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Chapter 2—Strategic Planning for Competitive Advantage

TRUE/FALSE

1. The manufacturer of Macho brand martial arts products was implementing a strategic plan when it sponsored a local karate tournament for teenagers.

ANS: FSuch a short-range decision is typically a tactical plan or operating decision, not a strategic plan.

PTS: 1 REF: 32 OBJ: 02-1 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Strategy

2. The marketing plan is a written document that acts as a guidebook of marketing activities for a marketing manager.

ANS: T PTS: 1 REF: 33 OBJ: 02-1 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Marketing Plan

3. A firm's mission statement should answer the question, "What products do we produce best?"

ANS: FMission statements should not focus on specific product offerings but on the market or markets served.

PTS: 1 REF: 34 OBJ: 02-2 TYPE: DefTOP: AACSB Analytic | TB&E Model Strategy

4. A production costs analysis could be a part of a company’s SWOT analysis.

ANS: TA production costs analysis could be used in measuring strengths and weaknesses.

PTS: 1 REF: 35 OBJ: 02-3 TYPE: DefTOP: AACSB Diversity | TB&E Model Strategy

5. A marketing audit is limited to the collection and analysis of information about factors that may affect the organization as well as the identification of market opportunities and threats.

ANS: FThis is the definition of environmental scanning.

PTS: 1 REF: 46-47 OBJ: 02-3 TYPE: DefTOP: AACSB Diversity | TB&E Model Customer

6. Marketing objectives should be consistent with organization objectives, they should be measurable, and they should specify the time frame during which they are to be achieved.

ANS: T PTS: 1 REF: 36 OBJ: 02-4 TYPE: CompTOP: AACSB Analytic | TB&E Model Strategy

Chapter 2 Strategic Planning for Competitive Advantage 1This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold,

copied, or distributed without the prior consent of the publisher.

7. The company's objective is to spend 10 percent of this fiscal year's sales revenue on research and development in an effort to introduce at least five new products in the next fiscal year. This is an example of a well-stated objective.

ANS: TThis objective is measurable and has a specific time frame. See Exhibit 2.3.

PTS: 1 REF: 36 OBJ: 02-4 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Research

8. A competitive advantage is some unique aspect of a firm's offering, or of the firm itself, that causes target customers to patronize the firm rather than its competition.

ANS: T PTS: 1 REF: 37 OBJ: 02-5 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Customer

9. Diamonds that come from rebel African troops trying to get money for weapons are much cheaper than diamonds from countries that are not in conflict. A diamond retailer that ignores human rights organizations’ pleas to not sell the cheaper diamonds is creating a cost competitive advantage for itself.

ANS: THaving a cost competitive advantage means being the low-cost competitor in an industry while maintaining satisfactory profit margins.

PTS: 1 REF: 37 OBJ: 02-5 TYPE: AppTOP: AACSB Ethics | TB&E Model Pricing

10. Niche competitive advantages are quite common.

ANS: TThe text lists several examples of how companies have created niche competitive advantages.

PTS: 1 REF: 39 OBJ: 02-5 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Product

11. Berkshire Hathaway Inc., a large property insurance company, owns a large chain of jewelry stores and has recently purchased Russell Corporation, a manufacturer of sporting goods. Berkshire Hathaway uses a market penetration strategy.

ANS: FBerkshire Hathaway uses a diversification strategy.


12. When the Internet auction company eBay opened a version of the company called eBayfrance for the French market, that was an example of market penetration.

ANS: FMarket penetration is the strategy of selling more to the existing customers.

PTS: 1 REF: 40 OBJ: 02-6 TYPE: AppTOP: AACSB Technology | TB&E Model Strategy



13. After listening to their customer requests for more natural products, Kraft removed high fructose corn syrup from some of their salad dressings. This is an example of product development.

ANS: FThis is an example of market penetration as Kraft is trying to increase market share among existing customers.

PTS: 1 REF: 40-41 OBJ: 02-6 TYPE: AppTOP: AACSB Diversity | TB&E Model Customer

14. The Home Depot’s purchase of Hughes Supply Company allows it to better meet the needs of its current business customers. This is an example of product development.

ANS: T PTS: 1 REF: 40-41 OBJ: 02-6 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Product

15. When a florist shop begins to sell burial caskets to its customers, it is engaged in product development.

ANS: TProduct development is the offering of new products to current markets.

PTS: 1 REF: 40-41 OBJ: 02-6 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Product

16. Simon needed to rent a trailer for the weekend. Then he learned the rental company offered lower daily rates for 7-day rentals. The rental company is clearly using a market development strategy.

ANS: FIn this case, the pricing strategy does not determine the strategic alternative used.


17. Marketing strategy involves the activities of selecting and describing one or more target markets and developing and maintaining a marketing mix that will produce mutually satisfying exchanges with target markets.

ANS: T PTS: 1 REF: 43 OBJ: 02-7 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

18. The development of a target market strategy begins with a market opportunity analysis (MOA).

ANS: T PTS: 1 REF: 43 OBJ: 02-7 TYPE: CompTOP: AACSB Analytic | TB&E Model Strategy

19. The four Ps of the marketing mix are product, planning, promotion, and price.

ANS: FThe four Ps are product, place, promotion, and price

PTS: 1 REF: 44 OBJ: 02-8 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy



20. Typically, the development of the marketing mix starts with the study of consumer behavior.

ANS: FThe development of the marketing mix begins with the product.

PTS: 1 REF: 44 OBJ: 02-8 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product

21. A marketing audit is a control device and is used primarily by large corporations to study past performance to identify market trends.

ANS: FA marketing audit is not preoccupied with past performance but instead looks to the future allocation of marketing resources.

PTS: 1 REF: 46-47 OBJ: 02-9 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Marketing Plan

22. Strategic planning is most effective when managers view it as an annual exercise.

ANS: FStrategic planning requires creativity and an ongoing commitment, not just going through the motions once a year.

PTS: 1 REF: 47 OBJ: 02-10 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Creativity

23. The most critical element for successful strategic planning is top management's support and participation.

ANS: T PTS: 1 REF: 48 OBJ: 02-10 TYPE: CompTOP: AACSB Analytic | TB&E Model Strategy | TB&E Model Marketing Plan

MULTIPLE CHOICE

1. With hospitals nationwide facing budget cuts and slimmer profit margins, Dekalb County's Medical Center decided to cash in on one of the most consistently profitable services--delivering babies. It initiated a three-year project to build a $55 million state-of-the-art women's center with 18 labor and delivery suites. When the hospital decided to commit its resources to obstetrics, it was engaging in:a. benchmarkingb. alternative problem solvingc. strategic planningd. portfolio evaluatione. tactical control

ANS: CStrategic planning provides a long-term vision and thus guides long-term commitment of resources.




2. Since gas prices have soared and consumers have cut back on their spending on new trucks and SUVs Ford Motor Corporation is transforming several of its plants to create small cars. Ford has engaged in:a. benchmarkingb. tactical resource realignmentc. alternative selectiond. portfolio evaluatione. strategic planning

ANS: EStrategic planning provides a long-term vision and thus guides long-term commitment of resources.


3. Heinz has announced that they plan to grow the company through new products, higher prices, and an accelerated push into emerging markets such as China, Indonesia, and India in the next two years. This is an example ofa. tactical objectifyingb. contingency planc. strategic planningd. marketing implementatione. horizon planning

ANS: CStrategic planning is the managerial process of creating and maintaining a fit between the organization's objectives and evolving market opportunities.


4. Volkswagen Group of America will be building a new plant in Chattanooga, Tennessee to manufacture cars just for the North American Market. The plant will employ 2000 people and create 150,000 vehicles annually. This is an example of _____.a. tactical objectifyingb. contingency planc. strategic planningd. market integratione. horizon planning

ANS: CStrategic planning is the managerial process of creating and maintaining a fit between the organization's objectives and evolving market opportunities.

PTS: 1 REF: 32 OBJ: 02-1 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E International Perspective



5. Strategic plans require:a. long-term resource commitmentsb. a change in organizational structurec. the addition of new personneld. new product developmente. changes in prices

ANS: AStrategic plans are long-range plans that involve developing, organizing, and controlling marketing activities.

PTS: 1 REF: 32 OBJ: 02-1 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Strategy

6. _____ is the managerial process of creating and maintaining a fit between the organization's objectives and resources and evolving market opportunities.a. Tactical managementb. The market auditc. Functional planningd. Environmental scanninge. Strategic planning

ANS: E PTS: 1 REF: 32 OBJ: 02-1 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

7. Earl is starting a new bank. Before their opening day Earl had a meeting with all employees. He discussed their mission, defined objectives for the bank for the coming years and shared who their target market is. He talked about their product offerings and where their future branches would be located. Earl is sharing the bank’s _____.a. reengineeringb. hierarchical restructuringc. a financial analysisd. marketing plane. strategic contingency planning

ANS: DSee Exhibit 2.1. All the listed activities are part of the marketing planning process.

PTS: 1 REF: 33 OBJ: 02-1 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Marketing Plan

8. Which of the following statements about a marketing plan is true?a. Marketing plans can exist as oral traditions.b. The marketing plan should be viewed as a series of sequential steps.c. All marketing plans have basically the same content.d. A marketing plan is created so an organization can meet its marketing objectives.e. All of the statements about a marketing plan are true.

ANS: DBy definition, marketing plans are written. Several steps of the marketing plan can be done at the same time. The content of marketing plans varies.

PTS: 1 REF: 33 OBJ: 02-1 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Marketing Plan



9. _____ is the process of anticipating events and determining strategies to achieve organizational objectives.a. Planningb. Portfolio evaluationc. Forecastingd. Implementatione. Evaluation

ANS: A PTS: 1 REF: 33 OBJ: 02-1 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Marketing Plan

10. Obstetrics is a the most lucrative service provided by most hospitals. Area hospitals compete to make their delivery rooms the most profitable by designing marketing activities that will allow them to reach their growth objectives. To reach their objectives, hospitals must rely on:a. strategic activationb. resource realignmentc. marketing planningd. a service-based mission statemente. trend analysis

ANS: CMarketing planning is designing activities relating to objectives and the marketing environment.

