Deck 9: An Overview of Advertising Management

Question 1

For many years,ad spending in the United States has averaged approximately 22 percent of the country's gross domestic product.

Answer 1

False

Question 2

Usage expansion advertising consists of teaching new uses for existing brands.

Answer 2

True

Question 3

Primary demand is defined as demand for a specific company's brand.

Answer 3

False

Question 4

A commercial that creates demand for Mountain Dew is an example of secondary demand.

Question 5

Advertising is an efficient form of communication,capable of reaching mass audiences at a relatively low cost per contact.

Question 6

The difference between advertising and public relations is that,for advertising,media exposure is paid for by the advertiser,and for public relations it is not.

Question 7

Advertising adds value to brands by influencing perceptions.

Question 8

Ad spending in developing countries is growing at a much more rapid rate than in the United States.

Question 9

Even though advertising is costly,its effects are certain.

Question 10

Advertising is defined as "a paid,mediated form of communication from an identifiable source,designed to persuade the receiver to take some action,now or in the future." 

Question 11

Advertising has not been demonstrated to influence brand switching.

Question 12

Most successful companies are aware that consistent investment spending is the key factor underlying successful advertising.

Question 13

Account executives are involved in tactical decision making and day-to-day contact with brand managers and other client personnel.

Question 14

Secondary demand is defined as the demand for an entire product category.

Question 15

There are three basic ways by which companies can add value to their offerings: innovating,altering consumer perceptions,and lowering price.

Question 16

Advertising's primary role is at times to facilitate other marcom efforts.

Question 17

Most advertising is undertaken by companies that market their brands to other companies (B2B advertising).

Question 18

Smaller competitors in an industry typically have to invest relatively larger percentages of their sales revenues in advertising than do larger competitors.

Question 19

Advertising's most important function is to increase sales.

Question 20

One function of advertising is to increase brand salience,which means enriching the memory trace for a brand such that the brand comes to mind in relevant choice situations.

Question 21

Measuring advertising effectiveness often requires that baseline measures be taken before an advertising campaign begins and then afterward to determine whether the objective was achieved.

Question 22

When considering barriers to entry,the advertising = market power school of thought believes that firms are not as likely to compete on quality or price dimensions.

Question 23

Management supervisors in a full-service agency are involved in tactical decision making and day-to-day contact with brand managers and other client personnel.

Question 24

In an in-house advertising operation,the advertiser employs an advertising staff and absorbs the overhead required to maintain the staff's operations.

Question 25

Advertising management generally involves the organization that has a product or service to advertise and an independent agency,or agencies,responsible for creating ads,making media choices,and measuring results.

Question 26

Account management provides the mechanism to link the agency with the client.

Question 27

Most sophisticated companies are willing to place their bets on advertising's ability to boost revenues and thus enhance profits from the revenue-increase side rather than from the expense-reduction side.

Question 28

The most common advertising agency compensation method today is an outcome- or performance-based program,used by 61 percent of advertisers.

Question 29

One advantage of purchasing advertising services a la carte from specialized agencies is potential cost efficiencies.

Question 30

Historically,advertising agencies charged a standard commission of 20 percent of the gross amount of media billings.

Question 31

In a labor-based fee system,advertisers are paid a commission based upon sales figures.

Question 32

Media planners are responsible for developing the overall media strategy and purchasing the specific media vehicles for the advertiser.

Question 33

A price elasticity coefficient of 0.15 indicates that a one percent increase in ad expenditures increases volume by 15 percent.

Question 34

Advertising elasticity is,in fact,a measure of advertising strength.

Question 35

Elasticity is a measure of how responsive quantity demanded is to changes in marketing variables such as price and advertising.

Question 36

Whether one chooses to invest or disinvest in advertising a brand depends largely on expectations about how advertising will influence a brand's sales volume and revenue.

Question 37

Advertising strategy implementation involves setting objectives,devising budgets,creating messages,and developing the media strategy.

Question 38

Outcome-based compensation programs encourages agencies to use whatever IMC programs are needed to build brand sales.

Question 39

An advantage of using a full-service advertising agency is the ability to obtain negotiating leverage with the media.

Question 40

In terms of profitability,investing in advertising can be justified only if the incremental revenue generated from the advertising effort exceeds the advertising expense.

Question 41

When consumers have well-established brand preferences,as often happens during the decline stage of a product's life cycle,what is the most appropriate combination of advertising and price elasticity to apply? 

A) build image via increased advertising 
B) grow volume via price discounting 
C) decrease advertising and discount prices 
D) maintain the status quo 
E) increase advertising and/or discount prices

Question 42

Advertising is costly and its effects are often _____.

