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CFMP practice questions

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Question 1Marketing Strategy and Planning

In the standard marketing planning sequence, which step immediately follows the situation analysis?

  1. Carrying out marketing control and evaluation
  2. Allocating the promotional budget line by line
  3. Setting marketing objectives and developing the strategy Correct answer.
  4. Implementing the marketing tactics

Explanation

Marketing planning moves from understanding the environment to deciding what the organisation intends to achieve and how. Objectives and strategy therefore follow the situation analysis, and only then can tactics be budgeted, implemented and controlled.

Question 2Marketing Strategy and Planning

A rival bank launches a digital onboarding platform that is rapidly winning younger customers away from your institution. In a SWOT analysis, this development is classified as a:

  1. Weakness
  2. Opportunity
  3. Threat Correct answer.
  4. Strength

Explanation

SWOT separates internal factors (strengths, weaknesses) from external ones (opportunities, threats). An adverse external development caused by a competitor is a threat because the firm does not control it but must respond to it.

Question 3Marketing Strategy and Planning

What is the primary purpose of a financial institution's mission statement in the marketing planning process?

  1. To define the organisation's purpose and the scope of markets it serves Correct answer.
  2. To detail the commission plan for sales staff
  3. To list the regulatory licences the institution holds
  4. To specify the annual advertising budget by channel

Explanation

A mission statement articulates why the organisation exists and which customers and needs it intends to serve, giving direction to later objectives and strategies. Budgets, licences and incentive plans are operational details that flow from the mission rather than define it.

Question 4Marketing Strategy and Planning

Which of the following is the best example of a SMART marketing objective?

  1. Increase brand awareness across the region
  2. Become the most trusted bank in the country
  3. Open 15% more retirement accounts through branch staff by 31 December Correct answer.
  4. Grow deposits substantially over time

Explanation

SMART objectives are specific, measurable, achievable, relevant and time-bound. Only the retirement-account objective states a metric, a responsible group and a deadline.

Question 5Marketing Strategy and Planning

Which element is added to the traditional four Ps when marketing services are described using the extended services mix?

  1. Product
  2. Price
  3. Process Correct answer.
  4. Promotion

Explanation

Services marketing extends the four Ps with people, process and physical evidence because service delivery, staff behaviour and tangible cues shape perceived quality. Process is one of these added elements.

Question 6Marketing Strategy and Planning

A new data-protection statute restricts how customer information may be used for outbound marketing. In a PESTLE analysis, this is classified under which dimension?

  1. Legal Correct answer.
  2. Economic
  3. Technological
  4. Political

Explanation

The legal dimension of PESTLE covers legislation, regulation and case law that constrain how the organisation may operate. A binding data-protection statute is a legal constraint on marketing practice.

Question 7Marketing Strategy and Planning

Dividing a retail banking market by customers' age, income level and life stage is an example of which segmentation basis?

  1. Behavioural
  2. Geographic
  3. Psychographic
  4. Demographic Correct answer.

Explanation

Demographic segmentation uses measurable population characteristics such as age, income, occupation and household life stage. These variables describe who the customer is rather than where they live or how they behave.

Question 8Marketing Strategy and Planning

An institution researches customer needs first and then designs its product range around those needs before setting volume targets. This reflects which business orientation?

  1. Selling orientation
  2. Production orientation
  3. Market orientation Correct answer.
  4. Product orientation

Explanation

A market orientation starts with the customer's needs and works back to the offer, treating customer satisfaction as the route to profit. The other orientations begin with internal capacity, existing products or promotional pressure.

Question 9Marketing Strategy and Planning

A life insurer that already sells term policies to individual customers begins offering the same term policies to small business owners through its existing broker network. Under the Ansoff matrix this is:

  1. Market development Correct answer.
  2. Market penetration
  3. Diversification
  4. Product development

Explanation

Ansoff classifies growth by whether the product and the market are existing or new. Taking an existing product into a new customer market is market development, which carries moderate risk because the offer itself is proven.

