Marketing management assistant material MARKETING MANAGEMENT EXERCISES Third edition College of Economics Trade, nau NoV.2004
Marketing Management Assistant Material MARKETING MANAGEMENT EXERCISES Third Edition College of Economics & Trade, NAU Nov. 2004
Marketing management Exercises Chapter 1 Understanding Marketing Management I Multiple choice 1. Which of the following is one of the Ten Rules of Radical Marketing that is used to quide marketers? A. The CEo must let the marketing be done by marketers B. Get face to face with the people who matter the most-customers C. Rely on marketing research as the most important too D. Don t use common sense as a guide 2. Marketing should pass through three stages when being implemented. Which one of the following is not one of the stages? A. Contractual Marketing B. Entrepreneurial Marketing C. Formulated Marketing D. Entrepreneurial Marketing demand is when a major part of the market dislikes the product and may even pay a price to avoid it A. Latent B. Decli C. Irregular D. Negative 4. Which of the following is not one of the entities that marketing people are involved in marketing? A. Goods C. News D. All of the above can be marketed 5. Which of the following is not an example of a Consumer Market? A. Grocery Stores B. Industrial Trade Shows C. Retail Stores D. Clothing Store 6. Marketing is the process of planning and executing the conception, pricing and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals B. commercials C. selling D. advertising 7. When consumers go shopping on the Intemet, they are said to be shopping in a
Marketing Management Exercises 1 Chapter 1 Understanding Marketing Management ⅠMultiple Choice 1. Which of the following is one of the Ten Rules of Radical Marketing that is used to guide marketers? A. The CEO must let the marketing be done by marketers. B. Get face to face with the people who matter the most - customers. C. Rely on marketing research as the most important tool. D. Don't use common sense as a guide. 2. Marketing should pass through three stages when being implemented. Which one of the following is not one of the stages? A. Contractual Marketing B. Entrepreneurial Marketing C. Formulated Marketing D. Intrepreneurial Marketing 3. ________ demand is when a major part of the market dislikes the product and may even pay a price to avoid it. A. Latent B. Declining C. Irregular D. Negative 4. Which of the following is not one of the entities that marketing people are involved in marketing? A. Goods B. Services C. News D. All of the above can be marketed. 5. Which of the following is not an example of a Consumer Market? A. Grocery Stores B. Industrial Trade Shows C. Retail Stores D. Clothing Stores 6. Marketing is the process of planning and executing the conception, pricing, _____________, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals. A. promotion B. commercials C. selling D. advertising 7. When consumers go shopping on the Internet, they are said to be shopping in a ____________
Marketing Management Exercises A. marketplace B. market-trace C. market D. marketspace are wants for specific products backed by an ability to pay A. Wants B. Need C. Demands D. Cravings 9. the formula that best describes how to determine customer value is as follows B C. Benefits-investments D. Outcomes-interests 10. There are various types of communication channels that can be utilized by marketers Which of the following is not one of those channels? A. Articulate B. Dialogue C. Distribution D. Service hold that consumers will prefer products that are widely available and Inexpensive A. Product Concepts B. Selling Concepts ots D. Production Concepts 12. There are five types of needs that consumers evaluate and marketers need to probe Which of the following is not one of those needs? A. Stated Needs B. Delight Needs C. Unrelated Needs D. Secret Needs 13.A(n) marketer discovers and produces solutions customers did not ask for but to which they enthusiastically respond A nsIve B C. anticipative D. outstanding marketing is the task of hiring, training, and motivating able employees who want to serve customers wel A. Internal B. External C. Integrated D. Interrelated 2
