Chapter 01

Market-Oriented Perspectives Underlie Successful ...

 

Multiple Choice Questions

 

1.  (p. 5) Which level of strategy provides direction on the company's mission, the kinds of
businesses it should be in, and its growth policies? 
A. Business-level strategy
B. Corporate strategy
C. Marketing strategy
D. Service strategy

Difficulty: Easy
 

2.  (p. 6) What component of strategy involves detailing the desired levels of accomplishment on
one or more performance dimensions over specified time periods for the organization as a
whole? 
A. Scope of an organization
B. Resource deployments
C. Identifying a sustainable competitive advantage
D. Goals and objectives of an organization

Difficulty: Medium
 

3.  (p. 8) What question needs to be specifically addressed while developing a business strategy? 
A. What business are we in?
B. What business should we be in?
C. What portion of our total resources should we devote to each business to achieve overall goals
and objectives?
D. What distinctive competencies can give the business unit a competitive advantage? Năng lực
đặc biệt

Difficulty: Hard
 
4.  (p. 8) What is primary focus of marketing strategy? 
A. Decisions about the organization's scope and resource deployments across divisions
B. Effective allocation and coordination of resources to meet organizational objectives within a
specific product-market
C. Addressing which competitive advantage best matches the needs and wants of the customers
in the target segment
D. How a business unit competes within its industry

Difficulty: Medium
 

5.  (p. 9) Which of the following falls within the scope of corporate strategy? 
A. Target market definition
B. Vertical integration
C. Branding policies
D. Line extension

Difficulty: Medium
 

6.  (p. 11) This observation concerning market-oriented firms is incorrect. 

A. They are characterized by a consistent focus on customers' needs by personnel in all
departments
B. They adapt product offerings to the special needs of different target markets
C. They are slower and less willing to adapt products and functional programs to fit
environmental changes
D. They adopt a variety of organizational procedures to improve the responsiveness of decision
making

Difficulty: Medium
 
7.  (p. 14) Why are early entrants into newly emerging industries, particularly industries based on
new technologies, especially likely to be internally focused and not very market-oriented? 
A. Strong competition during the formative years
B. Rapid growth in demand for the new product
C. Customer demand less than available supply
D. Resource constraints are rarely an immediate threat to survival

Difficulty: Hard
 

8.  (p. 14) The tendency for firms to automatically continue strategies that were successful in the
past, even though current market conditions are changing, is referred to as 
A. Marketing myopia
B. Strategic inertia
C. Cognitive dissonance
D. Law of probability

Difficulty: Medium
 

9.  (p. 15) Product-oriented firms 

A. Are primarily concerned with the marketing concept
B. Are likely to be internally focused
C. Have broad product lines
D. Consider credit a customer service

Difficulty: Medium
 

10.  (p. 15) Which of the following approaches characterize a production-oriented organization? 

A. Pricing based on perceived benefits provided
B. Applying new technology to satisfy customer needs
C. Company makes what can be sold
D. Primary focus on functional performance and cost

Difficulty: Medium
 
11.  (p. 15) What characterizes a market-oriented organization? 
A. Narrow product lines
B. Packaging designed for customer convenience
C. Technical research and focus on cost cutting in the production process
D. Emphasis on product features, quality, and price

Difficulty: Medium
 

12.  (p. 17) Matrix Computer Inc.'s focus on large organizational customers caused the company to
devote too little effort to the fast growing segment of small technology start-ups. This example
illustrates that the firm 
A. Was prone to strategic inertia
B. Can be classified as a drifting organization
C. Emphasized the usage of an adaptive strategic planning process
D. Implemented market-oriented concepts

Difficulty: Hard
 

13.  (p. 18) Dell attempted to maintain its long-standing low-cost position by reducing the number
of technicians in its customer call centers. As a result, increasing number of customers spent 30
minutes or more on hold before they found a technician to solve their problem. This affected
Dell's customer satisfaction rating in the United States and its sales and profit growth stagnated.
This scenario highlights 
A. The increased importance of service
B. Strategic inertia
C. The company's market-orientation focus
D. The impact of information technology

Difficulty: Easy
 
14.  (p. 18) Identify the incorrect statement concerning services. 
A. Services are the fastest-growing sector of developed economies
B. Good services improve customer loyalty over the long term
C. Intangible nature of services creates unique challenges for marketers
D. Efficient services are always tied to a physical product

Difficulty: Medium
 

15.  (p. 19) E-tailers such as Amazon and iTunes are examples of firms in this e-commerce
category. 
A. Business-to-Business
B. Consumer-to-Business
C. Business-to-Consumer
D. Consumer-to-Consumer

Difficulty: Easy
 

16.  (p. 21) Marketers have identified 4Cs critical to a good strategic marketing plan. Which of the
following is not one among them? 
A. Company
B. Context
C. Contacts
D. Customers

Difficulty: Medium
 

17.  (p. 23) A distinct subset of people with similar needs, circumstances, and characteristics that
lead them to respond in a similar way to a particular product or service offering is known as a 
A. Market segment
B. Target market
C. Penetrated market
D. Marketing mix

Difficulty: Easy
 
18.  (p. 24) Which of the following is considered an important tool for communicating and
coordinating expectations and responsibilities throughout the firm? 
A. Value statement
B. Written marketing plan
C. Detailed market analysis
D. Positioning statement

Difficulty: Easy
 
 

19. (p. 24) Which of the following is not part of a marketing plan?

A. Guidelines for objectives
B. Information about the external environment
C. An assessment of future trends affecting the product
D. Designation of resource allocations

Difficulty: Hard

20. (p. 15)  Which of the following statements is consistent with the marketing orientation?
A. Pricing is based on production and distribution costs
B. Pricing is based on perceived benefits the product provides.
C. Credit is a necessary evil.
D. Promotion should emphasize product features
Difficulty: Moderate

21. (p. 19)  In terms of e-commerce, e-Bay is mostly an example of:

A. Business to Consumer
B. Consumer to Business
C. Consumer to Consumer
D. all of the above
E. A. and C. above
Difficulty: Moderate

Chapter 02
Corporate Strategy Decisions and Their Marketing ...
 

Multiple Choice Questions

 
1.  (p. 34) What is not true of the criteria for defining a corporate mission? 
A. Basic customer needs tend to change over time, but products endure
B. Many firms specify their domain in physical terms
C. Statements focusing only on basic customer needs can be too broad to provide clear guidance
D. Statements that specify domains in physical terms can lead to slow reactions to customer
demand changes

Difficulty: Easy
 

2.  (p. 34) The most useful mission statements focus on being 

A. Functional and broad
B. Physical and specific
C. Functional and specific
D. Physical and broad

Difficulty: Easy
 

3.  (p. 38) What is the expansion for the acronym SMART used in specifying corporate objectives? 
A. Specific, Measurable, Attainable, Relevant, and Time-bound
B. Structured, Manageable, Acceptable, Related, and Theoretical
C. Standardized, Manageable, Accountable, Relevant, and Targeted
D. Structured, Marketable, Accountable, Reusable, and Targeted

Difficulty: Easy
 

4.  (p. 39) The profitability criterion is measured in terms of which of the following indexes? 
A. Percentage change in sales
B. Return on net assets
C. Price/earnings ratio
D. Percentage cost savings from new processes

Difficulty: Medium
 

5.  (p. 38) In expressing corporate objectives aimed at enhancing shareholder value, a firm
combining its debt and market value of its stock, and then subtracting the capital invested in the
company, is using the _____ approach. 
A. Return on capital
B. Economies of scale
C. Economic value added
D. Cash conversion cycle

Difficulty: Hard
 

6.  (p. 38) Standard accounting measures such as earnings per share or return on investment are 
A. Not always reliably linked to the true value of a company's stock
B. Objectives that always provide adequate guidance for a firm's lower-level managers
C. Fool-proof tools available to evaluate the future impact of strategic actions on shareholders
D. Objectives that consistently set benchmarks for accurately evaluating performance

Difficulty: Hard
 

7.  (p. 40) A survey on customer feedback for an auto dealer company found that about 75 percent
of customers' satisfaction scores were accounted for order processing, delivery, and post-sale
services. This finding substantiates which of the following statements? 
A. Customer satisfaction increases due to the product-oriented approach
B. Spending more on emphasizing product features creates a sustainable competitive advantage
C. Customer satisfaction is influenced by factors other than the product itself
D. Pricing is based on production and distribution costs

Difficulty: Easy
 
8.  (p. 42) A company trying to increase its market share for its current products is most likely to
follow which of the following strategies? 
A. Diversification
B. Market penetration
C. Market development
D. Product development

Difficulty: Medium
 

9.  (p. 41) Amazon.com pursued a combination of actions such as making service improvements,

cutting costs as well as forming alliances with Web portals to expand its share of Web shoppers,
even though the expense of such activities postponed the firm's ability to become profitable. This
is an example of expansion by 
A. Diversifying
B. Selling existing products to new segments
C. Developing new products for current customers
D. Increasing market penetration of current product

Difficulty: Medium
 

10.  (p. 42) Stepan Co. successfully introduced detergents for washing clothes, dishes, and carpets.
Each detergent capitalized on the image of baking soda as an effective deodorizer and on the
high level of recognition of the Stepan Co. brand. This example illustrates the use of a 
A. Market penetration strategy
B. Diversification strategy
C. Product development strategy
D. Market development strategy

