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Chapter 03Test Bank

1. Facebook has approximately what fraction of the world's population as customers?A. one-halfB. one-thirdC. one-quarterD. one-fifthE. one-seventh

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-01 Explain the purpose of environmental scanning.Level of Difficulty: 1 EasyTopic: Environmental Influences on Marketing

Feedback: In 2004 Mark Zuckerberg started Facebook in his Harvard dorm room. His vision was not just to be a company, but to connect everyone in the world. Today, with 1.65 billion active users, or one-fifth of the world's population, Facebook is well on its way to accomplishing that vision!

2. All of the following statements about the environmental forces that have influenced Facebook are true except which?A. The Federal Trade Commission (FTC) has a laissez-faire policy of not interfering with the development and marketing of Facebook and other social media websites.B. Technological advances in data storage, server speed, and software integration have made Facebook increasingly fast and convenient.C. Its rivalry with Google, Twitter, and Snapchat and new social networks encourage rapid expansion.D. The cost of wireless connectivity and smartphones rapidly declined and Internet access expanded, which increasingly made social networking affordable for more people.E. People increasingly look for new ways to communicate, obtain information, and offer opinions.

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-01 Explain the purpose of environmental scanning.Level of Difficulty: 2 MediumTopic: Environmental Influences on Marketing

Feedback: All five environmental forces have influenced Facebook, but the legal and regulatory force was that the company obtains trademark and patent rights to its name and many of its features, and it provides guidelines for a variety of topics such as privacy, data protection, protection of minors, and taxation. There is no mention of the FTC's efforts regarding Facebook, but in general the U.S. government agency has been involved in regulating the practices of social networks.

3. Environmental scanning refers toA. assessing any possible negative impact a firm's activities might have on the local ecology.B. continually acquiring information on events occurring outside the organization to identify and interpret potential trends.C. setting up a regular schedule to assess the performance of different divisions within a firm.D. initiating an internal talent search to identify employees who can think "outside the box" to generate solutions to marketing problems caused by changes in the marketing environment.E. requiring all employees to spend time outside the office to avoid the "ivory tower" syndrome.


Feedback: Key term definition—environmental scanning.

4. The process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends is referred to asA. significant trend analysis.B. organizational scanning.C. environmental scanning.D. a SWOT analysis.E. marketing intelligence.

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Feedback: Key term definition—environmental scanning.

5. Environmental trends arise from all of the following forces except which?A. competitiveB. economicC. regulatoryD. geographicalE. social


Feedback: Environmental scanning trends come from social, economic, technological, competitive, and regulatory forces. See Figure 3-1.

6. The purpose of environmental scanning is toA. uncover causes of trends in the marketplace.B. uncover trends in the workplace.C. stop unhelpful trends in the marketplace, and speed helpful ones.D. stop unhelpful trends in the workplace, and speed helpful ones.E. identify and interpret trends in the marketplace.


Feedback: The purpose of environmental scanning is to identify and interpret trends in the marketplace that affect the marketing activities of the firm. Environmental scanning is done through continually acquiring information on events occurring outside the organization.

7. Which of the following statements regarding environmental scanning is the most accurate?A. Environmental scanning changes the marketing environment.B. Environmental scanning identifies and interprets potential trends.C. Environmental scanning should be done about every five years.D. Environmental scanning focuses primarily on ecological factors.E. It is too costly and there is too much information generated from environmental scanning to make it viable for small firms.


Feedback: The process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends is called environmental scanning.

8. A firm conducting an environmental scan of the marketplace might uncover key __________ such as the growing popularity of video bloggers and the increasing mobility and connectivity of consumers.A. profitsB. responsibilitiesC. idealismsD. codesE. trends

AACSB: Analytical Thinking



Accessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-01 Explain the purpose of environmental scanning.Level of Difficulty: 2 MediumTopic: Environmental Influences on Marketing

Feedback: A firm conducting an environmental scan of the marketplace might uncover key trends such as the growing popularity of video bloggers, the increasing mobility and connectivity of consumers, and the importance of issues such as net neutrality. These trends affect consumers and the organizations that serve them. See Figure 3-2.

9. Starbucks entered a partnership with Keurig Green Mountain to sell K-Cup single-serving coffee packs. Because Starbucks __________, it was prepared for this shift in its marketing environment.A. optimized its distribution by adding local outlets in grocery storesB. noticed the change in the demographics of coffee and tea drinkers in generalC. added more in-store displaysD. shifted funds from product development to advertisingE. tracked, as part of its ongoing environmental scanning activities, the percentage of households with single cup brewers

AACSB: Knowledge ApplicationAccessibility: Keyboard NavigationBlooms: ApplyLearning Objective: 03-01 Explain the purpose of environmental scanning.Level of Difficulty: 3 HardTopic: Environmental Influences on Marketing

Feedback: The increase in the percentage of households with single-cup brewers led to changes in the marketplace, so Starbucks joined the move to single-serving coffee packs.

10. As the director of marketing for a local hospital that specializes in caring for limited mobility patients and related health issues, you must conduct an environmental scan to help create a five-year marketing plan for the hospital. Which of the following environmental trends should you consider to be the most important?A. The number of people in the geographic area who are 65 years or older will increase by 23 percent during the next five years.B. Millennials are becoming increasingly important in the workplace.C. The local community has seen a rise in dual-income households.D. By the year 2025, robotics will play a major role in surgical procedures.E. Twenty percent of the local population is of Hispanic origin, but that number is expected to grow during the next decade.


Feedback: The most important trend is the rise of the 65 and older population in the community because of the disproportionate demand for health care services among these consumers. This will likely be an important target market for the hospital.

11. The Lemon Tree is a high-fashion boutique selling top-of-the-line women's clothing and accessories. The keys to its success include knowing customers' changing tastes and providing something different than other retailers. In addition, because of the high value of the merchandise, The Lemon Tree's management is investing in the use of computerized inventory controls and sales order processing. The least important environmental force to The Lemon Tree at this time is likely to beA. economic.B. competitive.C. technological.D. social.E. regulatory.


Feedback: Only regulatory issues are not mentioned in the question.

12. Local newspaper readership has declined significantly in recent years. Not only are traditional newspapers losing subscribers, they are also losing



advertisers. To combat these trends, many newspaper publishers now offer online versions of their printed newspapers. This is most likely a response to which environmental force?A. economic, since few can afford a newspaper todayB. competitive, resulting from new, smaller local newspapers that are flourishingC. technological, since high-speed printing presses have become more easy to useD. social, resulting from changing consumer preferences for information delivered onlineE. regulatory, since the government provides tax incentives for paper-based products


Feedback: The declining readership of local newspapers (and magazines and books for that matter) is a trend within the social environment. Many newspaper publishers believe that if they provided online versions of their printed editions, they could reduce the decline in subscribers or actually increase them since many now seek information in digital form.

13. A growing trend to "Buy American" may encourage U.S. automakers to increase political pressure on Washington to pass legislation for more restrictive quotas on Japanese car imports. In addition, a decline in the value of the U.S. dollar would be instrumental in Toyota's decision to build a manufacturing plant in the United States instead of continuing to export cars from Japan. If Toyota builds the plant, its decision would reflectA. a reactive strategy that would impact the competitive environmental force.B. a proactive maneuver to manipulate and impact the social environmental force.C. a positive result from regulatory and economic environmental forces.D. a positive response to a technological environmental force.E. a negative impact as a result of adverse competitive, regulatory, and technological environmental forces.


Feedback: The identified examples represent regulatory and economic environmental forces that are not controllable by Toyota but could positively influence its decision to build a plant in the United States.

14. Many large consulting firms are beginning to sponsor "women-only" networking events. The purpose of these events is to offer an opportunity for women in management to network with other businesswomen, either as clients, mentors, or protégés. This is an example of which environmental force?A. socialB. economicC. technologicalD. competitiveE. regulatory


Feedback: There are increasing numbers of women in the workforce, a social environmental trend. These events can help women moving up the corporate ladder become connected with other women.

15. A proposed law in New Jersey would ban the use of tanning beds by anyone under the age of 18. This restriction would be an example of which environmental force?A. socialB. economicC. technologicalD. competitiveE. regulatory

AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation



Blooms: ApplyLearning Objective: 03-01 Explain the purpose of environmental scanning.Level of Difficulty: 3 HardTopic: Environmental Influences on Marketing

Feedback: Government regulation like the proposed law here is considered one of the uncontrollable environmental forces that include social, technological, economic, competitive, and regulatory forces.

16. Using smartphones, one can watch the news, shoot videos, browse the Internet, take pictures, and listen to music. Improved features are added with each smartphone introduced by Apple, Samsung, LG, and others. As a result, customers often want to replace their existing smartphones with new models or brands every two years when their contracts expire. This increase in demand is due mostly to changes in __________, an environmental force.A. competitionB. social cultureC. technologyD. regulationsE. the economy


Feedback: The technological environmental force has resulted in the addition of new features for the latest generation of smartphones, which make them appealing to prospective and current smartphone consumers, the latter whose contracts expire on average every two years.

17. Pending federal legislation will require all online retailers to collect state sales taxes from customers. This would affect online sellers such as Virtual Vineyards, which now collects state sales taxes only from customers who reside in California, its home state. This pending legislation would be an example of which environmental force?A. socialB. economicC. technologicalD. competitiveE. regulatory


Feedback: Government regulation is generally considered to be one of the uncontrollable or environmental forces. This legislation may be economically motivated but it nonetheless is an aspect of the regulatory environment.

18. The set of environmental forces that consists of the demographic characteristics of the population and its culture is referred to asA. social forces.B. economic forces.C. consumer forces.D. cultural forces.E. market forces.

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-02 Describe social forces such as demographics and culture.Level of Difficulty: 1 EasyTopic: Sociocultural Influences

Feedback: Key term definition—social forces.

19. The demographic characteristics of the population and its culture are referred to asA. attitudinal forces.B. psychographic forces.C. social forces.



D. cultural forces.E. market forces.



20. The social forces in the environment include the __________ of the population and its culture.A. living standardsB. social classesC. cohortsD. ethicsE. demographic characteristics



21. The social forces of the environment include the demographic characteristics of the population and itsA. geographic locations.B. social classes.C. generational cohorts.D. culture.E. ethics.



22. Which of the following statements regarding social forces is most accurate?A. Social forces can have a dramatic impact on marketing strategy.B. As a social force, consumer incomes have more impact on marketing strategy than demographics.C. Social forces within an organization motivate employees to improve their productivity.D. Social forces determine all of the other environmental forces that affect an organization.E. Of all the environmental forces, social forces are the easiest for a marketer to manipulate.

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-02 Describe social forces such as demographics and culture.Level of Difficulty: 2 MediumTopic: Sociocultural Influences

Feedback: The social forces of the environment include the demographic characteristics of the population and its culture. Changes in these forces can have a dramatic impact on marketing strategy.

23. Which of the following would be identified as a social force in an environmental scan?A. a new consumer protection lawB. an increase in Asian immigrationC. an advanced technology is perfectedD. a decrease in consumer incomesE. a new international firm exporting to the United States




Feedback: Social forces of the environment include demographic shifts, such as an increase in Asian immigration.

24. Generation X consumers indicate they want online customer support; websites that are comprehensive, professional, and interactive; and advertising that is authentic, family-oriented, and unique. Generation X is also replacing baby boomers as the largest segment of business travelers. In response, American Airlines is offering travelers in-flight Wi-Fi, entertainment on demand, and personal power ports. This is an example of how __________ forces impact the marketing environment.A. economicB. competitiveC. socialD. technologicalE. regulatory

AACSB: Knowledge ApplicationAccessibility: Keyboard NavigationBlooms: ApplyLearning Objective: 03-02 Describe social forces such as demographics and culture.Level of Difficulty: 3 HardTopic: Sociocultural Influences

Feedback: Social forces include the demographic characteristics of the population, such as age. Generation X is replacing baby boomers as the largest segment of business travelers. In response, American Airlines is offering travelers in-flight Wi-Fi, entertainment on demand, and personal power ports.

25. An important social trend is the continued concern for health and well-being in the United States. This is most likely evidenced byA. the increased sales of Cigar Aficionado magazine.B. the addition of Lay's Kettle Cooked potato chips, which have 40 percent less fat than regular potato chips.C. the opening of more Starbucks coffee boutiques in supermarkets.D. the upsizing of menu items at fast-food restaurants.E. the introduction of tablet devices such as the iPad.


Feedback: Social forces include the demographic characteristics of the population and its values. Interests in health, fitness, and appearance have prompted companies such as Frito-Lay, for example, to attract baby boomers with its Lay's Kettle Cooked potato chips, which have 40 percent less fat than regular potato chips.

26. Publishers were surprised by the dramatic success of the book Fifty Shades of Grey and believe that it will likely generate a fresh cycle of female-targeted romances packaged for the mainstream reader. This is an example of __________ force impacting the marketing environment.A. an economicB. a competitiveC. a technologicalD. a socialE. a regulatory


Feedback: Social forces include the demographic characteristics of the population and its values, the latter of which shape consumer buying patterns, as is the case with the publishing industry.



27. Demographics refer toA. the depiction of a population according to its core values or cultural beliefs and their rate of change.B. an objective measurement of a person's likelihood to purchase a product or service.C. the psychological profile of prospective consumers.D. the density of a population in a geographic area.E. the description of a population according to selected characteristics such as age, gender, ethnicity, income, and occupation.

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-02 Describe social forces such as demographics and culture.Level of Difficulty: 1 EasyTopic: Demographic Environment

Feedback: Key term definition—demographics.

28. The description of a population according to selected characteristics such as age, gender, ethnicity, income, and occupation is referred to asA. consumer group profiling.B. demographics.C. behavioral analysis.D. psychographics.E. statistical analysis.


Feedback: Key term definition—demographics.

29. Demographic characteristics that describe a population include all of the following except which?A. income.B. age.C. occupation.D. zip code.E. ethnicity.


Feedback: Key term definition—demographics. Zip code is a geographic characteristic.

30. More is a publication designed to appeal to women aged 40 and over. Demand for such magazines is an example of how changing __________ characteristics impact the marketing environment.A. culturalB. behavioralC. psychographicD. occupationalE. demographic

AACSB: Knowledge ApplicationAccessibility: Keyboard NavigationBlooms: ApplyLearning Objective: 03-02 Describe social forces such as demographics and culture.Level of Difficulty: 3 HardTopic: Demographic Environment

Feedback: Describing a population according to selected characteristics such as age, gender, ethnicity, income, and occupation is referred to as demographics. The age of readers is a demographic characteristic.

31. The most recent estimate indicates that the population of the world today is about



A. 5 billion.B. 6.3 billion.C. 7.4 billion.D. 7.9 billion.E. 9.5 billion.

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-02 Describe social forces such as demographics and culture.Level of Difficulty: 1 EasyTopic: Environmental Influences on Marketing

Feedback: The world population today is estimated at 7.4 billion people.

32. By 2050, the world's population is expected to beA. 5 billion.B. 5.7 billion.C. 6.1 billion.D. 7.9 billion.E. 9.8 billion.


Feedback: By 2050, the world's population is expected to be 9.8 billion.

33. The change in the growth of the world's population is called theA. population contraction.B. population inversion.C. population migration.D. population explosion.E. population eruption.


Feedback: Text term definition—population explosion.

34. The population explosion has occurredA. primarily in the developing countries of Latin America, Asia, and Africa.B. fairly evenly throughout the world.C. primarily in the United States due to high birth rates and immigration.D. primarily in the countries of the European Union due to high birth rates and immigration.E. primarily in developed countries due to better economic, infrastructure, and health care conditions.

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-02 Describe social forces such as demographics and culture.Level of Difficulty: 2 MediumTopic: Environmental Influences on Marketing

Feedback: The population explosion is occurring primarily in developing countries in Africa, Asia, and Latin America.

35. Projections show that the population isA. growing in most developed countries.B. declining in most developing countries.C. decreasing in Africa.



D. increasing in Asia.E. decreasing in Latin America.


Feedback: The world population is expected to grow from 7.4 billion today to 9.8 billion by 2050. In the developing countries within Africa, Asia, and Latin America, the populations are expected to grow. World population projections show that the populations of Japan, Russia, and Germany will be declining by more than 13 percent.

36. The country expected to have the largest population in 2050 isA. the United States.B. India.C. China.D. Russia.E. Brazil.


Feedback: India is predicted to have the world's largest population in 2050 with 1.66 billion people. China will be a close second with 1.36 billion.

37. Which of the following is a demographic trend with significant implications to global marketers?A. the declining populations in Latin American countriesB. the large and growing markets in India and ChinaC. the tripling of the population of consumers under 40 years oldD. the decreasing interest in entrepreneurship in developing countriesE. the lack of savings of elderly populations in developed countries


Feedback: India is predicted to have the world's largest population in 2050 with 1.66 billion people. China will be a close second with 1.36 billion. The relative size of these countries will mean they represent huge markets for many product categories.

38. Studies of the __________ characteristics of the U.S. population suggest that it is becoming larger, older, and more diverse.A. culturalB. psychographicC. geographicD. demographicE. economic


Feedback: Demographic variables include those such as age, gender, ethnicity, income, and occupation that describe a population. Studies of the demographic characteristics of the U.S. population suggest several important trends. Generally, the population is becoming larger, older, and more diverse.

39. Generally, the U.S. population is becomingA. smaller, younger, and more diverse.



B. smaller, older, and more diverse.C. larger, younger, and less diverse.D. larger, younger, and more diverse.E. larger, older, and more diverse.


Feedback: Studies of the demographic characteristics of the U.S. population suggest several important trends. Generally, the population is becoming larger, older, and more diverse.

40. By 2030, the U.S. population is expected to exceedA. 273 million.B. 314 million.C. 323 million.D. 359 million.E. 414 million.


Feedback: The U.S. Census Bureau estimates that the current population of the United States is approximately 323 million people. If current trends in life expectancy, birth rates, and immigration continue, by 2030 the U.S. population will exceed 359 million people.

41. All of the following factors contribute significantly to the rate of change of a country's population except which?A. life expectancy (the average number of years a population lives from birth)B. immigration (the number of people who enter a country for the purpose of permanent residence)C. population density (defined as the total number of people per square mile/kilometer)D. birth rate (the number of births during a specified time period)E. death rate (the number of deaths during a specified time period)


Feedback: Population density has little to do with the growth or decline of a country's population. All of the other alternatives have a significant impact on population growth.

42. The generation of children born between 1946 and 1964 is referred to asA. baby busters.B. millennials.C. Generation Y.D. baby boomers.E. Generation X.


Feedback: Key term definition—baby boomers.

43. Baby boomers can be defined as the generation bornA. between 1918 and 1945.



B. between 1946 and 1964.C. between 1965 and 1976.D. between 1977 and 1994.E. since 1995.


Feedback: Key term definition—baby boomers.

44. Which of the following currently affects baby boomers, and thus those that market to them, in a significant way?A. They are beginning to have children.B. They are getting their high school and college educations.C. They are currently retiring or nearing retirement age.D. They are just being born.E. They are beginning their primary school educations.

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-02 Describe social forces such as demographics and culture.Level of Difficulty: 2 MediumTopic: Demographic Environment

Feedback: Baby boomers are currently retiring at a rate of 10,000 every 24 hours, and all will be 65 or older by 2030.

45. Prudential, a financial planning firm, offers retirement plans and wealth management advice. These products are most likely targeted toward which generational cohort?A. Generation XB. baby bustersC. Generation YD. the greatest generationE. baby boomers


Feedback: Baby boomers are currently retiring at a rate of 10,000 every 24 hours, and all will be 65 or older by 2030. Companies that target boomers need to respond to their interests in health, fitness, retirement housing, financial planning, and appearance.

46. Olay, a personal care product firm, offers anti-aging and restoration products like its Total Effects cleansing cloths that are best targeted towardA. echo-boomers.B. Generation Z.C. Generation Y.D. baby boomers.E. baby busters.


Feedback: Companies that target boomers need to respond to their interests in health, fitness, retirement housing, financial planning, and appearance.

47. In a recent issue of AARP The Magazine, a print ad for State Farm Insurance annuities advises readers that "The company has helped you enjoy your time with the kids and it can now help you enjoy your time without them." The ad is most likely targeted toward which generational cohort?A. echo-boomers



B. Generation XersC. Generation YersD. baby boomersE. baby busters


Feedback: Baby boomers were born between 1946 and 1964, and being older, they often are receptive to products that focus on the enjoying the next stages of life.

48. Generation X is defined as the generation of children bornA. between 1946 and 1964.B. between WWI and WWII.C. between 1965 and 1976.D. between 1977 and 1994.E. since the millennium.


Feedback: Key term definition—Generation X.

49. Generation X is the label often given toA. persons born between 1965 and 1976.B. persons 65 years old and older.C. those who survived the Great Depression.D. the "greatest generation" born between the baby boomer generation and their parents that were called Generation W, the World War II generation.E. those people who were born since the millennium.



50. The 50 million people of the population born between 1965 and 1976, also called the baby bust, refers toA. Generation X.B. millennials.C. Generation Y.D. Generation Z.E. baby boomers.



51. The 50 million people born between 1965 and 1976, also called the __________, refers to Generation X.A. Generation YB. baby bustC. millennials



D. baby boomersE. Generation Z



52. The generational cohort known as __________ was born during the baby bust era when the number of children born each year was declining.A. Generation ZB. Generation YC. millennialsD. Generation XE. baby boomers


Feedback: Generation X includes the 50 million people of the population born between 1965 and 1976. This period is also known as the baby bust, because the number of children born each year was declining.

53. ________ is the generational cohort described as self-reliant, supportive of racial and ethnic diversity, better educated than previous generations, and not prone to extravagance.A. Generation ZB. Generation YC. MillennialsD. Generation XE. Baby boomers


Feedback: Generation X includes the 50 million people born between 1965 and 1976. These consumers are self-reliant, supportive of racial and ethnic diversity, and better educated than previous generations.

