Chapter 21 22 – Monitoring and ControlControlling Execution and

PerformanceFirm Performance and Functioning

True/False Questions

1. Post-actionSteering control refers to starting the process, letting time pass, then observing whether
or not the anticipated results have been achieved.
True False (easymoderate)

2. Steering control does a good job of assessing the firm’s success in implementing its strategy, but is
unable to take any action to change impending unsatisfactory results.Feedback cycle is the time
between firm actions and measured results
False True (moderate)

3. PrePost-action control refers to monitoring the process through time and making course corrections
if results diverge from what is anticipated.
False (moderate)

4. Annual profit and market share goals that are calendarized and tracked through time are examples
of steering control.
True (moderate)

5. According to the text, a competitor is a useful classification of output measures.Investment as a

percentage of sales is a soft input measure.
False (moderate)

6. Sales units and sales revenues are examples of “soft” measures.

False (moderate)

7. The output measure that focuses on the ability of the firm to secure purchases from customers is
called volume measures.Relative market share provides information of a firm’s market position
versus its major competitors.
True (moderate)

8. Volume measures are especially valuable for the sales division since they capture the results of a
firm’s sales force.Market occupancy measures the breadth of a firm’s marketing activity.
True (moderate)

9. Factoring is selling a firm’s accounts receivables.

True (moderate)

10. Product contribution plus direct fixed cost is direct product profit.
False (moderate)

11. Product contribution measures the extent to which sales revenues exceed variable costs.
True (easy)

12. Market share is the most common market-based measure, comparing the firm’s performance
directly with competitors.
True (moderate)

13. The fraction of potential customers with which the firm does business is information provided by
market occupancy ratio.
True (moderate)

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14. The gross margin measures the extent to which sales revenues exceed variable costs.
False (moderate)

15. The key action for a firm in which the strategy is good, but implementation is poor, is to improve
implementation.
True (moderate)

16. The purpose of determining a salesperson’s number of sales calls per day is to ensure that the sales
force is working hard.
True (moderate)

17. The average number of territories vacant is the sales force input measure that ensures sales force
management is planning for sales force attrition.
True (difficult)

18. Re-engineering focuses on examining various processes, identifying the goals of each process, and
seeing whether or not a more effective way of conducting the process can be developed.A well-
structured, validated, independently administered customer survey provides the best soft data.
True (moderate)

19. The environmental scan is a comprehensive structured process for evaluating a firm’s marketing
practice, including its strategy systems, activities, and organization.
False (moderate)

20. The marketing audit is best performed by the company’s board of directors so that confidences can
be assured and findings developed in an unbiased manner.
False (moderate)

Multiple Choice Questions

21. According to the text, a firm should build its monitor-and-control processes on all of the following
principles EXCEPT:
a.) Implement post-action control rather than steering control. (moderate)
b.) Focus on market levers and develop alternative plans.
c.) Use the right performance measures at the right organizational levels.
d.) Model the relationships between input, intermediate, and output measures.

22. Which of the following types of control refers to starting the process, letting time pass, then
observing whether or not the anticipated results have been achievedwaiting a preset time, then
comparing actual results against standards?
a.) Pre-action control
b.) Steering control
c.) Post-action control (moderate)
d.) Output control

23. Which of the following forms of control does a good job of assessing the firm’s success in
implementing its strategy, but is unable to take any action to change impending unsatisfactory
results?Firms exercising _____________ typically develop annual marketing plans and set
standards by quarter.
a.) Pre-action control
b.) Steering control
c.) Post-action control (moderate)
d.) Output control

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24. _______________ refers to monitoring the process through time and making course corrections if
results diverge from what is anticipated.Firms exercising ____________ set control limits for
performance and continually compare actual results against standards.
a.) Pre-action control
b.) Steering control (moderate)
c.) Post-action control
d.) Output control

25. Annual profit and market share goals that are calendarized and tracked through time are examples
of _______________.Firms using ____________ set standards for measures like sales, market
share, and profit, then calendarize by month, week, or even day.
a.) pre-action control
b.) steering control (moderate)
c.) post-action control
d.) output control

