Chapter 02 - Markets, Segments and Customer Value

Chapter 02
Markets, Segments and Customer Value

True / False Questions

1. (p. 53) A product-market is the set of products judged to e different !ithin those usage
situations in !hich different patterns of enefits are sought " groups of customers.
FALSE

Difficulty: Moderate

2. (p. 55) The proess o! mapping the product-market structure egins " identif"ing the
generic need #function$ satisfied " the product of interest to management.
T"#E

Difficulty: Moderate

%. (p. 64) American Airlines and South!est Airlines are ke" competitors on man" &.S. routes.
T"#E

Difficulty: Moderate

'. (p. 66) An e(aluation of a competitor)s strengths and !eaknesses !ould include information
on the competitor)s marketing strateg".
T"#E

Difficulty: Easy

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Chapter 02 - Markets, Segments and Customer Value
*. (p. 66) A ne$ ompetitor entering a market is likel" to come from companies competing in
an unrelated product-market.
FALSE

Difficulty: Challenging

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Chapter 02 - Markets, Segments and Customer Value
+. (p. 67) An important part of market opportunit" anal"sis is estimating the present and
potential si,e of the market.
T"#E

Difficulty: Easy

-. (p. 6) The sales !oreast is the amount of past sales for a defined product-market during a
specified time period.
FALSE

Difficulty: Moderate

.. (p. 6) Market share can e used to forecast future compan" sales and to compare actual
market position among competing rands of a product.
T"#E

Difficulty: Easy

/. (p. 6) Since a compan")s sales depend, in part, on its marketing plans, management)s
forecasts and marketing strateg" are not interrelated.
FALSE

Difficulty: Moderate

10. (p. 6) Sales forecasts of target markets are needed so that management can estimate the
financial attracti(eness of oth ne! and e0isting market opportunities.
T"#E

Difficulty: Moderate

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Chapter 02 - Markets, Segments and Customer Value

Multiple Choie Questions

11. (p. 5!) 11111 pro(ide#s$ simpler and less costl" !a"s to match the (alue re2uirements
offered " the products of incument firms ser(ing the market.
A% 3isrupti(e inno(ation
4. Commodi,ation of product designs
C. Creation of ne! market space
3. 5ast changing markets

Difficulty: Easy

12. (p. 5") 11111 make#s$ products commodities making it difficult to for a compan" to earn
an"thing more than susistence returns in that industr".
A. 3isrupti(e inno(ation
&% Modulari,ation
C. Creation of ne! market space
3. 5ast changing markets

Difficulty: Moderate

1%. (p. 5#) 6he purpose of 11111 is to target ne! opportunities !here u"ers) (alue
re2uirements are not eing satisfied " e0isting products.
A. 3isrupti(e inno(ation
4. Commodi,ation of product designs
C% Creation of ne! market space
3. 7dea creation

Difficulty: Moderate

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Chapter 02 - Markets, Segments and Customer Value
1'. (p. 5#) 'ot akno$ledging or responding to the threats and re(uirements of 11111 is the
real danger. 8(en in markets assumed to e stale, inno(ation can 2uickl" alter market space.
A. 3isrupti(e inno(ation
4. Commodi,ation of product designs
C. Creation of ne! market space
)% 5ast changing markets

Difficulty: Moderate

1*. (p. 5#) A definition of a 11111 recogni,es that there e0ists u"ers !ith needs !ho ha(e the
ailit" to purchase goods and ser(ices and products are a(ailale to satisf" the needs.
A% 9roduct-market
4. Customer enefit
C. :e! market space
3. Value re2uirement

Difficulty: Moderate

1+. (p. 54) Se(eral classes or t"pes of products can e comined to form the 11111 for kitchen
appliances.
A. Customer enefit
4. :e! market space
C. 9roduct-t"pe product-market
)% ;eneric product-market

