M Advertising 3rd Edition By William Arens – Test Bank

 

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Sample Test

Chapter 03

Test Bank

1.   Advertisers and advertising agencies rely on suppliers to provide creative content for ads.

TRUE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-01 List the various groups in the advertising business and explain their relationships.

Topic: Participants in Advertising

Feedback: Suppliers are the people and organizations that assist both advertisers and agencies in the preparation of advertising materials, such as photography, illustration, printing, and production. Media serve as communications vehicles to present ads.

2.   Local advertising is sometimes called cooperative advertising.

FALSE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-02 Discuss the differences between local, national, and transnational advertisers.

Topic: Local, National, and Transnational Advertisers

Feedback: Local advertising is sometimes called retail advertising because so much is placed by retail stores.

3.   Institutional advertising is primarily used to locate and recruit new employees.

FALSE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-02 Discuss the differences between local, national, and transnational advertisers.

Topic: Local, National, and Transnational Advertisers

Feedback: Institutional advertising is used to create a favorable long-term perception of a business. Classified ads are used to fill job positions.

4.   One of the primary purposes of co-op advertising is to build the manufacturer’s brand image.

TRUE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-02 Discuss the differences between local, national, and transnational advertisers.

Topic: Local, National, and Transnational Advertisers

Feedback: Cooperative (co-op) advertising has two key purposes: to build the manufacturer’s brand image and to help distributors, dealers, or retailers increase sales.

5.   The basic principles of advertising are the same for both local and national advertising.

TRUE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-02 Discuss the differences between local, national, and transnational advertisers.

Topic: Local, National, and Transnational Advertisers

Feedback: The basic principles of advertising are the same in both local and national advertising.

6.   One of the primary differences between national and local advertisers is that national advertisers plan strategically and local advertisers think tactically.

TRUE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-02 Discuss the differences between local, national, and transnational advertisers.

Topic: Local, National, and Transnational Advertisers

Feedback: National advertisers plan strategically to launch, build, and sustain brands. Local advertisers think tactically.

7.   A centralized advertising strategy relies on creating separate ad departments based on divisions, subsidiaries, regions, brands, or other categories.

FALSE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-03 Explain how advertisers organize themselves to manage their advertising both here and abroad.

Topic: How Companies Organize for Advertising

Feedback: Centralized advertised departments may be organized in any of five ways: by product or brand, by sub-function of advertising (copy, art, print production, media buying), by end user (consumer advertising, trade advertising), by media (radio, TV, Web, outdoor), and by geography (western advertising, eastern advertising, international advertising).

8.   In a decentralized advertising system, the company sets up separate ad departments for different divisions, subsidiaries, regions, brands, or other categories that suit the company’s needs.

TRUE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-03 Explain how advertisers organize themselves to manage their advertising both here and abroad.

Topic: How Companies Organize for Advertising

Feedback: In a decentralized system, the company sets up separate ad departments for different divisions, subsidiaries, regions, brands, or other categories that suit the company’s needs.

9.   Global marketers are multinational companies that create a standardized approach to marketing their brand in many countries.

TRUE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-03 Explain how advertisers organize themselves to manage their advertising both here and abroad.

Topic: How Companies Organize for Advertising

Feedback: Multinational companies that use a standardized approach to marketing and advertising in all countries are considered global marketers.

10.                International media that serve several countries are limited to newspapers and magazines.

FALSE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-03 Explain how advertisers organize themselves to manage their advertising both here and abroad.

Topic: How Companies Organize for Advertising

Feedback: In addition to newspapers and magazines, television is a viable international medium. For example, CNN and MTV are found in many parts of the world.

11.                Advertising agencies work for the media.

FALSE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-04 Define the main types of advertising agencies.

Topic: The Role of Advertising Agencies

Feedback: Agencies don’t work for the media or the suppliers. Their moral, ethical, financial, and legal obligation is to their clients. Agencies are morally obligated to work for the best interest of their clients.

12.                Some of the nonadvertising services performed by full-service agencies are performing research, selecting media, designing packages, and producing sales promotions.

FALSE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-04 Define the main types of advertising agencies.

Topic: The Role of Advertising Agencies

Feedback: Full-service advertising agencies are equipped to serve clients in all areas of communication and promotion. The services of such agencies include planning, creating, and producing advertisements as well as performing research and media selection services. Non-advertising functions include producing sales promotion materials, publicity articles, annual reports, trade show exhibits, and sales training materials.

13.                Creative boutiques work for advertisers and occasionally subcontract to ad agencies.

TRUE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-04 Define the main types of advertising agencies.

Topic: The Role of Advertising Agencies

Feedback: Some talented artists—such as graphic designers and copywriters—have set up their own creative services, or creative boutiques. They work for advertisers and occasionally subcontract to ad agencies.

14.                The account planner defends the consumer’s point of view and the creative strategy in the debate between the agency’s creative team and the client.