Difficulty: Medium
 
11.  (p. 43) Theaters, orchestras, and other performing arts organizations often reach audiences
outside major metropolitan areas by promoting matinee performances with lower prices and free
public transportation to attract senior citizens and students. Identify the strategy being employed
in this case. 
A. Expansion by diversifying
B. Expansion by selling existing products to new segments
C. Expansion by developing new products for current customers
D. Expansion by increasing penetration of current product-markets

Difficulty: Medium
 

12.  (p. 43) A manufacturer is moving downstream in terms of product flow by launching a chain of
retail outlets. Which diversification strategy is being used by the company? 
A. Forward vertical integration
B. Related diversification
C. Backward integration
D. Conglomerate diversification

Difficulty: Medium
 

13.  (p. 44) Faced with a decline in its current business, a generic drug manufacturer is planning a
foray into design, and manufacture of re-locatable modular structures. Which diversification
strategy is being employed by the company? 
A. Related diversification
B. Backward integration
C. Forward vertical integration
D. Unrelated diversification

Difficulty: Hard
 
14.  (p. 46) Which of the following is a limitation of the growth-share matrix? 
A. Since the matrix uses multiple variables as a basis for categorizing a firm's business, it is
complex to understand
B. Outcomes of this analysis are highly sensitive to variations in how growth and share are
measured
C. It is unable to analyze the impact of investing resources in different businesses on the firm's
future earnings
D. The model fails to consider that firms can generate cash from businesses with strong
competitive positions in mature markets

Difficulty: Medium
 

15.  (p. 46) Cash cows are 

A. Businesses with a high relative share of low-growth markets
B. Low-share businesses in low-growth markets
C. The market leaders in a high-growth industry
D. Businesses in high-growth industries with low relative market shares

Difficulty: Easy
 

16.  (p. 47) Identify the incorrect statement concerning alternative portfolio models. 

A. They are more useful for evaluating potential new product markets
B. They are multifactor models and are more detailed than the simple growth-share model
C. They provide more strategic guidance concerning the appropriate allocation of resources
across businesses
D. They provide the best measures when managers must evaluate different industries on the
same set of factors

Difficulty: Hard
 
17.  (p. 48) What does value-based planning assist in? 
A. Addressing questions concerning a business unit's competitive strategy by assessing the
shareholder value a given strategy is likely to create
B. In representing businesses in rapidly growing industries as more attractive investment
opportunities for future growth and profitability
C. Suggesting that a firm should invest cash in its question mark businesses
D. Viewing past efforts to formulate and implement effective business-level and marketing
strategies

Difficulty: Medium
 

18.  (p. 49) Identify a limitation of value-based planning. 

A. It attempts to assess the economic value a given strategy is likely to create by relying on
distorted accounting measures
B. It is mainly a tool for evaluating strategy alternatives identified and developed through
managers' judgments
C. It is unable assess the shareholder value a given strategy is likely to create
D. It is unable to provide a basis for comparing the economic returns to be gained from investing
in different businesses

Difficulty: Medium
 
 

19.  (p. 49) Which of the following is part of using customer equity to estimate the value of
alternative marketing actions? 
A. Attempting to assess the economic value using cost data
B. Calculating the lifetime values of each of its customers
C. Assessing the shareholder value of each marketing action
D. Using external data exclusively

 
Difficulty: Medium

20. (p. 45)  The following performance measures: market share, brand awareness and brand
preference are all measures of which of the following performance criteria.
A. Profitability
B. Contribution to owners
C. Competitive strength
D. Growth
21. (p. 43) A corporate growth strategy that focuses on developing new products for current
markets is called:
A. a Market penetration strategy
B. a Product development strategy
C. a Market development strategy
D. a Diversification strategy.

Chapter 03
Business Strategies and Their Marketing Implications
 

Multiple Choice Questions

 

1.  (p. 60) Strategic business units 

A. Are primarily alliances with other competitive firms aimed at new markets
B. Are components of a firm engaged in multiple industries or businesses
C. Adapt the same growth objectives and competitive strategies as other SBUs
D. Are business units that always focus on competing within their industry

Difficulty: Easy
 

2.  (p. 60) Which of the following is not a dimension that defines the scope and mission of an
individual SBU? 
A. Technical compatibility
B. Similarity of competitors
C. Similarity in customer needs
D. Similarity of personal characteristics of customers in the target markets

Difficulty: Easy
 
3.  (p. 61) A firm ensures that no two SBUs within the firm compete for the same customers with
similar products. Which SBU characteristic is being discussed here? 
A. A homogeneous set of markets to serve with a limited number of related technologies.
B. Controlling factors that are essential for successful performance
C. A unique set of product-markets
D. Responsibility for their own profitability

Difficulty: Medium
 
4.  (p. 61) 3M consumer product group introduced Never Rust soap pads made from recycled
plastic beverage bottles. Its objective was to capture a major share of the soap pad market and
maximize Never Rust's volume growth. The firm's top managers approved a major investment in
a new plant and a substantial introductory advertising budget. At the same time, the consumer
group maintained high profitability goals for its other established products to provide the cash
required for Never Rust's introduction and preserve the group's overall profit level. Identify the
business strategy employed here. 
A. A firm breaking down its corporate objectives into subobjectives for each SBU
B. A firm's subobjectives are consistent across the various SBUs
C. A firm's subobjectives are used only for existing product-market within the unit
D. A firm using value-based planning as a tool for evaluating alternative resource allocations

Difficulty: Medium
 

5.  (p. 62) According to Michael Porter, a business that avoids direct confrontation with its major
competitors by concentrating on narrowly defined market niches is using the ______ strategy to
gain and maintain competitive advantage. 
A. Overall cost leadership
B. Differentiation
C. Focus
D. Segmenting

Difficulty: Medium
 

6.  (p. 62) A business pursuing a prospector strategy 

A. Concentrates on maintaining its positions in established product-markets while paying less
attention to new product development
B. Focuses on growth through the development of new products and markets
C. Attempts to maintain a strong position in its core product-markets but also seeks to expand
into new product-markets
D. Does not have a clearly defined strategy

Difficulty: Medium
 
7.  (p. 62) Which business strategy is followed by a business that attempts to maintain a strong
position in its core product-market but also seeks to expand into new—usually closely related—
product-markets? 
A. Prospector strategy
B. Analyzer strategy
C. Low-cost defender strategy
D. Reactor strategy

Difficulty: Hard
 

8.  (p. 63) Businesses following a reactor strategy 

A. Attempt to maintain a stable line of products, but follow a selected set of promising new
developments in its industry
B. Try to protect their domain by offering lower prices, higher quality, or better services than
competitors
C. Are not as willing to assume the risks of a new product or market development as its
competitors
D. Respond rapidly to early signals concerning areas of opportunity, which often lead to new
rounds of competitive actions

Difficulty: Medium
 

9.  (p. 64) Belvedere vodka made by a small distillery in Poland, has captured a share of the prestige
segment of the North American vodka market by stressing the five-century tradition of its
production process and the superior quality of its imported product. Identify the strategy used by
the firm. 
A. Prospector strategy
B. Differentiated defender strategy
C. Low-cost defender strategy
D. Reactor strategy

Difficulty: Medium
 
10.  (p. 65) Which of the following observations is not true of services? 
A. They can be thought of as intangibles
B. They former can rarely be experienced in advance of the sale
C. They can be even tested before purchase
D. Almost all businesses are engaged in service to some extent

Difficulty: Easy
 

11.  (p. 69) Considering scope, these businesses usually operate in broad and rapidly changing
domains where neither the technology nor customer segments are well established. 
A. Prospector
B. Differentiated defender
C. Low-cost defender
D. Analyzer

Difficulty: Easy
 

12.  (p. 69) Which performance dimension is usually measured by the number of successful new
products introduced relative to competitors or the percentage of sales accounted for by products
introduced within the last five years? 
A. Efficiency
B. Effectiveness
C. Durability
D. Adaptability

Difficulty: Hard
 

13.  (p. 69) Which of the following best describes the effectiveness performance dimension? 
A. The success of a business's products and programs relative to those of its competitors in the
market
B. The outcome of a business's programs relative to the resources used in implementing them
C. The business's success in responding over time to changing conditions and opportunities in
the environment
D. The percentage of sales accounted for by products introduced within the last five years

Difficulty: Medium
 
14.  (p. 70) FirstEnergy Corp. formed an operating group of several otherwise autonomous business
units that make different types of electrical motors and tools. By sharing production facilities,
marketing activities, and a common sales force, the group was able to reduce the costs of both
per-unit production and marketing. FirstEnergy Corp. is trying to 
A. Gain operating synergies through sharing resources
B. Preserve its position in established product-markets
C. Generate excess cash to support its product and market development efforts
D. Devote a proportion of resources to the development of new product-markets

Difficulty: Medium
 

15.  (p. 71) Which condition is NOT part of the analyzer strategy? 

A. Using a niche strategy with a relatively weak share position
B. Using low costs
C. Differentiating in quality
D. Differentiating in service

Difficulty: Easy
 

16.  (p. 72) Which environmental factor is conducive to the prospector strategy? 

