Marketing leadership in hospitality and

tourism Strategies and tactics for

competitive advantage 4th Edition
Shoemaker Test Bank
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Exam

Name___________________________________

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

1) There are almost no changes in the competitive environment as an industry reaches the maturity stage of its life
cycle.
Answer: True False

2) Competition has become more oriented to value in relation to cost and service as knowledgeable buyers expect
similar price and product and service features.
Answer: True False

3) Any business that competes for the same customers in the same product class at the same point in time is
known as macro competition.
Answer: True False

4) The competitive intensity in a marketplace is the fierceness with which competing companies do battle with
each other
Answer: True False

5) Opportunity solutions, to be effective, are multi-faceted and complex.

Answer: True False

6) Firms that concentrate on the concept rather than the customer and the competition when designing their
product or service have "conceptitis."
Answer: True False

7) Markets rarely appear on their own out of nowhere; most of the time they are taken from competitors.
Answer: True False

8) "Scale economies" is one of many factors that can contribute to competitive intensity.
Answer: True False

9) Market share is not useful in telling a firm how it is doing in relationship to the competition.
Answer: True False

10) Some consider REVPAC to be a major measurement tool of the future.

Answer: True False

11) The two broad forms of competition are macro industry competition and micro product class competition.
Answer: True False

12) When new products or services are created to better meet customer needs, the competitive environment
changes.
Answer: True False

13) Michael Porter designed a framework of seven forces that shape competition within an industry.
Answer: True False

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 14) A firm's product/service concept development should precede analysis and choice of product/service
competition.
Answer: True False

15) In general, competitive intensity is somewhat low in the hospitality industry.

Answer: True False

16) Homogeneity of the market is one factor that can contribute to competitive intensity.
Answer: True False

17) .It is a marketing truism that all opportunities are competitive advantages.
Answer: True False

18) Services that can be easily duplicated offer only short-term advantage when you have aggressive competitors.
Answer: True False

19) When the needs of the market are similar, the intensity of competition is much greater as many entries in the
market are competing for the same customer.
Answer: True False

20) Competitive intelligence is knowing the enemy and what they are doing as well as their intentions, strengths
and weaknesses.
Answer: True False

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

21) What are the three different types of Competitive Intelligence?

A) Simple, Complex, and Offensive B) Offensive, Defensive, Passive
C) Defensive, Offensive, Complex D) Simple, Complex, Passive
Answer: B

22) Where is REVPAC primarily used?

A) Casinos
B) Resorts
C) Country clubs
D) Small B&B inns
E) Both A & B
Answer: E

23) What does REVPOR stand for?

A) Revenue per Outstanding Room B) Revenue per Occupied Room
C) Revenue per Optional Reason D) None of the above
Answer: B

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24) What are Porter's Five Forces?
A) Risk of entry, bargaining power of suppliers, rivalry among established firms, threat of substitute
products, bargaining power of buyers
B) Passive, Offensive, Defensive, Simple and Complex
C) Social Environment, Political Environment, Regulatory Environment, Technological Environment,
Economic Environment
D) None of the above
Answer: A

25) What are the three main barriers to entry?

A) Fear of competition, brand loyalty, demand conditions
B) Brand loyalty, absolute cost advantages, economies of scale
C) Lack of opportunity, cost advantages, economies of scale
D) None of the above
Answer: B

26) Which changes have impacted the hospitality industry?

A) New products, new services, new applications are harder to come by
B) Substitute products become more prevalent
C) Firms are selling experiences; repeat buyers are making choices from known alternatives
D) All of the above
E) None of the above
Answer: D

27) The bargaining powers of suppliers and buyers are:

A) Able to force prices up or down
B) A threat to the economy
C) A force with little effect
D) All of the above
E) Both A & B
Answer: E

28) What are some competitive innovations in hotels over the past few years?
A) Computer reservation systems B) Service quality management
C) Frequent guest programs D) Electricity
E) All of the above F) All but D
Answer: F

29) When does a sustainable competitive advantage occur?

A) Both the difference in important attributes and the capability gap can endure over time
B) Customers perceive a consistent difference in important attributes between one firm or property and its
competition
C) The difference is the result of a capability gap between the firm and its competitors
D) All of the above
Answer: D

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30) Porter suggests three strategies for beating the competition, which are:
A) Defense, counter attack, offense
B) Positioning, influencing, and exploiting
C) Defense, offense, passive resistance
D) All of the above
E) None of the above
Answer: B

31) REVPAC is:

A) Revenue Per Available Competitor
B) Measuring total yield per available customer
C) Revenue Per Available Customer
D) B and C
E) None of the above
Answer: D

32) Smith Travel Research, Travel Click and The Daily Bench are all internet websites that provide:
A) Software that can be purchased by individual companies in order to track their daily figures such as
market share
B) Ways for organizations to anonymously post questions to discussion boards about competitive
intelligence
C) The only current available resources for calculating the yield index
D) Daily reports that track competitive information such as market share
Answer: D

33) Perceptual mapping:

A) Plots customers' perceptions of your firm versus those of your competitors
B) Only uses multidimensional scaling
C) May involve simple plotting or sophisticated statistical methods
D) Is a way to analyze competitive intelligence
E) A, B & C
F) A, B & D
Answer: F