Difficulty: Moderate

1-. (p. 54) A 11111 offers a specific set of enefits intended to satisf" a customer)s need or !ant
in a specific !a" such as all the rands and t"pes of o(ens for consumers.
A. Customer enefit
4. :e! market space
C% 9roduct-t"pe product-market
3. ;eneric product-market

Difficulty: Moderate

2-*
Chapter 02 - Markets, Segments and Customer Value
2-+
Chapter 02 - Markets, Segments and Customer Value
1.. (p. 6") 11111 is hori*ontal and o+ers similar t,pes o! !irms and operating practices of the
firms.
A. Value chain anal"sis
&% 7ndustr" anal"sis
C. Market segmentation anal"sis
3. Customer profile anal"sis

Difficulty: Moderate

1/. (p. 6") 11111 onsiders the +ertial net$ork o! !irms that suppl" materials and<or parts,
produce products and distriute the products to end-users.
A% Value chain anal"sis
4. 7ndustr" anal"sis
C. Market segmentation anal"sis
3. Customer profile anal"sis

Difficulty: Easy

20. (p. 63) 11111 recogni,es that ati+e ompetition among industr, mem-ers helps
determine industr" performance and it is the most direct and intense form of competition.
A% =i(alr" among e0isting firms
4. 6hreat of ne! entrants
C. 6hreat of sustitute products
3. 4argaining po!er of suppliers

Difficulty: Moderate

21. (p. 64) >hen concerned !ith the 11111 e0isting firms ma" tr" to discourage ne!
competition " aggressi(e e0pansion and other t"pes of market entr" arriers.
A. =i(alr" among e0isting firms
&% 6hreat of ne! entrants
C. 6hreat of sustitute products
3. 4argaining po!er of suppliers

Difficulty: Moderate

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Chapter 02 - Markets, Segments and Customer Value
2-.
Chapter 02 - Markets, Segments and Customer Value
22. (p. 64) 'e$ tehnologies that satis!, the same ustomer +alue re(uirement ma" pose a
1111111.
A. =i(alr" among e0isting firms
4. 6hreat of ne! entrants
C% 6hreat of sustitute products
3. 6hreat from the po!er of u"ers

Difficulty: Moderate

2%. (p. 64) .! ritial inputs are in /eopard, or pries o! those inputs are e0traordinaril,
high, companies ma" pursue (ertical integration strategies or de(elop collaorati(e
relationships to reduce the 11111
A. =i(alr" among e0isting firms
4. 4argaining po!er of u"ers
C. 6hreat of sustitute products
)% 4argaining po!er of suppliers

Difficulty: Challenging

2'. (p. 64) 1al2Mart strongl" influences its (endors illustrating the 11111
A. =i(alr" among e0isting firms
&% 4argaining po!er of u"ers
C. 6hreat of sustitute products
3. 4argaining po!er of suppliers

Difficulty: Moderate

2*. (p. 65) 11111 is measured " omparing the share o! the !irm against the ompetitor
!ith the highest market share in the segment.
A. Market forecast
4. Market potential
C% =elati(e market position
3. Strong market position

Difficulty: Moderate

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Chapter 02 - Markets, Segments and Customer Value
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Chapter 02 - Markets, Segments and Customer Value
2+. (p. 65) An anal"sis of each competitors past sales !ould e included in a 11111.
A. Customer (alue report
4. Market forecast
C% Competitors) anal"sis
3. Market segment anal"sis

Difficulty: Moderate

2-. (p. 66) >hich !ould :?6 e included in an o(erall e(aluation of the ke" competitor)s
current strengths and !eaknesses@
A. Management capailities
4. 5inancial position
C. Marketing strateg"
)% 9olitical en(ironment

Difficulty: Challenging

2.. (p. 66) Market entr" " a ne! competitor is :?6 more likel" under this condition.
A. Aigh profit margins are achie(ed " market incuments
4. 5uture gro!th opportunities in the market are strong
C. :o major market-entr" arriers are present
)% Competition is spread among man" competitors

