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Marketing: An Introduction, 12e (Armstrong/Kotler)

Chapter 2 Company and Marketing Strategy: Partnering to Build Customer

Relationships

1) Which of the following is true of strategic planning in a firm?

A) It deals with maintaining the company's current business ventures.B) It focuses on the firm's internal environment rather than the eternal environment.

!) It occurs at the business"unit# product# and mar$et levels rather than at the corporate level.

%) It deals with adapting the firm to ta$e advantage of changing mar$eting opportunities.&) It involves preparing short"term investment obectives at the product level.

Answer( %

%ifficulty( oderate

!hapter *+( 1!ourse *+( Identify and describe the processes and tools of strategic mar$eting

,) !osmetics firm -atin-il$ is revamping its mission statement and advertising strategy. he

!&+ stresses that the new mission statement should be mar$et"oriented rather than product"oriented. Which of the following mission statements will best suit the company?

A) to create the best possible products and sell them at the best possible pricesB) to sell hypoallergenic cosmetics products made only from the finest organic ingredients

!) to give customers the compleion they dream about by providing products suited to their

needs%) to become a mar$et leader in every cosmetics product category

&) to increase our mar$et share in the cosmetics segment and increase profit margins

Answer( !

%ifficulty( oderate!hapter *+( 1

!ourse *+( Identify and describe the processes and tools of strategic mar$etingAA!-B( Analytic thin$ing

/) A company's mission statement should most li$ely be 00000000.

A) defined in terms of satisfying basic customer needsB) focused on the products and services the company sells

!) defined by the profits the company strives to earn

%) directed at the company's employees and not at its customers

&) focused on the manufacturing technology that the company usesAnswer( A

%ifficulty( &asy


1

!opyright ,213 4earson &ducation# Inc.



5) Which of the following best describes a company's business portfolio?

A) the list of all the mar$eting activities in which the company invests

B) the target segments of the company's various businesses!) the company's products or services in a particular mar$et

%) the collection of businesses and products that ma$e up the company

&) the company's strengths in terms of technology# people# and productsAnswer( %

%ifficulty( oderate

!hapter *+( ,!ourse *+( Identify and describe the processes and tools of strategic mar$eting

3) Business portfolio analysis is defined as the process in which management 00000000.A) studies the products and strategies of competitors to improve the company's own products

B) analy6es consumer feedbac$ in order to better position the company's brand image

!) assesses the attractiveness of an -B7's mar$et and the strength of its position in the mar$et%) segments the company's mar$ets to reach target consumers effectively

&) conducts mar$eting research to evaluate the company's mar$eting strategy

Answer( !%ifficulty( oderate

!hapter *+( ,

!ourse *+( Identify and describe the processes and tools of strategic mar$eting

8) Which of the following criteria provides a measure of mar$et attractiveness in the Boston

!onsulting 9roup approach?

A) relative mar$et shareB) mar$et sentiment

!) return on mar$eting investment

%) mar$et growth rate&) brand image

Answer( %

%ifficulty( &asy!hapter *+( ,


:) Which of the following criteria does the Boston !onsulting 9roup approach use to provide ameasure of a company's strength in the mar$et?

A) relative mar$et share

B) return on mar$eting investment!) mar$et sentiment

%) mar$et growth rate

&) annual profitAnswer( A

%ifficulty( &asy

!hapter *+( ,


,




;) In the B!9 growth"share matri# stars refer to products or businesses with a 00000000.

A) low mar$et share in a niche mar$et

B) low relative mar$et share in a mar$et with high growth prospects!) greater mar$et share than all their competitors combined in a saturated mar$et

%) high mar$et share in a mar$et with a high growth rate

&) high mar$et share in a mar$et that is set to shrin$ significantlyAnswer( %

%ifficulty( oderate


<) In the B!9 growth"share matri# =uestion mar$s refer to products or businesses with a 00000000.

A) low mar$et share in a niche mar$et

B) low mar$et share in a mar$et with high growth prospects!) greater mar$et share than all their competitors combined in a saturated mar$et

%) high mar$et share in a mar$et with a high growth rate

&) low mar$et share in a mar$et that is set to shrin$ significantlyAnswer( B

%ifficulty( oderate

!hapter *+( ,


12) In the B!9 matri# 00000000 refer to low"growth# high"share businesses or products.

A) starsB) cash cows

!) =uestion mar$s

%) dogs&) heroes

Answer( B



/




11) +mni >ealthcare's analgesic drug !etaprin has a 52 share in the analgesics mar$et in the

country of errania. Its closest competitor# @ebe# has a ,3 share in the mar$et# while four

other analgesic brands split the remainder. Which statement indicates that !etaprin is a cash cowaccording to the B!9 matri?

A) +mni >ealthcare often ta$es money from other strategic business units to support !etaprin.

B) A customer survey shows that !etaprin users do not prefer it to other analgesics in the mar$et.!) he demand for analgesic drugs in the erranian mar$et is epected to remain stable.

%) @ebe is rapidly gaining mar$et share over !etaprin due to aggressive mar$eting efforts.

&) he erranian mar$et for healthcare products is epanding rapidly.Answer( !

%ifficulty( %ifficult

!hapter *+( ,


1,) obe >ealthcare's analgesic drug %ilophin has a 53 share in the analgesics mar$et in the

country of Bodonia. Its closest competitor# !aritin# has a ,3 share in the mar$et# while three

other drugs split the remainder. Which statement indicates that %ilophin is a star according to theB!9 matri?

