motivations, company strengths, competitive threats, partner capabilities, and environmental trends. Which statement best describes what this stage accomplishes?

It provides a strategic foundation to design effective marketing actions.

A marketing director reviews the company’s 5C analysis and decides to change its pricing and distribution strategy. Which best captures this transition?

Translating strategic insights into tactical marketing decisions.

Historically, many firms began with a product-focused orientation. What was a key limitation of this approach once digital competition intensified?

It neglected the evolving heterogeneity of customer value.

Two firms sell identical products, but Firm A invests heavily in loyalty analytics while Firm B spends more on mass-market ads. After two years, Firm A’s market share is smaller but profits are higher. What explains this outcome?

Firm A focused on customer share rather than total market share.

A firm believes its success depends on producing the most advanced version of its product, assuming customers will recognize and reward superior engineering. Which hidden risk most threatens this strategy?

Customers may value convenience and service more than technical performance.

When digital competitors emerge, firms that emphasize market share growth often underperform those that emphasize customer share growth. Why?

Market-share strategies neglect CLV and retention economics.

A government proposes a carbon-tax policy that will raise fuel costs for logistics firms. From a PESTLE standpoint, which factor primarily influences marketing decisions here?

Political

A fashion brand observes that Gen Z consumers expect transparency in supply chains and reject over-consumption. Which PESTLE factors intersect here?

Sociological and Environmental

A firm faces pressure to use customer data for personalization but worries about privacy backlash. According to marketing ethics, what principle best guides its decision?

Protect consumer autonomy and consent collecting data 

Which situation most clearly violates the AMA Code of Ethics principle of fairness?

A firm exaggerates product performance in an ad.

A brand manager argues that ethical behavior is costly because it slows response time. Which marketing concept most effectively rebuts this claim?

Ethical reputation builds long-term CLV by increasing trust and retention.

A company decides to run an edgy campaign that could be perceived as manipulative but attract viral attention. Which of the three pillars of consumer dignity would be most at risk?

Autonomy

Which scenario best represents how ethical violations reduce firm value through CLV parameters?

They lower average purchase frequency and retention.

When marketers over-target vulnerable groups (e.g., predatory lending ads to low-income users), which ethical issue is violated?

Do no harm

During an economic downturn, a brand continues premium pricing to preserve perceived quality, but consumers accuse it of greed. From a contextual perspective, this tension illustrates:

The interaction between economic and sociological context factors.

In evaluating a new policy on influencer disclosure, marketers must consider its effect on trust, transparency, and industry standards. Which contextual lens primarily governs this issue?

Legal and Sociological

A skincare brand segments its market by lifestyle and self-care attitudes rather than age or gender. This approach most clearly reflects which goal of segmentation?

Translating heterogeneity into actionable customer insight.

A marketing team debates whether to move from a single national campaign to individualized online promotions. What trade-off best captures this shift?

Lower cost-efficiency but greater relevance and effectiveness.

A consumer-electronics company uses short-term promotional data to create temporary buyer clusters. This is an example of:

Tactical segmentation.

A firm uses 15 different segmentation variables, but its model becomes unstable when applied to new customers. Which problem has likely occurred?

Over-segmentation due to excessive degrees of freedom.

Two segmentation schemes are proposed: one by income, another by usage frequency. The income segments are large but inconsistent in behavior; the usage groups are smaller yet predictable. Which scheme better meets the criteria of good segmentation?

Usage frequency, because responses are homogeneous within and different across segments.

Why do marketers increasingly challenge gender-based segmentation?

Demographics rarely correlate with values and motivations 

A beverage company uses PRIZM data to target “Young Digerati” neighborhoods. Which characteristic distinguishes this approach from basic demographic segmentation?

It clusters by lifestyle, media use, and geography together.

A segment is attractive in size and growth but misaligned with the firm’s manufacturing capabilities. According to the Attractiveness–Compatibility Matrix, what should the firm do?

Invest in capability development before targeting this segment.

A firm decides to target two distinct customer groups with separate messages. Which risk most likely arises?

Market cannibalization and reduced brand clarity.

A company revises its positioning to highlight eco-friendly sourcing after competitors adopt similar messages. This change most likely reflects:

An evolution in differentiation to maintain relevance.

A streaming service notices that awareness is high but trial is low. Which interpretation fits best with the funnel model?

Consideration or evaluation barriers—like unclear value or perceived risk—prevent conversion.

Which statement best distinguishes the customer journey model from the classic funnel?

It captures nonlinear, feedback-driven interactions across touchpoints.

At the consideration stage, a marketer wants to increase the brand’s chance of entering the customer’s “short list.” Which tactic best aligns with this goal?

Emphasize product familiarity and reassurance messaging.

A user scrolls past multiple travel ads but stops instantly at a visually stunning reel and books impulsively. This decision likely relied on:

System 1—intuitive, emotional processing.

A company selling health insurance should primarily design its website for System 2 processing because:

The decision involves complex evaluation requiring analytical comparison.

A loyal customer occasionally switches to another brand for convenience but still recommends their original brand to others. On the 4-Quadrant Loyalty Map, this customer exhibits:

Latent loyalty

According to the Expectancy–Disconfirmation Model, what most directly causes customer dissatisfaction?

A mismatch between performance and expectation.

Two brands both have high NPS scores, but Brand A’s promoters are also repeat purchasers while Brand B’s promoters rarely buy again. What does this suggest about NPS as a measure?

NPS measures attitudinal loyalty, not necessarily purchase behavior.

Two firms have identical margins and acquisition costs, but Firm A keeps customers for twice as long. Which statement best explains why Firm A’s CLV is higher?

Longer relationships increase the number of discounted cash-flow periods that generate profit.

A brand increases acquisition spending by 25% but keeps retention and margin constant. Which outcome is most consistent with CLV logic?

CLV falls because higher acquisition cost lowers net present value.

Two customers generate identical revenue, but one regularly refers friends who become profitable users. Which element of CLV best captures this extra value?

Referral or increased advocacy 

Management discovers that 20 percent of customers deliver 80 percent of total profit. What strategic implication follows from CLV heterogeneity?

The firm should concentrate retention and loyalty programs on high-value segments.

How can emphasizing CLV alter a firm’s strategic priorities compared with a sales-volume mindset?

It shifts focus from short-term transactions to the long-term profitability of relationships.

In the Product Life Cycle (PLC), profits typically peak during which stage — and why?

Growth, because sales volume accelerates while costs per unit fall.

According to the Bass Diffusion Model, which product scenario most likely exhibits a high “q” (imitation) coefficient?

A product whose adoption surges after peer use and social proof.

Why do many products fail to “cross the chasm” between early adopters and early majority consumers?

Early majority buyers require pragmatic proof and compatibility that early adopters overlook.

A tech firm introduces a product at a premium price, later reducing it as competition grows. Which combination of strategies is it using?

Skimming—>widening to broader audience 

Which of the following ACCORD factors would most hinder adoption of a complex AI-driven wearable device?

Complexity

In mature markets where competitors have similar products and price pressure is high, which strategy is most sustainable?

Cost leadership or differentiation to defend market share

A brand maintains stable demand in a declining category by focusing on a loyal subsegment of older users. Which decline-stage strategy is this?

Niche

A company chooses to reduce marketing and production spending but continues selling an aging product at minimal cost. This approach best illustrates:

Harvest