PTS: 1 REF: 33 OBJ: 02-1 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Marketing Plan

11. Marketing plans should be written to do all of the following EXCEPT:a. compare actual and expected performanceb. provide clearly stated activitiesc. create common goals for employees to work towardd. allow managers to enter the marketplace with an awareness of possibilities and problemse. control the elements of the external marketing environment

ANS: EMarketing environment variables cannot be controlled.

PTS: 1 REF: 33 OBJ: 02-1 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Marketing Plan

12. Which of the following is one of the elements of the marketing plan?a. a business mission statementb. a situation analysisc. a target market strategyd. the marketing mixe. all of the choices

ANS: ESee Exhibit 2.1.

PTS: 1 REF: 33 OBJ: 02-1 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Marketing Plan



13. The _____ answers the question, "What business are we in, and where are we going?"a. mission statementb. financial statementc. situation analysisd. market strategye. strategic plan

ANS: A PTS: 1 REF: 34 OBJ: 02-2 TYPE: DefTOP: AACSB Analytic | TB&E Model Strategy

14. In its stockholders' report, PepsiCo has a _____ that states "our business is to increase the value of our shareholder's investment. We do this through sales growth, cost controls and wise investment of resources. We believe our commercial success depends upon offering quality and value to our consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to our investors while adhering to the highest standards of integrity."a. marketing mix strategyb. quantifiable goalc. mission statementd. statement of economic potentiale. market segmentation strategy

ANS: CA mission statement answers the question, "What business are we in?"

PTS: 1 REF: 34 OBJ: 02-2 TYPE: AppTOP: AACSB Analytic | TB&E Model Strategy

15. Copan Italia is a distributor of laboratory products and manufacturer of laboratory commodities, including transfer pipettes and flexible hematology cups used on a variety of automatic instruments to count blood corpuscle elements. Copan's _____ says that the company’s business is to continually work to improve the quality of the collection and preservation of the microbiological sample in the “pre-analytical phase,” as the demand for better protection of the specimen is growing day by day.a. market synergyb. product entropyc. marketing mix strategyd. mission statemente. qualified objective

ANS: DA mission statement answers the question, "What business are we in?"




16. Sara Lee sold its Mexican meats business as the company seeks to simplify its organization and focus on growth through its existing strong brands Ball Park, Douwe Egberts, Hillshire Farm, Jimmy Dean, Kiwi, Sanex, Senseo and its namesake, Sara Lee. Sara Lee felt that:a. the company needs a mission statementb. the Mexican meats unit was a cash cowc. Mexican meats kept the company from meeting objectives outlined in its marketing pland. Mexican meats was a doge. the company’s mission statement was too broad

ANS: CThe Marketing plan includes objectives and goals that the company would like to meet. Selling the Mexican meats division helps Sara Lee focus on its goal of simplifying its business.


17. The focus of an organization's mission statement should be on:a. the products it wishes to sellb. the market it wishes to servec. its social responsibilitiesd. the desires of government regulatorse. technologies it understands well

ANS: BThe choice of the market to serve determines the product and technology decisions.


18. By defining its business as "printing books" instead of "empowering imaginations," a children’s book publishing company would more than likely experience:a. market synergyb. product entropyc. market harvestingd. nonspecific strategic planninge. marketing myopia

ANS: EPublishing books focuses on one product, rather than a broad range of opportunities as found in "entertainment."

PTS: 1 REF: 35 OBJ: 02-2 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Product



19. Yildiz Holding of Turkey purchased Godiva Chocolates from Campbell’s Soup Company. Campbell’s sold one of its:a. strategic business units (SBUs)b. strategic alliancesc. action programsd. transactional unitse. synergistic divisions

ANS: ASBUs have separate business functions from one another and have their own mission statements, markets, and planning.


20. In December of 2007 Campbell’s soup sold Godiva Chocolates to Yildiz Holding of Turkey. Yildiz Holdings viewed Godiva as a stand-alone company and would continue to treat it like that. This would mean Godiva would act as a _____ of Yildiz.a. strategic business unitb. strategic alliancesc. transactional unitsd. synergistic divisionse. action programs

ANS: ASBUs have separate business functions from one another and have their own mission statements, markets, and planning.


21. Railroads often offer their customers a trucking service for local delivery or trailers for piggybacking loads to their final destination. Which of the following statements justifies the addition of these services to their strategic plans?a. Their mission statements reflect their belief that they are transportation companies, not

just railroads.b. Local delivery has high market attractiveness.c. Diversification is needed to survive.d. New business units are needed to continue growth.e. Owning trucks is probably cheaper and easier than using a local carrier.

ANS: AA broad mission statement would recognize that the firm's business is total transportation service.




22. Until spun off in 2007 Kraft was a _____ of Altria Group, Inc. Kraft had its own management team, mission statement, and target markets different from Altria Group, Inc.a. product market nicheb. diversified divisionc. heterogeneous elementd. strategic alliancee. strategic business unit

ANS: EAn SBU usually has its own mission statement, target markets, and separate functional departments.


23. _____ occurs when a business is defined in terms of goods and services rather than by the benefits customers seek from it.a. A circle trapb. A market barrier entryc. A reactive focusd. Unempowermente. Marketing myopia

ANS: E PTS: 1 REF: 35 OBJ: 02-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product

24. A popular technique for managing a large organization with different technologies and markets is to divide it into:a. strategic business unitsb. different technologiesc. strategic target marketsd. design matricese. tactical segments

ANS: A PTS: 1 REF: 35 OBJ: 02-2 TYPE: DefTOP: AACSB Analytic | TB&E Model Strategy

25. The acronym SBU refers to:a. stock in business unitsb. strategic business unitc. standard business utilizationd. strategic barter unitse. samples by units

ANS: B PTS: 1 REF: 35 OBJ: 02-2 TYPE: DefTOP: AACSB Analytic | TB&E Model Strategy



26. An SBU:a. competes with the same companies as the other SBUs in the parent organizationb. shares the same mission with all the other SBUs in the parent organizationc. controls its business independent of other SBUs in the organizationd. usually benefits from the combined corporate raw materials purchasese. still has strategic planning performed back at corporate headquarters

ANS: CSBUs have separate business functions from one another and have their own mission statements, markets, and planning.

PTS: 1 REF: 35 OBJ: 02-2 TYPE: DefTOP: AACSB Analytic | TB&E Model Strategy

27. When an organization creates a mission statement that is too narrow, _____ results.a. marketing synergyb. marketing myopiac. directional marketingd. an internal threate. sustainable competitive advantage

ANS: BMarketing myopia defines a business in terms of goods and services rather than in terms of benefits customers seek. See Review Learning Outcome 2.

PTS: 1 REF: 35 OBJ: 02-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product

28. Chrysler has a financial unit that is responsible for vehicle leases to consumers. This unit is an example of a:a. organizational levelb. SWOTc. secure business unitd. business sales unite. strategic business unit

ANS: EAn SBU is a subgroup of a single business or collection of related businesses within a larger organization.




29. Through the use of _____, Starbucks identified the fact that its brand had developed a poor image with its customers.a. marketing controlb. environmental controlc. environmental scanningd. social audite. strategic analysis

ANS: CEnvironmental scanning is the collection and interpretation of information gathered from the external environment.

PTS: 1 REF: 36 OBJ: 02-3 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Research

30. Which of the following will most likely impact the successful launch of the GM Volt in 2010? a. High gas pricesb. Competitors plug-in carsc. Changes in the state laws concerning emissions controld. The ingenuity of GM engineerse. All of the above

ANS: EAll of these environmental forces could affect the launch of the GM Volt.


31. Coca-Cola drink vending machines are found all over the world. The newest machines have an interactive screen that runs advertisements and allows users to obtain free photos of themselves and ringtones after they have bought a drink. The reason for the introduction of this new style vending machine is to "allow the company to interact more directly with its customers." According to a SWOT analysis, the technology used by these machines and the need to interact with customers are both examples of:a. strengths because they are part of Coke’s external environmentb. advantages because they are part of Coke’s marketing environmentc. weaknesses because Coke cannot control technology or consumer behaviord. opportunities because they are part of Coke’s external environmente. benefits because Coke has the resources to make use of the new technology and the

changing consumer behavior

ANS: DA SWOT analysis looks at opportunities and threats (external to the organization) and strengths and weaknesses (internal to the organization).

PTS: 1 REF: 35-36 OBJ: 02-3 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Research



32. A _____ is a formal study conducted by an organization to ascertain its current status and capabilities and its future expectations.a. situation analysisb. marketing auditc. trend analysisd. strategic alternative selectione. competitive advantage audit

ANS: A PTS: 1 REF: 35-36 OBJ: 02-3 TYPE: DefTOP: AACSB Analytic | TB&E Model Research

33. Tub King is a small company that refinishes antique claw foot bathtubs antique sinks and provides training for bathtub refinishing. The company's management is currently conducting a formal study of its current strengths and weaknesses by looking at the company's profit and sales histories and searching for opportunities and threats by studying consumer trends. Tub King is conducting a(n):a. marketing auditb. SWOT analysisc. environmental scand. market differentiation scane. strategic window search

ANS: BA SWOT analysis attempts to ascertain the present situation.

PTS: 1 REF: 35-36 OBJ: 02-3 TYPE: AppTOP: AACSB Analytic | TB&E Model Research

34. Briggs and Stratton is a southeastern company that makes small engines. The company is looking at customer trends, its competitors, and the economy to see if there are any threats or opportunities on the horizon. It has also examined its production policies and sales histories to determine its strengths and weaknesses. Briggs & Stratton is conducting a. environmental testb. market auditc. trend analysisd. situation analysise. competitive advantage search

ANS: CA situation analysis contains the SWOT components.

PTS: 1 REF: 35-36 OBJ: 02-3 TYPE: AppTOP: AACSB Analytic | TB&E Model Strategy



35. In 2008 Smucker’s purchased Folgers Coffee. According to Smucker’s web site “the addition of Folgers, a billion dollar brand, is consistent with Smucker's strategy to own and market number one food brands in North America.” The option to buy Folgers represented a _____ to Smucker’s.a. opportunityb. strengthc. weaknessd. threate. burden

ANS: AA SWOT analysis looks at opportunities and threats (external to the organization) and strengths and weaknesses (internal to the organization).

