Chapter 4

Chapter 4
Student: ___________________________________________________________________________
1. A(n) _____ is defined as being composed of individuals and organizations who are interested in
and willing to buy a good or service to obtain benefits that will satisfy a particular need.
A. sector
B. channel
C. posse
D. market
2. A group of firms that offer a product or class of products that are similar and are close substitutes
for one another is referred to as a(n) _____.
A. sector
B. channel
C. industry
D. concern
3. Identify the demographic trend that influences market attractiveness.
A. Fitness and nutrition

B. Immigration increase
C. Corporate social responsibility

D. Economic recession
4. Marketers of consumer services such as health care and life insurance are capitalizing on the
general trend of an aging population, thereby developing and implementing marketing strategies
accordingly. Which macroenvironmental trend is acting as a catalyst here?
A. Technological
B. Economic
C. Sociocultural
D. Demographic
5. Which of the following represents a sociocultural trend?
A. Fitness and nutrition patterns

C. Economic recession
D. Growing middle class
6. Which of the following is a factor of the economic environment?

B. Corporate social responsibility
C. Rise and fall in interest rates
D. Aging population
7. Each macroenvironmental trend has a distinct impact on the consumer and industrial market.
Identify the situation where industries such as check-cashing outlets and pawn shops will face a
tough time staying in business.
A. Increased immigration
B. Robust economy
D. Aging population
8. Which of the following is true of overregulation?
A. It protects inefficiencies.
B. It does not promote trade barriers.
C. It avoids inflationary pressures.

D. It allows easy entry for new competitors.
9. Marketing services have been made easy by advertisements on the web or via e-mail, social
networks, and online stores. Which macroenvironmental trend does this signify?
A. Natural environment
B. Economic environment
C. Technological environment
D. Regulatory environment
10. A rise in the production of hybrid gas-electric vehicles, high-efficiency LED bulbs, phosphate-free
detergents, and recycled paper indicates the impact of which of the following macroenvironmental
forces?
A. The natural environment

B. The sociocultural environment
C. The regulatory environment

D. The demographic environment
11. According to Porter's Five Competitive Forces, which of the following is the key force in the fast-
food industry?
A. Threat of new entrants
B. Threat posed by substitute products

C. Bargaining power of suppliers
D. Bargaining power of buyers
12. Which of the following forces increases industry attractiveness?
A. Higher threat of substitute products

B. Lesser threat of new entrants
C. Greater bargaining power for suppliers
D. Lower buying power for customers

13. According to Porter, rivalry among competitors is greater:
A. when low investment intensity exists in businesses.
B. when dominant firms exist in an industry.

C. when low switching costs exist for the buyers.
D. when strong product differentiation exists among current players.
14. The threat of new entrants to an industry is less:
A. when the economies of scale are strong.
B. when the industry has low capital requirements.

C. when little product differentiation exists among current players.
D. when it is particularly easy to gain distribution.
15. A distribution agency was using facsimile machines to send and receive long-distance messages.
This was replaced with an all-in-one printer that could scan, copy, and fax. The cost of the new
printer was almost the same as the facsimile machine. For the manufacturer of facsimile
machines, this example exemplifies:
A. the entry barrier for new entrants.

B. the bargaining power of buyers.
C. the threat of substitute products.
D. the bargaining power of suppliers.

16. The bargaining power of suppliers increases:
A. if the cost of switching suppliers is low.
B. if the prices of substitutes are not high.

C. if the suppliers can realistically threaten backward integration.
D. if the supplier's product is not a large part of the buyer's value added.
17. Which of the following increases a buyer's bargaining power?
A. Higher switching costs
B. Low buyer profitability

C. Higher importance of the product to the buyer
D. Backward integration by suppliers
18. Opportunities are attractive at the micro level on the market side when:
A. the target market is unlikely to grow.
B. the source of customer pain and its resolution is unknown.

C. the market offering does not provide customer benefits that other solutions do.
D. the company has other segments for which the currently targeted segment may provide a
springboard.
19. For an industry, attractive opportunities are available at the micro level when:
A. the business has inferior organizational processes or resources.
B. the company possesses something proprietary that is easily duplicable.
C. the company's business model is economically viable.

D. the source of customer pain and its resolution is unknown.
20. Which of the following is considered a critical success factor in retailing?
A. Price
B. Location
C. Promotion
D. Product
21. A(n) _____ is used to assess the impact and the timing of an environmental event in a firm.
A. BCG matrix
B. affinity diagram
C. activity network diagram
D. opportunity/threat matrix
22. Briefly describe the sociocultural environment and the economic environment of a business's
macroenvironment.
23. Explain the challenges in macro-level market and industry analysis.
24. Explain the significance of critical success factors.

