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Why do IRR and PI have problems with ranking projects?

Why do IRR and PI have problems with ranking projects?

Multiple Choice Questions
16. Dunkin' Donuts and Starbucks have transformed and lead the branded coffee market by:
A. using fresher ingredients than competitors do.
B. employing different but focused marketing strategies.
C. relying on quick responses to each others' moves instead of working through detailed plans
and strategies.
D. locating exclusively near college campuses and high-density downtown offices.
E. All of the above.
17. Over the last few months, John and his colleagues have been identifying the target
markets for his firm's personal care products and then developing the products, prices,
distribution and promotion that will appeal to each of those target markets. In doing so, he has
also identified what he believes is an advantage his competitors cannot match. John has been
working on:
A. strategic planning
B. vision development
C. team-building exercises
D. a marketing strategy
E. competitive assessments
18. Companies seek to develop a sustainable competitive advantage that can be maintained
over a long period of time and:
A. is difficult for competitors to copy.
B. can be patented or registered to protect it as intellectual property.
C. will appeal to financial analysts and potential shareholders.
D. will be easy for employees to use and remember.
E. cannot be discovered through marketing research.
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Chapter 02 - Developing Marketing Strategies and a Marketing Plan
19. Dale's Appliance Repair Service has created a scheduling system using cellular
communications and routing software to guide the work of each of its highly trained and wellequipped
technicians. As a result, Dale's can make and keep exact appointments with
customers. Other repair services in the area can only promise technicians will be there within
a four- to six-hour block. As a result, Dale's has developed a loyal customer following and the
business continues to grow through referrals. Dale's has developed:
A. a marketing plan.
B. a customer-service specialization
C. a referral development system.
D. a sustainable competitive advantage
E. All of the above.
20. If a firm wants to develop a sustainable competitive advantage, it should:
A. begin an aggressive campaign to buy up competitors.
B. copy the innovative features of other firms that are attractive to customers.
C. examine its own operations and relations with its customers to identify significant things
competitors cannot copy.
D. begin recruiting as many recent graduating marketing students as it can afford.
E. arrange to meet with competitors to discuss with them how to avoid direct competition in
agreed to market segments.
21. Which of the following is not one of the four overarching strategies to create and deliver
value and to develop sustainable competitive advantages?
A. Locational excellence
B. Customer excellence
C. Operational excellence
D. Product excellence
E. Planning excellence
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Chapter 02 - Developing Marketing Strategies and a Marketing Plan
22. Gerald's Tire Store offers all the major brands but pays extra attention to providing fast,
courteous, and friendly service in a clean, professional looking environment. Gerald's has
used this strategy for over 40 years and expanded to 15 outlets. Gerald's Tire store has created
a ___________________ to create and deliver value and to develop sustainable competitive
advantages.
A. product development
B. market development
C. market penetration
D. diversification
E. macro, or overarching, strategy
23. When Ron, the keynote speaker at a major business leader conference, arrived in the
middle of the night at the Ritz-Carlton, he was exhausted and his suit disheveled from being
on an airplane for 17 hours. The night clerk found someone to dry clean Ron's suit and have it
ready for his 9 AM presentation. Ron has been a loyal Ritz-Carlton customer ever since. In
this example, Ritz-Carlton demonstrated the macro strategy of:
A. customer excellence
B. operational excellence
C. product excellence
D. promotional excellence
E. global excellence
24. Almost every banker thinks his or her firm provides better service than their competitors.
If this is accurate, and customers recognize it, the bank creates and delivers value through:
A. customer excellence
B. operational excellence
C. product excellence
D. promotional excellence
E. global excellence
25. Customer excellence results in loyal customers. Customer loyalty can be developed
through:
A. having a strong brand
B. unique merchandise
C. superior customer service
D. all of the above
E. none of the above
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Chapter 02 - Developing Marketing Strategies and a Marketing Plan
26. Customer loyalty is an important method of:
A. creating new products.
B. promoting efficiency.
C. sustaining an advantage over competitors.
D. promotional pricing strategies.
E. all of the above.
27. Whenever Harry goes down on Bay Street to have something to drink, he goes to Luther's
Pharmacy. There are many other "watering holes" on Bay Street but Harry will only go to
them if Luther's is closed. Luther's has achieved __________________ from Harry.
