Marketing Strategies: Test Bank (Chapter 1-6)

lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies new product can be communicated. Other factors, while less important, are also at work, particularly at...

lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies new product can be communicated. Other factors, while less important, are also at work, particularly at the individual level, including the growing influence of social media. Thought should also be given to the legitimacy of the new product in the eyes of its stakeholders. Legitimacy may come from associations with established firms, the success of historical product launches or hiring a well-known name in the field. The rate at which an innovative new product category passes through the adoption process is also a function of the actions taken by the product’s marketers. Thus, the diffusion process may be faster when there is strong competition among competitors, when they have favorable reputations, and when they allocate substantial sums to R&D (to improve performance) and marketing (to build awareness). Level of Difficulty: Medium Page: 123–124 24. What are the major issues to be considered while designing marketing databases? Answer: Designing marketing databases that take effective advantage of customer data that companies are in a position to collect requires that several major issues be considered: the cost of collecting the data, the economic benefits of using the data, the ability of the company to keep the data current in today’s mobile society, and the rapid advances in technology that permit the data to be used to maximum advantage. Collecting information, then storing and maintaining it, always costs money. If a company wants to know more about the demographics and lifestyles of its best customers, in addition to their purchasing histories, it must obtain demographic and lifestyle data about them. Doing so is more difficult than it sounds; many people are unwilling to spend much time filling out forms that ask nosy questions about education, income, whether they play tennis, and what kind of car they drive. The cost of collecting such information must be weighed against its value. Level of Difficulty: Medium Page: 132 Chapter 06 Targeting Attractive Market Segments Multiple Choice Questions 1. _____ is the process by which a market is divided into distinct subsets of customers with similar needs and characteristics that lead them to respond in similar ways to a particular product offering and marketing program. A. Market capitalization B. Market segmentation C. Brand positioning D. Marketing mix Answer: b Level of Difficulty: Easy Page: 141 1-30 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies 2. _____ entails designing product offerings and marketing programs that can establish an enduring competitive advantage in the target market by creating a unique brand image, or position, in the customer’s mind. A. Brand positioning B. Market segmentation C. Brand preference D. Brand dilution Answer: a Level of Difficulty: Easy Page: 141 3. Identify the scenario emphasizing the impact of income on consumer markets that are segmented demographically. A. MobServ, a mobile service provider, focusing attention on the 65-plus segments to improve market penetration B. CarsForWomen Inc. launching an online information service aimed at women to directly influence eight out of ten vehicle purchases C. Cyan Mobiles launching a subsidiary to create an ultra-exclusive mobile telephone targeting customers who buy luxurious products D. GloGarments creating needs for specialized goods and services due to increase in the number of men opting for neon clothing Answer: c Level of Difficulty: Hard Page: 145 4. Carol’s Trio, an upscale retail chain, stocks and sells only Spanish, German, and French products. Trio is an example of segmenting a market by _____. A. age B. ethnic origin C. education D. income Answer: b Level of Difficulty: Easy Page: 145 5. _____ divides the market according to the characteristics of the buying organization using attributes such as age of firm, firm size, and industry affiliation. A. Microsegmentation B. Geographic segmentation C. Behavioral segmentation D. Macrosegmentation Answer: d Level of Difficulty: Easy Page: 146 1-31 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies 6. In _____, customers are grouped by the characteristics of the individuals who influence the purchasing decision. A. microsegmentation B. geographic segmentation C. demographic segmentation D. macrosegmentation Answer: a Level of Difficulty: Easy Page: 146 7. AdventureBikes targets wilderness enthusiasts and introduced special robust bikes for them. PowerDrink’s target market comprises tennis players who need to replenish water and salts lost through perspiration. These are examples of _____ segmentation that is based on target consumers’ activities. A. demographic B. geographical C. geodemographic D. behavioral Answer: d Level of Difficulty: Medium Page: 147 8. When consumers evaluate product alternatives on the basis of desired characteristics and how valuable each characteristic is to them, it is referred to as _____. A. benchmarking B. productivity paradox C. choice criteria D. paradox of thrift Answer: c Level of Difficulty: Easy Page: 147 9. Which of the following statements is true of behavioral segmentation? A. It is useful in assessing the size and market potential of a market segment defined by a particular trade area. B. It identifies a common purchasing structure across all organizational markets. C. It is based on who the target customers are and where they live. D. It identifies new markets even among homogeneous demographic groups when segmented by lifestyle. Answer: d Level of Difficulty: Medium Page: 148 10. Which of the following is true of principle-oriented consumers? A. They are motivated by abstract and idealized criteria. 1-32 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies B. They shop for products that demonstrate the consumer's success. C. They are guided by the need for social or physical activity and variety. D. They are motivated by risk-taking. Answer: a Level of Difficulty: Medium Page: 149 11. A(n) _____ consumer shops for products that demonstrate the consumer’s success. A. principle-oriented B. action-oriented C. resource-oriented D. status-oriented Answer: d Level of Difficulty: Easy Page: 149 12. _____ is the degree to which buying activity is centralized and influences a buyer to consider all transactions with a given supplier on a global basis, to emphasize cost savings, and to minimize risk. A. Brand parity B. Purchasing structure C. Choice criteria D. Purchasing influence Answer: b Level of Difficulty: Easy Page: 149 13. A(n) _____ refers to a recurring buying situation handled on a routine basis. A. straight rebuy B. old rebuy C. modified rebuy D. new buy Answer: a Level of Difficulty: Easy Page: 150 14. Which of the following buying situations occurs when some element, such as price or delivery schedules, has changed in a client–supplier relationship? A. A straight rebuy B. An old rebuy C. A modified rebuy D. A new buying situation Answer: c Level of Difficulty: Easy Page: 150 1-33 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies 15. What is the first step in constructing a market attractiveness/competitive position matrix for evaluating potential target markets? A. Selecting market attractiveness and competitive position factors B. Choosing segments to target and allocate resources C. Rating segments on each factor and plotting results on matrices D. Projecting future position for each segment Answer: a Level of Difficulty: Easy Page: 152 16. In which of the following steps of evaluating potential target markets is the market- attractiveness/competitive-position matrix plotted? A. Choosing segments to target and allocating resources B. Projecting future position for each segment C. Rating segments on each factor D. Assigning numerical weights to the factors Answer: c Level of Difficulty: Medium Page: 154-155 17. Based on the market attractiveness/competitive position matrix, which of the following strategies should a firm consider when the market attractiveness is moderate and the competitive position is weak? A. It should expand without high risk or minimize investment and focus on operations. B. It should withdraw if indications of sustainable growth are lacking. C. It should emphasize profitability by increasing productivity. D. It should seek ways to increase current earnings without speeding market's decline. Answer: a Level of Difficulty: Hard Page: 157 18. Based on the market attractiveness/competitive position matrix, which of the following strategies should a firm consider when the market attractiveness is low and the competitive position is strong? A. It should build selectively on strengths and invest to improve position only in areas where risk is low. B. It should emphasize profitability by increasing productivity and build up ability to counter competition. C. It should protect current strengths of the firm and seek ways to increase current earnings without speeding market’s decline. D. It should invest more to grow at a maximum rate and concentrate on maintaining strength. Answer: c Level of Difficulty: Easy Page: 157 1-34 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies 19. Based on the market attractiveness/competitive position matrix, which of the following strategies should a firm consider when the market attractiveness is high and the competitive position is strong? A. It should protect existing strengths and