Ch.8 Entrepreneurial Marketing And Sales Verified Test Bank

Chapter 8: Entrepreneurial Marketing and Sales

= Correct answer

Multiple Choice/Fill in the Blank

1. According to marketing research company CB Insights, in a survey of 101 companies that failed, ________ percent of them failed due to poor marketing.

A. 10

B. 14

C. 15

D. 20

Difficulty: Easy

1. On a basic level, ________ is a set of unconventional practices that can help start-ups and younger firms emerge and have an edge in competitive markets.

A. entrepreneurial marketing 

B. marketing

C. marketing research

D. traditional marketing

Difficulty: Easy

1. Small- and moderate-sized businesses are those with ________ or fewer employees and less than $________ of yearly receipts, as defined by the Small Business Administration.

A. 50; 100,000

B. 100; 500,000

C. 500; 7.5 million

D. 1,000; 10 million

Difficulty: Moderate

1. Developing new products, price points, channels, communication, process, training, and design are all elements of ________.

A. entrepreneurial marketing 

B. marketing

C. marketing research

D. traditional marketing

Difficulty: Moderate

1. How does process add its value to the 7 Ps of the marketing mix?

A. building trust through efficient procedures

B. communicating benefits to customers

C. conveying value through atmospherics

D. linking the company to its customers

Difficulty: Moderate

1. How does the “right” marketing mix help entrepreneurs succeed?

A. Each P of the marketing mix can help bring in new business on its own due to price bundling.

B. Each P of the marketing mix separately helps create more customers for the venture.

C. Each P of the marketing mix works with the new venture’s suppliers to achieve value-added pricing.

D. Each P of the marketing mix works with the other P’s to create value for a business and its customers.

Difficulty: Moderate

1. Why is social media a must-use tool for entrepreneurs?

A. It helps entrepreneurs find wealthy, private individuals called angel investors and other sources of investment capital who seek higher returns.

B. It helps connect them with lost-cost suppliers, since many suppliers in China and India can be found online in one social media platform or another.

C. It helps connect them with consumers, especially younger demographics since many customers can be found online in one social media platform or another.

D. It is available without any cost for entrepreneurs to advertise and promote their new business ideas for either a product or a service.

Difficulty: Difficult

1. Collecting new data for the purpose of answering a specific question or set of questions is known as ________ research.

A. entrepreneurial

B. market

C. primary

D. secondary

Difficulty: Easy

1. What kind of research uses existing data that has been collected by another entity, such as governmental agencies, to answer a wide range of questions about issues that are common to many organizations and people?

A. entrepreneurial

B. market

C. primary

D. secondary

Difficulty: Easy

1. If there is a specific question such as how many people would be interested in a new product with certain attributes that ________ research cannot answer, then ________ research will have to be used.

A. market; secondary

B. market; primary

C. primary; secondary

D. secondary; primary

Difficulty: Moderate

1. How did Dodgeball founder Dennis Crowley create and grow Foursquare when he was laid off from Google without using traditional marketing techniques?

A. He created and organized flash mobs all over the city of Austin, TX.

B. He created and organized the first ever flash mobs in the United States.

C. He used guerrilla marketing by setting up a real game of foursquare.

D. He used guerrilla marketing by staging a large protest in front of a convention.

Difficulty: Moderate

1. The benefit of ________ marketing is that it can lead to massive exposure for little or no effort or investment once the content is developed. The challenge, though, is that it is difficult to predict what content will be successful.

A. digital

B. guerilla

C. real-time

D. viral

Difficulty: Easy

1. ________ marketing does not involve active participation from the marketer and almost exclusively involves only customers, whereas ________ marketing attempts to build awareness and buzz mostly via videos or email.

A. Guerilla; real-time

B. Viral; word of mouth

C. Word of mouth; guerilla

D. Word of mouth; viral

Difficulty: Moderate

1. Another name for the image a company conveys to its customers is called ________ strategy, which can include advertising, public relations, customer service, and sales promotions.

A. brand

B. customer-focused

C. entrepreneurial

D. marketing

Difficulty: Easy

1. How does a marketing plan help an entrepreneur and their company achieve their business goals?

A. It is used as a blueprint for goal achievement by focusing on market research, attracting customers, and marketing strategies.

B. It describes how a company will select the right media to use in order to reach consumers and convert them into paying customers.

C. It conveys the company’s story and helps reinforce the connection to the customers by conveying branding information about a company.

D. It helps them determine the targeted customer segment, value proposition, and channels for the distribution of the proposition.

Difficulty: Difficult

1. Which section of the marketing plan presents the framework for generation of sales and the business’s competitive advantage?

A. action program

B. business model

C. executive summary

D. marketing opportunity

Difficulty: Easy

1. According to HubSpot’s top statistics on customer service, ________ percent of the customer experience or journey depends on how they are being treated.

