SMM Test 20

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Chapter 01 - Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies
Chapter 06
Targeting Attractive Market Segments
Multiple Choice Questions
1. _____ is the process by which a market is divided into distinct subsets of

customers with similar needs and characteristics that lead them to respond in
similar ways to a particular product offering and marketing program.
A. Market capitalization
B. Market segmentation
C. Brand positioning
D. Marketing mix
Answer: b
Level of Difficulty: Easy
Page: 141
2. _____ entails designing product offerings and marketing programs that can
establish an enduring competitive advantage in the target market by creating a
unique brand image, or position, in the customer’s mind.
A. Brand positioning
B. Market segmentation
C. Brand preference
D. Brand dilution
Answer: a
Page: 141
3. Identify the scenario emphasizing the impact of income on consumer markets

that are segmented demographically.
A. MobServ, a mobile service provider, focusing attention on the 65-plus
segments to improve market penetration
B. CarsForWomen Inc. launching an online information service aimed at
women to directly influence eight out of ten vehicle purchases
C. Cyan Mobiles launching a subsidiary to create an ultra-exclusive mobile
telephone targeting customers who buy luxurious products
D. GloGarments creating needs for specialized goods and services due to
increase in the number of men opting for neon clothing
Answer: c
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Level of Difficulty: Hard

Page: 145
4. Carol’s Trio, an upscale retail chain, stocks and sells only Spanish, German,
and French products. Trio is an example of segmenting a market by _____.
A. age
B. ethnic origin
C. education
D. income
Answer: b
Page: 145
5. _____ divides the market according to the characteristics of the buying

organization using attributes such as age of firm, firm size, and industry
affiliation.
A. Microsegmentation
B. Geographic segmentation
C. Behavioral segmentation
D. MacrosegmentationAnswer: d
Page: 146
6. In _____, customers are grouped by the characteristics of the individuals who

influence the purchasing decision.
A. microsegmentation
B. geographic segmentation
C. demographic segmentation
D. macrosegmentationAnswer: a
Page: 146
7. AdventureBikes targets wilderness enthusiasts and introduced special robust

bikes for them. PowerDrink’s target market comprises tennis players who need
to replenish water and salts lost through perspiration. These are examples of
_____ segmentation that is based on target consumers’ activities.
A. demographic
B. geographical
C. geodemographic
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D. behavioral
Answer: d
Level of Difficulty: Medium
Page: 147
8. When consumers evaluate product alternatives on the basis of desired

characteristics and how valuable each characteristic is to them, it is referred to
as _____.
A. benchmarking
B. productivity paradox
C. choice criteria
D. paradox of thrift
Answer: c
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Page: 147
9. Which of the following statements is true of behavioral segmentation?

A. It is useful in assessing the size and market potential of a market segment
defined by a particular trade area.
B. It identifies a common purchasing structure across all organizational
markets.
C. It is based on who the target customers are and where they live.
D. It identifies new markets even among homogeneous demographic groups
when segmented by lifestyle.
Answer: d
Page: 148
10. Which of the following is true of principle-oriented consumers?

A. They are motivated by abstract and idealized criteria.
B. They shop for products that demonstrate the consumer's success.
C. They are guided by the need for social or physical activity and variety.
D. They are motivated by risk-taking.
Answer: a
Page: 149
11. A(n) _____ consumer shops for products that demonstrate the consumer’s
success.
A. principle-oriented
B. action-oriented
C. resource-oriented
D. status-oriented
Answer: d
Page: 149
12. _____ is the degree to which buying activity is centralized and influences a
buyer to consider all transactions with a given supplier on a global basis, to
emphasize cost savings, and to minimize risk.
A. Brand parity
B. Purchasing structure
C. Choice criteria
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D. Purchasing influence
Answer: b
Page: 149
13. A(n) _____ refers to a recurring buying situation handled on a routine basis.
A. straight rebuy
B. old rebuy
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C. modified rebuy
D. new buy
Answer: a
Page: 150
14. Which of the following buying situations occurs when some element, such
as price or delivery schedules, has changed in a client–supplier relationship?
A. A straight rebuy
B. An old rebuy
C. A modified rebuy
D. A new buying situation
Answer: c
Page: 150
15. What is the first step in constructing a market attractiveness/competitive

position matrix for evaluating potential target markets?
A. Selecting market attractiveness and competitive position factors
B. Choosing segments to target and allocate resources
C. Rating segments on each factor and plotting results on matrices
D. Projecting future position for each segment
Answer: a
Page: 152
16. In which of the following steps of evaluating potential target markets is the
market-attractiveness/competitive-position matrix plotted?
A. Choosing segments to target and allocating resources
B. Projecting future position for each segment
C. Rating segments on each factor
D. Assigning numerical weights to the factors
Answer: c
Page: 154-155
17. Based on the market attractiveness/competitive position matrix, which of the

following strategies should a firm consider when the market attractiveness is
moderate and the competitive position is weak?
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A. It should expand without high risk or minimize investment and focus on

operations.
B. It should withdraw if indications of sustainable growth are lacking.
C. It should emphasize profitability by increasing productivity.
D. It should seek ways to increase current earnings without speeding market's
decline.
Answer: a
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Page: 157

low and the competitive position is strong?
A. It should build selectively on strengths and invest to improve position
only inareas where risk is low.
B. It should emphasize profitability by increasing productivity and build up
ability to counter competition.
C. It should protect current strengths of the firm and seek ways to increase
current earnings without speeding market’s decline.
D. It should invest more to grow at a maximum rate and concentrate on
maintaining strength.
Answer: c
Page: 157

high and the competitive position is strong?
A. It should protect existing strengths and invest to improve position only in
areas where risk is low.
B. It should defend its current position and stop all further investments.
C. It should sell when possible to maximize cash value and cut fixed costs in
themeantime.
D. It should invest more to grow at a maximum rate and concentrate on
maintaining strengths.
Answer: d
Page: 157
20. Which of the following is true of a mass-market strategy?

A. It involves serving one or more segments with customers seeking
somewhat-specialized benefits from a product.
B. It works on the principle that an undifferentiated marketing strategy
generates more sales than a differentiated strategy.
C. It involved using a differentiated marketing strategy to decrease
manufacturing and promotion costs.
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D. It involves designing a single product-and-marketing program that will

appeal to the largest number of consumers.
Answer: d
Page: 157
21. Which of the following market strategies is often favored by smaller

companies to avoid direct confrontations with larger firms while building
volume and share? A. A niche-market strategy
B. A growth-market strategy
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C. A resource-market strategy
D. A mass-market strategy
Answer: b
Page: 158
Essay Questions
22. What are the steps in a market segmentation process?