TRUE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-05 Describe the range of tasks people perform in an ad agency and an in-house advertising department.

Topic: The Role of Account Planners and Specialized Marketing Communication Organizations

Feedback: The account planner bridges the gap between account management and creative. The account planner defends the consumer’s point of view and the creative strategy in the debate between the agency’s creative team and the client.

15.                Effective advertising copy should contain all the information intended to be communicated in a few pertinent, succinct points.

TRUE

AACSB: Communication

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-05 Describe the range of tasks people perform in an ad agency and an in-house advertising department.

Topic: The Role of the Creative Department

Feedback: Most ads rely heavily on copy, the words that make up the headline and message. The people who create these words, copywriters, must condense all that can be said about a product into a few pertinent, succinct points.

16.                The traffic department coordinates all phases of production and makes sure everything is completed before deadlines.

TRUE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-05 Describe the range of tasks people perform in an ad agency and an in-house advertising department.

Topic: How Companies Organize for Advertising

Feedback: The agency traffic department coordinates all phases of production and makes sure everything is completed and approved before client and/or media deadlines. Traffic is often the first stop for entry-level college graduates and an excellent place to learn about agency operations.

17.                Local newspapers typically charge all advertisers the same commission—no matter what the size of the company.

FALSE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: How Companies Organize for Advertising

Feedback: Some media—local newspapers, for example—allow a commission on the higher rates they charge national advertisers but not on the lower rates they charge local advertisers.

18.                The incentive system is also called the retainer method.

FALSE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: Compensating Advertising Agencies

Feedback: The retainer method is also called the straight-fee method. In the straight-fee or retainer method, agencies charge for all their services, either by the hour or by the month, and return any media commissions earned to the client.

19.                Most agencies prefer giving a speculative presentation to potential clients than highlighting past accomplishments because speculative presentations are quick and inexpensive.

FALSE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: Participants in Advertising

Feedback: A speculative presentation allows an advertiser to see what the agency can do for it before signing any contractual agreement, but they require significant effort. Most agencies prefer building presentations around the work they’ve already done.

20.                Dissatisfaction with agency conduct is the most commonly cited reason for agency switches.

TRUE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: Participants in Advertising

Feedback: Dissatisfaction with agency conduct, or performance, is the most commonly cited reason for agency switches in every country.

21.                Advertising professionals argue that local advertisers have an advantage in social media over national advertisers because they can use local events like weather changes and festivals to inform customers of their products.

TRUE

AACSB: Technology

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-03 Explain how advertisers organize themselves to manage their advertising both here and abroad.

Topic: Local, National, and Transnational Advertisers

Feedback: Joe Morsello, a communications manager at a local business trade association, argues that local advertisers have an advantage over national advertisers in social media because they share a community with their customers. When things happen locally (bad weather, a town festival, a breaking news story), local advertisers can target customers about these shared events.

22.                Ford, GE, and McDonald’s are global advertisers that use a standardized approach to marketing and advertising in all countries.

TRUE

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-03 Explain how advertisers organize themselves to manage their advertising both here and abroad.

Topic: Local, National, and Transnational Advertisers

Feedback: Multinationals that use a standardized approach to marketing and advertising in all countries are considered global marketers, and they create global brands. Their assumption is that the way the product is used and the needs it satisfies are universal. McDonald’s, Coca-Cola, Ford, Apple, GE, and L’Oréal are global advertisers.

23.                An advertising agency that earns more money if an ad campaign attains specific, agreed-upon goals is most likely being compensated through an incentive system.

TRUE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: Compensating Advertising Agencies

Feedback: With a new type of agency compensation, the incentive system (sometimes called pay-for-performance), the agency earns more if the campaign attains specific, agreed-upon goals.

24.                In-house advertising agencies typically attract the best creative people, who prefer the stability of such settings and the lack of internal politics and managerial criticism.

FALSE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: How Companies Organize for Advertising

Feedback: In-house agencies have difficulty attracting and keeping the best creative people, who tend to prefer the variety and challenges offered by independent agencies.

25.                Many small and lesser-known agencies solicit new business by making cold calls, writing letters, and participating in advertising competitions.

TRUE

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: Participants in Advertising

Feedback: Lesser-known agencies may solicit new business by advertising, writing letters, making cold calls, or following up leads from sources in the business. Many agencies submit their best ads to competitions around the world to win awards and gain publicity and professional respect for their creative excellence.

26.                Advertising is organized around four distinct groups. Which group includes the photographers, the illustrators, video production houses, and digital service bureaus?

27.                encoders

28.                clients

29.                agencies

30.                D. suppliers

31.                creators

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-01 List the various groups in the advertising business and explain their relationships.

Topic: Participants in Advertising

Feedback: Suppliers include the photographers, illustrators, printers, digital service bureaus, video production houses, Web developers, and others who assist advertisers and agencies in preparing advertising materials. Suppliers also include consultants, research firms, and professional services.