Difficulty: Challenging

2/. (p. 67) 11111 is usuall" measured -, urrent dollar sales for a defined product-market and
specified time period.
A. Market profit margin
4. Market potential
C% Market si,e
3. Market share

Difficulty: Moderate

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Chapter 02 - Markets, Segments and Customer Value
%0. (p. 67) 11111 is usuall" measured -, the ma0imum produt sales that can e otained
from a defined product-market during a specified time period.
A. Market profit margin
&% Market potential
C. Market si,e
3. Market share

Difficulty: Moderate


Essa, Questions

%1. (p. 5!) 80plain the competiti(e o0. >h" is there a need for strategic thinkers to )think
outside the competiti(e o0)@
6here is a tendenc" for e0ecuti(es to think in terms of a stale Bcompetiti(e o0B around their
usinesses C defined " technolog", geograph", competitors and the e0isting customer ase.
6his frame of reference enales anal"tical tools to e successfull" applied, research to e
carried out and plans can e made. 6his traditional perspecti(e is logical in stale markets ut
fails to address the realit" that the real threats as !ell as e0citing opportunities ma" e present
outside the con(entional competiti(e o0. 7ncreasingl", ne! markets, ne! t"pes of
competition and ne! usiness designs are emerging !hich fuel market gro!th and
canniali,e the e0isting customer ase of incuments) markets. 7mportantl", effecti(e
processes for understanding markets and competiti(e space and guiding the strategic
initiati(es appropriate for the markets re2uire strategic thinking outside the competiti(e o0.

Difficulty: Moderate

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Chapter 02 - Markets, Segments and Customer Value
%2. (p. 53) 3iscuss the differences et!een a generic product-market and a product-t"pe
product-market.
6he generi produt2market includes a road group of products that satisf" a general, "et
similar, need. 6he starting point in determining product-market oundaries is to identif" the
particular need or !ant that a group of products satisf". Since people !ith a similar need ma"
not satisf" the need in the same manner, generic product-markets are often heterogeneous,
containing different end-user groups and se(eral t"pes of related products.
6he produt2t,pe produt2market includes all rands of a particular product t"pe. 6he
product t"pe is a product categor" or product classification that offers a specific set of enefits
intended to satisf" a customer)s need or !ant in a specific !a". 3ifferences in the products
!ithin a product-t"pe product-market ma" e0ist, creating product-(ariants.

Difficulty: Moderate

%%. (p. 54) 7dentif" the three guidelines for defining a product-market.
7n defining the product-market, it is helpful to indicate #1$ the asis for identif"ing u"ers in
the product-market of interest #geographical area, consumer<usiness etc.$, #2$ the market si,e
and characteristics and #%$ the rand and<or product categories competing for the needs and
!ants of the u"ers included in the product-market.

Difficulty: Easy

%'. (p. 5$) 80plain ho! u"ers make choices in products and rands.
7n considering ho! customers decide !hat to u", it is useful to anal",e ho! the" mo(e
through the se2uence of steps leading to a decision to purchase a particular rand. 4u"ers
normall" follo! a decision process. 6he" egin " recogni,ing a need #prolem recognition$D
ne0t, the" seek informationD then, the" identif" and e(aluate alternati(e productsD and finall",
the" purchase a rand. 6he length and comple0it" of this process (aries " product and
purchasing situation. 3ecisions for fre2uentl" purchased products and for !hich a u"er has
past e0perience, tend to e routine. ?ne part of stud"ing u"er decision processes is finding
out !hat criteria people use in making decisions.

Difficulty: Moderate

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Chapter 02 - Markets, Segments and Customer Value
%*. (p. 63) 7dentif" 9orter)s fi(e competiti(e forces that impact industr" performance.
Michael 9orter)s fi(e competiti(e forces that impact industr" performance areE 1. =i(alr"
among e0isting firms, 2. 6hreat of ne! entrants, %. 6hreat of sustitute products, '.
4argaining po!er of suppliers, *. 4argaining po!er of u"ers.

Difficulty: Easy

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