Marketing: An Introduction, 13e (Armstrong) Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relations

Transcription

1 Marketing: An Introduction, 13e (Armstrong) Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relations 1) is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. A) Sales promotion B) Personal selling C) Advertising D) Public relations E) Direct marketing Answer: C LO: 12-1: Define the five promotion mix tools for communicating customer value. 2) Greentech is launching a line of miniature solar chargers for laptops, cellphones, and other electronic devices. The chargers are compact, affordable and the green energy technology is a value-added benefit for both the company and consumers. Which of the following would qualify as an advertisement for Greentech's new solar chargers? A) a front-page notice of the release of Greentech's solar chargers in all leading newspapers B) a press conference to discuss the various benefits, including environmental feature C) the use of dedicated sales personnel to explain the qualities of the new solar chargers to retailers D) an endorsement by a national environmental organization to tout the benefits of the new solar chargers E) an online lottery where interested buyers have a chance to win a prize Answer: A LO: 12-1: Define the five promotion mix tools for communicating customer value. ; Ethical understanding and reasoning 3) In a marketing communications mix, refers to any short-term incentive that encourages the purchase or sale of a product or service. A) advertising B) sales promotion C) personal selling D) crowdsourcing E) public relations LO: 12-1: Define the five promotion mix tools for communicating customer value. 1

2 4) Power Pro, a leading manufacturer of lawn and garden equipment, releases a new line of cordless, lightweight, electric weed trimmers. To boost sales, Power Pro issues a 50 percent off coupon to the first 100 buyers at all Home Depot stores in the Northeast. Which element of the promotion mix has Power Pro used in this scenario? A) public relations B) crowdsourcing C) advertising D) sales promotion E) personal selling Answer: D LO: 12-1: Define the five promotion mix tools for communicating customer value. 5) In a promotion mix, performs the functions of building a good rapport with entities outside the company, building up a good corporate image, and handling unfavorable rumors and events. A) personal selling B) sales promotion C) direct marketing D) advertising E) public relations Answer: E LO: 12-1: Define the five promotion mix tools for communicating customer value. 6) ColaBlue, a soft drink manufacturer, is sued by an environmental group for not meeting certain safety standards in its waste disposal. ColaBlue remedies the problem by adding highergrade filters and purifiers. Which of the following actions by ColaBlue would constitute a public-relations effort to address the effects of the lawsuit and the consequent damage to its brand image? A) having well-trained personnel at retail outlets to explain the different ranges of products the company provides B) tying in with local restaurants to promote exclusive sales of ColaBlue soft drinks C) lowering prices of ColaBlue's products in the short term D) holding a press conference to explain the remedial steps that ColaBlue has taken E) making new advertisements for ColaBlue products and sponsoring shows on television Answer: D LO: 12-1: Define the five promotion mix tools for communicating customer value. ; Ethical understanding and reasoning 2

3 7) In a promotion mix, occurs when a firm's sales force makes individual presentations to consumers for the purpose of promoting sales and building customer relationships. A) advertising B) public relations C) crowdsourcing D) merchandising E) personal selling Answer: E LO: 12-1: Define the five promotion mix tools for communicating customer value. 8) Window Concepts has introduced a new line of windows that offer the same benefits as solar panels in reducing heating and cooling costs in homes. The state-of-the-art windows will also contribute to the slowing of global warming while providing energy reliability. The company sends a team of representatives to the National Doors and Windows Trade Show to promote the new line of windows. Which promotion mix tool has Window Concepts used in this scenario? A) crowdsourcing B) public relations C) advertising D) personal selling E) crowdcasting Answer: D LO: 12-1: Define the five promotion mix tools for communicating customer value. ; Ethical understanding and reasoning 9) Studio 19 is a dance studio geared to adults who want to learn ballroom and Latin dance. When individuals call the studio, they're encouraged to access the Web site to receive a $25 e- coupon entitling them to a free half hour of dance instruction. Once they become patrons, text messages are sent to share news about featured dance instructors and upcoming special events. Which of the following promotion mix tools does Studio 19 employ to reach target customers? A) public relations B) personal selling C) direct marketing D) crowdcasting E) retailing Answer: C LO: 12-1: Define the five promotion mix tools for communicating customer value. ; Information technology 3