invest to improve position only in areas where risk is low. B. It should defend its current position and stop all further investments. C. It should sell when possible to maximize cash value and cut fixed costs in the meantime. D. It should invest more to grow at a maximum rate and concentrate on maintaining strengths. Answer: d Level of Difficulty: Easy Page: 157 20. Which of the following is true of a mass-market strategy? A. It involves serving one or more segments with customers seeking somewhat-specialized benefits from a product. B. It works on the principle that an undifferentiated marketing strategy generates more sales than a differentiated strategy. C. It involved using a differentiated marketing strategy to decrease manufacturing and promotion costs. D. It involves designing a single product-and-marketing program that will appeal to the largest number of consumers. Answer: d Level of Difficulty: Medium Page: 157 21. Which of the following market strategies is often favored by smaller companies to avoid direct confrontations with larger firms while building volume and share? A. A niche-market strategy B. A growth-market strategy C. A resource-market strategy D. A mass-market strategy Answer: b Level of Difficulty: Medium Page: 158 Essay Questions 22. What are the steps in a market segmentation process? Answer: There are three important steps in the market segmentation process: 1) Identify a homogeneous segment that differs from other segments: The process should identify one or more relatively homogeneous groups of prospective buyers with regard to their wants and needs and/or their likely responses to differences in the elements of the marketing mix. 2) Specify criteria that define the segment: The segmentation criteria should measure or 1-35 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies describe the segments clearly enough so that members can be readily identified and accessed, in order for the marketer to know whether a given prospective customer is or is not in the target market and in order to reach the prospective customer with advertising or other marketing communication messages. 3) Determine segment size and potential: Finally, the segmentation process should determine the size and market potential of each segment for use in prioritizing which segments to pursue. Level of Difficulty: Medium Page: 143–144 23. Briefly discuss the market attractiveness and competitive position factors. Answer: Market Attractiveness Factors: Assessing the attractiveness of markets or market segments involves determining the market’s size and growth rate and assessing various trends — demographic, sociocultural, economic, political/ legal, technological, and natural—that influence demand in that market. An even more critical factor in determining whether to enter a new market or market segment, however, is the degree to which unmet customer needs, or needs that are currently not being well served, can be identified. In the absence of unmet or underserved needs, it is likely to be difficult to win customer loyalty, regardless of how large the market or how fast it is growing. “Me-too” products often face difficult going in today’s highly competitive markets. Competitive Position Factors: Understanding the attractiveness of the industry in which one competes is also important. Entering a segment in a way that would place the firm in an unattractive industry or increase its exposure therein may not be wise. Of more immediate and salient concern, however, is the degree to which the firm’s proposed product will be sufficiently differentiated from its competitors, given the critical success factors and product life-cycle conditions already prevalent in the category. Similarly, decision makers need to know whether their firm has or will be able to acquire the resources it will take—human, financial, and otherwise—to effectively compete in the new segment. Simply put, most new goods or services need to be either better from a consumer point of view or cheaper than those they hope to replace. Entering a new market or market segment without a source of sustainable competitive advantage is often a trap. Level of Difficulty: Medium Page: 153 24. Explain niche-market and growth-market strategies with relevant examples. Answer: Niche-market strategy involves serving one or more segments that, while not the largest, consist of a sufficient number of customers seeking somewhat-specialized benefits from a good or service. For example, overall coffee consumption is down in some countries, but the sales of gourmet coffees in coffee bars such as Starbucks or Coffee Republic have boomed in recent years. Businesses pursuing a growth-market strategy often target one or more fast-growth segments, even though these segments may not currently be very large. It is a strategy often favored by smaller companies to avoid direct confrontations with larger firms while building volume and share. Such a strategy usually requires strong R&D and marketing capabilities to identify and develop products appealing to newly emerging user segments, plus the resources to finance rapid growth. The problem, however, is that fast growth, if sustained, attracts large competitors. This happened to Apple when IBM entered the personal computer 1-36 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies industry. The goal of the early entrant is to have developed an enduring competitive position via its products, service, distribution, and costs by the time competitors enter. Level of Difficulty: Hard Page: 157–159 Chapter 07 Differentiation and Brand Positioning Multiple Choice Questions 1. Brand positioning refers to both the place a brand occupies in customers' minds relative to the competition, and: A. the profit that positioning can generate. B. the characteristics built into the product. C. the marketer's decision making intended to create that position. D. the competitive advantage that a position conveys. Answer: c Level of Difficulty: Easy Page: 163 2. Identify a limitation of physical positioning. A. It ignores the early stages of identifying new product offerings. B. Competitive offerings of many industrial goods and services cannot be typically evaluated on the basis of physical characteristics. C. It is rarely useful in undertaking a positioning analysis because they are based primarily on technical rather than on market data. D. Customers' attitudes toward a product are often based on social or psychological attributes. Answer: d Level of Difficulty: Medium Page: 166 3. Which of the following is characteristic of perceptual positioning analysis of a brand? A. Technical orientation B. R&D implications need to be interpreted C. Physical brand properties D. Large number of dimensions Answer: b Level of Difficulty: Medium Page: 166 4. Which of the following is characteristic of physical positioning analysis of a brand? A. Represents impact of product specs B. Limited number of dimensions C. Need for marketing research D. Perceptual measures Answer: a Level of Difficulty: Medium 1-37 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies Page: 166 5. Which of the following is a characteristic of physical positioning? A. Large number of dimensions B. Consumer orientation C. Perceptual attributes D. Limited number of dimensions Answer: a Level of Difficulty: Medium Page: 166 6. Which of the following is a difference between physical and perceptual positioning? A. Physical positioning represents product specs and communication, but perceptual positioning does not. B. In a perceptual positioning analysis, data is readily available, but in physical positioning analyses it is not. C. Perceptual positioning has a consumer orientation while physical positioning has a technical orientation. D. Physical positioning analysis is based in perceptual measures, while perceptual positioning analysis is based in objective measures. Answer: c Level of Difficulty: Medium Page: 166 7. Which of the following examples best illustrates perceptual positioning? A. General Foods' breakfast cereal in new chocolate and honey flavors B. Volvo's new venture into making fighter planes C. L'Oreal's new range of water resistant lipstick in fruit flavors D. Colgate's toothpaste with enhanced freshness of breath and sparkly teeth Answer: d Level of Difficulty: Hard Page: 166 8. Marketing decision makers, while seeking to win a particular position in a customer's mind, endow their product with various kinds of attributes. The speed of a computer system, the roominess of a car, and a product or service being user-friendly are examples of which type of categorization based on such attributes? A. Simple physically based attributes B. Complex physically based attributes C. Essentially abstract attributes D. Price Answer: b Level of Difficulty: Medium Page: 167 1-38 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies 9. A firm is considering introducing a new product category in a highly competitive environment. The marketers obtain customer perceptions of the new product concept relative to likely substitute products on various critical determinant attributes. Which of the following stages of the product positioning process is the firm currently in? A. Determining customers' most preferred combination of determinant attributes B. Examining the fit between preferences of market segments and current position of product C. Determining product's current location in the product space and intensity D. Identifying relevant set of competitive products serving a target market Answer: d Level of Difficulty: Medium Page: 168-169 10. Volvo's emphasis on safety, Toyota's emphasis on reliability, and Norelco's promising a "close and comfortable shave" highlights which determinant attribute? A. Ingredients B. Manufacturing process C. Benefits D. Endorsements Answer: c Level of Difficulty: Easy Page: 170 11. Which of the following positioning bases typically includes “who made it” and “prior products?” A. Parentage B. Comparison C. Ingredients D. Pro-environment Answer: a Level of Difficulty: Medium Page: 170 12. Which of the following positioning bases is illustrated by a clothing manufacturer’s claim of their shirts being made from pure organic cotton? A. Price/quality B. Endorsements C. Ingredients D. Parentage Answer: c Level of Difficulty: Medium Page: 170 13. Which of the following is an example of using product features as a determinant attribute in positioning? A. "This is the quietest dishwasher made in America." 