1) Describe the steps in the order-to-payment cycle.

Answer: Sales representatives, dealers, and customers send orders to the firm. The sales
department prepares invoices, transmits copies to various departments, and back-orders
out-of-stock items. Shipped items generate shipping and billing documents that go to
various departments.

2) List three examples of how companies are using Big Data.

Answer: Student answers will vary.

Examples from the text include: UK supermarket giant Tesco collects 1.5 billion pieces of
data every month to set prices and promotions; US kitchenware retailer Williams-Sonoma
uses its customer knowledge to customize versions of its catalog. Amazon reports
generating 30 percent of its sales through its recommendation engine ("You may also like").
Bank of America is tracking spending and demographic data and tailoring promotions — for
example, offering back-to-school deals to cardholders with children. JPMorgan Chase has
improved communications to new cardholders to gain more engagement. On the
production side, GE set up a team of developers in Silicon Valley to improve the efficiency of
the jet engines, generators, locomotives, and CT scanners it sells.

3) What is a marketing intelligence system? How can marketing intelligence data be

Answer: A marketing intelligence system is a set of procedures and sources that managers
use to obtain everyday information about developments in the marketing environment. The
marketing intelligence system supplies happenings data. Marketing managers collect
marketing intelligence in a variety of different ways, such as by reading books, newspapers,
and trade publications; talking to customers, suppliers, and distributors; monitoring social
media on the Internet; and meeting with other company managers

4) What are the various steps a company can take to improve the quality of its marketing
intelligence function?

1. a company can train and motivate the sales force to spot and report new developments

2. a company can motivate distributors, retailers, and other intermediaries to pass along
important intelligence

3. a company can network externally

4. a company can set up a customer advisory panel

5. a company can take advantage of government data resources 6. a company can purchase
information from outside suppliers

7. a company can use online customer feedback systems to collect competitive intelligence
5) Briefly describe the five main ways in which marketers can find relevant online information
on competitors' strengths and weaknesses.

Answer: The five ways are:

1. independent customer goods and service review forums

2. distributor or sales agent feedback sites which are built by the distributors themselves to
describe their experience and level of satisfaction on products or services

3. combo sites offering customer reviews and expert opinions mainly on financial services and
high-tech products that require professional knowledge

4. customer complaint sites designed mainly for dissatisfied customers, which allows customers
to express their dissatisfaction in certain firms or products

5. public blogs offering personal opinions, reviews, ratings and recommendations on virtually
any topic

6) How do the distributors, retailers, and other intermediaries help a company to improve the
quantity and quality of its marketing intelligence?

Answer: Since marketing intermediaries are often closer to the customer, they can offer helpful
insights to the company to improve its marketing intelligence system.

7) Suppose Canon and Nikon are the only players in the digital camera industry. What can
Canon do to acquire marketing intelligence?

Canon can network externally to find out more about its competitor Nikon. It can purchase
Nikon's products, attend open houses and trade shows, read reports published by the rival firm,
attend stockholders' meetings, talk to employees, collect competitors' ads, consult with
suppliers, and look up news stories about Nikon.

8) What are the different income-distribution patterns? How does income distribution in the
economies affect the marketing decision of the firms?

Answer: Marketers often distinguish countries using five income-distribution patterns:

1. very low incomes

2. mostly low incomes

3. very low, very high incomes

4. low, medium, high incomes

5. mostly medium incomes The market would be very small in countries with type 1 or 2 income
patterns and will be considerably large in the countries with income patterns 3 and 4. In
countries which have a marked inequality in income distribution, companies tend to produce
goods which are consumed by the mass as well as produce certain luxurious goods to cater to
the richer section
9) Discuss the impact of tougher environmental regulations on businesses, citing examples
whenever possible. Also, point out opportunities, if any, presented by these regulations.

Answer: Environmental regulations adversely affect certain industries. They increase the cost of
production for a range of industries. For instance, steel manufacturing units and firms which
generate electricity are required to install pollution control equipment. Automobile companies
are required to develop and use cleaner technology in their vehicles. However, businesses can
also achieve significant savings in their energy and gas bills by moving to environmentally
friendly ways to heat or cool their offices and run their manufacturing facilities. A shift to
paperless communication can cut costs and pollution. Plus, new business opportunities are
opening up in the "green" sectors as is evident in the companies that manufacture and sell
emission-control equipment and sell services to help companies adopt environmentally friendly
practices.

10) The United States has one of the world's highest percentages of college-educated citizens.
What can be the possible implications of this observation to the marketing environment of a
US firm?

Answer: The high percentage of college-educated citizens in the United States suggests that
there would be high demand for quality books, magazines, and travel. It also implies that there
would be a high supply of skilled potential employees. Students can point out other
implications.

11) Suppose the people of Greenworld, an island in the southwest Pacific, are primarily
involved in the direct procurement of edible plants and animals from the wild, foraging and
hunting without significant recourse to the domestication of either. On the contrary people in
Newland, a country rich in petroleum resources, export petroleum to the industrial countries.
Which of the two countries mentioned above is likely to offer greater marketing opportunities
for luxurious goods and why?