PTS: 1 REF: 35-36 OBJ: 02-3 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Research

36. The SWOT acronym refers to a firm’s analysis of its:a. sales, width of product mix, observations, and technologyb. situations, wealth, organizational strengths, and target marketsc. strengths, weaknesses, opportunities, and threatsd. service levels, willingness to spend, organizational culture, and total revenuese. strategies, willingness to change, objectives, and trends

ANS: C PTS: 1 REF: 35 OBJ: 02-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

37. Coca-Cola drink vending machines are found all over the world. The newest machines have an interactive screen that runs advertisements and allows users to obtain free photos of themselves and ringtones after they have bought a drink. Critics of these new vending machines are concerned that entertaining technology is being used to market sugary products. In terms of a SWOT analysis, this concern would be an example of a(n):a. weaknessb. strengthc. advantaged. opportunitye. threat

ANS: EA threat is an external condition that may lessen the success of the strategy.




38. A U.S. soft drink company conducting a SWOT analysis of market potential in India should be aware that all the following are potential threats EXCEPT:a. religious differences that could led to terroristic actsb. strict governmental regulation of foreign businessesc. a low gross domestic productd. fierce competition dominated by Thums Up brand soft drinke. a high demand for U.S.-made products

ANS: EA high demand for U.S.-made products would be an opportunity.


39. _____ is defined as the collection and interpretation of information about forces, events, and relationships that may affect the organization.a. Market samplingb. An internal auditc. Opportunity analysisd. Environmental scanninge. Stakeholder analysis

ANS: D PTS: 1 REF: 36 OBJ: 02-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Research

40. Of the following, what is the best objective for Purina cat food?a. To increase sales of Purina brand cat food by 15 percent over 2009 sales of $300 million.b. To increase sales of Purina brand cat food between January 1, 2009 and December 31,

2010.c. To increase sales of Purina brand cat food from $300 million to $345 million.d. To increase sales of Purina Brand cat food.e. To increase sales of Purina pet food.

ANS: AMarketing objectives should be realistic, measurable, time specific and compared to a benchmark.

PTS: 1 REF: 36 OBJ: 02-4 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Promotion

41. Objectives serve several functions. Which are they?a. Communicate philosophies and provide directionb. Motivate employeesc. Clarify executives thinkingd. Form the basis for controle. All of the above

ANS: EObjectives serve four functions: communicate, motivate, clarify, and aid in the control function.




42. After management agrees on a mission statement, it must set objectives. Which of the following is NOT a characteristic of a good objective?a. profitableb. realisticc. measurabled. time-specifice. consistent

ANS: AGood objectives are not necessarily stated in terms of profit.

PTS: 1 REF: 35 OBJ: 02-4 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing

43. A _____ is defined as a statement of what is to be accomplished through marketing activities.a. mission statementb. business planc. marketing objectived. goal-driven directivee. marketing criteria

ANS: C PTS: 1 REF: 36 OBJ: 02-4 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

44. Through the use of environmental scanning, zipcar, a company that rents cars by the hour, could:a. learn why it needed to use a team management structureb. determine why the market for short-term car rentals is growingc. benefit from experience curvesd. periodically divest itself of low-margin vehiclese. do none of these things

ANS: BEnvironmental scanning is the collection and interpretation of information gathered from the external environment.

PTS: 1 REF: 36-37 OBJ: 02-4 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Research

45. Carefully specified marketing objectives should NOT be used as a:a. method to appeal to all market segmentsb. method for developing standards to gauge performancec. motivational tool for those charged with achieving the objectivesd. way to force executives to sharpen their critical thinking skillse. method of developing, implementing, and evaluating a consistent marketing plan

ANS: AMarketing objectives should be stated for each target market.

PTS: 1 REF: 36-37 OBJ: 02-4 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Strategy



46. For marketing objectives to be realized, they must meet all of the following criteria EXCEPT:a. be consistent with organization objectivesb. be measurablec. be attainabled. be challenginge. be set within a one-year time frame

ANS: EThere is no one-year time frame restriction for marketing objectives although specifying a particular time frame makes an objective more clear and precise.


47. GM is pushing to have a new plug-in vehicle by 2010. What is wrong with this objective?a. The objective is not realistic.b. The objective is not measurable.c. The objective is not time specific.d. The objective is not compared to a benchmark.e. Nothing is wrong with this objective.

ANS: DOne of the important criteria for an effective goal is for the goal to be compared to a benchmark. What is the new plug-in vehicle compared to- the Volt or Saturn Vue or another GM vehicle?

PTS: 1 REF: 36-37 OBJ: 02-4 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Strategy

48. As a customer entered the Hornady store, which sells muzzle loading rifles, a salesperson approached her and said, "Hornady lead round balls are the musket balls you ought to buy. They are the most uniform in size and shape, and they are made of pure lead. Our shot is used by the Muzzle Loading World Champion." The salesperson was describing Hornady's:a. competitive advantageb. strategic strengthc. tactical opportunityd. opportunity missione. quality objective

ANS: AA competitive advantage is a set of unique features of a company and its product that are perceived by the target market as significant and superior to the competition.

PTS: 1 REF: 37 OBJ: 02-5 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Customer



49. WalMart recognizes a _____ using its relationships with suppliers to give customers low prices and good customer service.a. brand name strategyb. niche competitive advantagec. cost competitive advantaged. marketing competitive advantagee. synergistic competitive advantage

ANS: CA cost competitive advantage means being the low-cost competitor in an industry while maintaining satisfactory profit margins.

PTS: 1 REF: 37-38 OBJ: 02-5 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Pricing

50. Each labor and delivery room at Dekalb County's new Medical Center has hardwood floors, soft lighting, and mission-style furniture. The facility also features a stone fireplace in the lobby, a bistro-style restaurant, and VIP suites for discerning mothers-to-be. This unique design and furnishings give the Medical Center a:a. profit-enhanced advantageb. competitive advantagec. quality objectivityd. strategic strengthe. tactical opportunity

ANS: BA competitive advantage is a set of unique features of a company and its product that are perceived by the target market as significant and superior to the competition.

PTS: 1 REF: 37 OBJ: 02-5 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Strategy

51. Aldi is a no-frills grocery chain. It sells grocery staples right out of crates and boxes with emphasis on low-priced, private-label brands. Aldi stores are typically about one-third the size of the traditional supermarket. By controlling expenses, Aldi enables its customers to save 30 to 50 percent compared to Kroger customers. The chain targets bargain hunters who are willing to rent a cart and bag their own groceries. Aldi has a(n)a. market-homogeneous focusb. cost competitive advantagec. product aggregation strategyd. revenue-based competitive advantagee. profit-enhanced advantage

ANS: BA competitive advantage is a set of unique features of a company and its product that are perceived by the target market as significant and superior to the competition.

PTS: 1 REF: 37-38 OBJ: 02-5 TYPE: AppTOP: AACSB Analytic | TB&E Model Pricing



52. Yuengling is the oldest brewery in the United States. It was founded in 1827 in a time when small breweries dotted the nation. The brewery only sells in a ten state area on the eastern seaboard. For over 170 years, this strategy has given the brewery a:a. brand name strategyb. niche competitive advantagec. price differentiation advantaged. marketing competitive advantagee. sustainable competitive advantage

ANS: BYuengling offers a product that is available only on the eastern coast of the U.S.

PTS: 1 REF: 39 OBJ: 02-5 TYPE: AppTOP: AACSB Analytic | TB&E Model Product

53. Aldi is a grocery store that sells staples right out of crates and boxes with emphasis on low-priced, private-label brands. Aldi stores are typically about one-third the size of the traditional supermarket. By controlling expenses, Aldi enables its customers to save 30 to 50 percent compared to Kroger customers. The chain targets bargain hunters who are willing to rent a cart and bag their own groceries. Aldi uses _____ to create its competitive advantage.a. demand and supply curvesb. reengineeringc. production innovationd. no-frills goods and servicese. efficient labor

ANS: DAldi’s offers customers lower costs because they removed frills and options from their products/services.


54. Zipcar is a car rental service found in many metropolitan areas. It targets people who take mass transit or carpool to work but who occasionally need to run errands, visit the doctor, or check on a sick child. Zipcar is one of a few companies currently providing cars that can be rented by the hour. Zipcar has created a(n) _____ advantage.a. reengineeringb. experience curvec. service differentiation competitived. niche markete. sustainable competitive

ANS: CA service differentiation competitive advantage exists when a firm provides something unique that is valuable to buyers beyond simply offering a low price.




55. Fujisawa is Japan's seventh-largest pharmaceutical company. It sells drugs taken by organ transplant patients to increase the probability the new organ will operate efficiently and not be rejected. Currently, the only products Fujisawa makes are these organ transplant drugs, which it sells worldwide. Its patents protect it from competitors. Fujisawa has a:a. brand name strategyb. niche competitive advantagec. cost competitive advantaged. marketing competitive advantagee. sustainable competitive advantage

ANS: BA niche competitive advantage is the advantage achieved when a firm seeks to target and effectively serve a small segment of the market, in this case people who need organ transplant drugs. Its advantage is not sustainable because patents expire.

PTS: 1 REF: 39 OBJ: 02-5 TYPE: AppTOP: AACSB Diversity | TB&E Model Product | TB&E Model International Perspective

56. Arizona Tea is marketed by Vultaggio & Sons. Vultaggio & Sons took a basic drink and put it into unusual bottles with elaborate designs. The wide-mouthed, long-necked bottles are now considered to be trendsetters in the new age beverage industry, and customers often buy the tea just for the bottle. The success of Arizona Tea is based on:a. supply-demand curvesb. reengineeringc. a product differentiation competitive advantaged. a cost competitive advantagee. a heterogeneous marketing strategy

ANS: CA product differentiation competitive advantage exists when a firm provides something unique that is valuable to buyers beyond simply offering a low price.


57. Jiffy Mixes do not do any type of traditional advertising nor uses fancy packaging in marketing their products. They store their own wheat, make their own flour and their little blue boxes too. Jiffy would be an example of _____ low cost strategy.a. Efficient laborb. No-frills goods and servicesc. Government subsidiesd. Product designe. reengineering

ANS: BNo-frills goods and services offers low costs to the consumer because they do not do marketing or coupons just make the product and put it in the same size little boxes.