A. Industry in early growth stage
B. Industry in late growth or early maturity stage
C. Industry in maturity stage
D. Industry in decline stage

Difficulty: Easy
17.  (p. 74) The defender strategy is most useful 
A. For business units with a profitable share of one or more major segments in a relatively
mature and stable industry
B. For business units that try to avoid being left behind in newly developing application
segments within the market
C. For well-developed units that are still experiencing some growth and change as a consequence
of evolving customer needs
D. For unstable units due to fewer competitors and their relative market shares that shift rapidly
as new products are introduced

Difficulty: Hard
 

18.  (p. 76) A policy of high service quality is essential for _____, as it offers a way to maintain a
competitive advantage in well-established markets. 
A. Prospectors
B. Low-cost defenders
C. Differentiated defenders
D. Analyzers

Difficulty: Medium
 

19.  (p. 77) Identify the correct statement concerning the distribution policies. 

A. Prospector's need for motivation of distribution channel members is accomplished through
tight control of company-owned channels
B. Maintaining tight control over the behavior of channel members is an appropriate policy for
prospectors who rely on customer service
C. Defenders are likely to devote a larger percentage of sales to trade promotions than the
prospector businesses
D. Defenders rely on trade promotion tools and other incentives to induce support from their
independent channel members

Difficulty: Hard
 
 

20. (p. 76) Which of the strategies have the highest need for cash for product development?
A. Low-cost defender
B. Differentiated Defender
C. Prospector
D. Analyzer

Difficulty: Easy
21. (p. 76) For which of the following strategies is the introductory stage most favorable?

A. Low-cost defender
B. Differentiated Defender
C. Analyzer
D. Prospector
Difficulty: Easy

Chapter 04
Understanding Market Opportunities
 

Multiple Choice Questions

 

1.  (p. 87) A(n) _____ is composed of individuals and organizations who are interested in, and are
willing to buy a good or service to obtain benefits that will satisfy a particular need. 
A. Sector
B. Channel
C. Industry
D. Market

Difficulty: Easy
 

2.  (p. 88) A micro-level analysis of market and industry attractiveness is based on 
A. The industry as a whole
B. The market as a whole
C. Environmental conditions that affect the market
D. Specific target customers

Difficulty: Medium
 
3.  (p. 89) Identify a demographic trend that influences market attractiveness. 
A. Fitness and nutrition
B. Increased levels of immigration
C. Business ethics
D. Deregulation in a firm's operation

Difficulty: Medium
 
4.  (p. 86-89) Marketers of such consumer services such as health care, vacation homes, and life
insurance are capitalizing on the general trend of an ageing population, and are developing and
implementing marketing strategies accordingly. What macroenvironmental trend is acting as a
catalyst here? 
A. Technological
B. Natural
C. Sociocultural
D. Demographic

Difficulty: Easy
 

5.  (p. 91) Identify a sociocultural environment trend that affects market attractiveness. 

A. Declining marriage rates
B. Increased levels of immigration
C. Imbalanced population growth
D. Fitness and nutrition

Difficulty: Medium
 

6.  (p. 93) Each macroenvironmental trend has a distinct impact on the consumer and industrial
market. Identify the scenario where industries such as check-cashing outlets and pawn shops will
face a tough time staying in business. 
A. Increased immigration
B. Robust economy
C. Deregulation
D. Ageing population

Difficulty: Medium
 

7.  (p. 93) Deregulation 
A. Protects inefficiencies
B. Creates rapid growth in some markets
C. Creates inflationary pressures
D. Restricts entry by new competitors

Difficulty: Medium
 
8.  (p. 94) The rise in production of products such as hybrid gas-electric vehicles, phosphate-free
detergents, and high-efficiency light bulbs are all indicative of the impact of which of the
following macroenvironmental force? 
A. Natural environment
B. Technological environment
C. Regulatory environment
D. Economic environment

Difficulty: Easy
 

9.  (p. 96) According to Porter's five competitive forces, rivalry among present competitors is
greater under which of the following conditions? 
A. When strong economies of scale and learning effects are present
B. When low switching costs exist for the buyers
C. When suppliers can realistically threaten forward integration
D. When strong product differentiation exists among current players

Difficulty: Medium
 

10.  (p. 96) Porter's model identifies rivalry among present competitors as one competitive force.
According to this concept, why would the restaurant industry face greater rivalry? 
A. Because of absence of a dominant firm
B. Because of high investment intensity
C. Because of little product differentiation
D. Because of low switching costs for buyers

Difficulty: Hard
 

11.  (p. 97) The problem of overcoming a cost disadvantage becomes more difficult for existing
firms that share their output with their related businesses 
A. If gaining distribution is particularly difficult
B. When strong product differentiation exists among current players
C. If the industry has strong capital requirements at the outset
D. When strong economies of scale and learning effects are present

Difficulty: Medium
 
12.  (p. 99) A distribution agency was using facsimile machines to send and receive long-distance
messages. This was replaced with an all-in-one printer, flatbed scanner, copier and fax device
that allowed the agency to accomplish multiple tasks at the same price. For the manufacturer of
the facsimile machines, this example represents the 
A. Entry barrier for companies
B. Bargaining power of buyers
C. Threat of substitute products
D. Rivalry among present competitors

Difficulty: Easy
 

13.  (p. 98-99) The bargaining power of suppliers increases under all of the following conditions
except 
A. If the cost of switching suppliers is high
B. If prices of substitutes are high
C. If suppliers can realistically threaten backward integration
D. It the supplier's product is a large part of the buyer's value added

Difficulty: Medium
 

14.  (p. 98) Which of the following conditions does not relate to the bargaining power of buyers? 
A. Strong product differentiation exists among current players
B. The threat of backward integration exists
C. Concessions for large buyers that account for a large portion of industry sales
D. Switching costs that reduce the buyer's bargaining power

Difficulty: Hard
 

15.  (p. 102) Most companies and most goods deliver generic category benefits when 
A. The offering provides customer benefits that other solutions do not
B. The threat of backward integration exists
C. There is little product differentiation
D. The amount of fixed and working capital required to produce a dollar of sales is large

Difficulty: Hard
 
16.  (p. 103) Opportunities are attractive at the micro level for the industry when the company meets
which of the following tests? 
A. The target market is likely to grow
B. The source of customer pain and ability to resolve it has been identified
C. The offering provides customer benefits that other solutions do not
D. The company possesses something proprietary that is not easily duplicable

Difficulty: Hard
 

17.  (p. 104) Which of the following factors is considered a critical success factor in the case of
retailing? 
A. Price
B. Location
C. Promotion
D. Product

Difficulty: Easy

18.  (p. 104) Which of the following questions is NOT part of the consideration of a marketing
opportunity? 
A. Does the opportunity fit what we want to do?
B. Do we have the people who can help us be successful?
C. Do we know whether the opportunity will last for the long haul?
D. Do we have the right connections?

Difficulty: Easy

19.  (p. 106-107) According to the opportunity/threat matrix, which of the following events should be
closely monitored? 
A. Events with a low probability of occurring and having a low impact
B. Events with a high probability of occurring and having a high impact
C. Events with a low probability of occurring and having a high impact
D. Events with a high probability of occurring and having a low impact

Difficulty: Medium
 
20.  (p. 96) Porter's Five Competitive Forces framework enhanced understanding of the effect of
competition on companies. For the fast food industry, which force exerts the least powerful
effect?
A. Threat of new entrants
B. Rivalry among existing competitors
C. Bargaining power of suppliers
D. Threat of substitute products
E. Bargaining power of buyers.
Difficulty: Medium

21.  (p. 96) The US Postal Service faces several challenges. The emergence of e-mail and mail able
digital images are examples of which competitive force?
A. Threat of new entrants
B. Rivalry among existing competitors
C. Bargaining power of suppliers
D. Threat of substitute products
E. Bargaining power of buyers.
Difficulty: Medium

Chapter 05
Measuring Market Opportunities: Forecasting and ...
 

Multiple Choice Questions

 

1.  (p. 114) What term is used to refer to the size of current users who are already using a particular
product at the time of forecast? 
A. Target market
B. Penetrated market
C. Market potential
D. Test market

Difficulty: Easy
 
2.  (p. 114) Which of the following statements is true of the top-down approach in sales
forecasting? 
A. A central person or persons take the responsibility to prepare an overall forecast
B. Once each part of the firm prepares its own sales forecast, the parts are aggregated to create
the forecast as a whole
C. Firms can break their anticipated demand into pieces and sum the components to create the
summary forecast
D. Various combinations of market segments and/or product lines can be combined to build a
business plan that looks viable

Difficulty: Medium
 

3.  (p. 115) Statistical methods are not recommended for new product managers charged with
forecasting sales for a new product because 
A. There is no history in their venture on which to base a statistical forecast
B. These methods tend to not base their assumption of the future on the past
C. It does not include a method to forecast impact on consumer demand of different
combinations of attributes
D. It is not based on what people actually do

Difficulty: Medium
 
4.  (p. 115) Company A is a tire manufacturer and uses factors like the number and age of vehicles
currently on the road in the country, predictions of GDP for the region, and other relevant factors
to forecast market potential. Which of the following methods is the method Company A uses for
a more accurate forecast? 
A. Analogy
B. Statistical method
C. Observation
D. Surveys

Difficulty: Medium
 

5.  (p. 116) For which category of new products is the observational method of preparing an
evidence-based forecast not possible? 
A. New product lines
B. Improvements in or revisions of existing products
C. New-to-the-world products
D. Repositionings

Difficulty: Medium
 

6.  (p. 116) Honeydew, a well-known confectionery, plans to introduce a walnut fudge candy. It

asks some of its regular customers to sample it and provide their opinion. In this way, the
management hopes to estimate the likely number of buyers for the product, if introduced in their
store. Honeydew used the _____ method of forecasting. 
A. Survey
B. Judgment
C. Statistical
D. Analogy