4 10) In a promotion mix, involves personally connecting with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships. A) direct marketing B) advertising C) public relations D) predictive analyticals E) indirect procurement Answer: A LO: 12-1: Define the five promotion mix tools for communicating customer value. 11) A firm that sends updates to customers about new products is engaging in personal selling. Answer: FALSE LO: 12-1: Define the five promotion mix tools for communicating customer value. 12) What is a promotion mix? Define the major tools used in a promotion mix. Answer: The specific blend of promotion tools that a company uses to persuasively communicate customer value and build customer relationships is known as promotion mix. A company's total promotion mix also called its marketing communications mix consists of the following promotion tools: Advertising: Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Sales promotion: Short-term incentives to encourage the purchase or sale of a product or service. Personal selling: Personal presentation by the firm's sales force for the purpose of making sales and building customer relationships. Public relations: Building good relations with the company's various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events. Direct, digital, and social media marketing: Engaging in direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships. LO: 12-1: Define the five promotion mix tools for communicating customer value. 13) Which of the following is true of consumers in the new marketing communications model? A) They are more reliant on traditional methods of marketing for product information. B) They are less informed than before about companies and product marketing techniques. C) They are more reliant on mass-media marketing methods for product information. D) They are less powerful than before in affecting the way a company markets its products. E) They are better equipped to find product and brand information on their own. Answer: E 4

5 14) Which of the following is an effect of the advancement of technology on marketing? A) Fragmented markets have assimilated into a few mass markets. B) Marketers go through more intermediaries to connect with consumers. C) Consumers rely less on marketer-supplied information than in the past. D) Marketers have increasingly moved toward mass-marketing techniques. E) Marketers tend to supply less information to consumers than in the past. Answer: C AACSB: Information technology 15) Rather than just creating and placing "TV ads" or "print ads" or "Snapchat branded story ads," many marketers now view themselves more broadly as managers. A) social media marketing B) content marketing C) integrated marketing communication D) direct marketing E) multi-media marketing Diff: 3 16) Lush Lawns, a new landscaping company, uses the same logo and shade of green in all forms of communication including its online ads, truck signage, Web site, and business cards. Which technique is being used by Lush Lawns to promote its business? A) logistics information management B) inventory control segmentation C) niche market penetration D) integrated marketing communications E) global marketing management Answer: D 5

6 17) Which of the following is true of marketing strategies that are being developed in the new marketing communications model? A) They are more targeted, social, and engaging. B) They target much larger customer segments. C) They rely more on mass-media marketing techniques. D) They use very little alternative media. E) They include a greater number of print media ads. Answer: A 18) Which of the following is true of advertising in the new marketing communications model? A) Advertisers are increasingly shifting toward digital media. B) Advertisers are spending more on broadcast advertising. C) Advertisers are finding traditional media less expensive. D) Advertisers are using less targeted media to reach customers. E) Advertisers have replaced print catalogues with digital versions. Answer: A 19) Which of the following is a function of an integrated marketing communications system? A) designing products using environmentally friendly techniques B) allowing suppliers or vendors to manage the inventory of products C) controlling production levels by feedback received from customers D) delivering a clear, consistent, and compelling message on the product to each brand contact E) sharing company forecasting details with shareholders Answer: D 20) tends to legitimize products, is very expressive, allows brand or company dramatization, and can build up a long-term image for a product. A) Direct mailing B) Telephone marketing C) Door-to-door selling D) Television advertising E) Printed-catalog marketing Answer: D 6

7 21) Which of the following is a shortcoming of advertising? A) It does not allow dramatization of the brand or company. B) It only provides one-way communication with customers. C) It can be too customized and only attracts small, niche markets. D) It reaches targeted customers too slowly in most cases. E) It is the most costly promotion tool for companies. 22) Which of the following types of promotion tools requires a considerable degree of personal interaction with a customer? A) digital advertising B) personal selling C) sales promotion D) public relations E) television advertising 23) Karen Dodd is employed by Dell and responsible for calling on primary schools in her home state of Maine to promote the company's offerings. She demonstrates the Dell line of products including desktop computers, laptops, and tablets and fields questions from teachers and administrators alike. This is an example of which promotion tool? A) digital advertising B) personal selling C) sales promotion D) public relations E) television advertising 7