54. Generation X consumers areA. likely to rely on others.B. authoritative decision makers.C. very prone to extravagance.D. generally supportive of racial and ethnic diversity.E. poorly educated.


Feedback: Generation X includes the 50 million people born between 1965 and 1976. These consumers are self-reliant, supportive of racial and ethnic diversity, and better educated than previous generations.

55. Generation XA. is the least healthy generation since the 1940s.B. accounts for twice the amount of consumer spending as any other generational cohort.



C. is now the largest segment of business travelers.D. is interested in distinctive, memorable, and personal experiences.E. is a label often used synonymously with the term ‘millennials.'


Feedback: Generation X includes the 50 million people born between 1965 and 1976. These consumers are self-reliant, supportive of racial and ethnic diversity, and better educated than previous generations. Generation X has become the largest segment of business travelers.

56. Americans born between 1977 and 1994 are referred to asA. Generation X.B. baby boomers.C. Generation Y.D. baby busters.E. Generation Z.


Feedback: Key term definition—Generation Y.

57. Generation Y is defined as the generation of children bornA. between WWI and WWII.B. between 1946 and 1964.C. between 1965 and 1976.D. between 1977 and 1994.E. since the millennium.


Feedback: Key term definition—Generation Y.

58. Generation Y is sometimes referred to asA. echo-boomers.B. baby boomers.C. baby busters.D. the downtrodden generation.E. Generation 25.


Feedback: Text term definition—echo-boom.

59. The generation of children born between 1977 and 1994 is sometimes referred to asA. echo busters.B. baby busters.C. the lost generation.D. the baby boomerang.



E. millennials.


Feedback: Text term definition—millennials.

60. Members of Generation Y are more likely than other generational cohorts to influenceA. luxury air travel.B. health care and insurance.C. retirement plans.D. video games.E. automobile design.


Feedback: Generation Y includes those born between 1977 and 1994. Generation Y exerts influence on music, sports, computers, video games, and all forms of communication and networking.

61. When compared to other generational cohorts, members of Generation Y are most likely to influenceA. packaged food products.B. health care and insurance.C. communication and networking devices.D. retirement plans.E. automobile design.


Feedback: Generation Y includes those born between 1977 and 1994. Generation Y exerts influence on music, sports, computers, video games, and all forms of communication and networking.

62. Members of Generation Y, also known as __________, are interested in sustainability including sustainable campus communities.A. activistsB. sustainersC. progressivesD. reformersE. millennials


Feedback: Younger members of Generation Y are also known as millennials. Millennials' interest in sustainability is influencing colleges, graduate schools, and employers. There are approximately 17 million undergraduate millennials who expect sustainable campus communities that include certified housing, campus transit systems, and recycling programs.

63. Younger members of Generation Y are idealistic and eager to get started as a force for good. One way they hope to achieve their goal is throughA. environmental responsibility.B. political activism.C. intergenerational dialogue.



D. fiscal conservatism.E. educational reform.


Feedback: Younger members of Generation Y are also known as millennials. As the next generation of business leaders, millennials are determined to redefine the workplace as an outlet for creating both profit and meaning. They are idealistic, energetic, transparent, and eager to get started. In short, they are a force for good, particularly when it comes to social and environmental responsibility.

64. For millennials, "positive business" involvement meansA. engaging in free market economics with fair but limited regulations to manage exchange relationships.B. being part of a movement that balances the interests of shareholders, employees, and society.C. exploiting a nation's natural resources for the betterment of its society.D. seeking advanced jobs in agriculture that emphasize economies of scale in farming and ranching.E. executing an aggressive strategy regarding oil and natural gas exploration to make the United States energy independent.

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-02 Describe social forces such as demographics and culture.Level of Difficulty: 2 MediumTopic: Corporate Social Responsibility

Feedback: Millennials, who are members of Generation Y, want to work at companies that advocate good corporate citizenship, responsible capitalism, and "B-corp" status. They view themselves as part of a "positive business" movement that balances the interests of shareholders, employees, and society.

65. All of the following statements are true except which?A. LEED stands for Leadership in Energy and Environmental Design.B. Today's college graduates now seek green jobs that involve some aspect of social responsibility.C. Colleges of business have yet to establish sustainability course electives and case studies.D. Many students want to be involved with organizations such as Net Impact to use business to improve the world.E. Millennials want to make a difference by making the world a better place.

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-02 Describe social forces such as demographics and culture.Level of Difficulty: 2 MediumTopic: Corporate Social Responsibility

Feedback: In the Making Responsible Decisions box, one example discussed a student's choice to enroll at an educational institution where she could take a course on renewable energy.

66. Approximately one in __________ U.S. residents is African American, American Indian or Alaska Native, Asian American, or Native Hawaiian or Pacific Islander.A. tenB. sevenC. fiveD. threeE. two


Feedback: A notable trend is the changing racial and ethnic composition of the U.S. population. Approximately one in three U.S. residents is African American, American Indian or Alaska Native, Asian American, or Native Hawaiian or Pacific Islander.



67. Of the following, which racial or ethnic group had the greatest economic impact in the United States in terms of its buying power?A. Asian AmericansB. HispanicsC. African AmericansD. American Indian and other native populationsE. Indian immigrants (from India)


Feedback: As a group, Hispanics have the greatest economic impact in the United States in terms of its buying power, spending $1.3 trillion in 2015. African Americans, the second largest group, is estimated to have spent $1.1 trillion while Asian Americans spent $770 billion.

68. Combinations of the marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyles of different races and ethnic groups are referred to as __________ marketing programs.A. panethnicB. generationalC. cross-culturalD. multiculturalE. regional


Feedback: Key term definition—multicultural marketing.

69. Multicultural marketing refers to combinations of the marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyles of differentA. races or ethnic groups.B. nations.C. religions.D. generational cohorts.E. genders.


Feedback: Key term definition—multicultural marketing.

70. Recognized for excellence by Advertising Age, Alma creates advertising to reach diverse segments by "focusing the work on a deeper cultural knowledge, elevating the work beyond the clichés." For its clients, including Kraft and Revlon, Alma creates ads that are a part of programs incorporatingA. psychographic differences.B. population inputs.C. multicultural marketing.D. a value consciousness.E. macroeconomics.


Feedback: Many companies are developing multicultural marketing programs, which are combinations of the marketing mix that reflect the unique 3-18

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attitudes, ancestry, communication preferences, and lifestyles of different races and ethnic groups.

71. The set of values, ideas, and attitudes that are learned and shared among the members of a group is referred to asA. customs.B. morals.C. norms.D. culture.E. ethics.


Feedback: Key term definition—culture. Norms are the standards or patterns that are typical or expected of a group (see the New Oxford American Dictionary).

72. Culture refers to theA. moral and ethical beliefs of a family passed down from generation to generation.B. set of values, ideas, and attitudes that are learned and shared among the members of a group.C. pastimes associated with the fine arts, such as ballet, music, and theater.D. standard or pattern of behaviors that is typical or expected of a group.E. description of a population according to selected characteristics such as age, gender, ethnicity, income, and occupation.


Feedback: Key term definition—culture.

73. Culture is a component of what type of environmental force that must be scanned to assess its impact on the organization's marketing environment?A. regulatoryB. technologicalC. competitiveD. economicE. social


Feedback: Culture incorporates the set of values, ideas, and attitudes that are learned and shared among the members of a group. Culture is a component of the social force (the other being demographics) that is one of five forces that impact an organization's marketing environment.

74. Which one of the following is a commonly held value in the United States today?A. individualismB. traditionC. group welfareD. nostalgiaE. acceptance of birthright




Feedback: Culture includes values that may differ over time and between countries. In the United States today, commonly held values include personal control, continuous change, equality, individualism, self-help, competition, future orientation, and action.

75. All of the following are commonly held values in the United States except which?A. equalityB. actionC. group welfareD. continuous changeE. personal control


Feedback: Culture includes values that may differ over time and between countries. In the United States today, commonly held values include personal control, continuous change, equality, individualism, self-help, competition, future orientation, and action. Contrasting values outside the United States, for example, include belief in fate, the importance of tradition, the importance of rank and status, a focus on group welfare, and acceptance of birthright.

76. Which of the following is a commonly held value in the United States?A. the importance of rank and statusB. the importance of traditionC. belief in fateD. competitionE. acceptance of birthright


Feedback: Culture includes values that may differ over time and between countries. In the United States today, commonly held values include personal control, continuous change, equality, individualism, self-help, competition, future orientation, and action.

77. Two increasingly important values for consumers around the world areA. self-esteem and fitness.B. wealth and health.C. patriotism and friendship.D. family and fun.E. sustainability and preservation of the environment.


Feedback: Two increasingly important values for consumers are sustainability and preserving the environment.

78. Consumers are buying hybrid gas-electric automobiles such as the Toyota Prius. This is an example of which increasingly common cultural value?A. preserving the environmentB. paying the least amount possible for productsC. reducing inequality among competing brandsD. believing in fateE. reducing cognitive dissonance

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-02 Describe social forces such as demographics and culture.



Level of Difficulty: 2 MediumTopic: Sociocultural Influences

Feedback: An increasingly important cultural value for consumers is sustainability and preserving the environment, such as buying hybrid gas-electric automobiles such as the Toyota Prius, the Chevy Volt, and the Ford C-MAX.

79. Many consumers are committed to brands with a strong link to social action. An example of this would beA. McDonald's "I'm Lovin' It" campaign.B. Brita's "Filter for Good" campaign.C. Diesel's "Be Stupid" campaign.D. Liz Claiborne's "Claiborne for Men" campaign.E. Samsung's "The Jitterbug" campaign.


Feedback: Recent research indicates that consumers around the world are committed to brands with a strong link to social action. Brita's "Filter for Good" campaign asks consumers to take a pledge to reduce their plastic bottle waste.

80. Wal-Mart has set ambitious goals to cut energy use by buying more local products, reducing packaging, and switching to renewable power in response to customers'A. changing values.B. changing population composition.C. changing demographics.D. changing regulatory forces.E. changing ethnic composition.


Feedback: An increasingly important value for consumers in the United States and around the globe is sustainability and preserving the environment. Companies like Walmart are also changing their business practices to respond to trends in consumer values.

81. The economy is defined asA. the independent financial factors that are not affected by changes in government spending.B. the purchase of the highest quality product for the lowest possible price.C. the production, distribution, and consumption of products, services, and ideas by households.D. the income, expenditures, and resources that affect the cost of running a business and household.E. the forces within a manufacturer's control that affect the demand and supply its offerings.

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-03 Discuss how economic forces affect marketing.Level of Difficulty: 1 EasyTopic: Economic Environment

Feedback: Key term definition—economy.

82. All of the following are economic indicators except which?A. inflationB. barriers to entryC. unemploymentD. GDPE. deflation

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: Understand



Learning Objective: 03-03 Discuss how economic forces affect marketing.Level of Difficulty: 2 MediumTopic: Economic Environment

Feedback: At the macroeconomic level, economic performance is measured by the following metrics: GDP (gross domestic product), unemployment, and price changes (inflation or deflation).

83. A sudden drop in the average consumer income would be an example of which environmental force?A. economicB. competitiveC. technologicalD. socialE. regulatory

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-03 Discuss how economic forces affect marketing.Level of Difficulty: 2 MediumTopic: Economic Environment

Feedback: Consumer income is an aspect of the economic environmental force.

84. Oil prices have an impact on transportation costs for many types of products. Should oil prices change, the price consumers pay for products often is adjusted accordingly. Changing oil prices would be an example of __________ force.A. a socialB. an economicC. a technologicalD. a competitiveE. a regulatory

AACSB: Knowledge ApplicationAccessibility: Keyboard NavigationBlooms: ApplyLearning Objective: 03-03 Discuss how economic forces affect marketing.Level of Difficulty: 3 HardTopic: Economic Environment

Feedback: Fluctuations in expenditures related to changing oil prices would be an example of an economic force, since the economy pertains to the income, expenditures, and resources that affect the cost of running a business and household.

85. Volkswagen opened a large plant in Chattanooga, TN, in 2011. Within a few years, VW spurred more than 12,400 direct and indirect jobs in the area. The carmaker generates income of over $600 million there annually and boosts state and local tax revenues by over $50 million a year. A huge expansion was announced in 2016 that would nearly double its operations in Tennessee. This example best illustrates __________ change that has impacted the people and businesses of Chattanooga.A. a socialB. a regulatoryC. a competitiveD. an economicE. a technological


Feedback: The economy pertains to the income, expenditures, and resources that affect the cost of running a business and household.

86. In __________ economy, the cost to produce and buy products and services escalates as prices increase.A. an inflationaryB. an expansionaryC. a deflationaryD. a recessionaryE. a depressive




Feedback: In an inflationary economy, the cost to produce and buy products and services escalates as prices increase.

87. In __________ economy, if prices rise faster than consumer incomes, the number of items consumers can buy decreases.A. a deflationaryB. an expansionaryC. a recessionaryD. an inflationaryE. a depressive


Feedback: In an inflationary economy, if prices rise faster than consumer incomes, the number of items consumers can buy decreases.

88. In an inflationary economy, the cost to produce and buy products and services __________ as prices __________.A. increases; increaseB. increases; decreaseC. decreases; increaseD. decreases; decreaseE. does not change; increase


Feedback: In an inflationary economy, the cost to produce and buy products and services increases as prices increase.

89. The College Board reports that since 2000, college tuition and fees have increased by 160 percent while the share of family income required to pay for tuition at public four-year colleges has risen from 5 percent in 2000 to 14 percent in 2015. This is an example of __________ condition.A. a deflationaryB. a recessionaryC. a repressiveD. an inflationaryE. a depressive


Feedback: The College Board reports that since 2000 average college tuition and fees have increased 160 percent (from $3,508 to $9,139) while family incomes have declined by 7 percent. The share of family income required to pay for tuition at public four-year colleges has risen from 5 percent in 2000 to 14 percent today.

90. A time of declining economic activity when businesses decrease production, unemployment rises, and many consumers have less money to spend is referred to asA. deflation.B. inflation.C. prosperity.D. a recession.E. a depression.




Feedback: Periods of declining economic activity are referred to as recessions. During recessions, businesses decrease production, unemployment rises, and many consumers have less money to spend.

91. The most recent economic recession occurred when?A. 1981–1982B. 1990–1991C. 1998–1999D. 2007–2009E. 2010–2013


Feedback: The U.S. economy experienced recessions from 1973–75, 1981–82, 1990–91, and in 2001. Most recently, a recessionary period began in 2007 and ended in 2009, becoming the longest in recent history.

92. Components of a consumer's income consist ofA. inflationary, recessionary, and depressive economies.B. salaries, taxes, and assets.C. gross, disposable, and discretionary components.D. sales taxes, income taxes, and property taxes.E. assets, liabilities, and equities.


Feedback: A consumer's ability to buy is related to income, which consists of gross, disposable, and discretionary components.

93. The total amount of money made in one year by a person, household, or family unit is referred to as __________ income.A. governmentB. discretionaryC. disposableD. grossE. summative


Feedback: Key term definition—gross income.

94. Gross income refers toA. the money that remains after paying for taxes and necessities.B. the money deducted from a person's paycheck to pay for federal, state, and local taxes.C. the money a consumer has left after paying taxes to use for necessities such as food, shelter, clothing, and transportation.D. the total amount of money made by a single individual during his or her lifetime.E. the total amount of money made in one year by a person, household, or family unit.

AACSB: Analytical Thinking



Accessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-03 Discuss how economic forces affect marketing.Level of Difficulty: 1 EasyTopic: Economic Environment

Feedback: Key term definition—gross income.

95. At the U.S. Census Bureau, gross income is referred to asA. buying power.B. cash inflow.C. fiscal power.D. money income.E. household income.


Feedback: Key term definition—gross income or money income.

96. In 1970, the typical U.S. household earned about $8,700. In 2013, the typical U.S. household earned about $51,939. If adjusted for inflation, the gross income of the typical U.S. household in 2013 relative to 1970 hasA. increased dramatically.B. increased somewhat.C. remained relatively stable.D. decreased somewhat.E. decreased dramatically.


Feedback: While the typical U.S. household earned only about $8,700 of income in 1970, it earned about $51,939 in 2013. When gross income is adjusted for inflation, however, income of that typical U.S. household was relatively stable. In fact, inflation-adjusted income has only varied between $46,425 and $56,895 since 1970.

97. Approximately what percentage of U.S. households has an annual income between $25,000 and $99,999?A. 13B. 28C. 37D. 42E. 54


Feedback: Approximately 54 percent of U.S. households have an annual income between $25,000 and $99,999.

98. The money a consumer has left after paying taxes to use for necessities such as food, shelter, clothing, and transportation is referred to asA. net income.B. disposable income.C. discretionary income.D. household income.E. gross income.

AACSB: Analytical ThinkingAccessibility: Keyboard Navigation



Blooms: RememberLearning Objective: 03-03 Discuss how economic forces affect marketing.Level of Difficulty: 1 EasyTopic: Economic Environment

Feedback: Key term definition—disposable income.

99. Disposable income refers toA. the money that remains before paying for taxes and necessities.B. the money deducted from a person's paycheck to pay for federal, state, and local taxes.C. the total amount of money made by a single individual during his or her lifetime.D. the money a consumer has left after paying taxes to use for necessities such as food, shelter, clothing, and transportation.E. the money that is spent for necessities or charitable causes that is exempt from taxation.


Feedback: Key term definition—disposable income.

100. If taxes rise at a faster rate than incomes, consumers willA. have less disposable income and try to economize.B. feel more confident in the government and therefore spend more money.C. use cash for purchases such as a vacation.D. recognize that it is the perfect opportunity to buy a car or other expensive products on credit.E. react by voting for all incumbent members of Congress.


Feedback: If taxes rise at a faster rate than incomes, consumers must economize since tax increases reduce disposable income.

101. The recent large decline in __________ has caused consumers to adjust their spending in other categories.A. automobile pricesB. gasoline pricesC. interest ratesD. consumer confidenceE. property values


Feedback: The recent decline in the price of gasoline, for example, has led to increases in consumer spending in other categories.

102. The changes in __________ has had a psychological impact on consumers who tend to spend more when they feel their net worth is rising and postpone purchases when it declines.A. automobile pricesB. fuel pricesC. the number of people competing for jobsD. consumer confidenceE. home values

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-03 Discuss how economic forces affect marketing.Level of Difficulty: 2 Medium



Topic: Economic Environment

Feedback: A consumer's net worth would be based on personal assets such as property. If the value of their property rises, they are more confident and can spend more; if the value of their property declines, they are less confident and spend less.

103. During a recessionary period, which of the following economic behavior would be expected?A. Consumer spending would increase.B. The use of credit would decline.C. Taxes would increase nationally.D. Property values would jump dramatically.E. Consumers would use the majority of their discretionary income on entertainment.


Feedback: During a recessionary period, spending, debt, and the use of credit all decline.

104. During a recessionary period, which of the following economic behavior would be expected?A. Consumer would switch from premium brands to lower-priced ones.B. Consumer use of credit would increase.C. Taxes would increase nationally.D. Property values would jump dramatically.E. Consumers would use the majority of their discretionary income on groceries.


Feedback: During a recessionary period, spending, debt, and the use of credit all decline. The recent recession led many middle-income consumers to switch from premium brands to lower-priced brands.

105. Leah had an excellent year as a salesperson in 2015, earning $98,000. She paid $38,000 for necessities such as mortgage, food, and clothing. Her state and federal income taxes totaled $24,000. What was her disposable income?A. $36,000B. $74,000C. $60,000D. $98,000E. There is not enough data provided to calculate her discretionary income.


Feedback: Disposable income is the money that remains after paying for taxes. Disposable income = Gross income - Taxes (federal, state, and local) only. Disposable income = $98,000 - $24,000 = $74,000.

106. The portion of one's income that remains after paying for taxes and necessities is referred to asA. net income.B. discretionary income.C. disposable income.D. household income.E. gross income.

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-03 Discuss how economic forces affect marketing.



Level of Difficulty: 1 EasyTopic: Economic Environment

Feedback: Key term definition—discretionary income.

107. Discretionary income refers toA. the money deducted from a person's paycheck to pay for federal, state, and local taxes.B. the total amount of money made by a single individual during his or her lifetime.C. the money a consumer has left after paying taxes to use for necessities such as food, shelter, clothing, and transportation.D. the money that is spent for necessities or charitable causes that is exempt from taxation.E. the money that remains after paying for taxes and necessities.


Feedback: Key term definition—discretionary income.



Queen Mary 2 Ad

Queen Mary 2 Ad

108. See the Queen Mary 2 ad. Income used to buy luxury items such as a voyage about the Queen Mary 2 offered by Cunard referred to asA. gross income.B. disposable income.C. surplus income.D. wealth income.E. discretionary income.

AACSB: Analytical ThinkingBlooms: UnderstandLearning Objective: 03-03 Discuss how economic forces affect marketing.Level of Difficulty: 2 MediumTopic: Economic Environment

Feedback: Discretionary income is the money that remains after paying for taxes and necessities. It is the money that is used for luxury items such as a Cunard cruise.

109. The Department of Labor monitors consumer expenditures through its annualA. Consumer Price Index.B. Consumer Confidence Index.C. Consumer Expenditure Survey.D. Index of Consumer Sentiment.E. National Consumer Spending Assessment.


Feedback: The Department of Labor monitors consumer expenditures through its annual Consumer Expenditure Survey.

110. The Department of Labor monitors consumer expenditures through its annual Consumer Expenditure Survey. In the most recent report, consumers spent the largest proportion of their income on which of these?A. educationB. housingC. vacationsD. entertainmentE. investments




Feedback: The Department of Labor monitors consumer expenditures through its annual Consumer Expenditure Survey. The most recent report indicates that consumers spend about 13 percent of their income on food, 33 percent on housing, and 3 percent on clothes. While an additional 24 percent is often spent on transportation and health care, the remainder is generally viewed as discretionary.