Difficulty: Easy
 
7.  (p. 117) Which of the following observations is not applicable to the analogy approach of
forecasting sales? 
A. It allows for comparison of similar available historical data for any particular product
B. It uses a behavioral approach to estimate future sales patterns and likely customers
C. It is an approach often used to forecast the sales or market potential for a new product
D. It allows managers to look at the sales history of earlier introductions to forecast the sales for
the new product

Difficulty: Medium
 

8.  (p. 118) Which of the following is not a valid reason for the decline in the use of live test
markets? 
A. They are expensive to conduct
B. Competitors can buy checkout scanner data without bearing test marketing expenses
C. Differences exist between what people imagine about a product in a test market and what is
actually delivered
D. Competitors engage in marketing tactics to mislead the company by distorting normal
purchasing patterns in a category

Difficulty: Hard
 

9.  (p. 120) Diffusion of innovation theory allows 

A. Marketers to estimate how rapidly an innovation is likely to be adopted by the target market
B. Consumers to gauge the feasibility of product acceptance within their reference groups
C. Management to estimate how quickly innovation can seep into an organizational culture
D. Marketers to manipulate customer attitudes from the time they first hear about the new
product until they adopt it

Difficulty: Medium
 
10.  (p. 120) The speed of the adoption process Is based upon the all of the following except 
A. Relative simplicity of the new product
B. Ease with which the central idea of the new product is communicated
C. Extent to which its trial can be accomplished on a large-scale basis
D. Relative advantage of the new product over other products

Difficulty: Easy
 

11.  (p. 121) Late majority are individuals who 

A. Adopt a new product for economic or social reasons
B. Are more likely to be receptive to new ideas
C. Are the most "local" and stubbornly resist change
D. Want to be sure that a new product will prove successful before adopting it

Difficulty: Easy
 

12.  (p. 121) Arguably, in terms of value, the least important group in the diffusion of innovations
curve is: 
A. Early majority
B. Late majority
C. Laggards
D. None of the above

Difficulty: Easy
 

13.  (p. 125) Brendin Co. is a retail chain specializing in business and casual wear for working
women. Each week, all Brendin retail outlets receive sales information about their garments in
terms of style and color; merchandise category (e.g., dress or casual); store, area, or region; and
for various time periods. This is an example of the use of 
A. Marketing databases
B. Competitive intelligence systems
C. Internal records systems
D. Client contact and salesforce automation systems

Difficulty: Hard
 
14.  (p. 126) Company A uses loyalty cards to track and analyze customer buying patterns and to
offer customers coupons and incentives tailored to their buying behavior. Which of the market
knowledge systems does the company use? 
A. Marketing databases
B. Competitive intelligence systems
C. Internal records systems
D. Client contact and salesforce automation systems

Difficulty: Hard
 
15.  (p. 126) What system of information collection best illustrates a marketing database? 
A. "Cookies" or electronic signatures placed at a customer's personal computer
B. Detailed sales and inventory about the fastest-selling items in a particular store
C. Companies' annual and other financial reports, and government documents
D. Customer information captured from sales persons
 

Difficulty: Easy
 

16.  (p. 129) Which of the following statements about competitive intelligence systems is incorrect? 
A. It is a systematic and ethical approach for gathering and analyzing information about
competitors' activities and related business trends
B. It is based on the idea that more than 80 percent of all information is public knowledge
C. It uses online databases, government documents, etc. as its source of information
D. It allows the effective capture of customer intelligence from salespeople and account transfers

Difficulty: Medium
 

17.  (p. 129) Salesforce automation software helps companies to 

A. Gather and analyze information about competitors' activities and related business trends
B. Disseminate real-time product information to salespeople to satisfy customer needs
C. Record annual reports, other financial reports, online and government databases
D. Keep track of information about which goods or services were sold from which region

Difficulty: Medium
 
18.  (p. 129) The design, collection, analysis, and reporting of research intended to gather data
pertinent to a particular marketing challenge or situation is referred to as 
A. Data-mining
B. Marketing research
C. Marketing databases
D. Project research

Difficulty: Medium
 
19.  (p. 120) "Primary data collected when cheaper and faster secondary data will do. Quantitative
data collected without first collecting qualitative data." These are examples of things that could
go wrong in which step of the marketing research process? 
A. Reporting results to the decision maker
B. Determining data sources and types of data and research approaches required
C. Designing research: type of study, data collection approach, sample, etc
D. Identifying managerial problem and establishing research objectives
 

Difficulty: Medium
 
 
20.  (p. 114) When major television manufacturers introduced the High Definition television, they
had to account for characteristics like picture quality the levels of which were unprecedented.
They used data from the introduction of color television when black and white TV's were the
only sets available. This is an example of what kind of forecasting?
A. Primary data forecasting
B. Analogy
C. Observation
D. Judgment
Difficulty: Medium
21.  (p. 127) In forecasting the Customer Lifetime Value of a customer which of the following is
least important:
A. Historical purchase data
B. Forecasting future purchases
C. The nature of the products purchased
Difficulty: Medium

Chapter 06
Targeting Attractive Market Segments
 

Multiple Choice Questions

 
1.  (p. 135) Identify the process by which a market is divided into distinct subsets of customers with
similar needs and characteristics that led them to respond in similar ways to a particular product
offering and marketing program. 
A. Target marketing
B. Market segmentation
C. Product positioning
D. Diversification

Difficulty: Easy
 

2.  (p. 135) Which of the following involves evaluating the firm's mission and capabilities to deliver
what each segment wants, in order to choose which segments it will serve? 
A. Market penetration
B. Market segmentation
C. Product development
D. Target marketing

Difficulty: Medium
 

3.  (p. 135-136) If in a certain country, the population growth has slowed, and more product-markets
are maturing the result is most likely to be one of 
A. Intense competition and increase in brand extensions
B. Lower competition among products within a single market segment
C. Multimillion-dollar businesses that serve large market segments
D. Many new media that appeal to broad and wide interest groups

Difficulty: Hard
 
4.  (p. 136) The competitive environment in some industries is witnessing developments such as
build-to-order processes, mass-customization of products, and computer-aided design
technology. What reason can be attributed to the rising importance of marketing segmentation in
such an environment? 
A. Population growth has increased, and more product-markets are maturing
B. Social and economic forces have resulted in customers with less disposable incomes
C. An increasing trend toward microsegmentation exists in which extremely small market
segments are targeted
D. Competitive inertia during the market shakeout period as the market transitions from product
maturity to the decline stage

Difficulty: Hard
 

5.  (p. 137) Which of the following is not an objective entailed in the market segmentation process? 
A. Identifying a homogeneous segment that differs from other segments
B. Specifying criteria that define the segment
C. Developing strategic alliances in the decline stage of the product
D. Determining segment size and potential

Difficulty: Easy
 

6.  (p. 137) All of the following are reasons why the segmentation criteria should describe the
market segments clearly except 
A. Members can be readily identified and accessed
B. Marketers need to know whether a given prospective customer is or is not in the target market
C. To analyze customers' likely responses to differences in the elements of the marketing mix
D. To reach the prospective customer with advertising or other marketing communication
messages

Difficulty: Medium
 
7.  (p. 137-138) Which of the following statements emphasizes the impact of income in segmenting
markets geographically? 
A. Mobile service providers are focusing attention on the 65-plus segment to improve
penetration
B. Toyota has launched an online information service aimed at women as they directly influence
eight out of ten vehicle purchases
C. Nokia has launched a subsidiary to create an ultra-exclusive mobile telephone targeting
customers buying prestige products
D. The increase in the number of working women has created needs for specialized goods and
services

Difficulty: Medium
 

8.  (p. 139) Which of the following statements about geographic segmentation is incorrect? 

A. It is used only in consumer markets
B. It is used when customers are unwilling to travel very far to obtain the goods they require
C. It is particularly important in retailing and many services businesses
D. It is helpful as regions vary in their sales potential, customer needs, etc

Difficulty: Easy
 

9.  (p. 140) "Gatorade's" original target market consisted of athletes who needed to replenish water
and salts lost through perspiration. "Specialized" and "Gary Fisher" target bicyclists who wish to
ride on single-track trails or back-country terrain. Which type of segmentation do these examples
highlight? 
A. Demographic
B. Geographical
C. Behavioral
D. Geodemographic

Difficulty: Easy
 
10.  (p. 140) Which of the following illustrations exemplifies behavioral segmentation? 
A. Uni-Marts, Inc., a convenience store, focuses on small towns and rural areas, thereby avoiding
big competitors
B. In the United States, car companies have found ways to cater to the needs of the multicultural
segment
C. The sales of certain kinds of products such as trade magazines are tied closely to occupational
type
D. Over the years, Volvo has emphasized safety whereas Jaguar has emphasized styling,
quickness, and status

Difficulty: Medium
 

11.  (p. 140) Consumers evaluate product or brand alternative on the basis of desired characteristics
and how valuable each characteristic is. This is referred to as the 
A. Purchase influence for the product
B. Buying situation for the consumer
C. Choice criteria of the consumer
D. Centralized purchasing structure

Difficulty: Medium
 

12.  (p. 142) Principle-oriented consumers are consumers who 

A. Are motivated by abstract and idealized criteria for products or services
B. Shop for products that demonstrate the consumer's success
C. Are guided by the need for social or physical activity, variety, and risk taking
D. Provide consumer-inputs to marketers during product development

Difficulty: Medium
 
13.  (p. 142) _____ will influence a buyer to consider all transactions with a given supplier on a
global basis, to emphasize cost savings, and to minimize risk. 
A. Benefits sought
B. Purchasing structure
C. Average income
D. Purchase influence

Difficulty: Medium
 

14.  (p. 142) Which of the following occurs when some element, such as price or delivery schedules,
has changed in a client–supplier relationship? 
A. Straight rebuy
B. New task rebuy
C. Modified rebuy
D. New buying situation

Difficulty: Easy
 

15.  (p. 143) All of the following are benefits managers gain from applying a common analytical
framework across segments to evaluate the potential of alternative market segments except 
A. To compare the future potential of different segments using the same set of criteria
B. To prioritize different segments to decide which segments to target
C. To analyze how resources and marketing efforts should be allocated
D. To portray how different segments represent equally attractive opportunities

Difficulty: Medium
 

16.  (p. 146) Which of the following marketing questions underlines the market–attractiveness of a

firm? 
A. Are there unmet or underserved needs we can satisfy?
B. Can we perform against critical success factors?
C. Stage of competing products in product life cycle: Is the timing right?
D. Can we differentiate?