Question 10Marketing Strategy and Planning

In the BCG growth-share matrix, a product line with a low market share in a high-growth market is described as a:

  1. Question mark Correct answer.
  2. Star
  3. Cash cow
  4. Dog

Explanation

The BCG matrix pairs market growth with relative market share. Low share in a fast-growing market is a question mark: cash-hungry, with the potential to become a star if investment succeeds or to be divested if it does not.

Question 11Marketing Strategy and Planning

A well-funded digital-only bank begins accepting deposits in a region where an incumbent has historically faced no direct new competitors. Which of Porter's five forces is most directly intensified?

  1. Bargaining power of buyers
  2. Threat of new entrants Correct answer.
  3. Threat of substitute products
  4. Bargaining power of suppliers

Explanation

Porter's threat of new entrants concerns the ease with which additional competitors can join the industry and contest existing positions. A new institution entering the deposit market is precisely that force, even if it also raises customer choice as a side effect.

Question 12Marketing Strategy and Planning

A credit union advertises that every loan decision is made by a lending officer who lives in the customer's own town. This is an attempt to build a position based on:

  1. Promotional frequency
  2. Price leadership
  3. Service differentiation Correct answer.
  4. Product breadth

Explanation

Positioning requires a distinctive, valued and defensible claim in the target customer's mind. Local, personal decision-making is a claim about how the service is delivered, which is service differentiation rather than price or range.

Question 13Marketing Strategy and Planning

Which statement functions most effectively as a customer value proposition for a mobile savings app?

  1. Save automatically each payday with a protected, insured balance Correct answer.
  2. Our app runs on a modern cloud-based technology stack
  3. We were founded in 1998 by three local bankers
  4. Our staff are friendly, professional and always available

Explanation

A value proposition states the benefit a target customer receives and gives a reason to believe it. Combining an automatic saving benefit with a concrete assurance about protection does both in customer language.

Question 14Marketing Strategy and Planning

A firm sets next year's marketing budget by applying last year's marketing-to-sales ratio to the forecast sales figure. Which budgeting method is this?

  1. Affordable method
  2. Percentage-of-sales method Correct answer.
  3. Competitive-parity method
  4. Objective-and-task method

Explanation

The percentage-of-sales method ties spend to a fixed proportion of forecast or historical revenue. It is simple and financially defensible but can perpetuate underinvestment when sales fall, because the budget shrinks with them.

Question 15Marketing Strategy and Planning

In which stage of the product life cycle does sales growth flatten, competitive pressure push prices down, and the emphasis shift towards differentiating and retaining existing customers?

  1. Introduction
  2. Decline
  3. Maturity Correct answer.
  4. Growth

Explanation

In maturity, most of the addressable market has been served, so growth slows and competitors compete harder for share. Defending position through differentiation, loyalty and retention replaces rapid acquisition as the priority.

Question 16Marketing Strategy and Planning

At mid-year, a marketing plan's new-account openings are 20% below target while spending is on budget. What is the most appropriate control response?

  1. Wait until the year-end review to assess performance
  2. Increase the budget so the original target can still be met
  3. Revise the objective downwards so it matches current results
  4. Diagnose the cause of the shortfall and adjust the tactics Correct answer.

Explanation

Marketing control compares performance with plan and triggers corrective action while there is still time to act. Effective corrective action requires identifying whether the shortfall lies in the offer, the targeting, the message or the channel before changing anything.

Question 17Marketing Strategy and Planning

A bank estimates that a typical customer generates $180 of annual margin and remains a customer for an average of six years. Ignoring discounting, the customer lifetime value is:

  1. $30
  2. $180
  3. $1,080 Correct answer.
  4. $2,160

Explanation

A simple undiscounted customer lifetime value multiplies average annual margin by average retention duration. Here $180 × 6 years gives $1,080 per customer, which can then be compared with acquisition cost.

Question 18Marketing Strategy and Planning

A marketer wants rapid, low-cost evidence on which of two email headlines generates more responses before committing to a full campaign. Which approach fits best?

  1. Launch a multi-year longitudinal panel study
  2. Run an A/B test on a small sample of the mailing list Correct answer.
  3. Convene a focus group of ten existing customers
  4. Commission a nationwide telephone survey

Explanation

An A/B test exposes randomly split groups to alternative versions and compares actual behaviour, giving direct evidence on response at low cost. It measures what customers do rather than what they say they would do.