Chapter 4 Key
1. A(n) _____ is defined as being composed of individuals and organizations who are interested
(p. 89)
in and willing to buy a good or service to obtain benefits that will satisfy a particular need.
A. sector
B. channel
C. posse
D. market
Level of Difficulty: 1 Easy

Walker - Chapter 04 #1
2. A group of firms that offer a product or class of products that are similar and are close
(p. 89)
substitutes for one another is referred to as a(n) _____.
A. sector
B. channel
C. industry
D. concern

3. Identify the demographic trend that influences market attractiveness.
(p. 93)
A. Fitness and nutrition

C. Corporate social responsibility

D. Economic recession

4. Marketers of consumer services such as health care and life insurance are capitalizing on the
(p. 91)
general trend of an aging population, thereby developing and implementing marketing
strategies accordingly. Which macroenvironmental trend is acting as a catalyst here?
A. Technological
B. Economic
C. Sociocultural
D. Demographic
Level of Difficulty: 2 Medium

5. Which of the following represents a sociocultural trend?

(p. 94)

D. Growing middle class

6. Which of the following is a factor of the economic environment?
(p. 94)

B. Corporate social responsibility
C. Rise and fall in interest rates

D. Aging population

7. Each macroenvironmental trend has a distinct impact on the consumer and industrial market.
(p. 95)
Identify the situation where industries such as check-cashing outlets and pawn shops will face
a tough time staying in business.
A. Increased immigration
B. Robust economy
D. Aging population

8. Which of the following is true of overregulation?

(p. 96)
A. It protects inefficiencies.
B. It does not promote trade barriers.
C. It avoids inflationary pressures.

D. It allows easy entry for new competitors.

9. Marketing services have been made easy by advertisements on the web or via e-mail, social
(p. 97)
networks, and online stores. Which macroenvironmental trend does this signify?
A. Natural environment
B. Economic environment
C. Technological environment
D. Regulatory environment

10. A rise in the production of hybrid gas-electric vehicles, high-efficiency LED bulbs, phosphate-
(p. 98)
free detergents, and recycled paper indicates the impact of which of the following
macroenvironmental forces?
A. The natural environment
B. The sociocultural environment

C. The regulatory environment
D. The demographic environment

11. According to Porter's Five Competitive Forces, which of the following is the key force in the
(p. 99)
fast-food industry?
A. Threat of new entrants
B. Threat posed by substitute products

C. Bargaining power of suppliers
D. Bargaining power of buyers

12. Which of the following forces increases industry attractiveness?

(p. 100)
A. Higher threat of substitute products
B. Lesser threat of new entrants

C. Greater bargaining power for suppliers
D. Lower buying power for customers

13. According to Porter, rivalry among competitors is greater:

(p. 100)
A. when low investment intensity exists in businesses.

B. when dominant firms exist in an industry.
C. when low switching costs exist for the buyers.

D. when strong product differentiation exists among current players.

14. The threat of new entrants to an industry is less:

(p. 100)
A. when the economies of scale are strong.
B. when the industry has low capital requirements.

C. when little product differentiation exists among current players.
D. when it is particularly easy to gain distribution.

15. A distribution agency was using facsimile machines to send and receive long-distance
(p. 100)
messages. This was replaced with an all-in-one printer that could scan, copy, and fax. The
cost of the new printer was almost the same as the facsimile machine. For the manufacturer of
facsimile machines, this example exemplifies:
A. the entry barrier for new entrants.
B. the bargaining power of buyers.

C. the threat of substitute products.
D. the bargaining power of suppliers.

16. The bargaining power of suppliers increases:

(p. 101)
A. if the cost of switching suppliers is low.
B. if the prices of substitutes are not high.

C. if the suppliers can realistically threaten backward integration.
D. if the supplier's product is not a large part of the buyer's value added.

17. Which of the following increases a buyer's bargaining power?

(p. 101)
A. Higher switching costs

B. Low buyer profitability
C. Higher importance of the product to the buyer

D. Backward integration by suppliers

18. Opportunities are attractive at the micro level on the market side when:
(p. 105)
A. the target market is unlikely to grow.

B. the source of customer pain and its resolution is unknown.
C. the market offering does not provide customer benefits that other solutions do.
D. the company has other segments for which the currently targeted segment may provide a
springboard.

19. For an industry, attractive opportunities are available at the micro level when:
(p. 106)
A. the business has inferior organizational processes or resources.

B. the company possesses something proprietary that is easily duplicable.
C. the company's business model is economically viable.