A. 25

B. 35

C. 50

D. 70

Difficulty: Easy

1. When a customer has a negative experience or feels unappreciated, they are more likely to switch brands, and a company has to work hard to counteract a negative experience. How many positive reviews does it take to counteract one negative, unresolved customer issue?

A. 8

B. 10

C. 12

D. 15

Difficulty: Easy

1. Which step in the six-step sales strategy includes securing an appointment for a presentation, understanding the prospect better, and scheduling a second call/contact?

A. closing the sale

B. making the sales call

C. presenting the proposal

D. prospecting

Difficulty: Moderate

1. Which step in the six-step sales strategy includes checking in consistently to assess customer satisfaction and asking for referrals?

A. Step 1: Prospecting

B. Step 3: Presenting the proposal

C. Step 5: Closing the sale

D. Step 6: Fulfilling orders and fostering relationships

Difficulty: Moderate

1. What is the main goal of the executive summary section of a marketing plan?

A. summarize everything in the plan in no more than two pages

B. summarize plus highlight why people should invest in this venture

C. present a strong SWOT analysis as well as 5-year financial projections

D. articulate the competitive advantage and points of differentiation

Difficulty: Moderate

1. The financials section of a marketing plan is important because it will help an entrepreneur determine how profitable a business might be. When it comes to estimating expenses and future profits, ________.

A. most entrepreneurs tend to overestimate these numbers

B. most entrepreneurs tend to underestimate these numbers

C. most entrepreneurs tend to accurately project these numbers

D. most entrepreneurs need an accountant to help them project these numbers

Difficulty: Easy

1. Which model includes components that will help an entrepreneur determine the targeted customer segment, value proposition, channels for the distribution of the proposition, and type of customer relationships, among other key areas of importance to the future success of the entrepreneur?

A. the Business Model Canvas

B. the marketing mix (7 Ps)

C. the marketing plan

D. the six-step sales strategy

Difficulty: Difficult

1. Which model includes components that will help an entrepreneur determine the basic set of strategies and approaches that marketers use to identify and reach their target market?

A. the Business Model Canvas

B. the marketing mix (7 Ps)

C. the marketing plan

D. the six-step sales strategy

Difficulty: Difficult

1. In what section of a marketing plan would an entrepreneur use research as evidence to prove to the reader that there is a market gap and the entrepreneur knows how to fill it?

A. action program

B. executive summary

C. marketing opportunity

D. situation analysis

Difficulty: Difficult

True/False

1. True or false? No matter the size of the enterprise, marketing lays the foundation for how a company reaches and serves its target customers.

Difficulty: Easy

1. True or false? A target market is the specific group of consumers for which a company seeks to provide a good or service.

Difficulty: Easy

1. True or false? A good example of a tangible product is paying an expert to do something for you, such as car repair or house cleaning.

Difficulty: Moderate

1. True or false? One key advantage of social media for entrepreneurs is that it is usually easy to track conversion (customers taking a desired action, such as a purchase) and sales numbers.

Difficulty: Moderate

1. True or false? Customer-led pricing is the easiest way to price a product. This involves taking the cost of making the product and creating a profit margin, which is how much profit your business stands to make after costs have been deducted. 

Difficulty: Difficult

1. True or false? Cost-led pricing may lead to “price wars” in which competitors keep dropping prices in an attempt to beat each other.

Difficulty: Moderate

1. True or false? The main purpose of market research is to gain an understanding of customer needs and wants in an effort to reveal potential business opportunities.

Difficulty: Easy

1. True or false? A good exercise for entrepreneurs is to detail the everyday life of your ideal customer by describing a group of possible customers who would buy your product.

Difficulty: Easy

1. True or false? If an entrepreneur is just starting out, they may want to maximize using primary research because it is always free.

Difficulty: Moderate

1. True or false? One way to nurture and maintain relationships with new customers is through expeditionary marketing, which seeks to create customer loyalty through personal interactions and long-term engagement strategies.

Difficulty: Moderate

1. True or false? Television ad spending has outpaced digital ad spending in recent years.

Difficulty: Easy

1. True or false? A marketing strategy is a formal business document that is used as a blueprint or guide for how a company will achieve its marketing goals.

Difficulty: Easy

1. True or false? The majority of customers who fall in love with a brand say they feel that a great price is still more important than great customer service.

Difficulty: Moderate

1. True or false? When selling to customers who are going to be spending a substantial amount on a product or service, like a piece of equipment, a luxury yacht, or an expensive software program, there must be a sales system in place to take consumers from prospects to customers.

Difficulty: Easy

1. True or false? No matter what type of product or service, a salesperson should have a goal of closing one client out of ten prospects he or she sees per week (or through a sales cycle).