Answer: There are three important steps in the market segmentation process: 1)
Identify a homogeneous segment that differs from other segments: The process
should identify one or more relatively homogeneous groups of prospective
buyers with regard to their wants and needs and/or their likely responses to
differences in the elements of the marketing mix.
2) Specify criteria that define the segment: The segmentation criteria should
measure or describe the segments clearly enough so that members can be
readily identified and accessed, in order for the marketer to know whether a
given prospective customer is or is not in the target market and in order to reach
the prospective customer with advertising or other marketing communication
messages.
3) Determine segment size and potential: Finally, the segmentation process
should determine the size and market potential of each segment for use in
prioritizing which segments to pursue.
Page: 143–144
23. Briefly discuss the market attractiveness and competitive position

factors.Answer: Market Attractiveness Factors: Assessing the attractiveness of
markets or market segments involves determining the market’s size and growth
rate and assessing various trends— demographic, sociocultural, economic,
political/ legal, technological, and natural—that influence demand in that
market. An even more critical factor in determining whether to enter a new
market or market segment, however, is the degree to which unmet customer
needs, or needs that are currently not being well served, can be identified. In the
absence of unmet or underserved needs, it is likely to be difficult to win
customer loyalty, regardless of how large the market or how fast it is growing.
“Me-too” products often face difficult going in today’s highly competitive
markets. Competitive Position Factors: Understanding the attractiveness of the
industry in which one competes is also important. Entering a segment in a way
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that would place the firm in an unattractive industry or increase its exposure
therein may not be wise. Of more immediate and salient concern, however, is
the degree to which the firm’s proposed product will be sufficiently
differentiated from its competitors, given the critical success factors and
product life-cycle conditions already prevalent in the category. Similarly,
decision makers need to know whether their firm has or will be able to acquire
the resources it will take —human, financial, and otherwise—to effectively
compete in the new segment. Simply put, most new goods or services need to
be either better from a consumer point of view or cheaper than those they hope
to replace. Entering a new market or market segment without a source of
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sustainable competitive advantage is often a trap.

Page: 153
24. Explain niche-market and growth-market strategies with relevant

examples. Answer: Niche-market strategy involves serving one or more
segments that, while not the largest, consist of a sufficient number of customers
seeking somewhat-specialized benefits from a good or service. For example,
overall coffee consumption is down in some countries, but the sales of gourmet
coffees in coffee bars such as Starbucks or Coffee Republic have boomed in
recent years. Businesses pursuing a growth-market strategy often target one or
more fast-growth segments, even though these segments may not currently be
very large. It is a strategy often favored by smaller companies to avoid direct
confrontations with larger firms while building volume and share. Such a
strategy usually requires strong R&D and marketing capabilities to identify and
develop products appealing to newly emerging user segments, plus the
resources to finance rapid growth. The problem, however, is that fast growth, if
sustained, attracts large competitors. This happened to Apple when IBM entered
the personal computer industry. The goal of the early entrant is to have
developed an enduring competitive position via its products, service,
distribution, and costs by the time competitors enter.
Page: 157–159
Chapter 07
Differentiation and Brand Positioning
1. 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.
Answer: c
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Page: 163
2. 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. It is 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.
Answer: d
Page: 166
3. Which of the following is characteristic of perceptual positioning analysis of

a brand?
A. Technical orientation
B. R&D implications need to be interpreted
C. Physical brand properties
D. Large number of dimensions
Answer: b
Page: 166
4. Which of the following is characteristic of physical positioning analysis of a

brand?
A. Represents impact of product specs
B. Limited number of dimensions
C. Need for marketing research
D. Perceptual measures
Answer: a
Page: 166
5. Which of the following is a characteristic of physical positioning?
A. Large number of dimensions
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B. Consumer orientation
C. Perceptual attributes
D. Limited number of dimensions
Answer: a
Page: 166
6. Which of the following is a difference between physical and perceptual

positioning?
A. Physical positioning represents product specs and communication, but
perceptual positioning does not.
B. In a perceptual positioning analysis, data is readily available, but in
physical positioning analyses it is not.
C. Perceptual positioning has a consumer orientation while physical
positioning has a technical orientation.
D. Physical positioning analysis is based in perceptual measures, while
perceptual positioning analysis is based in objective measures.
Answer: c
Page: 166
7. Which of the following examples best illustrates perceptual positioning?

A. General Foods' breakfast cereal in new chocolate and honey flavors
B. Volvo's new venture into making fighter planes
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
Answer: d
Page: 166
8. 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 or service
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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
Answer: b
Page: 167
9. 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 substitute products on various critical
determinant attributes. Which of the following stages of the product positioning
process is the firm currently in?
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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
Answer: d
Page: 168-169
10. Volvo's emphasis on safety, Toyota's emphasis on reliability, and Norelco's

promising a "close and comfortable shave" highlights which determinant
attribute?
A. Ingredients
B. Manufacturing process
C. Benefits
D. Endorsements
Answer: c
Page: 170
11. Which of the following positioning bases typically includes “who made it”
and “prior products?”
A. Parentage
B. Comparison
C. Ingredients
D. Pro-environment
Answer: a
Page: 170
12. Which of the following positioning bases is illustrated by a clothing

manufacturer’s claim of their shirts being made from pure organic cotton?
A. Price/quality
B. Endorsements
C. Ingredients
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D. Parentage
Answer: c
Page: 170
13. Which of the following 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 that Renty Candies is more nutritious than Jimbo Candies,
costsless than Jimbo, and tastes great, too."
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Answer: a
Page: 170
14. Rex and Tens, a food manufacturing company, has the following tagline in
its ad for a new health drink—Speedheal“Find out why thousands of
nutritionists across America are recommending Speedheal to their clients.”—
Which positioning base is used in this Speedheal ad?
A. Manufacturing process
B. Endorsements
C. Ingredients
D. Parentage
Answer: b
Page: 170
15. A bank positions itself using its deposit safety as an 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 a bank’s deposit safety varies largely
among consumers
D. Because most consumers perceive all banks to be about equally safe
Answer: d
Page: 170-171
16. Two stores occupy positions comparable to one another on the positioning
grid. This indicates that:
A. the two stores use different perceptual positioning of their products.
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B. the intensity of competition between the two stores is most likely to be very
low.
C. consumers consider them to be relatively alike.
D. consumers see them as very different.
Answer: c
Page: 172
17. Identify the limitation of a 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 in terms of the level of as many attributes as are relevant.
D. It does not indicate how alternative products are positioned relative to
one another in customers' minds.
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Answer: a
Page: 176
18. 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: A. conjoint analysis.
B. cluster analysis.
C. logit analysis.
D. discriminant analysis.
Answer: a
Page: 176
19. Both positioning statements and value propositions should reflect a: A.

unique selling proposition.
B. low price component.
C. high value component.
D. indication of high market acceptance.
Answer: a
Page: 179-180
20. _____ is the term marketers use to refer to the value created by establishing
customer preference for one’s brand.
A. Brand extension
B. Brand recognition
C. Brand positioning
D. Brand equity
Answer: d
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Page: 181
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21. Which of the following results when companies create differences between
their brands and other brands that consumers perceive as meaningful?
A. Brand extension
B. Diversification
C. Line extension
D. Brand equity
Answer: d
Page: 181
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Essay Questions
22. Outline the elements involved with perceptual positioning.