34) A sustainable competitive advantage happens only when:

A) Both the difference in important attributes and the capability gap can endure over time.
B) Customers perceive a constant difference in important attributes between one firm or property and its
competition.
C) The difference is the result of a capability gap between the firm and its competitors
D) All of the above
Answer: D

35) The "amenity wars" between hotels in the early 1980s was a clear example of:
A) Microcompetition B) The threat of substitute products
C) A competitive advantage D) Competitive intensity
Answer: D

36) Environmental scanning means looking for new threats, which are the other side of:
A) Forces B) Opportunities
C) Rivalry D) Potential competitors
Answer: B

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37) How does a firm compete?
A) Ask customers what business they would choose if they had not chosen your business
B) Find the products you would like to duplicate
C) Deliberately choose with whom you want, and can, compete
D) Both A & C
Answer: D

38) One drawback in an effort to gain competitive advantage in an industry with high competitive intensity is that
it may lead to:
A) Counter-strategies to protect the firm's own interest
B) Less than wise decisions
C) An edgy new tactic with superior results
D) Both A & B
Answer: D

39) As many entries into a market are competing for the same customer, ________ competitive advantages can
become ________ ones if sustained.
A) Small; large B) Outside; inside C) Large; small D) Inside; outside
Answer: A

40) Competitive intelligence means:

A) CIA (Competitive Intelligence Analysis)
B) Know your firm's "enemies" and their weaknesses, which may become your opportunities
C) Thinking about the competition with only the "smart" managers
D) Nothing; it does not exist
Answer: B

41) To gain competitive intelligence, a firm could:

A) Talk directly to the competition
B) Explore public information, such as trade press and annual reports
C) Visit or use the competitor's product
D) All of the above
Answer: D

42) Market share, including actual and fair, are examples of:
A) Measurable differences of the competitive set outside of your firm
B) Measurable differences when comparing products within your firm
C) Measurable differences when comparing your business to that of a competitor
D) None of the above
Answer: C

43) REVPAR is calculated by dividing ________ by ________.

A) Number of rooms available for sale; room revenue
B) Number of total rooms; room revenue
C) Room revenue; number of total rooms
D) Room revenue; number of rooms available for sale
Answer: D

44) ________ is the market share calculation most widely used in the hotel industry today.
A) REVPAC B) REVPAR C) REVPOR D) Internet REVPAR
Answer: B

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45) ________ and ________ are two new market share calculations for restaurants.
A) RSQCM, REVPAS B) RSQIN, REVPAS C) RSQFT, REVPAS D) None of the above
Answer: C

46) CSI stands for:

A) Customer Satisfaction Initiative B) Customer Service Initiative
C) Customer Satisfaction Index D) Customer Service Industry
Answer: C

47) The main advantage of perceptual mapping is:

A) The conversion of customers' perceptions into scales
B) The use of competitive intelligence
C) The visual display to management of where to focus their attention to better serve the customer
D) To perceive the management issues as seen through management's eyes
Answer: C

48) Competitive intelligence has the following major objective:

A) To help you develop our own strategies and tactics that may create a competitive advantage
B) To understand competitors' strategies and tactics used
C) To understand your position of comparative advantage and disadvantage
D) All of the above
Answer: D

49) The purpose of competitive analysis is to:

A) Overcome barriers to move ahead
B) Seek and increase competitive advantage if the firm is behind
C) Erect barriers to stay ahead
D) To sustain and increase competitive advantage if the firm is ahead
E) All of the above
Answer: E

50) All marketing opportunities begin with:

A) Identification and quantification of customers' problems
B) Knowledge of the competition
C) Knowledge of the competitive set
D) Closing the gap for the customer between expectation and reality
E) Both A & D
Answer: E

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ESSAY. Write your answer in the space provided or on a separate sheet of paper.

51) What are the five forces that impact marketing strategy? Provide an example of three of the five forces.
Answer: There are five forces that shape competition within an industry: risk of entry by potential competitors, bargaining
power of suppliers, bargaining power of buyers, threat of substitute products, and rivalry among established
firms.

One example of risk of potential competitors would be a competitor that is not in the market but has the skill set
to be in the market. Hotels in Las Vegas that are in close proximity to hotel casinos would be a threat to those
casinos. They could expand into that market and become direct competition.

A threat of a substitute product would be any new product that steals the market share, but fulfills the same need
as the competition. Cruise lines have been very good at providing an alternative to resort hotels, appealing to
the customer who enjoys travel and leisure (or even adventure, depending on the trip).

The bargaining power of buyers is the collective power that buyers in large numbers possess. An example might
be a large foodservice contract in a hospital. They have a large bargaining power with regards to whom they
decide to choose for vendors because they purchase large volumes of food and have many choices of vendors.
Choices give buyers power.

52) What is market share, fair share, actual market share, occupancy, REVPAR and yield index?
Answer: Market Share is "Fair Share" and "Actual Share"
Fair Share % = your capacity/total capacity
Actual Market Share % = your occupancy/total market occupancy
Occupancy % = rooms sold/actual rooms
REVPAR = Average Daily Rate (ADR) × occupancy% or Total room revenue/available rooms
Yield Index = Share of REVPAR = Property REVPAR/Market REVPAR