27.                In advertising, what are television, radio, newspapers, magazines, billboards, direct mail, coffee mugs, and digital entertainment, commonly described as?

28.                clients

29.                B. media

30.                suppliers

31.                creative boutiques

32.                communication networks

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-01 List the various groups in the advertising business and explain their relationships.

Topic: Participants in Advertising

Feedback: The media sell time (on radio and TV), and space (in print, outdoor), or both (digital media) for delivering the advertiser’s message to the target audience.

28.                When Evie Poitevant, owner of a boutique shoe store, tweets about her stylish rain boots during a rainstorm at a neighborhood jazz festival, it is an example of _____ advertising.

29.                A. local

30.                institutional

31.                interactive

32.                interregional

33.                dealer

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Blooms: Apply

Difficulty: 2 Medium

Learning Objective: 03-02 Discuss the differences between local, national, and transnational advertisers.

Topic: Local, National, and Transnational Advertisers

Feedback: Local advertising is done by local businesses targeting customers in their geographic area. This is exactly what Evie Poitevent did when rain threatened to spoil a jazz festival in New Orleans. The boutique shoe store owner tweeted about her stylish rain boots and quickly sold out her inventory.

29.                Which of the following statements about local advertising is most likely true?

30.                Retail advertising is always local.

31.                There are only two categories of local advertisers.

32.                Local advertising refers to advertising done by stores like PetSmart and Target.

33.                D. Local advertising is critical because most consumer sales are made or lost locally.

34.                Ninety percent of the money advertisers spend each year is spent on local advertising.

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 3 Hard

Learning Objective: 03-02 Discuss the differences between local, national, and transnational advertisers.

Topic: Local, National, and Transnational Advertisers

Feedback: Local advertising is critically important because most consumer sales are made (or lost) locally. Both local and national stores use local advertising. There are four main types of local advertisers.

30.                Which of the following is an example of product advertising?

31.                A. an ad on Facebook advertising a two-for-one sale on fish tacos at Ralph Rubio’s Mexican restaurant

32.                a video on Youtube explaining British Petroleum’s efforts to help habitat in the Gulf of Mexico

33.                an ad sponsored by Avon promoting breast cancer prevention

34.                a classified ad to recruit new employees

35.                a television ad about the Ronald McDonald House’s efforts to help the families of sick children

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Blooms: Apply

Difficulty: 2 Medium

Learning Objective: 03-02 Discuss the differences between local, national, and transnational advertisers.

Topic: Local, National, and Transnational Advertisers

Feedback: Product advertising promotes a specific product or service and stimulates short-term action while building awareness of the business. To stimulate sales of merchandise or increase store traffic, local merchants frequently use sale advertising, placing items on sale and offering two-for-one specials or other deals.

31.                A(n) _____ performs all the administrative, planning, budgeting, and coordinating functions at a small, local business.

32.                account executive

33.                copywriter

34.                traffic manager

35.                D. advertising manager

36.                creative director

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-02 Discuss the differences between local, national, and transnational advertisers.

Topic: How Companies Organize for Advertising

Feedback: A small, local business—say, a hardware, clothing, or electronics store—may have just one person in charge of advertising. That person, the advertising manager, performs all the administrative, planning, budgeting, and coordinating functions. He or she may design ads, write copy, and engage customers in social media.

32.                _____ advertising attempts to create a favorable long-term perception of the business as a whole, not just of a particular good or service.

33.                A. Institutional

34.                Interactive

35.                Organizational

36.                Product

37.                Relationship

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-02 Discuss the differences between local, national, and transnational advertisers.

Topic: Local, National, and Transnational Advertisers

Feedback: Institutional advertising attempts to create a favorable long-term perception of the business as a whole, not just of a particular product or service. Many businesses use institutional advertising to promote an idea about the company and build long-term goodwill.

33.                Which of the following is an example of integrated marketing communications?

34.                a coupon in a local newspaper offering two-for-one printer cartridges at Office Depot

35.                an ad for American Express offering bonus air miles for purchases at restaurants, hotels, and car rental agencies

36.                a television ad for Toyota describing the company’s work to improve safety standards after a recent recall for brake failures

37.                an ad announcing GE appliances on sale for the holidays with free lifetime warranties available only at Best Buy for a limited time

38.                E. a series of ads on Facebook, in mailings, and on television from Ralph Rubio’s Mexican Restaurant describing the excellent service

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Blooms: Apply

Difficulty: 2 Medium

Learning Objective: 03-02 Discuss the differences between local, national, and transnational advertisers.

Topic: Key Concepts of Integrated Marketing Communications

Feedback: When Ralph Rubio built his restaurant business, his promotional activities involved a lot more than just running ads. In fact, he did everything he could to build relationships with his customers and to promote word of mouth. That meant using publicity, sales promotion, and direct response as well as media advertising—all integrated with consistently good food, reasonable prices, and excellent service. This combination constitutes integrated marketing communications (IMC)—joining together in a consistent manner every element that communicates with customers including the actual delivery of the product or service.