A) @ew players are willing to enter the analgesic drug mar$et since the mar$et has poor growth

potential.

B) A customer survey has revealed that %ilophin has the poorest brand"name recognition of anyanalgesic in the mar$et.

!) he demand for analgesic drugs in the Bodonian mar$et is epected to remain stable.

%) !aritin is rapidly gaining mar$et share over %ilophin as a result of aggressive mar$etingefforts.

&) he Bodonian mar$et for healthcare products is epanding rapidly.

Answer( &%ifficulty( %ifficult

!hapter *+( ,


5




1/) Which of the following products would the electronics company !ypress-ound classify as a

cash cow in its B!9 matri?

A) !yana cell phone that is designed for music lovers and has a very low mar$et share in amar$et that is growing steadily

B) Boosha home entertainment system that has a strong mar$et share in a mar$et that is li$ely

to epand in the future!) Cpressan 4/ player that has a high mar$et share in a mar$et that is not epected to grow

significantly

%) Auto4laya car audio system that has a high mar$et share in a mar$et that has been growingconstantly

&) 7nipressa !% player that has a very low mar$et share in a mar$et that is shrin$ing rapidly

Answer( !

%ifficulty( %ifficult!hapter *+( ,


AA!-B( Analytic thin$ing

15) Dertigo is an electronics company. According to the B!9 matri# which of the following

products of Dertigo would most li$ely classify as a =uestion mar$?A) Bluea cell phone that is designed for music lovers and has a very low mar$et share in a

mar$et that is growing steadily

B) &lectraa home entertainment system that has a strong mar$et share in a mar$et that is li$elyto epand in the future

!) Eumpan 4/ player that has a high mar$et share in a mar$et that is not epected to grow

significantly

%) -pin%rivea car audio system that has a high mar$et share in a mar$et that has been growingconstantly

&) -o*oa !% player that has a very low mar$et share in a mar$et that is shrin$ing rapidly

Answer( A%ifficulty( %ifficult

!hapter *+( ,


13) In the B!9 matri# 00000000 are low"share businesses and products in low"growth mar$ets.A) dogs

B) cash cows

!) blac$ holes%) stars

&) =uestion mar$s

Answer( A%ifficulty( &asy

!hapter *+( ,


3




18) Which of the following statements is true in the contet of the B!9 growth"share matri?

A) -tars often need heavy investment to finance their rapid growth in a mar$et.

B) he positions of -B7s in the growth"share matri rarely change over time.!) he income from one -B7 cannot be used to support other business units.

%) %ogs promise to be large sources of cash.

&) !ash cows typically turn into stars.Answer( A

%ifficulty( oderate


1:) When using a harvest strategy for a particular strategic business unit# a company 00000000.

A) invests ust enough in the strategic business unit to $eep its mar$et share at the current levelB) invests more in the business unit to build its mar$et share

!) sells off the strategic business unit and invests its resources elsewhere

%) tries to maimi6e its short"term cash flow regardless of long"term concerns

&) gradually increases investment in the strategic business unit over time to maimi6e profitsAnswer( %

%ifficulty( oderate!hapter *+( ,


1;) When a company chooses to divest a particular strategic business unit# it 00000000.

A) increases the advertising budget for that strategic business unit

B) invests more in the strategic business unit to build its mar$et share

!) sells off or phases out the strategic business unit%) invests ust enough in the strategic business unit to $eep its mar$et share at the current level

&) gradually increases investment in the strategic business unit over time to maimi6e profits

Answer( !%ifficulty( oderate

!hapter *+( ,


1<) Which of the following companies is using a divesting strategy?

A) Euggernaut Bi$es ac=uires new businesses in order to increase its mar$et share.B) o achieve a higher mar$et share# *B% Inc. increases investments in advertising and

promotion.

!) When sales of its clothing division decline# Blac$stone sells the division to a competitor.%) 9eti !omputers increases the price of its products in order to maimi6e short"term profits.

&) >arlow's mar$et share remains steady over two years# and the firm decides to maintain its

share at the current level.Answer( !


!hapter *+( ,


8




,2) A strategy for company growth that involves increasing sales to current mar$et segments

without changing the product is $nown as 00000000.

A) mar$et developmentB) mar$et differentiation

!) mar$et penetration

%) product development&) diversification

Answer( !



,1) &coBean# a chain of cafes# has introduced a -pecial -hopper !ard that allows customers to pay in advance for coffee and snac$s. his effort by &coBean management is most li$ely an

eample of 00000000.

A) mar$et development

B) product development!) diversification

%) mar$et penetration&) product adaptation

Answer( %




,,) Acme Inc.# a manufacturer of construction and mining e=uipment# is based in Australia.

Acme modifies the production processes of its widgets and gadgets to sell its current products in&astern &urope. his is most li$ely an eample of a 00000000 strategy.

A) mar$et penetration

B) mar$et development!) product diversification

%) business harvesting

&) product development

Answer( B%ifficulty( oderate

!hapter *+( ,


:




,/) Ainsworth is a toy manufacturer based in Australia. Which of the following most li$ely

indicates that Ainsworth is following a diversification strategy?

A) Ainsworth increases its spending on advertising and promotion.B) Ainsworth ac=uires the rights to manufacture toys resembling a popular cartoon character.

!) Ainsworth introduces its toys in the Indian and -outh"&ast Asian mar$ets.

