Consumer Behaviour and Marketing Strategy Questions and Answers

Answer: B

Customer satisfaction is measured by the relationship between perceived performance and expectation.

Kotler defines satisfaction as a person's feelings of pleasure or disappointment from comparing a product's perceived performance (or outcome) with his or her expectations. If performance falls short, the customer is dissatisfied; if it matches, satisfied; if it exceeds expectations, delighted.

The other options substitute something else for one side of that comparison: 'real' performance rather than what the customer perceives, advertised outcomes rather than personal expectations, or past experience, which is only one of several sources of expectation.

Answer: B

Establishing an image of the offer in the consumer's mind is positioning.

Kotler defines positioning as designing the company's offering and image to occupy a distinctive place in the minds of the target market. Volvo's position on safety and Maruti Suzuki's on economy and service reach are examples.

New product development is the process of creating new products. The product life cycle describes the stages of introduction, growth, maturity and decline through which a product's sales pass. Sales promotion uses short-term incentives such as discounts and coupons to boost sales. None of them is about the image held in the consumer's mind.

Answer: C

The first step in new product development is idea generation.

The standard sequence runs: idea generation, idea screening, concept development and testing, marketing strategy development, business analysis, product development, test marketing and commercialisation. Ideas come from customers, employees, competitors, research and other sources.

Idea screening is the second step, since ideas must exist before they can be screened. Product launch (commercialisation) is the last step. Market surveys may feed into several stages but are not the first step of the process.

Answer: A

A paid form of non-personal presentation by an identified sponsor is advertising.

This is the American Marketing Association's classic definition: advertising is any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor. Each word excludes another tool: 'paid' excludes publicity, 'non-personal' excludes personal selling, and 'identified sponsor' means the advertiser is named.

Personal selling is personal, face-to-face communication. Direct marketing reaches individual customers directly to get an immediate response. Sales promotion consists of short-term incentives such as discounts and contests.

Answer: C

The total assortment of products a firm sells is its product mix.

The product mix (or product assortment) is the set of all product lines and items that a company offers for sale. It is described by its width (the number of lines), length (the total number of items), depth (the variants of each product) and consistency.

A product line is one group of closely related products within the mix, such as a firm's range of shampoos. An individual product is a single item. Product strategy is the plan for managing products, not the assortment itself.

Answer: D

This is an exclusive territorial agreement.

In exclusive distribution the producer gives a single dealer the sole right to sell its products in a territory, and often requires buyers in that territory to buy only from that dealer. It is common for luxury cars and premium brands, where the producer wants close control over pricing, service and image.

Intensive distribution places the product in as many outlets as possible, as with soft drinks. Selective distribution uses more than one but fewer than all willing outlets in an area. 'Inclusive' is not a recognised distribution strategy.

Answer: D

Companies are turning to rural India because the rural market has tremendous untapped potential.

About two-thirds of India's population lives in villages. Rising rural incomes, better roads, electrification and media reach have made it a large and growing market, while urban markets have become saturated and competitive. Many consumer goods still have low rural penetration, so the room for growth is large.

Rural distribution is in fact more costly and difficult than urban, because villages are many, scattered and poorly connected, so it is not chosen for being economical. There is no general sales-tax exemption for rural sales, and a clean environment is not a business reason for entering a market.

Answer: C

This is public relations.

Public relations builds good relations with the company's publics by obtaining favourable publicity, building a good corporate image, and handling or heading off unfavourable rumours, stories and events. Press releases, sponsorship, corporate social responsibility reports and crisis communication are its tools.

Sales promotion uses short-term incentives to encourage purchase. Personal selling is direct presentation by the sales force to make sales. Advertising is paid, non-personal promotion by an identified sponsor. None of them is defined by handling unfavourable events to earn public goodwill.

Answer: A

Two or more outlets commonly owned and controlled form chain stores.

A corporate chain is two or more outlets under common ownership and control, which buy and merchandise centrally and often look alike, such as Reliance Fresh or Big Bazaar. Central buying gives them economies of scale.

A voluntary chain is a group of independent retailers, sponsored by a wholesaler, who buy together but are not commonly owned. Superstores and discount stores are classified by their size and pricing, not by ownership, so they do not answer a question about common ownership of several outlets.

Answer: D

Selling directly to final consumers for their personal, non-business use is retailing.

Retailing includes all the activities involved in selling goods or services directly to final consumers for their personal, non-business use, whether in stores, by mail, online or door to door.

Wholesaling is selling to those who buy for resale or business use, such as retailers and institutions, which is exactly what the question excludes. 'Distribution operation' is a general phrase, not this defined activity, and 'inter-modelling' (intermodal transport) concerns moving goods by combined modes, not selling them.