Question 19Marketing Strategy and Planning

A bank wants to serve mass-market customers' routine transactions at the lowest cost per transaction while preserving personal advice for complex needs. Which channel approach best fits?

  1. Rely solely on third-party brokers to distribute all products
  2. Move routine transactions to digital self-service and keep branches for advice Correct answer.
  3. Close all branches and serve every customer digitally
  4. Add branches in every neighbourhood to improve convenience

Explanation

Channel strategy should match the cost to serve with the complexity and value of the task. Routine, high-volume transactions are cheapest through digital self-service, while advice-intensive needs justify the higher cost of a face-to-face channel.

Question 20Marketing Strategy and Planning

Which customer segment is the most attractive for a bank to target?

  1. A segment whose needs require capabilities the bank does not possess
  2. A large segment with many competitors and low switching costs
  3. A growing segment that fits bank strengths and is reachable at low cost Correct answer.
  4. A small segment with limited ability to pay for the service

Explanation

Segment attractiveness depends on size and growth, competitive intensity, fit with the firm's capabilities and the cost of reaching the group. A growing segment aligned with existing strengths and efficiently reachable offers the best risk-adjusted return.

Question 21Marketing Strategy and Planning

A bank's strong mobile platform coincides with rising customer demand for remote banking. In a TOWS analysis, a strategy of aggressively expanding digital account acquisition is classified as:

  1. An SO strategy Correct answer.
  2. A WO strategy
  3. An ST strategy
  4. A WT strategy

Explanation

TOWS converts the SWOT lists into strategy options by pairing internal and external factors. Combining a strength with an opportunity to pursue growth is the SO quadrant, often called the maxi-maxi strategy.

Question 22Marketing Strategy and Planning

A campaign costs $50,000 and produces 200 new accounts with an average first-year margin of $400 per account. What is the first-year return on marketing investment, and what does it indicate?

  1. 37.5%, indicating a profitable campaign
  2. 160%, indicating a profitable campaign
  3. 60%, indicating an unprofitable campaign
  4. 60%, indicating a profitable campaign Correct answer.

Explanation

Return on marketing investment is the incremental contribution minus the spend, divided by the spend. Contribution is 200 × $400 = $80,000, so ($80,000 − $50,000) ÷ $50,000 = 60%, a positive return.

Question 23Marketing Strategy and Planning

A bank serves a narrow group of high-net-worth clients with tailored wealth services and does not attempt to compete on cost. Under Porter's generic strategies, this is:

  1. Broad differentiation
  2. Focus Correct answer.
  3. Cost leadership
  4. Stuck in the middle

Explanation

Porter's focus strategy targets a narrow segment and serves it better than broad-market competitors, either through lower cost or through differentiation for that segment. Restricting the customer set to high-net-worth clients with tailored service is a focused approach.

Question 24Marketing Strategy and Planning

A product launch slips because two departments disagree over who owns customer onboarding communications. In marketing planning terms, the root cause is:

  1. Poor internal marketing and cross-functional alignment Correct answer.
  2. Market research that is too small to be reliable
  3. A pricing model that misjudges price sensitivity
  4. A customer value proposition that is not compelling

Explanation

Implementation failure often stems from internal marketing problems: unclear ownership, conflicting incentives and weak coordination across functions. The symptom described is an accountability and alignment gap, not a flaw in the offer or the evidence base.

Question 25Marketing Strategy and Planning

A bank's three-year plan projects 12% deposit growth from current trends, but the corporate goal requires 20%. A strategic gap analysis would first lead the bank to:

  1. Lower the corporate growth goal so that it matches the trend projection
  2. Identify and evaluate additional initiatives to close the eight-point gap Correct answer.
  3. Increase advertising spend without changing the current strategy
  4. Postpone the plan until market conditions improve

Explanation

Gap analysis quantifies the difference between the desired outcome and the projected outcome, then asks what additional strategies could close it. The next step is therefore to generate and assess growth options before deciding on resources.