111. Spending on which of the following would be considered discretionary?A. foodB. housingC. vacationsD. clothingE. transportation


Feedback: The Department of Labor monitors consumer expenditures through its annual Consumer Expenditure Survey. The most recent report indicates that consumers spend about 13 percent of their income on food, 33 percent on housing, and 3 percent on clothes. While an additional 24 percent is often spent on transportation and health care, the remainder is generally viewed as discretionary.

112. Increases in discretionary income can occur as a result of all of the following except which?A. an increase in gross income.B. a decrease in taxes.C. an increase in disposable income.D. a decrease in housing costs.E. an increase in interest rates.


Feedback: Discretionary income is not dependent on interest rates.

113. Even if she pays high taxes and has high expenses for necessities, if a consumer's __________ is still high after those, she may be able to take advantage of the luxurious vacation travel opportunities like staying at the Ritz Carlton in New York City's Central Park.A. savings rateB. gross incomeC. taxesD. discretionary incomeE. disposable income


Feedback: Discretionary income is the money that remains after paying for taxes and necessities. Discretionary income can then be used for spending on luxury offerings such as this high-end hotel.

114. Kelly had an excellent year as a salesperson in 2015, earning $97,000. She paid $37,000 for necessities such as mortgage, food, and clothing. Her state and federal income taxes totaled $24,000. What was her discretionary income?A. $36,000B. $60,000C. $73,000D. $97,000E. Not enough information is provided to calculate her discretionary income.

AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation



Blooms: ApplyLearning Objective: 03-03 Discuss how economic forces affect marketing.Level of Difficulty: 3 HardTopic: Economic Environment

Feedback: Discretionary income is the money that remains after paying for taxes and necessities. Discretionary income = Gross income - Taxes (federal, state, and local) - Necessities (mortgage, food, and clothing). Discretionary income = $97,000 – $24,000 – $37,000 = $36,000.

115. A local pet supplies boutique had a good year with rising revenues and reduced operating costs resulting in personal income for the owner of nearly $100,000. One-third of that went to local, state, and federal income taxes and another third went to pay for a home mortgage, car payments, food, clothing, and other necessities. What is the remaining third called?A. gross incomeB. bonus incomeC. discretionary incomeD. disposable incomeE. profit


Feedback: Since discretionary income is the money that remains after paying for taxes and necessities, $100,000 less one-third for taxes and less one-third for necessities leaves one-third for discretionary income.

116. Leigh and Rob prepared a household budget in an attempt to manage their money better. They prepared the following list: Monthly income (after taxes) = $4,500; Monthly expenses (necessities), which include rent, $550; auto loan, $250; student loan, $200; savings, $500; food, $200 = $1,700; Amount left over = $2,800 (income less necessary expenses). The $2,800 they had remaining is theirA. gross income.B. personal income.C. disposable income.D. discretionary income.E. profit.


Feedback: The three components of consumer income are gross income (not given in the problem), disposable income ($4,500), and discretionary income ($2,800), which is the money that remains after paying for taxes and necessities.

117. Recently, the number of people who attended music concerts, plays, and other live entertainment increased because they had the __________ to enjoy these activities.A. gross incomeB. bonus incomeC. profitD. disposable incomeE. discretionary income


Feedback: Discretionary income is the money that remains after paying for taxes and necessities. Discretionary income is used for luxury items such as theater and concert tickets.

118. This year the Shafer family has dined at nice restaurants almost four times a week. Between raises received by Mr. and Mrs. Shafer, their family income rose 11 percent, while the cost of living rose by 4 percent and property taxes went up 5 percent in their community. As a result, the family eats outside the home more often now, compared to dining out only a few times a month a few years ago. This reflects



A. an increase in the number of fine restaurants during times of economic upswing.B. a reaction to an increase of discretionary income.C. a significant drop in disposable income since there was a negative gain in income.D. a rise in deflation.E. a shift from investing to spending.


Feedback: The cost-of-living increase represents inflation, which was less than the Shafers' rise in gross income. Therefore, the Shafer family experienced an increase in discretionary income—the amount left to spend after paying for taxes and necessities, such as meals eaten out of the home.

119. Recent data on consumer expenditures indicate that the savings rate of U.S. consumers hasA. declined by 6 percent.B. remained flat at 0.5 percent.C. fluctuated minimally around 2 percent.D. risen to 5.8 percent.E. exploded to nearly 10 percent.


Feedback: Recent data on consumer expenditures indicate that the savings rate of U.S. consumers has risen to approximately 5.8 percent.

120. Inventions or innovations from applied science or engineering research are referred to asA. scientific discoveries.B. theoretical development.C. technology.D. patents.E. dynamic engineering.

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-04 Describe how technological changes can affect marketing.Level of Difficulty: 1 EasyTopic: Technological Environment

Feedback: Key term definition—technology.

121. Technology is defined asA. any device or process based on scientific discoveries that are less than one year old.B. any mechanical device used in the production or distribution of a product.C. scientific findings that are used now or are able to generate a profit.D. ideas or concepts that will one day be translated into usable devices, mechanisms, or processes.E. the inventions or innovations from applied science or engineering research.

AACSB: TechnologyAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-04 Describe how technological changes can affect marketing.Level of Difficulty: 1 EasyTopic: Technological Environment

Feedback: Key term definition—technology.

Next Issue App



Next Issue App

122. Technological advances sometimes have disruptive effects. One great advance can replace or substitute for existing products in a relatively short period. The Next Issue app for tablets and smartphones with wireless connectivity are most likely to replace or substitute forA. TV broadcasts.B. digital video recorders.C. printed publications.D. printed images.E. online video games.

AACSB: TechnologyBlooms: UnderstandLearning Objective: 03-04 Describe how technological changes can affect marketing.Level of Difficulty: 2 MediumTopic: Technological Environment

Feedback: Technologies such as the Next Issue app are likely to replace or become substitutes for existing products and services such as paper versions of magazines.

Apple Pay Ad

Apple Pay Ad

123. Technological advances sometimes have disruptive effects. One great advance can replace or substitute for existing products in a relatively short period. Apple Pay for iPads and iPhones is most likely to replace or substitute forA. financial market trades.B. digital video recorders.C. credit cards and cash.D. printed catalogs.E. online banking.

AACSB: TechnologyBlooms: UnderstandLearning Objective: 03-04 Describe how technological changes can affect marketing.



Level of Difficulty: 2 MediumTopic: Technological Environment

Feedback: Technologies such as Apple Pay are likely to replace or become substitutes for existing products and services such as plastic credit cards and cash.

124. According to the textbook, several new technologies are expected to have dramatic impacts on marketing. Among those cited areA. biotechnology, green technologies, natural user interfaces, and social networks.B. neuron technology, lithium batteries, cloud computing, and wireless power.C. crowdsourcing, genomics, QR codes, and smart bio watches.D. the Internet of Things, computing with five senses, smart grid electricity services, and 3-D technologies.E. nanotechnology, autobots, cloud computing, and electric cars.


Feedback: The Internet of Things, five-sense computing, smart grid electricity services, and 3-D technologies are among the examples from the text.

125. Oral-B toothbrushes now connect to your smartphone to provide real-time feedback on your brushing. This is an example of how __________ forces help improve or replace existing products and companies.A. ecologicalB. regulatoryC. legalD. competitiveE. technological


Feedback: Technology refers to inventions or innovations from applied science or engineering research. The toothbrush sensor is an example of specialized technology.

126. Medication sensors have been developed that can dispense medicines by circulating within the arteries of the body and sensing when the medication is needed. This is an example of how __________ forces help improve or replace existing products and companies.A. ecologicalB. regulatoryC. legalD. competitiveE. technological

AACSB: TechnologyAccessibility: Keyboard NavigationBlooms: ApplyLearning Objective: 03-04 Describe how technological changes can affect marketing.Level of Difficulty: 3 HardTopic: Technological Environment

Feedback: Technology refers to inventions or innovations from applied science or engineering research. The toothbrush sensor is an example of specialized technology.

127. Recently, ink has been developed that will conduct electricity. The application for this ink is to print circuitry that can be read electronically. This may help to drive down the cost of radio frequency (RFID) tags that are currently used in industry. This is an example of how __________ forces are applied to industry.A. ecologicalB. regulatoryC. technologicalD. competitiveE. marketing mix

AACSB: Technology



Accessibility: Keyboard NavigationBlooms: ApplyLearning Objective: 03-04 Describe how technological changes can affect marketing.Level of Difficulty: 3 HardTopic: Technological Environment

Feedback: Technology refers to inventions or innovations from applied science or engineering research such as this type of ink.

128. One reason some people don't like to buy clothing from Internet retailers is the inability to know if the ordered clothes will fit. ImageTwin has developed a scanning system that obtains the measurements of individuals, which is then fed into a database. When you want to buy something at LandsEnd.com, you can see a 3-D image of what the item should look like on your body. This is an example of the __________ force in the marketing environment.A. economicB. technologicalC. socioculturalD. competitiveE. marketing mix


Feedback: Technology refers to inventions or innovations or applied science or engineering research, such as ImageTwin.

129. Cloud computing, such as Apple's iCloud, enables businesses and consumers to share data or use software applications directly from a remote server over the Internet or wirelessly rather than having that data file or program reside on a personal computer. This is an example of a __________ change in the marketing environment.A. regulatoryB. socioculturalC. competitiveD. technologicalE. marketing mix


Feedback: Technology refers to inventions or innovations from applied science or engineering research. Cloud computing is an example of a technological change in the marketing environment.

130. Growth of green technologies such as smart grid electricity services, online energy management, and consumer-generated energy are __________ forces that would be identified through an environmental scan.A. socialB. competitiveC. regulatoryD. technologicalE. economic

AACSB: TechnologyAccessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-04 Describe how technological changes can affect marketing.Level of Difficulty: 2 MediumTopic: Technological Environment

Feedback: Green technologies such as smart grid electricity services, online energy management, and consumer-generated energy are technological forces that would be identified through an environmental scan.

131. The Electronic Signatures in Global and National Commerce Act makes digital signatures as valid as pen-and-ink signatures. This act created a demand for software and hardware that would collect, transmit, and receive digital signatures. This example indicates how __________ forces can work together in the marketing environment.



A. technological and regulatoryB. technological and competitiveC. social and competitiveD. social and economicE. regulatory and economic


Feedback: The software to collect and transmit the signature is an example of technology. The law itself is part of the regulatory environment.

132. Marketspace refers toA. the two-way buyer-seller electronic communication in a computer-mediated environment in which the buyer controls the kind and amount of information received from the seller.B. websites that allow people to congregate online and exchange views on topics of common interest.C. Internet search engines used for the purpose of data mining.D. an information- and communication-based electronic exchange environment occupied by sophisticated computer and telecommunication technologies and digital offerings.E. the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online.


Feedback: Key term definition—marketspace.

133. An information- and communication-based electronic exchange environment mostly occupied by sophisticated computer and telecommunications technologies and digital offerings is referred to asA. Internet marketing.B. marketspace.C. electronic commerce.D. marketplace.E. e-exchange.


Feedback: Key term definition—marketspace.

134. Any activity that uses electronic communication in the inventory, promotion, distribution, purchase, and exchange of products and services is referred to asA. electronic commerce.B. Internet barter.C. intranet exchange.D. electronic exchange.E. extranet trade.


Feedback: Key term definition—electronic commerce.



135. Electronic commerce refers toA. an information- and communication-based electronic exchange environment mostly occupied by sophisticated computer and telecommunications technologies and digitized offerings.B. any activity that uses electronic communication in the inventory, promotion, distribution, purchase, and exchange of products and services.C. two-way buyer-seller electronic communication in a computer-mediated environment in which the buyer controls the kind and amount of information received from the seller.D. electronic storefronts that focus on converting an online browser into an online, catalog, or in-store buyer.E. electronic storefronts that advertise and promote a company's products and services and provide information on how items can be used and where they can be purchased.


Feedback: Key term definition—electronic commerce.

136. Buying a book at www.amazon.com to give as a birthday present is an example of __________ transaction.A. an i-marketB. an intranetC. an electronic commerceD. an extranetE. a marketplace


Feedback: Any activity that uses electronic communication in the inventory, promotion, distribution, purchase, and exchange of products and services is called electronic commerce. A purchase at Amazon.com is an example of electronic commerce (e-commerce).

137. The Internet of Things refers toA. technological breakthroughs that allow major innovation to occur.B. the network of products with connectivity-enabled electronics.C. an explosion in interest in advanced analytics.D. technological specifications that identify access to networks.E. the belief in technology as a driver of success in the marketplace.

AACSB: TechnologyAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-04 Describe how technological changes can affect marketing.Level of Difficulty: 2 MediumTopic: Technological Environment

Feedback: Key term definition—Internet of Things (IoT).

138. The network of products embedded with connectivity-enabled electronics has come to be known asA. marketspace.B. the extranet.C. the Internet of Things.D. the cloud.E. universal connection.

AACSB: TechnologyAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-04 Describe how technological changes can affect marketing.Level of Difficulty: 2 MediumTopic: Technological Environment



Feedback: Key term definition—Internet of Things (IoT).

139. Alternative firms that could provide a product to satisfy a specific market's needs are referred to asA. substitute firms.B. target markets.C. complementary firms.D. cross product marketers.E. competition.

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-05 Discuss the forms of competition that exist in a market.Level of Difficulty: 1 EasyTopic: Competitive Environment

Feedback: Key term definition—competition.

140. Competition refers toA. identical products that perform identical functions.B. any for-profit organization that targets the customers of other organizations.C. alternative firms that could provide a product to satisfy a specific market's needs.D. any product or service that vies for a portion of a customer's discretionary income.E. the set of firms that operate in a given geographic region, regardless of product or service.


Feedback: Key term definition—competition.

141. In business, the four basic forms of competition areA. pure competition, limited competition, oligopoly, and monopoly.B. dictatorship, monarchy, oligarchy, and democracy.C. pure competition, cross-market competition, oligopoly, and pure monopoly.D. technological competition, market competition, governmental competition, and environmental competition.E. pure competition, monopolistic competition, oligopoly, and pure monopoly.

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-05 Discuss the forms of competition that exist in a market.Level of Difficulty: 2 MediumTopic: Competitive Environment

Feedback: Four basic forms of competition form a continuum from pure competition to monopolistic competition to oligopoly to pure monopoly. Pure competition occurs when there are many sellers and they each have a similar product. Monopolistic competition occurs when there are many sellers competing with substitutable products within a price range. Oligopoly occurs when a few companies control the majority of industry sales. Pure monopoly occurs when only one firm sells the product.

142. Many firms now use e-mail and the Internet to promote their products instead of sending promotional literature to current and prospective customers through the mail. UPS and FedEx continue to grow, offering both overnight and ground package delivery services. As a result, the U.S. Postal Service (USPS) has lost millions of customers and billions in revenue. The USPS has challenges ahead in coping with ___________ forces in the marketplace.A. economicB. competitiveC. legalD. socialE. technological

AACSB: Knowledge ApplicationAccessibility: Keyboard NavigationBlooms: ApplyLearning Objective: 03-05 Discuss the forms of competition that exist in a market.



Level of Difficulty: 3 HardTopic: Competitive Environment

Feedback: The USPS has had to cope with new competitive forces in the marketplace, such as the growing trend for firms that once relied on the USPS to deliver promotional literature and packages but now rely on e-mail, the Internet, UPS, and FedEx for promotional and package delivery needs.

143. The form of competition in which there are many sellers and they each have a similar product is referred to asA. pure competition.B. singular competition.C. an oligopoly.D. monopolistic competition.E. a monopoly.


Feedback: Text term definition—pure competition.

144. Agribusinesses that sell commodity products such as wheat, rice, and corn are often in __________ position with their competitors.A. a limited competitionB. a pure competitionC. an oligopolistic competitionD. a monopolistic competitionE. a monopolistic


Feedback: In pure competition, there are many sellers and they each have a similar product. Companies that deal in commodities common to agribusiness (for example, wheat, rice, and corn) often are in a pure competition position in which distribution (in the sense of shipping products) is important but other elements of marketing have little impact.

145. __________ is the form of competition where distribution is the only element of the marketing mix that exerts much of an impact on the firm.A. Cross-market competitionB. Limited competitionC. Pure competitionD. Monopolistic competitionE. A monopoly


Feedback: In pure competition, there are many firms that market a similar product. As a result, distribution is the only marketing mix element that is important; others have little impact on the firm.

146. The form of competition in which many sellers compete with substitutable products within a price range is calledA. pure competition.B. cross-market competition.C. an oligopoly.D. monopolistic competition.E. a monopoly.

AACSB: Analytical ThinkingAccessibility: Keyboard Navigation



Blooms: RememberLearning Objective: 03-05 Discuss the forms of competition that exist in a market.Level of Difficulty: 1 EasyTopic: Competitive Environment

Feedback: Text term definition—monopolistic competition.

147. The use of coupons is a frequently used marketing tactic for which form of competition?A. pure competitionB. cross-market competitionC. an oligopolyD. a monopolyE. monopolistic competition


Feedback: In monopolistic competition, many sellers compete with substitutable products within a price range. Coupons or sales are frequently used in monopolistic competition.

148. Paul Avery is a salesperson at the only Ford automobile dealership in Wausau, Wisconsin. However, there are several other auto dealerships in town, offering both domestic and foreign cars and trucks. Paul works hard to keep his customers satisfied because he knows that if his customers are unhappy, they can simply buy a car from one of the several other comparable dealers in Wausau. This marketing environment is an example ofA. pure competition.B. monopolistic competition.C. an oligopoly.D. a monopoly.E. marginal competition.

AACSB: Knowledge ApplicationAccessibility: Keyboard NavigationBlooms: ApplyLearning Objective: 03-05 Discuss the forms of competition that exist in a market.Level of Difficulty: 3 HardTopic: Competitive Environment

Feedback: One brand of automobile is often viewed as substitutable for another. In this case, the several sellers compete with their products on a substitutable basis within a price range in monopolistic competition.

149. During the holiday shopping season, many online retailers offer buyers price reductions, coupons, two-for-one deals, or free delivery. This is because these retailers operate in __________ environment.A. a pure competitionB. an oligopolyC. a monopolistic competitionD. a monopolyE. a marginal competition


Feedback: Online retailers operate in a monopolistic competitive environment where many sellers compete with substitutable products within a given price range.

150. The form of competition where just a few companies control the majority of industry sales is referred to asA. pure competition.B. cross-market competition.C. an oligopoly.D. monopolistic competition.E. a monopoly.




Feedback: Text term definition—oligopoly.

151. AT&T, Verizon, Sprint, and T-Mobile serve more than 95 percent of the subscribers in the U.S. wireless mobile phone market. Which form of competition characterizes this market?A. pure competitionB. limited competitionC. a monopolyD. an oligopolyE. monopolistic competition


Feedback: An oligopoly occurs when a few companies control the majority of industry sales, as is the case in the U.S. wireless mobile phone market.

152. Because there are few sellers, price competition among firms is avoided in which form of competition?A. pure competitionB. cross-market competitionC. a monopolyD. monopolistic competitionE. an oligopoly


Feedback: Since there are few sellers in an oligopoly, price competition among firms is not desirable because it leads to reduced profits for all producers.

153. The entertainment industry in the United States is dominated by Viacom, Disney, and Time Warner. In terms of the form of competition, this industry is an example ofA. a monopoly.B. a mega monopoly.C. a pure competition.D. an oligopoly.E. a monopolistic competition.


Feedback: An oligopoly occurs when a few companies control the majority of industry sales, as is the case in the entertainment industry in the United States.

154. Only two companies, Intel and AMD, design the computer processors for nearly every laptop and desktop sold in the U.S. today. Intel and AMD operate in which type of competitive environment?A. a monopoly.B. a diopoly.C. a pure competition.



D. an oligopoly.E. a monopolistic competition.


Feedback: An oligopoly occurs when a few companies control the majority of industry sales, as is the case in the CPU industry in the United States.

155. The U.S. Securities and Exchange Commission has designated just nine credit-rating agencies as nationally recognized statistical rating organizations, which include Moody's, Standard & Poor's, and Fitch Ratings. These agencies provide opinions on the creditworthiness of other entities and the financial obligations issued by them. Because so few companies can compete in it, the credit-rating industry would be consideredA. a mega monopoly.B. an oligopoly.C. a pure competition.D. a monopolistic competition.E. a monopoly.


Feedback: An oligopoly occurs when a few companies control the majority of industry sales, as is the case in the credit-rating industry.

156. Boeing, Northrup Grumman, and Lockheed Martin control the vast majority of the U.S. defense contractor industry. In terms of the form of competition, this industry is an example ofA. an oligopoly.B. a trilateral monopoly.C. a monopoly.D. a pure competition.E. a monopolistic competition.


Feedback: An oligopoly occurs when a few companies control the majority of industry sales, as is the case in the defense contractor industry.

157. In marketing, the form of competition that occurs when only one firm sells the product is referred to asA. pure competition.B. a megopoly.C. an oligopoly.D. monopolistic competition.E. pure monopoly.


Feedback: Text term definition—pure monopoly.

158. Since __________ is typically regulated by the state or federal government, marketing plays a relatively small role in this setting.A. pure competitionB. a pure monopolyC. an oligopoly



D. monopolistic competitionE. a megopoly


Feedback: A pure monopoly occurs when only one firm sells the product. Typically, marketing plays a small role in a monopolistic setting because the firm is regulated by the state or federal government.

159. In many geographic areas, there is only a single provider for gas and electric service for businesses and consumers. However, the government regulates that firm to ensure price protection for the buyer. This is an example ofA. pure competition.B. a pure monopoly.C. an oligopoly.D. monopolistic competition.E. a megopoly.


Feedback: A pure monopoly occurs when only one firm sells the product. Typically, marketing plays a small role in a monopolistic setting because the firm is regulated by the state or federal government.

160. The Federal Trade Commission investigated Google as potentially being ________, but found that despite its very large market share, it had not harmed competition.A. a pure competitorB. an oligopolyC. a monopolistic competitorD. a monopolyE. a megopoly


Feedback: A recent Federal Trade Commission investigation of Google found that although the company's market share of the online search market exceeds 70 percent, it had not harmed competition in the marketplace. An investigation by the European Union, however, is still in progress.