A. customer loyalty
B. strategic acceptance
C. relative market share
D. value-based penetration
E. operational excellence
28. Banks have begun offering special accounts designed to attract junior high school
children. These kids save in very small amounts creating more work than the account is
probably worth to the bank but bankers know consumers are creatures of habit and young
people they service now will likely become adult customers. These banks recognize:
A. operational excellence as a macro strategy.
B. the life-time value of customers.
C. product excellence leads to loyal customers.
D. segmentation, targeting, and positioning strategy.
E. diversification demographics.
29. The key to modern customer retention programs is:
A. operational excellence as a macro strategy.
B. viewing customers with the life-time value perspective.
C. product excellence leads to transactional customers.
D. segmentation, targeting, and positioning strategy.
E. situational ethics.
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30. Most marketers spend heavily on customer retention programs, recognizing customer
retention leads to:
A. product design excellence.
B. mission statement satisfaction.
C. sustainable price decreases.
D. increased long term profits.
E. producer excellence.
31. _________________ are an example of an incentive-based customer loyalty program.
A. Frequent-flyer programs
B. Quantity discount incentives
C. Customer referral programs
D. Everyday low prices
E. Cost-based pricing programs
32. Narbonne's, an upscale department store, instructs sales personnel that whenever a
customer asks where something is, they should drop what they are doing and offer to escort
the customer to what they are looking for. The company's reputation for excellent customer
service has resulted in:
A. product design excellence.
B. mission statement satisfaction.
C. sustainable price decreases.
D. a sustainable competitive advantage.
E. producer excellence.
33. Firms achieve ___________ through efficient procedures and excellent supply chain
management.
A. customer loyalty
B. strategic acceptance
C. relative market share
D. value-based penetration
E. operational excellence
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Chapter 02 - Developing Marketing Strategies and a Marketing Plan
34. Marketers want their firms to develop efficient operations because:
A. it leads to lower prices or greater pricing flexibility.
B. marketers can then offer greater value to the customers.
C. it makes it easier to get the products customers want to them when they want it.
D. it can lead to more attractive margins.
E. All of the above
35. Marketers want their firms to develop excellent supply chain management and strong
supplier relations so they can:
A. persuade stores to refuse to carry competitors' products.
B. use their power and control within the supply chain to compel weaker members of the
supply chain to accept less favorable terms and agreements.
C. control prices and lock-in margins.
D. create competitive advantages.
E. develop information not available to others on strategic moves to help with its own
acquisitions and pricing.
36. Allen is in the marketing department of a mid-sized firm that develops and sells
communications systems. He is proud of the Human Resources area in the company that
provides the firm with excellent employees. Allen himself really enjoys his work, but he
knows the work of HR helps create an advantage for the firm because:
A. customers appreciate the kind of service that knowledgeable employees provide.
B. employees play a major role in the success of the firm.
C. it's easier to communicate with and inspire the customer if the employees really believe in
what the firm is doing.
D. building customer loyalty depends on a committed workforce.
E. All of the above.
37. Which of the following represents a way to build a sustainable competitive advantage
using product excellence?
A. Being the first to offer customers desired features, even if competitors can match these.
B. Positioning the product using a clear, distinctive brand image.
C. Having the most features on each model.
D. Focusing on being cutting edge and continually eliminating older features though this may
alienate some customers.