1-39 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies B. "Buying a car is like getting married." C. "We know it's perfect, but we take another 1,000 hours just to be sure." D. "Tests prove that Renty Candies is more nutritious than Jimbo Candies, costs less than Jimbo, and tastes great, too." Answer: a Level of Difficulty: Medium Page: 170 14. Rex and Tens, a food manufacturing company, has the following tagline in its ad for a new health drink—Speedheal“Find out why thousands of nutritionists across America are recommending Speedheal to their clients.”—Which positioning base is used in this Speedheal ad? A. Manufacturing process B. Endorsements C. Ingredients D. Parentage Answer: b Level of Difficulty: Hard Page: 170 15. A bank positions itself using its deposit safety as an attribute. Why would this positioning not create an impact in the consumer's mind? A. Because consumers can consider only those attributes of which they are aware B. Because the positioning effort was kept too simple and complexity was not included C. Because the importance attached to a bank’s deposit safety varies largely among consumers D. Because most consumers perceive all banks to be about equally safe Answer: d Level of Difficulty: Hard Page: 170-171 16. Two stores occupy positions comparable to one another on the positioning grid. This indicates that: A. the two stores use different perceptual positioning of their products. B. the intensity of competition between the two stores is most likely to be very low. C. consumers consider them to be relatively alike. D. consumers see them as very different. Answer: c Level of Difficulty: Medium Page: 172 17. Identify the limitation of a product positioning analysis. A. It does not tell the marketer which positions are most appealing to customers. B. It does not include a tool to identify gaps where an opportunity for developing a new product exists. C. It does not include a tool indicating how products within a category compare in terms of the level of as many attributes as are relevant. 1-40 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies D. It does not indicate how alternative products are positioned relative to one another in customers' minds. Answer: a Level of Difficulty: Medium Page: 176 18. Customers are surveyed and asked their preferences among various real or hypothetical product configurations, each with attributes that are systematically varied. This is an example of a: A. conjoint analysis. B. cluster analysis. C. logit analysis. D. discriminant analysis. Answer: a Level of Difficulty: Easy Page: 176 19. Both positioning statements and value propositions should reflect a: A. unique selling proposition. B. low price component. C. high value component. D. indication of high market acceptance. Answer: a Level of Difficulty: Easy Page: 179-180 20. _____ is the term marketers use to refer to the value created by establishing customer preference for one’s brand. A. Brand extension B. Brand recognition C. Brand positioning D. Brand equity Answer: d Level of Difficulty: Easy Page: 181 21. Which of the following results when companies create differences between their brands and other brands that consumers perceive as meaningful? A. Brand extension B. Diversification C. Line extension D. Brand equity Answer: d Level of Difficulty: Easy Page: 181 1-41 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies Essay Questions 22. Outline the elements involved with perceptual positioning. Answer: The elements involved with perceptual positioning are: Consumer orientation Perceptual attributes Perceptual measures Need for marketing research Perceptual brand positions and positioning intensities Limited number of dimensions Represents impact of product specs and communication R&D implications need to be interpreted Level of Difficulty: Easy Page: 166 23. Explain how the result of a brand positioning analysis affects the final decision about where to position a new brand or reposition an existing one. Answer: The chosen position should match the preferences of a particular market segment and should take into account the current positions of competing brands. It should reflect the current and future attractiveness of the target market and the relative strengths and weaknesses of competitors. Most successful products are positioned based on one or two determinant attributes. In “me- too” products, not only is success hard to achieve, but also ethical issues may arise. Documenting the desired positioning for the product provides a clear understanding of what is intended for the product and where it will fit in its competitive set. Two approaches are commonly used for this. In the classical approach, a positioning statement is written. Another approach involves writing a value proposition for the product. Level of Difficulty: Medium Page: 178-179 24. What are positioning statements and value propositions? Briefly explain their features. Answer: A positioning statement is a succinct statement that identifies the target market for which the product is intended and the product category in which it competes and states the unique benefit the product offers. A value proposition states what the product does for the customer, includes information about pricing relative to competitors. Both statements should reflect a unique selling proposition (USP) that the product embodies. A value proposition typically looks like this: (1) target market; (2) benefits offered (and not offered); (3) price range (relative to competitors). Both these statements should state benefits of the product, rather than its features. When used internally and by others, they are typically not written in catchy consumer language, though catchy slogans and tag lines for 1-42 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies communication with customers often follow. They are most commonly written for a product line or a brand, but sometimes for a single product or for a business as a whole. When used at the business level, they should articulate the strategic direction for the company. Level of Difficulty: Medium Page: 179-181 Chapter 08 Marketing Strategies for New Market Entries Multiple Choice Questions 1. In which of the following stages of the product life cycle do sales increase at a progressively faster rate as more people learn about the product and it becomes readily available? A. Growth stage B. Introductory stage C. Competitive turbulence stage D. Decline stage Answer: a Level of Difficulty: Easy Page: 191 2. _____ is designed to obtain as much margin per unit as possible and also enables the company to recover its new product investments more quickly. A. Penetration pricing B. Odd-even pricing C. Skimming D. Benchmarking Answer: c Level of Difficulty: Easy Page: 193 3. Which of the following is true of the introductory stage in a product life cycle? A. The product is easily available at this stage. B. The net adoption rate holds steady at this stage. C. Shakeout or competitive turbulence occurs at the end of this stage. D. Skimming is one of the pricing strategies applied at this stage. Answer: d Level of Difficulty: Medium Page: 193 4. Which of the following pricing strategies is appropriate during the maturity stage of the product life cycle? A. Skimming B. Penetration strategy 1-43 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies C. Reduce across the board D. Hold or reduce selectively Answer: d Level of Difficulty: Easy Page: 193 5. Identify the appropriate response by a firm when its product line is in the mature life cycle stage. A. Reduce length of line B. Hold length of line C. Broaden product line D. Introduce new product line Answer: b Level of Difficulty: Medium Page: 193 6. The shakeout stage in a product life cycle is signaled by: A. an expansion of the product line to attract new segments. B. limited purchase of the product due to lack of awareness. C. a drop in the overall growth rate and substantial price cuts. D. stability in terms of demand, technology, and competition. Answer: c Level of Difficulty: Medium Page: 195 7. New-to-the-world products can be defined as: A. true innovations that are new to the firm and create an entirely new market. B. a product category that is new for the company introducing it, but not new to customers in the target market. C. existing products that are targeted at new applications and new market segments. D. items providing improved performance brought out to replace existing products. Answer: a Level of Difficulty: Easy Page: 198 8. Which of the following refers to products that supplement a firm’s established product line? A. Repositioning B. Additions to existing product lines C. New product lines D. Cost-reduced products Answer: b Level of Difficulty: Easy Page: 198 9. Which of the following observations best describes new-to-the-world products? A. They are new to the company but not to the market. 