Value Chain Analysis Overview
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Questions and Answers

What is a significant risk marketers should avoid according to the content?

  • Believing that new ventures guarantee higher profits. (correct)
  • Overestimating the appeal of existing product features.
  • Neglecting the establishment of new distribution channels.
  • Failing to innovate within the core product line.

    • Which strategy could help in growing the core of a brand?

  • Focusing solely on new product categories.
  • Making the core of the brand as distinctive as possible. (correct)
  • Eliminating older versions of products immediately.
  • Limiting distribution to only premium channels.

    • Why is it crucial for a market leader to expand total market demand?

  • The dominant firm usually benefits the most from market expansion. (correct)
  • It minimizes legal and regulatory risks.
  • It reduces overall competition within the industry.
  • It allows the firm to focus solely on existing customers.

    • What should a market leader continuously do to protect its market share?

    <p>Lead in innovation for new products and services.</p> Signup and view all the answers

    What approach should be taken regarding distribution channels for brand growth?

    <p>Drive distribution through both existing and new channels.</p> Signup and view all the answers

    What can growing the core through improved revenues lead to?

    <p>Greater profits for the brand.</p> Signup and view all the answers

    Which of the following is NOT a method to grow the core of a brand?

    <p>Reducing the features of the existing product line.</p> Signup and view all the answers

    What is an assumption marketers make about well-known brands concerning market position?

    <p>They will automatically remain distinctive in consumers' minds.</p> Signup and view all the answers

    What is a possible consequence for dominant firms like Microsoft and Intel when they gain further market share?

    <p>They may face legal action for monopoly practices.</p> Signup and view all the answers

    What might the economic cost of gaining market share exceed?

    <p>The potential revenue from holdout customers.</p> Signup and view all the answers

    Why might companies that lower prices to gain market share not achieve their goals?

    <p>Rivals can match price cuts or provide additional value.</p> Signup and view all the answers

    What can result from too many customers overwhelming a firm’s resources?

    <p>Customer dissatisfaction and potential bankruptcy.</p> Signup and view all the answers

    Which firms have successfully gained market share by focusing on three key areas?

    <p>Companies excelling in new product activity.</p> Signup and view all the answers

    What is a risk associated with pursuing the wrong marketing activities?

    <p>Decreased product innovation.</p> Signup and view all the answers

    How did FairPoint Communications face challenges after acquiring customers from Verizon Communications?

    <p>They faced slow customer conversion and service issues.</p> Signup and view all the answers

    What strategy might large firms like Colgate and PepsiCo consider adopting?

    <p>Selecting a strategic posture to enhance competitiveness.</p> Signup and view all the answers

    What is the primary purpose of Value Chain Analysis?

    <p>To transform inputs into higher outputs</p> Signup and view all the answers

    Which of the following is not considered a primary activity in the value chain?

    <p>Human resource management</p> Signup and view all the answers

    Which activity involves the distribution of finished products?

    <p>Outbound logistics</p> Signup and view all the answers

    Which secondary activity focuses on the strategic management of staff?

    <p>Human resource management</p> Signup and view all the answers

    What is one effect of good marketing for new products?

    <p>Inducing trial and promoting word of mouth</p> Signup and view all the answers

    What is a significant challenge of marketing in mature markets?

    <p>Fighting for limited market share</p> Signup and view all the answers

    What is an important growth strategy mentioned for companies?

    <p>Growing the core products and markets</p> Signup and view all the answers

    What role does procurement play in a company’s value chain?

    <p>Purchasing raw materials and supplies</p> Signup and view all the answers

    What is the purpose of a broad market envelopment strategy?

    <p>To signal competitors not to initiate direct competition.</p> Signup and view all the answers

    What characterizes a counteroffensive defense strategy?

    <p>Meeting an attacker head-on while also hitting its flank.</p> Signup and view all the answers

    Which form of defense involves expanding into new territories and diversifying markets?

    <p>Mobile defense</p> Signup and view all the answers

    In a strategic withdrawal, what is a company likely to do?

    <p>Sell off weaker markets and reallocate resources.</p> Signup and view all the answers

    What is a potential downside of increasing market share through acquisition?

    <p>It can provoke antitrust action.</p> Signup and view all the answers

    When did U.S. tobacco companies start diversifying into other industries?

    <p>In response to growing regulations on smoking.</p> Signup and view all the answers

    Why might increasing market share not lead to higher profits, especially for service companies?

    <p>Labor-intensive services often lack economies of scale.</p> Signup and view all the answers

    What strategic move did P&G make regarding Pringles?