Marketing Management Exercises 2 A. marketplace B. market-trace C. market D. marketspace 8. __________ are wants for specific products backed by an ability to pay. A. Wants B. Need C. Demands D. Cravings 9. The formula that best describes how to determine customer value is as follows: A. Costs – benefits B. Benefits – costs C. Benefits – investments D. Outcomes - interests 10. There are various types of communication channels that can be utilized by marketers. Which of the following is not one of those channels? A. Articulate B. Dialogue C. Distribution D. Service 11. ___________ hold that consumers will prefer products that are widely available and inexpensive. A. Product Concepts B. Selling Concepts C. Marketing Concepts D. Production Concepts 12. There are five types of needs that consumers evaluate and marketers need to probe. Which of the following is not one of those needs? A. Stated Needs B. Delight Needs C. Unrelated Needs D. Secret Needs 13. A(n) ________ marketer discovers and produces solutions customers did not ask for but to which they enthusiastically respond. A. responsive B. creative C. anticipative D. outstanding 14. ___________ marketing is the task of hiring, training, and motivating able employees who want to serve customers well. A. Internal B. External C. Integrated D. Interrelated
Marketing management Exercises 15. There are different developments in business that are forcing marketers to take the marketing concept to heart. Which one of the following is not one of those B. Changing buying patterns C. Increased marketing expenditures D. Increased packaging II True or False 1. Today, companies tend to rely not on two-way communication with customers but on developing a Web site. (F 2. Because of the increase of Web sites, it is impossible to customize services for customers. (F) 3. It is important for a company to get face to face with its customers in today's new economy. T) 4. Marketing is typically seen as the task of creating commercials and promotions for consumers and businesses. ( F) 5. Demarketing requires finding ways to reduce demand temporarily or permanently for a company' s product or services. D) 6. Among the entities that marketing people are involved in marketing are persons places, products, and information. T) 7. Examples of places that are marketed are cities, states, regions, and countries. T 8. The consumer market exists to market items such as cars towels and raw materials used in manufacturing to consumers.(F) 9. Marketing manage ment is the art and science of choosing target markets and getting keeping, and growing customers through creating, delivering, and communicating superior customer value. 10. A transfer simply means that A gives X to b but does not receive anything tangible in return. T 11. The task environment includes components such as demographics, economics natural environments, technology, and political-legal issues.(F) 12. The marketing concept rests on four pillars: target market, customer needs, integrate marketing, and commercials. (F) 13. An anticipative marketer looks ahead into what needs customers may have in the near future. 14. When all the company s departments work to serve the customer's interests, the result is the marketing concept. (F) 15. Customers in today,'s business and markets are increasingly expecting higher quality and service and no customization.(F)
Marketing Management Exercises 3 15. There are different developments in business that are forcing marketers to take the marketing concept to heart. Which one of the following is not one of those developments? A. Increased competition B. Changing buying patterns C. Increased marketing expenditures D. Increased packaging ⅡTrue or False 1. Today, companies tend to rely not on two-way communication with customers but on developing a Web site. (F) 2. Because of the increase of Web sites, it is impossible to customize services for customers. (F) 3. It is important for a company to get face to face with its customers in today's new economy. (T) 4. Marketing is typically seen as the task of creating commercials and promotions for consumers and businesses. (F) 5. Demarketing requires finding ways to reduce demand temporarily or permanently for a company's product or services. (T) 6. Among the entities that marketing people are involved in marketing are persons, places, products, and information. (T) 7. Examples of places that are marketed are cities, states, regions, and countries. (T) 8. The consumer market exists to market items such as cars, towels, and raw materials used in manufacturing to consumers. (F) 9. Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. (T) 10. A transfer simply means that A gives X to B but does not receive anything tangible in return. (T) 11. The task environment includes components such as demographics, economics, natural environments, technology, and political-legal issues. (F) 12. The marketing concept rests on four pillars: target market, customer needs, integrated marketing, and commercials. (F) 13. An anticipative marketer looks ahead into what needs customers may have in the near future. (T) 14. When all the company's departments work to serve the customer's interests, the result is the marketing concept. (F) 15. Customers in today's business and markets are increasingly expecting higher quality and service and no customization. (F)