1-44 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies B. They are often not very innovative in design or operations. C. They are aimed at new customer segments or repositioning of existing products. D. They try to build primary demand by creating product awareness. Answer: d Level of Difficulty: Medium Page: 199 10. Which of the following is an appropriate strategic objective for repositionings? A. Use excess or off-season capacity B. Provide a cash generator C. Capitalize on distribution strengths D. Exploit technology in a new way Answer: b Level of Difficulty: Medium Page: 200 11. Defending a current market-share position is an appropriate strategic objective for: A. repositionings. B. new product lines. C. new-to-the-world products. D. improvements or revisions to existing products. Answer: d Level of Difficulty: Medium Page: 200 12. The pioneer's brand can become the standard of reference customers use to evaluate other brands, making it more difficult for followers to convince existing customers that their new brands are superior to the older and more familiar pioneer. Which advantage of being a pioneer does this explain? A. First choice of market segments and positions B. Economies of scale and experience C. Distribution advantages D. High switching costs for early adopters Answer: a Level of Difficulty: Medium Page: 201 13. Which of the following advantages of pioneers is particularly pronounced when the product is technically sophisticated and involves high development costs? A. Possibility of preempting scarce resources and suppliers B. Distribution advantages C. High switching costs for early adopters D. Economies of scale and experience Answer: d Level of Difficulty: Medium 1-45 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies Page: 202 14. Pioneers that are able to maintain their preeminent position well into the market's growth stage have supported their early status with one or more marketing strategy elements. Identify the strategy that allows firms to expand their volumes quickly and achieve the benefits of experience-curve effects before major competitors can confront them. A. Broad product lines B. Heavy promotional expenditures C. Large entry scale D. High product quality Answer: c Level of Difficulty: Medium Page: 205 15. Which of the following elements belongs to the successful late entrants' market strategy? A. Leapfrogging the pioneer with superior product technology B. Focusing on peripheral target markets or niches C. Larger entry scale than the pioneer D. Heavy promotional expenditures Answer: b Level of Difficulty: Easy Page: 206 16. Identify the firm characteristic of a new product pioneer pursuing the mass-market penetration strategy. A. It should have limited marketing skills and resources. B. It should have a leading share position in target segment. C. It should have the ability to shift from stimulation of primary demand to stimulation of selective demand. D. It should have limited financial resources to commit to building capacity prior to demand growth. Answer: c Level of Difficulty: Medium Page: 208 17. Which of the following is a primary objective of mass-market penetration strategies? A. Recoup development and commercialization costs as soon as possible. B. Maintain leading share position in target segment. C. Maximize number of triers and adopters in target segment. D. Maximize number of triers and adopters in total market. Answer: d Level of Difficulty: Medium Page: 208 18. Which of the following marketing programs is used by pioneers as a niche penetration strategy to increase the customers' ability to buy? 1-46 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies A. Moving relatively quickly to expand offerings to appeal to multiple segments B. Offering free trial or extended warranty policies to reduce target customers' perceived risk C. Attempting to maintain margins at level consistent with value of product to early adopters D. Starting with high price but bringing out lower-priced versions in anticipation of competitive entries Answer: d Level of Difficulty: Medium Page: 211 19. _____ is the simplest way to enter a foreign market because it involves the least commitment and risk. A. Exporting B. Countertrade C. Franchising D. Overseas direct investment Answer: a Level of Difficulty: Medium Page: 212 20. _____ grants the right to use the company's name, trademarks, and technology. A. Contract manufacturing B. Countertrade C. Franchising D. Coproduction Answer: c Level of Difficulty: Easy Page: 213 21. _____ involves a company providing technical know-how and components in return for a share of the output that it must sell. A. Buyback arrangement B. Countertrade C. Coproduction D. Joint ventures Answer: c Level of Difficulty: Easy Page: 214 Essay Questions 22. Discuss the strategic implications of the introductory and growth stages of the product life cycle. Answer: The introduction of a new product requires large investments, so most firms sustain a rather sizable short-term loss. As the product moves into the growth stage, sales increase rapidly; hence, substantial investments continue. Profitability is depressed because facilities have to be built in advance to ensure supply. The firm with the largest share during this period 1-47 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies should have the lowest per-unit costs due to scale and learning effects. If it chooses to decrease its real price proportionate to the decline in its costs, it dries up the investment incentives of would-be entrants and lower-share competitors. The innovating firm’s share is likely to erode substantially during the growth stage. Nevertheless, it must still make large investments; for even though it is losing share, its sales are increasing. New entrants and low- share sellers are at a substantial disadvantage here. They must not only invest to accommodate market growth, but also to gain market share. Level of Difficulty: Hard Page: 196-197 23. Briefly explain licensing, franchising, and joint ventures. Answer: In licensing, a firm offers the right to use its intangible assets in exchange for royalties or some other form of payment. It is less flexible and provides less control than exporting. Further, if the contract is terminated, the licensor may have developed a competitor. However, it is appropriate when the market is unstable or difficult to penetrate. Franchising grants the right to use the company's name, trademarks, and technology. The franchisee typically receives help in setting up the franchise. It is an attractive way for service firms to penetrate foreign markets at low cost and to couple their skills with local knowledge and entrepreneurial spirit. Host countries are reasonably receptive to this type of exporting since it involves local ownership. Joint ventures involve a joint ownership arrangement to produce or market goods in a foreign country. They are commonplace because they avoid quotas and import taxes and satisfy government demands to produce locally. They also have the advantage of sharing investment costs and gaining local marketing expertise. Level of Difficulty: Medium Page: 212-214 24. Write a short note on the marketing program components for a skimming strategy. Answer: A relatively high price is appropriate for a skimming strategy to increase margins and revenues, even though some price-sensitive customers may be reluctant to adopt the product at that price. Introductory promotional programs might best focus on customer groups who are least sensitive to price and most likely to be early adopters of the new product. Thus, in many consumer goods businesses, skimming strategies focus on relatively upscale customers, since they are often more likely to be early adopters and less sensitive to price. Another critical element of this strategy is the nature of the firm's continuing product development efforts. A pioneer that plans to leave a market when competitors enter should not devote much effort to expanding its product line through line extensions or multiple package sizes. Instead, it should concentrate on the next generation of technology or on identifying new application segments. Level of Difficulty: Medium Page: 215 Chapter 09 Strategies for Growth Markets Multiple Choice Questions 1-48 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies 1. The primary objective of the early share leader, usually the market pioneer, in a growth market is _____. A. share reduction B. share growth C. share maintenance D. mass-market penetration Answer: c Level of Difficulty: Easy Page: 221 2. Sony was the pioneer and early share leader in the videocassette recorder industry with its Betamax technology. But Matsushita's longer-playing and lower-priced VHS format equipment proved much more popular with consumers, and dethroned Sony as industry leader. This example underlines that: A. firms cannot always rely on their competencies to maintain share leadership in a market. B. the number of firms competing for a share of the market will decrease if there are few barriers to entry. C. market fragmentation will occur if potential customers have homogeneous functional needs. D. pioneers in new product-markets always manage to leverage their competitive advantages as the market grows. Answer: a Level of Difficulty: Medium Page: 224 3. Identify the share maintenance marketing objective for share leaders. A. Delineate