34.                Advertisers use _____ advertising in the newspaper to locate and recruit new employees, to offer services, or to sell or lease new and used merchandise.

35.                A. classified

36.                product

37.                generic

38.                relationship

39.                media

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-02 Discuss the differences between local, national, and transnational advertisers.

Topic: Local, National, and Transnational Advertisers

Feedback: Advertisers use classified advertising for a variety of reasons including to locate and recruit new employees, offer services (such as those of an employment agency or business opportunity broker), or sell or lease new and used merchandise (such as cars, real estate, and office equipment).

35.                Which of the following is a function of cooperative advertising?

36.                utilizing social media marketing

37.                ensuring that franchisees advertise

38.                C. building the manufacturer’s brand image

39.                lowering the manufacturer’s variable costs

40.                reducing dependence on institutional advertising

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-02 Discuss the differences between local, national, and transnational advertisers.

Topic: Local, National, and Transnational Advertisers

Feedback: Cooperative (co-op) advertising has two key purposes: to build the manufacturer’s brand image and to help distributors, dealers, or retailers increase sales.

36.                Hudson Pool and Spa, owned by Jill and Joel Hudson, sells and installs above-ground swimming pools and Beachcomber brand hot tubs. The manufacturer of the Beachcomber hot tub has sent the Hudsons a letter in which it offers to pay 50 percent of the advertising cost if the Hudsons will run a newspaper ad featuring the Beachcomber hot tubs. What type of advertising is the Beachcomber manufacturer suggesting they use?

37.                A. cooperative advertising

38.                horizontal advertising

39.                vertical advertising

40.                a franchise promotion

41.                a strategic promotion

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Blooms: Apply

Difficulty: 2 Medium

Learning Objective: 03-02 Discuss the differences between local, national, and transnational advertisers.

Topic: Local, National, and Transnational Advertisers

Feedback: The costs are shared in cooperative advertising by the manufacturer and the retailer.

37.                Southern California Honda Dealers is a franchise group that coordinates more than 50 Honda Dealers in Southern California. It advertises only in those areas where it has stores. The form of advertising that best describes Southern California Honda Dealers’ approach to advertising is

38.                institutional.

39.                adjacency.

40.                C.

41.                national.

42.                local.

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Blooms: Apply

Difficulty: 2 Medium

Learning Objective: 03-02 Discuss the differences between local, national, and transnational advertisers.

Topic: Local, National, and Transnational Advertisers

Feedback: Some companies operate in one part of the country—in one or several states—and market exclusively within that region. These are referred to as regional advertisers.

38.                National companies focus on building their _____, while local advertisers focus on attracting customers to a location.

39.                autonomy

40.                ad penetration

41.                C. brands

42.                volume

43.                tactics

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-02 Discuss the differences between local, national, and transnational advertisers.

Topic: Local, National, and Transnational Advertisers

Feedback: National companies are concerned about building their brands, so their advertising tends to focus on the competitive features of one brand over another. Local merchants or dealers often carry hundreds of different brands, so they focus on attracting customers to a particular location—their place of business.

39.                Evie Poitevent operates a boutique store that specializes in footwear. She faces many promotional and advertising decisions on a daily basis, such as what kind of a sale she should conduct after Christmas, for how many days the sale should be held, and what kind of items should be placed on sale. Poitevent’s advertising focus is on _____ because of its short-term nature.

40.                strategy

41.                B. tactics

42.                narrowcasting

43.                broadcasting

44.                relationships

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Blooms: Apply

Difficulty: 2 Medium

Learning Objective: 03-02 Discuss the differences between local, national, and transnational advertisers.

Topic: Local, National, and Transnational Advertisers

Feedback: Local advertisers typically take a tactical approach to planning, while large firms focus on strategies to launch, build, and sustain brands.

40.                Toys ‘R’ Us has divided its advertising department into two sections: Toys ‘R’ Us United States and Toys ‘R’ Us International. Toys ‘R’ Us International is further divided into individual overseas locations including Italy, Germany, France, Hong Kong, Singapore, and Canada. Given these facts, it would appear that the Toys ‘R’ Us ad department is organized by

41.                product.

42.                brand.

43.                end user.

44.                media.

45.                E.

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Blooms: Apply

Difficulty: 3 Hard

Learning Objective: 03-03 Explain how advertisers organize themselves to manage their advertising both here and abroad.

Topic: How Companies Organize for Advertising

Feedback: The advertising department may be organized in any of five ways: by product or brand, by sub-function of advertising (copy, art, print production, media buying), by end user (consumer advertising, trade advertising), by media (radio, TV, Web, outdoor), by geography (western advertising, eastern advertising, international advertising).

41.                Ericsson, an international telecommunications supplier, manufactures radio communication systems, defense systems, components, and cable and network television systems. If a media representative wants to sell ad space to the company, he or she must meet with representatives from each of the product lines. Ericsson’s ad department is organized by

42.                A.

43.                service.

