Sample Questions and Answers
What is the purpose of ‘market segmentation’?
A) To identify and target a broad customer base
B) To divide a large market into smaller, more manageable segments
C) To increase the number of products offered by a company
D) To create a single marketing message for all customers
Answer: B) To divide a large market into smaller, more manageable segments
Explanation: Market segmentation involves dividing a large market into smaller segments based on various criteria, such as demographics, geography, or behavior, to tailor marketing strategies more effectively.
What is a ‘value-based pricing’ strategy?
A) Setting a price based on the cost of production
B) Setting a price based on the perceived value of the product to the consumer
C) Setting a price that matches competitors’ pricing
D) Setting a price to cover a company’s fixed and variable costs
Answer: B) Setting a price based on the perceived value of the product to the consumer
Explanation: Value-based pricing sets the price of a product or service based on the perceived value it provides to the customer, rather than on its production cost.
Which of the following is a characteristic of ‘brand extension’?
A) Creating a new product with a completely different name
B) Using an existing brand name to introduce new products in the same category
C) Changing the target market for a brand
D) Maintaining a single product under a brand for many years
Answer: B) Using an existing brand name to introduce new products in the same category
Explanation: Brand extension occurs when a company uses an established brand name to launch new products within the same product category or market.
Which of the following marketing strategies focuses on reducing costs through increased operational efficiency?
A) Differentiation strategy
B) Cost leadership strategy
C) Market penetration strategy
D) Focus strategy
Answer: B) Cost leadership strategy
Explanation: A cost leadership strategy aims to become the lowest-cost producer in the industry, often by improving operational efficiency and reducing costs.
What is ‘consumer behavior’ in marketing?
A) The process of creating demand for a product
B) The study of how individuals make decisions to spend their resources on consumption
C) The study of how marketing influences consumer emotions
D) The process of setting prices based on consumer preferences
Answer: B) The study of how individuals make decisions to spend their resources on consumption
Explanation: Consumer behavior refers to the actions and decision-making processes of individuals when they purchase and use products or services.
What is the purpose of a ‘product life cycle’ analysis?
A) To determine the target market for a product
B) To plan the marketing strategies for each stage of a product’s life
C) To decide the price of a product based on its demand
D) To develop new products for a market
Answer: B) To plan the marketing strategies for each stage of a product’s life
Explanation: The product life cycle analysis helps companies understand the different stages a product goes through and informs the strategies needed for marketing and managing the product at each stage.
Which of the following is an example of ‘psychological pricing’?
A) Offering a 10% discount for a limited time
B) Pricing a product at $99.99 instead of $100 to make it seem more affordable
C) Offering a buy-one-get-one-free promotion
D) Pricing products according to their cost of production
Answer: B) Pricing a product at $99.99 instead of $100 to make it seem more affordable
Explanation: Psychological pricing uses pricing tactics that influence consumer perception, such as pricing items just below a whole number to make them seem less expensive.
What is the ‘marketing environment’?
A) The internal processes of a company that influence marketing
B) The external factors that affect marketing decisions, such as economic, political, and social forces
C) The set of marketing tools a company uses to implement its strategies
D) The physical store environment in which products are sold
Answer: B) The external factors that affect marketing decisions, such as economic, political, and social forces
Explanation: The marketing environment includes external factors like economic conditions, cultural trends, and technological advancements that influence marketing strategies.
What does the ‘AIDA model’ stand for in marketing?
A) Attention, Interest, Desire, Action
B) Awareness, Information, Decision, Action
C) Advertising, Innovation, Demand, Analysis
D) Attention, Impact, Design, Audience
Answer: A) Attention, Interest, Desire, Action
Explanation: The AIDA model outlines the stages a consumer goes through in the buying process: Attention, Interest, Desire, and Action.
What is the main focus of ‘relationship marketing’?
A) Selling as many products as possible
B) Creating long-term relationships with customers to increase loyalty and retention
C) Attracting new customers with aggressive sales tactics
D) Using discounts and promotions to generate immediate sales
Answer: B) Creating long-term relationships with customers to increase loyalty and retention
Explanation: Relationship marketing emphasizes building and maintaining long-term relationships with customers to foster loyalty and repeat business.
Which of the following is a key feature of ‘personal selling’?
A) Promoting products through mass media
B) Direct, face-to-face interaction between a salesperson and a potential customer
C) Using coupons to drive sales
D) Sending generic emails to a large audience
Answer: B) Direct, face-to-face interaction between a salesperson and a potential customer
Explanation: Personal selling involves direct communication between a salesperson and a potential customer, often with a focus on persuasion and relationship-building.
What is ‘marketing automation’?
A) Using automated technology to perform market research
B) Automating the process of creating advertisements
C) Using software to automate marketing tasks, such as sending emails and managing social media
D) Hiring a dedicated marketing team for each task
Answer: C) Using software to automate marketing tasks, such as sending emails and managing social media
Explanation: Marketing automation involves using software and tools to automate repetitive marketing tasks, improving efficiency and effectiveness.
What is the ‘substitution effect’ in pricing?
A) The reduction in demand for a product when its price increases due to the availability of cheaper alternatives
B) The increase in demand for a product when its price decreases
C) The effect of an increase in supply on market prices
D) The increase in demand for a product when its brand becomes more popular
Answer: A) The reduction in demand for a product when its price increases due to the availability of cheaper alternatives
Explanation: The substitution effect occurs when consumers choose alternatives over a product because the price of the original product has risen, making the substitute more attractive.
What is ‘word-of-mouth marketing’?
A) Using TV commercials to promote a product
B) Customers sharing their positive experiences with others, influencing new potential customers
C) Advertising through paid social media influencers
D) Creating viral marketing campaigns on the internet
Answer: B) Customers sharing their positive experiences with others, influencing new potential customers
Explanation: Word-of-mouth marketing relies on customers sharing their positive experiences with friends, family, or peers, leading to increased awareness and trust for a brand.
Which of the following is an example of ‘product bundling’?
A) Offering a single product at a high price
B) Selling two or more products together at a lower price than if purchased separately
C) Offering a product with a discount for limited-time offers
D) Creating a loyalty program that rewards repeat customers
Answer: B) Selling two or more products together at a lower price than if purchased separately
Explanation: Product bundling involves selling multiple products together at a discounted price to encourage consumers to buy more than one product.
What is ‘market penetration’?
A) Increasing market share by promoting existing products in existing markets
B) Entering new markets with new products
C) Reducing the price of existing products to gain a larger customer base
D) Expanding the product range to include new categories
Answer: A) Increasing market share by promoting existing products in existing markets
Explanation: Market penetration is a strategy to increase market share for existing products in existing markets, often by using promotions or competitive pricing.
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