into niche target markets in product growth stage. B. Stimulate selective demand among innovators. C. Retain existing customers and ensure brand loyalty. D. Stimulate secondary demand to help speed up overall market growth. Answer: c Level of Difficulty: Medium Page: 226 4. Identify a market leader's action aimed at stimulating selective demand among later adopters. A. Maintaining/improving customer satisfaction and loyalty B. Encouraging/simplifying repeat purchase C. Differentiated positioning against competitive offerings D. Reducing attractiveness of switching Answer: c Level of Difficulty: Medium Page: 227 5. The marketing action of developing a second product line with features that are more 1-49 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies appealing to a specific segment of potential customers is characteristic of the _____ strategy. A. market expansion B. contraction C. flanker D. confrontation Answer: c Level of Difficulty: Easy Page: 227 6. Which of the following is characteristic of a market expansion strategy? A. Make product modifications or improvements to match or beat superior competitive offerings. B. Develop a second brand or product line with features or price more appealing to a specific segment of potential customers. C. Meet or beat lower prices or heavier promotional efforts by competitors when necessary to retain customers and when lower unit costs allow. D. Develop multiple-line extensions or brand offerings targeted to the needs of various potential user applications or geographical segments within the market. Answer: d Level of Difficulty: Medium Page: 227 7. Which of the following statements is associated with the fortress strategy? A. The market leader develops a strong position when potential customers have relatively homogeneous needs. B. The market leader develops a second brand to compete directly against the challenger's offering. C. The market leader changes the marketing program before a suspected competitive challenge occurs. D. The market leader defends its relative market share by expanding into a number of market segments. Answer: a Level of Difficulty: Medium Page: 228 8.Which of the following objectives can be achieved with a confrontation strategy for share maintenance? A. Appeal to late adopters with same attributes and benefits offered to early adopters. B. Improve ability to retain current customers as market fragments. C. Increase ability to attract new customers in selected high-growth segments by focusing resources on them. D. Improve ability to win new customers who might otherwise be attracted to competitor's offering. Answer: d Level of Difficulty: Hard Page: 229 1-50 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies 9. Which of the following strategies is most effective in a market that is relatively homogeneous in relation to customer needs and purchase criteria? A. Fortress strategy B. Market expansion strategy C. Contraction strategy D. Flanker strategy Answer: a Level of Difficulty: Easy Page: 229 10. What action must a leader take to improve customer satisfaction as competitor enters or prepares to enter the market? A. It should take steps to improve the physical product and customers' perceptions of it as well. B. It should shift its sales promotion emphasis from building selective demand to stimulating primary demand. C. It should continue sales promotion efforts aimed only at stimulating trial among later adopters. D. It should shift its sales-force efforts from servicing existing customers to prospecting for new accounts. Answer: a Level of Difficulty: Medium Page: 230 11. Tokomo Motors has introduced a new line of cars aimed at creating an appeal for young car buyers looking for good quality, funky designs, and low-prices. Their intent is to protect their primary brands from direct competition in the same category and from low-price competitors. Identify the strategy employed by Tokomo Motors. A. Confrontation strategy B. Position defense strategy C. Flanker strategy D. Market expansion strategy Answer: c Level of Difficulty: Hard Page: 231-232 12. A firm develops line extensions, new brands, or alternative product forms utilizing similar technologies to appeal to multiple market segments. Identify the strategy employed here. A. Flanker strategy B. Fortress strategy C. Confrontation strategy D. Market expansion strategy Answer: d Level of Difficulty: Medium Page: 233 1-51 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies 13. Strategic withdrawal is most likely when: A. a firm is unable to defend itself adequately in all segments due to competitors having more resources. B. a firm's primary objective is to capture a large share of new customers who may prefer something different from the initial offering. C. a competitor chooses to attack the leader head to head and attempts to steal customers in the target market. D. a firm tries to beat the attractive features of a competitor's offering only after the challenger's success has become obvious. Answer: a Level of Difficulty: Medium Page: 233 14. What is the major marketing objective for followers, particularly larger firms entering a product-market shortly after the pioneer? A. Defend market position B. Develop only a niche strategy C. Attain share growth D. Start discrete price wars Answer: c Level of Difficulty: Easy Page: 234 15. Which of the following share-growth strategies involves attacking the leader within its primary target market? A. Flanker strategy B. Frontal attack strategy C. Encirclement strategy D. Guerrilla attack strategy Answer: b Level of Difficulty: Medium Page: 236 16. Which of the following is an appropriate share-growth strategy in a relatively homogeneous market with respect to customers’ needs and purchase criteria? A. Guerrilla attack B. Encirclement C. Flank attack D. Frontal attack Answer: d Level of Difficulty: Easy Page: 237 17. Which of the following share-growth strategies is appropriate when the needs and preferences of customers in most segments are currently satisfied by competing brands? A. Leapfrog 1-52 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies B. Flank attack C. Encirclement D. Guerrilla attack Answer: d Level of Difficulty: Easy Page: 237 18. What strategy would a challenger be pursuing if its primary objective is to capture a modest share of repeat purchases in several market segments? A. Frontal attack strategy B. Leapfrog strategy C. Guerrilla attack strategy D. Encirclement strategy Answer: c Level of Difficulty: Medium Page: 237 19. A _____ strategy is appropriate when the market can be broken into two or more large segments, when the leader and/or other major competitors hold a strong position in the primary segment, and when no existing brand fully satisfies the needs of customers in at least one other segment. A. frontal attack B. leapfrog C. guerrilla attack D. flank attack Answer: d Level of Difficulty: Easy Page: 240 20. A(n) _____ strategy involves targeting several smaller untapped or underdeveloped segments in the market simultaneously. A. encirclement B. guerrilla attack C. flank attack D. leapfrog Answer: a Level of Difficulty: Easy Page: 241 21. Sales promotion efforts (like coupon drops and merchandising deals), local advertising blitzes, and legal action are examples of the _____ strategy to achieve share growth. A. guerilla attack B. flank attack C. frontal attack D. leapfrog Answer: a 1-53 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies Level of Difficulty: Easy Page: 241 Essay Questions 22. Explain how share gains are worth more in a growth market than in a mature market. Answer: The premise that share gains are more valuable when the market is growing stems from the expectation that the earnings produced by each share point continue to expand as the market expands. The implicit assumption here is that the business can hold its relative share as the market grows. The validity of such an assumption depends on a number of factors, including the following: (1) the existence of positive network effects; (2) future changes in technology or other key success factors; (3) future competitive structure of the industry; (4) future fragmentation of the market. Level of Difficulty: Medium Page: 223-224 23. Explain the various ways a challenger can target competitors established in the market. Answer: A challenger can target its competitors in several ways: (1) Attack the market-share leader within its primary target market: Typically involves either a frontal assault or an attempt to leapfrog the leader through the development of superior technology or product design; (2) Attack another follower who has an established position within a major market segment: Also usually involves a frontal assault, but it may be easier for the challenger to gain a sustainable advantage if the target competitor is not as well established; (3) Attack one or more smaller competitors who have only limited resources: This may seem like an inefficient way to attain substantial share increases; (4) Avoid direct attacks on any established competitor: Usually involves either a flanking or an encirclement strategy, involving one large or several smaller segments in which no competitor currently holds a strong position. Level of Difficulty: Medium Page: 236; 238 24. Compare and contrast the frontal attack and leapfrog strategy. Answer: Where the market for a product category is relatively homogeneous, with few untapped segments and at least one well-established competitor, a follower wanting to capture an increased market share may have little choice but to tackle a