161. Small businesses make up a large portion of the competitive landscape for most businesses. There are approximately __________ small businesses in the United States.A. 17 millionB. 28 millionC. 39 millionD. 52 millionE. 97 million


Feedback: There are approximately 28.2 million small businesses in the United States.

162. Small businesses employ about __________ of all private-sector employees.



A. one-quarterB. one-thirdC. one-halfD. three-quartersE. ninety percent


Feedback: There are approximately 28 million small businesses in the United States, which employ 48 percent of all private-sector employees.

163. Small businesses account for __________ of the gross domestic product (GDP).A. 21 percentB. 32 percentC. 46 percentD. 68 percentE. 82 percent


Feedback: Small businesses account for 46 percent of the gross domestic product (GDP).

164. The restrictions that state and federal laws place on business with regard to the conduct of its activities are referred to asA. jurisprudence.B. competitive constraints.C. barriers to entry.D. restraints of trade.E. regulation.

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-06 Explain how regulatory forces ensure competition and protect producers and consumers.Level of Difficulty: 1 EasyTopic: Political and Legal Environment

Feedback: Key term definition—regulation.

165. Regulation refers toA. the restrictions that state and federal laws place on business with regard to the conduct of its activities.B. constraints placed on businesses for activities that are legal but unethical.C. society's values and standards that are enforceable in the courts.D. requirements concerning which customers a firm may serve or not serve.E. the moral principles and values that govern the actions and decisions of an individual or group.


Feedback: Key term definition—regulation.

166. An Arizona cardiac surgery practice agreed to pay the U.S. Department of Health and Human Services a $100,000 settlement following an investigation of potential violations of the Health Insurance Portability and Accountability Act (HIPAA) Privacy and Security Rules. The practice posted clinical and surgical appointments for its patients on an Internet-based calendar that was publicly accessible, which drew complaints for failing to protect health information of consumers. HIPAA rules are an example of __________ forces in the marketing environment.



A. economicB. ecologicalC. technologicalD. socialE. regulatory

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: ApplyLearning Objective: 03-06 Explain how regulatory forces ensure competition and protect producers and consumers.Level of Difficulty: 3 HardTopic: Political and Legal Environment

Feedback: Regulation consists of restrictions state and federal laws place on business with regard to the conduct of its activities. The fines and other punishments were levied here as a result of federal regulations in place since 1996.

167. Visa and MasterCard have recently been accused of violating antitrust laws by improperly fixing credit and debit card fees (known as swipe fees) paid by retailers to use their services, creating an anti-competitive environment. Legislation that prohibits price-fixing is an example of __________ forces that affect the marketing environment.A. economicB. ecologicalC. technologicalD. regulatoryE. social

AACSB: Knowledge ApplicationAccessibility: Keyboard NavigationBlooms: ApplyLearning Objective: 03-06 Explain how regulatory forces ensure competition and protect producers and consumers.Level of Difficulty: 3 HardTopic: Political and Legal Environment

Feedback: Regulation consists of restrictions state and federal laws place on business with regard to the conduct of its activities. Price-fixing is illegal under antitrust (antimonopoly) legislation.

168. The first major federal legislation passed to forbid contracts, combinations, or conspiracies in restraint of trade in the United States was theA. Lanham Act.B. Sherman Antitrust Act.C. Federal Trade Commission Act.D. Robinson-Patman Act.E. Clayton Act.


Feedback: Text term definition—Sherman Antitrust Act.

169. The first major federal legislation passed to forbid actual monopolies or attempts to monopolize any part of trade or commerce in the United States was theA. Lanham Act.B. Federal Trade Commission Act.C. Robinson-Patman Act.D. Sherman Antitrust Act.E. Clayton Act.


Feedback: Text term definition—Sherman Antitrust Act.



170. Which of the following laws has the purpose of protecting competition?A. Lanham ActB. Federal Trade Commission ActC. Fair Trade ActD. Unfair Practices ActE. Sherman Antitrust Act

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-06 Explain how regulatory forces ensure competition and protect producers and consumers.Level of Difficulty: 2 MediumTopic: Political and Legal Environment

Feedback: The Sherman Antitrust Act is one of several laws that were passed to protect competition. The others include the Clayton Act and the Robinson-Patman Act.

171. The purpose of the Clayton Act is toA. provide incentives for interstate commerce.B. forbid actions that are likely to lessen competition, although no actual harm has yet occurred.C. exact compensation from firms found guilty of violating fair trade practices.D. repeal provisions of the Sherman Antitrust Act that stifled innovation.E. strengthen the Robinson-Patman Act.


Feedback: The Clayton Act (1914) forbids certain actions that are likely to lessen competition, although no actual harm has yet occurred.

172. The purpose of the __________ is to forbid certain actions that are likely to lessen competition, although no actual harm has yet occurred.A. Federal Trade Commission ActB. Lanham ActC. Clayton ActD. Sherman Antitrust ActE. Robinson-Patman Act


Feedback: Text term definition—Clayton Act.

173. Which of the following laws has the purpose of protecting competition?A. Prevention and Enforcement ActB. Clayton ActC. Federal Trade Commission ActD. Fair Trade ActE. Unfair Practices Act


Feedback: The Clayton Act is one of several laws that were passed to protect competition. The others include the Sherman Antitrust Act and the Robinson-Patman Act.



174. The __________ makes it unlawful to discriminate in prices charged to different purchasers of the same product, where the effect may substantially lessen competition or help to create a monopoly.A. Fair Trade ActB. Clayton ActC. Lanham ActD. Robinson-Patman ActE. Unfair Practices Act


Feedback: Text term definition Robinson-Patman Act.

175. The purpose of the Robinson-Patman Act is toA. outlaw price discrimination for purchasers of the same product.B. encourage pure competition.C. protect inventors from having their intellectual property stolen.D. repeal the Sherman Antitrust Act.E. provide incentives for interstate commerce.


Feedback: The Robinson-Patman Act makes it unlawful to discriminate in prices charged to different purchasers of the same product, where the effect may substantially lessen competition or help to create a monopoly.

176. The purpose of patent law is toA. provide incentives for increased competition and lower prices by limiting the granting of patents.B. give an author of a literary, dramatic, musical, or artistic work the exclusive right to print, perform, or otherwise copy that work.C. give inventors of new and novel products the right to exclude others from making, using, or selling products that infringe the patented invention.D. guarantee the quality and safety of any product produced or distributed in the United States.E. level the playing field between inventors who work for large corporations and those who work on their own.


Feedback: A company can protect its competitive position in new and novel products under the patent law, which gives inventors the right to exclude others from making, using, or selling products that infringe the patented invention.

177. A company can protect its competitive position under __________, which gives inventors of new and novel products the right to exclude others from making, using, or selling products that infringe on the invention.A. copyright lawB. patent lawC. trademark lawD. commercial lawE. antitrust law


Feedback: A company can protect its competitive position in new and novel products under the patent law, which gives inventors the right to exclude others from making, using, or selling products that infringe the patented invention.



178. The purpose of copyright law is toA. provide incentives for increased competition.B. give inventors of new and novel products the right to exclude others from making, using, or selling products that infringe the patented invention.C. level the playing field between inventors who work for large corporations and those who work on their own.D. guarantee the quality and safety of any product produced or distributed in the United States.E. give an author of a literary, dramatic, musical, or artistic work the exclusive right to print, perform, or otherwise copy that work.


Feedback: Copyright law gives the author of a literary, dramatic, musical, or artistic work the exclusive right to print, perform, or otherwise copy that work.

179. The purpose of __________ is to give the author of a literary, dramatic, musical, or artistic work the exclusive right to print, perform, or otherwise copy that work.A. copyright lawB. patent lawC. trademark lawD. commercial lawE. antitrust law


Feedback: Copyright law gives the author of a literary, dramatic, musical, or artistic work the exclusive right to print, perform, or otherwise copy that work.

180. The Digital Millennium Copyright Act, signed in 1998,A. limits access of children to online material considered to be inappropriate or harmful.B. improves protection of copyrighted digital products.C. allows the government to collect taxes if printed materials are sold online.D. prevents the pirating of digital products that do not have a registered trademark.E. allows anyone with access to a computer to publish original materials online and seek remuneration (pay).


Feedback: Copyright law gives the author of a literary, dramatic, musical, or artistic work the exclusive right to print, perform, or otherwise copy that work. The Digital Millennium Copyright Act (1998) is legislation designed to improve protection of copyrighted digital products.

181. The Child Protection Act (1966) and the Consumer Product Safety Act (1972) are examples ofA. pricing-related legislation.B. laws specifying product requirements.C. fair trade legislation.D. distribution-related legislation.E. government contracts with private firms.




Feedback: These federal consumer protection laws specify product requirements.

182. All of the following federal laws are designed to protect consumers except which?A. Consumer Product Safety Act.B. FTC Act of 1914.C. Nutritional Labeling and Education Act.D. Digital Millennium Copyright Act.E. Child Protection Act.


Feedback: The Digital Millennium Copyright Act is legislation designed to improve protection of copyrighted digital products, which often protects the interests of businesses rather than consumers.

183. The grassroots movement started in the 1960s to increase the influence, power, and rights of consumers in dealing with institutions is referred to asA. Naderism.B. consumerism.C. green marketing.D. anti-corporate activism.E. libertarianism.


Feedback: Key term definition—consumerism.

184. Consumerism refers toA. a movement of conspicuous consumption that began when World War II ended.B. conducting business in a way that protects the natural environment while making economic progress.C. a collaborative effort between buyers and sellers to create an exchange where each benefit.D. the recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth.E. the grassroots movement started in the 1960s to increase the influence, power, and rights of consumers in dealing with institutions.


Feedback: Key term definition—consumerism.

185. Which of these laws came about as a response to the 1960s grassroots movement known as consumerism?A. Robinson-Patman ActB. Clayton ActC. Digital Millennium Copyright ActD. FTC ActE. Consumer Product Safety Act




Feedback: The Consumer Product Safety Act is among several laws designed to protect consumers, many of which came about because of the consumerism movement in the 1960s.

186. Each year, the U.S. Army shoots an estimated 200 million rounds of lead bullets at target practice areas across the United States. Pentagon officials, in response to environmentalists' concerns over lead poisoning in the soil, have invested over $12 million to develop an environmentally safe tungsten bullet. This is an example of one of the outcomes ofA. marketing ethics.B. consumerism.C. cause marketing.D. self-regulation.E. Naderism.


Feedback: One hotly debated issue concerns liability for environmental damage.

187. Which of the following legislative actions created a government entity to monitor business practices and stop unfair ones such as misleading promotions?A. Robinson-Patman ActB. Consumer Product Safety ActC. Lanham ActD. Federal Trade Commission ActE. Fair Packaging and Labeling Act


Feedback: The Federal Trade Commission Act established the Federal Trade Commission (FTC), which closely monitors promotion and advertising. The FTC has been concerned with deceptive or misleading advertising and unfair business practices.

188. The __________ can require a company to spend money on corrective advertising to rectify previous misleading ads.A. Food and Drug AdministrationB. U.S. Department of JusticeC. Federal Trade CommissionD. Better Business BureauE. American Marketing Association


Feedback: With corrective advertising, the Federal Trade Commission (FTC) can require a company to spend money on advertising to correct previous misleading ads.

189. Which of the following is an action the Federal Trade Commission (FTC) can take to stop a company from continuing an unfair trade practice?A. competitive advertisingB. a cease and desist orderC. a private rulingD. a consent degreeE. a stay

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-06 Explain how regulatory forces ensure competition and protect producers and consumers.



Level of Difficulty: 1 EasyTopic: Political and Legal Environment

Feedback: The Federal Trade Commission (FTC) can issue cease and desist orders to stop unfair business practices.

190. The Federal Trade Commission (FTC) can require a company to spend money to rectify previous misleading ads with revised information, which is known asA. corrective advertising.B. a cease and desist order.C. an advertising injunction.D. a ‘truth in advertising' order.E. comparative advertising.


Feedback: The Federal Trade Commission (FTC) can require corrective advertising to correct previous misleading ads or other promotions.

191. There are many diet aids on the market. They promise immediate weight loss without exercise or a change in diet. Each is accompanied by a testimonial from a satisfied user. If you pay close attention, you will notice that each ad also contains the statement, "Results may vary." Most likely this statement is included to prevent the Federal Trade Commission (FTC) from requiring the dietary aid distributor toA. engage in self-regulation.B. engage in comparative advertising.C. issue an advertising injunction.D. guarantee truth in advertising.E. run corrective advertising.


Feedback: Corrective advertising is a Federal Trade Commission (FTC) action that requires a company to spend money on advertising to correct previous misleading ads. The ads with the statement, "Results may vary," do not promise that everyone will have the same results, which reduces the likelihood they will be found to be misleading.

192. For 18 months, Warner-Lambert Co., an American pharmaceutical company, was required to include the following statement in all television advertisements for Listerine: "Listerine will not help prevent colds or sore throats or lessen their severity." The Federal Trade Commission (FTC) imposed this requirement because previous advertising had caused consumers to believe Listerine was effective against colds. This is an example of the FTC action known asA. corrective advertising.B. deceptive advertising.C. unethical advertising.D. cease and desist advertising.E. self-regulation.


Feedback: Corrective advertising is a Federal Trade Commission (FTC) action that requires a company to spend money on advertising to correct previous misleading ads. The FTC found that Listerine had been misleading advertised as a cold remedy.

193. It had been the Campbell Soup Co.'s practice to insert clear glass marbles into the bottom of soup containers used in print advertisements to bring some of the soup's ingredients (e.g., noodles or chicken) to the surface, thus misrepresenting the amount of solid ingredients in the soup. Which agency would monitor such a practice?A. Food and Drug Administration



B. U.S. Department of JusticeC. Federal Trade CommissionD. Better Business BureauE. American Marketing Association


Feedback: Advertising is closely monitored by the Federal Trade Commission (FTC) to prevent deceptive or misleading advertising. Campbell's practiced deceptive advertising by using marbles to misrepresent the amount of solid ingredients in the soup.

194. Recent legislation including the Telephone Consumer Protection Act and the Controlling the Assault of Non-solicited Pornography and Marketing (CAN-SPAM) Act are reforms that areA. promotion-related.B. price-related.C. distribution-related.D. self-regulated.E. product-related.


Feedback: Laws such as the Deceptive Mail Prevention and Enforcement Act (1999), the Telephone Consumer Protection Act (1991), and the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act (2004) are designed to guide the use of direct mail, telemarketing, e-mail solicitations, and other forms of promotion.

195. The Lanham Act (1946)A. prevents someone from using a trademark on a noncompeting product.B. protects the consumer from product defects.C. provides for registration of a company's trademarks.D. allows a company to secure rights to a name before its actual use.E. facilitates the protection of U.S. trademark rights throughout the world.


Feedback: Text term definition—Lanham Act.

196. The __________ provides for registration of a company's trademark, such as the Nike swoosh.A. Lanham ActB. Patent ActC. Clayton ActD. Sherman Antitrust ActE. The FTC Act


Feedback: Text term definition—Lanham Act.

197. The two major purposes for any trademark statute are to



A. (1) protect the investment of energy, time, and money that the owner of a trademark has invested in the development of the product and (2) guarantee the owner of the trademark complete rights to his or her work for the duration of the owner's lifetime.B. (1) protect the inventor's individual rights and (2) provide the company with the maximum profits possible.C. protect the rights of the inventor both here and abroad.D. (1) protect the public so consumers will get the product wanted and requested and (2) protect the government so it will be able to collect its fair share of taxes from the revenues generated.E. (1) protect the firm selling the trademarked product from infringers and (2) protect the consumer buying the product by allowing him to correctly identify the product he wants.

AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-06 Explain how regulatory forces ensure competition and protect producers and consumers.Level of Difficulty: 2 MediumTopic: Trademarks

Feedback: A Senate report states that the purposes of a trademark are twofold: (1) protect the firm selling the trademarked product and (2) protect the consumer buying the product.

198. The Lanham Act cannot protect the rights to a trademark ifA. the company is accused of violating the Sherman Antitrust Act.B. the product patent is less than 17 years old.C. the word, name, or symbol has become generic.D. the statute of limitations has run out.E. the government refuses to enforce violations.


Feedback: A company can lose its trademark under the Lanham Act if its product's trademark becomes generic, which means that it has become merely a commonly used descriptive word for the product, such as elevator and aspirin.

199. Though registration under the Lanham Act provides important advantages to a trademark owner,A. copyright protection is preferred for most branding in the United States.B. foreign firms are not allowed to register.C. it has resulted in an anti-competitive environment for domestic firms.D. patent law is preferred for most branding in the United States.E. it does not confer ownership.


Feedback: Registration under the Lanham Act provides important advantages to a trademark owner that has used the trademark in interstate or foreign commerce, but it does not confer ownership.

200. The popular cupcake chain Sprinkles, which launched in Southern California in 2005, recently settled a trademark infringement lawsuit against a Connecticut bakery that was calling itself Pink Sprinkles. The latter was forced to change its name to Pink Cupcake Shack because it was apparently violating provisions of theA. Consumer Product Safety Act.B. Consumer Bill of Rights.C. Lanham Act.D. Sherman Antitrust Act.E. CAN-SPAM Act.




Feedback: The Lanham Act provides for the registration of trademarks, and this case was one of trademark infringement.

Brands Photo

Brands Photo

201. In the Brands photo, the manufacturers of these products may be concerned that their brand names will become generic. The legislation most likely to address this issue is theA. Sherman Antitrust Act.B. Patent Act.C. Clayton Act.D. Lanham Act.E. The FTC Act.

AACSB: Knowledge ApplicationBlooms: ApplyLearning Objective: 03-06 Explain how regulatory forces ensure competition and protect producers and consumers.Level of Difficulty: 3 HardTopic: Political and Legal Environment

Feedback: The Lanham Act provides for the registration of trademarks.

202. Which of the products in the Brands photo is least likely to be concerned with having its name become generic?A. Kleenex because most people just ask for a tissueB. Jell-O because there are no other gelatin dessertsC. All Sport Disk because most people call it a FrisbeeD. Q-Tips because most people call it a cotton swabE. Vaseline because most people refer to it as petroleum jelly


Feedback: The Lanham Act provides for the registration of trademarks. A company can lose its trademark if it becomes generic, which means that it has primarily come to be merely a common descriptive word for the product. Kleenex, Jell-O, Q-Tips, and Vaseline are almost synonymous with the product itself.

203. Coca-Cola has hired brand police to make sure that the Coca-Cola brand name and logo are not used without written permission. Why is Coca-Cola so rigorous in protecting its trademark?A. Coca-Cola risks losing its generic status.B. In order to maintain the use of its widely recognizable trademark, Coca-Cola must prevent the name from becoming generic.C. The Robinson-Patman Act conferred ownership of the Coke name and other trademarked property to the Coca-Cola Co.D. The government will file charges for trademark infringement only if the owner of the trademark has documented proof of wrongdoing.E. By protecting its trademark, Coca-Cola is protecting the entire soft drink industry from indirect competition.

AACSB: Knowledge ApplicationAccessibility: Keyboard NavigationBlooms: ApplyLearning Objective: 03-06 Explain how regulatory forces ensure competition and protect producers and consumers.



Level of Difficulty: 3 HardTopic: Political and Legal Environment

Feedback: A company can lose its trademark if it becomes generic, which means that it has primarily come to be merely a common descriptive word for the product. Aspirin and escalator are former trademarks that are now generic terms in the United States and can be used by anyone.

204. In 2008, Apple filed for and received approval from the U.S. Patent and Trademark Office to trademark the "App Store" name to describe a service that allows its iPhone and iPad customers to purchase and download applications, video games, and other software. Over the past few years, Apple has invested millions in advertising and publicity and customers have purchased millions of dollars of software from its "App Store." However, Amazon.com claims that Apple did not have exclusive rights to the name because other firms used it to describe their online storefronts where consumers can obtain software for smartphones and tablet devices. In March 2011, Apple filed a lawsuit against Amazon for violating its trademark. Why should Apple rigorously protect its "App Store" trademark?A. Apple risks losing its status as a generic smartphone and tablet device manufacturer.B. In order to maintain the use of its widely recognizable trademark, Apple must prevent the name from becoming generic.C. The Robinson-Patman Act conferred ownership of the "App Store" name and other trademarked property to Apple and/or Microsoft.D. The government will file charges for trademark infringement only if Apple, the owner of the trademark, has documented proof of wrongdoing by Amazon.E. By protecting its trademark, Apple is protecting the entire smartphone and tablet device industries from indirect competition.


Feedback: A company can lose its trademark if it becomes generic, which means that it has primarily come to be merely a common descriptive word for the product or service. As a result, a firm like Apple must rigorously protect its trademarks.

205. An alternative to government control where an industry attempts to police itself is referred to asA. consumer protection.B. self-regulation.C. industry accountability.D. voluntary compliance.E. government-imposed ethical policing.


Feedback: Key term definition—self-regulation.

206. Self-regulation refers toA. governmental guidelines that suggest what is legal and ethical and what is not.B. a self-imposed set of rules set by a specific industry watchdog group that dictates legal and ethical behaviors.C. an alternative to government control where an industry attempts to police itself.D. voluntary compliance to governmental rules and regulations set for a specific industry.E. a set of rules created and enforced by the FTC to which all members of an industry voluntarily agree to comply.


Feedback: Key term definition—self-regulation.

207. One of the problems associated with self-regulation isA. the lack of a written code of ethics by firms in the industry.B. the intrusive enforcement by the FTC.C. the opportunity corporate for espionage by competitors.D. the absence of an industry association with persuasive power.



E. noncompliance by members.


Feedback: The problems associated with self-regulation include noncompliance by members and enforcement.

