Deck 4: Marketing Analytics: Testing and Measurement

Question 1

An experiment or test is used by direct marketers to measure the effect of change. Which of the following questions would a direct marketer use in designing an experiment?

A)how many current customers are likely to buy a new product in development?
B)what do current customers think about the company's current product offerings?
C)what happens to customer demand when a company raises or lowers a price level?
D)all of the above

Answer 1

D

Question 2

A _________ is a group on which the experiment is not conducted but that is otherwise identical to the test group.

A)dependent group
B)control group
C)focus group
D)independent group

Answer 2

B

Question 3

The two types of errors that can occur in hypothesis testing are known as:

A)ho and ha
B)type A and type B
C)type I and type II
D)implicit and explicit

Answer 3

C

Question 4

In the event it is decided to reject the null hypothesis, it is rejected in favor of the __________:

A)previous null hypothesis
B)alternative hypothesis
C)observed hypothesis
D)none of the above

Question 5

Which of the following represent ways in which a key code could be placed on an order form for direct mail purposes?

A)a departmental number
B)a unique telephone number
C)an individual's name
D)all of the above

Question 6

If you are creating a direct mail campaign, a lift can ______ the mailing quantity needed (via selectivity) and ______ the overall response rate.

A)increase/increase
B)decrease/impair
C)decrease/increase
D)help/help

Question 7

In attempting to measure the impact of a lift, marketers will utilize_________

A)a control group
B)an experimental
C)panel group
D)all of the above

Question 8

In the conversion rate calculation, if you have 1000 inquiries and 300 of them subsequently become buyers, you have a ________ conversion rate:

A)30 percent
B)300 percent
C)33 percent
D).03 percent

Question 9

In direct marketing, the budget is a function of:

A)net order contribution of the items sold
B)media and sales costs
C)response rates
D)all of the above

Question 10

The process by which an order response is tracked back to the original source from which it was generated is known as:

A)identifier key
B)coding
C)matchback
D)split test

Question 11

The term "unit margin" is defined as:

A)target price for an item in a campaign
B)amount left after subtracting costs of goods sold/variable costs from price
C)the approximate amount of marketing costs allocated to each item sold
D)amount left when subtracting variable costs from fixed costs

Question 12

Which of the following is not a variable cost in a direct marketing campaign?

A)cost of goods sold
B)advertising costs
C)shipping
D)allowance for bad debt

Question 13

Net profit is defined as:

A)amount of money left after subtracting fixed costs from gross revenues
B)amount of money left after subtracting variable costs from gross revenue
C)amount of money after dividing fixed costs by margin unit in dollars
D)breakeven amount plus profit incentive in dollars added in

Question 14

What calculation do you perform to find the target (in units of goods sold) once you know your target profit margin and your breakeven amount?

A)add all fixed costs to all variable costs and divide by production units
B)subtract variable costs from selling price and divide by fixed costs
C)add desired profit margin to other fixed costs and divide by margin per unit
D)multiply breakeven units by target profit margin

Question 15

A twostep direct marketing campaign can best be defined as:

A)a campaign where two different segments are addressed sequentially
B)a campaign where a smaller amount is spent initially, then a higher amount
C)a campaign where two different media are used in sequence
D)a campaign where the first step is to get inquiries only; the second to produce a sale

Question 16

A "cost per inquiry" (CPI) differs from a "cost per response" (CPR) because:

A)the CPI is not indicative of the true cost of a campaign
B)the CPI tells us how much it costs to get a customer to inquire, but not to get him to buy
C)the CPR is always more expensive
D)they are essentially the same, just different terms

Question 17

The rate by which a company converts _______ into _______ is called the conversion rate.

A)buyers/sellers
B)advocates/ distributers
C)buying customers/prospects
D)leads/sales

Question 18

Return on investment (ROI) or Return on Advertising Investment (ROAI) is calculated by:

A)dividing net profit by the average amount invested (in a company or campaign)
B)dividing fixed costs by all revenues before taxes
C)dividing all revenues by fixed and variable costs
D)dividing all marketing costs by revenues

Question 19

A good reason to conduct a marketing test before rolling out a full campaign would be:

A)to test two different versions of an offer
B)to test whether the campaign can be successful at a specific allowable margin
C)to see if assumptions about the response rate from a given list are reasonable
D)all of the above

Question 20

To calculate whether a marketing test met the allowable margin in terms of cost per order, you would:

A)multiply the variable costs by the number of orders received
B)divide the costs of the test by the number of orders received
C)divide the total revenues by the marketing costs
D)divide the total revenues by the number of names on the list used

Question 21

Calculating customer value can be done on a segment or cluster basis, or on an individual basis.

Question 22

When a customer is retained, it is only the revenue that is generated over a oneyear period that constitutes the value of that customer.

Question 23

Market penetration is calculated by dividing the number of customers in a specific category by the total number of customers the company has in general.

Question 24

There is an average or typical "response rate" that a marketing campaign should expect to generate.

Question 25

Breaking even on a campaign at least ensures a minimum profit.

Question 26

A "lift" should provide an increase in the average response rate due to making a special offer to all market segments or clusters.

Question 27

The concept of a lift can be applied to the measurement of almost any medium.

Question 28

In creating a direct marketing campaign budget, the best means of estimating the budget needed is to take a percentage of the previous year's profits.

Question 29

The "allowable margin" is basically the amount of money you have left over to cover advertising/promotion and profit after all other expenses have been deducted.

Question 30

A good way to increase ROI is to reduce the cost of the marketing campaign.

Question 31

A more effective market penetration strategy is to concentrate marketing efforts on market segments that contain larger customer penetrations.