Chapter 8: Objective Setting and Budgeting - Exam Study Guide 2024/2025, Exams of Business Strategy

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TRUE/FALSE

1. Objective setting and budgeting decisions are implementation marcom decisions.

ANS: F PTS: 1

2. Objective setting and budgeting decisions must be formal and systematic.

ANS: T PTS: 1

3. Marcom implementation decisions include the choice of messages, media, mixture of marcom elements, and the achievement of a continuous message presence, or momentum.

ANS: T PTS: 1

4. Marcom objectives are goals that the various marcom elements aspire to individually or collectively achieve during a specific period of time.

ANS: T PTS: 1

5. Marcom objectives should be established after making decisions regarding message selection and media determination.

ANS: F PTS: 1

6. It is optional that marcom objectives be established prior to making decisions regarding message selection and media determination.

ANS: F PTS: 1

7. One reason why it is essential that objectives be established prior to making implementation decisions is that objectives provide a formalized expression of management consensus.

ANS: T PTS: 1

8. Objectives provide standards against which results can be measured.

ANS: T PTS: 1

9. According to the hierarchy-of-effects model, brand-loyal consumers are the ultimate goal.

ANS: T PTS: 1

10. The hierarchy-of-effects model implies that for marketing communications to be successful, the

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11. The initial marcom imperative for new or unestablished brands is to create awareness.

ANS: T PTS: 1

12. The top step on the hierarchy of effects ladder is brand awareness.

ANS: F PTS: 1

13. Of all the marcom tools, sales promotion generally is the most effective and efficient method for quickly creating brand awareness.

ANS: F PTS: 1

14. An expectation from the consumer’s perspective is based on how the brand has been positioned.

ANS: T PTS: 1

15. Sales promotion is effective for encouraging trial purchases.

ANS: T PTS: 1

16. Because individual consumers inevitably will be at different levels of the hierarchy of effects, marcom objectives should be based on the lowest level where any consumers are located.

ANS: F PTS: 1

17. Marcom objectives should specify the target audience, indicate the specific goal to be accomplished and indicate the relevant time frame.

ANS: T PTS: 1

18. Marcom objectives should be qualitative and measurable.

ANS: F PTS: 1

19. Marcom objectives must specify the amount of change.

ANS: T PTS: 1

20. Objectives for a particular element of a marcom program should be determined independently from objectives set for other marcom components.

ANS: F PTS: 1

21. The two broad type of marcom objectives are short-term and long-term.

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ANS: F PTS: 1

22. The traditional view states that marcom objectives should be stated in terms of sales and market share.

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brand’s share of voice (SOV).

ANS: T PTS: 1

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33. When a company that has a relatively low market share has a major competitor with a relatively high share of voice, the recommendation would be to increase advertising expenditures and find a niche that can be defended against other small-share brands.

ANS: F PTS: 1

34. Increasing advertising expenditures is guaranteed to have a substantial impact on augmenting a brand’s sales volume.

ANS: F PTS: 1

35. The encoding variability hypothesis states that people will be more likely to remember information that is relevant to their daily lives.

ANS: F PTS: 1

MULTIPLE CHOICE

1. Objective setting and budgeting are marcom decisions. a. fundamental b. implementation c. short-term d. long-term e. primary

ANS: A PTS: 1

2. Objective setting and budgeting decisions must be. a. short-term b. long-term c. short-term and long-term d. formal and systematic e. unplanned

ANS: D PTS: 1

3. Which of the following is NOT a marcom implementation decision? a. budgeting b. choice of messages c. media d. mixture of marcom elements e. achievement of momentum

ANS: A PTS: 1

4. are goals that the various marcom elements aspire to individually or collectively achieve during

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e. Market share objectives

ANS: D PTS: 1

5. Which of the following is an example of a marcom goal from which marcom objectives can be derived? a. Facilitate the successful introduction of new brands. b. Create brand awareness. c. Increase customer loyalty. d. Generate sales leads. e. All of these are correct.

ANS: E PTS: 1

6. The marcom tools most suitable for accomplishing the objective of informing the trade and consumers about brand improvements are. a. advertising and packaging b. p-o-p displays and brand naming c. personal selling and trade-oriented advertising d. word-of-mouth and event sponsorship e. cause-oriented marketing and public relations

ANS: C PTS: 1

7. Which of the following is a reason why it is essential that objectives be established prior to making implementation decisions regarding message selection, media determination, and how the various marcom elements should be mixed and maintained? a. Objectives provide standards against which results can be measured. b. Objective setting guides the budgeting, message, and media aspects of a brand’s marcom strategy. c. Objectives provide a formalized expression of management consensus. d. a and b only e. a, b, and c