58. Technol Medical Products makes specialty face masks to shield health-care workers from infection. Because it focuses on this narrow market, it is able to outsell its primary competitors--3M and Johnson & Johnson. Technol Medical Products has a(n):a. aggregated positioning strategyb. demarketing focusc. heterogeneous target marketingd. cost competitive advantagee. niche competitive advantage

ANS: E PTS: 1 REF: 39 OBJ: 02-5 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Product

59. Which of the following companies has a competitive advantage?a. World Wrestling Entertainment (formerly the World Wrestling Federation) holds the

trademark on the names of the wrestlers that participate in the company's wrestling matches.

b. Netcentives holds the patent on software that allows merchants to distribute loyalty points online.

c. DeBeers diamonds controls 90 percent of the world's diamond mines.d. Mildred's Café makes the world's best pecan pie.e. All of the choices have a competitive advantage.

ANS: EWhile not all have sustainable competitive advantage, all do have a unique feature that differentiates them from other businesses selling similar products.


60. _____ show costs declining at a predictable rate as experience with a product increases.a. Liquidity growth curvesb. EOQ graphsc. Breakeven analysesd. Experience curvese. Supply/demand curves

ANS: D PTS: 1 REF: 38 OBJ: 02-5 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Pricing

61. Land O’Lakes makes a light butter with Canola oil that has sixty percent less cholesterol and fifty percent less fat and calories than butter. This marketing gives the product a _____.a. strategic edgeb. competitive advantagec. tactical strengthd. marketing mixe. mission statement

ANS: BA competitive advantage is set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition.




62. Which of the following is NOT a source of a cost competitive advantage?a. reengineeringb. experience curvesc. break-even analysesd. efficient labore. production innovation

ANS: C PTS: 1 REF: 37-38 OBJ: 02-5 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Pricing

63. iTunes has a _____ as they have exclusive agreements with some of the most sought after music corporations that other digital music stores do not have.a. targeted market positionb. sustainable competitive advantagec. strategic focusd. situational strengthe. opportunistic privilege

ANS: BA sustainable competitive advantage is one that cannot be copied by the competition.


64. Everyone knows the brand name Kleenex. Kleenex is what many consumers think of when they think of tissues. This widely recognized brand name is a source of:a. a product differentiation competitive advantageb. a cost advantagec. market augmentationd. a niche competitive advantagee. none of these things

ANS: AThe brand name is unique and has a valued impression.


65. Bentley automobiles are extremely expensive and are designed to appeal to consumers who equate value and quality with price. The manufacturer of Bentley automobiles has created a _____ competitive advantage.a. value-enhancedb. mass-marketingc. functionald. nichee. social class-oriented

ANS: DA niche competitive advantage seeks to target and effectively serve a single segment of the market.

PTS: 1 REF: 39 OBJ: 02-5 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Customer



66. Patents on allergy relief medications like Allegra and Claritin give the pharmaceutical companies that own the patents a(n) _____ for 17 years until the patent expires.a. targeted market positionb. sustainable competitive advantagec. strategic focusd. situational strengthe. opportunistic privilege

ANS: BA sustainable competitive advantage is one that cannot be copied by the competition, in this case at least until the patent expires.


67. Which of the following is a type of strategic alternative that matches products and markets?a. vertical integrationb. product penetrationc. divestmentd. horizontal integratione. market penetration


68. Kraft foods created a magazine full of recipes and coupons for customers as well as a web site with product and recipe information. All of these activities would be representative of a _____ strategy.a. diversificationb. product developmentc. market developmentd. market penetratione. product penetration

ANS: DSelling more of the same product to existing markets is market penetration.

PTS: 1 REF: 40 OBJ: 02-6 TYPE: AppTOP: AACSB Analytic | TB&E Model Product | TB&E Model Strategy

69. _____ is a strategy of increasing market share for present products in existing markets.a. Market penetrationb. Product developmentc. Market developmentd. Diversificatione. Product penetration

ANS: A PTS: 1 REF: 40 OBJ: 02-6 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy



70. The marketing of organic cotton tees for Life is Good’s existing customers would be an example of a _____ strategy. a. market developmentb. product developmentc. market penetrationd. product penetratione. diversification

ANS: BProduct development is the introduction of new products to present market.

PTS: 1 REF: 40-41 OBJ: 02-6 TYPE: AppTOP: AACSB Analytic | TB&E Model Product | TB&E Model Creativity

71. _____ is a strategy that attracts new customers to existing products.a. Product developmentb. Market developmentc. Market penetrationd. Product penetratione. Diversification

ANS: B PTS: 1 REF: 40 OBJ: 02-6 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

72. Clay Market began as a retailer of terra cotta pots and garden figures imported from Turkey and Mexico. It has since added Turkish rugs and fabrics, leather trimmed purses, and a line of women's clothes for its customers. This activities is indicative of a _____ strategy.a. vertical integrationb. market penetrationc. diversificationd. product developmente. market development

ANS: DProduct development stimulates new sales to existing markets. Since the question states the items are for the firm’s customers, they are aimed at existing markets (buyers).

PTS: 1 REF: 40-41 OBJ: 02-6 TYPE: AppTOP: AACSB Diversity | TB&E Model Product

73. Pajamagrams was only marketing pajamas to women. Now they offer pajamas for men and kids. This is an example of a _____ strategy.a. market developmentb. product developmentc. market penetrationd. product penetratione. divestment

ANS: AMarket development finds new uses for a product to stimulate sales among new customers.




74. _____ is a strategy that creates new products for present markets.a. Product penetrationb. Market penetrationc. Product developmentd. Market developmente. Diversification

ANS: C PTS: 1 REF: 40-41 OBJ: 02-6 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

75. LVMH, a maker of luxury-goods, has expanded its products offerings into China, Russia, India and the Middle East. This exemplifies a _____ strategy.a. market developmentb. product developmentc. market penetrationd. diversificatione. product expansion

ANS: AMarket development is the introduction and sale of present products to new markets.

PTS: 1 REF: 40 OBJ: 02-6 TYPE: AppTOP: AACSB Analytic | TB&E Model Research

76. _____ is the strategy of increasing sales by introducing new products into new markets.a. Product penetrationb. Product developmentc. Market penetrationd. Market developmente. Diversification

ANS: E PTS: 1 REF: 41 OBJ: 02-6 TYPE: DefTOP: AACSB Diversity | TB&E Model Strategy | TB&E Model International Perspective

77. Due to recent hurricanes, orange growers in Florida have lost millions of dollars. As a result, some growers have decided to bulldoze their orange groves and put in freshwater lakes for raising shrimp, a product that has a strong popularity and is more weather-resistant. Former orange growers who are now raising shrimp are pursuing a _____ strategy.a. market penetrationb. product developmentc. diversificationd. market developmente. product penetration

ANS: CDiversification is defined as selling a new product to a new market.




78. Kellogg’s has developed Pirates of the Caribbean cereal for kids who already eat their cereals. This is an example of _____.a. market developmentb. market penetrationc. product penetrationd. product developmente. diversification

ANS: DKellogg’s has created a new cereal for existing users.

PTS: 1 REF: 40-41 OBJ: 02-6 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Creativity

79. The company that manufactures Molson beer simultaneously launched Arctic brand in Ontario and Tornade brand in Quebec with the intention of gaining a share of the rapidly expanding alcoholic lemonade segment of the beverage industry. The separate launch strategies for the products are due to different market conditions in the two Canadian provinces. Molson used _____ strategies to reach existing markets with its new product.a. market developmentb. market penetrationc. product penetrationd. product developmente. diversification

ANS: DMolson has developed a new product for people who are already drinkers of Molson's other products.

PTS: 1 REF: 40-41 OBJ: 02-6 TYPE: AppTOP: AACSB Analytic | TB&E Model Strategy

80. For most American consumers, the brand name Benetton brings to mind a retail-clothing store that carries many products that bear the Benetton brand. But Edizone Holding, which also owns a chain of restaurants, several toll roads in Italy, and a telecommunications company, holds the Benetton Group. The list of the company's holdings indicates that the company's managers believe in growth through:a. market penetrationb. diversificationc. product developmentd. market developmente. market integration

ANS: BDiversification is defined as strategy of increasing sales by selling new products to a new market.

PTS: 1 REF: 41 OBJ: 02-6 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Marketing Plan | TB&E Model International Perspective



81. U.S.-based Thermo Electron Corporation, the biggest maker of measurement instruments for medical laboratories, agreed to buy the radiation-monitoring products unit of Compagnie de Saint-Gobain for $30 million to gain European customers. Saint-Gobain of France is Europe's number one distributor of building materials, and its radiation monitoring unit did not support the company's mission statement. Thermo Electron engaged in a _____ strategy.a. buildingb. divestingc. diversificationd. penetratione. market development

ANS: E PTS: 1 REF: 40 OBJ: 02-6 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution

82. Smucker’s bought the Folgers coffee business from Proctor and Gamble. Smucker’s is using a _____ strategy.a. market developmentb. market penetrationc. product penetrationd. product developmente. diversification

ANS: ESmucker’s is entering a new market with coffee.

PTS: 1 REF: 41 OBJ: 02-6 TYPE: AppTOP: AACSB Diversity | TB&E Model Strategy | TB&E Model International Perspective

83. The Hallmark Company was inspired by the popularity of Jan Karon's best-selling novels about Mitford, a fictional town in the mountains of North Carolina, to develop a new line of products for Hallmark Gold Crown Stores nationwide. Hallmark created hundreds of Mitford-inspired products that authentically bring "the little town with the big heart" into tangible reality. The products include greeting cards, partyware and gift wrap, mugs, and puzzles for Hallmark's existing customers. Hallmark used a _____ strategy.a. market developmentb. market penetrationc. product penetrationd. product developmente. diversification

ANS: DHallmark created new Mitford-based items for its regular customers.

PTS: 1 REF: 40-41 OBJ: 02-6 TYPE: AppTOP: AACSB Analytic | TB&E Model Product



84. In order to expand its sales into the U.S. market, BRL, an Australia-based winemaker, agreed to a merger with a U.S.-based wine distribution company. According to Ansoff's Strategic Opportunity Matrix, BRL would be implementing a _____ strategy.a. diversificationb. market developmentc. product developmentd. divestmente. product penetration

ANS: BMarket development refers to the attracting of new markets (U.S. consumers) to existing products.