8 24) Which of the following is true of personal selling? A) It is the most effective promotional tool for geographically dispersed buyers. B) It allows firms to dramatize product offers through arts and visuals. C) It is the most expensive promotional tool for companies to utilize. D) It is an ineffective method for building long-term customer relationships. E) It presents a firm's message as news rather than as a sales-directed communication. Answer: C 25) Surf's Up, a family-owned business, offers a free surf lesson with the purchase of any surfboard over $200 during the month of May. This is an example of which promotion mix element? A) direct and digital marketing B) public relations C) advertising D) personal selling E) sales promotion Answer: E 26) Which of the following is most likely a difference between advertising and sales promotion? A) Advertising is a sales-directed form of communication, while sales promotions are endorsed as company news. B) Advertising can be used to build up a long-term image for a product while sales promotion effects can be short lived. C) Advertising can be used to dramatize product offers, but sales promotion cannot be used for this purpose. D) Advertising can trigger quick sales, while sales promotions cannot. E) Advertising is not as effective in building long-term brand preferences as sales promotions. 8

9 27) When a company issues a press release to announce a sizable donation to a national charity, they are using to generate goodwill and maintain a positive corporate image. A) personal selling B) sales promotion C) public relations D) direct and digital marketing E) advertising Answer: C 28) Which of the following is true of public relations? A) It provides quick incentives to make product purchases. B) It emphasizes news and events rather than sales C) It involves training a dedicated sales force to meet customers. D) It cannot be used to dramatize a product or company. E) It is the most widely used promotional tool. 29) Which of the following is an example of a combination of sales promotions and direct marketing? A) a company giving discounts on their product prices in order to gain a brand image B) a company releasing a nationwide television ad about every buyer having a chance to win a lottery prize C) a company holding a press conference to talk about their new product D) a company's sales representatives meeting customers directly to present customized offerings E) a company sending an to a customer about a discount on a product during a holiday season Answer: E Diff: 3 9

10 30) Which of the following is true of direct and digital marketing? A) Its marketing message is fixed and does not change according to the customer's requirements. B) It is suited for highly targeted marketing efforts and for building one-to-one customer relationships. C) It is presented as company news rather than as a sales-directed communication. D) It does not involve any interaction between the company and its customers. E) It is an impersonal promotion tool that hinders two-way communication. 31) A company that uses telephone marketing to sell its products to customers is most likely using the promotion tool of. A) advertising B) public relations C) direct and digital marketing D) retailing E) merchandising Answer: C 32) Which of the following promotion mix approaches involves a producer promoting a product to different channel members who in turn promote the product to customers? A) direct marketing B) a push strategy C) the publish-subscribe method D) a pull strategy E) vertical integration 10

11 33) A pharmaceutical manufacturer offers monetary incentives to its sales representatives to promote a new drug to the medical professionals in their respective geographic territories. This is an example of a strategy. A) push B) direct marketing C) vertical integration D) pull E) publish-subscribe Answer: D 34) Chic Eyewear, a producer of designer eyeglass frames, promotes their new line in national fashion magazines. Chic Eyewear lists the select optical retailers that carry their line at the bottom of their ads. This is an example of a strategy. A) push B) vertical integration C) pull D) publish-subscribe E) direct marketing Answer: C 35) The new marketing communications model consists of promotional mixes that are designed to make traditional mass-media obsolete. Answer: FALSE 36) Integrated marketing communications involves carefully coordinating a company's many communications channels to deliver a clear, consistent, and compelling message about the organization and its products. Answer: TRUE 11

12 37) Advertising can reach masses of geographically dispersed buyers at a low cost per exposure. Answer: TRUE 38) Direct marketing is the optimal promotion tool for building personal and long-lasting relationships with customers. Answer: TRUE 39) Some marketers now rely almost entirely on digital and social media. Answer: TRUE 40) In a push promotion strategy, the producer promotes a product to channel members who in turn promote it to final consumers. Answer: TRUE 41) A consumer demanding a product from a retailer after watching an ad on television has responded to a pull promotional advertising strategy. Answer: TRUE 42) John Deere's sales force working with Lowe's, Home Depot, independent dealers, and other channel members to promote their products to final consumers is an example of a push promotion strategy. Answer: TRUE 12