208. The best-known self-regulatory group is the __________, which is a voluntary alliance of companies whose goal is to help maintain fair practices.A. U.S. Department of JusticeB. National Chamber of CommerceC. Better Business BureauD. Federal Trade CommissionE. National Federation of Independent Business


Feedback: The best-known self-regulatory group is the Better Business Bureau (BBB). This agency is a voluntary alliance of companies whose goal is to help maintain fair practices. The BBB is a nonprofit corporation that tries to use "moral suasion" to encourage members to comply with its standards.

209. The Better Business BureauA. is the best-known federal agency involved in monitoring self-regulation of competing businesses.B. has a great deal of legal power to force a company to comply with its regulations.C. cannot be involved with Internet commerce.D. is a voluntary alliance of companies whose goal is to help maintain fair practices.E. is the agency that oversees advertising that runs on television programs.


Feedback: The best-known self-regulatory group is the Better Business Bureau (BBB). This agency is a voluntary alliance of companies whose goal is to help maintain fair practices. The BBB is a nonprofit corporation that tries to use "moral suasion" to encourage members to comply with its standards. The television industry has its own self-regulating board.

210. The Better Business Bureau (BBB) tries to use __________ to get its members to comply with its standards of business conduct.A. the FTCB. industry trade associationsC. moral suasionD. the courtsE. competitors



211. When a firm or business displays the Better Business Bureau (BBB) Accredited Business logo on its store window or website, it assures



consumers thatA. the company's products comply with current safety standards set by the Consumer Product Safety Commission.B. it is a member of a voluntary alliance of companies whose goal is to help maintain fair business practices.C. the firm has met the standards for qualification as a green marketing firm.D. the firm takes a proactive stance on diversity in the workplace.E. the company incorporates sustainable business practices.



212. Laws refer toA. a specific set of behaviors a given society considers to be ethical.B. society's values and standards that are enforceable in the courts.C. the agreed upon codes of behavior for a given nation, community, religious group, or family.D. written documentation of a prescribed set of attitudes, beliefs, and values.E. a code of ethics that defines what may be done in specific business circumstances.

AACSB: EthicsAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-06 Explain how regulatory forces ensure competition and protect producers and consumers.Level of Difficulty: 1 EasyTopic: Role of Ethics in Marketing

Feedback: Key term definition—laws.

213. Society's values and standards that are enforceable in the courts are referred to asA. situational ethics.B. cultural norms.C. industry practices.D. laws.E. the Consumer Bill of Rights.

AACSB: EthicsAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-06 Explain how regulatory forces ensure competition and protect producers and consumers.Level of Difficulty: 1 EasyTopic: Role of Ethics in Marketing

Feedback: Key term definition—laws.

214. Which one of the following statements most accurately distinguishes between laws and ethics?A. Laws reflect the beliefs of the majority of society while ethics reflect the beliefs of the minority of society.B. Ethics deal with religious and moral beliefs while laws deal with social, economic, and environmental behaviors.C. Ethics deal with internal (personal) issues while laws deal with external (social) issues.D. There is no significant difference between laws and ethics; these terms can be used interchangeably.E. Ethics deal with personal moral principles and values whereas laws are society's values and standards that are enforceable in the courts.

AACSB: EthicsAccessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-06 Explain how regulatory forces ensure competition and protect producers and consumers.Level of Difficulty: 2 MediumTopic: Role of Ethics in Marketing

Feedback: Ethics deal with personal and moral principles while laws are society's values that are enforceable in the courts.

215. Ethics refers to the



A. religious tenets of a country or ethnic region that shape its culture.B. social norms of a nation, community, or family.C. values and standards of society that are enforceable in the courts.D. moral principles and values that govern the actions and decisions of an individual or group.E. universal laws of man that go beyond an individual or a group's beliefs of nations or religions.

AACSB: EthicsAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-07 Identify factors that influence ethical and unethical marketing decisions.Level of Difficulty: 1 EasyTopic: Role of Ethics in Marketing

Feedback: Key term definition—ethics.

216. The moral principles and values that govern the actions and decisions of an individual or group are referred to asA. social norms.B. cultural values.C. ethics.D. societal philosophy.E. religion.

AACSB: EthicsAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-07 Identify factors that influence ethical and unethical marketing decisions.Level of Difficulty: 1 EasyTopic: Role of Ethics in Marketing

Feedback: Key term definition—ethics.

217. Which of the following is considered one of the major factors that influences an individual's personal moral philosophy and ethical behavior?A. organizational structuresB. societal culture and normsC. national and local legislationD. the strength and stability of political partiesE. a nation's moral philosophy

AACSB: EthicsAccessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-07 Identify factors that influence ethical and unethical marketing decisions.Level of Difficulty: 2 MediumTopic: Ethical Issues in Marketing

Feedback: Figure 3-2 shows a framework with three influences that can have an effect on one's personal moral philosophy and ethical marketing behavior. These include societal culture and norms, business culture and industry practices, and corporate culture and expectations.

218. Which of the following is considered one of the major factors that influences an individual's personal moral philosophy and ethical behavior?A. organizational structuresB. legislationC. federal regulatory agenciesD. a nation's wealth and standard of livingE. business culture and industry practices



219. Factors influencing personal moral philosophy and ethical behavior include societal culture and norms, business culture and industry practices, and



A. religious beliefs and practices.B. corporate culture and expectations.C. national and regional legislation.D. universal core values.E. the universal concept of good versus evil.



220. Culture refers toA. the set of values, ideas, and attitudes that are learned and shared among members of a group.B. the music, art, theater, etc., that reflects the values of an entire nation.C. the learned behaviors of a specific racial, ethnic, or religious group based on commonly shared ethical principles and protected by laws.D. the combination of beliefs and behaviors accepted as correct regardless of a person's age, sex, race, or religion.E. the set of values, ideas, attitudes, and norms of behavior that is learned and shared among the members of an organization.

AACSB: EthicsAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-07 Identify factors that influence ethical and unethical marketing decisions.Level of Difficulty: 1 EasyTopic: Ethical Issues in Marketing

Feedback: Text term definition—culture.

221. In marketing, the set of values, ideas, and attitudes that are learned and shared among members of a group is referred to asA. ideals.B. morals.C. ethics.D. culture.E. diversity.


Feedback: Text term definition—culture.

222. Culture refers to the set of values, ideas, and attitudes that are learned and shared among members of a group. It also serves as a socializing force thatA. reflects the will of the largest or most powerful ethnic or racial group.B. is determined by the largest generational cohort at a given point in time.C. becomes the basis of all legislation—federal, state, and local—in societies around the world.D. expresses the diverse backgrounds of a nation's subcultures.E. dictates what is morally right and just.


Feedback: Culture refers to the set of values, ideas, and attitudes that are learned and shared among members of a group and serves as a socializing force that dictates what is morally right and just.

223. Which of the following is a socializing force that dictates what is morally right and just?



A. federal regulatory agencies such as the FTCB. federal, state, and local legislationC. the U.S. Supreme CourtD. cultureE. organizational core values


Feedback: Culture refers to the set of values, ideas, and attitudes that are learned and shared among members of a group and serves as a socializing force that dictates what is morally right and just.

224. Culture refers to the set of values, ideas, and attitudes that are learned and shared among members of a group. Culture also serves as a socializing force that dictates what is morally right and just. This means that moral standardsA. are relative to particular societies.B. must be universal in order for cross-cultural marketing to be effective.C. are fluid and very easy to change.D. are cyclical so it is important to change with the times.E. are concrete; something is either right or wrong.


Feedback: Moral standards are relative to particular societies. These standards often reflect the laws and regulations that affect social and economic behavior, which can create ethical dilemmas.

225. In most countries, copyrights, trademarks, and patents are viewed as intellectual property, and unauthorized use, reproduction, or distribution of intellectual property is illegal. In a few countries, however, copying enjoys a long tradition, does not carry a stigma, and is legal. For example, copying a masterpiece may be historically considered an art form in its own right. The difference between these two groups of countries shows that __________ affect(s) the view of ethical behavior held in each country.A. business cultureB. industry practicesC. corporate cultureD. corporate expectationsE. societal culture and norms

AACSB: EthicsAccessibility: Keyboard NavigationBlooms: ApplyLearning Objective: 03-07 Identify factors that influence ethical and unethical marketing decisions.Level of Difficulty: 3 HardTopic: Ethical Issues in Marketing

Feedback: Differences in societal culture and norms affect the view of ethical behavior held in both groups—the first, where infringing on intellectual property is illegal, and in the second, where it is legal.

226. As the use of the Internet grows around the world, there must be as easy an exchange of ideas and information as possible between countries. One important issue is opt-in versus opt-out. In general, European websites have opt-in policies while U.S. websites have opt-out policies. Opt-in means customers must ask to be involved in data collection and marketing while opt-out companies automatically include customers in data collection unless the customer specifically asks not to be included. Europeans believe it is unethical to invade someone's privacy. Americans are not nearly as protective of their right to privacy. What ethical factor is illustrated by this example?A. industry practicesB. social legislationC. societal culture and normsD. changes in international lawE. organizational culture and expectations

AACSB: EthicsAccessibility: Keyboard Navigation



Blooms: ApplyLearning Objective: 03-07 Identify factors that influence ethical and unethical marketing decisions.Level of Difficulty: 3 HardTopic: Ethical Issues in Marketing

Feedback: Culture refers to the set of values, ideas, and attitudes that are learned and shared among members of a group. Culture also serves as a socializing force that dictates what is morally right and just. This means that moral standards, like the right to privacy, are relative to particular societies.

227. Making counterfeit copies of Gucci purses, Tommy Hilfiger sportswear, and other international brands is pervasive in some countries because laws protecting intellectual property are unclear and sporadically enforced. A business introducing a product into such a country needs to know that its __________ may lead to trademark infringements.A. religious preceptsB. antecedent statesC. moral idealismD. societal culture and normsE. utilitarianism


Feedback: In such a country, counterfeiting is viewed as a profitable way of doing business. An international company doing business there must be vigilant in understanding the country's societal culture and norms.

228. In marketing, the effective rules of the game, the boundaries between competitive and unethical behavior, and the codes of conduct in business dealings are referred to asA. societal norms.B. societal mores.C. business cultures.D. fair trade practices.E. corporate values.


Feedback: Text term definition—business cultures.

229. Business culture affects ethical conduct both in the exchange relationship between sellers and buyers and in theA. competitive behavior among sellers.B. purchase behavior among buyers.C. price, service, and product responsibility to the ultimate consumer.D. accountability of buyers and sellers to federal and state regulators.E. perception of ethical behavior as viewed by employers of business firms, not nonprofit organizations.


Feedback: Business cultures comprise the effective rules of the game, the boundaries between competitive and unethical behavior, and the codes of conduct in business dealings. Business culture affects ethical conduct both in the exchange relationship between sellers and buyers and in the competitive behavior among sellers.

230. Ethical exchanges between sellers and buyers should result inA. the seller making a profit at the expense of the buyer.B. the buyer getting the product for the best price at the expense of the seller.C. both parties to the exchange being better off after a transaction.



D. the seller offering buyers its products and services at cost, especially during a period of recession.E. the buyer forming a strategic alliance with the seller.


Feedback: The exchange process is central to the marketing concept. Ethical exchanges between sellers and buyers should result in both parties being better off after a transaction.

231. The Latin phrase caveat emptor is a legal concept that meansA. "Cash on delivery."B. "Let the buyer beware."C. "Let's make a deal."D. "Be informed."E. "Such is life."


Feedback: Key term definition—caveat emptor.

232. The legal concept of "let the buyer beware," which was pervasive in the American business culture before the 1960s, is referred to asA. ad nauseum.B. mea culpa.C. quid pro quo.D. ćest la vie.E. caveat emptor.



233. Caveat emptor refers toA. the legal concept of "let the buyer beware," which was pervasive in the American business culture before the 1960s.B. the marketing concept of "be first or be last," implying that the first company to the marketplace wins.C. the Latin term meaning that "all is fair in love and war," an attitude that was held by most marketers prior to the 1990s.D. the legal concept of "such is life," which created many illegal as well as legal but unethical business practices during the 1980s.E. the Latin phrase meaning "empty promises," which was a charge placed upon many firms during the period after WWII when products failed to meet their marketing claims.



234. Investors should understand that when purchasing stock, the principle of __________ is in effect. It is in the best interests of investors to do research on the company, so they will make a wise purchase.A. modus operandiB. e pluribus unumC. de facto marketing



D. ćest la vieE. caveat emptor


Feedback: Caveat emptor means "let the buyer beware." It is up to investors to do the research on a company. Neither the government nor any other organization guarantees the suitability of or the positive returns on their investments.

235. In the private purchase of a used or "pre-owned" car, __________ places the burden on the buyer to make sure the car is worth the purchase price, so it is advisable to take the car first to a mechanic. Once the transaction is complete the buyer typically will not receive a warranty or return option from the seller.A. modus operandiB. caveat emptorC. de facto marketingD. ćest la vieE. anguis in herba


Feedback: Caveat emptor means let the buyer beware. It is up to a car buyer to get adequate information, which can be aided by a mechanic. Courts will not intervene unless there was misrepresentation of defects or fraud.

236. In the 1960s, President Kennedy developed what is known as the Consumer Bill of Rights. This legislation represents limitations to the legal concept of ________ that was pervasive before that.A. utilitarianismB. self-regulationC. economic espionageD. consumerismE. caveat emptor


Feedback: Caveat emptor means let the buyer beware. The Consumer Bill of Rights represents the first legislation to put limits on this principle.

237. A law that codified the ethics of exchange between buyers and sellers, including the rights to safety, to be informed, to choose, and to be heard, is referred to as theA. Lanham Act.B. Fair Practices Act.C. Caveat Emptor Decree.D. Consumer Bill of Rights.E. Customer Consent Decree.


Feedback: Key term definition—Consumer Bill of Rights.

238. The Consumer Bill of Rights refers to a statement that



A. codified the ethics of exchange between manufacturers, distributors, and suppliers, including the right to be paid.B. codified the ethics of exchange between manufacturers, distributors, and suppliers, including the rights to safe working conditions, fair pay, and collaborative decision making.C. codified the ethics of exchange between buyers and sellers, including the rights to safety, to be informed, to choose, and to be heard.D. guaranteed consumers the right to be compensated through replacement, repair, or reimbursement for products that fail to perform as promised by the manufacturer.E. guaranteed consumers the rights that are enumerated in the First Amendment to the U.S. Constitution.


Feedback: Key term definition—Consumer Bill of Rights.

239. The Consumer Bill of Rights codified the ethics of exchange between buyers and sellers. It was outlined by __________ in __________.A. President John F. Kennedy; 1962B. President Ronald Reagan; 1983C. President Bill Clinton; 1996D. President George W. Bush; 2003E. President Barack Obama; 2009


Feedback: The Consumer Bill of Rights was the set of statements that codified the ethics of exchange between buyers and sellers including the rights to safety, to be informed, to choose, and to be heard. President John F. Kennedy outlined it in 1962.

240. In 1962, President John F. Kennedy outlined a Consumer Bill of Rights that codified the ethics of exchange between buyers and sellers. Which of the following is a primary principle of it?A. to privacyB. to be compensated for product defectsC. to be treated with respectD. to be treated without prejudiceE. to safety


Feedback: In 1962, President John F. Kennedy outlined a Consumer Bill of Rights that codified the ethics of exchange between buyers and sellers. These were the right: (1) to safety; (2) to be informed; (3) to choose; and (4) to be heard.

241. In 1962, President John F. Kennedy outlined a Consumer Bill of Rights that codified the ethics of exchange between buyers and sellers. Which of the following is a major principle that was included?A. to have legal representation in a court of lawB. to exchange or return products and services within a reasonable period of timeC. to receive fair prices for both products and servicesD. to be heardE. to be compensated for product defects


Feedback: In 1962, President John F. Kennedy outlined a Consumer Bill of Rights that codified the ethics of exchange between buyers and sellers. 3-64


These were the right: (1) to safety; (2) to be informed; (3) to choose; and (4) to be heard.

242. Dell Inc. learned that the lithium-ion batteries in its notebook computers posed a fire hazard to consumers. The company recalled 2.7 million batteries and gave consumers a replacement before any personal injuries resulted. Dell was most likely concerned with consumers' right toA. choose.B. be informed.C. safety.D. be heard.E. happiness.


Feedback: Dell informed consumers that its lithium-ion batteries posed a safety hazard, so it recalled them and gave a replacement battery before any injuries resulted.

243. Cosco, the world's largest children's products company, recently sold a high chair that could be used as an infant feeding seat, a youth chair, a play chair, a booster chair, and when reclined, an infant bed for $49. The prototypes had been tested by Cosco employees who had small children, but this was the only product testing performed. Once sold, several children were injured and some died as a result of using the chair. Cosco was charged with being unconcerned about consumers' right toA. choose.B. be informed.C. be treated courteously.D. safety.E. happiness.


Feedback: The chair was unsafe, so Cosco violated the right to safety. The U.S. Consumer Product Safety Commission fined Cosco $1.3 million for its misconduct regarding the chair.

244. Recently, Chillafish recalled some of its Chillafish brand of children's balance bikes. The Consumer Product Safety Commission website stated that overinflated tires could cause the wheel rims to crack and send pieces of the plastic rim flying, posing a laceration hazard to consumers. Chillafish was responding to consumers' right toA. choose.B. be informed.C. be treated courteously.D. safety.E. happiness.


Feedback: The balance bikes were deemed unsafe as Chillafish had received 19 reports of plastic separating from the rims, including two reports of consumers being cut by flying plastic when pieces of the plastic rim were expelled, so Chillafish was concerned about the right to safety. Promoted by an investigation by the U.S. Consumer Product Safety Commission, the bikes were recalled to be repaired or replaced.

245. If a brand of imported toys was found to have very high levels of lead in the paint and was recalled, the action would be necessary to protect consumers' right toA. safety.B. be informed.C. be heard.D. choose.



E. be treated courteously.


Feedback: These toys would be harmful to children so the companies that sold them would have violated consumers' right to safety and could resolve this by recalling the toys.

246. When shopping on the Internet, most consumers assume their personal information is confidential. If a web retailer proposed sharing its customer information with its partners without telling users, this is related most directly to consumers' right toA. be heard.B. be treated courteously.C. safety.D. happiness.E. be informed.


Feedback: The right to be informed means that marketers have an obligation to inform consumers about the solicitation, collection, and dissemination of their personal information over the Internet.

247. Business culture affects ethical behavior in competition. Two kinds of unethical behavior are most common:A. economic espionage and bribery.B. price fixing and copyright infringement.C. bribery and extortion.D. price fixing and economic espionage.E. economic espionage and antitrust infractions.


Feedback: Business culture also affects ethical behavior in competition. Two kinds of unethical behavior are most common: (1) economic espionage and (2) bribery.

248. Economic espionage refers toA. the destruction of a competitor's products or services through physical damage of property or damage to their reputation.B. persuading someone to act in one's favor, typically illegally or dishonestly, by a gift of money or other inducement.C. an illicit payment made to someone who has facilitated a transaction or appointment.D. the collection of trade secrets or other intellectual property from foreign countries or governments.E. the clandestine collection of trade secrets or proprietary information about a company's competitors.


Feedback: Key term definition—economic espionage.

249. The clandestine collection of trade secrets or proprietary information about a company's competitors is referred to asA. economic espionage.B. industrial espionage.C. marketplace espionage.



D. industrial surveillance.E. patent infringement.


Feedback: Key term definition—economic espionage.

250. All of the following are examples of economic espionage except which?A. wiretapping.B. trespassing.C. bribery.D. searching a competitor's trash.E. noncompete clause employment contract violations.


Feedback: Economic espionage is the clandestine collection of trade secrets or proprietary information about a company's competitors and includes illegal trespassing, theft, fraud, misrepresentation, wiretapping, the search of a competitor's trash, and violations of written and implicit employment agreements with noncompete clauses. Giving and receiving bribes and kickbacks is another form of unethical competitive business behavior.

251. Economic espionage includes such activities asA. two firms hiring the same musician to write their company jingle.B. hiring people who worked in an executive capacity at a competitor's firm, especially if they didn't have a non-compete clause.C. offering to accept all competitors' coupons, making their effectiveness as a promotional tool negligible.D. searching through a competitor's trash.E. marrying someone who works for a competitor in an executive position.


Feedback: Economic espionage is the clandestine collection of trade secrets or proprietary information about a company's competitors and includes illegal trespassing, theft, fraud, misrepresentation, wiretapping, the search of a competitor's trash, and violations of written and implicit employment agreements with noncompete clauses.

252. A rival of a branded food product manufacturer was known to have asked a mutual supplier for certain ingredients, using secret codes known only to the manufacturer and the supplier. The rival had picked the codes out of the manufacturer's refuse. This is an example ofA. corporate intelligence.B. economic espionage.C. clandestine trade secrets.D. industrial reconnaissance.E. competitive surveillance.


Feedback: Economic espionage is the clandestine collection of trade secrets or proprietary information about a company's competitors, which includes the search of a competitor's trash.

253. A national pet health care provider recently made a competitive move when it acquired new information. A rival had "preannounced" a new pet



coverage product in a tiny community newspaper six months prior to launching it. The national pet health care provider's marketing manager was notified immediately through a news monitoring service. The firm quickly added a similar offering, and got it to the market before its rival. The marketing manager relied on __________ to keep abreast of competitors' activities.A. legitimate environmental scanningB. economic espionageC. kickbacksD. corporate piracyE. primary market research


Feedback: Economic espionage is the clandestine collection of trade secrets or proprietary information about a company's competitors. Espionage activities include illegal trespassing, theft, fraud, misrepresentation, wiretapping, the search of a competitor's trash, and violations of written and implicit employment agreements with noncompete clauses. In this case, the national pet health care provider found out about its competitor's activities by reading a news story in a local paper. This is a legal form of secondary data collection, not economic espionage. Whether the national pet health care provider's response is ethical or unethical is debatable.