A) certain 
B) uncertain 
C) predetermined 
D) constant 
E) detrimental

Question 43

Most successful companies are aware that _____ spending is the key factor underlying successful advertising.

A) increased 
B) decreased 
C) consistent investment 
D) maximum 
E) minimum

Question 44

PepsiCo's commercials that encourage people to purchase Mountain Dew is an example of creating _____ demand.

A) elastic 
B) primary 
C) secondary 
D) derived 
E) joint

Question 45

An advertisement that was designed to keep a company's brand fresh in the consumer's memory performs the advertising function of _____.

A) informing 
B) persuading 
C) adding value 
D) reminding 
E) assisting other company efforts

Question 46

Advertising that teaches new uses for existing brands is known as _____.

A) elaboration advertising 
B) top-of-mind awareness advertising 
C) primary demand advertising 
D) usage expansion advertising 
E) alternative use advertising

Question 47

Critics of the advertising = information view contend that a number of factors other than advertising also account for brand loyalty and prince insensitivity.

Question 48

Which combination of advertising and price elasticity should be applied in a situation where there are mature market goods and consumers have complete information about most brands in the category? 

A) increase advertising and/or discount prices 
B) maintain the status quo 
C) build image via increased advertising 
D) grow volume via price discounting 
E) decrease prices and advertising expenses

Question 49

To distinguish advertising,which typically is conveyed via print,TV,radio,the Internet,etc.,from person-to-person forms of communication,including personal selling and word of mouth,the term _____ communication is used.

A) mediated 
B) paid-for 
C) commercial 
D) technological 
E) focused

Question 50

An example of usage expansion advertising is _____.

A) a soft drink manufacturer who is the first to introduce a five-liter plastic bottle 
B) a manufacturer of baking soda promoting a new use for the product 
C) a retailer who doubles the promotional budget 
D) a retailer that was using only newspaper advertising expanding into radio advertising 
E) a gas station advertising that it is open 24 hours a day

Question 51

Creating demand for an entire product category is known as _____ demand.

A) joint 
B) elastic 
C) derived 
D) primary 
E) secondary

Question 52

Ad spending in the United States has averaged approximately ______ percent of the country's gross domestic product.

A) 2.2 
B) 4.7 
C) 15 
D) 22 
E) 47

Question 53

Which of the following is an example of an advertisement that was designed to create primary demand? 

A) "Weekends were made for Michelob." 
B) "Orange juice isn't just for breakfast anymore." 
C) "Like a good neighbor, State Farm is there." 
D) "You're in good hands with Allstate." 
E) "Gillette: the best a man can get."

Question 54

The Beef Council sponsored a variety of advertisements encouraging people to eat more meat.These advertisements were designed to create _____ demand.

A) secondary 
B) derived 
C) elastic 
D) joint 
E) primary

Question 55

_____ is a paid,mediated form of communication from an identifiable source,designed to persuade the receiver to take some action,now or in the future.

A) Public relations 
B) Advertising 
C) Communications 
D) Marketing 
E) Marcom

Question 56

Which is NOT a function performed by advertising? 

A) persuading 
B) reminding 
C) adding value 
D) assisting production 
E) informing

Question 57

Which of the following is an advertising function? 

A) informing 
B) influencing 
C) reminding 
D) adding value 
E) All of these are correct.

Question 58

Ad spending is growing at a much more rapid rate in which of the following than elsewhere around the globe? 

A) the United States 
B) other developed countries 
C) developing countries 
D) all of Europe 
E) all of North America

Question 59

The National Dairy Council sponsored a series of commercials promoting milk and cheese as healthy foods.This advertising was designed to create _____.

A) secondary demand 
B) horizontal demand 
C) vicarious demand 
D) primary demand 
E) joint demand

Question 60

An ex-CEO at Procter & Gamble-one of the world's largest advertisers-aptly draws an analogy between advertising and exercise in that both _____.

A) provide short-term benefits 
B) are expensive 
C) need to be done regularly 
D) take place in a learning environment 
E) give life to its participants

Question 61

Advertising strategy formulation involves which activity? 

A) setting objectives 
B) devising budgets 
C) message creation 
D) media strategy 
E) All of these are correct.

Question 62

A Korean brand of television was perceived as "low quality" by over 70 percent of American consumers who were surveyed.However,after an extensive advertising campaign,the percentage of American consumers who perceived this brand as low quality fell to 20 percent.In this instance,advertising has successfully altered consumers' perceptions and performed which function? 

A) adding value 
B) informing 
C) persuading 
D) reminding 
E) assisting other company efforts

Question 63

Message strategies and decisions are most often the joint enterprise of the companies that advertise and their _____.

