Fall 2021 Marketing Past Paper PDF - Version A

Name – please include both your preferred and your “official” first names: Name:___________________________________________________________ Your class time __________ Final Exam – Dec. 16, 2021 – Version A MKTG-UB.0001: INTRODUCTION TO MARKETIN...

Name – please include both your preferred and your “official” first names: Name:___________________________________________________________ Your class time __________ Final Exam – Dec. 16, 2021 – Version A MKTG-UB.0001: INTRODUCTION TO MARKETING Prof. Eric Greenleaf Fall 2021 PLEASE DO NOT TURN THE PAGE UNTIL YOU ARE INSTRUCTED TO DO SO READ THESE INSTRUCTIONS CAREFULLY 1) Please write your answers on the exam. The suggest answer lengths are intended only as approximate guidelines – be sure you write want you want to communicate, but be careful not to take too much time in answering a question, which may leave too little time for another answer. Remember, you are writing by hand, and not typing at a keyboard. 2) If there are any non-marketing words you don't understand, don't hesitate to ask for a definition. If you feel a question is not clear, ask for clarification. If you need to ask me a question, please come up to the front and ask quietly to avoid disturbing other students. 3) Exams will be collected promptly after 1 hour and 50 minutes. You must stop writing at that point. 4) PLEASE FILL OUT THE FOLLOWING INFORMATION: The person sitting to my left at this exam is __________________________________________ The person sitting to my right at this exam is _________________________________________ 5) PLEASE READ AND SIGN THE FOLLOWING PLEDGE: I have neither given nor received aid during this exam, nor given nor received prior information concerning its contents, nor will I discuss its contents with those who have not yet taken this exam. I understand my exam will not be graded unless I sign this pledge. _____________________________________________________ (Your signature) GOOD LUCK!! The examples in this exam are provided for educational purpose only and are not intended or claimed to represent actual business decisions or situations. ©2021 Prof. Eric Greenleaf 1 Please circle the letter for the answer that you feel is best: (1.5 pts. each.) 1) In marketing, “weak ties” exist when a. a firm’s communication strategy is only weakly coordinated with the rest of its marketing mix. b. a firm that uses several brand names for its products does not mention in its advertisements that these different brand names are made, or sold, by the same company. c. the consumer advantage that a firm wants to establish using marketing communications is weakly tied to its existing operating advantages. d. a person tends to tells other people, who they know but who are not close friends of theirs, about a product, either in person or electronically. e. the ads that a firm uses on different media are only weakly tied together by a common theme, rather than having a strong common theme. 2) Nonresponse error in marketing surveys a. decreases as the number of consumers who are sent a survey increases. b. is higher for surveys involving more expensive products. c. occurs when consumers who answer a survey have different behavior, beliefs, or perceptions compared to those who do not answer the survey. d. rarely affects the accuracy of conclusions that researchers reach based on survey data. e. is less likely if the survey is sent online rather than using mail or telephone. 3) Firms who place online ads using programmatic buying a. save money because online ads cost less to produce than TV ads. b. bid against other firms to show a particular consumer an ad in a particular space on a web page, based on analysis of data regarding the consumer’s individual characteristics. c. buy ads to reach all consumers with a desired set of characteristics who are viewing a particular web page during a particular set time, such as during a day or a week. d. are more likely to offer their product at reduced prices in the ad. e. are more likely to have a broader target segment. 4) One major limitation of cost-plus pricing is a. it may be difficult to compute costs across different products produced in the same factory. b. cost-plus prices do not compensate for inflation. c. cost-plus prices are difficult to change once they are set. d. consumers tend to have a difficult time understanding cost plus prices. e. it is easier for competitors to copy cost-plus prices than to copy other prices. 5) A consumer’s involvement level in a purchase decision tends to increase a. as the purchase’s price increases. b. as the number of ads a consumer has seen for the product increases. c. if the product is in the mature stage of the product life cycle. d. if a product has recently been repositioned. e. as the personal consequences for the consumer of the product performing properly increase. 2 6) Large firms that want to introduce a steady supply of new products to the market a. are taking unreasonable risks, since new products are so likely to fail. b. should implement and use a rigorous new product development process. c. need to make sure that their new products will cannibalize sales of their existing products. d. need to charge higher prices for their existing, mature products, compared to competitors who are not actively introducing new products. e. risk losing their brand name meaning. 