1. In the marginal costing approach to promotional budgeting, the marketer only spends up to the point where any further spending would not generate enough extra business to justify the outlay. Which of the following statements reflects the advantages of this method?

1. Company cannot become over-committed or run into trouble by relying on sales that do not, materialize.
2. Simple to calculate; also ensures that, if sales drop off, costs also drop.
3. Ensures that the firm remains on a par with the competitors, and does not waste expenditure.
4. Has a logical basis, and if carried out correctly will achieve the firm's strategic goals.
5. This method would maximize profits since no excess spending would result.

Answer: This method would maximize profits since no excess spending would result

2. There are various methods of determining marketing promotional budgets. Which of the following statements reflect the shortfalls or disadvantages in the percentage of sales forecasting method?

1. Extremely difficult to calculate, given the changing nature of markets
2. Is based on the false premise that sales cause promotion, rather than promotion causing sales
3. Relies on the marketer being able to persuade other departments within the firm to give up expenditure on their own pet projects
4. Bears no relationship to the state of the marketplace
5. Takes no account of changes in the market, or opportunities that might arise; is not customer-orientated, in other words
6. Difficult to calculate the necessary spend to achieve the objective. Time-consuming and expensive in terms of market research.

Answer: Is based on the false premise that sales cause promotion, rather than promotion causing sales

3. The Boston Consulting Group Model indicates which of the following-

1. Market growth
2. Share of market against largest competitor
3. Competitor analysis
4. Market attractiveness
5. Market growth and share of market against largest competitor

Answer: Market growth and share of market against largest competitor

4. When conducting the marketing audit and portfolio analysis, which of the following models are used to gain greater insight into the critical issues that could affect the business?

1. Ansoff Model
2. General Electric Model
3. Boston Consulting Group Model
4. Porter's Five Forces Model
5. All of the above

Answer: All of the above

5. What part of a marketing plan could this statement have come from?

1. Objectives
2. Marketing audit
3. Corporate strategy
4. Critical issues
5. Marketing mix

Answer: Marketing audit

9. American Express is creating new products in mobile communications, travel products and health care. What kind of diversification strategy are they using?

1. Forward integration
2. Concentric diversification
3. Conglomerate diversification
4. Backward integration

Answer: Conglomerate diversification

10. The marginal method of sales forecasting involves:

1. Determining the point at which we cannot afford to spend any more.
2. Determining the point at which we will be spending more than our competitors.
3. Determining the point at which further expenditure will not be justified by increased sales.
4. Determining the point at which the organization breaks even.

Answer:
Determining the point at which further expenditure will not be justified by increased sales.
Determining the point at which we will be spending more than our competitors.

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