44.                end user.

45.                media.

46.                geography.

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Blooms: Apply

Difficulty: 3 Hard

Learning Objective: 03-03 Explain how advertisers organize themselves to manage their advertising both here and abroad.

Topic: How Companies Organize for Advertising

Feedback: The advertising department may be organized in any of five ways: by product or brand, by sub-function of advertising (copy, art, print production, media buying), by end user (consumer advertising, trade advertising), by media (radio, TV, Web, outdoor), by geography (western advertising, eastern advertising, international advertising). This is similar to the General Mills example in text.

42.                A decentralized advertising system is first broken up by

43.                product or brand.

44.                subfunction of advertising.

45.                C. separate departments.

46.                end user.

47.                medium.

 

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-03 Explain how advertisers organize themselves to manage their advertising both here and abroad.

Topic: How Companies Organize for Advertising

Feedback: In a decentralized system, the company sets up separate ad departments for different divisions, subsidiaries, regions, brands, or other categories that suit the company’s needs. For large companies with many divisions, decentralized advertising is more flexible.

43.                In a decentralized system, the _____ of each division or brand is responsible for that group’s advertising.

44.                brand manager

45.                creative manager

46.                organizer

47.                D. general manager

48.                marketing manager

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-03 Explain how advertisers organize themselves to manage their advertising both here and abroad.

Topic: How Companies Organize for Advertising

Feedback: The general manager of each division or brand is responsible for that group’s advertising. A brand manager, who oversees each individual brand, typically works under a marketing manager. This system gives significant authority to the individuals responsible for each brand.

44.                Organizations that use a standardized approach to marketing and advertising in all countries in which they do business are called

45.                foreign marketers.

46.                homogenized corporations.

47.                C. global marketers.

48.                international exporters.

49.                transnational corporations.

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-03 Explain how advertisers organize themselves to manage their advertising both here and abroad.

Topic: Local, National, and Transnational Advertisers

Feedback: Multinationals that use a standardized approach to marketing and advertising in all countries are considered global marketers, and they create global brands.

45.                An advertiser who uses international media most likely

46.                A. uses the same ad in several countries.

47.                relies on an in-house advertising group.

48.                has a highly decentralized advertising department.

49.                develops a different ad for the local media of each country.

50.                typically produces its ads in the language of each country in which it advertises.

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-03 Explain how advertisers organize themselves to manage their advertising both here and abroad.

Topic: Local, National, and Transnational Advertisers

Feedback: International media refer to media serving several countries. An advertiser would most likely use the same ad campaign across national borders.

46.                Procter & Gamble’s brands are advertised in more than 180 countries, with different ad themes in scores of different languages. Overseas divisions are set up like separate companies, with their own advertising departments to coordinate advertising across brands in that division. Procter & Gamble would be a user of

47.                viral marketing.

48.                B. foreign media.

49.                global advertising.

50.                standardized advertising.

51.                international media.

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Blooms: Apply

Difficulty: 2 Medium

Learning Objective: 03-03 Explain how advertisers organize themselves to manage their advertising both here and abroad.

Topic: Local, National, and Transnational Advertisers

Feedback: Advertisers use foreign media—the local media of each country—for large campaigns targeted to consumers or businesses within a single country. Because foreign media cater to their own national audience, advertisers must produce their ads in the language of each country.

47.                As defined by the American Association of Advertising Agencies, the _____ is an independent organization of creative people and business people that specialize in developing and preparing advertising plans, advertising, and other promotional tools.

48.                creative boutique

49.                promotional facilitator

50.                facilitating intermediary

51.                D. advertising agency

52.                advertising supplier

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-04 Define the main types of advertising agencies.

Topic: The Role of Advertising Agencies

Feedback: The American Association of Advertising Agencies (AAAA) defines an advertising agency as an independent organization of creative people and business people who specialize in developing and preparing marketing and advertising plans, advertisements, and other promotional tools.

48.                What is the most likely advantage of using an independent advertising agency instead of an in-house agency?

49.                reduced overhead

50.                organizational vision

51.                distribution control

52.                D. greater experience

53.                lower commissions

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-04 Define the main types of advertising agencies.

Topic: The Role of Advertising Agencies

Feedback: Outside agencies typically offer greater experience, versatility, and a larger talent pool. Advertisers with in-house agencies hope to save money by cutting overhead, keeping the media commission, and avoiding markups on outside purchases.

49.                The modern _____ advertising agency supplies both advertising and nonadvertising services in all areas of communications and promotion for its clients.

50.                entrepreneurial

51.                institutional

52.                organizational

53.                D. full-service

54.                multi-tasking

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-04 Define the main types of advertising agencies.

Topic: The Role of Advertising Agencies

Feedback: The modern full-service advertising agency supplies both advertising and non-advertising services in all areas of communications and promotion.