Difficulty: Hard
 
17.  (p. 147) If a marketer performs five force analysis for a potential new product and finds that:
- entry barriers are low
- buyer power is high
- supplier power is high
- the threat of substitutes is high
and - rivalry among existing firms is growing. The situation would be ________

A. Unfavorable
B. Favorable
C. Mixed
D. Difficult to predict
 

Difficulty: Easy

18.  (p. 148) Possible shifts in customer needs and behavior, the entry or exit of competitors, and
changes in their strategies are considered during this step of constructing a market-
attractiveness/competitive-position matrix for evaluating potential target markets. 
A. Select market-attractiveness and competitive-position factors
B. Project future position for each segment
C. Rate segments on each factor, and plot results on matrices
D. Weigh each of the market-attractiveness and competitive-position factors

Difficulty: Medium
 

19.  (p. 149) Identify the action point that a firm must take when the market attractiveness is
moderate and the competitive position is weak. 
A. Attempt to expand without high risk or minimize investment and focus on operations
B. Invest to improve position only in areas where the risk is low
C. Emphasize profitability by increasing productivity and build up ability to counter competition
D. Seek ways to increase current earnings without speeding market's decline

Difficulty: Medium
 
 
20.  (p. 143) The text notes that over 20% of US consumers are functionally illiterate and word
based promotional techniques like signage and packaging are ineffective in reaching them.
Which techniques hold promise for effective marketing to this group? 
A. Use of pictorial information alongside word information.
B. Employee training to help consumers avoid embarrassment
C. Reliance on words and numbers but with the use of graphics.
D. A and B above
 

Difficulty: Medium
 

21.  (p. 146) Elements such as the threat of new entrants, threat of substitutes, buyer power,
competitive rivalry pertain to which factor? 
A. Competitive position
B. Macro trends
C. Firm capabilities and resources
D. Industry attractiveness
 

Difficulty: Medium
 

Chapter 07
Differentiation and Brand Positioning
 

Multiple Choice Questions

 

1.  (p. 154) Identify the incorrect statement concerning positioning. 

A. It comprises both competitive and customer needs considerations
B. This concept is applicable only for an existing brand
C. It is essentially concerned with differentiation
D. Generally, it is more difficult for marketers to position services than goods successfully

Difficulty: Easy
 
2.  (p. 154) 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

Difficulty: Medium
 

3.  (p. 155) Physical positioning helps in all of the following ways except 

A. It enables buyers to evaluate industrial goods and services on the basis of what it does rather
than on what it is
B. It contributes to a better marketing/R&D interface by determining key physical product
characteristics
C. It helps define the structure of competition by revealing the degree of competitiveness
between various brands
D. It may indicate the presence of meaningful product gaps and thus reveal opportunities for a
new product entry

Difficulty: Medium
 
4.  (p. 156) 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. They are 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

Difficulty: Hard
 

5.  (p. 157) Which of the following is a characteristic of physical positioning? 

A. Large number of dimensions
B. Consumer orientation
C. Represents impact of product specs
D. Represents impact of communication

Difficulty: Medium
 

6.  (p. 156) A Sri Lankan tea producer is positioning its teas in the same way that wine has been
positioned for years. What does this positioning strategy signify?

A. Consumers often know a lot about the essential physical attributes of many products,
especially household products
B. Consumers generally understand the physical attributes well enough to use them as a basis for
choosing between alternatives
C. Consumers often evaluate goods and services on factors other than physical properties,
including their past experiences
D. Consumers can typically evaluate a product better on the basis of what it is than what it does

Difficulty: Medium
 
7.  (p. 156) Which of the following examples best illustrates perceptual positioning? 
A. General Foods' breakfast cereal in new chocolate and honey flavors
B. Volvo's latest SUV featuring 225 Horsepower and a mileage of 18 miles per gallon
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

Difficulty: Easy
 

8.  (p. 157-158) 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's or service's 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

Difficulty: Medium
 

9.  (p. 159) 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 alternatives on various determinant attributes the new product may contain. Based on this,
infer what step of the positioning process is the firm at? 
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

Difficulty: Medium
 
10.  (p. 160) Volvo's emphasis on safety, Toyota's emphasis on reliability, and Norelco's promising
a "close and comfortable shave" highlights which determinant attribute? 
A. Features
B. Manufacturing process
C. Benefits
D. Endorsements

Difficulty: Easy
 

11.  (p. 160) "At Fidelity, you're not just buying a fund, a stock, or a bond—you're buying a better
way to manage it." Identify the determinant attribute being used here. 
A. Parentage
B. Comparison
C. Ingredients
D. Pro-environment

Difficulty: Medium
 

12.  (p. 160) Which positioning concept is illustrated by a clothing manufacturer claiming that their
shirts are made from pure organic cotton? 
A. Price/quality
B. Endorsements
C. Ingredients
D. Features

Difficulty: Medium
 

13.  (p. 160) This is an example of using product features as a determinant attribute in positioning. 

A. "This is the quietest dishwasher made in America."
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 Pedigree is more nutritious than IAMS, costs less than IAMS, and tastes great,
too."

Difficulty: Medium
 
14.  (p. 161) A bank positions itself using its deposit safety 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 the deposit safety attribute is large and uniform across
various consumers
D. Because all the alternative brands are perceived to be about equal on that dimension

Difficulty: Hard
 

15.  (p.  162) Identify the incorrect statement concerning the positioning grid. 
A. It provides a visual representation of the positions of various products in a competitive set
B. Where more than two attributes are to be considered, multidimensional grids are produced
C. It indicates how products within a category compare on the level of as many attributes as are
relevant
D. It identifies gaps that may exist either because of technical constraints or lack of prospective
customers

Difficulty: Easy
 

16.  (p. 164) "British Leyland was formed through a series of mergers involving a number of British
car manufacturers. It did not have a clear identity because it was new and manufactured a variety
of brands, including Rover, Triumph, and Austin-Morris." Which constraint associated with an
intense position does this example illustrate? 
A. Repositioning may result in alienating the product's current users despite the success with its
newly targeted group
B. Success in repositioning efforts may well ensure losing the current group of users
C. The dilution of an existing intense position as a result of consolidation
D. The temptation to overexploit the position by using the brand name on line extensions and
new products

Difficulty: Hard
 
17.  (p. 165) 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. Conjoint analysis
B. Cluster analysis
C. Logit analysis
D. Discriminant analysis

Difficulty: Easy
 

18.  (p. 165) Identify the limitation of 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 on the level of as
many attributes are relevant
D. It does not indicate how alternative products are positioned relative to one another in
customers' minds

Difficulty: Medium
 
19.  (p. 165) Both positioning statements and value propositions should reflect. 
A. A unique selling proposition
B. A low price component
C. A high value component
D. An indication of high market acceptance
 
Difficulty: Easy
 

20.  (p. 170) Brand equity can be described as: 

A. How consumers feel, think, and act toward the brand
B. The result of brand differences that consumers find meaningful
C. The foundation for the prices and profits the brand can achieve
D. All of the above
 

Difficulty: Easy

21.  (p. 157) Objective measures, technical orientation and physical brand properties are associated
with:
A. Perceptual mapping
B. Perceptual positioning
C. Conceptual positioning
D. Physical positioning
Difficulty: Easy

Chapter 08
Marketing Strategies for New Market Entries
 

Multiple Choice Questions

 

1.  (p. 178) Which of the following observations about pioneering firms is incorrect? 

A. They are always the market share leaders as the new product categories mature
B. They must change and adapt their strategies as their products move through a life cycle
C. Capitalizing on early advantage, some of them earn substantial revenues and profits
D. They can be overtaken by followers that offer better products, superior customer service, or
lower prices

Difficulty: Medium
 

2.  (p. 181) _____ 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. Prestige pricing

Difficulty: Easy
 

3.  (p. 180) What is true of the introductory stage in a product life cycle? 

A. The product is easily available
B. The net adoption rate holds steady
C. Shakeout or competitive turbulence occurs at the end of this stage
D. The length of the product line typically should be relatively short

Difficulty: Medium
 
4.  (p. 182) 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

Difficulty: Medium
 

5.  (p. 185) 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

Difficulty: Easy
 

6.  (p. 186) These items may be moderately new to both the firm and the customers in its established
product-markets. 
A. Repositioning
B. Additions to existing product lines
C. New product lines
D. Improvements in or revisions of existing products

Difficulty: Hard
 

7.  (p. 186) Which observation best describes new-to-the-world products? 