Answer: The elements involved with perceptual positioning are:
Consumer orientation
Perceptual attributes
Perceptual measures
Need for marketing research
Perceptual brand positions and positioning intensities
Limited number of dimensions
Represents impact of product specs and communication
R&D implications need to be interpreted
Page: 166
23. Explain how the result of a brand positioning analysis affects the final
decision about where to position a new brand or reposition an existing one.
Answer: The chosen position should match the preferences of a particular
market segment and should take into account the current positions of competing
brands. It should reflect the current and future attractiveness of the target market
and the relative strengths and weaknesses of competitors.
Most successful products are positioned based on one or two determinant
attributes. In “me-too” products, not only is success hard to achieve, but also
ethical issues may arise.
Documenting the desired positioning for the product provides a clear
understanding of what is intended for the product and where it will fit in its
competitive set. Two approaches are commonly used for this. In the classical
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approach, a positioning statement is written. Another approach involves writing

a value proposition for the product.
Page: 178-179
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24. What are positioning statements and value propositions? Briefly explain
their features.
Answer: A positioning statement is a succinct statement that identifies the target
market for which the product is intended and the product category in which it
competes and states the unique benefit the product offers.
A value proposition states what the product does for the customer, includes
information about pricing relative to competitors.
Both statements should reflect a unique selling proposition (USP) that the
product embodies. A value proposition typically looks like this: (1) target
market; (2) benefits offered (and not offered); (3) price range (relative to
competitors). Both these statements should state benefits of the product, rather
than its features. When used internally and by others, they are typically not
written in catchy consumer language, though catchy slogans and tag lines for
communication with customers often follow. They are most commonly written
for a product line or a brand, but sometimes for a single product or for a
business as a whole. When used at the business level, they should articulate the
strategic direction for the company.

Page: 179-181
Chapter 08
Marketing Strategies for New Market Entries
1. In which of the following stages of the product life cycle do sales increase at
a progressively faster rate as more people learn about the product and it
becomes readily available?
A. Growth stage
B. Introductory stage
C. Competitive turbulence stage
D. Decline stage
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Answer: a
Page: 191
2. _____ 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. Benchmarking
Answer: c
Page: 193
3. Which of the following is true of the introductory stage in a product life

cycle?
A. The product is easily available at this stage.
B. The net adoption rate holds steady at this stage.
C. Shakeout or competitive turbulence occurs at the end of this stage.
D. Skimming is one of the pricing strategies applied at this stage.
Answer: d
Page: 193
4. Which of the following pricing strategies is appropriate during the maturity

stage of the product life cycle?
A. Skimming
B. Penetration strategy
C. Reduce across the board
D. Hold or reduce selectivelyAnswer: d
Page: 193
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5. Identify the appropriate response by a firm when its product line is in the
mature life cycle stage. A. Reduce length of line
B. Hold length of line
C. Broaden product line
D. Introduce new product line
Answer: b
Page: 193
6. 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.
Answer: c
Page: 195
7. 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.
Answer: a
Page: 198
8. Which of the following refers to products that supplement a firm’s

established product line?
A. Repositioning
B. Additions to existing product lines
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C. New product lines

D. Cost-reduced products
Answer: b
Page: 198
9. Which of the following observations 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.
Answer: d
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Page: 199
10. Which of the following is an appropriate strategic objective for

repositionings?
A. Use excess or off-season capacity
B. Provide a cash generator
C. Capitalize on distribution strengths
D. Exploit technology in a new way
Answer: b
Page: 200
11. Defending a current market-share position is an appropriate strategic

objective for:
A. repositionings.
B. new product lines.
C. new-to-the-world products.
D. improvements or revisions to existing products.
Answer: d
Page: 200
12. 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
Answer: a
Page: 201
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13. Which of the following advantages of pioneers is particularly pronounced

when the product is technically sophisticated and involves high development
costs?
A. Possibility of preempting scarce resources and suppliers
B. Distribution advantages
C. High switching costs for early adopters
D. Economies of scale and experience
Answer: d
Page: 202
14. Pioneers that are able to maintain their preeminent position well into the
market's growth stage have supported their early status with one or more
marketing strategy elements. Identify the strategy that allows firms to expand
their volumes quickly and achieve the benefits of
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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
Answer: c
Page: 205
15. 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
Answer: b
Page: 206
16. Identify the firm characteristic of a new product pioneer pursuing the
massmarket penetration strategy.
A. It should have limited marketing skills and resources.
B. It should have a leading share position in target segment.
C. It should have the ability to shift from stimulation of primary demand to
stimulation of selective demand.
D. It should have limited financial resources to commit to building capacity
prior to demand growth.
Answer: c
Page: 208
17. Which of the following is a primary objective of mass-market penetration

strategies?
A. Recoup development and commercialization costs as soon as possible.
B. Maintain leading share position in target segment.
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C. Maximize number of triers and adopters in target segment.

D. Maximize number of triers and adopters in total market.
Answer: d
Page: 208
18. Which of the following marketing programs is used by pioneers as a 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
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Answer: d
Page: 211
19. _____ 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
Answer: a
Page: 212
20. _____ grants the right to use the company's name, trademarks, and
technology.
A. Contract manufacturing
B. Countertrade
C. Franchising
D. Coproduction
Answer: c
Page: 213
21. _____ involves a company providing technical know-how and components

in return for a share of the output that it must sell.
A. Buyback arrangement
B. Countertrade
C. Coproduction
D. Joint ventures
Answer: c
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Page: 214
Essay Questions
22. Discuss the strategic implications of the introductory and growth stages of
the product life cycle.
Answer: The introduction of a new product requires large investments, so most
firms sustain a rather sizable short-term loss. As the product moves into the
growth stage, sales increase rapidly; hence, substantial investments continue.
Profitability is depressed because facilities have to be built in advance to ensure
supply. The firm with the largest share during this period should have the
lowest per-unit costs due to scale and learning effects. If it chooses to decrease
its real price proportionate to the decline in its costs, it dries up the investment
incentives of would-be entrants and lower-share competitors. The innovating
firm’s share is likely to erode substantially during the growth stage.
Nevertheless, it must still make large
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investments; for even though it is losing share, its sales are increasing. New
entrants and low-share sellers are at a substantial disadvantage here. They must
not only invest to accommodate market growth, but also to gain market share.
Page: 196-197
23. Briefly explain licensing, franchising, and joint ventures.

Answer: In licensing, a firm offers the right to use its intangible assets in
exchange for royalties or some other form of payment. It is less flexible and
provides less control than exporting. Further, if the contract is terminated, the
licensor may have developed a competitor. However, it is appropriate when the
market is unstable or difficult to penetrate. Franchising grants the right to use
the company's name, trademarks, and technology. The franchisee typically
receives help in setting up the franchise. It is an attractive way for service firms
to penetrate foreign markets at low cost and to couple their skills with local
knowledge and entrepreneurial spirit. Host countries are reasonably receptive to
this type of exporting since it involves local ownership. Joint ventures involve a
joint ownership arrangement to produce or market goods in a foreign country.
They are commonplace because they avoid quotas and import taxes and satisfy
government demands to produce locally. They also have the advantage of
sharing investment costs and gaining local marketing expertise. Level of
Difficulty: Medium
Page: 212-214
24. Write a short note on the marketing program components for a skimming
strategy.
Answer: A relatively high price is appropriate for a skimming strategy to
increase margins and revenues, even though some price-sensitive customers
may be reluctant to adopt the product at that price. Introductory promotional
programs might best focus on customer groups who are least sensitive to price
and most likely to be early adopters of the new product. Thus, in many
consumer goods businesses, skimming strategies focus on relatively upscale
customers, since they are often more likely to be early adopters and less
sensitive to price. Another critical element of this strategy is the nature of the
firm's continuing product development efforts. A pioneer that plans to leave a
market when competitors enter should not devote much effort to expanding its
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product line through line extensions or multiple package sizes. Instead, it should
concentrate on the next generation of technology or on identifying new
application segments.
Page: 215
Chapter 09
Strategies for Growth Markets
1. The primary objective of the early share leader, usually the market pioneer, in
a growth market is _____.
A. share reduction
B. share growth
C. share maintenance
D. mass-market penetration
Answer: c
Page: 221
2. 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.
Answer: a
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Page: 224
3. Identify the share maintenance 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.
Answer: c
Page: 226
4. 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
Answer: c
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Page: 227
5. The marketing action of developing a second product line with features that
are more appealing to a specific segment of potential customers is characteristic
of the _____ strategy.
A. market expansion
B. contraction
C. flanker
D. confrontation
Answer: c
Page: 227
6. Which of the following is characteristic of a market expansion strategy?