13 43) How has the new communications model changed the face of today's marketing communications? Answer: (Students' answers may vary. The answer given below is indicative.) The new communications model is changing the face of today's marketing communications in several ways. First, consumers are changing. In this digital age, wireless consumers are better informed and more communications empowered. Rather than relying on marketer-supplied information, they can use the Internet, social media, and other technologies to find information on their own. Second, marketing strategies are changing. As mass markets have fragmented, marketers are shifting away from mass marketing. More and more, they are developing focused marketing programs designed to build closer relationships with customers in more narrowly defined micromarkets. Finally, sweeping advances in digital technology are causing remarkable changes in the ways companies and customers communicate with each other. The digital age has spawned a host of new information and communication tools from smartphones and tablets to satellite and cable television systems to the many faces of the Internet (brand Web sites, , blogs, social media and online communities, the mobile Web, and so much more). Just as mass marketing once gave rise to a new generation of mass-media communications, the new digital and social media have given birth to a more targeted, social, and engaging marketing communications model. Diff: 3 AACSB: Information technology 44) Why do today's firms need integrated marketing communications systems? How do firms benefit from such systems? Answer: (Students' answers may vary. The answer given below is indicative.) Consumers today are bombarded by commercial messages from a broad range of sources. But consumers don't distinguish between message sources the way marketers do. In the consumer's mind, messages from different media and promotional approaches all become part of a single message about the company. Conflicting messages from these different sources can result in confused company images, brand positions, and customer relationships. An integrated marketing communications system helps to integrate its many communications channels to deliver a clear, consistent, and compelling message about the organization and its brands. Integrated marketing communications calls for recognizing all touchpoints where the customer may encounter the company and its brands. Each brand contact will deliver a message whether good, bad, or indifferent. The company's goal should be to deliver a consistent and positive message to each contact. Integrated marketing communications leads to a total marketing communications strategy aimed at building strong customer relationships by showing how the company and its products can help customers solve their problems. Integrated marketing communications ties together all of the company's messages and images. 13

14 45) Watson Insurance is an insurance company that provides coverage for personal property and bodily injury. The company offers customized policy options for individual customers. High levels of interaction with customers are needed so that the company can provide the best customized service possible. What kind of promotional tool will best help Watson Insurance to sell its policies to its target customers? Answer: (Students' answers may vary. The answer given below is indicative.) Since Watson Insurance requires high levels of interactions with its customers, so as to customize its policies, the promotional tool of personal selling will best help Watson Insurance. Personal selling is the most effective tool at certain stages of the buying process, particularly in building up buyers' preferences, convictions, and actions. It involves personal interaction between two or more people, so each person can observe the other's needs and characteristics and make quick adjustments. Personal selling also allows all kinds of customer relationships to spring up, ranging from matter-of-fact selling relationships to personal friendships. An effective salesperson keeps the customer's interests in mind to build a long-term relationship. Diff: 3 AACSB: Application of knowledge 46) Explain the use of sales promotions as a promotion mix tool. Answer: Sales promotion includes a wide assortment of tools coupons, contests, discounts, premiums, and others all of which have many unique qualities. They attract consumer attention, offer strong incentives to purchase, and can be used to dramatize product offers and boost sagging sales. Sales promotions invite and reward quick response. Whereas advertising says, "Buy our product," sales promotion says, "Buy it now." Sales promotion effects are often short lived, however, and often are not as effective as advertising or personal selling in building long-run brand preference and customer relationships. 14

15 47) Contrast pull and push promotion mix strategies with suitable examples. Answer: (Students' answers may vary. The answer given below is indicative.) Marketers can choose from two basic promotion mix strategies: push promotion or pull promotion. A push strategy involves "pushing" the product through marketing channels to final consumers. The producer directs its marketing activities (primarily personal selling and trade promotion) toward channel members to induce them to carry the product and promote it to final consumers. For example, John Deere does very little promoting of its lawn mowers, garden tractors, and other residential consumer products to final consumers. Instead, John Deere's sales force works with Lowe's, Home Depot, independent dealers, and other channel members, who in turn push John Deere products to final consumers. Using a pull strategy, the producer directs its marketing activities (primarily advertising and consumer promotion, and direct and digital media) toward final consumers to induce them to buy the product. For example, Unilever promotes its Axe grooming products directly to its young male target market using TV and print ads, a brand Web site, its YouTube channel and Facebook page, and other channels. If the pull strategy is effective, consumers will then demand the brand from retailers. Diff: 3 48) Which of the following is the first step in developing an advertising program? A) setting the advertising budget B) developing an advertising strategy C) developing a brand message D) setting advertising objectives E) evaluating advertising campaigns Answer: D 49) "Informing the target market about a price change for a signature cookie dough product through a national TV campaign within three months" is an example of a(n) objective. A) reminder B) comparative C) informative D) advertising E) persuasive Answer: D 15