A. They are new to the company but not to the market
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

Difficulty: Medium
 
8.  (p. 188) To establish a foothold in a future new market, or preempt a market segment, a firm
must introduce 
A. New-to-the-world products; improvements or revisions to existing products
B. New-to-the-world products; additions to existing product line; repositionings
C. Additions to or revisions of existing product line; repositionings; cost reductions
D. New-to-the-world product; new product line

Difficulty: Hard
 

9.  (p. 188) Improving or revising existing products, additions to existing product lines and cost
reductions aim at achieving which of the following objectives? 
A. Capitalizing on distribution strengths
B. Maintaining position as a product innovator
C. Exploiting technology in a new way
D. Defending a current market-share position

Difficulty: Medium
 

10.  (p. 189) Identify an advantage of follower strategies. 

A. Influencing consumer choice criteria and attitudes
B. Making the best use of latest technology
C. Possibility of positive network effects
D. Ability to define the rules of the game

Difficulty: Medium
 

11.  (p. 189) 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

Difficulty: Hard
 
12.  (p. 185)  Apple's iPhone's sleek design, innovative software, and functionality enabled Apple to
capture a substantial share of the global mobile phone market from competitors like Nokia,
Motorola, and Samsung. This example illustrates Apple's ability to take advantage of the
pioneers' 
A. Marketing mistakes
B. Limited resources
C. Positioning mistakes
D. Product mistakes

Difficulty: Medium
 

13.  (p. 193) Pioneers that are able to maintain their preeminent position well into the market's
growth stage have supported their early entry 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

Difficulty: Hard
 

14.  (p. 193) 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

Difficulty: Easy
 
15.  (p. 195) Identify the firm characteristic of mass-market penetration for new product pioneers. 
A. Limited marketing skills and resources
B. A prospector with good capability for continued new product innovation
C. Ability to shift from stimulation of primary demand to stimulation of selective demand
D. Limited financial resources to commit to building capacity prior to demand growth

Difficulty: Medium
 

16.  (p. 196) All of the following are true of firms adopting the niche penetration marketing strategy
except 
A. It is appropriate when a number of different benefit segments are present in the new market
B. It is attractive when only a few barriers to the entry of major competitors exist
C. It is appropriate when the new market for the new product is more fragmented than expected
D. It is appropriate when the product category is likely to experience positive network effects

Difficulty: Hard
 

17.  (p. 198) Which of the following marketing programs is used by the niche penetration strategy to
increase the customers' ability to buy? 
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

Difficulty: Medium
 
18.  (p. 199) _____ 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

Difficulty: Easy
 
 19. (p. 200) ________
grants the right to use the company's name, trademarks, and technology.
A. Contract manufacturing
B. Countertrade
C. Franchising
D. Coproduction
 

Difficulty: Easy

20.  (p. 179) In the Introduction stage of the Product Life Cycle, firms should focus on all but which
of the following?

A. Improve product quality

B. Using a skimming or penetration pricing strategy
C. Intensive channel use
D. High level of communication to promote the product
Difficulty: Easy

21.  (p. 179) Which of the following pricing strategies is appropriate during the maturity stage of the
PLC?
A. Skimming
B. Premium price strategy
C. Reduce across the board
D. Hold or reduce selectively
Difficulty: Easy

Chapter 09
Strategies for Growth Markets
 

Multiple Choice Questions

 

1.  (p. 207) All of the following are reasons why followers are attracted to rapidly growing markets
except 
A. It is easier to gain share when a market is growing
B. The price competition is likely to be less intense
C. The share gains are seldom worth more in a growth market than in a mature market
D. It is necessary to make sure that the firm keeps pace with the technology

Difficulty: Easy
 

2.  (p. 209) 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

Difficulty: Medium
 

3.  (p. 211) This is a 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

Difficulty: Easy
 
4.  (p. 212) 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

Difficulty: Hard
 

5.  (p. 215) The marketing action of developing a product line with features that are more appealing
to a specific segment of potential customers is characteristic of the 
A. Market expansion strategy
B. Contraction strategy
C. Flanker strategy
D. Confrontation strategy

Difficulty: Medium
 

6.  (p. 213) Which of the following statements is associated with the fortress strategy? 
A. Leader develops a strong position when potential customers have relatively homogeneous
needs
B. Leader develops a second brand to compete directly against the challenger's offering
C. Leader changes the marketing program before a suspected competitive challenge occurs
D. Leader defends its relative market share by expanding into a number of market segments

Difficulty: Hard
 

7.  (p. 214) Firms can implement any combination of the given strategies to maintain its leading
share position. Firms can choose the preferred combination for a particular product-market of
based on all of the following except 
A. The market's size and its customers' characteristics
B. The number and relative strengths of the potential competitors in that market
C. The leader's own resources and competencies
D. The leader's organizational history and culture

Difficulty: Easy
 
8.  (p. 214) Identify the characteristics of competitors of the market expansion strategy. 
A. Current or potential customers have a high level of marketing resources
B. Current or potential customers have adequate levels of resources to counter market expansion
C. Current or potential customers have sufficient resources to present a challenge to a market
expansion strategy
D. Current or potential customers have relatively limited resources and competencies with
respect to marketing and R&D
 

Difficulty: Easy

9.  (p. 214) Identify the primary objective of the confrontation share maintenance strategy. 
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

Difficulty: Hard
 

10.  (p. 214) Which strategy has a market characteristic of a relatively homogeneous market in

relation to customer needs and purchase criteria? 
A. Fortress or position defense strategy
B. Market expansion strategy
C. Contraction or strategic withdrawal strategy
D. Flanker strategy

Difficulty: Easy
 
11.  (p. 215) What action step must a leader take to improve customer satisfaction as competition
enters, or prepares to enter the market? 
A. Leader should take steps to improve not only the physical product but customers' perceptions
of it as well
B. Leader's sales promotion emphasis should shift from building selective demand to stimulating
primary demand
C. Leader should continue sales promotion efforts aimed only at stimulating trial among later
adopters
D. Sales-force efforts should shift from servicing existing customers to prospecting for new
accounts

Difficulty: Medium
 

12.  (p. 216-217) Toyota 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. What is the strategy employed by Toyota? 
A. Confrontation strategy
B. Position defense strategy
C. Flanker strategy
D. Market expansion strategy

Difficulty: Hard
 

13.  (p. 218) 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

Difficulty: Medium
14.  (p. 218) Strategic withdrawal strategy is best suited 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 is trying to beat the attractive features of a competitor's offering only after the
challenger's success has become obvious
 

Difficulty: Hard
 

15.  (p. 219) What is the major marketing objective for followers? 

A. Defend market position
B. Develop only a niche strategy
C. Attain share growth
D. Start discrete price wars

Difficulty: Medium
 

16.  (p. 221) Attacking the leader within its primary target market involves which of the following
strategies? 
A. Flanker strategy
B. Frontal attack strategy
C. Encirclement strategy
D. Guerrilla attack strategy

Difficulty: Medium
 

17.  (p. 222) 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

Difficulty: Medium
 
18.  (p. 222) The primary objective of encirclement strategy is to 
A. Attract significant share of new customers in specialized, smaller segments
B. Capture a modest share of repeat purchases in several market segments
C. Stimulate current customers to purchase superior new offering
D. Capture substantial repeat purchases from target competitor's current customers

Difficulty: Medium
 

19.  (p. 223) A firm develops differentiated product offerings targeted at one large or several smaller
segments in which no competitor currently holds a strong position. What strategy is being used
here? 
A. Frontal attack
B. Leapfrog
C. Guerrilla attack
D. Encirclement

Difficulty: Easy
 

20.  (p. 214) Share leaders have an enviable position but must defend their shares against
competition. Which of the following marketing objectives are important for firms with the
largest market share?

A. Retaining current customers

B. Stimulate demand among later adopters
C. Stimulate primary demand to grow the market
D. All of the above.

Difficulty: Easy

21.  (p. 2141) Repeat purchases by customers can spell the difference between profit and loss.
Which of the following is least likely to be effective?

A. Maintain a perception of quality by raising price

B. Reduce delivery times
C. Develop automatic reorder systems
D. Expand production capacity to reduce stockouts

Difficulty: Easy
 Chapter 10
Strategies for Mature and Declining Markets
Multiple Choice Questions

1. (p. 232) Which statement is most indicative of a maturing market?

A. Total sales volume stabilizes.
B. First-time buyers account for a vast majority of sales volume.
C. The primary objective of firms is to find new markets for existing products.
D. Managers face the critical question of whether to divest or liquidate the company.

Difficulty: Easy

2. (p. 232) What is true of the transition from market growth to maturity?

A. Often accompanied by a shakeout, during which weaker businesses fail.
B. Almost always followed by a period of competitive inertia.
C. Often begins after the product has been introduced.
D. Characterized by competitors underestimating future sales volume.

Difficulty: Medium

3. (p. 232) Failure in anticipating transition from growth to maturity leads to all of the following
consequences except
A. firms expand rapidly and production capacity overshoots demand as growth slows.
B. firms reduce prices or increase promotion to increase their sales volume.
C. firms experience large technological differentials as competitors leave the market.
D. firm may make overly optimistic forecasts of future sales volume.

Difficulty: Hard

4. (p. 234) "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 not so
in the transition period." This is true of which strategic trap?
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.
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.