Answer: Newland is likely to produce greater marketing opportunities for luxurious goods as
people in this country are likely to have greater affordability than the people in Greenworld.

12) Why do companies need to search for practical means to harness renewable sources of
energy like wind and water?

Answer: Prolonged exploitation of the conventional sources of energy like oil has led to an acute
shortage of these resources resulting in their prices increasing over time. Firms face substantial
cost increase as these resources are depleted, hence they need to search for means to harness
the infinite renewable resources.

13) Assume that you are a marketing manager for a youth clothing manufacturer that has just
read about the megatrend of the "rising Hispanic influence" in the United States. Explain this
megatrend and indicate why it might be important to your company.

Answer: The Hispanic population grew by 43 percent, from 35.3 million to 50.5 million, in the
last ten years. Hispanics are having a huge impact on the food US consumers eat and the
clothing, music, and cars they buy. Companies are refining their products and marketing to
reach this fastest-growing and most influential consumer group.

14) What does total market potential mean? How can it be estimated?

Answer: Total market potential is the maximum sales available to all firms in an industry during
a given period, under a given level of industry marketing effort and environmental conditions. A
common way to estimate total market potential is to multiply the potential number of buyers by
the average quantity each purchases, times the price. A variation on this method is the chain-
ratio method, which multiplies a base number by several adjusting percentages.

15) Suppose a cotton-textile company wants to estimate the area market potential for its high
quality fabrics in Houston. List the possible steps that the marketers will follow to compute
the area market potential.

Answer: The marketers may follow the following steps: Identify all the potential buyers of
textile in the area, primarily the firms manufacturing readymade garments in that area. In order
to do that, the company may compile a list from a directory of all manufacturing establishments
in the area. Then it can estimate the quantity of fabrics each firm might purchase to produce
garments worth $1 million. Compiling the quantity required by each of the firms, the marketers
can estimate the area market potential of the fabric produced by the textile company.

16) Briefly describe the methods of forecasting future demand on the basis of past sales.
Answer: The methods are: 1. Time-series analysis, that breaks past time series into four
components (trend, cycle, seasonal, and erratic) and projects them into the future 2.
Exponential smoothing, that projects the next period's sales by combining an average of past
sales and the most recent sales, giving more weight to the latter 3. Statistical demand analysis,
which measures the impact of a set of causal factors (such as income, marketing expenditures,
and price) on the sales level 4. Econometric analysis, which builds sets of equations that
describe a system and statistically derives the different parameters that make up the equations
statistically.

17) Organix Internationals LLC is planning to introduce its new range of breakfast cereals. List
the different product levels that it considers while formulating the demand estimates for the
new product.

Answer: The six different product levels that Organix needs to consider to formulate the
demand estimates for its new range of cereals are all sales, industry sales, company sales,
product line sales, product from sales, and product item sales

18) Suppose the Belgian government prohibits sale of cigarettes to people below 20 years of
age. Who are likely to comprise the qualified available market for Dunhill, a manufacturer of
herbal cigarettes in Belgium?

Answer: Eligible adults (i.e., people above 20 years of age), who have interest and affordability
constitute the qualified available market for the cigarettes in Belgium
19) If the ratio between current and potential levels of market demand is close to one, what
can you infer about the industry's market-penetration index and the growth potential of the
firms in the industry

? Answer: The industry has a high market-penetration index and there is a negligible growth
potential for all the firms in the industry.

20) How does the marketing environment determine the position of the market demand
function?

Answer: During economic prosperity the market demand function shifts up as every dollar spent
in stimulating demand leads to a greater market demand. Whereas during recession the market
demand function shifts downward as an equal increase in marketing expenditure leads to a
smaller increase in market demand.

21) Suppose 100 million people consume black tea every year, and an average consumer
consumes 8 kgs of tea at an average price of $3 per kg. Compute the total market potential for
tea

. Answer: $2,400 million

22) Simpsons, a manufacturer of air conditioners, finds that its sales potential is less than its
market potential even when it spends a sufficient amount on advertisements and after sale
services. What is the basic reason behind such an observation by the marketers of Simpsons?

Answer: Company sales potential is less than the market potential, even when a company's
marketing expenditures increase considerably because each firm has a set of loyal consumers
unresponsive to other companies' efforts to woo them.

23) Two major methods of computing area market potential are market build-up method and
multiple factor-index method. Which of these methods will Nexus Enterprises, a manufacturer
of auto parts implement to estimate its market potential?

Answer: Nexus Enterprise will implement market-build up method to estimate its area market
potential as this method is primarily used by business marketers such as Nexus.

24) Suppose the brand development index of the detergent manufactured by Fasclean in
Boston is 90 and in Austin is 48. Compare the marketing opportunity of Fasclean detergent in
the two cities.

Answer: Fasclean has a greater marketing opportunity for its detergent in Austin than it has in
Boston

25) Suppose Redbus, a player in the small car market, is planning to launch its new range of
hybrid cars. It decides to estimate the future demand for its new car before launching it in the
market. If interviewing consumers is not practical, what alternative technique might it resort
to?

Answer: When buyer interviewing is impractical, Redbus may ask its sales representatives to
estimate the future sales or use expert opinions.