A) advertising agencies 
B) marketing departments 
C) advertising departments 
D) promotion departments 
E) communication consultants

Question 64

What simplifying assumption does the elasticity equation for predicting market share make? 

A) Advertising is the sole determinant of market share. 
B) Price is the sole determinant of market share. 
C) The number of brands in the category is the sole determinant of market share. 
D) Market share is determined by the combination of the price and advertising. 
E) Market share is determined by the combination of number of brands and advertising.

Question 65

In finance terms,by making a brand more valuable,advertising generates incremental ______.

A) elasticity 
B) equity 
C) discounted cash flow 
D) primary demand 
E) secondary demand

Question 66

_____ is the process of creating ad messages,selecting media in which to place the ads,and measuring the effects of the advertising efforts.

A) Marketing management 
B) Advertising management 
C) Marcom management 
D) Promotion management 
E) Advertising

Question 67

Customers are known to be more responsive to retailers' price deals when retailers _____.

A) use rebate offers 
B) advertise those deals 
C) offer coupons 
D) provide additional incentives 
E) include in-package premiums

Question 68

Which of the following is a way advertisers can perform the advertising function? 

A) purchase advertising services on an as-needed basis from specialized agencies 
B) use a full-service advertising agency 
C) use an in-house advertising operation 
D) a and b only 
E) a, b, and c

Question 69

Which of the following is consistent with the advertising = market power approach to advertising's role in the economy? 

A) Consumers become more price sensitive and buy best value. 
B) Advertising does not change the way consumers value product attributes. 
C) Consumers become brand loyal. 
D) Consumers can compare competitive offerings easily. 
E) Innovation is facilitated via new entrants.

Question 70

_____ deals with the tactical,day-to-day activities that must be performed to carry out an advertising campaign.

A) Marketing management 
B) Advertising management 
C) Advertising strategy formulation 
D) Advertising strategy implementation 
E) Measuring effectiveness

Question 71

Which of the following is consistent with the advertising = information approach to advertising's role in the economy? 

A) Consumers perceive fewer substitutes for advertised brands. 
B) Advertising affects consumer preferences and tastes. 
C) Advertising changes product attributes. 
D) Firms are insulated from potential rivals. 
E) Advertising makes entry possible for new brands by communicating product attributes to consumers.

Question 72

A full-service advertising agency _____.

A) necessitates employing an advertising staff and absorbing the overhead required to maintain the staff's operations 
B) is unprofitable unless a company does a large and continuous amount of advertising 
C) has the advantage of complete control over the advertising function 
D) performs all the basic functions of advertising for a client 
E) does not perform other marcom functions, such as sales promotion and publicity

Question 73

How can companies add value to their offerings? 

A) innovating 
B) improving quality 
C) altering consumer perceptions 
D) a and b only 
E) a, b, and c

Question 74

Clara's job responsibilities include the process of creating ad messages,selecting media in which to place the ads,and measuring the effects of the advertising efforts.Clara is involved in _____.

A) marketing management 
B) message management 
C) marcom management 
D) communication management 
E) advertising management

Question 75

The _____ are involved in tactical decision making and day-to-day contact with brand managers and other client personnel.

A) account executives 
B) management supervisors 
C) assistant supervisors 
D) product managers 
E) line managers

Question 76

An advertisement that is designed to pre-sell a company's products and provide salespeople with valuable introductions performs the advertising function of _____.

A) informing 
B) persuading 
C) adding value 
D) reminding 
E) assisting other company efforts

Question 77

Rick's job at a major consumer goods manufacturer is to oversee the process of setting advertising objectives,devising budgets,message creation,and determining media strategy.Rick is involved in _____.

A) formulating advertising strategy 
B) implementing advertising strategy 
C) account management 
D) marketing management 
E) implementing marketing strategy

Question 78

Advertising that is designed to deliver coupons and sweepstakes is performing the function of _____.

A) informing 
B) influencing 
C) reminding 
D) adding value 
E) assisting other company efforts

Question 79

One option for an organization wishing to advertise is to recruit the services of a variety of firms with particular specialties in distinct aspects of advertising.These firms are called _____.

A) salons 
B) boutiques 
C) cafeteria agencies 
D) full-service agencies 
E) buffet agencies

Question 80

Gwen works at a consumer-goods manufacturer and deals with the tactical,day-to-day activities that must be performed to carry out an advertising campaign.Gwen is involved in _____.

A) formulating advertising strategy 
B) implementing advertising strategy 
C) account management 
D) marketing management 
E) formulating marketing strategy