Coke-Pepsi Photo

Coke-Pepsi Photo

254. Consider the Coke-Pepsi photo. Marketing and advertising executives were asked to suppose they were a senior executive at PepsiCo when a Coca-Cola employee offered to sell you the marketing plan and sample for a new Coke product at a modest price. When asked in an online survey, __________ percent of the executives said they would buy the plan and product sample if there were no repercussions.A. 15B. 36C. 52D. 67E. 89

AACSB: EthicsBlooms: RememberLearning Objective: 03-07 Identify factors that influence ethical and unethical marketing decisions.Level of Difficulty: 1 EasyTopic: Ethical Issues in Marketing

Feedback: When this question was posed in an online survey of marketing and advertising executives, 67 percent said they would buy the plan and product sample if there were no repercussions.

255. An employee of Coca-Cola attempted to share its marketing plan with an employee of PepsiCo for a modest price. What should the PepsiCo employee do?A. Buy the marketing plan if assured there would be no legal or ethical repercussions.B. Ignore the offer to buy the marketing plan and hope the ethical dilemma will go away.C. Immediately contact Coca-Cola to advise it of the plot to sell the marketing plan.D. Immediately report the offer to the Better Business Bureau.E. Advise the Coca-Cola employee that it would be ethical to accept the plan if it was offered for free.



AACSB: EthicsBlooms: UnderstandLearning Objective: 03-07 Identify factors that influence ethical and unethical marketing decisions.Level of Difficulty: 2 MediumTopic: Ethical Issues in Marketing

Feedback: The PepsiCo employee should immediately report the incident to Coca-Cola, which will take the appropriate steps such as contacting the FBI to investigate the situation.

256. __________ is often disguised as gifts, consultant fees, and favors, but is used to gain an unethical advantage over competitors.A. Economic espionageB. UtilitarianismC. Business intelligenceD. OligopolyE. Bribery


Feedback: One form of unethical competitive behavior is giving and receiving bribes and kickbacks. Bribes and kickbacks are often disguised as gifts, consultant fees, and favors.

257. Bribery is most likely to occur whenA. a monopoly exists in the industry.B. industries experience intense competition.C. the country has reached a high level of economic development.D. industries are high-tech in nature.E. industries operate in an economically and politically stable environment.


Feedback: Bribery is most evident in industries experiencing intense competition and in countries in earlier stages of economic development. Economic espionage is most prevalent in high-technology industries.

258. Corporate culture refers toA. a formalized method for controlling the marketing environment.B. the set of accepted standards and practices within a given industry.C. the fundamental, passionate, and enduring principles of an organization that guide its conduct over time.D. the set of values, ideas, and attitudes that is learned and shared among the members of an organization.E. the formal statement of ethical principles and rules of conduct adopted by an organization.


Feedback: Text term definition—corporate culture.

259. The set of values, ideas, and attitudes that is learned and shared among the members of an organization is referred to asA. a mission statement.B. core values.C. the socialization process.D. a code of ethics and conduct.E. corporate culture.




Feedback: Text term definition—corporate culture.

260. Corporate culture manifests itself in many different ways: the ethical behavior of top management, expectations for ethical behavior present in formal codes of ethics, andA. contracts and agreements between members of the same industry.B. state and local laws regarding ethical business behavior.C. the dress codes, manner of work, and sayings of its employees.D. the socially responsible behaviors of its customers.E. the involvement of shareholders with an organization's day-to-day marketing decisions.


Feedback: Corporate culture is a set of values, ideas, and attitudes that is learned and shared among the members of an organization. The culture of a company demonstrates itself in the dress, sayings, and manner of work (team efforts) of employees. Culture is also apparent in the expectations for ethical behavior present in formal codes of ethics and the ethical actions of top management and co-workers.

261. Lava.com is an Internet company that helps other organizations implement marketing strategies to aid them in dominating their industry. Lava's advertising states, "We ignore the rules, and we let no obstacle stand in your company's way—no matter how bold or impossible your idea may seem." The company is composed of eighteen bright young Internet experts. They work in one large room, which also contains dartboards, a pool table, and a meditation center. If you were to walk into the office, it would be next to impossible to tell the company owners from its lowest-ranking employee. This best describes the Internet company'sA. modus operandi.B. mission or vision.C. socialization process.D. business definition.E. corporate culture.


Feedback: A corporate culture is a set of values, ideas, and attitudes that is learned and shared among the members of an organization, such as treating everyone equally and providing a relaxed atmosphere at work.

262. A code of ethics is a formal statement of ethical principles andA. legal restrictions.B. rules of conduct.C. cultural values.D. core values.E. moral laws.


Feedback: Key term definition—code of ethics.

263. A formal statement of ethical principles and rules of conduct is referred to asA. an ethical mission.



B. a moral code.C. a core value pronouncement.D. a code of conduct.E. a code of ethics.



264. A code of ethics refers toA. a formal statement of moral and ethical business attitudes.B. a formal statement of ethical principles and rules of conduct.C. an informal guide of ethical principles and moral conduct.D. the written document stating the beliefs and values of each employee in a firm.E. a firm's itemized list of business activities that are and are not consistent with the company's mission statement.



265. All of the following are addressed by an organization's code of ethics except which?A. the dress, sayings, and manner of work of employeesB. contributions to political parties and government officialsC. customer and supplier relationshipsD. accurate record keepingE. conflicts of interest


Feedback: The dress, sayings, and manner of work of employees are part of a corporate culture and not a code of ethics.

266. Which of the following is a major reason for the violation of ethics codes?A. government regulationB. family influenceC. lack of religious beliefsD. fear of disciplinary actionE. perceived behavior of top management


Feedback: The perceived behavior of top management and co-workers is a major reason for the violation of ethics codes.

267. Six executives of Tyson Foods, one of the world's largest poultry, beef, and pork processors, were arrested for the illegal smuggling of undocumented foreign workers into the United States to work at Tyson plants. Based on this information, Tyson's violations may have been the result of __________, one of the major reasons some company employees engage in unethical behavior.A. a mission statement that is too broadB. the absence of a written core values statement



C. the absence of whistle-blowersD. top management's behaviorE. the absence of a stakeholder code of ethics


Feedback: Employees often gauge how serious a company is about ethical behavior by looking at the actions of upper management.

268. A recent study of business executives reported that __________ percent had witnessed ethically troubling behavior.A. 7B. 18C. 25D. 45E. 62


Feedback: A study of business executives reported that 45 percent had witnessed ethically troubling behavior.

269. Employees who report unethical or illegal actions of their employers are referred to asA. whistle-blowers.B. scabs.C. cronies.D. corporate snitches.E. ombudsmen.


Feedback: Key term definition—whistle-blowers.

270. Whistle-blowers refer toA. employees who are simultaneously employed by competing firms and who trade company secrets.B. employees who blackmail or extort money from their employers.C. employees who are coerced by their employers to participate in illegal or unethical activities.D. customers who report unethical or illegal actions of the firms that market the offerings they purchased.E. employees who report unethical or illegal actions of their employers.


Feedback: Key term definition—whistle-blowers.

271. An employee who contacts the SEC to report her company's use of illegal accounting procedures is an example ofA. a crony.B. a scab.C. a whistle-blower.D. a corporate snitch.E. an ombudsman.




Feedback: Whistle-blowers are employees who report unethical or illegal actions of their employers.

272. Which of the following statements best describes the activities of a whistle-blower?A. An employee is unhappy because his company is downsizing.B. An employee tells the Consumer Product Safety Commission his company falsified safety reports on a child's car seat.C. A salesperson for a company finds out that a member of his softball team, who works for another firm, "borrowed" some wheelbarrows from that firm to use for his personal use and calls his boss.D. An employee criticizes his employer's finance personnel to his fellow co-workers for picking the wrong stocks in his retirement fund; they lost value last year despite an upturn in the stock market.E. An employee spends the afternoon at work studying for her test rather than counting inventory as she was supposed to be doing.


Feedback: Whistle-blowers are employees who report unethical or illegal actions of their employers—in this case, the falsification of a safety document.

273. Which of the following statements best describes the activities of a whistle-blower?A. Mattel employees were sorry that 150 of the 10 million Power Wheels cars and trucks the company sold had caught on fire.B. Mattel research engineers proved that the spate of fires in the company's Power Wheels cars and trucks was the result of consumers' tinkering with the engine.C. A former Mattel employee owned one of the Mattel Power Wheel cars that caught on fire and slightly burned its rider.D. The Consumer Product Safety Commission investigated the fires and ordered a recall to repair all of the 10 million units that had been sold.E. A Mattel employee reported to the Consumer Product Safety Commission that Mattel knowingly sold Power Wheels with an electrical system that could catch on fire after prolonged use.


Feedback: Whistle-blowers are employees who report unethical or illegal actions of their employers. If a Mattel employee had reported to the CPSC that Mattel was knowingly manufacturing a Power Wheels electrical system that would catch on fire after long use, he or she would have been a whistle-blower.

274. Two former sales representatives of Amgen, a biotech company, alleged the company strongly encouraged its salesforce to search confidential medical records in dermatologist's offices to find names of patients that would benefit Amgen's drug Enbrel, a psoriasis treatment. After reporting this practice to the president, one rep was fired and the other resigned after receiving a poor performance review. Both sued Amgen, claiming they did not go along with the scheme because they objected to it as being unethical. The two sales representatives areA. scabs.B. cronies.C. whistle-blowers.D. contrarians.E. ombudsmen.


Feedback: Whistle-blowers are employees who report unethical or illegal actions of their employers, as the sales reps did in this case.



275. Ultimately, ethical choices are based onA. the personal moral philosophy of the decision maker.B. societal culture and norms.C. business culture and industry practices.D. laws enacted by Congress and regulations by federal and state governments.E. chance and opportunity.


Feedback: Ultimately, ethical choices are based on the personal moral philosophy of the decision maker.

276. All of the following statements about a person's moral philosophy are true except which?A. Moral philosophy is usually in written form in the workplace.B. Moral philosophy is learned through the process of socialization with family and friends.C. Moral philosophy is influenced by the corporate culture a person is in.D. Moral philosophy can be learned through formal education.E. Moral philosophy is influenced by the societal culture a person is in.


Feedback: Moral philosophy is learned through the process of socialization with friends and family and by formal education. It is also influenced by the societal, business, and corporate culture in which a person finds himself/herself. It is not written like a code of ethics.

277. Two prominent personal moral philosophies that have direct bearing on marketing practice areA. existentialism and pragmatism.B. pragmatism and idealism.C. moral idealism and utilitarianism.D. social responsibility and personal ethics.E. moral relativism and situational ethics.


Feedback: Two prominent personal moral philosophies—moral idealism and utilitarianism—have direct bearing on marketing practice.

278. A personal moral philosophy that considers individual rights or duties as universal, regardless of the outcome, is referred to asA. social responsibility.B. moral idealism.C. utilitarianism.D. hedonism.E. religion.


Feedback: Key term definition—moral idealism.

279. Moral idealism refers to a personal moral philosophy that



A. centers on the idea that good will always triumph over evil.B. follows the Golden Rule, "You should treat others as you would like others to treat you."C. all human beings are basically good.D. considers individual rights or duties as universal, regardless of the outcome.E. prefers the outcome that provides "the greatest good for the greatest number."



280. Moral idealism refers toA. a personal moral philosophy that focuses on the greatest good for the greatest number by assessing the costs and benefits of the consequences of ethical behavior.B. a democratic consensus of moral principles and laws that govern the behavior of individuals based on legislation adopted at the federal, state, and local levels.C. a societal moral philosophy based on the Golden Rule of the Judeo-Christian ethic embodied in the U.S. Constitution's Bill of Rights.D. a formal statement of ethical principles and rules of conduct.E. a personal moral philosophy that considers individual rights or duties as universal, regardless of the outcome.



281. A moral philosophy that exists in the Consumer Bill of Rights and is favored by moral philosophers and consumer interest groups is referred to asA. social responsibility.B. moral idealism.C. utilitarianism.D. hedonism.E. the Golden Rule.


Feedback: Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome. This philosophy exists in the Consumer Bill of Rights and is favored by moral philosophers and consumer interest groups.

282. Why did 3M phase out the production of a chemical used as an ingredient in its Scotchgard fabric protector?A. New advances in fabric manufacturing, such as dirt repellant fibers, made the need for the product obsolete.B. The product accidentally violated the patent rights of a competitor.C. Traces of the potentially harmful chemical were found in humans, so the product was voluntarily halted.D. New governmental legislation banned the production of one of the product's key component chemicals.E. The company developed a new product that didn't contain this chemical and was less costly to produce, resulting in a significantly higher profit margin.


Feedback: Popular Scotchgard fabric protector had no known harmful health or environmental effect. However, 3M discovered that a chemical used in the product appeared in minuscule amounts in the tissues of humans and animals. Believing that the substance could be possibly harmful in large



doses, 3M voluntarily stopped its production, resulting in a $200 million loss in annual sales of the product. This is an example of moral idealism, which is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome.

283. The 3M company stopped production of a chemical it had made for more than 40 years when tests showed the chemical could be accumulated in human tissue, even though the products in which it was used had no known harmful health or environmental effect. The voluntary action by 3M is an example ofA. individualism.B. utilitarianism.C. existentialism.D. moral idealism.E. socialism.


Feedback: Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal (in this case consumer safety), regardless of the outcome.

284. Western Digital, the Irvine, California-based maker of disk drives, recalled about 400,000 of its hard drives because of a faulty internal chip. The chip would not affect the disk drive motor until after six to 12 months of use. This delay in the problem's appearance meant that many consumers would not think to blame the disk drive manufacturer. But, instead of taking the less expensive route of remaining quiet about the problem, Western Digital chose to offer replacement disk drives for all those that had the faulty chip. This action is an example ofA. hedonism.B. utilitarianism.C. moral idealism.D. existentialism.E. socialism.


Feedback: Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal (in this case, a product that works as promised), regardless of the outcome.

285. The owners of Ben & Jerry's Homemade Inc. adhere to the belief that the company should not harm the environment in any way but actually improve it. This is an example ofA. moral capitalism.B. utilitarianism.C. existentialism.D. moral idealism.E. socialism.


Feedback: The philosophy of moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome.

286. A personal moral philosophy that focuses on "the greatest good for the greatest number" by assessing the costs and benefits of the consequences of ethical behavior is referred to asA. utilitarianism.B. hedonism.C. existentialism.D. moral idealism.



E. socialism.


Feedback: Key term definition—utilitarianism.

287. According to the personal moral philosophy of __________, if the benefits exceed the costs, the behavior is ethical.A. hedonismB. utilitarianismC. existentialismD. moral idealismE. socialism


Feedback: Utilitarianism assesses the costs and benefits of the consequences of a behavior. If the benefits exceed the costs, then the behavior is ethical. If not, then the behavior is unethical.

288. The personal moral philosophy of utilitarianism underlies the economic tenets ofA. existentialism.B. moral idealism.C. communism.D. socialism.E. capitalism.


Feedback: Utilitarianism is a personal moral philosophy that focuses on the greatest good for the greatest number by assessing the costs and benefits of the consequences of ethical behavior. This philosophy underlies the economic tenets of capitalism and is embraced by many business executives and students.

289. Nestlé's marketing of Good Start infant formula, sold by Nestlé's Carnation Co., promoted the product as hypoallergenic. However, some severely milk-allergic infants experienced serious side effects after using Good Start, including convulsive vomiting. A Nestlé vice president defended the claim and product, saying, "I don't understand why our product should work in 100 percent of cases. If we wanted to say it was foolproof, we would have called it allergy-free. We call it hypo-, or less, allergenic." Nestlé's actions exemplify which of the following philosophies?A. existentialismB. moral idealismC. communismD. socialismE. utilitarianism


Feedback: Utilitarianism is a personal moral philosophy that focuses on the greatest good for the greatest number by assessing the costs and benefits of the consequences of ethical behavior. Nestlé officials seemingly believed that most allergic infants would benefit from Good Start—"the greatest good for the greatest number."



290. The idea that organizations are part of a larger society and are accountable to that society for their actions is referred to asA. stakeholder responsibility.B. social responsibility.C. profit responsibility.D. utilitarianism.E. moral idealism.

AACSB: EthicsAccessibility: Keyboard NavigationBlooms: RememberLearning Objective: 03-08 Describe the different concepts of social responsibility.Level of Difficulty: 1 EasyTopic: Corporate Social Responsibility

Feedback: Key term definition—social responsibility.

291. Social responsibility refers toA. a personal moral philosophy that focuses on the greatest good for the greatest number by assessing the costs and benefits of the consequences of ethical behavior.B. a democratic consensus of moral principles and laws that govern the behavior of individuals based on legislation adopted at the federal, state, and local levels.C. a societal moral philosophy based on the Golden Rule of the Judeo-Christian ethic found in the U.S. Constitution's Bill of Rights.D. the view that organizations are part of a larger society and are accountable to that society for their actions.E. a personal moral philosophy that considers individual rights or duties as universal, regardless of the outcome.


Feedback: Key term definition—social responsibility.

292. Which of the following statements about social responsibility is most accurate?A. The three concepts of social responsibility are economic responsibility, internal social responsibility, and external social responsibility.B. Organizations are part of a larger society and are accountable to that society for their actions.C. Societal responsibility focuses on the obligations an organization has to its customers, employees, suppliers, and distributors.D. The duty of an organization is most easily understood at the societal responsibility level.E. Social responsibility cannot be taught; it is an innate outgrowth of a person's moral and ethical belief system.

AACSB: EthicsAccessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-08 Describe the different concepts of social responsibility.Level of Difficulty: 2 MediumTopic: Corporate Social Responsibility

Feedback: The societal marketing concept stresses marketing's social responsibility by not only satisfying the needs of consumers but also providing for society's welfare. Social responsibility means that organizations are part of a larger society and are accountable to that society for their actions.

293. Gap, Inc. ended its relationship with 23 foreign production facilities due to code violations. Several closings occurred because of the use of child labor. In response to these events, the Gap created a large team whose purpose is to travel worldwide to ensure compliance with its Code of Vendor Conduct. This is an example ofA. cause marketing.B. profit responsibility.C. utilitarianism.D. moral idealism.E. social responsibility.

AACSB: EthicsAccessibility: Keyboard NavigationBlooms: ApplyLearning Objective: 03-08 Describe the different concepts of social responsibility.Level of Difficulty: 3 HardTopic: Corporate Social Responsibility

Feedback: Social responsibility is the view that organizations are part of a larger society and are accountable to that society for their actions.3-78


294. The residents of Alaska and people throughout the world were outraged when the Exxon Valdez crashed into a shoal and dumped millions of gallons of crude oil into the pristine waters of Prince William Sound. People were upset with Exxon's response to the disaster. The company was slow to admit its mistake and even slower to implement cleanup activities. Exxon was criticized for acting in a manner that would benefit the organization but not society. In short, Exxon did not demonstrateA. social responsibility.B. value consciousness.C. green marketing.D. profit responsibility.E. cause marketing.


Feedback: Social responsibility means that marketing firms, as well as other organizations, exist as part of a larger society and are accountable to that society for their actions. Exxon acted, at least initially, with only the organization's interests in mind.

295. Profit responsibility, societal responsibility, and stakeholder responsibility are three concepts ofA. cause marketing.B. moral idealism.C. social responsibility.D. utilitarianism.E. green marketing.


Feedback: There are three concepts of social responsibility: (1) profit responsibility, (2) stakeholder responsibility, and (3) societal responsibility.

296. There are three concepts of social responsibility, each relating to particular constituencies. Profit responsibility is characterized byA. the triple bottom line, to achieve sustainable, long-term growth.B. a focus on the obligations an organization has to those who can affect achievement of its objectives.C. an engagement in open and free competition without deception or fraud.D. an unrelenting customer focus.E. a focus on seller-oriented outcomes.


Feedback: Profit responsibility holds that companies have a simple duty: to maximize profits for their owners or stockholders. This view is expressed by Nobel Laureate Milton Friedman, who said, "There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."

297. There are three concepts of social responsibility, each relating to particular constituencies. Stakeholder responsibility is characterized byA. the triple bottom line, to achieve sustainable, long-term growth.B. a focus on the obligations an organization has to those who can affect achievement of its objectives.C. an engagement in open and free competition without deception or fraud.D. an unrelenting customer focus.E. a focus on seller-oriented outcomes.

AACSB: EthicsAccessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-08 Describe the different concepts of social responsibility.



Level of Difficulty: 2 MediumTopic: Corporate Social Responsibility

Feedback: Stakeholder responsibility focuses on the obligations an organization has to those who can affect achievement of its objectives. These constituencies include consumers, employees, suppliers, and distributors.

298. There are three concepts of social responsibility, each relating to particular constituencies. Societal responsibility can be characterized byA. the triple bottom line, to achieve sustainable, long-term growth.B. a focus on the obligations an organization has to those who can affect achievement of its objectives.C. an engagement in open and free competition without deception or fraud.D. an unrelenting customer focus.E. a focus on seller-oriented outcomes.


Feedback: Societal responsibility refers to obligations that organizations have (1) to the preservation of the ecological environment and (2) to the general public. Emphasis is placed on the triple-bottom line—recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth.

299. Profit responsibility refers toA. the obligation of a firm to price its products or services at a level whereby the consumer is treated fairly and the firm is still able to make a profit.B. the view that an organization has an obligation to those who can affect the achievement of its objectives.C. the concept that no expansion or additional research and development will occur until a company is making a profit.D. the idea that organizations are part of a larger society and are accountable to that society for their actions.E. the duty of a firm to maximize financial returns for its owners or stockholders.


Feedback: Text term definition—profit responsibility.

300. The duty of a firm to maximize financial returns for its owners or stockholders is referred to asA. social responsibility.B. value consciousness.C. benefit marketing.D. profit responsibility.E. stakeholder responsibility.


Feedback: Text term definition—profit responsibility.

301. The groups primarily served by a firm exhibiting profit responsibility includeA. the general public, public interest groups, and the environment.B. consumers, employees, and supplier/distributors.C. owners and stockholders.D. the general public and competitors.E. state and federal government.