Difficulty: Moderate

1. True or false? Prospecting tends to be more important in certain industries such as financial advising or business-to-business industries.

Difficulty: Easy

1. True or false? In general, the goal for a salesperson is to grow the pool of prospects through each successive step of the sales process.

Difficulty: Difficult

1. True or false? If a salesperson is not proficient at dealing with objections in a truthful manner, the relationship that is established cannot be based on trust.

Difficulty: Easy

1. True or false? Developing the right key performance indicators will help entrepreneurs evaluate the effectiveness of their strategies.

Difficulty: Easy

1. True or false? The various parts of a marketing plan do not need to be written in a certain order.

Difficulty: Moderate

Short Answer

1. Listen to the podcast with Warby Parker founders that is in the Link to Learning box (see https://openstax.org/books/entrepreneurship/pages/8-1-entrepreneurial-marketing-and-the-marketing-mix) and summarize at least three or four key points relating to entrepreneurship that you learned.

Difficulty: Moderate

1. Explain briefly at least three of the pricing methods mentioned in Entrepreneurial Marketing and the Marketing Mix (https://openstax.org/books/entrepreneurship/pages/8-1-entrepreneurial-marketing-and-the-marketing-mix) and provide an example of each method.

Sample Answers:

Cost-led pricing is the easiest way to price a product. This method takes the cost of making the product and adds a profit margin, which is the percentage of profit the business will make after deducting the cost of what is being sold. An example of this provided in the text would be adding 30% to a product with a $5 cost to yield a $6.50 sales price.

Premium pricing (also called perceived value pricing) requires the entrepreneur to provide customers with the reason(s) to spend more on their product. Designer items from brands like Louis Vuitton and Gucci use this type of pricing.

Penetration pricing means pricing below competitors, which may include introductory offers that use an initial lower price to attract new customers and build a customer base before prices return to “normal.” For example, when Lyft entered the rideshare market, they offered lower prices than Uber. These prices were temporary and are no longer effective.

Similar to penetration pricing, loss leader pricing uses a below-standard price to attract business, hoping that customers will buy other more profitable products. It is called a loss leader because companies lose money on the lower-priced product but make money on the other items the customer buys on that same shopping trip. Supermarkets and department stores probably use this tactic.

Price bundling means offering a discounted price for a set of products to encourage customers to buy them together because the overall price for a bundle reduces the individual price of each product if purchased separately. Computer hardware with software included in the same purchase is a common example, as well as when cable, Internet, and phone services are bundled together.

Customer-led pricing is when the entrepreneur researches what the consumer is willing to pay and charges that price. The text suggested that many technology products are priced this way.

Skimming is a pricing strategy that leverages the newness of a product to justify the highest price possible in order to “skim” the most profits off the top, meaning in the first phase of sales. Apple is a good example of this pricing strategy.

The odd numbers strategy is a psychological pricing strategy often used in conjunction with other pricing methods to make a product’s price point more attractive to consumers. This is really common in almost all retail situations. For example, an item is sold at $199.99 instead of $200.

Difficulty: Difficult

1. While pricing must be established when starting a new business, the text mentions that pricing strategies should be reviewed on an ongoing basis. List at least three of the six situations when a pricing strategy should be reviewed.

Sample Answers:

1. When adding a new product or service to your offerings
2. When demand shifts (due to market, consumer, or other factors)
3. When entering a new market
4. When competitors are making changes
5. When your costs are changing
6. When adjusting products/services or strategies

Difficulty: Easy

1. Compare and contrast indirect and direct channels of distribution.

About the only aspect where both channel strategies are similar would be that both have an original producer of the product and both have an end user or customer.

Difficulty: Easy

1. How is the type of research recommended in Entrepreneurial Opportunity (https://openstax.org/books/entrepreneurship/pages/5-1-entrepreneurial-opportunity) and Researching Potential Business Opportunities (https://openstax.org/books/entrepreneurship/pages/5-2-researching-potential-business-opportunities) similar or different than the research discussed in Market Research, Market Opportunity Recognition, and Target Market (https://openstax.org/books/entrepreneurship/pages/8-2-market-research-market-opportunity-recognition-and-target-market)? Would the application of each type essentially be the same or differ?

Difficulty: Moderate

1. Consider the market for hair care products, such as shampoo and conditioner, with a target market of hair salons and beauty supply stores. Describe the process an entrepreneur might go through to determine the market potential using both TAM and SAM.

Difficulty: Difficult

1. Why have digital ads and social media ads outpaced television ad spending in recent years? Provide examples of how this happens.

Search ads, which are those text ads seen while looking for something on a search engine, provide businesses the ability to create targeted ads to reach customers who are looking for something in particular. These ads cost less than television ads, plus they enable the entrepreneur to specifically target prospective customers who already have some kind of interest in their product, as evidenced by the fact that these potential customers are searching on the Internet for similar or the same solutions.