Marketing management Exercises III Essay Questions 1.Using the Ten Rules of Radical Marketing, give an example of how accomplish each rule in business 2. What is the difference between a market segment and a target market? 3. Describe each of the five types of needs a customer experiences when making a purchase IV Marketing Spotlight GE GE was established in 1892 when Edison General Electric merged with Thomson-Houston. The company produced lightbulbs, elevators, motors, and appliances. Early success came as a result of J. P. Morgan's financial backing and a focus on research and development. Over the next century GE evolved into one of the worlds biggest companies, with a diverse portfolio of products and businesses. It is among the largest U.S. companies in terms of revenues, and offers an incredible variety of products, from consumer electronics and industrial power to financial services and television broadcasting. Other operating segments include plastics, aircraft engines, and technical products and services for medicine and science. Under the leadership of Jack Welch, who became GES CEO in 1981, the company enjoyed two decades of unprecedented growth and prosperity Welch is widely praised as a visionary business leader due to his performance at GE. He structured the industrial giant by decentralizing the company's operations. He also sought to expand GE's business with highly profitable ventures, and worked to shed low-performing businesses, such as air-conditioning and housewares. This massive restructuring significant cost to GEs workforce: between 1981 and 1985, the company cut 100,000 Once the restructuring was completed, Welch pursued an aggressive acquisition strategy. Some of the major acquisitions included GEs purchases of NBC Television in 1986, and Kidder, Peabody investment bank in 1990(which it later sold to Paine Webber ) In the 1990s, Welch greatly expanded the historically small GE Capital Services with bank and insurance company acquisitions. GE Capital now operates a diverse range of 27 business, including real estate, insurance, finance, and heavy equipment leasing, and provides over 40 percent of the companys revenues. The pace increased between 1997 and 2000, during which time GE averaged more than 100 acquisitions per year. In 1999, GE acquired 134 companies worth $17 billion. In 2000, Welch tenure. the $45 billio manufacturing titan Honeywell International Today, GE has 49 strategic business units operating under the larger master brand. Despite its size, the company is able to react to the fast pace of the New Economy. In 2000, the company reorganized GE Information Systems into an e-commerce unit called GE Global Exchange Services and a support unit named GE Systems Services. These two units manage the worlds largest electronic trading community, comprised of more than 100,000 trading partners Additionally, at Welch's urging, GE employees saved billions of dollars for the company by
Marketing Management Exercises 4 Ⅲ Essay Questions 1. Using the Ten Rules of Radical Marketing, give an example of how you would accomplish each rule in business. 2. What is the difference between a market segment and a target market? 3. Describe each of the five types of needs a customer experiences when making a purchase. Ⅳ Marketing Spotlight GE GE was established in 1892 when Edison General Electric merged with Thomson-Houston. The company produced lightbulbs, elevators, motors, and appliances. Early success came as a result of J.P. Morgan’s financial backing and a focus on research and development. Over the next century GE evolved into one of the world’s biggest companies, with a diverse portfolio of products and businesses. It is among the largest U.S. companies in terms of revenues, and offers an incredible variety of products, from consumer electronics and industrial power to financial services and television broadcasting. Other operating segments include plastics, aircraft engines, and technical products and services for medicine and science. Under the leadership of Jack Welch, who became GE’s CEO in 1981, the company enjoyed two decades of unprecedented growth and prosperity. Welch is widely praised as a visionary business leader due to his performance at GE. He restructured the industrial giant by decentralizing the company’s operations. He also sought to expand GE’s business with highly profitable ventures, and worked to shed low-performing businesses, such as air-conditioning and housewares. This massive restructuring came at a