D. the source of customer pain and its resolution is unknown.
Level of Difficulty: 3 Hard

20. Which of the following is considered a critical success factor in retailing?

(p. 108)
A. Price
B. Location
C. Promotion
D. Product

21. A(n) _____ is used to assess the impact and the timing of an environmental event in a firm.
(p. 110)
A. BCG matrix
B. affinity diagram
C. activity network diagram

D. opportunity/threat matrix

22. Briefly describe the sociocultural environment and the economic environment of a business's
(p. 94-95)
macroenvironment.
Sociocultural trends are those that have to do with the values, attitudes, and behavior of
individuals in a given society. Two trends of particular relevance today are greater interest in
corporate social responsibility by businesses and trends toward fitness and nutrition.
Among the most far-reaching of the six macro trend components is the economic environment.
When people's incomes rise or fall, when interest rates rise or fall, when the fiscal policy of
governments results in increased or decreased government spending, entire sectors of
economies are influenced deeply, and sometimes suddenly. Marketers everywhere must face
the fact that the so-called emerging markets are no longer just seen as sources of low-cost
commodities and labor. Rather, they are where any growth in demand must come from.

23. Explain the challenges in macro-level market and industry analysis.
(p. 103)
While analyzing the attractiveness of one's market or industry, one must identify exactly which
market or industry to analyze. On the market side, the challenge often lies in sizing the
relevant market. Markets can be measured in various ways, in numbers of qualified potential
customers, in units consumed of a class of goods or services, or in terms of value. On the
industry side, the challenge lies in how narrowly or broadly to define one's industry. A good
way to identify the most suitable definition of the industry that pertains to one's company is to
consider whether the kinds of key suppliers, the processes by which value is added, and the
kinds of buyers are the same for your company and other companies whose industry you
consider your firm a part of.

24. Explain the significance of critical success factors.
(p. 108-
109)
Those critical factors that tend to separate the winners from the also-rans within an industry,
and whose successful implementation along with other hard-to-imitate elements specific to a
firm may account for a firm's continued success within a particular industry are called the
industry's critical success factors, or CSFs. An industry's CSFs may be identified by asking
two key questions: (1) Which few decisions or activities are the ones that, if gotten wrong, will
almost always have severely negative effects on company performance? (2) Which decisions
or activities, done right, will almost always deliver disproportionately positive effects on
performance? An efficient and well-connected team enables firms to enhance the
attractiveness of an opportunity because it is more likely to be able to ride out the inevitable
winds of change. Connected people up and down the value chain are able to control the
uncertainties involved with the attractiveness of an industry, and the success of the product by
changing strategies according to requirements.

Chapter 4 Summary
Category # of Questions
Level of Difficulty: 1 Easy 13
Level of Difficulty: 2 Medium 10
Level of Difficulty: 3 Hard 1
Walker - Chapter 04 24

Chapter 4

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Chapter 4

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Chapter 4

3. Identify the demographic trend that influences market attractiveness.

A. Fitness and nutrition

C. Corporate social responsibility

5. Which of the following represents a sociocultural trend?

A. Fitness and nutrition patterns

6. Which of the following is a factor of the economic environment?

A. Fitness and nutrition patterns

8. Which of the following is true of overregulation?

C. It avoids inflationary pressures.

A. The natural environment

C. The regulatory environment

A. Threat of new entrants

B. Threat posed by substitute products

D. Bargaining power of buyers

12. Which of the following forces increases industry attractiveness?

A. Higher threat of substitute products

D. Lower buying power for customers

A. when low investment intensity exists in businesses.

B. when dominant firms exist in an industry.

D. when strong product differentiation exists among current players.

14. The threat of new entrants to an industry is less:

A. when the economies of scale are strong.

B. when the industry has low capital requirements.

D. when it is particularly easy to gain distribution.

A. the entry barrier for new entrants.

D. the bargaining power of suppliers.

A. if the cost of switching suppliers is low.

B. if the prices of substitutes are not high.

17. Which of the following increases a buyer's bargaining power?

A. Higher switching costs

B. Low buyer profitability

D. Backward integration by suppliers

A. the target market is unlikely to grow.

B. the source of customer pain and its resolution is unknown.

A. the business has inferior organizational processes or resources.

B. the company possesses something proprietary that is easily duplicable.

C. the company's business model is economically viable.

24. Explain the significance of critical success factors.

Level of Difficulty: 1 Easy

Level of Difficulty: 1 Easy

A. Fitness and nutrition

C. Corporate social responsibility

Level of Difficulty: 1 Easy

Level of Difficulty: 2 Medium

5. Which of the following represents a sociocultural trend?

A. Fitness and nutrition patterns

Level of Difficulty: 1 Easy

A. Fitness and nutrition patterns

C. Rise and fall in interest rates

Level of Difficulty: 1 Easy

Level of Difficulty: 2 Medium

8. Which of the following is true of overregulation?

C. It avoids inflationary pressures.

Level of Difficulty: 1 Easy

Level of Difficulty: 1 Easy

A. The natural environment

B. The sociocultural environment

D. The demographic environment

Level of Difficulty: 1 Easy

A. Threat of new entrants

B. Threat posed by substitute products

Level of Difficulty: 2 Medium