16 50) The objective of advertising is to build primary demand. A) reminder B) comparative C) personal D) informative E) persuasive Answer: D 51) Inglast, a chocolate producer, is faced with a class action suit when customers found pieces of plastic in boxes of cocoa powder. Inglast settles the case and then releases an advertising campaign to show the new and improved safety seals on all containers of cocoa powder. Which kind of advertisement has Inglast most likely used? A) classified B) informative C) comparative D) personalized E) reminder ; Ethical understanding and reasoning 52) The primary objective of advertising is to build selective demand. A) reminder B) classified C) personal D) informative E) persuasive Answer: E 53) advertising would most likely result in attack ads between competitors. A) Reminder B) Comparative C) Personal D) Informative E) Classified 16

17 54) advertising primarily maintains brand relationships and is important for mature products. A) Comparative B) Persuasive C) Personalized D) Reminder E) Classified Answer: D 55) Trendy Appliances has introduced a new product, Minute Yogurt, into the yogurt maker appliance market. Minute Yogurt differs from competitive offerings because it takes a minute to blend and a minute to clean. Which type of advertising would be best for promoting Minute Yogurt? A) informative advertising B) reminder advertising C) classified advertising D) comparative advertising E) personalized advertising Answer: A 56) Which statement is most likely true about the affordable method of setting an advertising budget? A) Spending on advertising is calculated based on the financial objectives a company wishes to accomplish. B) Spending on advertising is calculated after operating expenses and capital outlays are deducted from total revenues. C) Spending on advertising is based on a predetermined percentage of current or forecasted sales for the year. D) Spending on advertising is calculated as a percentage of the unit sales price. E) Spending on advertising is based on a competitor's advertising outlays. 17

18 57) The method of setting an advertising budget typically overlooks how promotion affects sales. A) affordable B) percentage-of-sales C) objective-and-task D) competitive parity E) adaptive-control Answer: A 58) Which method of setting advertising budgets best helps management think about the relationship between promotion spending, selling price, and profit per unit? A) adaptive-control method B) objective-and-task method C) competitive-parity method D) affordable method E) percentage-of-sales method Answer: E 59) In the competitive-parity method of setting an advertising budget, the budget is set based on. A) a percentage of future sales B) the total revenues that a company makes C) the amount spent by similar companies in the same industry D) objectives set by the company and the cost required to accomplish them E) a percentage of current sales Answer: C 60) According to the text, the most logical budget-setting method in advertising is the method. A) adaptive-control B) objective-and-task C) competitive-parity D) affordable E) percentage-of-sales 18

19 61) Which of the following best describes the term "Madison and Vine"? A) utilizing the slice of life style of advertising B) emphasizing reach over impact in advertising C) using social media for advertising a brand D) merging advertising with entertainment E) voicing social concerns through advertising Answer: D 62) The aim of is to make ads and brand content so engaging or useful that people want to watch them. A) branded entertainment B) advertainment C) social advertising D) subliminal advertising E) infotainment advertising 63) Which of the following is an example of branded entertainment? A) a company placing its product in a movie scene B) a company using a celebrity to endorse a product C) a company airing its advertisements in movie theaters D) a company using an acclaimed movie director to film an advertisement E) a company using a famous song in its advertisement Answer: A 19

20 64) Starbucks has signed a contract with a television production company to have its brand featured prominently in a new situation comedy about empty nesters. The conditions of the agreement state that the situation comedy will feature only the Starbucks brand of coffee. What kind of advertising technique is being used in this example? A) geofencing B) advertainment C) product placement D) vertical integration E) subliminal advertising Answer: C 65) The style of advertising shows ordinary people clearly using a product in a normal setting. A) personality symbol B) slice of life C) mood or image D) testimonial evidence E) technical expertise 66) Trainstar, a sportswear equipment manufacturer, releases a new line of energy drinks called VitaZing. The television ad for the energy drink shows people jogging, working out in a gym, and doing aerobics. The actors then take a break to drink VitaZing, which visibly re-energizes them and leads them to continue exercising. Which advertising style is most likely used in the VitaZing ad? A) scientific evidence B) technical expertise C) personality symbol D) testimonial evidence E) lifestyle Answer: E 20