major competitor head-on. Such an approach is most likely to succeed when most existing customers do not have strong brand preferences or loyalties, the target competitor’s product does not benefit from positive network effects, and the challenger’s resources and competencies—particularly in marketing —are greater than the target competitor’s. To successfully implement a frontal attack, a challenger should seek one or more ways to achieve a sustainable advantage over the target competitor. A challenger stands the best chance of attracting repeat or replacement purchases from a competitor’s current customers when it can offer a product that is attractively differentiated from the competitor’s offerings. The odds of success might be even greater if the challenger can offer a far superior product based on advanced technology or a more sophisticated design. This is the essence of a leapfrog strategy. It is an attempt to gain a significant advantage over 1-54 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies the existing competition by introducing a new generation of products that significantly outperform or offer more desirable customer benefits than do existing brands. Level of Difficulty: Easy Page: 238-239 Chapter 10 Strategies for Mature and Declining Markets Multiple Choice Questions 1. A primary marketing objective of all competitors in mature markets is simply to: A. hold their existing customers. B. market their products to a new market. C. increase market penetration. D. increase price to maximize profits. Answer: a Difficulty: Easy Page: 246-247 2. The transition from market growth to maturity typically begins: A. when the market is still growing but the rate of growth starts to decline. B. when the market growth starts to accelerate. C. after the market ceases to grow. D. when the demand for a product outstrips its rate of production. Answer: a Difficulty: Medium Page: 247 3. Goliath Corp. made overly optimistic forecasts of future sales volume. As a result, the firm expanded too rapidly, and production capacity overshot the demand as growth slowed. The excess, in turn, lead to an increase in price per unit. Which of the following strategic traps did Goliath Corp. fall into during the shakeout period? A. Sacrificing market share in favor of short-run profit B. No clear competitive advantage as growth slows C. Failure to anticipate transition from growth to maturity D. Assumption that an early advantage will insulate the firm from price or service competition Answer: c Difficulty: Hard Page: 248 4. "A business may survive and prosper during the growth stage even though it has neither differentiated its offering from competitors nor attained the lowest-cost position in its industry. But during the transition period, such is not the case." Which of the following strategic traps leads to such a state? A. Failure to recognize the events signaling the beginning of the shakeout period B. Getting caught in the transition period without a clear strategic advantage 1-55 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies C. Failure to recognize the declining importance of product differentiation and the increasing importance of service D. Giving up market share too easily in favor of short-run profit Answer: b Difficulty: Medium Page: 248 5. National Motors manufactures high-end automobiles. The attributes of their cars include excellent handling, acceleration, comfort, and braking, and provides the company an advantage over its competitors. Identify the product quality dimension emphasized by National Motors. A. Reliability B. Performance C. Durability D. Serviceability Answer: b Difficulty: Medium Page: 252 6. The _____ quality dimension refers to the consistency of performance from purchase to purchase or to a product’s uptime, the percentage of time that it can perform satisfactorily over its life. A. brand equity B. serviceability C. reliability D. durability Answer: c Difficulty: Easy Page: 252 7. The gap between management perceptions and service quality specifications occurs when: A. a firm’s policies concerning customer service are unclear or haphazardly enforced. B. a firm does not have an accurate understanding of service evaluation by customers. C. a firm’s marketing communications causes unrealistically high expectations in customers. D. a firm fails to give its employees adequate reward structures for good performance. Answer: a Difficulty: Medium Page: 255 8. The production of no-frills goods to maintain a low-cost position: A. involves removing all extras from the basic product or service. B. involves the use of customized component parts. C. always involves short-term profits through the use of inexpensive labor. D. involves replacing technology to personalized services. Answer: a 1-56 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies Difficulty: Easy Page: 256 9. In some labor-intensive industries, a business can achieve a cost advantage, at least in the short term, by gaining access to inexpensive labor. This is an example of the _____ method used to obtain a sustainable cost advantage. A. no-frills product B. cheaper raw materials C. low-cost distribution D. innovative production processes Answer: d Difficulty: Medium Page: 257 10. Papyrus Inc. achieved a cost advantage by being the first major papermaker to rely exclusively on recycled pulp. The firm’s lower cost gave it a competitive edge in the price- sensitive commercial market for toilet paper and other such products used in hotels, restaurants, and office buildings. Which method of maintaining a low-cost position has the company used? A. Low-cost distribution B. Cheaper raw materials C. No-frills product D. Innovative product design Answer: b Difficulty: Medium Page: 257 11. Which of the following is the critical determinant of success in mature markets? A. Continually working to improve the value of offerings B. Hostile takeover of competitors in the market C. Lowering the price of offerings instead of differentiating D. Considerably downsizing the firm to cut costs Answer: a Difficulty: Medium Page: 258 12. Identify the market characteristic that affirms growth extension in maturing markets through application of an extended use strategy. A. Insufficient competencies to preempt underdeveloped applications segments B. Relatively heterogeneous market with a variety of segments C. Relatively high penetration but low frequency of use in one or more major segments D. Relatively low penetration in one or more segments Answer: c Difficulty: Medium Page: 262 1-57 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies 13. Which of the following is a possible marketing action that may be taken to convert current nonusers in target segment into users and increase penetration? A. Encourage larger volume purchases of nonperishable products. B. Move storage of the product closer to the point of end use by offering additional package sizes or designs. C. Develop line extensions suitable for additional uses or applications. D. Enhance product’s value by adding features, benefits, or services. Answer: d Difficulty: Easy Page: 263 14. To develop differentiated positioning focused on untapped segments using a market expansion strategy, a firm should: A. encourage larger volume purchases for nonperishable products. B. stimulate additional primary demand by promoting new features. C. develop a differentiated flanker brand with more appealing unique features. D. move storage of the product closer to the point of end use by offering additional package sizes. Answer: c Difficulty: Medium Page: 263 15. Which of the following is a possible marketing action that can encourage extended use of products? A. Enhancing product’s value by including it in the design of integrated systems B. Producing for private labels C. Developing line extensions suitable for additional uses or applications D. Entering global markets where product category is in an earlier stage of its life cycle Answer: c Difficulty: Medium Page: 263 16. _____ is a factor that helps to determine the strategic attractiveness of declining product- markets, and includes the rate and certainty of future declines in volume. A. Time to market B. Conditions of demand C. Exit barriers D. Intensity of future competitive rivalry Answer: b Difficulty: Easy Page: 269 17. _____ refers to the ease with which weaker competitors can leave the market. A. Time to market B. Conditions of demand C. Intensity of future competitive rivalry 1-58 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies D. Exit barriers Answer: d Difficulty: Easy Page: 269 18. The objective of a _____ strategy is to generate cash quickly by maximizing cash flow over a relatively short term. A. harvesting B. maintenance C. profitable survivor D. niche Answer: a Difficulty: Medium Page: 271 19. Which of the following is the primary objective of niche strategies in a declining market? A. Increasing share of the declining market with an eye to future profits and encourage weaker competitors to exit B. Maintaining share in short term as market declines, even if margins must be sacrificed C. Focusing on strengthening position in one or a few relatively substantial segments with potential for future profits D. Maximizing short-term cash flow Answer: c Difficulty: Medium Page: 272 20. Which of the following will be the primary objective of a firm, in a declining market, which has a sustainable competitive advantage in target segments but limited overall resources? A. To increase share of the declining market with an eye to future profits and encourage weaker competitors to exit B. To maintain share in short term as market declines, even if margins must be sacrificed C. To maximize short-term cash flow and maintain or increase margins even at the expense of a slow decline in market share D. To focus on strengthening position in one or a few relatively substantial segments with potential for future profits Answer: d Difficulty: Hard Page: 272 21. Which of the following is the most probable marketing action by a firm to implement a harvesting strategy in a declining market? A. Consider introducing line extensions to appeal to remaining demand segments. B. Lower prices if necessary to maintain share, even at the expense of reduced margins. C. Focus salesforce efforts on attaining repeat purchases from current users. D. Eliminate R&D expenditures and capital investments related to the business. 