50.                Non-advertising services include

51.                planning ads.

52.                B. creating trade-show exhibits.

53.                performing research.

54.                selecting media.

55.                creating ads.

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-04 Define the main types of advertising agencies.

Topic: The Role of Advertising Agencies

Feedback: Advertising services include planning, creating, and producing ads; performing research; and selecting media. Non-advertising services run the gamut from packaging to public relations to producing sales promotion materials, annual reports, and trade-show exhibits.

51.                General consumer agencies

52.                provide advertising primarily for trade publications.

53.                concentrate on institutional advertising accounts.

54.                C. represent the widest variety of accounts.

55.                are not paid on a commission basis.

56.                do not operate internationally.

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-04 Define the main types of advertising agencies.

Topic: The Role of Advertising Agencies

Feedback: A general consumer agency represents the widest variety of accounts, but it concentrates on consumer accounts—companies that make goods purchased chiefly by consumers.

52.                A manufacturer of _____ would be most likely to use a business-to-business agency.

53.                greeting cards

54.                B. X-ray machines

55.                personal laptops

56.                designer apparel

57.                monogrammed towels

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Blooms: Apply

Difficulty: 2 Medium

Learning Objective: 03-04 Define the main types of advertising agencies.

Topic: The Role of Advertising Agencies

Feedback: A business-to-business agency represents clients that market products to other businesses. Examples are electronic components for computer manufacturers, equipment used in oil and gas refineries, and MRI equipment or X-ray machines for radiology.

53.                Flex Co. manufactures rivets used on heavily loaded conveyor belts which carry ore in underground and surface mining operations. Flex would most likely hire a(n) _____ agency to create the company’s advertising.

54.                general consumer

55.                intermediary

56.                institutional

57.                noncommissioned

58.                E. business-to-business

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Blooms: Apply

Difficulty: 2 Medium

Learning Objective: 03-04 Define the main types of advertising agencies.

Topic: The Role of Advertising Agencies

Feedback: A business-to-business agency represents clients that market products to other businesses. Examples are electronic components for computer manufacturers, equipment used in oil and gas refineries, and MRI equipment for radiology.

54.                A(n) _____ is an organization of talented artists who work for advertisers and occasionally subcontract to advertising agencies. Its mission is to develop exciting creative concepts and to produce fresh, distinctive advertising messages.

55.                promotional facilitator

56.                interactive agency

57.                entrepreneurial agency

58.                D. creative boutique

59.                IMC agency

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-04 Define the main types of advertising agencies.

Topic: The Role of Advertising Agencies

Feedback: Some talented artists—such as graphic designers and copywriters—have set up their own creative services, or creative boutiques. They work for advertisers and occasionally subcontract to ad agencies. Their mission is to develop exciting creative concepts and produce fresh, distinctive advertising messages.

55.                Creative boutiques usually provide

56.                A. original concepts.

57.                research.

58.                marketing.

59.                sales expertise.

60.                deep customer service.

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Blooms: Apply

Difficulty: 2 Medium

Learning Objective: 03-04 Define the main types of advertising agencies.

Topic: The Role of Advertising Agencies

Feedback: Advertising effectiveness depends on originality in concept, design, and writing. However, while boutiques may be economical, they usually don’t provide the research, marketing, sales expertise, or deep customer service that full-service agencies offer. Thus, boutiques tend to be limited to the role of creative suppliers.

56.                Western International Inc. purchases unsold television and radio media and resells the time and space to advertisers and agencies. Western International is most likely a(n)

57.                entrepreneurial agency.

58.                promotional facilitator.

59.                creative boutique.

60.                D. media-buying service.

61.                promotional broker.

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Blooms: Apply

Difficulty: 2 Medium

Learning Objective: 03-04 Define the main types of advertising agencies.

Topic: Role of the Media Buyer

Feedback: A media-buying service is an organization such as Western International that specializes in purchasing and packaging radio and television time.

57.                Interactive agencies

58.                use customer relationship marketing to work with customers.

59.                create ads for nontraditional media like shopping carts.

60.                C. design Web pages and ads for the Internet.

61.                purchase media time and space in bulk.

62.                facilitate refunds and rebate offers.

AACSB: Technology

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-04 Define the main types of advertising agencies.

Topic: The Role of Advertising Agencies

Feedback: An interactive agency is an advertising agency that specializes in the creation of digital interactive media such as Web pages, mobile apps, and social media campaigns.

58.                Account executives are

59.                brokers of advertising services to small firms.

60.                B. the liaisons between the agency and the client.

61.                typically employed by nonprofit organizations.

62.                agents that handle multiple, noncompeting accounts.

63.                the sole media buyers at most in-house advertising agencies.

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-05 Describe the range of tasks people perform in an ad agency and an in-house advertising department.

Topic: How Companies Organize for Advertising

Feedback: Account executives (AEs) are the liaison between the agency and the client. The account executive is responsible both for managing all the agency’s services for the benefit of the client and for representing the agency’s point of view to the client.