%) Ainsworth enters the 7.-. mar$et with a line of children's clothing.&) Ainsworth develops a new line of educational toys targeting its current mar$et.

Answer( %




,5) oyBo is a toy manufacturer based in the 7nited ingdom. Which of the following

indicates that the company is following a mar$et penetration strategy?

A) It introduces a line of children's clothing in the 7nited ingdom.

B) It ac=uires toy rights for a popular cartoon character to boost its sales.!) It introduces its toys in the Indian and -outh"&ast Asian mar$ets.

%) It enters the 7.-. mar$et with a line of children's clothing.&) It develops a new line of educational software targeted at the current mar$et.

Answer( B




,3) BlueBear is a shoe manufacturer based in the 7nited -tates. Which of the following indicates

that the company is following a mar$et development strategy?

A) BlueBear introduces a line of children's clothing to its current target mar$et.B) BlueBear employs a British comedian for a 7.-. advertising campaign.

!) BlueBear introduces its shoes in the Indian and -outh"&ast Asian mar$ets.

%) BlueBear adds a line of leather purses to its offerings in the 7.-. mar$et.&) BlueBear develops a line of athletic shoes for its current target mar$et.

Answer( !




;




,8) FedIn$# a company that manufactures office furniture# is based in Bodonia. It is loo$ing to

sell its current products in other countries as well. he company identifies the country of -oleria

as a good option because the cultures and tastes of consumers in the two countries are similar.his is an eample of a strategy for 00000000.

A) mar$et penetration

B) mar$et development!) downsi6ing

%) diversification

&) product developmentAnswer( B

%ifficulty( oderate

!hapter *+( ,


,:) Indigo# a company that manufactures electric chimneys# is based in the country of errania.

Indigo aims to increase its sales by increasing advertising efforts and underta$ing fre=uent promotional events. Which of the following strategies is Indigo using in this scenario?

A) mar$et penetrationB) mar$et development

!) downsi6ing

%) diversification&) product development

Answer( A

%ifficulty( oderate



,;) Both mar$et penetration strategies and mar$et development strategies primarily involve

00000000.

A) selling a company's current productsB) modifying the company's product line

!) selling in new as well as eisting mar$ets

%) developing a new product

&) leaving the current mar$etAnswer( A

%ifficulty( oderate


<




,<) 9rey6one# a company that creates customi6ed household furniture# is based in errania and is

loo$ing to enter other countries as well. he company identifies the country of Gyev$a as a good

option because the entry barriers for new companies are low in Gyev$a. Which statementindicates that 9rey6one follows a diversification strategy?

A) 9rey6one does not modify its products for the Gyev$an mar$et.

B) 9rey6one leaves the erranian mar$et entirely in order to establish itself in the Gyev$anmar$et with its current products.

!) Goting that Gyev$a lac$s well"established suppliers of office e=uipment# 9rey6one begins to

manufacture and supply office e=uipment.%) 9rey6one manufactures furniture in errania and ships it to Gyev$a without setting up outlets

in Gyev$a.

&) Goting that production costs are lower in Gyev$a# 9rey6one shifts its production operations

entirely to Gyev$a.Answer( !


!hapter *+( ,


/2) Both product development strategies and diversification strategies involve 00000000.

A) selling a company's current products

B) selling in a company's current mar$et!) selling in new as well as eisting mar$ets

%) developing a new product

&) leaving the current mar$et

Answer( %%ifficulty( oderate

!hapter *+( ,


/1) A strategy for company growth through starting up or ac=uiring businesses outside the

company's current products and mar$ets is called 00000000.A) vertical integration

B) mar$et development

!) diversification

%) mar$et penetration&) product development

Answer( !



12




/,) With a mar$et development strategy# a company aims to improve sales by 00000000.

A) increasing advertising efforts to build brand image in its current mar$et

B) introducing a new variant of its product in a new mar$et!) increasing sales efforts in its current mar$et with its current products

%) introducing its product in a new mar$et without ma$ing any changes to the product

&) selling a new product in its current mar$etAnswer( %

%ifficulty( oderate


//) 00000000 refers to reducing the business portfolio by abandoning products that no longer fitthe company's overall strategy.

A) ar$et segmentation

B) Dertical integration!) 4roduct line etension

%) %ownsi6ing

&) %iversificationAnswer( %

%ifficulty( &asy

!hapter *+( ,


/5) Which of the following best describes the value chain of a company?

A) the collection of businesses and products that ma$e up the companyB) profits earned by the cash cows and stars in the company's business portfolio

!) touchpoints at which a company or brand interacts with its consumers

%) the series of departments that design# produce# mar$et# deliver# and support the company's products

&) a networ$ made up of the company# its suppliers# and its distributors wor$ing together to

deliver customer valueAnswer( %

%ifficulty( oderate

!hapter *+( /


/3) Which of the following groups is included in a company's value chain?

A) customersB) suppliers

!) employees

%) distributors&) competitors

Answer( !

%ifficulty( &asy

!hapter *+( /!ourse *+( Identify and describe the processes and tools of strategic mar$eting

11




/8) Which of the following groups is included in both a company's value chain and its value

delivery networ$?

A) customersB) suppliers

!) employees

%) distributors&) competitors

Answer( !

%ifficulty( oderate!hapter *+( /


/:) A 00000000 is made up of a company# its suppliers# its distributors# and its customers who

partner with each other to improve the performance of the entire system.