A. Make product modifications or improvements to match or beat superior
competitive offerings.
B. Develop a second brand or product line with features or price more
appealingto a specific segment of potential customers.
C. Meet or beat lower prices or heavier promotional efforts by competitors
when necessary to retain customers and when lower unit costs allow.
D. Develop multiple-line extensions or brand offerings targeted to the needs
of various potential user applications or geographical segments within the
market.
Answer: d
Page: 227
7. Which of the following statements is associated with the fortress strategy?

A. The market leader develops a strong position when potential customers
have relatively homogeneous needs.
B. The market leader develops a second brand to compete directly against
the challenger's offering.
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C. The market leader changes the marketing program before a suspected

competitive challenge occurs.
D. The market leader defends its relative market share by expanding into a
number of market segments.
Answer: a
Page: 228
8.Which of the following objectives can be achieved with a confrontation

strategy for share maintenance?
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
byfocusing resources on them.
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D. Improve ability to win new customers who might otherwise be attracted to

competitor's offering.
Answer: d
Page: 229
9. Which of the following strategies is most effective in a market that is

relatively homogeneous in relation to customer needs and purchase criteria?
A. Fortress strategy
B. Market expansion strategy
C. Contraction strategy
D. Flanker strategy
Answer: a
Page: 229
10. What action must a leader take to improve customer satisfaction as

competitor enters or prepares to enter the market?
A. It should take steps to improve the physical product and customers'
perceptions of it as well.
B. It should shift its sales promotion emphasis from building selective
demand to stimulating primary demand.
C. It should continue sales promotion efforts aimed only at stimulating trial
among later adopters.
D. It should shift its sales-force efforts from servicing existing customers to
prospecting for new accounts.
Answer: a
Page: 230
11. Tokomo Motors has introduced a new line of cars aimed at creating an
appeal for young car buyers looking for good quality, funky designs, and
lowprices. Their intent is to protect their primary brands from direct competition
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in the same category and from low-price competitors. Identify the strategy
employed by Tokomo Motors. A. Confrontation strategy
B. Position defense strategy
C. Flanker strategy
D. Market expansion strategy
Answer: c
Page: 231-232
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12. 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
Answer: d
Page: 233
13. Strategic withdrawal is most likely 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 tries to beat the attractive features of a competitor's offering only
after the challenger's success has become obvious.
Answer: a
Page: 233
14. What is the major marketing objective for followers, particularly larger
firms entering a product-market shortly after the pioneer?
A. Defend market position
B. Develop only a niche strategy
C. Attain share growth
D. Start discrete price wars
Answer: c
Page: 234
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15. Which of the following share-growth strategies involves attacking the leader
within its primary target market?
A. Flanker strategy
B. Frontal attack strategy
C. Encirclement strategy
D. Guerrilla attack strategy
Answer: b
Page: 236
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16. Which of the following is an appropriate share-growth strategy in a

relatively homogeneous market with respect to customers’ needs and purchase
criteria?
A. Guerrilla attack
B. Encirclement
C. Flank attack
D. Frontal attack
Answer: d
Page: 237
17. Which of the following share-growth strategies is appropriate when the

needs and preferences of customers in most segments are currently satisfied by
competing brands? A. Leapfrog
B. Flank attack
C. Encirclement
D. Guerrilla attack
Answer: d
Page: 237
18. 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
Answer: c
Page: 237
19. A _____ strategy is appropriate when the market can be broken into two or
more large segments, when the leader and/or other major competitors hold a
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strong position in the primary segment, and when no existing brand fully
satisfies the needs of customers in at least one other segment.
A. frontal attack
B. leapfrog
C. guerrilla attack
D. flank attack
Answer: d
Page: 240
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20. A(n) _____ strategy involves targeting several smaller untapped or

underdeveloped segments in the market simultaneously.
A. encirclement
B. guerrilla attack
C. flank attack
D. leapfrog
Answer: a
Page: 241
21. Sales promotion efforts (like coupon drops and merchandising deals), local
advertising blitzes, and legal action are examples of the _____ strategy to
achieve share growth.
A. guerilla attack
B. flank attack
C. frontal attack
D. leapfrog
Answer: a
Page: 241
Essay Questions
22. Explain how share gains are worth more in a growth market than in a mature
market.
Answer: The premise that share gains are more valuable when the market is
growing stems from the expectation that the earnings produced by each share
point continue to expand as the market expands. The implicit assumption here is
that the business can hold its relative share as the market grows. The validity of
such an assumption depends on a number of factors, including the following:
(1) the existence of positive network effects; (2) future changes in technology or
other key success factors; (3) future competitive structure of the industry; (4)
future fragmentation of the market.
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Page: 223-224
23. Explain the various ways a challenger can target competitors established in
the market.
Answer: A challenger can target its competitors in several ways: (1) Attack the
market-share leader within its primary target market: Typically involves either a
frontal assault or an attempt to leapfrog the leader through the development of
superior technology or product design; (2) Attack another follower who has an
established position within a major market segment: Also usually involves a
frontal assault, but it may be easier for the challenger to gain a sustainable
advantage if the target competitor is not as well established; (3) Attack one or
more smaller competitors who have only limited resources: This may seem like
an inefficient way to attain substantial share increases; (4) Avoid direct attacks
on any established competitor: Usually involves either a flanking or an
encirclement strategy, involving one large or several smaller segments in which
no competitor currently holds a strong position. Level of Difficulty: Medium
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Page: 236; 238
24. Compare and contrast the frontal attack and leapfrog strategy.
Answer: Where the market for a product category is relatively homogeneous,
with few untapped segments and at least one well-established competitor, a
follower wanting to capture an increased market share may have little choice
but to tackle a major competitor head-on. Such an approach is most likely to
succeed when most existing customers do not have strong brand preferences or
loyalties, the target competitor’s product does not benefit from positive network
effects, and the challenger’s resources and competencies—particularly in
marketing—are greater than the target competitor’s. To successfully implement
a frontal attack, a challenger should seek one or more ways to achieve a
sustainable advantage over the target competitor.
A challenger stands the best chance of attracting repeat or replacement
purchases from a competitor’s current customers when it can offer a product
that is attractively differentiated from the competitor’s offerings. The odds of
success might be even greater if the challenger can offer a far superior product
based on advanced technology or a more sophisticated design. This is the
essence of a leapfrog strategy. It is an attempt to gain a significant advantage
over the existing competition by introducing a new generation of products that
significantly outperform or offer more desirable customer benefits than do
existing brands.
Page: 238-239
Chapter 10
Strategies for Mature and Declining Markets
1. A primary marketing objective of all competitors in mature markets is simply

to:
A. hold their existing customers.
B. market their products to a new market.
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C. increase market penetration.