PTS: 1 REF: 40 OBJ: 02-6 TYPE: AppTOP: AACSB Diversity | TB&E Model Distribution | TB&E Model International Perspective

85. Market penetration occurs when:a. a supermarket adds a new storeb. a U.S.-based company begins to sell its products in Chinac. Motown records sells DVDs to Wal-Martd. Yoplait yogurt sends coupons to its existing customerse. 3M distributes breathe-right nasal strips in Europe

ANS: DMarket penetration is the marketing of the same product to current customers.

PTS: 1 REF: 40 OBJ: 02-6 TYPE: AppTOP: AACSB Diversity | TB&E Model Customer | TB&E Model International Perspective

86. Yard Whimzees, a Statesboro, Georgia sign business, began by making wooden signs for residential use to announce births, anniversaries and such. They then turned to the business market making signs for businesses. This idea of creating signs for a new market is called a _____.a. market developmentb. market penetrationc. product penetrationd. product developmente. diversification

ANS: AYard Whimzees created used the same product (signs) for a new market (businesses).

PTS: 1 REF: 40 OBJ: 02-6 TYPE: AppTOP: AACSB Diversity | TB&E Model Customer | TB&E Model International Perspective



87. Kraft introduced Philadelphia Ready-to-eat Cheesecake Filling for those who do not have time to make cheesecake in the traditional manner. This is an example of _____ strategy.a. diversificationb. market developmentc. product developmentd. divestmente. product penetration

ANS: CA product development strategy entails the creation of a new product for existing markets.

PTS: 1 REF: 40-41 OBJ: 02-6 TYPE: AppTOP: AACSB Diversity | TB&E Model Strategy | TB&E Model International Perspective

88. The _____ is a tool for allocating resources among products or strategic business units on the basis of relative market share and market growth rate.a. market auditb. portfolio matrixc. experience matrixd. market development analysise. market opportunity analysis

ANS: B PTS: 1 REF: 41-42 OBJ: 02-6 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

89. Before Heinz sold its 9-Lives brand cat food unit, the company identified the product as having a low market share in a high-growth market. The portfolio matrix would classify 9-Lives as a(n):a. starb. exclamation pointc. question markd. cash cowe. widow

ANS: CA question market, also called a problem child, shows rapid growth but has poor profit margins.


90. Pure Digital Technologies created the Flip, which is a digital camera that is priced around $150 dollars. It filled a gap between expensive digital cameras and web cams. The flip plugs straight into your computer and the video can easily be viewed and shared instantly. Creating a new product for a new market is called _____.a. divestmentb. segment developmentc. target marketingd. diversificatione. directed growth

ANS: DDiversification is creating a new product for a new market.




91. John R. Harland Company is best known for printing checks. Its Financial Solutions division develops software for mortgage companies. This division is currently producing much less than the desired level of profitability in what has been identified as a high-growth industry. According to the portfolio matrix, Harland would label its Financial Solutions division as a(n):a. widowb. exclamation pointc. problem childd. stare. dog

ANS: CA problem child, also called a question mark, has a low market share in a rapidly growing industry.


92. Russell Athleticwear was a market leader in the sports apparel industry, an industry that is growing rapidly. With Berkshire Hathaway, Inc.’s recent purchase of Russell Corporation, it becomes an SBU, but it is still an example of a(n) _____ according to the portfolio matrix.a. starb. question markc. problem childd. exclamation pointe. widow

ANS: AA star has a large market share in a rapidly growing industry.


93. John R. Harland Company is best known for printing checks. Its Financial Solutions division develops software for mortgage companies, a growing industry. This division is currently not producing at the desired level of profitability, but Harland plans to turn the division into a success by acquiring other companies that develop similar software. Harland would be engaging in a _____ strategy.a. harvestingb. diversificationc. divestingd. holdinge. building

ANS: EIf an organization has an SBU that it believes has potential to be a star, building would be an appropriate strategy.




94. Heinz is expecting to launch four hundred new products in the next two years. Products include Smart Ones low-fat frozen main dishes aimed at those consumers who would rather dine in than eat out. This product would be an example of:a. diversificationb. market developmentc. product developmentd. divestmente. product penetration

ANS: ADiversification is a strategy of increasing sales by introducing a new product to a different market.

PTS: 1 REF: 41 OBJ: 02-6 TYPE: AppTOP: AACSB Diversity | TB&E Model Distribution | TB&E Model International Perspective

95. Heinz is introducing four hundred new products in the next two years. To know which markets to reach they would first perform a _____.a. market diversification analysisb. market auditc. social auditd. market opportunity analysise. niche analysis

ANS: DAn MOA is the description and estimation of the size and sales potential of market segments that are of interest to the firm.


96. CentralPulse is Europe's largest manufacturer of hip and knee replacement joints. The company's _____ strategy would identify the surgeons and hospitals as two market segments on which the CentralPulse will focus its marketing efforts.a. target marketb. marketing samplec. sales unitd. strategic business unite. target sample

ANS: AA target market is one or more market segments on which a company focuses.




97. Volkswagen is building a plant in Chattanooga, Tennessee. A _____ let VW know that the sales potential in North America is great and therefore they decided to build their first plant in the U.S. a. market diversification analysisb. market auditc. social auditd. market opportunity analysise. niche analysis

ANS: DAn MOA is the description and estimation of the size and sales potential of market segments that are of interest to the firm.


98. Fit, a health and fitness magazine, describes its readers as being female, 18 to 25 years of age, single, high school graduates, and earners of above-average income. The magazine's _____ would have identified this market segment.a. environmental auditb. statement of purposec. market development strategyd. target market strategye. environmental mission statement

ANS: DThe target market strategy identifies the market segment on which to focus.


99. Arizona Beverage Company has made a new Smoothies Mix for their _____ who wants antioxidants, vitamin C and fruit juice in an easy mix formula. Just pour over ice and mix. a. target marketb. marketing samplec. sales unitd. strategic business unite. target sample

ANS: AA target market is one or more market segments on which a company focuses.

PTS: 1 REF: 43 OBJ: 02-7 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model International Perspective

100. A(n) _____ describes and estimates the size and sales potential of market segments of interest to the firm and assesses key competitors in these market segments.a. marketing orientationb. environmental scanc. marketing mix auditd. target market strategye. market opportunity analysis




101. Zipcar is a car rental agency that is geared for people who take mass transit or carpool to work but occasionally need to run errands, visit the doctor, or check on a sick child during the workday. The preceding statement describes the _____ for Zipcar.a. exchange mixersb. target marketc. diversified marketd. transactionalistse. sustainable market

ANS: BA target market is one or more market segments on which a company focuses.


102. Ocean Spray's development of Craisins sweetened dried cranberries to compete against raisins most directly affected the _____ element of the company's marketing mix.a. placeb. productionc. productd. distributione. target market

ANS: C PTS: 1 REF: 44 OBJ: 02-8 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Product

103. Apple Inc. is now offering the iPhone 3G for half its original price. This new strategy reflects a change in the _____ element of its marketing mix.a. priceb. productionc. productd. distributione. target market

ANS: A PTS: 1 REF: 44 OBJ: 02-8 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Distribution

104. The _____ is the unique blend of product, distribution, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market.a. internal environmental mixb. marketing mixc. product mixd. product linee. market portfolio

ANS: B PTS: 1 REF: 44 OBJ: 02-8 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy



105. The starting point of any firm's marketing mix is the:a. analysis of what production equipment is available and owned by the companyb. design of the promotion campaign to be used for the productc. selection of the places through which the good or service will be soldd. determination of the product's price, enabling future revenues and budgets to be estimatede. development of the good or service to be sold

ANS: EThe product is the starting point for any marketing mix. Without it, pricing, distribution, and promotion are irrelevant. The production capacity can be changed to fit the proposed product.


106. Lands End guarantees their products for as long as you own them. They would seem most concerned with which element of the marketing mix?a. priceb. distributionc. personalizationd. promotione. product

ANS: EThe product element of the marketing mix includes guarantees and quality.


107. Golden Valley Microwave Foods, Inc. is the manufacturer of ACT II popcorn. In its early years, the company had trouble financing the development and marketing of products for the microwave, so it chose to participate in a financial arrangement in which it agreed that it would not sell ACT II popcorn in supermarkets or grocery stores. Which element of the marketing mix was most influenced by this arrangement?a. productb. placec. priced. public relationse. promotion

ANS: BWhere a product is sold is part of the place (distribution) element of its marketing mix.

PTS: 1 REF: 45 OBJ: 02-8 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Distribution



108. Making sure products are available when and where customers want them is the job of which element of the marketing mix?a. advertising strategiesb. production strategiesc. product strategiesd. promotion strategiese. distribution strategies

ANS: EDistribution strategies make products available when and where customers want them.

PTS: 1 REF: 45 OBJ: 02-8 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

109. InBev bought Anheuser Busch. How will this purchase affect InBev’s marketing mix?a. It will only affect the product element of InBev’s marketing mix.b. It will only affect InBev’s four Ps--not its marketing mix.c. It will affect all of InBev's marketing mix elements, either directly or indirectly.d. It will not affect the promotion or distribution elements of the InBev marketing mix.e. It will have no affect on InBev's marketing mix.

ANS: CThe purchase will directly change the company's product mix and indirectly affect its promotion, pricing, and distribution elements.

PTS: 1 REF: 45 OBJ: 02-8 TYPE: CompTOP: AACSB Analytic | TB&E Model Pricing

110. The promotion strategy of the marketing mix deals exclusively with:a. personal selling and advertisingb. advertising and public relationsc. personal selling, advertising, sales promotion, and public relationsd. advertising, publicity, and pricinge. personal selling and purchased mass media time or space

ANS: C PTS: 1 REF: 45 OBJ: 02-8 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Promotion

111. Some of Mattel’s toy products contained lead, which is dangerous to humans. Which of the marketing mix strategies should the toy manufacturer use to alert buyers to this problem?a. productb. promotionc. productiond. pricinge. distribution

ANS: BPromotion includes all actions a firm takes to bring about mutually satisfying exchanges with target markets by informing, educating, persuading, and/or reminding them about the organization’s offerings.

PTS: 1 REF: 45 OBJ: 02-8 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Promotion



112. SoBe nutritional beverages uses twin lizards on every bottle of its products and in all of its promotion efforts. It even has its own Team Lizard made up of skateboarders, mountain bike riders, and inline skaters that it sponsors. The lizard is used to remind consumers of the product and its benefits. To which of the four Ps does this strategy relate?a. promotionb. pricec. publicityd. placee. product

ANS: APromotion covers a wide range of communication vehicles.