AACSB: EthicsAccessibility: Keyboard NavigationBlooms: UnderstandLearning Objective: 03-08 Describe the different concepts of social responsibility.Level of Difficulty: 2 Medium



Topic: Corporate Social Responsibility

Feedback: Companies practicing profit responsibility serve owners and stockholders. Companies practicing stakeholder responsibility primarily serve consumers, suppliers, distributors, and employees. Companies practicing societal responsibility primarily have obligations to the preservation of the ecological environment and to the general public.

302. Who said the following: "There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud"?A. Federal Reserve Chairman Ben BernankeB. Nobel Laureate Paul KrugmanC. President Barack ObamaD. Nobel Laureate Milton FriedmanE. President Ronald Reagan


Feedback: This view was expressed by Nobel Laureate Milton Friedman.

303. Genzyme, the maker of Cerdelga, a drug that treats a genetic illness called Gaucher's disease that affects 10,000 people worldwide, has been criticized for charging up to $300,000 for a year's worth of Cerdelga. This is an example of the manufacturer adhering to itsA. utopian responsibility.B. moral idealism.C. social responsibility.D. cause marketing strategy.E. profit responsibility.


Feedback: Profit responsibility holds that companies have a simple duty: to maximize profits for their owners or stockholders. Important considerations here are (1) how companies can recover costs of their research and development if they give away their discoveries and/or (2) how they can compensate their stakeholders if they sell their products at a loss.

304. Stakeholder responsibility refers toA. the view that an organization has an obligation to those who can affect the achievement of its objectives.B. the obligation of a firm to price its products or services at a level whereby the consumer is treated fairly and the firm is still able to make a profit.C. the duty of a firm to maximize profits for its owners or stockholders.D. the concept that no expansion or additional research and development will occur until a company is making a profit.E. the idea that organizations are part of a larger society and are accountable to that society for their actions.


Feedback: Text term definition—stakeholder responsibility.

305. The view that an organization has an obligation to those who can affect the achievement of its objectives is referred to asA. social responsibility.B. value consciousness.C. benefit marketing.D. stakeholder responsibility.E. profit responsibility.




Blooms: RememberLearning Objective: 03-08 Describe the different concepts of social responsibility.Level of Difficulty: 1 EasyTopic: Corporate Social Responsibility

Feedback: Text term definition—stakeholder responsibility.

306. The groups primarily served by a firm exhibiting stakeholder responsibility includeA. the general public, public interest groups, and the environment.B. consumers, employees, suppliers, and distributors.C. owners and stockholders.D. the general public, owners, and stockholders.E. government, owners, and stockholders.


Feedback: Companies practicing profit responsibility serve owners and stockholders. Companies practicing stakeholder responsibility primarily serve consumers, suppliers, distributors, and employees. Companies practicing societal responsibility primarily have obligations to the preservation of the ecological environment and to the general public.

307. Source Perrier S.A., the supplier of Perrier bottled water, exercised __________ when it recalled 160 million bottles of water in 120 countries after traces of a toxic chemical were found in 13 bottles. The recall cost the company $35 million and the profit from $40 million in lost sales. Even though the chemical was not harmful to humans, the president of the company believed it was his duty to remove "the least doubt, as minimal as it might be, to weigh on the image of the quality and purity of our product."A. moral idealismB. utilitarianismC. cause marketingD. profit responsibilityE. stakeholder responsibility


Feedback: Stakeholder focuses on the obligations an organization has to those who can affect achievement of its objectives. Source Perrier was protecting its customers.

308. Toyota Motor Corp. executives were widely criticized for their failure to practice __________ when selected Toyota brands had been linked to sticky gas pedals, which can lead to sudden acceleration problems. The company recalled over 9 million cars worldwide under pressure from the National Highway Traffic Safety Administration and thousands of consumer complaints. After the recall, Toyota sales fell, which affected Toyota consumers, employees, suppliers, and dealers.A. moral idealismB. stakeholder responsibilityC. utilitarianismD. cause marketingE. profit responsibility


Feedback: Stakeholder focuses on the obligations an organization has to those who can affect achievement of its objectives. Toyota was criticized for not responding quickly to stakeholder (particularly customer) concerns.

309. Societal responsibility refers toA. the obligation that organizations have to the preservation of the ecological environment and the general public.



B. the obligation of a firm to price its products or services at a level whereby the consumer is treated fairly and the firm is still able to make a profit.C. the view that an organization has an obligation to those who can affect the achievement of its objectives.D. the duty of a firm to maximize profits for its owners or stockholders.E. the idea that organizations are part of a larger society and are accountable to that society for their actions.


Feedback: Text term definition—societal responsibility.

310. The obligation organizations have to the preservation of ecological environment and to the general public is referred to asA. social responsibility.B. stakeholder responsibility.C. benefit marketing.D. societal responsibility.E. profit responsibility.


Feedback: Text term definition—societal responsibility.

311. Most paint is neither biodegradable nor friendly to the environment because it is made with petroleum solvents. A builder who decided to build a subdivision with 500 homes and paint each with an environmentally friendly, soy-based paint (even though it costs more) would be practicingA. profit responsibility.B. cause marketing.C. stakeholder responsibility.D. mass marketing.E. societal responsibility.


Feedback: Societal responsibility is the view that organizations have obligations to the general public and to the preservation of the ecological environment. Many more people besides those who live in the subdivision will benefit from the use of environmentally-friendly paint.

312. The maker of Wrigley chewing gum funded a $10 million ad campaign aimed at getting African Americans to use doctors for regular health care maintenance instead of only when they are sick. This is an example ofA. profit responsibility.B. cause marketing.C. stakeholder responsibility.D. societal responsibility.E. mass marketing.


Feedback: Societal responsibility is the view that organizations have obligations to the general public and to the preservation of the ecological environment. Wrigley is taking responsibility for the general public by trying to help people who are not necessarily its stakeholders.

313. The recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve



sustainable, long-term growth is referred to asA. social responsibility.B. the triple-bottom line.C. the marketing concept.D. sustainability.E. social entrepreneurship.


Feedback: Key term definition—triple-bottom line.

314. Triple-bottom line refers toA. the recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth.B. the obligations an organization has to those who can affect achievement of its sales, profit, and market share objectives simultaneously.C. the recognition of the need for organizations to be responsible simultaneously to shareholders, employees, and customers.D. the obligations an organization has to practice profit, stakeholder, and societal responsibility simultaneously.E. three different financial statements prepared in three different formats: one for governmental regulators, one for shareholders, and one for internal use.


Feedback: Key term definition—triple-bottom line.

315. All of the following are the result of an interest in the triple-bottom line except which?A. sustainable developmentB. cause marketingC. environmental scansD. green marketingE. social audits


Feedback: Green marketing, cause marketing, social audits, and sustainable development reflect the growing interest in the concept of the triple-bottom line, which is the recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth.

316. Green marketing refers toA. the purchasing of products from producers whose farming practices are Fair Trade certified.B. the marketing efforts taken by new and smaller companies that lack both the experience and resources of their major competitors.C. the marketing efforts to produce, promote, and reclaim environmentally sensitive products.D. the marketing of products that have in no way been altered or reprocessed by artificial means.E. the marketing of those products made exclusively from recycled materials.


Feedback: Key term definition—green marketing.



317. Marketing efforts to produce, promote, and reclaim environmentally sensitive products are referred to asA. green marketing.B. recycle marketing.C. cause marketing.D. environmental marketing.E. recycling.


Feedback: Key term definition—green marketing.

318. At 3M, the "Pollution Prevention Pays" (3P) program has generated over 9,000 3P projects that eliminated more than 3.5 billion pounds of air, water, and solid-waste pollutants from the environment. This is an example ofA. proactive marketing.B. green marketing.C. consumerism.D. an ecological code of ethics.E. cause marketing.


Feedback: Green marketing is defined as marketing efforts designed to produce, promote, and reclaim environmentally sensitive products. The 3M 3P program has reduced the amount of pollutants in the environment.

319. Levi Strauss & Co. uses eight recycled plastic bottles, which make up at least 20 percent of the content, in fabricating each pair of its Waste<Less jeans. This is an example ofA. proactive marketing.B. consumerism.C. an ecological code of ethics.D. green marketing.E. cause marketing.


Feedback: Green marketing is defined as marketing efforts designed to produce, promote, and reclaim environmentally sensitive products. Levi Strauss & Co. uses eight recycled plastic bottles, which make up at least 20 percent of the content, in fabricating each pair of its Waste<Less jeans. This practice has eliminated millions of discarded plastic bottles from landfills and reduced the water consumed in the manufacturing process.

320. Which of the following is an example of green marketing?A. McDonald's added apple snacks to its Happy Meals targeted at children.B. Lowe's and Home Depot discontinued the sale of lumber and other wood products.C. Levi-Strauss marketed prewashed jeans.D. Joe's Lawn Service offered a special spring cleanup promotion.E. Walmart implemented buying practices that encourage its suppliers to use containers and packing made from corn, not petroleum-based resins.




Feedback: Green marketing is defined as marketing efforts designed to produce, promote, and reclaim environmentally sensitive products.

321. Chrysler recycles thousands of tons of wood pallets, cardboard, and paper annually. Chrysler cars are 75 percent recyclable. Chrysler's recycling programs are examples ofA. recycle marketing.B. cause marketing.C. green marketing.D. environmental marketing.E. triple-top line marketing.


Feedback: Green marketing is defined as marketing efforts to produce, promote, and reclaim environmentally sensitive products.

322. Many fast-food restaurants, including Burger King, McDonald's, and Wendy's, no longer use polystyrene containers (which do not degrade as quickly as paper in a landfill) for packaging their products. Rather, these firms wrap their burgers in recycled paper wrappers, containers, and bags, usually clearly marked as such. These fast-food restaurants are practicingA. triple-top line marketing.B. green marketing.C. consumerism.D. an ecological code of ethics.E. cause marketing.


Feedback: Green marketing is defined as marketing efforts designed to produce, promote, and reclaim environmentally sensitive products. Polystyrene does not degrade as quickly as paper in a landfill. Using recycled paper reduces the amount of solid waste sent to landfills.

323. FedEx and UPS are converting their delivery trucks with standard diesel engines to more fuel-efficient and cleaner hybrid-electric vehicles, which can cut fuel costs by half and lower fuel emissions by 90 percent. This is an example ofA. demarketing.B. triple-top line marketing.C. preemptive compliance.D. green marketing.E. cause marketing.


Feedback: Green marketing is defined as marketing efforts designed to produce, promote, and reclaim environmentally sensitive products.

324. When the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of its products, this marketing practice is referred to asA. marketing philanthropy.B. marketing allegiance.C. relationship marketing.D. transactional marketing.E. cause marketing.

AACSB: EthicsAccessibility: Keyboard NavigationBlooms: Remember



Learning Objective: 03-08 Describe the different concepts of social responsibility.Level of Difficulty: 1 EasyTopic: Corporate Social Responsibility

Feedback: Key term definition—cause marketing.

325. Cause marketing refers toA. efforts to tie the charitable contributions of a firm directly to the customer revenues produced through the promotion of one of its products.B. the recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth.C. marketing services provided at little or no cost for the purpose of promoting or supporting a worthy cause.D. marketing efforts to produce, promote, and reclaim environmentally sensitive products.E. situations in which marketing actions that took place actually caused more harm than good.


Feedback: Key term definition—cause marketing.

326. A key difference between cause marketing and a charitable contribution isA. a charitable contribution provides an organization with a lower tax deduction.B. there is no limit to the amount of charitable deductions a firm can make, but a firm is limited to the number of cause marketing efforts it can make during a fiscal year.C. charitable donations are contributed at the sole discretion of the firm while for cause marketing the amount is directly affected by consumers' purchases.D. cause marketing is generally linked to public causes and concerns while straight charitable contributions are generally given to private institutions.E. there is essentially no difference between a charitable contribution and cause marketing.


Feedback: Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenue produced through the promotion of one of its products. Charitable contributions are outright donations.

327. Cause marketing programs incorporate all three concepts of social responsibility by addressing public concerns, satisfying customer needs, andA. protecting the environment.B. enhancing corporate sales and profits.C. following industry-specific codes of ethics.D. fulfilling societal objectives.E. demonstrating ethical behavior.


Feedback: Socially responsible efforts on behalf of the general public are becoming more common. Cause marketing programs incorporate all three concepts of social responsibility by addressing public concerns and satisfying customer needs. They can also enhance corporate sales and profits.

328. Procter & Gamble supports disadvantaged youth and provides relief after disasters strike when its customers purchase selected company products. This is an example ofA. cause marketing.B. philanthropic marketing.C. green marketing.D. public relations.E. societal promotions.




Feedback: Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenue produced through the promotion of one of its products. The amount of money received by disadvantaged youth programs and disaster relief agencies is directly related to how many P&G products are purchased by customers.

329. Since 2006, Procter & Gamble has developed a successful brand campaign in partnership with UNICEF that includes the Pampers 1 Pack = 1 Vaccine initiative, which has protected 100 million women and their babies against maternal and neonatal tetanus. This is an example ofA. philanthropic marketing.B. corporate altruism.C. the marketing concept.D. green marketing.E. cause marketing.


Feedback: Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenue produced through the promotion of one of its products.

330. During its Drive to End Hunger campaign to help fight hunger among the nearly nine million older Americans, Quaker State donated 25 cents per bottle sold of five-quart, specially-marked oil products to the AARP Foundation that works on this issue. This is an example ofA. philanthropic marketing.B. corporate altruism.C. the marketing concept.D. green marketing.E. cause marketing.


Feedback: Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenue produced through the promotion of one of its products.

331. When a customer buys Avon's Pink Power Pro Nail Enamel, 100 percent of the profits go to Avon Breast Cancer Crusade. This is an example ofA. philanthropic marketing.B. corporate altruism.C. cause marketing.D. the marketing concept.E. societal marketing.


Feedback: Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenue produced through the promotion of one of its products. How much Avon donates to the nonprofit organizations is based on how many products in selected categories it sells.

332. A Toyota dealership in British Columbia, Canada, donated $50 to the Make-A-Wish Foundation of Canada for each Toyota purchased during a particular month. This is an example of how a small business can engage in



A. philanthropic marketing.B. cause marketing.C. marketing altruism.D. public relations marketing.E. societal marketing.


Feedback: Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenue produced through the promotion of one of its products. The amount donated by the car dealership was directly related to how many Toyotas it sold.

333. American Express Company pioneered cause marketing when it sponsored the renovation ofA. Carnegie Hall.B. Madison Square Garden.C. Liberty Hall.D. the Statue of Liberty.E. Radio City Music Hall.


Feedback: Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenue produced through the promotion of one of its products. American Express Company pioneered cause marketing when it sponsored the renovation of the Statue of Liberty. This effort raised $1.7 million for the renovation, increased card usage among cardholders, and attracted new cardholders.

334. When American Express pioneered cause marketing, it raised $1.7 million to renovate a national icon, increased usage among cardholders, andA. became the only credit card accepted for admission to the sight.B. decreased outstanding debt on previously unpaid credit cards.C. was able to raise interest rates without facing customer complaints.D. received a tax credit that more than paid for the original campaign.E. attracted new cardholders.


Feedback: American Express Co. pioneered cause marketing when it sponsored the renovation of the Statue of Liberty. This effort raised $1.7 million for the renovation, increased card usage among cardholders, and attracted new cardholders.

335. Eighty percent of consumers say they will switch to a brand or retailer that supports a good cause if the price and quality of brands or retailers are equal. In short, cause marketing may be a valued _______________ for brands and companies, all other things being equal.A. sales approachB. societal marketing trendC. public relations exerciseD. transactional marketing practiceE. point of difference


Feedback: Research indicates that 85 percent of U.S. consumers say they have a more favorable opinion of companies that support causes they care about. Also, 80 percent of consumers say they will switch to a brand or retailer that supports a good cause if the price and quality of brands or



retailers are equal. In short, cause marketing may be a valued point of difference for brands and companies, all other things being equal.

336. Which of the following statements concerning cause marketing is most accurate?A. The vast majority of consumers say they will switch to a brand that supports a good cause, provided the price and quality of the brands are equal.B. The profits generated by cause marketing are usually based in "goodwill" rather than actual revenue.C. The positive effects of cause marketing are significant during the promotion, but they lose their benefit almost immediately after the promotion runs its course.D. Cause marketing rarely creates a point of difference for the firm that engages in this marketing practice.E. Women are much more suspicious about the sincerity of cause marketing programs than men; therefore, their contributions are significantly less.


Feedback: Cause marketing benefits companies as well as causes. Research indicates that 85 percent of U.S. consumers say they have a more favorable opinion of companies that support causes they care about. Also, 80 percent of consumers say they will switch to a brand or retailer that supports a good cause if the price and quality of brands or retailers are equal.

337. Conducting business in a way that protects the natural environment while making economic progress is referred to asA. green marketing.B. sustainable development.C. stakeholder responsibility.D. the marketing concept.E. environmental marketing.


Feedback: Key term definition—sustainable development.

338. Sustainable development refers toA. placing restraints on a company's growth until all ancillary support services are in place to ensure a new venture's success.B. global economies that are slowly moving from an agrarian-base to an industrial base.C. adhering to worldwide standards for environmental quality and green marketing practices.D. marketing efforts to produce, promote, and reclaim environmentally sensitive products.E. conducting business in a way that protects the natural environment while making economic progress.


Feedback: Key term definition—sustainable development.

339. Which of the following statements about sustainable development is most accurate?A. A company that makes its furniture from rare tropical woods is practicing sustainable development.B. Currently, sustainable development is a luxury in which only large multinational companies can engage.C. Sustainable development is achieved when a firm's sales growth rate increases an average of 1 to 2 percent a year for a period of at least five years.D. A mining company that replants native vegetation after mining ceases practices sustainable development.E. Unfortunately, only a small number of consumers care whether a company practices sustainable development.




Feedback: Sustainable development involves conducting business in a way that protects the natural environment while making economic progress.

340. Arrowhead brand Mountain Spring Water recently changed its bottle by reducing the size of its label by one-third, using 30 percent less plastic, and making the bottle more flexible for easier recycling. These efforts are part of the company's goal to engage inA. sustainable development.B. market development.C. ISO 14000 compliance.D. cause marketing.E. environmental downsizing.


Feedback: Arrowhead's bottle changes are an example of sustainable development, which involves conducting business in a way that protects the natural environment while making economic progress.

341. Toyota employs all of the following principles and practices as part of "The Toyota Way" exceptA. continuously improve business processes and products.B. empower individuals and teams.C. respect people.D. build trust.E. provide personalized and customized products.


Feedback: Alternative "provide personalized and customized products" is not a core principle or a business practice that forms "The Toyota Way." See Video Case 3: Toyota: Building Cleaner, Greener Cars.

342. One of Toyota's top goals has been to develop advanced vehicle technologies to complement existing ones. The G21 vision arose out of this goal, which eventually led to the production of which of the following vehicles?A. Lexus 450 all-electric carB. Toyota Tundra gas-electric hybrid truckC. Scion iQ micro-subcompact compressed natural gas carD. Toyota Prius gas-electric hybrid carE. Toyota Camry hydrogen fuel cell car


Feedback: In the early '90s Toyota developed what was called the G21 vision. The goal of the G21 plan was to bring a vehicle to market that represented a great value and had great environmental benefits, not just in Japan but globally. The concept was eventually introduced as the Prius, a hybrid vehicle with a gasoline engine and an electric motor combination called the Hybrid Synergy Drive. See Video Case 3: Toyota: Building Cleaner, Greener Cars.

343. In a recent survey, consumers were asked the following question: "Who should take the lead in addressing environmental issues?" Results suggest that consumers expect that __________ should.A. the federal governmentB. businessesC. individualsD. environmental groupsE. state governments




Blooms: UnderstandLearning Objective: 03-08 Describe the different concepts of social responsibility.Level of Difficulty: 2 MediumTopic: Corporate Social Responsibility

Feedback: In a recent survey, consumers were asked the following question: "Who should take the lead in addressing environmental issues?" The results suggest that businesses should, followed by individuals, state government, federal government, and environmental groups. See Figure 1 in the case. See Video Case 3: Toyota: Building Cleaner, Greener Cars.

344. How would the following environmental trends influence the success of a manufacturer of high-definition televisions (HDTVs): (1) growing number of older Americans; (2) population shifts to remote suburbs and small towns; (3) increase in per capita income and standard of living; and (4) increased use of various types of communication technology?

All four trends are relevant to growing sales of these home entertainment products. Older Americans will have more leisure time in retirement to spend at home, some of which would be spent watching more television programs. People of all ages living far from centers where they can attend live sports, music, and other events are likely to watch such entertainment on either traditional or online television. Increased incomes and communication technology will make it possible for these consumers to buy higher-quality equipment to enjoy better reception and more features such as HDTV. Increased use of various types of communication technologies have led and will lead to incorporating them into new TV models. Consumers can make telephone calls through their TVs, upload photos from digital cameras, etc.

AACSB: Knowledge ApplicationBlooms: ApplyLearning Objective: 03-01 Explain the purpose of environmental scanning.Level of Difficulty: 3 HardTopic: Environmental Influences on Marketing

345. List the five environmental forces that have an impact on an organization as well as its suppliers and customers. Provide examples of factors that might be examined as part of environmental scanning for each of these forces.

The following environmental forces have an impact on the organization: (1) social—demographic shifts and cultural changes; (2) economic—macroeconomic conditions and consumer income; (3) technological—changing technology, technology's impact on customer value, and electronic business technologies; (4) competitive—alternative forms of competition and small businesses; and (5) regulatory—laws protecting competition, laws affecting marketing mix actions, and self-regulation. See Figure 3-1.

AACSB: Analytical ThinkingBlooms: UnderstandLearning Objective: 03-01 Explain the purpose of environmental scanning.Level of Difficulty: 2 MediumTopic: Environmental Influences on Marketing

346. Identify the five environmental forces that affect an organization, and explain using the coffee industry as an example. What might you predict would be the future of the coffee industry.