Difficulty: Medium

5. (p. 238) National Motors manufactures high-end automobiles. The attributes of their cars include
excellent handling, acceleration, comfort and braking, providing the company an advantage over its
competitors. Identify the product quality dimension of these cars.
A. Reliability
B. Performance
C. Durability
D. Serviceability

Difficulty: Easy

6. (p. 238) The quality dimension of _____ refers to a customer’s ability to obtain prompt and competent
service when the product does break down.
A. serviceability
B. reliability
C. brand equity
D. durability

Difficulty: Easy

7. (p. 238) This quality dimension refers to the absence of defects.

A. Reliability
B. Durability
C. Brand equity and fit and finish
D. Conformance to specifications

Difficulty: Medium

8. (p. 240) 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.

Difficulty: Medium

9. (p. 242) In some labor-intensive industries, a business can achieve a cost advantage, at least in the short
term, by gaining access to inexpensive labor. Identify the type of method used to obtain a sustainable cost
advantage.
A. No-frills product
B. Cheaper raw materials
C. Low-cost distribution
D. Innovative production processes

Difficulty: Medium

10. (p. 242) 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.

Difficulty: Medium

11. (p. 242) 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

Difficulty: Medium

12. (p. 243) Financial dimensions of performance are usually of greater interest than growth-oriented
dimensions to defender businesses because they are concerned with
A. maximizing profitability over the remaining life of their existing product-markets.
B. creating new opportunities in one or more mature market segments.
C. volume increases or new product success.
D. passively defending their mature products.

Difficulty: Hard

13. (p. 248) 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.

Difficulty: Hard

14. (p. 249) 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.

Difficulty: Hard

15. (p. 248, 250) A successful increased penetration strategy depends on discovering why nonusers are
uninterested in the product. Often, consumers do not perceive enough value in the product. Which of the
following is not a suitable solution to enhance product value?
A. Add features or benefits, usually via line extensions.
B. Develop and sell integrated systems that help improve the basic product’s performance or ease of use.
C. Offer services that improve its performance or ease of use for the potential customer.
D. Develop more convenient and accessible channels of distribution.

Difficulty: Easy

16. (p.  251) In a mature market, a market expansion strategy may work. To be successful it depends on a
number of factors. Which of the following is not a useful factor in such a market expansion strategy?
A. Targeting new or underdeveloped geographic markets
B. Targeting new customer segments.
C. Rely on price cutting to build volume.
D. Targeting foreign markets.

Difficulty: Easy

17. (p. 254) This is not a factor that helps determine the strategic attractiveness of declining product-
markets.
A. Time to market
B. Conditions of demand
C. Exit barriers
D. Intensity of future competitive rivalry

Difficulty: Easy

18. (p. 255) Conditions of demand, factors that help determine the strategic attractiveness of declining
product-markets, include demand characteristics such as the rate and the certainty of sales decline. What
observation is true of the market conditions being affected by these characteristics?
A. A slow and gradual decline allows an orderly withdrawal of weaker competitors.
B. Overcapacity is more likely to become excessive and lead to predatory competitive behavior.
C. Competitors who remain are less likely to make profits than in a quick or erratic decline.
D. Reduction of capacity is more likely to be erratic when industry managers believe market decline is
predictable.

Difficulty: Medium

19. (p. 255-256) A harvesting strategy can be used in all the following situations except
A. when rivalry among remaining competitors is likely to be very intense.
B. when the market’s decline is inevitable.
C. when the market’s decline is likely to occur at a relatively slow and steady rate.
D. when a firm has a strong competitive position in the market at the start of the decline.

Difficulty: Medium
20. (p. 233) During the shakeout period, firms may fall into common strategic traps. Which of the
following is not one of the common traps?

A. Failure to anticipate transition from growth to maturity.

B. Assumption that an early advantage will insulate the firm from price or service competition.
C. Maintaining market share despite short-run loss.
D. No clear competitive advantage as growth slows.
Difficulty: Medium

21. (p. 246) In a mature market, what should a firm's customer priorities be?
A. Gain market share
B. Seek technological dominance
C. Gain new customers
D. Hold on to existing customers

Difficulty: Medium
Chapter 11
Marketing Strategies for the New Economy
 

Multiple Choice Questions

 

1.  (p. 267) What role is a company providing search engine technology to many branded search
engine sites playing? 
A. Role of originator
B. Role of contactor
C. Role of distributor
D. Role of optimizer

Difficulty: Medium
 

2.  (p.2 66) _____ 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

Difficulty: Easy
 
3.  (p. 268) 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. Customization
D. Disintermediation

Difficulty: Medium
 
4.  (p. 268) Collaborative filtering 
A. Enables firms to compare a consumer's past purchase to recommend a personalized newer
purchase
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

Difficulty: Hard
 

5.  (p. 269) The Internet makes it possible for marketers to reach customers directly, without the
expense or complication of distribution channels. This phenomenon is known as 
A. Disintermediation
B. Customization
C. Network externality
D. Really simple syndication

Difficulty: Easy
 

6.  (p. 270) 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
implies that 
A. There is a negative network effect
B. There are decreasing returns to scale
C. Rules-based personalization exists
D. A global reach exists for these services

Difficulty: Easy
 
7.  (p. 272) Marketers of information products who determine which features will be valuable to
some customers, but of little value to others, can package and repackage information differently
and serve market segments with margins that need not fall to zero. This defense mechanism is
termed as 
A. Disintermediation
B. Versioning
C. Network externality
D. Really simple syndication

Difficulty: Easy
 

8.  (p. 273-274) Which of the following is true of firms with a first-mover advantage? 

A. The first-mover advantage is the best recipe 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

Difficulty: Easy
 

9.  (p. 274) In which stage of the consumer experience process does cash flow from the producer to
the consumer? 
A. Product delivery
B. Product return
C. Customer support and service
D. Customer insight

Difficulty: Medium
 

10.  (p. 275) 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

Difficulty: Medium
 
11.  (p. 276) Conducting marketing research online must be done carefully. Which of the following
is NOT a useful guideline for successful online research? 
A. Design surveys to take less than 30 minutes to complete
B. Place open ended questions at the beginning of a survey
C. Indicate the progress the respondent is making toward completing the survey
D. Do not ask questions that only brand-users can answer

Difficulty: Medium

12.  (p. 278) Which of the following statements about blogs is incorrect? 

A. They provide news or an exchange of views on a particular topic
B. They provide a way for readers to post their comments
C. They cover a range of techniques that improve a web site's ranking
D. They are potentially attractive tools for community building

Difficulty: Medium
 

13.  (p. 279) Rich media ads that show up unexpectedly on a viewer's screen are called 
A. Superstitials
B. Cliffhangers
C. Streaming audio
D. VFlash

Difficulty: Medium
 

14.  (p. 278) One way of using Internet advertising in a measurable manner is to use _____, which
offers the potential for companies to create trust, build long-term relationships with customers,
and greatly improve their chances for making a sale. 
A. Cliffhanger
B. Permission marketing
C. Click-stream data
D. Digital signatures

Difficulty: Medium
 
15.  (p. 280) Which controversial system gauges a customer's desire to buy, measures his means,
and sets the price accordingly? 
A. Dynamic pricing
B. Click-stream
C. Digital signature
D. Permission marketing

Difficulty: Medium
 

16.  (p. 282) _____ involves companies carefully considering which burdens they can remove from
the customer, using new-economy technologies, and which customers can perform, assessing
costs and benefits to both parties. 
A. Disintermediation
B. Paid inclusion
C. Coproduction
D. Affiliate schemes

Difficulty: Medium
 

17.  (p. 284) There are several questions that an old-economy firm should ask when making new-
economy marketing decisions. The fact that Wal-Mart posts on the Web, password-protected,
up-to-the-minute, store-by-store, sales information for its key suppliers to access, enabling them
to ensure that the stores are stocked with their merchandise, addresses which of the following
questions? 
A. Can we digitize any of the necessary flows at each stage in the consumer experience process?
B. How valuable and time-critical is what kind of information?
C. Can we reach and build relationships with our target market?
D. Can we do so first and be proprietary?

Difficulty: Hard

18.  (p. 287-288) The most important element that determines the success of a an e-business is: 
A. Quality of the business concept.
B. The presence of high barriers to entry.
C. Knowing what your company has to sell.
D. Quality of management .
 

Difficulty: Hard
 
19.  (p. 288) Barriers to entry in the new economy are 
A. Nonexistent
B. Incredibly low
C. Phenomenally high
D. Much higher than in old economy

Difficulty: Medium
 
 
20.  (p. 275) The list of new-economy applications for promotion and branding span six major
categories. Which of the following is not one of the categories?
A. blogs
B. e-mail marketing
C. television advertising
D. banner advertising

Difficulty: Medium

21. (p. 283)  Which of the following is NOT one of the stages in the customer experience process?
A. Customer insight
B. Product promotion and brand building
C. Product delivery
D. Financing

Difficulty: Easy

Chapter 12
Organizing and Planning for Effective Implementation
 

Multiple Choice Questions

 
1.  (p. 295) What is an organizational fit? 
A. It refers to a firm using a highly centralized organization structure in its early growth and
effectively responding to the changes in the market
B. It is a fit between an organization's marketing strategy and the needs of its target customers
and the technological realities of the marketplace
C. It refers to a well-conceived foundation that permits effective implementation of a particular
strategy
D. It is the fit between a business's competitive and marketing strategies and the organizational
structures, processes, and plans necessary to effectively implement them

Difficulty: Medium
 

2.  (p. 296) The evaluation and reward systems for this strategy comprises of high incentives based
on sales and share growth. 
A. Differentiated defender
B. Prospector
C. Low-cost defender
D. Reactor

Difficulty: Hard
 

3.  (p. 296) SBU autonomy level is moderate in which business strategy? 