A) value chainB) shareholder networ$

!) business portfolio

%) value delivery networ$&) growth"share matri

Answer( %

%ifficulty( oderate


/;) ra is a newly emerging shoe manufacturing company. After etensive mar$et research#ra divides its mar$et into professional athletes# HhobbyistsH or amateur players# and people

who wear shoes as part of their casual attire. &ach category has its own needs# traits# and

mar$eting goals. In this scenario# ra has engaged in mar$et 00000000.A) development

B) positioning

!) diversification%) segmentation

&) penetration

Answer( %

%ifficulty( &asy!hapter *+( 5


1,




/<) 00000000 refers to the process of evaluating each mar$et segment's attractiveness and

selecting one or more segments to enter.

A) ar$et divestingB) ar$et diversification

!) ar$et targeting

%) ar$et miing&) ar$et positioning

Answer( !



52) Which of the following best describes product positioning?A) differentiating a mar$et offering to create superior customer value

B) arranging for a product to occupy a clear# distinctive# and desirable place relative to

competing products in the minds of target consumers

!) identifying consumer needs and creating a product to meet those needs%) evaluating each mar$et segment's attractiveness and selecting one or more segments to enter

&) dividing a mar$et into distinct groups of buyers who have different needs# characteristics# or behaviors

Answer( B



51) A consumer group that responds in a similar way to a given set of mar$eting efforts is the

company's 00000000.

A) value chainB) mar$et segment

!) financial public

%) business portfolio&) mar$et position

Answer( B

%ifficulty( &asy


1/




5,) Which of the following best describes mar$et segmentation?

A) differentiating a mar$et offering to create superior customer value

B) identifying consumer needs and creating a product to meet those needs!) arranging for a product to occupy a clear# distinctive# and desirable place relative to

competing products in the minds of target consumers

%) evaluating each mar$et segment's attractiveness and selecting one or more segments to enter &) dividing a mar$et into distinct groups of buyers who have different needs# characteristics# or

behaviors

Answer( &%ifficulty( oderate

!hapter *+( 5


5/) Which component of the mar$eting mi refers to the goods"and"services combination a

company offers to its target mar$et?

A) promotion

B) product!) price

%) place&) position

Answer( B



55) o which of the following elements of the mar$eting mi do design# pac$aging# services# andfeatures belong?

A) product

B) price!) promotion

%) place

&) peopleAnswer( A

%ifficulty( oderate

!hapter *+( 5


15




53) Which of the following will most li$ely be included in the HplaceH component of a company's

mar$eting mi?

A) pac$agingB) sales promotion

!) brand name

%) inventory&) discounts

Answer( %



58) Which of the following will most li$ely be included in the HpriceH component of a company'smar$eting mi?

A) pac$aging

B) sales promotion

!) brand name%) inventory

&) discountsAnswer( &

%ifficulty( &asy


5:) When viewing the mar$et from a buyer's point of view# HcommunicationH corresponds to the

00000000 component of the mar$eting mi.A) people

B) price

!) product%) promotion

&) place

Answer( %%ifficulty( oderate

!hapter *+( 5


5;) When viewing the mar$et from a buyer's point of view# HconvenienceH corresponds to the

00000000 component of the mar$eting mi.

A) productB) price

!) promotion

%) place&) people

Answer( %

%ifficulty( oderate


13




5<) In a -W+ analysis# which of the following would most li$ely be considered a strength of a

company?

A) a favorable economic climate that encourages consumptionB) the eit of a competitor from the mar$et

!) higher prices of the company's products resulting from inflation

%) an increase in consumer interest in the company's products&) an improvement in the company's production technology

Answer( &




32) In a -W+ analysis# which of the following would be considered a wea$ness of a company?

A) an unfavorable economic climate that discourages consumption

B) the eit of a competitor from the mar$et

!) inflation that leads to higher prices of the company's products%) falling consumer interest in its products

&) obsolete technologies used by the companyAnswer( &




31) In a -W+ analysis# 00000000 refer to favorable factors or trends in the eternalenvironment that a company may be able to eploit to its advantage.

A) strengths

B) strategies!) threats

%) opportunities

&) controlsAnswer( %

%ifficulty( &asy

!hapter *+( 3


18




3,) In a -W+ analysis# 00000000 refer to unfavorable eternal factors or trends that may

present challenges to performance.

A) threatsB) strategies

!) wea$nesses

%) opportunities&) strengths

Answer( A



3/) he process that turns mar$eting plans into mar$eting actions to accomplish strategic

mar$eting obectives is called mar$eting 00000000.

A) analysisB) implementation

!) control

%) planning&) design

Answer( B

%ifficulty( &asy


35) Which of the following best describes a mar$eting department with a functionalorgani6ation?

A) A company creates large teams# or even whole divisions# to serve domestic and international

mar$ets.B) ar$eting managers are responsible for developing mar$eting strategies and plans for their

specific mar$ets or customers# and the company is organi6ed around the needs of specific

customer segments.!) A product manager develops and implements a complete strategy and mar$eting program for

a specific product or brand.

%) -ales and mar$eting people are assigned to specific countries# regions# and districts.

&) %ifferent mar$eting activities are headed by specialists such as sales managers# advertisingmanagers# mar$eting research managers# and customer service managers.

Answer( &



1:




33) &valuating the results of mar$eting strategies and plans and ta$ing corrective action to ensure

that the obectives are attained is called 00000000.