Question 26Marketing Strategy and Planning

A regional insurer learns that a large technology company with a widely used mobile app plans to launch micro-insurance products in its home market. In a SWOT analysis, this development is best classified as a:

  1. Threat Correct answer.
  2. Strength
  3. Weakness
  4. Opportunity

Explanation

SWOT separates internal factors (strengths and weaknesses) from external ones (opportunities and threats). A development arising outside the firm that could damage its performance is a threat, whether or not the firm is able to respond to it.

Question 27Marketing Strategy and Planning

A hospital group invests heavily in training and certification for its front-desk staff because patient satisfaction scores track closely with how staff behave at check-in. Within the extended services marketing mix, this investment is directed at which element?

  1. Process
  2. Physical evidence
  3. People Correct answer.
  4. Product

Explanation

The extended services mix adds people, process and physical evidence to the classic four Ps. People covers the staff who deliver the service and whose conduct shapes the customer's perception of service quality.

Question 28Marketing Strategy and Planning

A confectionery brand wants its chocolate bars stocked in as many convenience stores, vending machines and supermarkets as possible so that shoppers can buy on impulse. Which distribution intensity best matches this goal?

  1. Selective distribution
  2. Franchised distribution
  3. Exclusive distribution
  4. Intensive distribution Correct answer.

Explanation

Distribution intensity reflects how many intermediaries carry a product. Intensive distribution maximises outlet coverage for low-involvement, impulse-driven goods in which availability itself drives purchase.

Question 29Marketing Strategy and Planning

Which marketing objective is written in SMART form?

  1. Add 60,000 active mobile-banking users, a 15% rise, by 31 December next year. Correct answer.
  2. Become the most trusted and admired retail banking brand in the region over the long term.
  3. Significantly grow digital engagement and improve marketing return on investment across all channels.
  4. Improve overall marketing effectiveness and steadily reduce the cost of acquiring each new customer.

Explanation

A SMART objective is specific, measurable, achievable, relevant and time-bound. Only one option states a quantified change from an implied current baseline together with a fixed deadline.

Question 30Marketing Strategy and Planning

A rail operator's strategy team notes that more commuters are working from home and using remote collaboration tools instead of travelling to meetings. In Porter's five forces, this pressure is best described as:

  1. Bargaining power of buyers
  2. Bargaining power of suppliers
  3. Threat of substitutes Correct answer.
  4. Rivalry among existing competitors

Explanation

Substitutes are alternative ways of meeting the same underlying need, even when they come from a different product category. Remote collaboration removes the need to travel, so it caps the operator's pricing and growth potential.

Question 31Marketing Strategy and Planning

A challenger supermarket chain entering a saturated grocery market prices sharply below established rivals to win share quickly and accepts thin margins for the first two years. Which pricing strategy is this?

  1. Premium pricing
  2. Cost-plus pricing
  3. Penetration pricing Correct answer.
  4. Price skimming

Explanation

Penetration pricing sets a deliberately low initial price to accelerate adoption and build share, accepting low margins until volume or cost efficiencies arrive. It suits price-sensitive markets with easy switching.

Question 32Marketing Strategy and Planning

A campaign delivers 250,000 ad impressions, 5,000 clicks, 800 landing-page sign-ups and 160 funded accounts. What is the conversion rate from landing-page sign-up to funded account?

  1. 2%
  2. 3.2%
  3. 20% Correct answer.
  4. 0.064%

Explanation

Stage-to-stage conversion divides the number completing the later step by the number entering the earlier step: 160 divided by 800 equals 20%. The two stages named in the question must define both the numerator and the denominator.

Question 33Marketing Strategy and Planning

A bank spends $240 to acquire a customer whose estimated lifetime value is $1,200. How should the marketer interpret the resulting ratio?

  1. It is a 5:1 ratio, which means the acquisition campaign is unprofitable.
  2. It is a 5:1 ratio, which is generally a healthy return on acquisition spend. Correct answer.
  3. It is a 0.2:1 ratio, which sits below the break-even point.
  4. It is a 1:5 ratio, which signals that acquisition spending is far too low.

Explanation

The ratio compares lifetime value with acquisition cost: $1,200 divided by $240 equals 5:1. Ratios of roughly 3:1 or better are commonly treated as healthy, while a ratio near 1:1 leaves little room for overheads and profit.