21 67) Which of the following best describes the personality symbol style of advertising? A) using ordinary people to show how a product affects them in their daily lives B) using scientific evidence to support claims about a product in an advertisement C) using an animated character or mascot to represent a product in an advertisement D) using a technical expert to recommend a product in an advertisement E) using a celebrity to endorse a product in an advertisement Answer: C 68) A TV ad promoting how an ordinary person's life has changed due to considerable weight loss is an example of the style of advertising. A) scientific evidence B) testimonial evidence C) technical expertise D) mood or image E) fantasy 69) Crest toothpaste has used a style of advertising to convince buyers that Crest is better than other brands at fighting cavities. A) testimonial evidence B) technical expertise C) scientific evidence D) mood or image E) fantasy Answer: C 70) Which of the following media is most suitable for advertising a product that needs to be demonstrated? A) television B) radio C) newspaper D) magazine E) billboard Answer: A 21

22 71) Which of the following media is most suitable for having consumers provide input on product design or features? A) television B) radio C) magazines D) social media E) billboards Answer: D 72) Marketers need to know how customers connect with an ad and brand idea as a part of the broader brand relationship. This can be achieved by measuring levels. A) media engagement B) reach C) frequency D) listenership E) readership Answer: A 73) Which of the following is a disadvantage of using digital, mobile, and social media for advertising? A) The costs are high. B) Audience selectivity is low. C) The audience controls content and ad exposure. D) The interactive capabilities are low. E) There is little scope for personalization. Answer: C 74) Which of the following is a disadvantage of using a magazine as an advertising medium? A) It has a poor pass-along readership. B) It involves high costs. C) It has low geographic selectivity. D) It has low credibility and image. E) It consists of low-quality reproduction. 22

23 75) Persuasive advertising helps to maintain customer relationships and keep consumers thinking about the product. Answer: FALSE 76) Comparative advertising is a type of persuasive advertising. Answer: TRUE 77) Reminder advertising is ideal for maintaining customer relationships with mature products. Answer: TRUE 78) The affordable method of setting an advertising budget depends on the total revenues of a company. Answer: TRUE 79) The principle behind the percentage-of-sales method of budget setting is viewing sales as the result of advertising. Answer: FALSE 80) The competitive-parity method of setting promotion budgets prevents promotion wars between companies. Answer: FALSE 81) Product placement is a form of brand integration. Answer: TRUE 23

24 82) In the context of execution styles in advertising, using an animated character that represents a product in an advertisement is an example of an endorsement. Answer: FALSE 83) In advertising, reach is a measure of the percentage of people in the target market who are exposed to an ad campaign during a given period of time. Answer: TRUE 84) In advertising media selection, frequency describes the qualitative value of message exposure through a given medium. Answer: FALSE 85) In any medium, the relevance of advertising content to an audience is less important than how many people the advertisement reaches. Answer: FALSE 86) Newspapers, as a medium of advertising, provide poor local market coverage. Answer: FALSE 87) Media impact is the qualitative value of message exposure through a given medium. Answer: TRUE 24

25 88) Kronos Inc., a car manufacturer, makes a car called Hover that runs on the force generated by super magnets. Kronos is the first company to use super-magnet technology in automobile manufacturing, aiming to reduce dependency on non-renewable fuels. If Kronos plans to release television advertisements about Hover, what kind of advertising objective should it pursue when introducing the new product into the market? Answer: (Students' answers may vary. The answer given below is indicative.) Hover uses a new technology in its production, and its advertisement should reflect that. Introducing a new product and potentially creating a new market requires an advertising campaign that stresses on its uniqueness and usability. The best advertising model to follow for Hover would be informative advertising. Informative advertising is used heavily when introducing a new product category. In this case, the objective is to build primary demand. Diff: 3 AACSB: Application of knowledge 89) What methods of setting advertising budgets are directly based on company revenues? What are the disadvantages of such methods? Answer: One of the methods of setting advertising budgets based on company revenues is called the affordable method. The team sets the promotion budget at the level they think the company can afford. Small businesses often use this method, reasoning that a company cannot spend more on advertising than it has. They start with total revenues, deduct operating expenses and capital outlays, and then devote some portion of the remaining funds to advertising. This method of setting budgets completely ignores the effects of promotion on sales. It tends to place promotion last among spending priorities, even in situations in which advertising is critical to the firm's success. It leads to an uncertain annual promotion budget, which makes long-range market planning difficult. Other companies use the percentage-of-sales method, setting their promotion budget at a certain percentage of current or forecasted sales. Or they budget a percentage of the unit sales price. The percentage-of-sales method has advantages. It is simple to use and helps management think about the relationships between promotion spending, selling price, and profit per unit. Despite these claimed advantages, however, the percentage-of-sales method has little to justify it. It wrongly views sales as the cause of promotion rather than as the result. Diff: 3 25