ANS: E PTS: 1

8. The process of setting objectives literally forces top marketing executives and marcom personnel to agree on the course that a brand’s marcom strategy will take for the following planning period as well as the tasks it is to accomplish for a specific brand, thus providing a formalized expression of. a. guidelines b. standards c. hierarchy of effects d. competitive advantage e. management consensus

ANS: E PTS: 1

9. Good objectives set precise, quantitative yardsticks of what a marcom program hopes to accomplish,

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or. a. achieve management consensus b. guide subsequent marcom decisions c. provide standards

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e. change beliefs of the brand

ANS: A PTS: 1

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15. Linda saw a print ad in a magazine for Clairol’s Natural Essence semi-permanent hair color that she knew existed but did not know anything about it. The ad informed her that users of this hair dye will not see gray roots. In terms of the hierarchy-of-effects model, which step does this marketing communication represent? a. creating awareness b. creating an expectation c. encouraging trial purchase d. reinforcing attitudes e. accomplishing brand loyalty

ANS: B PTS: 1

16. Which is the top rung on the hierarchy of marcom effects? a. awareness b. beliefs c. attitudes d. expectations e. brand loyalty

ANS: E PTS: 1

17. Owners of Sun Buns, Incorporated, a new beach-side California baker, want to make sure that consumers are aware of their baked goods, but they also want to persuade consumers that their products are more nutritious than competitive brands. Their ads will be designed to move consumers from the awareness state of the hierarchy-of-effects model to what stage? a. brand loyalty b. trial c. expectation d. unawareness e. preference

ANS: C PTS: 1

18. Which marcom tool is best at encouraging trial purchases? a. advertising b. personal selling c. public relations d. sales promotion e. point-of-purchase displays

ANS: D PTS: 1

19. A marketer distributes samples of a new product to consumers in the hope that they will form positive about the product’s performance, which will then lead to further purchases. a. feedback b. interpretations c. awareness

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20. Attitudes would most likely precede behavior when purchasing. a. pens b. cleaning products c. new automobiles d. soft drinks e. aspirin

ANS: C PTS: 1

21. Once brand-specific beliefs and attitudes are formed as the outcome from firsthand product usage experience, subsequent marketing communications. a. are not necessary b. should increase in intensity c. should decrease in intensity d. serve to guarantee brand loyalty e. serve to reinforce the consumers’ beliefs and attitudes

ANS: E PTS: 1

22. Why is the ultimate objective to achieve brand loyal consumers? a. It is much cheaper to retain present customers than it is to continuously prospect for new ones. b. Competitors will go out of business once consumers are loyal to your brand. c. Switching costs are too high for consumers once they become brand loyal. d. Brand loyal consumers are a “captive audience,” which reduces marcom expenditures in the future. e. Brand loyal consumers are more satisfied consumers.

ANS: A PTS: 1

23. Advertisers obtain consumer loyalty by providing a brand that meets the needs of the consumers and . a. by continually advertising the brand's merits b. by stressing the price c. by stating the unfavorable attributes of the major competitor d. by using sales promotion e. All of these are correct.

ANS: A PTS: 1

24. The objective for a brand’s marcom program at any point in time depends on. a. how many consumers are in the market b. how long the marketer has been offering the brand c. where on the hierarchy most consumers are located d. the lowest level on the hierarchy where consumers are located e. the highest level on the hierarchy where consumers are located

ANS: C PTS: 1

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25. Which of the following is a requirement for setting marcom objectives? a. Objectives must include a precise statement of who, what, and when. b. Objectives must be qualitative.

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30. A manufacturer of consumer goods has stated the advertising and sales promotion objective is to increase retail distribution by 25 percent while at the same time has reduced the sales force size by 20 percent. This objective suffers from. a. not being quantitative and measurable

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b. not being internally consistent c. being too specific d. expecting too small of a change e. not being clear

ANS: B PTS: 1

31. Presales objectives are commonly referred to as. a. marcom standards b. communication objectives c. benchmarks d. short-term goals e. focused strategies

ANS: B PTS: 1

32. Which point of view asserts that it is unsuitable to use sales as the objective for a branded product’s marcom effort? a. traditional view b. common view c. communications view d. heretical view e. revolutionary view

ANS: A PTS: 1

33. The traditional view states that advertising objectives should not be stated in terms of. a. sales or market share gains b. brand awareness c. attitude change d. purchase intentions e. creating brand loyalty

ANS: A PTS: 1

34. Which of the following is an argument against using sales as the objective for a branded product’s marcom effort? a. A brand’s sales volume during any given period is the consequence of a host of factors in addition to marcom efforts. b. Marcom’s effect on sales is typically delayed. c. Marcom agency compensation formulas are based on media commissions, not a brand’s sales. d. a and b only e. a, b, and c

ANS: D PTS: 1

35. Harriet is a marcom manager who asserts that using sales as the objective for a branded product’s