PTS: 1 REF: 45 OBJ: 02-8 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Creativity

113. Which of the marketing mix strategies is the most flexible?a. productb. promotionc. publicityd. placee. pricing

ANS: EThe only element that is often subject to quick and easy change is price.

PTS: 1 REF: 45 OBJ: 02-8 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Pricing

114. Apple’s iPhone can only be purchased through AT&T cell phone distributors and the Apple retail store. This limitation on the _____ element of its marketing mix strategy supports the product’s competitive advantage.a. planningb. productc. promotiond. distributione. production

ANS: DDistribution strategies make products available when and where customers want them.

PTS: 1 REF: 45 OBJ: 02-8 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product



115. There is an overabundance of apartments in Atlanta. Post Properties, the owner many of the metropolitan area's largest apartment complexes, has reduced its rent so it can fill vacant apartments. Which of the following types of strategies did Post Properties use to create more demand for its apartments?a. production strategiesb. personnel strategiesc. distribution strategiesd. product strategiese. pricing strategies

ANS: EThe firm tried to increase demand by altering its pricing strategies. This is often the only element of the marketing mix that is capable of quick and easy change.

PTS: 1 REF: 45 OBJ: 02-8 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Pricing

116. _____ is the process that turns marketing plans into action assignments and ensures these assignments are executed in a way that accomplishes the plans' objectives.a. Mechanistic controlb. Strategic analysisc. Implementationd. Strategic planninge. Strategic design

ANS: C PTS: 1 REF: 45-46 OBJ: 02-9 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

117. General Motors Corporation has a goal of launching a plug-in-car by the year 2010. The car has been in test drives and they are still in the process of working out any bugs that may occur. GM is in the process of working toward mass production of the vehicle. They are in what stage of the marketing plan.a. product planningb. mechanistic organizationc. synergistic controld. strategic diversificatione. implementation

ANS: EFord is turning their marketing plan into action.




118. After an organization implements its strategic plan, management:a. must track results, monitor the external environment, and adjust the plan as necessaryb. should then concentrate on developing internal information systemsc. can be assured the plan will work for the time frame specifiedd. must make sure no part of the plan is changed, lest the plan faile. can stop work on this strategic plan, take a rest, and begin work on the next one

ANS: ABecause the strategic environment continually changes, plans must be monitored and altered.

PTS: 1 REF: 47-48 OBJ: 02-9 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Research

119. John R. Harland Company is best known for printing checks. Its Financial Solutions division develops software for mortgage companies. This division is currently not producing at the desired level of profitability, but Harland plans to turn the division into a success by acquiring other companies that develop similar software. _____ will turn this marketing plan into action assignments in a manner that accomplishes the company's stated objectives.a. Implementationb. Entrepreneurshipc. Marketing mix maintenanced. Marketing plan controle. Market strategizing

ANS: AImplementation is the process that turns a marketing plan into action assignments and ensures that these assignment are executed in a way that accomplishes the plan’s objectives.

PTS: 1 REF: 45-46 OBJ: 02-9 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Marketing Plan

120. General Motors Corporation has a goal of launching a plug-in-car by the year 2010. The car has been in test drives and they are still working out any bugs that may occur. GM is in the process of working toward mass production of the vehicle. They are in what stage of the marketing plan.a. product planningb. mechanistic organizationc. synergistic controld. strategic diversificatione. implementation

ANS: EFord is turning their marketing plan into action.




121. Enzo Fierro has just finished constructing the marketing plan for a new line of low-carb salad dressings. After selecting his target market and specifying the elements of the marketing mix, he next should:a. set marketing objectives that are realistic and in a time frameb. get employees to do the work necessary to put the marketing strategy into actionc. plan every action program and contingency pland. research the magnitude of the low-carb trende. examine similar manufacturers in the area to determine baseline productions

ANS: BAfter construction of a marketing plan, implementation takes place, including gaining compliance from employees.

PTS: 1 REF: 45-46 OBJ: 02-9 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Marketing Plan

122. Compass is the name of a United Kingdom-based catering company that has developed a marketing plan designed to make it the largest caterer in China within the next two decades. As part of its marketing _____, it has already begun serving meals on trains that run between Shanghai and Beijing.a. policyb. implementationc. evaluationd. controle. strategy

ANS: BImplementation is the process that turns marketing plans into action assignments.

PTS: 1 REF: 45-46 OBJ: 02-9 TYPE: AppTOP: AACSB Diversity | TB&E Model Marketing Plan | TB&E Model International Perspective

123. _____ is the process of gauging the extent to which marketing objectives have been achieved during a specified time period.a. Implementationb. Controlc. Heuristic measurementd. Evaluatione. Mechanistic compliance

ANS: D PTS: 1 REF: 46 OBJ: 02-9 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Research

124. _____ provides the mechanism for evaluating marketing results in light of the marketing plan’s goals and for correcting actions that do not help the marketing organization reach these objectives within the budget guidelines.a. Controlb. Implementationc. Reengineeringd. Planninge. Budgeting

ANS: A PTS: 1 REF: 46 OBJ: 02-9 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Marketing Plan | TB&E Model Strategy



125. An international company that needs to develop a way to compare its actual marketing results with planned results would need to engage in:a. external market researchb. implementationc. comparative analysesd. planninge. control

ANS: EControl involves that mechanism for evaluating results and correcting actions in the planning and implementation phases.

PTS: 1 REF: 46 OBJ: 02-9 TYPE: CompTOP: AACSB Analytic | AACSB Diversity | TB&E Model Strategy | TB&E Model Marketing Plan

126. Which of the following is NOT a common reason why companies fail to achieve a marketing objective?a. unrealistic marketing objectivesb. poor implementationc. lack of capitald. inappropriate marketing strategye. changes in the environment after the objective was specified and the strategy implemented

ANS: CAlthough lack of capital is a common reason for small business failure, it is not one of the four stated common reasons for failing to achieve marketing objectives.

PTS: 1 REF: 45-47 OBJ: 02-9 TYPE: CompTOP: AACSB Analytic | TB&E Model Strategy

127. A marketing audit is a(n):a. thorough, systematic, periodic evaluation of the objectives, strategies, structure, and

performance of the marketing organizationb. financial examination of the firm's marketing performancec. financial examination of the firm's accounting records performed by outside consultantsd. evaluation of the effectiveness of advertisinge. evaluation of pricing strategies across all the relevant competitors in an industry

ANS: A PTS: 1 REF: 46-47 OBJ: 02-9 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Research



128. Compass is the name of a United Kingdom-based catering company that has developed a marketing plan designed to make it the largest caterer in China within the next two decades. To evaluate how successful its efforts have been at the end of the first decade, Compass could use a(n):a. SWOT analysisb. environmental scanc. competitive analysisd. marketing audite. comprehensive sales analysis

ANS: DA market audit is a thorough, systematic, periodic evaluation of the objectives, strategies, structure, and performance of a marketing organization.

PTS: 1 REF: 46-47 OBJ: 02-9 TYPE: AppTOP: AACSB Diversity | TB&E Model Research | TB&E Model International Perspective

129. A planning manager visiting a company's health and beauty aids division discovers the division has no effective method for allocating resources, nor for evaluating actual results against planned results. He suggests the division should prepare a:a. marketing auditb. contingency planc. service auditd. market share analysise. series of tactical evaluations

ANS: AA marketing audit is a thorough, systematic, periodic evaluation of the objectives, strategies, structure, and performance of the marketing organization. A marketing audit will evaluate the past, present, and future performance of all aspects of the marketing department.

PTS: 1 REF: 46-47 OBJ: 02-9 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Research

130. Which of the following statements about marketing audits is true?a. Marketing audits only need to be performed once.b. The main purpose of the marketing audit is to develop a full profile of a company's

marketing effort.c. Marketing audits should only be performed after a major crisis.d. Marketing audits simply examine the external environment in which a company operates.e. The marketing audit should only be performed by outside accounting firms.

ANS: BMarketing audits should be performed periodically by an inside or outside party who is independent enough to have top management's confidence and to be objective. Marketing audits examines all facets of an organization's internal and external marketing environments.




131. The marketing audit:a. should only be performed by an outside accounting firmb. only looks at potential threats the organization has identifiedc. is a rather restricted, specialized tool for marketing managersd. is a good tool with which to implement marketing planse. is an excellent way to raise the level of marketing consciousness within an organization

ANS: EA marketing audit can be performed by internal employees as well as an external organization. A marketing audit is systematic and looks at all facets of the organization. The marketing audit is a control tool--not implementation.


132. Which of the following statements about strategic planning is true?a. It is a real time-saver for marketing managers because once it has been completed, the

plan can be left unchanged for years.b. Effective strategic planning creates plans that are unaffected by environmental changes.c. Top-management participation in and commitment to strategic planning should be limited

to hiring the right subordinates.d. It allows a firm to replace creativity with careful analysis.e. None of these statements about strategic planning are true.

ANS: EThis chapter emphasizes that strategic planning is an ongoing process that needs creativity and top-management involvement. The reason strategic planning should be ongoing is due to the dynamic nature of the environment.

PTS: 1 REF: 47-48 OBJ: 02-10 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Strategy

133. Effective strategic planning requires:a. the planner to challenge existing company assumptionsb. no management involvementc. a designated single time frame during the yeard. a tactical mission statemente. a stringent and narrow mission statement for the creation of effective guidelines

ANS: APlanners need to stretch their imaginations and search for creative solutions to problems. Planning is a constant process and should include top management.




134. Larkspur Pottery used to sell finished pots and figurines by local artists when its owner noticed many of her customers were asking if they could make and personalize their own pieces. Now, she sells pottery blanks, and customers create pieces that exactly suit their needs. This is an example of:a. planning with the intent to challenge existing company assumptionsb. strategic planning based on creativityc. a designated single time frame during the yeard. the use of a BCG portfolio matrixe. a stringent and narrow mission statement

ANS: BManagers and owners should challenge assumptions about the firm and the environment and establish new strategies.