7) Which of the following is not one of the major dimensions of brand personality? a. Sophistication b. Competence c. Ruggedness d. Trendiness e. Sincerity 8) If it costs $5 million for Nike to place a 30 second TV ad on the Super Bowl football game, and the game is watched by 100 million viewers, then the CPM for this ad a. depends on the number of ads placed on the Super Bowl by Nike’s competitors. b. is 5 cents. c. may not give a good indication of the cost to Nike to reach TV viewers in Nike’s target segment. d. depends on how many people watch the Super Bowl online instead of on a conventional TV. e. depends on the attention that viewers give to the beer commercials that also usually appear on the Super Bowl. 3 9) Rose is a salesperson at Equinox gyms, who have gyms throughout the United States. She sells two types of Equinox gym memberships - memberships for individuals, and memberships for businesses who want to their employees to be able to use Equinox gyms to stay healthy. She interacts - in person, over the phone, or electronically - with potential customers interested in purchasing memberships. We have discussed six important personal selling skills that Rose should use in her interactions with potential customers. For each of these six personal selling skills (i) describe that skill and (ii) give an example of how Rose could apply that skill in an in-person sales interaction with a potential customer. (one or two sentences to describe skill and one or two sentences for how Rose can apply skill). (12 pts.) 4 10) Equinox must decide how to compensate Rose and its other gym salespeople. a) Suppose Equinox is trying to decide between compensating salespeople using only salary, or using only commission. Discuss two advantages of using only salary, and two advantages of using only commission. (one to two sentences per advantage or disadvantage) (4 pts.) Be sure to answer part (b) on the next page. 5 b) Suppose Equinox decides to pay its salespeople a commission that is 8% of sales revenue. For example, if a salesperson sells an Equinox membership for $1000, they will receive an $80 commission. i) Explain in words why this commission structure may not be optimal for Equinox, based on the information about Equinox provided in this question and in the previous Equinox question. (Two or three sentences) (3 pts.) ii) Provide a simple numerical example of an alternative commission structure that Equinox can use for its salespeople, which we discussed in class, which will be better for Equinox, and explain why this alternative commission structure is better for Equinox. (5 pts.) 6 11) Crunch is another chain of gyms, and competes with Equinox. To attract new customers, suppose Crunch Gyms is offering a free trial where interested consumers can use Crunch gyms for free for a week and also receive 2 free hours of individual, personal training from one of Crunch’s certified gym trainers to help them in the gym skills of their choice (cardio, weights, etc.). Crunch predicts that 30% of the customers who use the free trial will join the gym, and remain customers at Crunch for an average of 3 years. Each year, Crunch offers its existing customers, including those who joined in that year, 4 hours of free personal training. Gym membership costs $1000 per year and Crunch makes a 45% gross margin on selling price on gym memberships. Crunch usually charges $40 per hour for personal training, and its gross margin on selling price for personal training is 35%. This pricing and margin structure applies both to the personal training that potential customer get as part of the free trial, and for personal training that Crunch offers to existing customers. Beyond the personal training, there are no additional expenses for Crunch from having potential customers who are trying Crunch for a week be in Crunch gyms – they do take up space in the gym, but you can ignore that. Crunch uses an 8% annual discount rate to value future cash flows. Calculate the net present value to Crunch of a customer attracted using the free trial. Show all work and explain your calculations. (14 pts.) Please note that there is no separate “first purchase” in this problem. The “first purchase” is the first year of Crunch membership. 7 Use this additional space for your answer if you need it. 8 12) Suppose that Michelin, which is one of the world’s largest tire companies, is worried about losing sales to smaller tire companies with much smaller market shares, whose tires cost much less than Michelin’s. Suppose two of these smaller competitors are Roadrunner Tires and Acme Tires. Michelin has decided to use TV commercials that show a person at a tire store buying Roadrunner tires for their car and delighting in how much money they are saving. However, later that week they are driving alone in a heavy rainstorm and try to stop quickly to avoid a truck stuck in the road, but the Roadrunner tires will not stop the car in the heavy rain. The ad then shows the driver’s car hitting the truck, shows the driver being very badly injured, and then dying. The ad shows another car, with Goodyear tires, that did stop in time, so that car’s driver is safe. The ad then says “You may think you are saving money if you buy Roadrunner tires, but think again. Buy Michelin, because you never know when the weather is going to change.” Michelin also intends to run versions of this ad using Acme tires instead of Roadrunner. This proposed TV ad uses two kinds of message strategies that are appropriate for a Michelin ad, but uses each message strategy incorrectly. For each of these message strategies, (i) describe