D. increase price to maximize profits.
Answer: a
Difficulty: Easy
Page: 246-247
2. The transition from market growth to maturity typically begins:

A. when the market is still growing but the rate of growth starts to decline.
B. when the market growth starts to accelerate.
C. after the market ceases to grow.
D. when the demand for a product outstrips its rate of production.
Answer: a
Difficulty: Medium
Page: 247
3. Goliath Corp. made overly optimistic forecasts of future sales volume. As a

result, the firm expanded too rapidly, and production capacity overshot the
demand as growth slowed. The excess, in turn, lead to an increase in price per
unit. Which of the following strategic traps did Goliath Corp. fall into during
the shakeout period?
A. Sacrificing market share in favor of short-run profit
B. No clear competitive advantage as growth slows
C. Failure to anticipate transition from growth to maturity
D. Assumption that an early advantage will insulate the firm from price or
service competition Answer: c
Difficulty: Hard
Page: 248
4. "A business may survive and prosper during the growth stage even though it
has neither differentiated its offering from competitors nor attained the
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lowestcost position in its industry. But during the transition period, such is not
the case." Which of the following strategic traps leads to such a state?
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
Answer: b
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Difficulty: Medium
Page: 248
5. National Motors manufactures high-end automobiles. The attributes of their

cars include excellent handling, acceleration, comfort, and braking, and
provides the company an advantage over its competitors. Identify the product
quality dimension emphasized by National Motors.
A. Reliability
B. Performance
C. Durability
D. ServiceabilityAnswer: b
Difficulty: Medium
Page: 252
6. The _____ quality dimension refers to the consistency of performance from

purchase to purchase or to a product’s uptime, the percentage of time that it can
perform satisfactorily over its life.
A. brand equity
B. serviceability
C. reliability
D. durabilityAnswer: c
Difficulty: Easy
Page: 252
7. 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.
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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.
Answer: a
Difficulty: Medium
Page: 255
8. 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.
Answer: a
Difficulty: Easy
Page: 256
9. In some labor-intensive industries, a business can achieve a cost advantage, at
least in the short term, by gaining access to inexpensive labor. This is an
example of the _____ method used to obtain a sustainable cost advantage.
A. no-frills product
B. cheaper raw materials
C. low-cost distribution
D. innovative production processes
Answer: d
Difficulty: Medium
Page: 257
10. 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
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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
Answer: b
Difficulty: Medium
Page: 257
11. Which of the following is the critical determinant of success in mature

markets?
A. Continually working to improve the value of offerings
B. Hostile takeover of competitors in the market
C. Lowering the price of offerings instead of differentiating
D. Considerably downsizing the firm to cut costs
Answer: a
Difficulty: Medium
Page: 258
12. 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
Answer: c
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Difficulty: Medium
Page: 262
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13. Which of the following is a possible marketing action that may be taken to
convert current nonusers in target segment into users and increase penetration?
A. Encourage larger volume purchases of nonperishable products.
B. Move storage of the product closer to the point of end use by offering
additional package sizes or designs.
C. Develop line extensions suitable for additional uses or applications.
D. Enhance product’s value by adding features, benefits, or services.
Answer: d
Difficulty: Easy
Page: 263
14. 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. Answer: c
Difficulty: Medium
Page: 263
15. Which of the following is a possible marketing action that can encourage
extended use of products?
A. Enhancing product’s value by including it in the design of integrated systems
B. Producing for private labels
C. Developing line extensions suitable for additional uses or applications
D. Entering global markets where product category is in an earlier stage of its
life cycle
Answer: c
Difficulty: Medium
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Page: 263
16. _____ is a factor that helps to determine the strategic attractiveness of

declining product-markets, and includes the rate and certainty of future declines
in volume.
A. Time to market
B. Conditions of demand
C. Exit barriers
D. Intensity of future competitive rivalry
Answer: b
Difficulty: Easy
Page: 269
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17. _____ refers to the ease with which weaker competitors can leave the
market.
A. Time to market
B. Conditions of demand
C. Intensity of future competitive rivalry
D. Exit barriers
Answer: d
Difficulty: Easy
Page: 269
18. The objective of a _____ strategy is to generate cash quickly by maximizing

cash flow over a relatively short term.
A. harvesting
B. maintenance
C. profitable survivor
D. niche
Answer: a
Difficulty: Medium
Page: 271
19. Which of the following is the primary objective of niche strategies in a

declining market?
A. Increasing share of the declining market with an eye to future profits and
encourage weaker competitors to exit
B. Maintaining share in short term as market declines, even if margins must
be sacrificed
C. Focusing on strengthening position in one or a few relatively substantial
segments with potential for future profits D. Maximizing short-term cash flow
Answer: c
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Difficulty: Medium
Page: 272
20. Which of the following will be the primary objective of a firm, in a

declining market, which has a sustainable competitive advantage in target
segments but limited overall resources?
A. To increase share of the declining market with an eye to future profits
and encourage weaker competitors to exit
B. To maintain share in short term as market declines, even if margins must
be sacrificed
C. To maximize short-term cash flow and maintain or increase margins even
at the expense of a slow decline in market share
D. To focus on strengthening position in one or a few relatively substantial
segments with potential for future profits
Answer: d
Difficulty: Hard
Page: 272
21. Which of the following is the most probable marketing action by a firm to
implement a harvesting strategy in a declining market?
A. Consider introducing line extensions to appeal to remaining demand
segments.
B. Lower prices if necessary to maintain share, even at the expense of reduced
margins.
C. Focus salesforce efforts on attaining repeat purchases from current users.
D. Eliminate R&D expenditures and capital investments related to the business.
Answer: d
Difficulty: Medium
Page: 273
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Essay Questions
22. What are the causes of market decline?

Answer: The causes of market decline include:
Technological advances
Changing customer demographics
Changing customer tastes or lifestyles
Development of substitutes
Difficulty: Easy
Page: 247
23. What are analyzer and defender strategies? How are they similar and
dissimilar from each other? List the conditions most appropriate for their
use.
Answer: Analyzers and defenders are both concerned with maintaining a strong
share position in established product markets. However, analyzers pursue some
product and market development to avoid being leapfrogged by competitors
with more advanced products or being left behind in new applications segments.
While defenders may initiate some product improvements or line extensions to
protect and strengthen their position in existing markets, they spend relatively
little on new product R&D. Both analyzer and defender strategies may be
appropriate for units with a leading, or at least a profitable, share of one or more
major segments in a mature industry. An analyzer strategy is most appropriate
for developed industries that are still experiencing some technological change
and may have opportunities for continued growth, such as the computer and
commercial aircraft industries. The defender strategy works best in industries
where the basic technology is not very complex or is unlikely to change
dramatically in the short run. Both analyzers and defenders can attempt to
sustain a competitive advantage in established product markets through
differentiation of their product offering (either on the basis of superior quality or
service or by maintaining a low-cost position).
Difficulty: Hard
Page: 250
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24. Write a brief note on the profitable survivor strategy. Illustrate the
conditions most appropriate for its usage.
Answer: Profitable survivor strategy involves investing enough to increase its
share position and establishing itself as the industry leader for the remainder of
the market’s decline. It is suitable for a business that has a strong share position
and a sustainable competitive advantage in a declining product-market, and
makes most sense when the firm expects a gradual decline in market demand or
when substantial pockets of continuing demand are likely well into the future. It
is also attractive when a firm’s declining business is closely intertwined with
other SBUs through shared facilities and programs or common customer
segments. The key to the success of such a strategy is to encourage other
competitors to leave the market early. Upon achieving this, the firm can switch
to a harvesting strategy.
Difficulty: Medium
Page: 274
Chapter 11
Marketing Strategies for a Digitally Networked World
1. When people see something they like on the web or on their mobile phones,
they share it with others. This illustrates the basic concept of: A. collaborative
filtering.
B. positive network effect.
C. really simple syndication.
D. viral marketing.
Answer: d
Page: 282
2. Tinker Inc. is a firm that provides its search engine technology to many
branded search engine sites. Which of the following roles does Tinker Inc. play?
A. Originator
B. Contactor
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C. Distributor
D. Optimizer
Answer: a
Page: 283
3. _____ 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
Answer: b
Page: 283
4. In e-commerce business models, a(n) _____ refers to a website that provides