Difficulty: Difficult

1. Describe at least two specific strategic branding tools and provide examples for each.

Other components in a brand include the website, social media, customer service, and packaging. Distinctive packaging, such as the shape of the Coca-Cola bottle which has been used for years, or the shape of a bottle of POM Wonderful pomegranate juice, a somewhat newer product, can also enhance the branding strategy of a product.

Difficulty: Moderate

1. Refer to the Work It Out box featuring Forever 21 (https://openstax.org/books/entrepreneurship/pages/8-4-entrepreneurial-branding). Of course, the lawsuits over intellectual property might result from honest mistakes made by the design, production, and marketing departments, but could an organization like Forever 21 deliberately copy well-known designs of another company because management estimates that the sales which they might make would be greater than the cost of the lawsuits? What would be the legal and ethical implications of this kind of copycat marketing strategy, if that indeed was what Forever 21 was intentionally doing?

From a financial point of view, it’s possible that Forever 21 might earn revenue far in excess of the cost of these lawsuits from the designs which allegedly were similar to some major brands, so as a dollars and cents calculation, this kind of marketing strategy might be worth it to Forever 21’s management. However, from an ethical perspective, it’s certainly wrong to steal intellectual property. Thus ultimately, this kind of marketing strategy, whether deliberate or accidental, might end up hurting all of the internal stakeholders at Forever 21 as well as the company.

Difficulty: Difficult

1. How can entrepreneurs and the managers they hire demonstrate or model that they are “walking the talk” when it comes to customer service?

Difficulty: Easy

1. What are some effective ways for entrepreneurs to ensure great customer service?

Entrepreneurs should also use training programs to encourage and energize their employees to maintain positive attitudes when working with customers. Training programs are most effective when used often instead of only during an employee’s initial hire stage.

Sales training programs are a good way for employees to learn more about customer service. It’s a good idea for entrepreneurs to consider candidates’ previous customer service experience and good referrals during the hiring process.

Entrepreneurs can also use incentives to encourage great customer service. Many employees respond positively to awards or financial incentives.

Finally, the entrepreneur and other management need to lead by example. When employees see that the leaders of a company work to serve them and prioritize customer service, they will follow suit with the same energy and enthusiasm. As the text says, “Happy employees turn into profitable customers.” 

Difficulty: Difficult

1. Why are marketing plans important tools, and how do they help entrepreneurs succeed?

When entrepreneurs write a marketing plan, they are forced to make their goals and strategies concrete and detailed. Marketing plans also cause entrepreneurs to research markets and competition. They have to think deeply about their business and profit potential in order to create a strong marketing plan. This encourages entrepreneurs to make better business and marketing decisions.

Difficulty: Moderate

1. Why do different audiences require different kinds of information inside a marketing plan?

Difficulty: Easy

1. List each of the six steps common in conducting primary market research and describe one key decision an entrepreneur might need to make at each step of the six-step primary research process.

Sample Answers:

Define the Research Goal – Decisions might include: What do you need to know? Do you need to focus more on your target market, their preferences, lifestyle choices, and culture? Do you need to know more about your competitors and why your target market buys from them? How will you evaluate your research goals?

Determine Research Design – Decisions might include: Which research technique(s) will work most effectively? Do you need to focus on qualitative or quantitative research? Since well-designed research projects often use some combination of both, what kind of combination will you use?

Choose a Sample – Decisions might include: What will be your sampling method? How will you get a sample that reflects your target market? This decision is very important since errors of reliability and validity can arise if a sample is not thoughtfully selected.

1. Collect Data – Decisions might include: How will you collect the data? Will you use observation and taking notes, interviews, or surveys performed by hand or via the Internet? Will you use a tool such as SurveyMonkey or Qualtrics? How will you watch for and prevent data collection errors?
2. Analyze Data – Decisions might include: How will you analyze the data? What do you need from the data? Will you hire data analysis experts to help you find patterns and trends among the answers?
3. Results and Next Steps – Decisions might include: How will you reconcile the results of the research with your goals? Will you be open to what the data say, even if it’s not what you wished? How will you move forward if, for example, the research suggests market potential? How will you move forward if it doesn’t? How will you use the data?

Difficulty: Difficult

1. Describe some of the tools and information that are provided on the US Small Business Administration website that is referred to in the Link to Learning box (https://openstax.org/books/entrepreneurship/pages/8-5-marketing-strategy-and-the-marketing-plan ).

There are also sample marketing plans links via the marketing and sales home page, plus an offer of free business counseling. In addition to the tools and information here in the marketing and sales area, there are links to just about every other subject that an entrepreneur might find important.

Difficulty: Easy

This file is copyright 2020, Rice University. All Rights Reserved.