significant cost to GE’s workforce: between 1981 and 1985, the company cut 100,000 jobs. Once the restructuring was completed, Welch pursued an aggressive acquisition strategy. Some of the major acquisitions included GE’s purchases of NBC Television in 1986, and Kidder, Peabody investment bank in 1990 (which it later sold to Paine Webber). In the 1990s, Welch greatly expanded the historically small GE Capital Services with bank and insurance company acquisitions. GE Capital now operates a diverse range of 27 business, including real estate, insurance, finance, and heavy equipment leasing, and provides over 40 percent of the company’s revenues. The pace increased between 1997 and 2000, during which time GE averaged more than 100 acquisitions per year. In 1999, GE acquired 134 companies worth $17 billion. In 2000, Welch oversaw the company’s biggest acquisition during his tenure, the $45 billion purchase of manufacturing titan Honeywell International. Today, GE has 49 strategic business units operating under the larger master brand. Despite its size, the company is able to react to the fast pace of the New Economy. In 2000, the company reorganized GE Information Systems into an e-commerce unit called GE Global Exchange Services and a support unit named GE Systems Services. These two units manage the world’s largest electronic trading community, comprised of more than 100,000 trading partners. Additionally, at Welch’s urging, GE employees saved billions of dollars for the company by
Marketing management Exercises finding ways to involve the Web in their jobs. The company developed an online network to monitor its manufacturing practices, put its human resources reviews online, and established 24/7 service center for its plants. Welch sees GE as well-positioned to take advantage of the Internet, because he thinks content is the easy part of e-commerce while "infrastructure is the hard part, and we have the infrastructure to capitalize on. (fn McGinn, Daniel, " Jack Welch Goe Surfing, "Newsweek, Dec 25, 2000.) In the 20 years Jack Welch was at GEs helm, the company prospered tremendously. GE stock rose 3,098 percent between April 1981 and February 2001, compared with 896 percent growth for the S&P 500 during that same period. Once Welch named his successor -Jeffrey Immelt head of GEs medical imaging business -in November 2000, analysts wondered what effect the change would have on the company Immelt, like Welch, has professed a dedication to the Internet. He describes it as"a transformational technology that is right in our sweet spot. (fn Useem, Jerry, Meet 'Da Man, Fortune, Jan 8, 2001. )What remains to be seen, though, is whether Immelt will conduct ge through a period of prosperity the way Welch has 1. Marketing would appear to be an important part of what Welch did with GE. Where and how did Welch apply some of the marketing concepts discussed in the text? 2. If Welch returned to the company following the events of late 2001 and 2002 (September 11, 2001 and the Enron debacle), what changes do you think he might make in the GE marketing strategy
Marketing Management Exercises 5 finding ways to involve the Web in their jobs. The company developed an online network to monitor its manufacturing practices, put its human resources reviews online, and established a 24/7 service center for its plants. Welch sees GE as well-positioned to take advantage of the Internet, because he thinks content is the easy part of e-commerce while “infrastructure is the hard part, and we have the infrastructure to capitalize on.” (fn McGinn, Daniel, “Jack Welch Goes Surfing,” Newsweek, Dec 25, 2000.) In the 20 years Jack Welch was at GE’s helm, the company prospered tremendously. GE stock rose 3,098 percent between April 1981 and February 2001, compared with 896 percent growth for the S&P 500 during that same period. Once Welch named his successor – Jeffrey Immelt, head of GE’s medical imaging business – in November 2000, analysts wondered what effect the change would have on the company. Immelt, like Welch, has professed a dedication to the Internet. He describes it as “a transformational technology that is right in our sweet spot.” (fn Useem, Jerry, “Meet ‘Da Man,” Fortune, Jan 8, 2001. )What remains to be seen, though, is whether Immelt will conduct GE through a period of prosperity the way Welch has. 1. Marketing would appear to be an important part of what Welch did with GE. Where and how did Welch apply some of the marketing concepts discussed in the text? 2. If Welch returned to the company following the events of late 2001 and 2002 (September 11, 2001 and the Enron debacle), what changes do you think he might make in the GE marketing strategy?