Question 34Marketing Strategy and Planning

A firm can describe a proposed customer segment in rich detail but has no cost-effective way of reaching its members through any available channel. Which criterion of effective segmentation does the segment fail?

  1. Substantiality
  2. Measurability
  3. Durability
  4. Reachability Correct answer.

Explanation

A usable segment must be measurable, substantial, reachable, differentiable and actionable. Reachability means the firm can serve segment members through affordable channels; without it the segment cannot be addressed even if it is perfectly described.

Question 35Marketing Strategy and Planning

A positioning statement reads: "For first-time homebuyers who worry about hidden fees, our mortgage product is the only one that shows every cost up front." Which element of a standard positioning statement is missing?

  1. A reason to believe Correct answer.
  2. The customer need being addressed
  3. The core benefit promised to the buyer
  4. The target customer group

Explanation

A positioning statement normally names the target, the need, the brand, the competitive frame, the benefit and a reason to believe. This statement supplies the target, the need and the benefit but offers no evidence making the transparency claim credible.

Question 36Marketing Strategy and Planning

A consumer goods group owns dozens of separate product brands, each with its own name and identity, and deliberately keeps the corporate name out of consumer communications. Which brand architecture does this describe?

  1. House of brands Correct answer.
  2. Branded house
  3. Line extension
  4. Endorsed brand

Explanation

In a house-of-brands architecture the parent keeps its corporate identity separate and each product brand builds its own equity. This spreads risk across brands but forgoes the shared endorsement a corporate name could provide.

Question 37Marketing Strategy and Planning

A bank estimates that 4 million households in its region could use its savings product and that its own target segment of digitally active savers is 1.2 million households. It plans to capture 5% of that target segment within three years. What is the planned SOM in households?

  1. 60,000 households Correct answer.
  2. 1.2 million households
  3. 200,000 households
  4. 4 million households

Explanation

SOM is the share of the served market the firm realistically expects to win. The served market here is the 1.2 million digitally active savers, and 5% of that figure is 60,000 households.

Question 38Marketing Strategy and Planning

A brand manager has only a vague sense that younger customers find the mobile app confusing but has no defined hypotheses. Which research approach is most appropriate as a first step?

  1. A controlled field experiment with a control group
  2. A large-scale structured survey with fixed response options
  3. A longitudinal tracking study of brand awareness
  4. Qualitative depth interviews and focus groups Correct answer.

Explanation

Exploratory research is used when the problem is loosely defined and hypotheses are not yet formed. Small-sample qualitative techniques such as depth interviews surface themes that can later be tested quantitatively.

Question 39Marketing Strategy and Planning

A retailer carries a broad assortment at mid-market prices, spends less on service than premium rivals but more than discounters, and has steadily lost share at both ends of the market. According to Porter's generic strategies, the firm is:

  1. Stuck in the middle Correct answer.
  2. Operating a differentiation strategy
  3. Pursuing a focused differentiation strategy
  4. Following a cost leadership strategy

Explanation

Cost leadership and differentiation are the two broad routes to competitive advantage; a firm that attempts both without achieving either ends up stuck in the middle with below-average returns. This retailer's price and service positions sit between the two viable models.

Question 40Marketing Strategy and Planning

A marketing dashboard reports both the number of qualified leads generated each week and the revenue closed from those leads several months later. Which statement about these two metrics is correct?

  1. Neither can support in-plan control because both are financial measures.
  2. Leads are a leading indicator; closed revenue is a lagging indicator. Correct answer.
  3. Closed revenue is a leading indicator because it drives future lead generation activity.
  4. Both are lagging indicators because they are recorded after marketing spend has occurred.

Explanation

Leading indicators move before the outcome they predict and can still be acted on, whereas lagging indicators record results already achieved. Lead volume predicts later revenue and can be adjusted in-year, while closed revenue reports what has already happened.

Question 41Market Research and Customer Insight

A retail bank wants to understand the underlying reasons customers close their accounts. Which research approach is designed to explore motivations in depth with a small number of participants?