A. Differentiated defender
B. Prospector
C. Low-cost defender
D. Reactor

Difficulty: Easy
 
4.  (p. 296) Which of the following relates to shared programs and synergy for a low-cost defender? 
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

Difficulty: Hard
 

5.  (p. 300) What represents the functional coordination and conflict resolution 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

Difficulty: Hard
 

6.  (p. 302) What does centralization refer 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

Difficulty: Easy
 
7.  (p. 302) Prospector business units and their marketing departments are likely to perform better in
which of the following situations? 
A. When the decision-making authority is centralized
B. When rigid rules and policies dominate managerial discretion
C. When there is a high degree of formalization
D. When more specialists are present

Difficulty: Hard
 

8.  (p. 302) Identify the simplest and most bureaucratic organizational design. 

A. Product management
B. Market management
C. Matrix
D. Functional

Difficulty: Medium
 

9.  (p. 303) Product management organizations 

A. Rely primarily on hierarchical mechanisms for resolving conflicts across functional areas
B. Are characterized by decentralized decision making while increasing the 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

Difficulty: Medium
 
10.  (p. 304) Identify the statement that relates to the 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

Difficulty: Medium
 

11.  (p. 305) The matrix form is 

A. The most bureaucratic type of organization
B. The most centralized type of organization
C. The most specialized type of organization
D. The most common type of organization

Difficulty: Medium
 

12.  (p. 306) Regardless of the form of worker self-management, all self-managing teams are based
on this concept. 
A. Empowerment
B. Joint venture
C. Centralization
D. Hierarchy

Difficulty: Medium
 
13.  (p. 308) Which global organizational type is especially appropriate when there is considerable
variance across markets regarding product acceptance and marketing activities? 
A. Functional
B. Product
C. Area
D. Process

Difficulty: Easy
 

14.  (p. 309) The executive summary in an annual marketing plan 

A. Describes actions to be taken if specific threats or opportunities materialize during the
planning period
B. Specifies the goals to be accomplished in terms of sales volume, market share, and profit
C. Examines the past performance of the product and the elements of its marketing program such
as distribution and promotion
D. Presents a short overview of the issues, objectives, strategy, and actions incorporated in the
plan and their expected outcomes for quick management review

Difficulty: Easy
 

15.  (p. 309) Key issues in an annual marketing plan 

A. Identifies the main opportunities and threats to the product that the plan must deal with in the
coming year
B. Summarizes the overall strategic approach that will be used to meet the plan's objectives
C. Describes actions to be taken if specific threats or opportunities materialize during the
planning period
D. Specifies the goals to be accomplished in terms of sales volume, market share, and profit

Difficulty: Medium
 
16.  (p. 312-313) Which of these is typically included in a situation analysis? 
A. Financial objectives
B. Marketing objectives
C. Sales forecast
D. Maintenance strategy

Difficulty: Medium
 

17.  (p. 314) Which of the following is the most crucial part of the annual marketing plan for
ensuring proper execution? 
A. Action plans
B. Performance review
C. Objectives
D. Executive summary

Difficulty: Medium
 

18.  (p. 315) Which section of an annual marketing plan would contain plans to be implemented if
specific threats or opportunities should occur during the planning period? 
A. Action plan
B. Marketing strategy
C. Profit-and-loss statement
D. Contingency plan

Difficulty: Easy
 

19. (p. 315)  Organizational structures can be distinguished by a set of three variables. Which is
not one of them?
A. Formalization
B. Centralization
C. Orientation
D. Specialization
Difficulty: Easy

20. (p. 296)  For a low cost defender strategy, what levels of SBU autonomy and synergy are
required for success.
A. SBU autonomy: Relatively high level; synergy - relatively high synergy
B. SBU autonomy: Relatively low level; synergy - relatively high synergy
C. SBU autonomy: Relatively high level; synergy - relatively little synergy
D. SBU autonomy: Relatively low level; synergy - relatively little synergy

Chapter 13
Measuring and Delivering Marketing Performance
Multiple Choice Questions
 

1.  (p. 322) Identify the first step in the performance measurement process. 

A. Evaluating data
B. Setting performance standards
C. Specifying feedback
D. Obtaining data

Difficulty: Medium
 

2.  (p. 323) At the product-market entry level, milestone achievement measures include 
A. Level of awareness
B. Reduction in marketing costs as a percent of sales
C. Percent of store stocking
D. Product sales by market segments

Difficulty: Hard

  3. (p. 323) To
be valuable, performance standards need all but which of the following
characteristics? 
A. Measurability
B. Relevancy
C. Attainability
D. Flexibility
 

Difficulty: Easy
4.  (p. 324) This type of performance measure typically involves comparison of a firm's
performance in a given area against the performance of other companies. 
A. Balanced scorecard
B. Benchmarking
C. Scenario analysis
D. Cost benefit analysis

Difficulty: Easy
 

5.  (p. 324) This is probably the single most important measure of performance. 

A. Profitability
B. Market share
C. Customer satisfaction
D. Productivity

Difficulty: Easy
 

6.  (p. 324) The costs of occupancy, general management, and the management of the sales-force are
all _____ for a multi-product company. 
A. Marginal costs
B. Standard costs
C. Direct costs
D. Indirect costs

Difficulty: Medium
 

7.  (p. 325) Contribution analysis 

A. Helps in obtaining an accurate picture of a product's value by allocating all costs to it
B. Involves fixed joint costs that cannot be linked directly to a single unit of analysis
C. Is helpful in determining the yield derived from the application of additional resources
D. Uses both direct and indirect costs to the unit of analysis

Difficulty: Hard
 
8.  (p. 326) What is activity-based costing? 
A. It bases costs on the different tasks involved in performing a given activity
B. It identifies costs according to various expense categories
C. It assigns both direct and indirect costs to the unit of analysis
D. It identifies costs according to various income categories

Difficulty: Hard
 

9.  (p. 328) This is typically the most expensive and time-consuming method of gathering feedback
data. 
A. Company accounting records
B. Marketing research
C. Syndicated marketing information
D. Transaction records

Difficulty: Medium
 

10.  (p. 331) What is the first and foremost objective for marketing? 

A. The rate of market growth
B. The level of sales the company achieves
C. The firm's plan of action for each product-market entry
D. To make certain the company does not overspend

Difficulty: Hard
 

11.  (p. 332) Identify the typical geographical control unit used for sales territory analysis in the
United States. 
A. Borough
B. City
C. State
D. County

Difficulty: Medium
 
12.  (p. 333) This is not a variable that helps in finding useful decompositions of the sales data. 
A. Recency
B. Frequency
C. Reliability
D. Monetary value

Difficulty: Easy
 

13.  (p. 336) Advertising managers track advertising costs by 

A. Attitude change
B. New accounts
C. Action plans
D. Calls per sales person

Difficulty: Medium
 

14.  (p. 336) What is the first step in a typical contingency planning process? 

A. Assigning probabilities of being right about the assumptions
B. Ranking the importance of each assumption
C. Tracking and monitoring the action plan
D. Identifying critical assumptions

Difficulty: Easy
 

15.  (p. 338) Which stage in a contingency planning process typically follows rank ordering the
critical assumptions? 
A. Assigning probabilities of being right about the assumptions
B. Ranking the importance of each assumption
C. Tracking and monitoring the action plan
D. Identifying critical assumptions

Difficulty: Hard
 
16.  (p. 338) The contingency plan for a company has an alert set at sales declines of 20 percent or
more, compared to the previous month. In which stage of the contingency planning process
would such an alert be set? 
A. Specifying response options
B. Activating the contingency plan
C. Tracking and monitoring the action plan
D. Identifying critical assumptions

Difficulty: Easy
 

17.  (p. 341) What is the purpose of marketing functions audit? 

A. Evaluate the adequacy of the systems that develop the firm's product-market entry action
plans
B. Evaluate the firm's overall structure and the extent of synergy between the various marketing
units
C. Examine the profitability of the company's individual products, markets, and key accounts
D. Examine, in detail, the adequacy of the firm's ability to handle each of the marketing-mix
elements

Difficulty: Medium
 

18.  (p. 340) The _____ evaluates the profitability of the company's individual products, markets,
and key accounts. 
A. Marketing productivity audit
B. Marketing functions audit
C. Control system audit
D. Organization audit

Difficulty: Medium
 
19.  (p. 341) What would be a focus of questions relating to price while examining how adequately
the firm handles each of the marketing-mix elements? 
A. The actions of major competitors
B. Cost-effectiveness
C. Functions performed
D. Sales force compensation

 
Difficulty: Medium
 
 

20. (p. 328)  What is the last step in the control process?

A. Taking corrective action

B. Evaluating feedback data
C. Obtaining feedback data
D. Defining customer satisfaction metrics.

Difficulty: Medium

21. (p. 340)  Profitability is the single more important measure of performance. Profitability
analysis is the process of assessing a firm's overall success. What areas would a profitability
analysis assess?
A. Different market
B. Segments
C. Products
D. Customer accounts
E. All of the above

Difficulty: Medium