26. Which of the following is NOT mentioned in the text as a useful classification of output measures?
a.) Volume Sales
b.) Market share
c.) Profits
d.) A competitorFinancial resources (moderate)

27. According to the text, sales units and sales revenues are examples of _______________
measures.The time between firm actions and measured results is referred to as _____________.
a.) market-basedoutput cycle
b.) profitinput cycle
c.) “soft” steering cycle
d.) volume feedback cycle (moderate)

28. The output measure that focuses on the ability of the firm to secure purchases from customers is
called _______________ measures.Which of the following is NOT mentioned in the text as a way
to classify revenue predictability?
a.) volume stagnant (moderate)
b.) market-basedcontinuous
c.) profitperiodic
d.) “soft” episodic

29. Which of the following output measures are especially valuable for the sales division since they
capture the results of a firm’s sale force?Building material sales following a hurricane is an
example of which of the following classifications of revenue predictability?
a) stagnant
b) continuous
c) periodic
d) episodic (moderate)
a.) Market-based
b.) Volume (moderate)
c.) Profit
d.) “Soft”

30. All of the following are mentioned in the text as an important sales breakdown that focuses on the
types of products and customers EXCEPT:In order to earn positive net profits, profit contribution
must _____________.
a.) Old products/old customersmatch fixed costs
b.) Old products/new customersbe less than marginal costs
c.) New products/old customersbe less than total costs
d.) Expensive products/new customersexceed fixed costs (moderate)
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31. Which of the following statements is FALSE?
a.) Output measures are “lagging indicators.”
b.) Output measures represent the “rearview mirror.”
c.) Output measures represent “what has happened.”
d.) Output measures are “leading indicators.” (moderate)

32. All of the following statements are TRUE EXCEPT:

a.) Input measures are “leading indicators.”
b.) Input measures represent the “dashboard.”
c.) Input measures represent “lagging indicators.” (moderate)
d.) Input measures represent “what should happen.”

33. Internal hard measures include all of the following EXCEPT:

a.) Customer satisfaction (difficult)
b.) Sales volume
c.) Product profitability
d.) Customer profitability

34. Which of the following measures is an example of a “hard output measure”?

a.) Customer satisfaction
b.) Market-occupancy ratio (difficult)
c.) Brand health checks
d.) Sales volume

35. ________________ is selling a firm’s accounts receivables.

a.) Liquidating
b.) Discounting
c.) Factoring (difficult)
d.) Surplusing

36. Product contribution less direct fixed cost is ________________.

a.) direct product expense
b.) indirect product expense
c.) direct product profit (moderate)
d.) indirect product profit

37. Product _______________ measures the extent to which sales revenues exceed variable costs.
a.) fixed
b.) profitability
c.) contribution (moderate)
d.) gross

38. _____________ measures the breadth of a firm’s marketing activity.

a.) Return on assets
b.) Return on investment
c.) Market occupancy (moderate)
d.) Customer lifetime value

3839. _______________ is the most common market-based measure, comparing the firm’s performance
directly with competitors.
a.) Product profitability
b.) Sales volume
c.) Market share (moderate)
d.) Factoring

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3940. The One of the most widely employed soft measure of firm performance mentioned in the text is
_______________.
a.) market share
b.) profitability
c.) customer satisfaction (moderate)
d.) sales growth

4041. The issue for which of the following strategic situations is to continue to monitor the market
environment and ensure that the strategy keeps pace with emerging customer needs and competitor
activitycustomers, competitors, and the general environment to ensure strategy remains on tract is
_____________.?
a.) Strategy good/implementation good (moderate)
b.) Strategy good/implementation poor
c.) Strategy poor/implementation good
d.) Strategy poor/implementation poor

4142. The key action for a firm in which of the following strategic situations is to improve
implementation execution to defend the firm’s position?
a.) Strategy good/implementation good
b.) Strategy good/implementation poor (moderate)
c.) Strategy poor/implementation good
d.) Strategy poor/implementation poor