Marketing management Exercises Ch2. Building Customer Satisfaction, Value, and Retention I Multiple Choice is the difference between the prospective cus tomer's evaluation of all the benefits and all the costs of an offering as compared to the perceived alternatives A. Total customer value B. Customer perceived value C. Total customer cost D. Customer gains 2. Customers develop their expectations about a product they will purchase from all of the following sources except A. unread e-mail B. friends C. past experience 3. Which of the following is not a tool for tracking and measuring customer satisfaction? A. Complaint and suggestion systems B. Customer satisfaction surveys Ghost she D. All of the above 4 companies are increasingly focusing on the need to manage core siness processes such as new-product development, customer attraction and retention and order fulfillment. A. Big B. High-profile ormance D. Highly competitive 5. Which of the following are not resources that are needed by companies to carry out its business processes? A. lab B. commercials D. information A company's consists of its structures, policies, and corporate culture, all of which can be dysfunctional in a rapidly changing business environment A
Marketing Management Exercises 6 Ch2. Building Customer Satisfaction, Value, and Retention ⅠMultiple Choice 1. _________________ is the difference between the prospective customer's evaluation of all the benefits and all the costs of an offering as compared to the perceived alternatives. A. Total customer value B. Customer perceived value C. Total customer cost D. Customer gains 2. Customers develop their expectations about a product they will purchase from all of the following sources except: A. unread e-mail B. friends C. past experience D. peers 3. Which of the following is not a tool for tracking and measuring customer satisfaction? A. Complaint and suggestion systems B. Customer satisfaction surveys C. Ghost shopping D. All of the above 4. ___________ companies are increasingly focusing on the need to manage core business processes such as new-product development, customer attraction and retention, and order fulfillment. A. Big B. High-profile C. High-performance D. Highly competitive 5. Which of the following are not resources that are needed by companies to carry out its business processes? A. labor B. commercials C. materials D. information 6. A company's _________ consists of its structures, policies, and corporate culture, all of which can be dysfunctional in a rapidly changing business environment. A. organization
Marketing management Exercises B. rules C. policies 7. companies are acknowledged as the industry leaders and widely admired; they set ambitious goals, communicate to their employees, and embrace a high purpose beyond making money A. Utopian B. Encouraging C. Comparison 8. The primary activities that represent creating value for customers as part of the value chain tool include all of the following except B. operations C. technol D. marketing and sales 9. Some of the ways that a company can seek to increase their profits and sales by searching for new customers include all of the following except A. ads B. reading the obituaries 10. Which of the following descriptions would best characterize a highly satisfied A. Buys more products and services B. Visits competitors on a regular basis C. Try other brands to make sure they are loyal to a company D. Would not complain so they can appear to remain loyal 11. Which of the following would best describe the calculation of a customer's lifetime A. The present value of the stream of future costs expected over the lifetime B. The present value of the stream of future income increases expected over the C. The future value of the stream of future costs expected over the lifetime D. The present value of the stream of future profits expected over the lifetime is the customer's objective assessment of the utility of an offering based on perceptions of its benefits relative to its cost A. Relations equity B. Brand equity 13. There are five different levels of investment n customer-relationship building. They are basic, reactive, proactive, partnership, and what? A. Subjective
Marketing Management Exercises 7 B. rules C. policies D. culture 7. _______________ companies are acknowledged as the industry leaders and widely admired; they set ambitious goals, communicate to their employees, and embrace a high purpose beyond making money. A. Utopian B. Encouraging C. Comparison D. Visionary 8. The primary activities that represent creating value for customers as part of the value chain tool include all of the following except: A. inbound logistics B. operations C. technology D. marketing and sales 9. Some of the ways that a company can seek to increase their profits and sales by searching for new customers include all of the following except: A. ads B. reading the obituaries C. direct mail D. phone calls 10. Which of the following descriptions would best characterize a highly satisfied customer? A. Buys more products and services B. Visits competitors on a regular basis C. Try other brands to make sure they are loyal to a company D. Would not complain so they can appear to remain loyal 11. Which of the following would best describe the calculation of a customer's lifetime value? A. The present value of the stream of future costs expected over the lifetime B. The present value of the stream of future income increases expected over the lifetime C. The future value of the stream of future costs expected over the lifetime D. The present value of the stream of future profits expected over the lifetime 12. ____________ is the customer's objective assessment of the utility of an offering based on perceptions of its benefits relative to its cost. A. Relations equity B. Brand equity C. Value equity D. Net equity 13. There are five different levels of investment in customer-relationship building. They are basic, reactive, proactive, partnership, and what? A. Subjective