news articles in electronic form and delivers them to other sites, each of which
appeals to a different target audience.
A. originator
B. syndicator
C. contractor
D. optimizer
Answer: b
Page: 283
5. 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. benchmarking
D. disintermediation
Answer: a
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Page: 284
6. Collaborative filtering:
A. enables firms to compare a consumer's past purchase to recommend a
personalized newer purchase options.
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
userdriven rather than marketer-driven.
D. allows firms to conduct an interactive, online survey with potential target
consumers about their tastes.
Answer: a
Page: 285
7. _____ techniques, which are user-driven instead of marketer-driven, allow

customers to specify the nature of what is offered to them.
A. Rules-based personalization
B. Mass-customization
C. Collaborative filtering
D. Mass-media
Answer: b
Page: 285
8. Quickbeats.com is an online music seller that allows customers to order

personalized CDs that contain only the songs chosen by the customers. Which
of the following personalization techniques does Quickbeats use?
A. Collaborative filtering
B. Rules-based personalization
C. Mass-customizationD. Disintermediation
Answer: c
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Page: 285
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9. 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
Answer: a
Page: 286
10. 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 illustrates that: A. there is a negative network
effect.
B. there are decreasing returns to scale.
C. rules-based personalization has been implemented.
D. a global reach exists for these services.
Answer: d
Page: 287
11. According to the first-mover advantage, success of a firm depends on being

the first to:
A. provide alternatives to an established product.
B. establish a significant presence in each market niche.
C. outsource labor in order to cut production costs.
D. launch a frontal attack of competitors to gain market share.
Answer: b
Page: 289
12. Which of the following is true of firms with a first-mover advantage? A.

The first-mover advantage is the best technique for building a great
company.
B. First movers always need to use a skimming strategy to be successful.
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C. All first movers capitalize on their potential advantages.

D. First movers must continue to innovate to maintain their differential
advantage.
Answer: d
Page: 289
13. In which of the following stages of customer experience process does the
direction of cash flow occur from customer to producer?
A. Customer insight
B. Product delivery
C. Production promotion, customer acquisition, and brand buildingD. Product
return or disposal
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Answer: b
Page: 290
14. In which stage of the consumer experience process does cash flow from the
producer to the consumer? A. Product delivery
B. Product return or disposal
C. Customer support and service
D. Customer insight
Answer: b
Page: 290
15. Which of the following is the first stage of the customer experience process?
A. Transaction
B. Production promotion, customer acquisition, and brand building
C. Customer insight
D. Customer support and service
Answer: c
Page: 290
16. In which of the following stages of the customer experience process does
information flow from the producer to the customer?
A. Customer insight
B. Product delivery
C. Product return or disposal
D. Production promotion, customer acquisition, and brand building
Answer: d
Page: 290
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17. 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
Answer: d
Page: 291
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18. If the customer likes an offering, a(n) _____ ensues, requiring that
information about pricing, terms, delivery, and so on flows to the customer, and
cash—either now or upon delivery—flows the other way.
A. transaction
B. disintermediation
C. syndication
D. aggregation
Answer: a
Page: 291
19. In which of the following stages of the customer experience process do

firms obtain data from social networking sites and instant messaging?
A. Product return or disposal
B. Customer insight
C. Transaction
D. Customer support and service
Answer: b
Page: 291-292
20. Which controversial system gauges a customer's desire to buy, measures his
means, and sets the price accordingly?
A. Dynamic pricing
B. Price pooling
C. Price skimming
D. Hedonic pricing
Answer: a
Page: 294
21. _____ involves companies carefully considering which burdens they can
remove from the customer, using digital technologies, and which customers can
perform, assessing costs and benefits to both parties.
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A. Benchmarking
B. Paid inclusion
C. Coproduction
D. Affiliate schemes
Answer: c
Page: 296
Essay Questions
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22. What is syndication of information? List the types of syndication and

explain briefly how syndication of information helps marketers.
Answer: Syndication involves the sale of the same good—typically an
informational good—to many customers, who may then combine it with
information from other sources and distribute it. The types of syndication
include the originator, syndicator, and the distributor.
There are numerous ways in which syndication of information helps in the
neweconomy. Since syndication delivers informational goods, rather than
tangible goods, a company can syndicate the same informational goods or
services to an almost infinite number of customers with little incremental cost.
The syndication process can be automated and digitized, enabling syndicated
networks to be created, expanded, and flexibly adapted far more quickly than
would be possible in the physical world. Syndication via the Internet—and via
mobile phones or other devices—opens up endless opportunities for marketers.
It replaces scarcity with abundance. Information can be replicated an infinite
number of times and combined and recombined in an infinite number of ways.
It can be distributed everywhere, all at once, and be available all the time.
Page: 283-284
23. Discuss the use of mass-customization techniques in customizing market

offerings.
Answer: Mass-customization techniques, which are user-driven instead of
marketer-driven, allow customers to specify the nature of what is offered to
them, from T-shirts to coffee mugs and more. Several office supply firms offer
corporate users the ability to create customized office supply catalogs tailored to
their company. Such catalogs simplify ordering procedures, save time and
money in the purchasing department, and help control expenses by offering to
perhaps far-flung employees only what the purchasing department has approved
in advance. Similarly, some online music sellers offer consumers the
opportunity to order customized CDs consisting of only the songs the customer
chooses. In today’s highly competitive markets, personalization and
customization can help build customer loyalty and make it less likely that
customers will switch to other suppliers.
Page: 285-286
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24. How can entrepreneurs better serve the digitally networked markets of
tomorrow?
Answer: Would-be internet or social networking entrepreneurs should consider
the various ways in which revenue can be generated on the web or in other
settings such as mobile phones. Unless someone, a business or a consumer, is
eventually willing to fork over money for what a new business offers, its
chances for success lie somewhere between slim and none. Thus, understanding
one’s revenue model and being willing to change it as market and technological
conditions warrant are essential.
Next, such entrepreneurs must ask not what can I sell but what do today’s and
tomorrow’s customers need, and how and where might they want to consume
what I have to offer?
Finally, would-be entrepreneurs must realize that barriers to entry are incredibly
low in this new world. For everyone who has the next latest and greatest
webbased or social networking idea, there are dozens of other prospective
entrepreneurs likely to be exploring similar ideas concurrently. It’s not really
the ideas that count. What matters is the team that will execute an idea to deliver
the performance and value that customers, whether businesses or consumers, or
even potential acquirers of the nascent business want and will pay for.
Page: 301
Chapter 12
Organizing and Planning for Effective Implementation
1. Which of the following types of business strategies for evaluation and reward
systems comprises high incentives based on sales and share growth?
A. Differentiated defender
B. Prospector
C. Low-cost defender
D. Reactor
Answer: b
Page: 310
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2. Which of the following types of business strategies is characterized by a