4243. Marketing audits can be a very effective diagnostic tool.  The firm should especially look out for all
of the following EXCEPT:
a.) Failure to segment markets effectively
b.) New product development gets delegated to developers
c.) Increasing prices in an attempt to increase value  (moderate)
d.) Considering marketing as the marketing department’s job

4344. All of the following are examples of “hard output measures” EXCEPT:
a.) Customer satisfaction relative to competition (difficult)
b.) Market share
c.) Customer retention versus industry averages
d.) Investment as a percentage of sales

44. Which of the following questions is at the heart of implementation control?

a.) Is the firm’s market strategy well conceived and on target?
b.) Are the firm’s processes the best they can be?
c.) Did the firm implement its planned actions? (moderate)
d.) Is the firm properly conducting an environmental scan?

45. Which of the following best describes the purpose of the measure “sales territories vacant”?
a.) Ensure sales force spends time with target accounts.
b.) Measure sales force discretionary costs.
c.) Ensure sales force is working hard.
d.) Ensure sales managers plan for attrition. (easy)

46. Which of the following best describes the purpose of the measure “products completing
beta tests”?
a.) Customer testing critical for launching new products (moderate)
b.) External generation of new product possibilities
c.) New products are necessary to generate sales
d.) Ensures sales force is competent to sell new products

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4746. ____________________ best describes the purpose of the measure “number of new products
approaching commercialization.”measures success in developing products for market readiness.
a.) “Test markets conducted” (difficult)
b.) New concepts tested
c.) Sales calls on new accounts
d.) New products launched

4847. The _______________ is a comprehensive, structured process for evaluating a firm’s marketing
practice, including its strategy systems, activities, and organization.
a.) marketing plan
b.) marketing audit (moderate)
c.) market analysis
d.) environmental scan

4948. The marketing audit is best performed by _______________ so that confidences can be assured and
findings developed in an unbiased manner.
a.) the company’s board of directors
b.) the company’s general manager
c.) an objective independent organization (moderate)
d.) a subjective independent organization

5049. All of the following questions are related to the marketing environment section of the marketing
audit EXCEPT:
a.) “What changes can be identified among customers, competitors, and suppliers?”
b.) “Are the marketing objectives and strategy realistic given the market environment and
the firm’s strengths?” (difficult)
c.) “What social, political, technological, and regulatory trends are impacting the industry?”
d.) “What are the implications for firm performance?”

5150. Which of the following questions is NOT related to the marketing productivity sections of the
marketing audit?
a.) “How is profitability distributed across the product line?”
b.) “Do some products/customers merit additional marketing effort?”
c.) “Are the various marketing-mix elements mutually consistent and do they implement the
marketing strategy?” (difficult)
d.) “How should marketing resources be allocated across the marketing mix, such as product
improvements, trade incentives, additional sales/service persons?”

52. According to the text, which of the following is NOT a common marketing failure identified from a
large number of marketing audits conducted across a wide variety of companies?
a.) Insufficient knowledge of customers behavior and attitudes
b.) Failure to segment markets effectively
c.) Increasing price rather than increasing value (difficult)
d.) Failure to invest for the future, especially in human resources

53. Which of the following statements is TRUE?

a.) Post-action control is generally superior to steering control. (difficult)
b.) steering control [Note: These three are not statements.]
c.) shareholder-value creation
d.) activity-based costing

54. All of the following are questions that pertain to the marketing environment EXCEPT:
a.) What changes are occurring at customers, competitors, and suppliers?
b.) What social and political trends affect the industry?
c.) Are the firm’s market objectives and strategy realistic? (difficult)

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 d.) What technological and regulatory trends affect the industry?

55. _________________ answers the question: “Is the firm’s market strategy well conceived and
on target?”
i. Strategy control (moderate)
ii. Steering control
c.) Process control
d.) Sales control

Essay Questions

5651. In a short essay, list and discuss four separate types of output measures a firm uses to measure final
results.In a short essay, list and discuss the three classifications of revenue predictability. Include
an example of each to support your answer.