PTS: 1 REF: 47 OBJ: 02-10 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Creativity

DeFeet International

DeFeet International started as a cyclist sock company. The founder, Shane Cooper, said that the socks for cyclists were just not of great quality so he made socks for his cycling team by knitting them inside out. The socks were of special materials aimed at giving the cyclist the most comfortable fit. These socks were not the traditional white socks but bright, bold, and flashy colored socks with cool graphics. These high tech socks were priced around $10 a pair. Their web site says “Defeet is Made for Driven Soles.” Soon cycling elites like Lance Armstrong and Greg LeMond were sporting the Defeet brand. The company branched into running, hiking and snow gear. Their products include socks, armskins, calfskins, boxer briefs, gloves, and shirts for the serious athlete. They also have a custom department where socks, armskins, and gloves can be customized with any motif including sponsor types of logos like Michelin, Pabst Blue Ribbon, or BP. Even kids can enjoy Defeet’s high quality socks. Defeet products can be found in retailers across the globe, in more than twenty countries, like Israel, Australia, Belgium and the United States. More than two-dozen online retailers also carry their products.

135. Refer to Defeet. If you were to define DeFeet’s mission which would be most appropriate?a. Defeet makes socks.b. Defeet makes clothes for athletes.c. Defeet creates high-tech products for the serious athlete.d. Defeet provides the highest quality apparel for customers who demand the best.e. Defeet covers the world.

ANS: DThe mission statement should not be so broad as answer “e” as “covers” could be blankets or car covers. Yet answer a, b, and c would limit Defeet’s business to socks, clothes and athletic products. From the discussion above we know that their products are made for kids, corporate sponsors, and athletes so answer D would be the best choice.

PTS: 1 REF: 35 OBJ: 02-1TOP: AACSB Reflective Thinking | TB&E Model Customer



136. Refer to Defeet. What kind of competitive advantage would you say Defeet has?a. Low costb. Nichec. Product/service differentiationd. Product Developmente. Diversification

ANS: CA product/service differentiation competitive advantage exists when a firm provides something unique that is valuable to buyers beyond simply offering a low price. Defeet has high-tech apparel for a variety of target groups and is not a low cost provider so answer C would be the best choice.


137. Refer to Defeet. Defeet branched from making socks for cyclists to making apparel for skiing, hiking, corporate sponsors, and kids. This is an example of which of Ansoff’s strategic alternatives?a. Market penetrationb. Market developmentc. Product developmentd. Diversificatione. None of the above

ANS: DDefeet made new products for different markets.


138. Refer to Defeet. What is Defeet’s most likely target market strategy?a. Appeal to the entire marketb. Concentrate on one segment of the marketc. Appeal to multiple segmentsd. Appeal to athletese. Appeal to the world

ANS: CDefeet makes products for various target groups; cyclists, runners, hikers, athletic women & men, and corporate sponsors so their appeal would be to multiple segments.




139. Refer to Defeet. Defeet’s _____ is high-tech apparel, the packaging it comes in, the brand name, company image and value.a. productb. placec. priced. promotione. None of the above

ANS: AProduct is the physical unit, the warranty, the service, brand name, company image, value, and many other factors.


140. Refer to Defeet. Defeet’s _____ includes retailers and online retailers throughout the world.a. Product strategyb. Place strategyc. Price strategyd. Promotion strategye. None of the above

ANS: BIn this example place is the physical distribution of Defeet’s product.


141. Refer to Defeet. Defeet’s _____ is what its customers give up to obtain their apparel.a. product strategyb. place strategyc. price strategyd. promotion strategye. None of the above

ANS: CPrice is what buyers give up to obtain a product.


142. Refer to Defeet. Defeet’s _____ includes advertising, public relations, sales promotions, and personal selling.a. productb. placec. priced. promotione. None of the above

ANS: DPromotion includes advertising, public relations, sales promotions, and personal selling.




FFRS

Patricia Curtis has been running the Ferrets First Rescue and Shelter (FFRS) since 1996. FFRS is in the business of ferret pickup and rescue, as well as ferret boarding and training, and education for ferret owners. She would like to expand her operations, and has been asked to write a marketing plan in order to apply for a bank loan. Curtis knows she can better serve ferrets and ferret owners if she can expand her target audience to schools, animal control officers at city facilities, and pet stores. To do this, she must increase marketing communications.

143. Refer to FFRS. "Serving ferrets and their owners in a 5-county area" would be an example of a:a. mission statementb. business arenac. situation analysisd. market strategye. strategic plan

ANS: AThis mission statement answers the question, "What business are we in?"

PTS: 1 REF: 34 OBJ: 02-2TOP: AACSB Reflective Thinking | TB&E Model Strategy

144. Refer to FFRS. Curtis is short of capital and labor and overcrowded with ferrets because they are not adopted out fast enough. She also knows she has superior ferret knowledge and an excellent facility for housing ferrets, and hopes to increase her capacity to 100 ferrets. This assessment process in which she learned this about her environment is called a(n):a. market auditb. situation analysisc. environmental scand. profit and loss assessmente. strategic window search

ANS: BWhen a company pursues a study to ascertain its current status and capabilities and its future expectations, it is conducting a situation analysis.

PTS: 1 REF: 35-36 OBJ: 02-4TOP: AACSB Reflective Thinking | TB&E Model Strategy

145. Refer to FFRS. The fact that FFRS is the only shelter of its kind in the state of Texas to have a "no-kill" policy, to offer pickup services in a 5-county area, and to have exclusive rights in the region to market Totally Ferret Food makes up the company's:a. sustained window of opportunityb. comparative edgec. competitive advantaged. marketing alliancee. penetration strategy

ANS: CThese facets could be a competitive advantage or sustainable competitive advantage.




146. Refer to FFRS. By marketing its existing ferret services to people who work with ferrets (such as educators, city officers, and pet store managers) in addition to ferret owners, FFRS would be engaged in:a. expanding her strategic windowb. market penetrationc. product developmentd. diversificatione. market development

ANS: EMarket development entails marketing current products to new target markets.


147. Refer to FFRS. Curtis will be exploring aspects of what her service offers, her central location and mobile pickup offering, the price of ferret adoptions, and promotions to increase awareness and expand donations. These elements in the marketing plan make up the service's:a. marketing mixb. target marketing planc. strategic goalsd. situation analysise. environmental audit

ANS: AProduct/service, place/distribution, price, and promotion make up the marketing mix.

PTS: 1 REF: 44 OBJ: 02-8TOP: AACSB Reflective Thinking | TB&E Model Promotion

148. Refer to FFRS. Curtis should know effective strategic planning for the Ferrets First Rescue and Shelter requires all of the following EXCEPT:a. continual attentionb. sound planning based on creativityc. top management's support and participationd. marketing information systemse. an ongoing process

ANS: DAlthough a marketing information system is used to support the plan, it is not usually a formal part of the broad approach to strategic planning.

PTS: 1 REF: 47-48 OBJ: 02-10TOP: AACSB Technology | TB&E Model Strategy | TB&E Model Online/Computer



Delta Faucet Company

Masco is the name of a well-recognized company in the construction industry. It produces cabinetry, furniture, lighting, and plumbing fixtures for the upper-end homeowner and builder. One of the divisions of Masco is the Delta Faucet Company, which is the leader in the faucet industry. Delta Faucet was founded in 1955. Over the decades, it has developed a legacy based on well-crafted, high-quality products. Since the 1970s, Delta has focused its energies on building loyalty with the builder marketplace. Research in 2002 showed that while builders respect the Delta faucet for its quality, durability, and dependability, household consumers were not enamored with Delta products. Due to the number of new magazines and television programs devoted to home style, homeowners wanted faucets that were chic and stylish. This was not the image of the Delta Faucet. To change its image, Delta Faucet began a marketing program in which it committed itself to developing new products to appeal to homeowners. It adopted a new slogan, "Beautifully Engineered."

149. Refer to Delta Faucet Company. The Delta Faucet Company is a _____ of Masco.a. target marketb. transactional divisionc. strategic business unit (SBU)d. share-bearing unit (SBU)e. situational business usage (SBU)

ANS: C PTS: 1 REF: 35 OBJ: 02-3TOP: AACSB Reflective Thinking | TB&E Model Strategy

150. Refer to Delta Faucet Company. Delta Faucet would most likely have gathered the information about how homeowners perceive its products through the use of a(n):a. break-even analysisb. correlation analysisc. sales potential assessmentd. situation analysise. economic forecast

ANS: D PTS: 1 REF: 35 OBJ: 02-4TOP: AACSB Reflective Thinking | TB&E Model Strategy

151. Refer to Delta Faucet Company. The marketing program, which Delta designed to develop new products to appeal to homeowners, is an example of:a. strategic planningb. a mission statementc. mass marketingd. production-oriented marketinge. tactical planning

ANS: A PTS: 1 REF: 47-48 OBJ: 02-1TOP: AACSB Reflective Thinking | TB&E Model Marketing Plan | TB&E Model Strategy



152. Refer to Delta Faucet Company. The reputation the Delta faucet has for its quality, durability, and dependability among builders is an example of a(n):a. tactical threatb. competitive advantagec. experience curved. economy of scalee. market differentiator

ANS: B PTS: 1 REF: 37 OBJ: 02-5TOP: AACSB Reflective Thinking | TB&E Model Product

153. Refer to Delta Faucet Company. Since Delta was already marketing to homeowners (although not very successfully), its development of new styles of faucets to appeal to this underserved market would be an example of a _____ strategy.a. market penetrationb. product diversificationc. market developmentd. product developmente. product penetration

ANS: D PTS: 1 REF: 40-41 OBJ: 02-6TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Strategy

154. Refer to Delta Faucet Company. While new home construction is not growing as rapidly as it once did, the number of homeowners who are remodeling bathrooms and kitchens is growing. According to the portfolio matrix, Masco would consider Delta a(n):a. question markb. exclamation pointc. stard. cash cowe. problem child

ANS: DA cash cow is an SBU that usually generates more cash than it needs to maintain its market share.