    <p>Sold Pringles to focus on its core products.</p> Signup and view all the answers

    What is an encirclement attack?

    <p>A strategy to launch a grand offensive on multiple fronts to take a larger territory.</p> Signup and view all the answers

    How did Sun Microsystems attempt to compete with Microsoft?

    <p>By licensing its Java software to many companies and developers.</p> Signup and view all the answers

    What is a bypass attack characterized by?

    <p>Attacking easier markets by diversifying strategies.</p> Signup and view all the answers

    How did Haier successfully enter the U.S. market?

    <p>By introducing small refrigerators aimed at college students.</p> Signup and view all the answers

    What type of strategy is identified as a guerrilla attack?

    <p>Small and occasional aggressive marketing tactics to disrupt competitors.</p> Signup and view all the answers

    Which of the following is NOT a line of approach in a bypass attack?

    <p>Focusing exclusively on existing customer bases.</p> Signup and view all the answers

    What is commonly associated with guerrilla marketing?

    <p>Innovative and disruptive marketing tactics.</p> Signup and view all the answers

    Which company is known for using guerrilla marketing tactics, including the Stratos jump?

    <p>Red Bull</p> Signup and view all the answers

    Study Notes

    Value Chain Analysis

    • Value chain represents a firm's internal activities when transforming inputs into outputs.
    • Value Chain Analysis (VCA) identifies and capitalizes on primary and support activities to reduce costs or increase differentiation.
    • Primary Activities:
      • Inbound logistics: raw materials handling & warehousing
      • Operations: machining, assembling, and testing
      • Outbound logistics: warehousing & distribution of finished products
      • Marketing & sales: advertising, promotion, pricing, and channel relations
      • Service: installation, repair, and parts
    • Secondary Activities
      • Firm infrastructure: general management, accounting, finance, and strategic planning
      • Human resource management: recruiting, training, and development
      • Technology development: research and development, product or process improvement
      • Procurement: purchasing raw materials, machines, and supplies

    Growth

    • Marketing drives growth in sales and revenue for a company.
    • Good marketing can induce trial and promote word of mouth & diffusion.
    • Growing the core involves focusing on the most successful existing products and markets.
    • Growing the core can be less risky than expanding into new product categories.
    • Growing the core strengthens a brand’s credentials as a source of authority and credibility and yields economies of scale.
    • Growing the core through improved revenues and lower costs can lead to greater profits.

    Growth Strategies

    • Make the core of the brand as distinctive as possible.
    • Drive distribution through both existing and new channels.
    • Offer the core product in new formats or versions.

    Competitive Strategies for Market Leaders

    • Market Leader: largest market share, leads in price changes, new product introductions, distribution coverage and promotional intensity.
    • To stay number one, the firm must:
      • Expand Total Market Demand: look for new customers or more usage from existing customers.
      • Protect Market Share:
        • Continuous innovation in product, service, distribution, and cost-cutting.
        • Achieve broad market envelopment signaling competitors not to attack.
        • Counteroffensive defense: meet the attacker frontally and hit its flank, launch a pincer movement, and exercise economic or political clout.
        • Mobile defense: stretch its domain over new territories through market broadening and market diversification.
        • Contraction defense: giving up weaker markets and reassign resources to stronger ones.
      • Increasing Market Share:
        • Consider antitrust action, economic cost, pursuing the wrong marketing activities and the effect of increased market share on quality.
        • Companies successfully gaining share typically outperform competitors in new-product activity, relative product quality, and marketing expenditures.

    Other Competitive Strategies

    • Challenger: Firms adopt one of two postures:
      • Frontal attack: matching the competitor's product, price, distribution, and advertising.
      • Flank attack: attacking a competitor's weak spots.
    • Follower:
      • Imitates the competitor's product and marketing strategies, but usually with less investment.
    • Nicher:
      • Serves a particular segment of the market, usually focusing on a specific geographic area or customer type.
    • Other Strategies
      • Encirclement Attack: Capture a wide slice of territory by launching a grand offensive on several fronts.
      • Bypass Attack: Bypass the enemy altogether by diversifying into: unrelated products, new geographical markets, and leapfrogging into new technologies.
      • Guerrilla Attack: Small, intermittent attacks to harass the opponent and eventually secure permanent footholds.

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    Description

    This quiz explores the concept of Value Chain Analysis, focusing on both primary and support activities within a firm. Understand the processes involved in transforming inputs into outputs, and how these can be optimized for cost reduction and differentiation. Test your knowledge on inbound logistics, operations, marketing, and more.

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