26 90) With a suitable example, show how advancements in technology help consumers avoid advertisement cluttering. What implications does this trend hold for advertisers? Answer: (Students' answers may vary. The answer given below is indicative.) Until recently, television viewers were pretty much a captive audience for advertisers. But today's digital wizardry has given consumers a rich new set of information and entertainment choices. With the growth in cable and satellite TV, the Internet, video streaming, tablets, and smartphones, today's viewers have many more options. Digital technology has also armed consumers with an arsenal of weapons for choosing what they watch or don't watch. Increasingly, thanks to the growth of DVR systems, consumers are choosing not to watch ads. Seventy-six percent of American TV households have a DVR, subscribe to Netflix, or use videoon-demand from a cable or telecommunications provider and two-thirds of DVR owners use the device to skip commercials. Thus, advertisers can no longer force-feed the same old cookiecutter messages and content to captive consumers through traditional media. Simply interrupting or disrupting consumers no longer works. Unless ads provide content that is engaging, useful, or entertaining, many consumers will simply ignore or skip them. To break through the clutter, many marketers have subscribed to a new merging of advertising and entertainment, dubbed "Madison & Vine." It represents the merging of advertising and entertainment in an effort to create new avenues for reaching consumers with more engaging messages. Just to gain and hold attention, today's content must be better planned, more imaginative, more entertaining, and more emotionally engaging. Simply interrupting or disrupting consumers no longer works. Unless ads provide information that is interesting, useful, or entertaining, many consumers will simply skip by them. Diff: 3 ; Information technology 91) Yuran Inc., a designer and seller of lifestyle products and inexpensive furniture, has decided to engage in brand integration to advertise its products. The decision coincides with Yuran's plan to release a new line of coffee tables that fold easily and do not take up much space. What are the different ways in which Yuran can achieve brand integration? Answer: Yuran can achieve brand integration through product placement. Product placement involves embedding brands as props within other programming like TV shows, either being used in a show, or being scripted into the show. The Yuran coffee table, for example, could be placed in sitcoms which generally have home settings. The product could even be worked into the show's overall storyline, making it an integral part of that episode. It can even have product placement in movies, video games, comic books, and even pop music. Yuran can achieve brand awareness by being part of the entertainment rather than interrupting it. Diff: 3 AACSB: Application of knowledge 26

27 92) What are the important factors that a marketer should be aware of when developing a creative concept for an advertisement? Answer: An advertiser must develop a compelling creative concept or big idea that will bring a message strategy to life in a distinctive and memorable way. The creative concept will guide the choice of specific appeals to be used in an advertising campaign. Advertising appeals should have three characteristics. First, they should be meaningful, pointing out benefits that make the product more desirable or interesting to consumers. Second, appeals must be believable. Consumers must believe that the product or service will deliver the promised benefits. However, the most meaningful and believable benefits may not be the best ones to feature. Appeals should also be distinctive. They should tell how the product is better than competing brands. 93) John works as a junior marketing executive at Frontloop Corporation. Frontloop Corporation manufactures guitars and other stringed instruments. It designs a new guitar, the Loneway, customized for the folk music genre. The company plans to attract both folk artists and folk music lovers with its advertising campaigns and decides to exclusively use mass-media marketing techniques to advertise the Loneway guitar. What arguments can John use if he wants to convince Frontloop to adopt digital media instead of television advertising? Answer: (Students' answers may vary. The answer given below is indicative.) The Loneway guitars are specifically designed for folk music lovers, who form a niche market in music. Marketing these guitars through mass-media outlets like television will not help the company reach its target customers efficiently. The costs of mass media are rising, and their audiences are reducing in number. Though mass media have good coverage, they provide low audience selectivity. In contrast, the digital media, like the Internet, are relatively inexpensive and highly customer selective. They are also highly interactive. The Loneway guitar ads could be placed at strategic Web sites that folk music enthusiasts frequently visit. The ads can be uploaded on sites like YouTube, or Facebook, which are very apt at reaching target customers and niche markets. On the other hand, television advertising is highly cluttered and provides fleeting exposure to potential customers. Using the Internet also saves time as compared to television, which may have a higher ad purchase lead time. Hence, advertising the Loneway line of guitars through online advertising is the cheaper, more audience selective, and customer interactive outlet that the Frontloop Corporation can adopt, especially when compared to television advertising. Diff: 3 AACSB: Application of knowledge 27