A) mar$eting controlB) mar$eting implementation

!) mar$et planning

%) mar$eting development&) mar$et targeting

Answer( A



38) 00000000 are tools that give mar$eters the detailed measures they need to assess and adusttheir strategies.

A) &F4 tools

B) %ashboards

!) B!9 matrices%) Balanced scorecards

&) Dalue delivery networ$sAnswer( B

%ifficulty( oderate


3:) 00000000 involves loo$ing at whether a company's basic business models are well matchedto its opportunities.

A) +perating control

B) as$ control!) Agency control

%) -trategic control

&) ar$et controlAnswer( %

%ifficulty( &asy

!hapter *+( 3


1;




3;) Which of the following is a primary characteristic of strategic control rather than operating

control?

A) determining the profitability of different products# territories# mar$ets# and channelsB) ensuring that the company achieves the sales# profits# and other goals set out in its annual plan

!) chec$ing ongoing performance against the annual plan and ta$ing corrective action when

necessary%) loo$ing at whether the company's basic plans and action goals are well matched to its

opportunities

&) monitoring ongoing company proects to ensure that efficiency and effectiveness aremaimi6ed

Answer( %

%ifficulty( oderate


3<) Which of the following mar$eting measures can best be translated into dollar returns?

A) brand loyaltyB) advertising impact

!) pac$aging effectiveness%) mar$et share

&) brand"building impact

Answer( %%ifficulty( &asy

!hapter *+( 3


82) Which of the following is true of mar$eting F+I?

A) ar$eting F+I uses only those mar$eting factors that can be measured in dollars.

B) ar$eting F+I ignores customer"centered measures of mar$eting impact# such as customerac=uisition and retention.

!) ar$eting F+I is easier to calculate than financial F+I.

%) ar$eting F+I cannot be assessed in terms of standard mar$eting performance measures#such as brand awareness# sales# or mar$et share.

&) ar$eting F+I measures the profits generated by investments in mar$eting activities.

Answer( &



81) ost firms begin the strategic planning process by developing detailed mar$eting and

departmental plans that support a company"wide plan.Answer( @A*-&

%ifficulty( oderate

!hapter *+( 1


1<




8,) According to the tet# an organi6ation's mission statement should emphasi6e its intentions

toward customers and the customer eperience the organi6ation see$s to create.

Answer( F7&%ifficulty( oderate

!hapter *+( 1


8/) HAt %odson# we sell shoesH is a mar$et"oriented business definition.

Answer( @A*-&%ifficulty( oderate

!hapter *+( 1



85) HAt !* +nline# we create customer connectivity# anytime# anywhereH is a product"oriented

mission statement.




83) An -B7 can be a company division or a product line within a division# but not a single

product or brand.

Answer( @A*-&



88) he growth rate of a strategic business unit that is classified as a star remains constant over

time.

Answer( @A*-&%ifficulty( &asy

!hapter *+( ,


8:) -B7s identified as cash cows need less investment than stars.

Answer( F7&




,2




8;) any -B7s start out as stars and move into the =uestion mar$ category if they succeed.

Answer( @A*-&



8<) he position of a strategic business unit in the growth"share matri typically remains

constant over time.


!hapter *+( ,


:2) he B!9 and other formal matri methods have a decentrali6ed approach toward strategic

planning.

Answer( @A*-&



:1) A tool for identifying growth opportunities is the productmar$et epansion grid.

Answer( F7&%ifficulty( &asy

!hapter *+( ,


:,) A firm's mar$eting department must partner with other company departments to produce

superior value for customers.


!hapter *+( /


:/) A company's customer value delivery networ$ does not include members eternal to the

organi6ation.

Answer( @A*-&%ifficulty( &asy

!hapter *+( /


:5) In the mar$eting mi# product refers to the goods and services the company offers to the

target mar$et# while promotion refers to advertising.Answer( F7&

%ifficulty( oderate

!hapter *+( 5


,1




:3) A company can offer greater customer value by either charging lower prices than competitors

or offering more benefits to ustify higher prices.

Answer( F7&%ifficulty( oderate

!hapter *+( 5


:8) >oliday Inn divided the total customer mar$et into smaller segments and selected the most promising segments. %eciding what position it wants to occupy in these segments is called

diversification.

Answer( @A*-&

%ifficulty( %ifficult!hapter *+( 5



::) In the mar$eting mi# place refers to activities that communicate the merits of a product and

persuade target customers to buy it.Answer( @A*-&

%ifficulty( &asy

!hapter *+( 5


:;) In the four 4s of the mar$eting mi# promotion refers solely to advertising.


!hapter *+( 5


:<) he @our 4s concept ta$es into consideration the seller's view of the mar$et.


!hapter *+( 5


;2) In a -W+ analysis# strengths and wea$nesses refer to a firm's eternal environment# while

opportunities and threats refer to the internal environment.


!hapter *+( 3


;1) he most common form of mar$eting organi6ation is the product management organi6ation.

Answer( @A*-&



,,




;,) he purpose of operating control is to ensure that a company achieves the sales# profits# and

other goals set out in its annual plan.Answer( F7&

%ifficulty( &asy


;/) A company can assess mar$eting F+I in terms of standard mar$eting performance measures#

such as brand awareness# sales# or mar$et share.

Answer( F7&



;5) ar$eting F+I measures the profits generated by investments in mar$eting activities.