1-59 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies Answer: d Difficulty: Medium Page: 273 Essay Questions 22. What are the causes of market decline? Answer: The causes of market decline include: Technological advances Changing customer demographics Changing customer tastes or lifestyles Development of substitutes Difficulty: Easy Page: 247 23. What are analyzer and defender strategies? How are they similar and dissimilar from each other? List the conditions most appropriate for their use. Answer: Analyzers and defenders are both concerned with maintaining a strong share position in established product markets. However, analyzers pursue some product and market development to avoid being leapfrogged by competitors with more advanced products or being left behind in new applications segments. While defenders may initiate some product improvements or line extensions to protect and strengthen their position in existing markets, they spend relatively little on new product R&D. Both analyzer and defender strategies may be appropriate for units with a leading, or at least a profitable, share of one or more major segments in a mature industry. An analyzer strategy is most appropriate for developed industries that are still experiencing some technological change and may have opportunities for continued growth, such as the computer and commercial aircraft industries. The defender strategy works best in industries where the basic technology is not very complex or is unlikely to change dramatically in the short run. Both analyzers and defenders can attempt to sustain a competitive advantage in established product markets through differentiation of their product offering (either on the basis of superior quality or service or by maintaining a low-cost position). Difficulty: Hard Page: 250 24. Write a brief note on the profitable survivor strategy. Illustrate the conditions most appropriate for its usage. Answer: Profitable survivor strategy involves investing enough to increase its share position and establishing itself as the industry leader for the remainder of the market’s decline. It is suitable for a business that has a strong share position and a sustainable competitive advantage in a declining product-market, and makes most sense when the firm expects a gradual decline in market demand or when substantial pockets of continuing demand are likely well into the future. It is also attractive when a firm’s declining business is closely intertwined with other SBUs through shared facilities and programs or common customer segments. The key to the success of such a strategy is to encourage other competitors to leave the market early. Upon achieving this, the firm can switch to a harvesting strategy. 1-60 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies Difficulty: Medium Page: 274 Chapter 11 Marketing Strategies for a Digitally Networked World Multiple Choice Questions 1. When people see something they like on the web or on their mobile phones, they share it with others. This illustrates the basic concept of: A. collaborative filtering. B. positive network effect. C. really simple syndication. D. viral marketing. Answer: d Level of Difficulty: Easy Page: 282 2. Tinker Inc. is a firm that provides its search engine technology to many branded search engine sites. Which of the following roles does Tinker Inc. play? A. Originator B. Contactor C. Distributor D. Optimizer Answer: a Level of Difficulty: Medium Page: 283 3. _____ involves the sale of the same good—typically an informational good—to many customers, who then combine it with information from other sources and distribute it. A. Aggregation B. Syndication C. Customization D. Subscription Answer: b Level of Difficulty: Easy Page: 283 4. In e-commerce business models, a(n) _____ refers to a website that provides news articles in electronic form and delivers them to other sites, each of which appeals to a different target audience. A. originator B. syndicator C. contractor D. optimizer Answer: b Level of Difficulty: Easy 1-61 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies Page: 283 5. The characteristic of a new product becoming more valuable with an increase in the number of users within informational networks is referred to as _____. A. network externality B. increasing returns to scale C. benchmarking D. disintermediation Answer: a Level of Difficulty: Easy Page: 284 6. Collaborative filtering: A. enables firms to compare a consumer's past purchase to recommend a personalized newer purchase options. B. enables firms to identify formal decision rules in the way consumers behave. C. allows users to specify the nature of what is offered to them and is user-driven rather than marketer-driven. D. allows firms to conduct an interactive, online survey with potential target consumers about their tastes. Answer: a Level of Difficulty: Hard Page: 285 7. _____ techniques, which are user-driven instead of marketer-driven, allow customers to specify the nature of what is offered to them. A. Rules-based personalization B. Mass-customization C. Collaborative filtering D. Mass-media Answer: b Level of Difficulty: Easy Page: 285 8. Quickbeats.com is an online music seller that allows customers to order personalized CDs that contain only the songs chosen by the customers. Which of the following personalization techniques does Quickbeats use? A. Collaborative filtering B. Rules-based personalization C. Mass-customization D. Disintermediation Answer: c Level of Difficulty: Medium Page: 285 9. The Internet makes it possible for marketers to reach customers directly, without the 1-62 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies expense or complication of distribution channels. This phenomenon is known as _____. A. disintermediation B. customization C. network externality D. really simple syndication Answer: a Level of Difficulty: Easy Page: 286 10. Flick Software lets its customers download its products directly from its website. Online support is also available round the clock, creating great value to customers everywhere. This illustrates that: A. there is a negative network effect. B. there are decreasing returns to scale. C. rules-based personalization has been implemented. D. a global reach exists for these services. Answer: d Level of Difficulty: Easy Page: 287 11. According to the first-mover advantage, success of a firm depends on being the first to: A. provide alternatives to an established product. B. establish a significant presence in each market niche. C. outsource labor in order to cut production costs. D. launch a frontal attack of competitors to gain market share. Answer: b Level of Difficulty: Easy Page: 289 12. Which of the following is true of firms with a first-mover advantage? A. The first-mover advantage is the best technique for building a great company. B. First movers always need to use a skimming strategy to be successful. C. All first movers capitalize on their potential advantages. D. First movers must continue to innovate to maintain their differential advantage. Answer: d Level of Difficulty: Medium Page: 289 13. In which of the following stages of customer experience process does the direction of cash flow occur from customer to producer? A. Customer insight B. Product delivery C. Production promotion, customer acquisition, and brand building D. Product return or disposal Answer: b 1-63 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies Level of Difficulty: Easy Page: 290 14. In which stage of the consumer experience process does cash flow from the producer to the consumer? A. Product delivery B. Product return or disposal C. Customer support and service D. Customer insight Answer: b Level of Difficulty: Easy Page: 290 15. Which of the following is the first stage of the customer experience process? A. Transaction B. Production promotion, customer acquisition, and brand building C. Customer insight D. Customer support and service Answer: c Level of Difficulty: Easy Page: 290 16. In which of the following stages of the customer experience process does information flow from the producer to the customer? A. Customer insight B. Product delivery C. Product return or disposal D. Production promotion, customer acquisition, and brand building Answer: d Level of Difficulty: Easy Page: 290 17. In which stage of the consumer experience process is information about price, terms, delivery, warranty, etc. shared between both the producer and the consumer? A. Customer insight B. Product disposal C. Promotion and brand building D. Transaction Answer: d Level of Difficulty: Easy Page: 291 18. If the customer likes an offering, a(n) _____ ensues, requiring that information about pricing, terms, delivery, and so on flows to the customer, and cash—either now or upon delivery—flows