E. All of the above.
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Chapter 02 - Developing Marketing Strategies and a Marketing Plan
38. Product excellence occurs through:
A. customer loyalty
B. strategic acceptance
C. branding and positioning
D. value-based penetration
E. operational excellence
39. For many years, Southwest Airlines distinguished itself as the low-cost airline. Now,
many other low-cost competitors have entered the market. Similarly, Southwest was one of
the first airlines to offer online ticketing. Now, all airlines have online ticketing. These
examples suggest:
A. no single strategy is likely to be sufficient to build a sustainable competitive advantage.
B. situation analysis is a continuous process.
C. marketing is a never-ending story.
D. product excellence is the best source of a sustainable competitive advantage.
E. all of the above
40. "Effective marketing doesn't just happen." It is:
A. promoted through STP analysis.
B. imagined.
C. planned.
D. introduced through control phase SBUs.
E. the result of competitor's failures.
41. Building a competitive advantage based on location is sustainable because:
A. mobile marketing has not yet proven its value for most customers.
B. real estate prices have been dropping.
C. few marketers are aware of its importance yet.
D. it is not easily duplicated.
E. the internet has diminished the importance of "brick and mortar" stores.
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Chapter 02 - Developing Marketing Strategies and a Marketing Plan
42. Of the five steps to the strategic marketing planning process, which step usually comes in
the MIDDLE of the process?
A. evaluate performance
B. define the business mission.
C. situation analysis
D. implement marketing mix and resources.
E. identifying and evaluating opportunities.
43. Brenda works as a caterer at many business functions. Pump-N-Slurp convenience store
chain has just had their annual meeting and left behind copies of their marketing plan. Brenda
opens a copy of their plan. Which of the following would Brenda likely find in Pump-NSlurp's
marketing plan?
A. a situation analysis.
B. opportunities for the firm
C. perceived threats to the firm.
D. marketing objectives.
E. all of the above.
44. Carla has been directed by her regional marketing manager to cut prices on seasonal
items, submit an ad in the local paper, and tell distributors to reduce deliveries for the next
month. Which stage of the strategic marketing planning process is Carla engaged in?
A. evaluate performance
B. define the business mission.
C. situation analysis
D. implement marketing mix and resources.
E. identifying and evaluating opportunities.
45. When conducting a SWOT analysis, in what phase of the strategic marketing process is an
organization presently engaged?
A. planning
B. implementation
C. control
D. segmentation
E. all of the above.
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Chapter 02 - Developing Marketing Strategies and a Marketing Plan
46. Violet's company has just purchased a small software manufacturer. Violet has been
charged to assess what the new company will do as part of her company and what will be
needed to address this question. Violet is engaged in the ____________ stage of the strategic
marketing planning process.
A. evaluate performance
B. define the business mission
C. situation analysis
D. implement marketing mix and resources
E. identifying and evaluating opportunities
47. The automobile manufacturing industry closely watches the annual consumer satisfaction
survey. For years, Japanese car companies have consistently had the highest levels of
customer satisfaction, creating a ____________ for these companies.
A. strategic marketing plan
B. control phase mission advantage
C. STP cost
D. sustainable competitive advantage
E. diversification strategy
48. Which of the following is LEAST likely to be a sustainable competitive advantage?
A. lowering prices.
B. brand name.
C. customer satisfaction.
D. patented technology.
E. supply chain efficiency.
49. The cereal industry is dominated by four companies. These firms produce large volumes,
promote heavily, and through slotting allowance payments control access to the supermarket
shelves. Combined, these four firms have:
A. value-based customer care.
B. successful mission-goal statements.
C. sustainable competitive advantages.
D. market segmentation sufficiency.
E. strategic business acumen.
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Chapter 02 - Developing Marketing Strategies and a Marketing Plan
50. Even when big-box discount retailers enter a market, some small, local retailers survive
and prosper. These retailers have developed a _________________ generating long-term
profitability.
A. value-based customer avoidance
B. successful mission-goal statements
C. sustainable competitive advantage
D. market segmentation sufficiency
E. strategic business simulation

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Because we can get multiple IRRs and the IRR method sometimes will result in unrealistic rates of return since it favors more the short term investment ...

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