the message strategy that is being used, and how it is being used in the TV ad, (ii) explain why you feel that message strategy is being used incorrectly in the ad, and (iii) recommend how you would change the ad to use that same message strategy correctly. (for each message strategy, about two sentences for (i) and one or two sentences for (ii) and (iii) ) (12 pts.) Write about one of the message strategies here 9 Write about the other message strategy here 10 13) In late 2022 General Motors will introduce a “Super Cruise” self-driving feature on its GMC Sierra pickup truck, which allows a driver to take their hands off the wheel when the car is moving. Super Cruise can be used when driving on a highway, even when towing a boat or trailer behind the truck, and when parking with the boat or trailer connected to the truck. Super Cruise is an option that will cost an extra $2500 when buying a Sierra. Although Super Cruise will not be introduced until late 2022, GM is already placing ads that feature Super Cruise. However, GM is concerned that truck buyers considering buying Super Cruise may experience perceived risk for Super Cruise, which will prevent them from purchasing Super Cruise. We have discussed four types of perceived risk. For each type of perceived risk (i) describe this type, (ii) give an example of why potential Sierra buyers may experience this type of perceived risk for the Super Cruise feature, and (iii) describe message content that GM could use in its advertising to reduce this type of perceived risk. (for each type, about one sentence for (i), one or two sentences for (ii), and one or two sentences for (iii) (12 pts.) 11 Use this additional space for your answer if you need it. 12 14) The tkts theater program allows people to purchase tickets to plays in New York City, in Broadway theaters and smaller theaters, for half of the usual price that people pay if they buy tickets from the theater box office. tkts tickets for a play that evening can only be purchased on the day of a play’s performance. In the morning, interested customers must get in lines, which can be long, at one of the two tkts ticket booths in Manhattan. Then, when their turn comes, they can buy tickets for whatever plays are still available for that evening. Some plays sell out early at tkts, and very popular plays, such as Hamilton or The Lion King, may not offer tickets at tkts. The tkts app indicates which plays have tickets available at tkts the start of the day, but some plays sell out while people are still in the tkts line, so they need to think about a second or third choice. The tkts program is a form of price discrimination, also called segmented pricing. a) Define price discrimination and explain why tkts is a form of price discrimination. (two or three sentences). (3 pts.) b) How does using price discrimination with tkts allow theaters to increase their profits? (three or four sentences) (3 pts.) Be sure to answer part (c) on the next page. 13 c) We discussed three conditions that must be met for successful price discrimination. For each of these conditions (i) describe that condition, (ii) explain why that condition is important for price discrimination to succeed, and (iii) explain why the tkts program satisfies, or does not satisfy, that condition for successful price discrimination. You can make any reasonable assumptions about tkts beyond the information stated on the previous page, but please state those assumptions briefly if they affect your answer (about one or two sentences for each of (i), (ii), and (iii) for each of the three conditions). (9 pts.) 14 15) Logitech makes computer accessories, including webcams. Suppose that Logitech would like to increase sales of its webcams by creating a free-standing store display featuring Logitech webcams, to put in electronics and department stores that sell Logitech, such as Best Buy, Target, Walmart, etc. These displays increase the chance that a consumer will see Logitech webcams. Logitech estimates that it will cost $1,800,000 to create these displays and install them in these retail stores. a) Suppose you have the following information: Retail price that stores charge for Logitech webcam $100 Retailer’s gross margin on cost for webcam 25% Logitech’s gross margin on selling price for webcam 45% Logitech sells the webcam directly to retailers, so Logitech’s selling price is the retailer’s cost of good sold (COGS) a) What are the cost of goods sold (COGS) (i) for Logitech and (ii) for the retailer. (4 pts.) b) How many additional webcams must Logitech sell to break even on the plan for the in- store displays? (3 pts.) 15 16) Our third guest speaker, Jed Weissberg of Mobiquity, spoke about how Mobiquity and about his advice for market research analysis, and for entrepreneurs. Please answer one of the following three questions – answer only part (a), or only part (b), or only part (c). a) Jed discussed how Mobiquity had changed the information products it focused on over time, moving from focusing on one information product, then to another, and then to another. Describe these three different information products. (two or three sentences) (4 pts.) b) Jed also discussed three mistakes that firms often make in collecting and analyzing market research data to help with marketing decisions. Describe two of these three mistakes. (4 pts.) c) Jed also advised that students interested in someday starting their own firm should acquire four skills. Describe two of these four skills. (4 pts.) 16