Answer
a.) Volume measures – sales units and sales revenues – focus on the ability of the firm to secure
purchases from customers. These are important output measures overall, but are especially
valuable for the sales force as they capture the results of their actions. However, outputs that
identify the type of sales are perhaps more important outputs than overall measures of sales
volume.
b.) Market-based measures – market-based criteria compares the firm’s sales performance with
some external measure. The most common is market share, which compares the firm’s sales
performance directly with the market. It is often useful to decompose sales volume into market
share and market size variances. This decomposition separates out the source of forecasting
errors from other sources of variance.
c.) Profit measures – in general, when considering product profitability, marketing professionals
prefer profit contribution measures that separate variable costs and fixed marketing costs. These
measures more directly isolate marketing performance. The variable margin measures the
extent to which sales revenues exceed variable costs. The job of variable margin is to cover
fixed costs and provide profit.
d.) “Soft” measures – the most widely employed soft measure of firm performance is customer
satisfaction. Typically, the firm develops and validates a survey instrument and then
administers it periodically by an independent organization to its customer base. In part to
ensure anonymity, satisfaction measures are collected on several competitors so that the firm
can track its satisfaction performance over time, both independently and versus
competition.Continuous – the firm expects to receive revenues on a week-by-week or month-
by-month basis. Examples are raw material sales and long-term contractual payments.
e.) Periodic – sales are infrequent but can be forecasted; capital equipment sales are a good
example.
f.) Episodic – occur because of unanticipated events and cannot be forecasted, like building
materials sales following a hurricane.
(moderate)

5752. In a short essay, list and discuss the four combinations of good and poor strategy and
implementation.

Answer
a.) Strategy goodMarket strategy good/implementation good – assessment that the strategy was
both well developed and well implemented should have led to good performance. The issue
here is to continue to monitor the market environment and to ensure that the strategy keeps pace
with emerging customer needs and competitor activityactivity well-developed and well-
implemented strategy should drive good output performance. The firm must monitor
customers, competitors, and the general environment to ensure the strategy remains on track.

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 b.) Market sStrategy good/implementation poor – performance in this cell can range across the
spectrum from good to poor. If the strategy is especially robust, it can survive a variety of
implementation mishaps. The key action for the firm is to improve implementation to defend
the firm’s position. More likely, however, poor implementation of good strategy will lead to
inferior performance. The key is to highlight the implementation failures and improve
implementation performancepoor implementation of a good strategy will probably lead to poor
output performance. Sometimes an especially robust strategy can survive poor implementation,
but this is unusual..
c.) Market sStrategy poor/implementation good – rarely will excellent implementation
performance overcome a poor strategy. If the firm’s market offer does not provide value to
customers, no matter how well other marketing elements are implemented, failure is
likelyrarely does excellent implementation overcome a poor strategy. If the firm fails to
provide customer value, successfully implementing other marketing elements will not
compensate..
d.) Market sStrategy poor/implementation poor – the problem here is to separate out the poor
strategy from the poor implementation. With problems in both areas, the firm has a major
challenge on its handsoutput performance in this situation is likely disastrous. The firm’s
challenge is to isolate the cause: poor strategy or poor implementation?.
(difficult)

5853. In a short essay, list and discuss five of the most commonly used measures for balanced scorecards.

Answer
a.) market share – hard output measure
b.) customer satisfaction relative to competition – soft output measure
c.) customer retention versus industry averages – hard output measure
d.) investment as a percentage of sales – hard input measure
e.) employee attitudes and retention – soft and hard output measures
(moderate)