Answer( F7&



;3) ar$eting F+I is the net return from a mar$eting investment divided by the costs of themar$eting investment.

Answer( F7&



,/




;8) What is a business portfolio? >ow does a company typically conduct a portfolio analysis?

Answer( A business portfolio is the collection of businesses and products that ma$e up a

company. Business portfolio planning involves two steps. @irst# the company must analy6e itscurrent business portfolio and determine which businesses should receive more# less# or no

investment. -econd# it must shape the future portfolio by developing strategies for growth and

downsi6ing. he maor activity in strategic planning is business portfolio analysis# wherebymanagement evaluates the products and businesses that ma$e up the company. he company will

want to put strong resources into its more profitable businesses and phase down or drop its

wea$er ones. anagement's first step is to identify the $ey businesses that ma$e up the company#called strategic business units J-B7s). An -B7 can be a company division# a product line within

a division# or sometimes a single product or brand. he company net assesses the attractiveness

of its various -B7s and decides how much support each deserves. When designing a business

portfolio# it's a good idea to add and support products and businesses that fit closely with thefirm's core philosophy and competencies. he purpose of strategic planning is to find ways in

which the company can best use its strengths to ta$e advantage of attractive opportunities in the

environment.



;:) According to the Boston !onsulting 9roup approach# how can a company classify its -B7son a growth"share matri?

Answer( he growth"share matri defines four types of -B7s(

1. -tars( -tars are high"growth# high"share businesses or products. hey often need heavyinvestments to finance their rapid growth. &ventually their growth will slow down# and they will

turn into cash cows.

,. !ash cows( !ash cows are low"growth# high"share businesses or products. hese establishedand successful -B7s need less investment to hold their mar$et share. hus# they produce a lot of

the cash that the company uses to pay its bills and support other -B7s that need investment.

/. Kuestion mar$s( Kuestion mar$s are low"share business units in high"growth mar$ets. heyre=uire a lot of cash to hold their share# let alone increase it. anagement has to thin$ hard about

which =uestion mar$s it should try to build into stars and which should be phased out.

5. %ogs( %ogs are low"growth# low"share businesses and products. hey may generate enough

cash to maintain themselves but do not promise to be large sources of cash.%ifficulty( oderate

!hapter *+( ,


,5




;;) -hould a company use the B!9 matri to classify its products or brands? 9ive reasons for

your answer.

Answer( J-tudents' answers may vary. he answer given below is indicative.)he Boston !onsulting 9roup matri evaluates -B7s on two important dimensions( the

attractiveness of the -B7's mar$et or industry growth rate and the strength of the -B7's position

or relative mar$et share in that mar$et or industry. he growth"share matri defines four types of-B7s( stars# cash cows# =uestion mar$s# and dogs. +nce each -B7 has been defined# a company

can determine what role each will play in the firm's future# using strategies of building# holding#

harvesting# or divesting each -B7. >owever# the B!9 and other portfolio planning approachescan be difficult to eecute# time consuming# and also costly to implement. %efining -B7s and

measuring relative mar$et share and growth can be difficult tas$s as well. A serious flaw with

these approaches is that while they are helpful for classifying current businesses# they offer little

or no advice for future planning.%ifficulty( %ifficult

!hapter *+( ,



;<) %ifferentiate between the B!9 matri and the productmar$et epansion grid.

Answer( he Boston !onsulting 9roup matri evaluates -B7s on two important dimensions(

the attractiveness of the -B7's mar$et or industry growth rate and the strength of the -B7's

position or relative mar$et share in that mar$et or industry. he growth"share matri defines four types of -B7s( stars# cash cows# =uestion mar$s# and dogs. +nce each -B7 has been defined# a

company can determine what role each will play in the firm's future# using strategies of building#

holding# harvesting# or divesting each -B7. A serious flaw in this approach is that while it ishelpful for classifying current businesses# it offers little or no advice for future planning.

+n the other hand# the productmar$et epansion grid is a useful device for identifying growth

opportunities in the future. here are four strategies available to companies( mar$et penetration#mar$et development# product development# and diversification. ar$et penetration entails

ma$ing more sales to current customers without changing original products. ar$et development

involves identifying and developing new mar$ets for a company's products. Gew mar$etsinclude demographic groups and geographic regions# among others. !ompanies can also

consider product development# offering modified or new products to current mar$ets. !ompanies

wishing to diversify might consider ac=uiring or starting new businesses unrelated to their core

competencies. >owever# diversifying too broadly can be detrimental in the long run.%ifficulty( %ifficult

!hapter *+( ,


,3




<2) &plain how a company's value chain wor$s. 4rovide an eample to illustrate your response.

Answer( J-tudents' answers may vary. he answer given below is indicative.)