the other way. A. transaction 1-64 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies B. disintermediation C. syndication D. aggregation Answer: a Level of Difficulty: Easy Page: 291 19. In which of the following stages of the customer experience process do firms obtain data from social networking sites and instant messaging? A. Product return or disposal B. Customer insight C. Transaction D. Customer support and service Answer: b Level of Difficulty: Medium Page: 291-292 20. Which controversial system gauges a customer's desire to buy, measures his means, and sets the price accordingly? A. Dynamic pricing B. Price pooling C. Price skimming D. Hedonic pricing Answer: a Level of Difficulty: Easy Page: 294 21. _____ involves companies carefully considering which burdens they can remove from the customer, using digital technologies, and which customers can perform, assessing costs and benefits to both parties. A. Benchmarking B. Paid inclusion C. Coproduction D. Affiliate schemes Answer: c Level of Difficulty: Medium Page: 296 Essay Questions 22. What is syndication of information? List the types of syndication and explain briefly how syndication of information helps marketers. Answer: Syndication involves the sale of the same good—typically an informational good— to many customers, who may then combine it with information from other sources and distribute it. The types of syndication include the originator, syndicator, and the distributor. There are numerous ways in which syndication of information helps in the new-economy. 1-65 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies Since syndication delivers informational goods, rather than tangible goods, a company can syndicate the same informational goods or services to an almost infinite number of customers with little incremental cost. The syndication process can be automated and digitized, enabling syndicated networks to be created, expanded, and flexibly adapted far more quickly than would be possible in the physical world. Syndication via the Internet—and via mobile phones or other devices—opens up endless opportunities for marketers. It replaces scarcity with abundance. Information can be replicated an infinite number of times and combined and recombined in an infinite number of ways. It can be distributed everywhere, all at once, and be available all the time. Level of Difficulty: Medium Page: 283-284 23. Discuss the use of mass-customization techniques in customizing market offerings. Answer: Mass-customization techniques, which are user-driven instead of marketer-driven, allow customers to specify the nature of what is offered to them, from T-shirts to coffee mugs and more. Several office supply firms offer corporate users the ability to create customized office supply catalogs tailored to their company. Such catalogs simplify ordering procedures, save time and money in the purchasing department, and help control expenses by offering to perhaps far-flung employees only what the purchasing department has approved in advance. Similarly, some online music sellers offer consumers the opportunity to order customized CDs consisting of only the songs the customer chooses. In today’s highly competitive markets, personalization and customization can help build customer loyalty and make it less likely that customers will switch to other suppliers. Level of Difficulty: Medium Page: 285-286 24. How can entrepreneurs better serve the digitally networked markets of tomorrow? Answer: Would-be internet or social networking entrepreneurs should consider the various ways in which revenue can be generated on the web or in other settings such as mobile phones. Unless someone, a business or a consumer, is eventually willing to fork over money for what a new business offers, its chances for success lie somewhere between slim and none. Thus, understanding one’s revenue model and being willing to change it as market and technological conditions warrant are essential. Next, such entrepreneurs must ask not what can I sell but what do today’s and tomorrow’s customers need, and how and where might they want to consume what I have to offer? Finally, would-be entrepreneurs must realize that barriers to entry are incredibly low in this new world. For everyone who has the next latest and greatest web-based or social networking idea, there are dozens of other prospective entrepreneurs likely to be exploring similar ideas concurrently. It’s not really the ideas that count. What matters is the team that will execute an idea to deliver the performance and value that customers, whether businesses or consumers, or even potential acquirers of the nascent business want and will pay for. Level of Difficulty: Medium Page: 301 Chapter 12 Organizing and Planning for Effective Implementation 1-66 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies Multiple Choice Questions 1. Which of the following types of business strategies for evaluation and reward systems comprises high incentives based on sales and share growth? A. Differentiated defender B. Prospector C. Low-cost defender D. Reactor Answer: b Level of Difficulty: Easy Page: 310 2. Which of the following types of business strategies is characterized by a moderate level of SBU autonomy? A. Differentiated defender B. Prospector C. Low-cost defender D. Reactor Answer: a Level of Difficulty: Easy Page: 310 3. Which of the following relates to shared programs and synergy for a low-cost defender business strategy? A. Little synergy in areas central to differentiation—shared programs elsewhere B. Relatively little synergy—few shared programs C. No synergy—no shared programs D. High level of synergy and shared programs Answer: d Level of Difficulty: Hard Page: 310 4. Which of the following represents the functional coordination and conflict resolution factor for the successful implementation of a low-cost defender strategy? A. SBU will experience moderate levels of inter-functional conflict. B. SBU will perform best on ROI and cash flow dimensions when conflict resolution mechanisms are hierarchical. C. SBU will experience high levels of inter-functional conflict. D. SBU will perform best on volume and share-growth dimensions when participative resolution mechanisms are used. Answer: b Level of Difficulty: Medium Page: 314 5. _____ refers to the division of tasks and activities across positions within the organizational 1-67 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies unit. A. Formalization B. Centralization C. Specialization D. Orientation Answer: c Level of Difficulty: Easy Page: 316 6. Centralization refers to: A. the location of decision authority and control within an organization's hierarchy. B. the degree to which formal rules and standard policies and procedures govern decisions and working relationships. C. the degree to which organizations emphasize the managing of business processes in contrast to functional areas. D. the division of tasks and activities across positions within the organizational unit. Answer: a Level of Difficulty: Easy Page: 316 7. In which of the following situations are prospector business units and their marketing departments most likely to perform better? A. When the decision-making authority is rigidly centralized B. When rigid rules and policies dominate managerial discretion C. When there is a high degree of formalization D. When the units are highly specialized Answer: d Level of Difficulty: Medium Page: 316 8. Identify the simplest and most bureaucratic form of organizational design. A. Product management B. Market management C. Matrix D. Functional Answer: d Level of Difficulty: Medium Page: 316 9. Highly structured business units and marketing departments are: A. able to quickly adapt to a changing environmental circumstance. B. unlikely to have a centralized decision-making authority. C. unlikely to be very innovative. D. likely to have very little formalization. Answer: c Level of Difficulty: Easy 1-68 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downloaded by Bích Kha Ngô ([email protected])  lOMoARcPSD|7648752 Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies Page: 316 10. Product management organizations: A. rely primarily on hierarchical mechanisms for resolving conflicts across functional areas. B. are characterized by decentralized decision making and an increased amount of product specialization within the SBU. C. are the most specialized type of organization. D. are the most common organizational form among entrepreneurial start-ups, including many dot-com companies. Answer: b Level of Difficulty: Medium Page: 317 11. Identify the statement that relates to a market management organization. A. A product manager has overall responsibility for planning and implementing a national marketing program for the product. B. This form is the least bureaucratic or centralized and the most specialized type of organization. C. This is particularly suitable for a business facing an extremely complex and uncertain environment. D. It involves the creation of an additional organizational unit responsible for coordinating the actions of other units within the firm. Answer: a Level of Difficulty: Medium Page: 319 12. The matrix form is the most: A. bureaucratic type of organization. B. centralized type of organization. C. specialized type of organization. D. common type of organization. Answer: c Level of Difficulty: Easy Page: 319 13. All self-managing teams are based on which of the following concepts, regardless of the form of worker self-management? A. Empowerment B. Joint venture C. Centralization D. Hierarchy A