155. Refer to Delta Faucet Company. Delta's decision to make more stylish faucets represents a change in the _____ element of its marketing mix.a. productb. promotionc. placed. productione. distribution

ANS: A PTS: 1 REF: 44 OBJ: 02-7TOP: AACSB Reflective Thinking | TB&E Model Product



156. Refer to Delta Faucet Company. Delta's development of a new slogan represents a change in the _____ element of its marketing mix.a. productb. promotionc. placed. productione. distribution

ANS: B PTS: 1 REF: 45 OBJ: 02-7TOP: AACSB Reflective Thinking | TB&E Model Promotion

ESSAY

1. What is the difference between planning, strategic planning, and marketing planning?

ANS:Planning is the process of anticipating future events and determining strategies to achieve organizational objectives in the future.

Strategic planning is the managerial process of creating and maintaining a fit between the organization's objectives and resources and the evolving market opportunities. The goal of strategic planning is long-run profitability and growth. Thus, strategic decisions require long-term commitments of resources.

Marketing planning involves designing activities relating to marketing objectives and the changing marketing environment. Marketing planning is the basis for all marketing strategies and decisions. Issues such as product lines, distribution channels, marketing communications, and pricing are all delineated in the marketing plan.

PTS: 1 REF: 32-34 OBJ: 02-1TOP: AACSB Analytic | TB&E Model Strategy | TB&E Model Marketing Plan

2. What is marketing myopia? If a movie theater company had a myopic orientation, how might it state its business purpose? If the movie theater company avoided a myopic orientation, how would its business purpose change?

ANS:Defining a business in terms of goods and services rather than in terms of the benefits customers seek is called marketing myopia, which implies a narrow, short-term orientation. This orientation can threaten the survival of an organization.

If a movie theater had a myopic orientation, it might state its business as "selling tickets to movies." A better business statement for the theater would be "to provide convenient entertainment."

PTS: 1 REF: 34 OBJ: 02-2TOP: AACSB Analytic | TB&E Model Strategy | TB&E Model Marketing Plan



3. What is an SBU? If properly created, what characteristics should an SBU have?

ANS:SBU is an acronym for strategic business unit. A popular technique for managing large, heterogeneous organizations is to divide the firm into strategic business units.

When properly created, an SBU will have the following characteristics:

A distinct mission and a specific target market Control over its own resources Its own competitors A single business or collection of related businesses Plans independent of other businesses of the total organization Its own basic business functions

PTS: 1 REF: 35 OBJ: 02-2TOP: AACSB Analytic | TB&E Model Strategy

4. What is a marketing objective? Name three criteria for good marketing objectives. Use the criteria to write an objective for a business with which you are familiar.

ANS:A marketing objective is a statement of what is to be accomplished through marketing activities.

For marketing objectives to be realized, they must meet several criteria. They must:

be consistent with organizational objectives be measurable specify the time frame during which they are to be achieved be attainable and challenging

The example objective should fulfill the above criteria and be stated in terms of actions expected by the target consumers.

PTS: 1 REF: 36 OBJ: 02-3TOP: AACSB Analytic | TB&E Model Strategy

5. What is a SWOT analysis? How does it relate to strategic planning?

ANS:The SWOT acronym represents the four components of a situation analysis, the second step in strategic business planning. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal components of the organization that should be analyzed, while opportunities and threats are characteristics of the external environment that should be analyzed. With the SWOT analysis, the company is determining its present status, its current capabilities, and its future expectations.

PTS: 1 REF: 37-38 OBJ: 02-4TOP: AACSB Analytic | TB&E Model Strategy



6. What is environmental scanning? Name four environmental forces that affect marketing decision-making.

ANS:Environmental scanning is the collection and interpretation of information about external forces, events, and relationships that may affect the future of the organization. It helps identify market opportunities and threats and provides guidelines for the design of marketing strategy.

Important forces include:

social forces demographic forces economic forces technological forces political and legal forces competitive forces

PTS: 1 REF: 36 OBJ: 02-4TOP: AACSB Analytic | AACSB Diversity | TB&E Model Research

7. Stump’s Hot Olives are manufactured in Wisconsin. The company’s owner is Jim Haakinson. He sells his products at midwestern grocery stores and through mail order. He also sells some to local restaurants. The company has been in operation since 1998. The company relies on labor from Jim’s family and friends to produce and package olives. His olives are packaged in attractive, reusable glass containers. He uses store demonstrations to introduce his spicy olives to new customers. Discuss how this company can establish or maintain at least one of the three types of competitive advantage.

ANS:Student answers to this question will vary. Their answers should include a cost competitive advantage, which can be achieved through no-frills goods and customer service, efficient labor, production innovations (such as new products not currently on the market), and the experience curve. A product differentiation competitive advantage might be achieved by the use of the value impression (this possibility is implied in the description of the containers). The company might also try selling an augmented product-offering bundled pickles and pepper products with its olives. The niche competitive advantage is probably not appropriate for this company. Some students may suggest targeting gourmets or some other single market.




8. One method for conceptualizing alternative strategic opportunities is through the use of a strategic opportunity matrix. Fill in the matrix below with the appropriate names of alternatives. For each of the four opportunity alternatives, also give a specific example of a firm following that strategy.

Present Product New ProductPresent Market

New Market

ANS:

Present Product New ProductPresent Market Market Penetration Product Development

New Market Market Development Diversification

Text examples given for the four alternatives are as follows:

MARKET PENETRATION. Kraft Foods using heavy promotional expenditures in the form of aggressive advertising and cents-off coupons for Maxwell House coffee.

MARKET DEVELOPMENT. McDonald's opening restaurants in Russia, China, and Italy; colleges and universities expanding to executive development and continuing education.

PRODUCT DEVELOPMENT. Brooks Brothers has introduced a line of poplin suits with polyester fibers that move moisture away from the body.

DIVERSIFICATION. LTV entering the monorail business; Sony's acquisition of Columbia Pictures; Coca-Cola manufacturing water treatment equipment.

PTS: 1 REF: 40-41 OBJ: 02-6TOP: AACSB Analytic | AACSB Diversity | TB&E Model Strategy | TB&E Model Product

9. What is a competitive advantage? What makes a competitive advantage sustainable?

ANS:A competitive advantage is defined as one or more unique aspects of an organization that cause target consumers to patronize that firm rather than competitors. Seeking a competitive advantage over other firms in the market is an excellent means of examining opportunities.

A sustainable competitive advantage is one that cannot be copied by the competition. Without this, a competitive advantage could be easily copied and the advantage lost.




10. The Heritage Bank is unaware of all the many tools available that will let marketers examine a firm's processes and identify potential areas for improvement. This firm wants to examine all of its goals, strategies and structure, to ensure it's on the right track, and doing things well. The Heritage Bank has hired you as an outside consultant to recommend a plan of action. What do you suggest, and why?

ANS:The broadest control device available to marketing management is the marketing audit. A marketing audit is a thorough, systematic, periodic evaluation of the goals, strategies, structure, and performance of the marketing organization. This would address all of the issues this firm wants more information about.

PTS: 1 REF: 46-47 OBJ: 02-9TOP: AACSB Analytic | TB&E Model Marketing Plan

11. List the four basic strategies used once an organization has identified its SBUs in terms of the portfolio matrix. Describe when each is used.

ANS:The four basic strategies are (1) Build is used when an organization has identified an SBU it believes has the potential to be a star. Most likely the SBU has been identified as a problem child. (2) Hold is used when the SBU has been identified as a very successful cash cow. (3) Harvest is used with all SBU classifications except stars. The basic goal with this strategy is to increase short-term cash return. (4) Divest means to get rid of SBUs with low market share. Divestment strategy may be used with either dogs or problem children (also called question marks).

PTS: 1 REF: 46-47 OBJ: 02-6TOP: AACSB Reflective Thinking | TB&E Model Strategy

12. An essential part of marketing strategy is target market strategy. Selection of target market(s) drives marketing objectives and selection of the marketing mix (the four Ps). What are the three general strategies for selecting target markets?

ANS:The strategies are to:

appeal to the entire market with a single marketing mix concentrate on only one segment of the market appeal to multiple market segments using multiple marketing mixes

PTS: 1 REF: 44 OBJ: 02-7TOP: AACSB Analytic | AACSB Diversity | TB&E Model Strategy | TB&E Model Product



13. The marketing mix refers to a unique blend of marketing variables known as the four Ps. Name and briefly describe each of the 4 Ps.

ANS:PRODUCT. The firm's product offerings are the heart of the marketing mix. The Product P includes product development, production assistance, packaging, warranties, servicing, branding, company image, and other components in addition to the physical unit.

PLACE (or DISTRIBUTION). Distribution strategies make products available when and where customers want them. Products move through a channel of distribution that may include wholesalers and retailers. Physical distribution (stocking and transportation logistics) is also part of the Place P.

PROMOTION. Promotion includes personal selling, advertising, sales promotion, and public relations. Promotion serves to inform, educate, persuade, and remind target markets about product benefits.

PRICE. Price strategies are an important competitive weapon. Pricing is an important component of the marketing mix because it is flexible and allows revenue to be estimated and measured.


14. Perhaps, the broadest control device available to marketing management is the marketing audit. Describe this tool and its characteristics.

ANS:A marketing audit incorporates both financial and nonfinancial reporting, is mainly futuristic in nature, and is largely strategy-oriented. The marketing audit is designed to aid management in allocating marketing resources efficiently. It may be defined as a thorough, systematic, periodic evaluation of the goals, strategies, organization, and performance of the marketing organization. The marketing audit looks to the future allocation of marketing resources. All companies should use the audit system to uncover potential weaknesses and identify cost-cutting opportunities. The marketing audit should be comprehensive, systematic, independently conducted, and run periodically.

PTS: 1 REF: 46-47 OBJ: 02-9TOP: AACSB Analytic | TB&E Model Research | TB&E Model Strategy

15. Name and describe the three requirements for effective strategic planning

ANS:CONTINUAL PROCESS. Strategic planning should be an ongoing process because the environment is continually changing and the firm's resources and capabilities are continually evolving.

CREATIVITY. Sound planning is based on creativity. Existing assumptions about the firm and the environment should be challenged, and new rules of the game should be established. Developing unique and visionary strategies that defy conventional wisdom also prevents managers from locking into static and predictable options.

MANAGEMENT COMMITMENT. Perhaps the most critical element of successful strategic planning is top management's support and participation. Without the involvement of top management, no strategic plan can be effectively implemented.

PTS: 1 REF: 47-48 OBJ: 02-10TOP: AACSB Reflective Thinking | AACSB Analytic | TB&E Model Marketing Plan | TB&E Model Strategy



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