A value chain is the series of departments within a firm that carry out value"creating activities todesign# produce# mar$et# deliver# and support a firm's products. &ach company department can be

thought of as a lin$ in a company's internal value chain. he company's success depends not only

on how well each department performs its wor$ but also on how well the various departmentscoordinate their activities. @or eample# Walmart's goal is to create customer value and

satisfaction by providing shoppers with the products they want at the lowest possible prices.

ar$eters at Walmart play an important role. hey learn what customers need and stoc$ thestores' shelves with the desired products at unbeatable low prices. hey prepare advertising and

merchandising programs and assist shoppers with customer service. hrough these and other

activities# Walmart's mar$eters help deliver value to customers. >owever# the mar$eting

department needs help from the company's other departments. Walmart's ability to helpcustomers H-ave oney. *ive Better.H depends on the purchasing department's s$ill in

developing the needed suppliers and buying from them at low cost. Walmart's information

technology department must provide fast and accurate information about which products are

selling in each store. Its operations people must provide effective# low"cost merchandisehandling. A company's value chain is only as strong as its wea$est lin$. -uccess depends on how

well each department performs its wor$ of adding customer value and on how the companycoordinates the activities of various departments. At Walmart# if purchasing can't obtain the

lowest prices from suppliers# or if operations can't distribute merchandise at the lowest costs#

then mar$eting can't deliver on its promise of unbeatable low prices.%ifficulty( %ifficult

!hapter *+( /



<1) &plain the term Hvalue delivery networ$.HAnswer( In its =uest to create consumer value# a firm needs to loo$ beyond its own value chain

and into the value chains of its suppliers# distributors# and# ultimately# its customers. A value

delivery networ$ is the networ$ made up of a company# its suppliers# its distributors# andcustomers who partner with each other to improve the performance of the entire system. ore

companies are partnering with other members of the supply chain to improve the performance of

the customer value delivery networ$. In fact# in today's mar$etplace# competition no longer ta$es

place between individual competitors. It ta$es place between entire value delivery networ$screated by these competitors.

%ifficulty( oderate


,8




<,) %iscuss the four 4s of the typical mar$eting mi. -ome people consider that there should be

more than four mar$eting mi elements. -uggest two additional aspects that the mar$eting mi

could include.Answer( he mar$eting mi is the set of tactical mar$eting tools that a firm blends to produce

the response it wants in the target mar$et. he mar$eting mi consists of everything a firm can

do to influence the demand for its product. he many possibilities can be collected into fourgroups of variablesthe four 4s. 4roduct means the goods"and"services combination a company

offers to the target mar$et. 4rice is the amount of money customers must pay to obtain the

product. 4lace includes company activities that ma$e the product available to target consumers.4romotion refers to activities that communicate the merits of the product and persuade target

customers to buy it. Additional aspects of the mar$eting mi( J-tudents' answers to this part of

the =uestion may vary. he answer given here is merely indicative.) Additional aspects could

include services and pac$aging.%ifficulty( %ifficult

!hapter *+( 5


</) What is a -W+ analysis? Why is it re=uired?

Answer( anaging the mar$eting function begins with a complete analysis of a company'ssituation. he mar$eter should conduct a -W+ analysis# by which it evaluates a company's

overall strengths J-)# wea$nesses JW)# opportunities J+)# and threats J). -trengths include

internal capabilities# resources# and positive situational factors that may help a company serve itscustomers and achieve its obectives. Wea$nesses include internal limitations and negative

situational factors that may interfere with a company's performance. +pportunities are favorable

factors or trends in the eternal environment that a company may be able to eploit to its

advantage. And threats are unfavorable eternal factors or trends that may present challenges to performance.

!onducting a -W+ analysis is important because a company should analy6e its mar$ets and

mar$eting environment to find attractive opportunities and identify environmental threats. Itshould analy6e company strengths and wea$nesses as well as current and possible mar$eting

actions to determine which opportunities it can best pursue. he goal is to match the company's

strengths to attractive opportunities in the environment# while simultaneously eliminating orovercoming the wea$nesses and minimi6ing the threats. ar$eting analysis provides inputs to

each of the other mar$eting management functions.

%ifficulty( oderate


,:




<5) %efine mar$eting planning. Briefly outline what a company should cover in its mar$eting

plan.

Answer( ar$eting planning involves deciding on mar$eting strategies that will help a companyachieve its overall strategic obectives. A detailed mar$eting plan is needed for each business#

product# or brand. A typical product or brand mar$eting plan begins with an eecutive summary

that =uic$ly reviews maor assessments# goals# and recommendations. he main section of the plan presents a detailed -W+ analysis of the current mar$eting situation as well as potential

threats and opportunities. he plan then states maor obectives for the brand and outlines the

specifics of a mar$eting strategy for achieving them. In addition# action programs forimplementing the mar$eting strategy along with the details of a supporting mar$eting budget are

presented. he final section outlines the controls used to monitor progress and corrective action.

%ifficulty( oderate


<3) awaii &lectronics sells air conditioning systems for office buildings. he company's

mar$eting department is currently structured as a functional organi6ation. >owever# awaii isconsidering changing the structure to either a product management or a customer management

organi6ation. In a brief essay# describe each type of organi6ation( functional# productmanagement# and customer management. What are the advantages andor disadvantages of each

structure for awaii? Which structure do you recommend for awaii? Why?

Answer( J-tudents' answers may vary. he answer given below is indicative.)7nder the functional organi6ation# different mar$eting activities are headed by a functional

specialista sales manager# an advertising manager# a mar$eting research manager# a customer

service manager# or a new product manager.

7nder a product management organi6ation# a product manager develops and implements acomplete strategy and mar$eting program for a specific product or brand. 7nless the company

has a few standout products# this system will not benefit it as much as other methods.

!onsidering that the company sells one basic product type# this system may not be profitable forthe company.