  1. A structured survey mailed to 10,000 customers
  2. A pricing experiment run in ten branches
  3. Focus groups with a small number of customers Correct answer.
  4. Analysis of past transaction records

Explanation

Qualitative methods such as focus groups explore motivations and attitudes in depth with small, non-representative groups. Large surveys, transaction analysis, and pricing experiments are quantitative approaches suited to measuring prevalence or causal effects rather than reasons.

Question 42Market Research and Customer Insight

In survey research, the entire group about which a researcher wishes to draw conclusions is called the:

  1. sampling unit
  2. sample frame
  3. panel
  4. population Correct answer.

Explanation

The population is the complete set of units about which conclusions are drawn. The sample frame is only the list actually used to select respondents, which may not cover the whole population.

Question 43Market Research and Customer Insight

Which metric is calculated as the percentage of promoters minus the percentage of detractors?

  1. Customer lifetime value
  2. Net Promoter Score Correct answer.
  3. Customer churn rate
  4. Customer satisfaction score

Explanation

Net Promoter Score subtracts the percentage of detractors from the percentage of promoters. Passives are counted in the base but contribute nothing to the numerator.

Question 44Market Research and Customer Insight

Which of the following is an example of secondary research?

  1. Fielding a new customer satisfaction survey
  2. Reviewing published industry reports on deposit growth Correct answer.
  3. Running a focus group with newly opened accounts
  4. Conducting in-depth interviews with ten branch managers

Explanation

Secondary research uses data that already exist, such as published reports, regulator statistics, or internal records. Primary research collects new data specifically for the question at hand.

Question 45Market Research and Customer Insight

Which survey question is double-barreled?

  1. How often do you visit a branch in a typical month?
  2. How satisfied are you with the speed of service at your local branch?
  3. How satisfied are you with our branch staff's speed and friendliness? Correct answer.
  4. How likely are you to recommend our branch to a friend or colleague?

Explanation

A double-barreled question asks about two issues at once, so a single answer cannot be interpreted. Speed and friendliness are separate attributes and must be rated separately.

Question 46Market Research and Customer Insight

A five-point response format running from 'strongly disagree' to 'strongly agree' is known as a:

  1. constant sum scale
  2. semantic differential scale
  3. Likert scale Correct answer.
  4. rank-order scale

Explanation

A Likert item presents a statement with a graded agree-disagree response set, and combining several such items produces a Likert scale. The format measures the strength of agreement with a statement.

Question 47Market Research and Customer Insight

Which sampling method gives every member of the population a known, non-zero chance of being selected?

  1. Convenience sampling
  2. Judgment sampling
  3. Quota sampling
  4. Simple random sampling Correct answer.

Explanation

Probability methods give every population member a known, non-zero selection chance, and simple random sampling is the basic form. Quota, convenience, and judgment samples are non-probability methods in which selection chances are unknown.

Question 48Market Research and Customer Insight

A visual representation of the stages, touchpoints, channels, and emotional highs and lows a customer experiences with a company is called a:

  1. perceptual map of competitor positions
  2. Gantt chart of the research timeline
  3. customer journey map Correct answer.
  4. brand funnel showing awareness and consideration

Explanation

A customer journey map documents the sequence of stages, touchpoints, channels, and emotional responses a customer goes through. It is used to find friction points across the whole experience.

Question 49Market Research and Customer Insight

A bank needs its survey to contain at least 100 small-business customers and 100 retail customers so each group can be analysed separately. Which sampling approach is most appropriate?

  1. Snowball sampling
  2. Convenience sampling
  3. Stratified sampling Correct answer.
  4. Simple random sampling

Explanation

Stratified sampling divides the frame into mutually exclusive strata and samples within each stratum, guaranteeing the required number from each segment. Simple random sampling could by chance produce too few small-business customers for subgroup analysis.

Question 50Market Research and Customer Insight

A satisfaction survey is sent only to customers who recently praised the bank on social media. The most serious threat to the study's validity is:

  1. coding error during data entry
  2. measurement error from poorly worded questionnaire items
  3. interviewer bias during data collection
  4. coverage error from an incomplete sampling frame Correct answer.

Explanation

Coverage error arises when the sampling frame omits or over-represents parts of the target population. Customers who praise the bank publicly are not representative of all customers, so the frame is biased regardless of how carefully the questions are written.