59.                Which of the following statements is most likely true about account planning?

60.                It is a method used to benchmark competitors’ promotions.

61.                B. It bridges the gap between management and creatives.

62.                It rarely involves conducting consumer research.

63.                It restructures an advertiser to improve its image.

64.                It is a service provided by B2B creative boutiques.

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-05 Describe the range of tasks people perform in an ad agency and an in-house advertising department.

Topic: The Role of Account Planners and Specialized Marketing Communication Organizations

Feedback: Account planning is a hybrid discipline that uses research to bridge the gap between account management and creatives. The account planner also defends the consumer’s point of view and the creative strategy in the debate between the agency’s creative team and the client.

60.                _____ must have the skill to condense all that can be said about a product into a few salient and pertinent points.

61.                Account directors

62.                Advertising supervisors

63.                C. Copywriters

64.                Communication specialists

65.                Advertising planners

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-05 Describe the range of tasks people perform in an ad agency and an in-house advertising department.

Topic: The Role of the Creative Department

Feedback: Copywriters are people who create the words and concepts for ads and commercials. They must condense all that can be said about a product into a few pertinent, succinct points.

61.                An ad for Benetton shows a full-size photograph of a young woman wearing business casual clothing and looking despondent. The caption says, “Unemployee of the Year.” Who is in charge of the photograph portion of the ad, its framing, and the location and appearance of the language in the ad?

62.                ad illustrator

63.                advertising planner

64.                media specialist

65.                D. art director

66.                communication specialist

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Blooms: Apply

Difficulty: 2 Medium

Learning Objective: 03-05 Describe the range of tasks people perform in an ad agency and an in-house advertising department.

Topic: The Role of the Creative Department

Feedback: The job of the art directors, graphic designers, and production artists is to determine how an ad’s verbal and visual symbols will fit together. The art director deals with all of the nonverbal parts of the ad.

62.                An ad agency’s traffic department

63.                makes sure there is no unplanned replication of the advertising effort.

64.                maintains the agency’s position as a facilitating intermediary.

65.                develops the client’s channel of distribution.

66.                D. coordinates all phases of ad production.

67.                negotiates long-term media deals.

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-05 Describe the range of tasks people perform in an ad agency and an in-house advertising department.

Topic: How Companies Organize for Advertising

Feedback: The agency traffic department coordinates all phases of production and makes sure everything is completed and approved before client and/or media deadlines.

63.                A large advertising agency that is divided into a number of “little” agencies is most likely structured according to

64.                industry.

65.                B. the group system.

66.                media availability.

67.                the departmental system.

68.                geographical location.

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-05 Describe the range of tasks people perform in an ad agency and an in-house advertising department.

Topic: How Companies Organize for Advertising

Feedback: Medium and large agencies are usually structured in a departmental or group system. In the departmental system, agencies are organized around various functions. In the group system, the agency is divided into a number of “little” agencies or groups.

64.                When the advertising agency of Lopez and White purchased several hours of television time for its customers’ commercials from KLOX-TV, the agency received 15 percent of the gross amount charged by the station. The 15 percent is known as a

65.                spiff.

66.                retainer.

67.                markup.

68.                slotting allowance.

69.                E. media commission.

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Blooms: Apply

Difficulty: 2 Medium

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: Compensating Advertising Agencies

Feedback: Media commission is compensation paid by a medium to recognized advertising agencies, usually 15 percent for advertising placed with it.

65.                If Tomlinson Inc., an ad agency, were to buy an ad in Western Horseman magazine for the manufacturer of Reins saddles, the ad would cost $3,000. How much money would the advertising agency bill the saddle manufacturer?

66.                $2,250

67.                $2,850

68.                C. $3,000

69.                $3,150

70.                $3,750

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Blooms: Apply

Difficulty: 3 Hard

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: Compensating Advertising Agencies

Feedback: The saddle manufacturer would pay the full price ($3,000) to the agency. The agency would then subtract the commission before paying the magazine.

66.                JWT Co., an ad agency, has designed a quarter-page magazine ad for Promise vegetable-oil spray. The job required the services of a photographer to produce photographs of various foods that will “taste better with Promise.” The invoice for the artwork from the photographer was for $200. If JWT uses the traditional markup, how much did the advertising agency bill Promise vegetable-oil spray company?

67.                $170

68.                $200

69.                $230

70.                D. $235

71.                $250

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Blooms: Apply

Difficulty: 3 Hard

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: Compensating Advertising Agencies

Feedback: Markup is a source of agency income gained by adding some amount to a supplier’s bill, usually 17.65 percent. To get the traditional agency commission of 15 percent, JWT would markup the $200 bill by 17.65 percent which comes to $235.

67.                An agency that earns a _____ charges a basic monthly fee for all of its services to the client and retains any media commissions earned.