5954. In a short essay, list and discuss the six-part auditing framework that is used by experienced
organizations.

Answer
a.) Marketing environment – What changes can be identified among customers, competitors, and
suppliers? What social, political, technological, and regulatory trends are impacting the
industry? How are these changes and trends affecting the firm? What are the implications for
firm performance?What changes are occurring at customers, competitors, complementers, and
suppliers? What social, political, technological, and regulatory trends affect the industry? How
do these changes and trends affect the firm? What are the performance implications?
b.) Marketing objectives and strategy – Are the marketing objectives and strategy realistic given
the market environment and the firm’s strengths? Are they well understood by all managers?Do
managers understand the objectives and strategy?
c.) Marketing implementation – How does the firm compare to competitor offers in terms of
product, service, promotion, distribution, and price? Does the firm’s marketing mix implement
the market strategy? Are they mutually consistent?
d.) Marketing organization – Are job roles and responsibilities clear and consistent? Is recruiting,
hiring, training, and development on track? Is senior management engaged with major
customers? Do measurement and reward systems motivate performance?Are the job roles and
responsibilities clear? Do the measurement and reward systems motivate performance?
e.) Marketing systems – How effective and efficient are marketing systems, including competitor
intelligence, customer advisory boards, customer database design and update, marketing
research, measuring customer satisfaction, new product development, sales forecasting and
pipeline management, and sales lead generation, such as new product development, marketing
research, customer satisfaction measurement, sales forecasting, sales lead generation, customer
database design and update, competitor intelligence, and product pruning?
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 f.) Marketing productivity – How is profitability distributed across the product line? Across
customers? Do some products/customers merit additional marketing effort? Should products be
repriced, cost reduced, or discontinued? Should some customers be dropped? How should
marketing resources be allocated across the marketing mix, such as product improvement, trade
incentives, additional sales/service persons?profitable are the firm’s product lines? How
profitable are the firm’s customers and segments? Do some products or customers merit
additional effort? Should some products be repriced or discounted? Should some customers be
dropped? Should other customers be pursued more vigorously? Is the firm’s focus appropriate,
given the market environment? How should the firm allocate resources across the marketing
mix? Does it need more or less product improvements, trade incentives, and sales or service
personnel?
g.) Marketing implementation – How does the firm compare to competitors in product, price,
promotion, distribution, and service? Are the various marketing-mix elements mutually
consistent and do they implement the marketing strategy?
(moderatedifficult)

6055. In a short essay, list and discuss six common marketing failures that were identified from a large
number of marketing audits conducted across a wide variety of companiesthat should be checked
during marketing audits.

Answer
a.) Considering marketing only as the marketing department’s job – customers are the firm’s
critical assets. Marketing is everybody’s business, not just the marketing department’s
responsibility.
b.) Cutting prices rather than increasing value – the sales force complains and the firm cuts prices.
The firm earns insufficient profit to enhance customer value.
c.) Failure to invest for the future, especially in human resources – the firm views marketing and
HR as expenses, not investments. The firm under-funds marketing and training and
development.
d.) Failure to segment market effectively – firms form simple geographic or demographic
segments; they do not probe deeply enough to gain good insight.
e.) Insufficient knowledge of customer attitudes and behavior – firms collect customer data too
infrequently. Even with frequent collection, senior managers are often ill-informed and the
data do not drive marketing decision-making.
f.) New product development delegated to the developers – technical employees develop new
products with little marketing input and insufficient insight.Insufficient knowledge of
customers’ behavior and attitudes – either data on customers is collected too infrequently or, if
collected, is not seen by senior management and does not drive decision-making.
g.) Failure to segment markets effectively – companies tend to use geographic or demographic
segmentation bases rather than probing more deeply for greater insight.
h.) Cutting price rather than increasing value – all too often management responds to sales force
complaints of too-high prices by leaving insufficient margin to invest in value-adding benefits
for customers.
i.) Failure to invest for the future, especially in human resources – marketing is too often viewed
as a cost rather than as an investment leading to the underfunding of marketing activities.
j.) Tendency to delegate new product development to the developers – a close marriage or
integration of customer needs and technology is essential for effective new product
development. Yet technical people, who are often disinclined to talk to customers in sufficient
depth to understand real needs, conduct product development.
k.) Considering marketing as the job of the marketing department – because customers are the
firm’s critical assets, marketing is everybody’s business, not just the responsibility of the
marketing department.
l.)
(moderate)

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