28 94) What is consumer-generated content? Provide an example. Answer: (Students' answers may vary. The answer given below is indicative.) Taking advantage of today's digital and social media technologies, many companies are now tapping consumers for marketing content, message ideas, or even actual ads and videos. Sometimes the results are outstanding; sometimes they are forgettable. If done well, however, user-generated content can incorporate the voice of the customer into brand messages and generate greater customer engagement. Perhaps the best known consumer-generated content effort is the long-running annual "Crash the Super Bowl Challenge" held annually by PepsiCo's Doritos brand. Doritos invites consumers to create their own 30-second video ads, and winners receive large cash awards and have their ads run during the Super Bowl. But brands across a wide range of industries from automakers and fast-food chains to apparel brands and pet food marketers are inviting customers to participate in generating marketing content. Diff: 3 95) Which of the following is an example of a firm utilizing public relations as a promotion tool? A) a firm using its personal sales force at an expo to sell its products B) a firm sending its catalog directly to customers through C) a firm informing customers of special discounts on its Web site D) a firm providing interesting information about a product to the news media E) a firm using a celebrity to endorse a product in a television commercial Answer: D LO: 12-4: Explain how companies use public relations to communicate with their publics. 96) Public relations can have a strong impact on public awareness at a much lower cost than advertising can. Answer: TRUE LO: 12-4: Explain how companies use public relations to communicate with their publics. 97) Usually, when using public relations, a company pays for the space or time in the media. Answer: FALSE LO: 12-4: Explain how companies use public relations to communicate with their publics. 98) Lobbying refers to a PR department maintaining relationships with shareholders and others in the financial community. Answer: FALSE LO: 12-4: Explain how companies use public relations to communicate with their publics. 28

29 99) What are the different functions of a public relations (PR) department? Answer: PR departments may perform any or all of the following functions: Press relations or press agency: Creating and placing newsworthy information in the news media to attract attention to a person, product, or service. Product publicity: Publicizing specific products. Public affairs: Building and maintaining national or local community relationships. Lobbying: Building and maintaining relationships with legislators and government officials to influence legislation and regulation. Investor relations: Maintaining relationships with shareholders and others in the financial community. Development: Working with donors or members of nonprofit organizations to gain financial or volunteer support. LO: 12-4: Explain how companies use public relations to communicate with their publics. 100) How does public relations help in creating an integrated marketing communications system? Answer: An integrated marketing communications system is required to deliver a consistent and positive message of a company's brand to its customers. Public relations is used to promote products, people, places, ideas, activities, organizations, and even nations. Companies use PR to build good relations with consumers, investors, the media, and their communities. Public relations can have a strong impact on public awareness at a much lower cost than advertising can. When using public relations, a company does not pay for the space or time in the media. Rather, it pays for a staff to develop and circulate information and manage events. If the company develops an interesting story or event, it could be picked up by several different media and have the same effect as advertising that would cost millions of dollars. Moreover, public relations has the power to engage customers and make them a part of the brand story. Although public relations still captures only a small portion of the overall marketing budgets of many firms, PR can be a powerful brand-building tool. Especially in this digital age, the lines between advertising, PR, and other content are becoming more and more blurred. For example, are brand Web sites, blogs, brand videos, and social media activities advertising, PR, or something else? All are marketing content. And as the use of earned and shared digital content grows rapidly, PR may play a bigger role in marketing content management. More than any other department, PR has always been responsible for creating relevant marketing content that draws consumers to a brand rather than pushing messages out. Hence, public relations works hand-in-hand with advertising within an integrated marketing communications program to help build brands and customer relationships. LO: 12-4: Explain how companies use public relations to communicate with their publics. 29