moderate level of SBU autonomy?
A. Differentiated defender
B. Prospector
C. Low-cost defender
D. Reactor
Answer: a
Page: 310
3. Which of the following relates to shared programs and synergy for a low-cost
defender business strategy?
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
Answer: d
Page: 310
4. Which of the following represents the functional coordination and conflict

resolution factor 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.
Answer: b
Page: 314
5. _____ refers to the division of tasks and activities across positions within the
organizational unit. A. Formalization
B. Centralization
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C. Specialization
D. Orientation
Answer: c
Page: 316
6. Centralization refers 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
governdecisions 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.
Answer: a
Page: 316
7. In which of the following situations are prospector business units and their
marketing departments most likely to perform better? A. When the decision-
making authority is rigidly centralized
B. When rigid rules and policies dominate managerial discretion
C. When there is a high degree of formalization
D. When the units are highly specialized
Answer: d
Page: 316
8. Identify the simplest and most bureaucratic form of organizational design.

A. Product management
B. Market management
C. Matrix
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D. Functional
Answer: d
Page: 316
9. Highly structured business units and marketing departments are: A.

able to quickly adapt to a changing environmental circumstance.
B. unlikely to have a centralized decision-making authority.
C. unlikely to be very innovative.
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D. likely to have very little formalization.

Answer: c
Page: 316
10. Product management organizations:

A. rely primarily on hierarchical mechanisms for resolving conflicts across
functional areas.
B. are characterized by decentralized decision making and an increased 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.
Answer: b
Page: 317
11. Identify the statement that relates to a 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.
Answer: a
Page: 319
12. The matrix form is the most:

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

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Answer: c
Page: 319
13. All self-managing teams are based on which of the following concepts,
regardless of the form of worker self-management?
A. Empowerment
B. Joint venture
C. Centralization
D. Hierarchy
Answer: a
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Page: 320
14. Among self-managing teams, _____ refers to the theory that those doing the
work should have the means to do what it takes to please the customer.
A. hierarchy
B. joint venture
C. centralization
D. empowerment
Answer: d
Page: 320
15. Which of the following types of global organizations is especially

appropriate when there is considerable variance across markets regarding
product acceptance and marketing activities?
A. Functional structure
B. Product structureC. Area structure
D. Process structure
Answer: c
Page: 323
16. 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.
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D. presents a short overview of the issues, objectives, strategy, and actions
incorporated in the plan and their expected outcomes for quick management
review.
Answer: d
Page: 324
17. Key issues in an annual marketing plan:

A. identifies the main opportunities and threats to the product that the plan
mustdeal with in the coming year.
B. summarizes the overall strategic approach that will be used to meet the
plan'sobjectives.
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.
Answer: a
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Page: 324
18. Which of the following is the most crucial part of the annual marketing plan
for ensuring proper execution?
A. Action plan
B. Performance review
C. Objective
D. Executive summary
Answer: a
Page: 329
19. Which of the following sections 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
Answer: d
Page: 330
20. The “controls” section of an annual marketing plan:

A. specifies the goals to be accomplished in terms of sales volume, market
share, and profit.
B. summarizes relevant background information on the market, competition
andthe macroenvironment.
C. identifies the main opportunities and threats to the product.
D. discusses how the plan’s progress will be monitored.
Answer: d
Page: 324
21. Which of the following is part of a situation analysis?
A. Financial objectives
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B. Marketing objectives
C. Sales forecast
D. Maintenance strategy
Answer: c
Page: 328
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Essay Questions
22. Describe and outline the parts of an Action Plan in an annual marketing
plan.
Answer: This is the most critical section of the annual plan for helping to ensure
effective implementation and coordination of activities across functional
departments. It specifies:
1) The target market to be pursued.
2) What specific actions are to be taken with respect to each of the 4 Ps.
3) Who is responsible for each action.
4) When the action will be engaged in.
5) How much will be budgeted for each action.
Page: 324
23. Write a short note on situation analysis.

Answer: Situational analysis is known as the "homework" portion of the plan
where the manager summarizes his or her analysis of current and potential
customers, the competitive environment and the company's relative strengths
and weaknesses, trends in the broader macroenvironment that may impact the
product, and past performance outcomes for existing products. This section also
typically includes estimates of sales potential, forecasts, and other assumptions
underlying the plan. Based on these analyses, the manager may then call
attention to one or more key issues, major opportunities, or threats that should
be dealt with during the planning period.
Page: 327
24. Explain the role of action plans in an annual marketing plan.

Answer: The action plan is the most crucial part of the annual marketing plan
for ensuring proper execution. Here the specific actions necessary to implement
the strategy for the product are listed, together with a clear statement of who is
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responsible for each action, when it will be done, and how much is to be spent
on each activity. Actions requiring the cooperation of other functional
departments should be included, but only after the product manager has
contacted the departments involved, and received assurances of support. This
part of the marketing plan is concerned with setting up specific timelines and
milestones. A variety of planning and project management tools such as Gantt
charts and stage-gate development processes may be used to illustrate and
orchestrate the action steps entailed in the plan.
Page: 329
Chapter 13
Measuring and Delivering Marketing Performance
1. Identify the first step in the performance measurement process.

A. Evaluating data
B. Setting performance standards
C. Specifying feedback
D. Obtaining data
Answer: b
Page: 336
2. Which of the following is the last step of the performance measurement

process?
A. Taking corrective action
B. Evaluating feedback data
C. Obtaining feedback data
D. Defining customer satisfaction metrics
Answer: a
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Page: 336
3. Which of the following provides a measure of performance expectations for
profitability? A. Return on equity
B. Market share
C. Customer satisfaction
D. Productivity
Answer: a
Page: 336
4. Which of the following is a useful framework for setting performance

standards?
A. Collaborative filtering
B. Profitability analysis
C. Total quality management
D. The SMART acronym
Answer: d
Page: 337
5. _____ 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
Answer: b
Page: 338
6. Which of the following is a limitation of profitability as a measure of

performance?
A. It is unreliable in the short-term.
B. It is difficult to measure.
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C. It measures performance in nonfinancial terms.

D. It is a short-term measure.
Answer: d
Page: 339
7. The costs of occupancy, general management, and the management of the

sales-force are all _____ for a multiproduct company.
A. marginal costs
B. standard costs
C. direct costs
D. indirect costs
Answer: d
Page: 339
8. 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.
Answer: c
Page: 339
9. Which of the following is true of activity-based costing?

