Consumer Behaviour and Marketing Strategy Questions and Answers

Answer: A

This is targeting.

Kotler's STP sequence has three steps. Segmentation divides the market into distinct groups of buyers with different needs; targeting evaluates the segments and chooses one or more to serve; and positioning designs the offer and image so that it occupies a distinct place in the minds of the target customers.

Choosing the segments for which to design marketing strategy is the second step, targeting. Segmenting comes before it and positioning after it. Local marketing tailors programmes to the needs of local customer groups, which is a form of micro-marketing, not the act of choosing segments.

Answer: B

Demarketing is deliberately reducing demand for certain products.

Demarketing, a term introduced by Philip Kotler and Sidney Levy, is used when demand exceeds the supply that can or should be provided. It aims to reduce demand, temporarily or permanently, for all customers or for some. Examples are campaigns to save water and electricity, discouraging tobacco and alcohol consumption, and higher peak-hour prices to spread demand.

Managing irregular demand is synchromarketing; managing latent demand is developmental marketing; and stopping the marketing of products in the maturity stage is not what the term means.

Answer: A

It is called brand extension.

Brand extension uses an established brand name to launch a new product, often in a new category: for example, a soap brand launching a shampoo, or a motorcycle brand launching apparel. It draws on existing awareness and trust to reduce the cost and risk of the launch, though a failed extension can harm the parent brand.

A parent brand is the existing brand being extended; a sub-brand combines the parent name with a new name; and a product (line) extension adds a variant in the same category, such as a new flavour, rather than a new product introduced under the brand.

Answer: C

Sales volume peaks in the maturity stage.

In the product life cycle, sales are low during introduction, rise rapidly during growth, level off at their highest during maturity, and fall during decline. Maturity is usually the longest stage: the product is widely accepted, most potential buyers have bought it, competition is intense and sales growth slows to a halt at the peak.

Growth is the stage of fastest increase in sales, not of the highest level. In decline, sales fall away as tastes change or substitutes appear.

Answer: C

It is brand equity.

Kotler and Keller define brand equity as the added value endowed on products and services. It is reflected in how consumers think, feel and act with respect to the brand, and in the prices, market share and profitability the brand commands. A buyer paying more for a branded product than for an identical unbranded one is paying for brand equity.

Brand value is usually the financial worth of the brand as an asset, a measure of equity rather than its definition. Brand strategy is the plan for building and managing brands, and 'brand premise' is not a standard term.

Answer: D

It is made possible by inseparability.

Services are produced and consumed at the same time, and the provider and often the customer are both present when the service is delivered: a haircut, a medical consultation, a class. This inseparability means the customer takes part in producing the service, which is what co-production means, as in self-service banking or a patient describing symptoms.

Heterogeneity (variability) means service quality varies; intangibility means services cannot be seen or touched before purchase. Neither explains co-production. 'Homogeneity' and 'tangibility' are the opposites of service characteristics.

Answer: D

The one that is not a retail format is Wal-mart.

Retail formats are types of store defined by their product range, size, pricing and service: convenience stores, off-price retailers selling branded goods at below regular prices, department stores, supermarkets, hypermarkets, discount stores and so on.

Walmart is a company, a particular retailer that operates discount stores, supercentres and warehouse clubs. It is an example of a retailer using certain formats, not a format itself.

Answer: D

They are measures of customer loyalty.

In the service-profit chain of Heskett and colleagues, internal service quality leads to employee satisfaction, which leads to employee loyalty and productivity, then to external service value, customer satisfaction and customer loyalty, and finally to profit and growth. Customer loyalty is measured by retention, repeat business and referrals.

Internal service quality concerns the workplace and support employees receive, employee satisfaction concerns staff attitudes, and external service quality is what customers receive. None is measured by repeat purchases and referrals.

Answer: A

The key's answer is spatial convenience.

Spatial convenience is one of the service outputs a retail or distribution channel provides: it reduces the time and effort customers spend in reaching the goods and buying them, by locating outlets close to customers and arranging them so that purchase is easy. Shopping centres that bring many stores together under one roof are a standard example of creating spatial convenience.

Lot size is the number of units customers can buy at a time, a different service output. 'Jobber convenience' and 'interactive convenience' are not standard terms in this classification.

Answer: C

The consumer purchases convenience goods this way.

Convenience goods are bought frequently, immediately and with minimum effort in comparison or search: everyday staples such as bread, toothpaste and newspapers, impulse goods such as chocolates, and emergency goods such as umbrellas in a storm.

Shopping goods, such as clothes and appliances, are bought less often after comparing quality, price and style. Speciality goods, such as luxury watches, have unique features for which buyers will make a special effort. 'Personal goods' is not a category in this classification.