Question 1

In Australia, consumer spending in the past few months has seen an upward trend, and buyers are willing to spend more on premium brands. From this pattern, we can say that Australia is in the _____ stage of the business cycle.

Accepted Answer

When consumer spending increases and there is a willingness to spend more on premium brands, it indicates economic growth and confidence, characteristics of the prosperity stage in the business cycle.

Question 2

Which of the following is an example of indirect competition?

Accepted Answer

Indirect competition refers to competition between products or services that are not direct substitutes but can be considered alternatives by consumers based on their needs or desires. In this case, a Sony home entertainment system and a Jacuzzi hot tub are not direct substitutes but could compete for discretionary spending on home leisure or improvement.

Question 3

_____ can lead to a damaging downward spiral, causing a freefall in business profits, lower returns on most investments, and widespread job layoffs.

Accepted Answer

Deflation can lead to a damaging downward spiral as it typically results in decreased consumer spending, reduced business revenues, and can cause businesses to cut costs by laying off workers, further reducing demand and economic activity.

Question 4

It has been seen that periods of major innovations often lead to:

Accepted Answer

Periods of major innovations often lead to higher standards of living because they can introduce new products, services, and efficiencies that improve people's lives, increase productivity, and potentially lower the cost of goods and services.

Question 5

The _____ component of the marketing environment consists of laws that require firms to operate under competitive conditions and to protect consumer rights.

Accepted Answer

The political-legal component of the marketing environment includes laws and regulations that firms must follow, including those that ensure competition and protect consumer rights.

Question 6

During which phase in the business cycle do marketers consider lowering prices and increasing promotions that include special offers to stimulate demand?

Accepted Answer

During a recession, consumer spending typically decreases due to economic uncertainty or decline. Marketers may lower prices and increase promotions, including special offers, to stimulate demand and encourage spending despite the economic downturn.

Question 7

News reports from Zimbabwe indicate that a small pack of locally produced coffee beans costs approximately 1 billion Zimbabwean dollars, an amount that would have bought 60 new cars less than ten years ago in the same country. It can be surmised that Zimbabwe is experiencing extremely high levels of _____, which has spiraled out of control in the past ten years.

Accepted Answer

The correct answer is inflation, as the scenario described indicates a significant decrease in the value of the Zimbabwean dollar, requiring much larger amounts of money to purchase the same goods, a hallmark of inflation.

Question 8

Which of the following components of the marketing environment consists of factors that influence consumer buying power and marketing strategies?

Accepted Answer

The economic environment consists of factors that affect consumer purchasing power and spending patterns, which in turn influence marketing strategies. Factors include inflation, income levels, economic growth, and consumer confidence.

Question 9

It is believed that marketers need to reevaluate their strategies and concentrate on their most promising products during the _____ stage of the business cycle.

Accepted Answer

During the recession stage of the business cycle, businesses often need to reevaluate their strategies to ensure survival and sustainability. Concentrating on the most promising products can help a company maintain revenue and prepare for eventual recovery, as consumer spending is typically reduced during a recession.

Question 10

Which of the following devalues money and reduces its purchasing power through persistent increase in prices?

Accepted Answer

Inflation is the correct answer because it refers to the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. Central banks attempt to limit inflation, and avoid deflation, in order to keep the economy running smoothly.

Question 11

_____ leads to new goods and services for consumers, improves existing products, offers better customer service, and often reduces prices through new, cost-efficient production and distribution methods.

Accepted Answer

Technology leads to innovation in products and services, enhances customer service, and often makes production and distribution more cost-efficient, thereby potentially reducing prices.

Question 12

The history of U.S. government regulation can be divided into four phases: the antimonopoly period, _____, consumer protection, and industry deregulation.

Accepted Answer

The history of U.S. government regulation indeed includes a phase focused on protecting competitors, which fits between the antimonopoly period and later phases like consumer protection and industry deregulation. This phase aimed at ensuring fair competition among businesses.

Question 13

Which of the following is a trend usually observed during an economic depression?

Accepted Answer

During an economic depression, consumers typically prioritize essential and basic needs over luxury or premium items, leading to a focus on more basic, functional products that are more affordable.

Question 14

The amount of money available with people after buying necessities such as food, clothing, and housing is referred to as _____.

Accepted Answer

Discretionary income is the amount of an individual's income that is left for spending, investing, or saving after taxes and personal necessities (like food, clothing, and housing) have been paid. It is the money that can be used at one's discretion.

Question 15

JP Video Rentals is offering a "Rent 2 get 1 free" video rental coupon. They have been accused of deceptive advertising throughout the United States. Which division of the Council of Better Business Bureaus is designated to handle such cases?

Accepted Answer

The National Advertising Division (NAD) is the division of the Council of Better Business Bureaus that handles complaints about deceptive advertising. It reviews national advertising for truthfulness and accuracy.

Question 16

When marketers offer new products, increase their promotional efforts, and expand their distributional limits, it is a sign of:

Accepted Answer

The answer of When marketers offer new products, increase their...

Question 17

In times of prosperity, marketers respond to consumer buying behavior by:

Accepted Answer

In times of prosperity, consumers are more willing to spend, which encourages marketers to introduce new products, increase promotional activities to attract attention, and expand distribution to reach more customers. This approach takes advantage of the higher consumer confidence and spending power during prosperous times.

Question 18

Which of the following agencies supports consumer rights through its initiative of informing consumers of their right to modify or discontinue receiving solicitations?

Accepted Answer

The Direct Marketing Association (DMA) supports consumer rights by providing services that allow consumers to opt-out of receiving unsolicited marketing communications, thus helping them manage their solicitation preferences.

Question 19

Which of the following usually indicates a strong economy?

Accepted Answer

Growth in services such as banking and restaurants typically indicates a strong economy because it suggests that consumers have disposable income to spend on non-essential services, reflecting overall economic health and confidence.

Question 20

The Council of Better Business Bureaus is a national organization devoted to consumer service and _____.

Accepted Answer

The Council of Better Business Bureaus focuses on promoting ethical business practices and resolving disputes between businesses and consumers, which aligns with the concept of business self-regulation.

Quiz 3: The Marketing Environment, Ethics, and Social Responsibility