A. It bases costs on the different tasks involved in performing a given process
oraction.
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.
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Answer: a
Page: 340
10. Which of the following is typically the most expensive and time-consuming
method of gathering feedback data? A. Company accounting records
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B. Marketing research
C. Syndicated marketing information
D. Transaction records
Answer: b
Page: 342
11. Which of the following is typically 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. The certainty that the company does not overspend
Answer: b
Page: 346
12. Identify the typical geographical control unit used for sales territory analysis
in the United States.
A. Borough
B. City
C. State
D. County
Answer: d
Page: 346
13. Which of the following is a variable that helps in finding useful

decompositions of the sales data?
A. Measurability
B. Return on investment
C. Monetary value
D. Reliability
Answer: c
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Page: 348
14. Which of the following involves buying keywords for which consumers are
likely to search on the Internet?
A. Benchmarking
B. Search engine optimization
C. Search engine marketing
D. Electronic data interchangeAnswer: c
Page: 350
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15. Which of the following 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
Answer: d
Page: 353
16. Which of the following is the final step in a typical contingency planning
process?
A. Specifying alternative response options
B. Identifying critical assumptions about the future
C. Ordering of critical assumptions by rank
D. Tracking/monitoring of action plan
Answer: a
Page: 353
17. Identify the stage of the contingency planning process that involves
specifying what information or measures are needed to determine whether the
implementation of the action plan is on schedule?
A. Assigning probabilities of being right about the assumptions
B. Ranking the importance of each assumption
D. Identifying the action plan
Answer: c
Page: 354
18. Identify the step of the contingency planning process that requires a
specification of both the level at which an alert will be called and the
combination of events that must occur before the firm reacts.
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A. Specifying response options

B. Activating the contingency plan
D. Identifying critical assumptions
Answer: b
Page: 354
19. What is the purpose of marketing functions audit?

A. To evaluate the adequacy of the systems that develop the firm's product-
market entry action plans
B. To evaluate the firm's overall structure and the extent of synergy between
the various
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marketing units
C. To examine the profitability of the company's individual products,
markets, and key accounts
D. To examine, in detail, the adequacy of the firm's ability to handle each of
the marketing-mix elements
Answer: d
Page: 356
20. 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
Answer: a
Page: 356
21. In a marketing functions audit, price questions have to do with:

A. the actions of major competitors.
B. cost-effectiveness.
C. the attainability of the present product-line objective.
D. sales force compensation.
Answer: a
Page: 356-357
Essay Questions
22. Write a short note on designing marketing metrics.

Answer: To be successful, performance measurement system should be well
integrated with the other steps in the marketing management process—setting
objectives, formulating strategies, and implementing a plan of action.
The system monitors the extent to which the firm is achieving its objectives.
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When it is not, the firm determines whether the reason lies in the environment,
the strategies employed, the action plans, or the way the plans were being
implemented. In a large diversified company, corporate management is
concerned with how well its various SBUs are performing relative to the
opportunities and threats each faces and the resources given to them. At the
SBU level, concern is primarily with the unit's own strategy, especially as it
pertains to its individual product-market entries.
Regardless of the organizational level involved, the process is essentially the
same. It consists of five steps: setting performance standards, specifying
feedback, obtaining data, evaluating it, and taking corrective action. Level
of Difficulty: Medium
Page: 335-336
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23. Explain the importance of sales analysis.

Answer: A sales analysis involves breaking down aggregate sales data into
categories such as products, end-user customers, channel intermediaries, sales
territories, method of sales and order size. The objective of this analysis is to
find areas of strength and weakness, for example, products producing the
greatest and least volume. Sales analysis not only helps to evaluate and control
marketing efforts, but also helps management to better formulate objectives and
strategies and administer nonmarketing activities such as production planning,
inventory management, and facilities planning. An important decision in
designing the firm's sales analysis system concerns which units of analysis to
use. Most companies assemble data in the following groupings: geographical
areas, product, customer, channel intermediary, method of sale, and size of
order.
These breakdowns are not mutually exclusive. Firms combine product and
account breakdowns with a geographical one. Sales analysis conducted on a
hierarchical basis using a combination of breakdowns can help analysts to
locate the opportunities and problems facing their firms.
Page: 346
24. Explain search engine optimization. What are the benefits of using search
engine optimization?
Answer: Search engine optimization (SEO) refers to a set of techniques that
helps ensure that a company’s web pages are ranked highly when consumers
search for information using Google, China’s Baidu, or any other search engine.
The search engines’ organic search, as it is called, is driven by proprietary
algorithms which vary from one search engine to another and are programmed
to look for certain things. SEO’s first job is to figure out what the algorithms are
looking for, despite the fact that this is always a moving target. Then, job two is
to optimize the company’s web pages by, for example, ensuring that commonly
searched-for keywords appear where the search engines are programmed to
look for them. Doing so involves ensuring that the code is written so that the
search engines can “read” it; ensuring that the right keywords are used in the
site’s content (and buried in its meta-data across the site); and influencing other
authoritative sites to provide inbound links to one’s own site.
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The results of a company’s effective use of SEO are that a company’s web
pages rank higher in the results returned from consumers’ searches—the main
left-hand side of a page on Google’s search results, for example—than they
would otherwise.
Page: 349

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Multiple Choice Questions

1. _____ is the process by which a market is divided into distinct subsets of

3. Identify the scenario emphasizing the impact of income on consumer markets

Level of Difficulty: Hard

5. _____ divides the market according to the characteristics of the buying

6. In _____, customers are grouped by the characteristics of the individuals who

7. AdventureBikes targets wilderness enthusiasts and introduced special robust

8. When consumers evaluate product alternatives on the basis of desired

9. Which of the following statements is true of behavioral segmentation?

10. Which of the following is true of principle-oriented consumers?

15. What is the first step in constructing a market attractiveness/competitive

17. Based on the market attractiveness/competitive position matrix, which of the

A. It should expand without high risk or minimize investment and focus on

18. Based on the market attractiveness/competitive position matrix, which of the

19. Based on the market attractiveness/competitive position matrix, which of the

20. Which of the following is true of a mass-market strategy?

D. It involves designing a single product-and-marketing program that will

21. Which of the following market strategies is often favored by smaller

22. What are the steps in a market segmentation process?

23. Briefly discuss the market attractiveness and competitive position

sustainable competitive advantage is often a trap.

24. Explain niche-market and growth-market strategies with relevant

Multiple Choice Questions

1. Brand positioning refers to both the place a brand occupies in customers'

3. Which of the following is characteristic of perceptual positioning analysis of

4. Which of the following is characteristic of physical positioning analysis of a

6. Which of the following is a difference between physical and perceptual

7. Which of the following examples best illustrates perceptual positioning?

8. Marketing decision makers, while seeking to win a particular position in a

being user-friendly are examples of which type of categorization based on such

9. A firm is considering introducing a new product category in a highly

A. Determining customers' most preferred combination of determinant attributes

10. Volvo's emphasis on safety, Toyota's emphasis on reliability, and Norelco's

12. Which of the following positioning bases is illustrated by a clothing

13. Which of the following is an example of using product features as a

Level of Difficulty: Medium

Level of Difficulty: Medium

17. Identify the limitation of a product positioning analysis.

Level of Difficulty: Medium

19. Both positioning statements and value propositions should reflect a: A.

Level of Difficulty: Medium

22. Outline the elements involved with perceptual positioning.

approach, a positioning statement is written. Another approach involves writing

Level of Difficulty: Medium

Multiple Choice Questions

3. Which of the following is true of the introductory stage in a product life

4. Which of the following pricing strategies is appropriate during the maturity

6. The shakeout stage in a product life cycle is signaled by:

7. New-to-the-world products can be defined as:

8. Which of the following refers to products that supplement a firm’s

C. New product lines

9. Which of the following observations best describes new-to-the-world

10. Which of the following is an appropriate strategic objective for

11. Defending a current market-share position is an appropriate strategic

13. Which of the following advantages of pioneers is particularly pronounced

experience-curve effects before major competitors can confront them.

17. Which of the following is a primary objective of mass-market penetration

C. Maximize number of triers and adopters in target segment.