Marketing management Exercises B. Accountable D. Accounting 14. Creating structural ties with customers is a long-term process for a company. Which of the following would not be a good suggestion for creating those ties? A. Concentrate on current sales B. Create long-term contracts C. Charge a lower price to consumers who buy larger supplies D. Turn the product into a long-term service 15.A advantage is one that a company can use as a springboard to new advantages B. relationshi D. leverageable II True or False 1. Total customer value is the bundle of costs customers expect to incur in evaluating obtaining, using, and disposing of the given market offering.(F) 2. A person,'s feelings of pleasure or disappointment resulting from comparing a product's performance (or outcome) in relation to his or her own performance(or outcome)is called satisfaction. (F) 3. Customer expectations are created by buying experience, friends and associates advice, and marketers'and competitors' information and promises 4. A value inquest consists of the whole cluster of benefits the company promises to deliver; it is more than the core positioning of the offering.(F 5. One of the tools used to track and measure customer satisf action is a complaint and estion sy 6. Companies that navig ate all the pitfalls to reach their customer value and satisfaction goals are called high-performance companies (T) 7. Examples of resources that a company can use to carry on its business processes are labor, materials, and information. 8. The shared stories, experiences, beliefs, and norms that every employee has and shares within a company are called policies. (F) 9. Visionary companies are acknowledged industry leaders and are widely admired, set ambitious goals, communicate to their employees, and embrace a high purpose beyond making money. D) 10. A value chain is a tool used by a company to identify ways to create more customer value through its activities. T) 11. The process of calculating a company's customer defection rate is called customer scrambling.(F) 12. A highly satisfied consumer stays loyal longer, buys more products talks favorably about the company, and shops at competitors regularly to keep up with price
Marketing Management Exercises 8 B. Accountable C. Objective D. Accounting 14. Creating structural ties with customers is a long-term process for a company. Which of the following would not be a good suggestion for creating those ties? A. Concentrate on current sales B. Create long-term contracts C. Charge a lower price to consumers who buy larger supplies D. Turn the product into a long-term service 15. A _________________ advantage is one that a company can use as a springboard to new advantages. A. customer B. relationship C. contractual D. leverageable ⅡTrue or False 1. Total customer value is the bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering. (F) 2. A person's feelings of pleasure or disappointment resulting from comparing a product's performance (or outcome) in relation to his or her own performance (or outcome) is called satisfaction. (F) 3. Customer expectations are created by buying experience, friends' and associates' advice, and marketers' and competitors' information and promises. (T) 4. A value inquest consists of the whole cluster of benefits the company promises to deliver; it is more than the core positioning of the offering. (F) 5. One of the tools used to track and measure customer satisfaction is a complaint and suggestion system. (T) 6. Companies that navigate all the pitfalls to reach their customer value and satisfaction goals are called high-performance companies. (T) 7. Examples of resources that a company can use to carry on its business processes are labor, materials, and information. (T) 8. The shared stories, experiences, beliefs, and norms that every employee has and shares within a company are called policies. (F) 9. Visionary companies are acknowledged industry leaders and are widely admired, set ambitious goals, communicate to their employees, and embrace a high purpose beyond making money. (T) 10. A value chain is a tool used by a company to identify ways to create more customer value through its activities. (T) 11. The process of calculating a company's customer defection rate is called customer scrambling. (F) 12. A highly satisfied consumer stays loyal longer, buys more products talks favorably about the company, and shops at competitors regularly to keep up with price