Environmental trends typically arise from five sources: (1) social, (2) economic, (3) technological, (4) competitive, and (5) regulatory. Social forces include the demographic characteristics of the population and its values. Economic forces include the income, expenditures, and resources that affect the cost of running a business and household. Technological forces include the inventions or innovations from applied science or engineering research. Competitive forces include the alternative firms that could provide a product to satisfy a specific market's needs. Regulatory forces include the restrictions state and federal laws place on business with regard to the conduct of its activities.

The growth of single-cup brewers is one of the trends in the coffee industry. You may have concluded that these changes in coffee consumption are likely to influence coffee manufacturers, coffee shops, and supermarkets. Due to the recent decline in coffee consumption, manufacturers are offering new flavors and seasonal blends, coffee shops such as Starbucks are testing a delivery service and flavors such as S'mores Frappuccino, and supermarkets are adding boutiques and gourmet brands. The increase in the percentage of households with single-cup brewers has also led to changes. Starbucks has begun selling single-serving coffee packs. Predicting the future requires assumptions about the number of years the trends will continue and their rate of increase or decline.

AACSB: Analytical ThinkingBlooms: UnderstandLearning Objective: 03-01 Explain the purpose of environmental scanning.Level of Difficulty: 2 MediumTopic: Environmental Influences on Marketing

347. Give an example of how each of the five environmental forces can impact an organization's marketing environment.

This question can be made a little more challenging by asking students to provide an example of each of the environmental forces. Student answers will vary, but may include: (1) social—to adapt to the new marketplace in which Hispanics, African Americans, and Asians will spend $1.3 trillion,



$1.1 trillion, and $770 billion each year, respectively; (2) economic—as consumer discretionary income increases, so does spending on pleasure and travel; (3) technological—3-D printing is creating a resurgence in domestic manufacturing; (4) competitive—partnerships, collaboration, and co-creation of value are becoming important dimensions of competition; and (5) regulatory—online privacy protection advocacy and regulation is increasing.

AACSB: Knowledge ApplicationBlooms: ApplyLearning Objective: 03-01 Explain the purpose of environmental scanning.Level of Difficulty: 3 HardTopic: Environmental Influences on Marketing

348. Describe the three generational cohorts that are of interest to marketers today.

Today's marketers are interested in the 76 million baby boomers, the generation of children born between 1946 and 1964, who are retiring at a rate of 10,000 every 24 hours, and they will all be 65 or older by 2030. The baby boom cohort is followed by Generation X, which includes the 50 million people born between 1965 and 1976. This period is also known as the baby bust because the number of children born each year was declining. This is a generation of consumers who are self-reliant, supportive of racial and ethnic diversity, and better educated than any previous generation. They also have become the largest segment of business travelers. The generational cohort labeled Generation Y, or millennials, includes the 72 million Americans born between 1977 and 1994. This was a period of increasing births, which resulted from baby boomers having children, and it is often referred to as the echo-boom or baby boomlet. Generation Y exerts influence on music, sports, computers, video games, and all forms of communication and networking.

AACSB: Analytical ThinkingBlooms: UnderstandLearning Objective: 03-02 Describe social forces such as demographics and culture.Level of Difficulty: 2 MediumTopic: Demographic Environment

349. Which generational cohort is also known as the baby bust? Describe the interests and lifestyles of this cohort and explain why it is important to marketers.

The baby boom cohort is followed by Generation X, which includes the 50 million people born between 1965 and 1976. This period is also known as the baby bust because the number born each year was declining. This is a generation of consumers who are self-reliant, supportive of racial and ethnic diversity, and better educated than any previous generation.


350. Which generational cohort is often referred to as the echo-boom or baby boomlet? Describe the interests and lifestyles of this cohort and explain why it is important to marketers.

The generational cohort labeled Generation Y includes the 72 million Americans born between 1977 and 1994. This was a period of increasing births, which resulted from baby boomers having children, and it is often referred to as the echo-boom or baby boomlet. Generation Y exerts influence on music, sports, computers, video games, and all forms of communication and networking.


351. Explain the trends in the racial and ethnic composition of the United States. How can marketers use this information?

By 2030, the Hispanic population will grow from 51 million to more than 78 million, or 22 percent of the U.S. population. The number of Asians in the United States will almost double to 23 million, or 6 percent of the population, and the African American population will be approximately 49 million, or 14 percent of the population. The multiracial category currently makes up 1.7 percent of the population and is expected to grow to 3.6 percent. Overall, the trends in the composition of the population suggest that the U.S. market will no longer be dominated by one group and that non-Hispanic Caucasians will be a declining majority over the next 15 years.

While the growing size of these groups has been identified through new census data, their economic impact on the marketplace is also very noticeable. Hispanics, African Americans, and Asian Americans spend more than $1.3 trillion, $1.1 trillion, and $770 billion each year, respectively. To adapt to this new marketplace, many companies are developing multicultural marketing programs, which are combinations of the marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyles of different races. Because businesses must now market their



products to a consumer base with many racial and ethnic identities, in-depth marketing research that allows an accurate understanding of each culture is essential.


352. How do the macroeconomic conditions as well as consumer income affect marketing?

The economy pertains to the income, expenditures, and resources that affect the cost of running a business and household. Of particular concern at the macroeconomic level is the inflationary or recessionary state of the economy, whether actual or perceived by consumers or businesses. In an inflationary economy, the cost to produce and buy products and services escalates as prices increase. From a marketing standpoint, if prices rise faster than consumer incomes, the number of items consumers can buy decreases. Recession is a time of declining economic activity. Businesses decrease production, unemployment rises, and many consumers have less money to spend. Consumer expectations of an inflationary and recessionary U.S. economy are an important element of environmental scanning. Consumer spending, which accounts for two-thirds of U.S. economic activity, is affected by expectations of the future. Microeconomic trends in terms of consumer income are also important issues for marketers. Having a product that meets the needs of consumers may be of little value if they are unable to purchase it. A consumer's ability to buy is related to income, which consists of gross, disposable, and discretionary components. Gross income is the total amount of money made in one year by a person, household, or family unit. Disposable income is the money a consumer has left after paying taxes to use for food, shelter, clothing, and transportation. Discretionary income is the money that remains after paying for taxes and necessities.


353. Define technology. How does it affect marketing?

Technology refers to inventions or innovations from applied science or engineering research. Technological forces affect marketing because each new wave of innovation can displace existing products and companies. Advancing technology has a dramatic impact on marketing. For example, connectivity will grow to include all customers, machines, vehicles, appliances, and mobile devices to create the Internet of Things. In addition, computers will develop all five senses to create intelligent data collection and personalized predictive capabilities. Green technologies such as smart grid electricity services, online energy management, and consumer-generated energy (e.g., home wind turbines) will gain widespread acceptance among American consumers. Finally, 3-D technologies will move from movie theaters and televisions to many new and useful applications.


354. How does technology affect customer value?

Technological forces affect customer value in two ways. First, customer value is increased because the cost of technology is plummeting. Second, technology provides value through the development of new products. Finally, technology can also change existing products and the ways they are produced, sometimes recycling products through the manufacturing cycle several times.


355. Explain marketspace and its relevance for marketing.

The transformative power of technology may be best illustrated by the rapid growth of the marketspace, an information- and communication-based electronic exchange environment mostly occupied by sophisticated computer and telecommunication technologies and digitized offerings. Any activity that uses some form of electronic communication in the inventory, exchange, advertisement, distribution, and payment of goods and services is often called electronic commerce. Network technologies are now used for everything from filing expense reports, to monitoring daily sales, to sharing information with employees, to communicating instantly with suppliers.

AACSB: TechnologyBlooms: UnderstandLearning Objective: 03-04 Describe how technological changes can affect marketing.



Level of Difficulty: 2 MediumTopic: Technological Environment

356. There are only three major recording labels in the world—Sony Music Entertainment, Time Warner's Warner Music Group, and GE's Universal Music Group. They are responsible for the vast majority of music recordings that are made. Harry says that these three music companies operate as an oligopoly. Maryanne says that they operate as monopolistic competition. Explain how each came to his or her conclusion. Who is correct?

Monopolistic competition occurs when many sellers compete with similar products. Oligopoly occurs when just a few companies control the majority of industry sales. Since these three recording labels produce the vast majority of music recordings and each recording is substantially different (people are fans of particular artists), Harry is correct.

AACSB: Knowledge ApplicationBlooms: ApplyLearning Objective: 03-05 Discuss the forms of competition that exist in a market.Level of Difficulty: 3 HardTopic: Competitive Environment

357. Explain the difference(s) between the Sherman Antitrust Act, the Clayton Act, and the Robinson-Patman Act, all of which were enacted to protect competition.

The Sherman Antitrust Act (1890) was the first law passed to protect competition. It forbids (1) contracts, combinations, or conspiracies in restraint of trade and (2) actual monopolies or attempts to monopolize any part of trade or commerce. Because of vague wording and government inactivity, there was only one successful case against a company in nine years. In 1914, the Sherman Act was supplemented with the Clayton Act, which forbids certain actions that are likely to lessen competition, although no actual harm has yet occurred. In 1936, the Robinson-Patman Act made it unlawful to discriminate in prices charged to different purchasers of the same product, where the effect may substantially lessen competition or help to create a monopoly.

AACSB: Analytical ThinkingBlooms: UnderstandLearning Objective: 03-06 Explain how regulatory forces ensure competition and protect producers and consumers.Level of Difficulty: 2 MediumTopic: Competitive Environment

358. What is the difference between a patent and a copyright? Digital technology has required what additional recent legislation?

A patent gives inventors of new and novel products the right to exclude others from making, using, or selling products that infringe the patented invention. A copyright gives the author of a literary, dramatic, musical, or artistic work the exclusive right to print, perform, or otherwise copy that work. Copyright is secured automatically when the work is created. Digital technology has necessitated additional copyright legislation, called the Digital Millennium Copyright Act (1998), to improve protection of copyrighted digital products.

AACSB: Analytical ThinkingBlooms: UnderstandLearning Objective: 03-06 Explain how regulatory forces ensure competition and protect producers and consumers.Level of Difficulty: 2 MediumTopic: Product-Related Legislative

359. What actions does the Federal Trade Commission have the power to implement when dealing with deceptive or misleading advertising and unfair business practices?

Promotion and advertising are aspects of marketing closely monitored by the Federal Trade Commission (FTC), which was established by the FTC Act of 1914. The FTC has been concerned with deceptive or misleading advertising and unfair business practices and has the power to (1) issue cease and desist orders and (2) order corrective advertising. In issuing a cease and desist order, the FTC orders a company to stop practices the commission considers unfair. With corrective advertising, the FTC can require a company to spend money on advertising to correct previous misleading ads. The enforcement powers of the FTC are so significant that often just an indication of concern from the commission can cause companies to revise their promotion.

AACSB: Analytical ThinkingBlooms: UnderstandLearning Objective: 03-06 Explain how regulatory forces ensure competition and protect producers and consumers.Level of Difficulty: 2 MediumTopic: Political and Legal Environment

360. Some industries have opted for self-regulation of their members to ensure that each acts fairly. Discuss potential problems associated with self-regulation, and give an example of it.

An alternative to government control is self-regulation where an industry attempts to police itself. There are two problems with self-regulation:



noncompliance by members and enforcement. An industry alliance created to institute self-regulation typically has no authority to enforce its regulations. Also, if the attempts at self-regulation are too rigorous, the members of the industry alliance may violate the Robinson-Patman Act. The best-known self-regulatory group is the Better Business Bureau (BBB). Although the BBB has no legal power, it does try to use "moral suasion" to get members to comply with its standards.


361. Describe the difference between ethics and laws.

Ethics are the moral principles and values that govern the actions and decisions of an individual or group. They serve as guidelines on how to act rightly and justly when faced with moral dilemmas. While ethics deal with personal moral principles and values, laws are society's values and standards that are enforceable in the courts.

AACSB: EthicsBlooms: UnderstandLearning Objective: 03-06 Explain how regulatory forces ensure competition and protect producers and consumers.Level of Difficulty: 2 MediumTopic: Role of Ethics in Marketing

362. Describe each of the three factors included in the framework for understanding ethical behavior that influence one's personal moral philosophy and ethical behavior.

The three major factors affecting business ethics are societal culture and norms, business culture and industry practices, and corporate culture and expectations. Culture is the set of values, ideas, and attitudes that are learned and shared among members of a group. Culture also serves as a socializing force that dictates what is morally right and just. This means that moral standards are relative to particular societies. Business cultures are made up of the effective rules of the game, the boundaries between competitive and unethical behavior, and the codes of conduct in business dealings. Corporate culture is a set of values, ideas, and attitudes that is learned and shared among the members of an organization.


363. Explain the difference between societal culture and business culture.

Societal culture provides a foundation for understanding moral behavior in business activities. Business cultures "comprise the effective rules of the game, the boundaries between competitive and unethical behavior, [and] the codes of conduct in business dealings." Business culture affects ethical conduct both in the exchange relationship between sellers and buyers and in the competitive behavior among sellers.


364. How did President John F. Kennedy change the concept of American business culture away from caveat emptor in the 1960s?

Before the 1960s, the legal concept of caveat emptor (let the buyer beware) was pervasive in American business culture. In 1962, President Kennedy codified a Consumer Bill of Rights that was intended to regulate the ethics of exchange between buyers and sellers. Ethical exchanges between buyers and sellers should result in both parties being better off after a transaction. The Consumer Bill of Rights includes the rights to safety, to be informed, to choose, and to be heard.


365. Business culture affects ethical behavior in competition. Briefly discuss the two most common kinds of unethical competitive behavior. In answering, provide concrete examples for both.

The two kinds of unethical behavior that are most common are (1) economic espionage and (2) bribery. Economic espionage is the clandestine



collection of trade secrets or proprietary information about a company's competitors. This practice is illegal and unethical and carries serious criminal penalties for the offending individual or business. Espionage activities include illegal trespassing, theft, fraud, misrepresentation, wiretapping, the search of a competitor's trash, and violations of written and implicit employment agreements with noncompete clauses. The second form of unethical competitive behavior is giving and receiving bribes and kickbacks. Bribes and kickbacks are often disguised as gifts, consultant fees, and favors. This practice is more common in business-to-business and government marketing than in consumer marketing. In general, bribery is most evident in industries experiencing intense competition and in countries in the earlier stages of economic development.


366. Identify and describe the two types of personal moral philosophy.

Ultimately, ethical choices are based on the personal moral philosophy of the decision maker. Moral philosophy is learned through the process of socialization with friends and family and by formal education. It is also influenced by the societal, business, and corporate culture in which a person finds him or herself. Two prominent personal moral philosophies have direct bearing on marketing practice: (1) moral idealism and (2) utilitarianism. Moral idealism and utilitarianism are two types of moral philosophy. Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome. It exists in the Consumer Bill of Rights and is favored by moral philosophers and consumer interest groups. Utilitarianism is a personal moral philosophy that focuses on "the greatest good for the greatest number" by assessing the costs and benefits of the consequences of ethical behavior. If benefits exceed the costs, then the behavior is considered ethical, if not, then the behavior is considered unethical. This philosophy underlies the economic tenets of capitalism and is embraced by many business executives and students.


367. Define the moral philosophy of utilitarianism and explain its relationship to capitalism.

Utilitarianism is a personal moral philosophy that focuses on "the greatest good for the greatest number" by assessing the costs and benefits of the consequences of ethical behavior. If the benefits exceed the costs, then the behavior is ethical. If not, then the behavior is unethical. This philosophy underlies the economic tenets of capitalism and is embraced by many business executives and students.


368. Body Bazaar: The Market for Human Tissue in the Biotechnology Age is a book by Lori Andrews and Dorothy Nelkin. According to the book, "Body parts are bought and sold for medical research, diagnostics, and therapies. They are marketed to museums and personal collectors. And pieces of people are increasingly being used as raw materials for products—from placenta-enriched shampoos to experimental DNA-run computers. Blood has become one of the most valuable commodities on Earth. While petroleum sells for $100 a barrel, an equivalent quantity of blood products is worth $67,000." Use this quote to explain why ethics is such a difficult concept to understand.

This example makes it obvious why ethics is such a difficult topic. Students should realize that they must weigh their personal philosophy of moral idealism—the way the remains of a loved one should be treated respectfully—with a more utilitarian philosophy, which focuses on how much can be learned from research on body parts. The cost of the blood is a supply and demand issue—just like the price of rocks compared to the price of diamonds. It is not really an ethical issue. It is included to demonstrate that subjects can be made to appear to be an ethical issue when they are not.

AACSB: EthicsBlooms: ApplyLearning Objective: 03-07 Identify factors that influence ethical and unethical marketing decisions.Level of Difficulty: 3 HardTopic: Ethical Issues in Marketing

369. Describe the three major concepts of social responsibility.

The three concepts of social responsibility include profit responsibility, stakeholder responsibility, and societal responsibility. Profit responsibility holds that companies have a simple duty to maximize profits for their owners or stockholders. Stakeholder responsibility focuses on the obligations organizations have to those who can affect achievement of their objectives, including customers, employees, suppliers, and distributors. Societal responsibility refers to obligations that organizations have to the preservation of the ecological environment and to the general public.

AACSB: Ethics



Blooms: UnderstandLearning Objective: 03-08 Describe the different concepts of social responsibility.Level of Difficulty: 2 MediumTopic: Corporate Social Responsibility

370. An increasing percentage of turkeys are now being marketed as "free range." Consumers typically pay $1 more per pound for free-range turkeys, which are thought to have lived more "humane" or "avian" lives—and as a result, to taste better than conventionally raised turkeys. The USDA defines a free-range bird as one that has been allowed "access to the out-of-doors." Are turkey growers who allow their birds to access the out-of-doors only moments before they are killed acting in a socially responsible manner?

To answer this question, students will need to consider the three concepts of social responsibility. If the turkey grower feels that its responsibility is to maximize profits for its owners and stockholders, then it is taking profit responsibility—this is one of the concepts of social responsibility. It is not acting socially responsible if it believes in stakeholder responsibility. Customers who actually desire a more humanely treated animal are being deceived. There is nothing to indicate that the grower is taking any societal responsibility.

AACSB: EthicsBlooms: ApplyLearning Objective: 03-08 Describe the different concepts of social responsibility.Level of Difficulty: 3 HardTopic: Corporate Social Responsibility

371. A recent survey found that 79 percent of Internet and e-commerce companies take absolutely no social responsibility. Even more worrying is the finding that 75 percent of these Internet companies justify this omission on the grounds that they don't have any environmental or social impacts, while 55 percent said they didn't have time to think about these issues, and 50 percent said they didn't have the expertise to address them. Would these Internet-based companies benefit from acting more socially responsible? Explain your answer.

Social responsibility encompasses profit responsibility, stakeholder responsibility, and societal responsibility. Societal responsibility refers to obligations that organizations have (1) to the preservation of the ecological environment and (2) to the general public. A formal practice of giving service to the general public is referred to as cause marketing, which occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of its products. They can also enhance corporate sales and profits. Today, emphasis is placed on what is termed the triple-bottom line—recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth. Growing interest in green marketing, cause marketing, and sustainable development reflect this recognition. Green marketing consists of efforts to produce, promote, and reclaim environmentally sensitive products. Cause marketing programs incorporate all three concepts of social responsibility by addressing public concerns and satisfying customer needs. Frequently, marketing and social responsibility programs are often integrated. Sustainable development involves conducting business in a way that protects the natural environment while making economic progress. Ecologically responsible initiatives such as green marketing represent one such initiative.


372. Define green marketing and provide an example.

Green marketing refers to a company's marketing efforts to produce, promote, and reclaim environmentally sensitive products. Examples from the textbook include 3M's "Pollution Prevention Pays" program and Walmart's buying practices that encourage its suppliers to use containers and packaging made from corn, not oil-based, resins. Students, of course, may think of other equally appropriate examples.


373. What is the difference between standard charitable contributions and cause marketing?

A firm's standard charitable contributions are outright donations. Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of a specific product. Cause marketing programs incorporate all three concepts of social responsibility by addressing public concerns, satisfying customer needs, and enhancing corporate sales and profits.

AACSB: EthicsBlooms: UnderstandLearning Objective: 03-08 Describe the different concepts of social responsibility.Level of Difficulty: 2 MediumTopic: Corporate Social Responsibility



374. MasterCard International links usage of its card with fund-raising for institutions that combat cancer, heart disease, child abuse, and muscular dystrophy. MasterCard gives a modest percentage of charges from its credit card charges to the institutions. What is this called and how does it affect cardholders' behavior?

This practice is called cause marketing, which occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of its products. It may have the effect of encouraging the cardholders to charge more on their MasterCards (rather than Visa or American Express)—especially if they respect the charity receiving the contribution.


Category # of QuestionsAACSB: Analytical Thinking 161AACSB: Ethics 146AACSB: Knowledge Application 46AACSB: Technology 21Accessibility: Keyboard Navigation 331Blooms: Apply 97Blooms: Remember 138Blooms: Understand 139Learning Objective: 03-01 Explain the purpose of environmental scanning. 21Learning Objective: 03-02 Describe social forces such as demographics and culture. 67Learning Objective: 03-03 Discuss how economic forces affect marketing. 40Learning Objective: 03-04 Describe how technological changes can affect marketing. 22Learning Objective: 03-05 Discuss the forms of competition that exist in a market. 26Learning Objective: 03-06 Explain how regulatory forces ensure competition and protect producers and consumers. 56Learning Objective: 03-07 Identify factors that influence ethical and unethical marketing decisions. 82Learning Objective: 03-08 Describe the different concepts of social responsibility. 60Level of Difficulty: 1 Easy 136Level of Difficulty: 2 Medium 141Level of Difficulty: 3 Hard 97Topic: Competitive Environment 27Topic: Corporate Social Responsibility 62Topic: Demographic Environment 33Topic: Economic Environment 40Topic: Environmental Influences on Marketing 34Topic: Ethical Issues in Marketing 80Topic: Political and Legal Environment 49Topic: Product-Related Legislative 1Topic: Role of Ethics in Marketing 6Topic: Sociocultural Influences 19Topic: Technological Environment 22Topic: Trademarks 1



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