7nder a mar$et or customer management organi6ation# the company is organi6ed around the

needs of specific customer segments. In firms that use this organi6ation# one product line is soldto many different types of mar$ets and customers that have different needs and preferences.

hough the firm sells a single type of product and product line# all its customers are offices and

significant differences will most li$ely not eist. hough the company may segment its mar$et

based on office si6e# this may be an inefficient use of company resources.%ifficulty( %ifficult

!hapter *+( 3

!ourse *+( Identify and describe the processes and tools of strategic mar$etingAA!-B( Feflective thin$ing

,;




<8) oyrain is a toy company that sells its products in most regions of the 7nited -tates. It

produces a variety of toys for children of every age group# from toddlers to preteens. What are

oyrain's options for organi6ing its mar$eting department? Briefly describe each structure as itwould apply to oy rain. Which organi6ation do you thin$ would be best for oyrain? Why?


odern mar$eting departments can be arranged in several ways. he most common form ofmar$eting organi6ation is the functional organi6ation.

7nder a functional organi6ation# different mar$eting activities are headed by a functional

specialista sales manager# an advertising manager# a mar$eting research manager# a customer"service manager# or a new product manager. As oyrain is based only in the 7nited -tates# a

functional organi6ation may be appropriate if mar$eting strategies and messages need to be

consistent across the region. 7nder a geographic organi6ation# sales and mar$eting people are

assigned to specific countries# regions# and districts. A company that sells across a country could benefit from a geographic organi6ation. As oyrain sells products across the country# organi6ing

its sales and mar$eting personnel by region may also be appropriate.

7nder a product management organi6ation# a product manager develops and implements a

complete strategy and mar$eting program for a specific product or brand. 7nless the companyhas a few standout brands# this system will not benefit it as much as other methods.

7nder a mar$et or customer management organi6ation# the company is organi6ed around theneeds of specific customer segments. In firms that use this organi6ation# one product line is sold

to many different types of mar$ets and customers that have different needs and preferences.

oyrain could use this method and organi6e its departments according to the age groups of thechildren it caters to and the types of toys suitable for each group.

he company could also use some combination of these organi6ational forms.



AA!-B( Feflective thin$ing

,<




<:) F@ %evelopers is a construction company with a presence in several countries. he

company currently organi6es its mar$eting department using a functional system of organi6ation#

but this seems inefficient. &plain why a geographic organi6ation would benefit the companymore than a functional organi6ation.


7nder a functional organi6ation# different mar$eting activities are headed by a functionalspecialista sales manager# an advertising manager# a mar$eting research manager# a customer

service manager# or a new product manager. 7nder a geographic organi6ation# sales and

mar$eting people are assigned to specific countries# regions# and districts. As F@ has a presencein many countries# a geographic system might benefit it more than a functional system.

+rgani6ing its mar$eting department by country would allow its mar$eting plans and messages

to be tailored to the culture and customers of that particular country and may produce a better

result than centrali6ed planning across countries. A geographic organi6ation also allowssalespeople to settle into a territory# get to $now their customers# and wor$ with a minimum of

travel time and cost.



AA!-B( Feflective thin$ing

<;) >ow do organi6ations carry out mar$eting control?

Answer( ar$eting control is the process of evaluating the results of mar$eting strategies and plans and ta$ing corrective action to ensure that the obectives are attained. As many surprises

occur during the implementation of mar$eting plans# mar$eters must practice constant mar$eting

control. ar$eting control involves four steps. anagement first sets specific mar$eting goals. Itthen measures its performance in the mar$etplace and evaluates the causes of any differences

between epected and actual performance. @inally# management ta$es corrective action to close

the gaps between goals and performance. his may re=uire changing the action programs or evenchanging the goals. +perating control involves chec$ing ongoing performance against the annual

plan and ta$ing corrective action when necessary. Its purpose is to ensure that the company

achieves the sales# profits# and other goals set out in its annual plan. It also involves determiningthe profitability of different products# territories# mar$ets# and channels. -trategic control

involves loo$ing at whether the company's basic strategies are well matched to its opportunities.

ar$eting strategies and programs can =uic$ly become outdated# and each company should

periodically reassess its overall approach to the mar$etplace.%ifficulty( oderate

!hapter *+( 3


/2




<<) What are mar$eting dashboards? >ow do they benefit mar$eters?

Answer( A company can assess mar$eting F+I in terms of standard mar$eting performance

measures# such as brand awareness# sales# or mar$et share. any companies are assembling suchmeasures into mar$eting dashboardsmeaningful sets of mar$eting performance measures in a

single display used to monitor strategic mar$eting performance. Eust as automobile dashboards

present drivers with details on how their cars are performing# the mar$eting dashboard givesmar$eters the detailed measures they need to assess and adust their mar$eting strategies.

%ifficulty( oderate



122) Faintree %evelopers has been measuring its mar$eting return on investment Jor mar$eting

F+I) to assess its mar$eting performance for the past few years. &plain why this method may

not accurately reflect the company's performance and what Faintree can use to better estimate its performance.


ar$eting F+I is the net return from a mar$eting investment divided by the costs of themar$eting investment. F+I is a measure of the profits generated by investments in mar$eting

activities. ar$eting F+I can be difficult to assess because the benefits of mar$eting are not

always easily translated in dollar amounts. @or instance# returns such as advertising and brand"

building impact cannot be easily put into dollar returns. >owever# mar$eting F+I can beassessed in terms of more =uantifiable standard mar$eting performance measures such as brand

awareness# sales# or mar$et share. Beyond standard performance measures# Faintree can also use

customer"centered measures such as customer ac=uisition# customer engagement# customerretention# customer e=uity# and customer lifetime value.




armstrong mai12 tif 02

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