Marketing m 13. Customer lifetime value describes the present value of the stream of future profits expected over the customers lifetime purchases. T 14. Value equity is the customer's subjective and intangible assessment of the brand above and beyond its objectively perceived value.(F) 15. A customer advantage is something that a comp any can use as a springboard to new Ill Essay Questions 1.From your own personal standpoint, state three ways in which you create your expectations about your purchases as a consumer. 2. Core competencies are important for a business to recognize in themselves in order to e competitive Core competencies have three characteristics. State them 3. What is the difference between a visionary company and a comparison company? IV Marketing Spotlight Charles Schwab Charles Schwab founded the discount brokerage named for him in 1974. The company's no-frills investment offerings were predicated on Charles Schwab's distaste for traditional brokers, who he labeled"hucksters of inside inf omation, always trying to get me to buy this product or investment. Until 1993, Schwab's brokers were instructed not to offer investment advice, but rather to refer curious customers to publicly available research from Standard Poors or Morningstar Schwab benefited from the online trading boom. Long before any of the traditional brokerage houses considered an e-commerce move. in 1997 Schwab was one of the first discount brokerages to offer online trading It offered online trades at $29.95 for the first 1000 shares compared with the per-trade fees that exceeded $100. Starting at zero in 1995, online trades accounted for 85 percent of all trades executed by Schwab by 2001. The company s retail assets grew threefold to almost $1 trillion during the same time period, putting it in league with the biggest brokerages in America. Between 1997 and 2000, daily trades rose 183 percent. while profits increased 112 percent during that time frame Schwab's marketing activities helped the company become a household name synonymous with online trading Early ads used real Schwab customers and employees in testimonial advertisements. In 1999, the company enlisted celebrity spokespersons to advertise its full-service online investing offerings. The humorous ads featured sports stars such as football player Shannon Sharpe and tennis star Anna Kournikova in cameo roles as Schwab customers who surprised competitors with their knowledge of investing principles. The tagline served to reinforce Schwab's dif ference from online-only brokerages: "We' ve created a smarter kind of investing We've created a smarter kind of investor These ads were part of Schwab's $200 million marketing budget for 1999
Marketing Management Exercises 9 comparisons. (F) 13. Customer lifetime value describes the present value of the stream of future profits expected over the customer's lifetime purchases. (T) 14. Value equity is the customer's subjective and intangible assessment of the brand, above and beyond its objectively perceived value. (F) 15. A customer advantage is something that a company can use as a springboard to new advantages. (F) Ⅲ Essay Questions 1. From your own personal standpoint, state three ways in which you create your expectations about your purchases as a consumer. 2. Core competencies are important for a business to recognize in themselves in order to be competitive. Core competencies have three characteristics. State them. 3. What is the difference between a visionary company and a comparison company? Ⅳ Marketing Spotlight Charles Schwab Charles Schwab founded the discount brokerage named for him in 1974. The company's no-frills investment offerings were predicated on Charles Schwab's distaste for traditional brokers, who he labeled "hucksters of inside information, always trying to get me to buy this product or investment." Until 1993, Schwab's brokers were instructed not to offer investment advice, but rather to refer curious customers to publicly available research from Standard & Poor's or Morningstar. Schwab benefited from the online trading boom. Long before any of the traditional brokerage houses considered an e-commerce move, in 1997 Schwab was one of the first discount brokerages to offer online trading. It offered online trades at $29.95 for the first 1000 shares, compared with the per-trade fees that exceeded $100. Starting at zero in 1995, online trades accounted for 85 percent of all trades executed by Schwab by 2001. The company's retail assets grew threefold to almost $1 trillion during the same time period, putting it in league with the biggest brokerages in America. Between 1997 and 2000, daily trades rose 183 percent, while profits increased 112 percent during that time frame. Schwab's marketing activities helped the company become a household name synonymous with online trading. Early ads used real Schwab customers and employees in testimonial advertisements. In 1999, the company enlisted celebrity spokespersons to advertise its full-service online investing offerings. The humorous ads featured sports stars such as football player Shannon Sharpe and tennis star Anna Kournikova in cameo roles as Schwab customers who surprised competitors with their knowledge of investing principles. The tagline served to reinforce Schwab's difference from online-only brokerages: "We've created a smarter kind of investing. We've created a smarter kind of investor." These ads were part of Schwab's $200 million marketing budget for 1999