68.                retainer

69.                salary-plus-commission

70.                media markup

71.                D. fee-commission combination

72.                negotiated fee

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: Compensating Advertising Agencies

Feedback: There are two pricing methods in the fee system. With the fee-commission combination, the agency charges a basic monthly fee for all its services to the client and retains any media commissions earned.

68.                In advertising, a retainer is

69.                A. the same as a straight fee.

70.                a commission that is paid on a monthly rate.

71.                a form of markup paid by nonprofit organizations.

72.                the cost for reserving TV and radio time.

73.                a commission paid to media-buying services.

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: Compensating Advertising Agencies

Feedback: In the straight-fee or retainer method, agencies charge for all their services, either by the hour or by the month, and return any media commissions earned to the client.

69.                The primary reason that some advertisers set up a wholly owned in-house ad agency is to

70.                attract the best photographers and graphic artists.

71.                B. save money and tighten control over their advertising.

72.                stimulate external creative efforts on the part of the marketing staff.

73.                meet the challenges of mass media with respect to creative incentives.

74.                utilize inexpensive social media tools in their online advertising efforts.

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: How Companies Organize for Advertising

Feedback: Some companies set up a wholly owned in-house agency (or house agency) to save money and tighten control over their advertising.

70.                What is probably the greatest disadvantage associated with in-house ad agencies?

71.                loss of revenues

72.                adherence to the organizational mission

73.                reluctant acknowledgement by the mass media

74.                D. loss of objectivity

75.                staff-line relationships

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: How Companies Organize for Advertising

Feedback: The biggest risk for in-house agencies may be a loss of objectivity. In the shadow of internal politics, linear-thinking policymakers, and criticism from management, ads may become bland and self-serving, rather than imaginative messages relevant to customers.

71.                When an advertiser asks for speculative presentation, the ad agency is expected to

72.                A. give a presentation of what the agency intends to do for the advertiser.

73.                infer what the market is for a particular product based on experience with other clients.

74.                show a portfolio of previous campaigns.

75.                improvise a storyboard based on brainstorming during a meeting.

76.                present three-dimensional advertising plan.

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: The Role of Advertising Agencies

Feedback: Some advertisers ask for or imply that they want a speculative presentation, meaning they want to see what the agency intends to do for them before they sign on.

72.                Which is not a way ad agencies typically get new clients?

73.                referrals and word of mouth

74.                advertising, writing letters, and making cold calls

75.                presentations

76.                publicity from recent campaigns

77.                E. research

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: Participants in Advertising

Feedback: To succeed, advertising agencies need clients. New clients come from personal contact with top management, referrals from satisfied clients or advertising consultants, publicity on recent successful campaigns, trade advertising, direct-mail solicitation, or an agency’s general reputation. The three most successful ways to develop new business are having clients who strongly champion the agency, having superior presentation skills, and cultivating a personal relationship with a network of top executives.

73.                What is the most critical factor in the agency-client relationship?

74.                the competitive relationship between the in-house and the outside agencies

75.                the level and type of communication between the client and the agency

76.                the ethical conduct and history of the advertising agency

77.                the dynamic nature of the environment in which the client operates

78.                E. the personal chemistry between the client’s employees and the agency’s staff

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: Participants in Advertising

Feedback: Many forces influence the agency-client relationship. Generally, they can be grouped into the four Cs: chemistry, communication, conduct, and changes. The most critical factor is the personal chemistry between the client and people in the agency.

74.                The most commonly cited reason for changing agencies is

75.                internal environmental changes.

76.                poor communication.

77.                the loss of subjectivity.

78.                D. dissatisfaction with agency conduct.

79.                a static competitive environment in the agency.

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: Participants in Advertising

Feedback: Dissatisfaction with agency conduct, or performance, is the most commonly cited reason for agency switches in every country.

75.                Which of the following are not considered to be suppliers?

76.                A. ad distributors

77.                art studios

78.                Web design houses

79.                printers

80.                film and video production houses

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: Participants in Advertising

Feedback: The people and organizations that provide specialized services to the advertising business are called suppliers. Without their services it would be impossible to produce the billions of dollars’ worth of advertising placed every year. Important suppliers include art studios and Web design houses, printers, film and video production houses, and research companies.

76.                _____ supply agencies with artwork and illustrations for advertisements.

77.                Ad intermediaries

78.                B. Art studios

79.                Art warehouses

80.                Production houses

81.                Art directors

AACSB: Analytic

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: Participants in Advertising

Feedback: Art studios design and produce artwork and illustrations for advertisements.

77.                Which of the following creates online ads?

78.                production houses

79.                art houses

80.                Internet boutiques

81.                art agencies

82.                E. Web design houses

AACSB: Technology

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: 1 Easy

Learning Objective: 03-06 Relate how agencies get new clients and how they make money.

Topic: Participants in Advertising

Feedback: Similar to art studios, Web design houses employ specialists who understand the intricacies of Internet programming languages and can design ads and Web pages that are both effective and cost-efficient.