Chapter 18 Practice Quiz
Jim Koch, founder of Boston Beer Company, whose Samuel Adams Boston Lager beer has become one of the top-selling craft beers in America, started out in 1984 brewing a cherished family beer recipe in his kitchen. Koch visualized an opportunity and took risks. Which approach to marketing strategy does this example illustrate?
Entrepreneurial marketing
Retail Grocer Inc. just introduced a new store brand that is 17% cheaper than their existing name brand products. However, the profit margin is 4% instead of 2% on the name brand products. How much profit does Retail Grocer make on $82 million in sales with their new store brand?
$3.28 million
Jeremiah Industries has 27% of the current market share. However, Jeremiah's management believes they can expand the current $500 million market by 15% and increase their market share to 31%. What is the size of the market if Jeremiah Industries is successful with their expansion efforts?
$575 million
Marketing managers at Firm YYQ want to benchmark some performance metrics with their top competitors. They learned that in the most recent year (this year) the top three firms in this market have 82% of the overall market with the remaining 18% spread among about 12 other niche firms. Firm YYQ's management is concerned about declining performance and want to determine if their primary competitors are outperforming them and gaining market share or if it is simply due to a declining economy. They have compiled the following table of data to help them conduct their analysis. What percentage of revenue does Firm YYQ spend on marketing?
10.3%
Jeremiah Industries has 27% of the current market share. However, Jeremiah's management believes they can expand the current $470 million market by 13% and increase their market share to 25%. How much will Jeremiah Industries generate in new revenue?
132.78 million
Jeremiah Industries has 24% of the current market share. However, Jeremiah's management believes they can expand the current $445 million market by 15% and increase their market share to 25%. What was the percentage increase in Jeremiah Industries' revenue attributed to the market share expansion and higher market share?
19.79%
In the past, almost all of the advertising for Essential-Beauty has been in women's fashion magazines.The firm is now launching a new line of skin care products, ranging from facial cleansers to body lotion. These products are designed to be marketed to a broader audience, so the marketing team is exploring the effectiveness of different promotional mixes.Before deciding to launch the new line of products, Essential-Beauty conducted extensive market research to make sure the products were optimally positioned. A complete marketing plan including mobile advertising, magazine advertising, event sponsorship, and sales promotions was established long before the products themselves were ready for market. In this case, Essential-Beauty was using ________.
formulated marketing
Market challengers may launch a(n) ________, matching the competitor's product, advertising, price, and distribution efforts. It attacks the competitor's strengths rather than its weaknesses. -entrepreneurial strategy -niche strategy -full frontal attack -continuous innovation strategy -value analysis
full frontal attack
Whereas the mass marketer achieves ________, the nicher achieves ________.
high volume, high margins
Which of the following is the first step taken in the competitive intelligence system? -create a new brand image and marketing concept for the firm -identify the vital types of competitive information needed -collect published data and information from the field -check, interpret, and organize gathered information -respond to inquiries from managers about competitors
identify the vital types of competitive information needed
Informal ways of developing strategy include all of the following EXCEPT ________.
implementing formal competitive marketing strategies
Cozy Country Market entered the candle business with a unique product: a line of candles made from soy that produces less smoke and lasts up to twice as long as other candles. The firm sold this unique product exclusively to a few niches. The candles were priced at twice the cost charged for normal candles. The product was also sold online and in unconventional outlets not dominated by market leaders. In this case, Cozy Country Market was using a(n) ________ against the market leaders.
indirect attack
Companies can identify their competitors from both ________ points of view.
industry and market
Companies that have been in existence for some time often lose the marketing creativity and passion that they had at the start. They often need to refresh their marketing strategies and try new approaches, known as ________.
intrapreneurial marketing
Market niching is profitable because the company ________.
knows the needs of the target customer segment better than other firms that casually to sell to the same segment
Greener-grass Inc. is a lawn care company providing landscaping and lawn maintenance services to customers in and around Kansas City. The marketing team at Greener-grass carefully tracks the moves of competing companies, watching for shifting strategies and new promotions. The marketing team is also in constant touch with customers, using surveys and other feedback methods to find out what kind of services customers value the most. Greener-grass is most accurately described as having a ________ orientation.
market
Nintendo, producer of the Wii video game console, might define its competitors as other makers of physically interactive video games. But from a(n) ________ point of view, it would include all firms making physically interactive -recreational products. -market -industry -niche -interdependent
market
A runner-up firm that is fighting hard to increase its market share in an industry is a ________.
market challenger
________ are runner-up firms that want to hold their share in an industry without rocking the boat. Market challengers Market leaders Market nichers Market mavens Market followers
market followers
Which of the following statements is most likely true of market follower strategies?
market followers must keep manufacturing costs and prices low or product quality and services high
Most of the market is in the hands of the ________, the firm with the largest market share.
market leader
Ritz-Carlton competes against other hotels. Even more broadly, competitors might include all companies making products that supply the same service. Here Ritz-Carlton would see itself competing not only against other hotels but also against businesses large and small that supply rooms for busy travelers, from Airbnb to private bed-and-breakfasts. This is an example of ________.
market leader strategies
A ________ is a firm that serves small segments not being pursued by other firms.
market nicher
How does a small search engine compete against global powerhouses? It finds a unique place. That's the strategy of DuckDuckGo, a plucky search engine that has carved out its own special market space. DuckDuckGo is an example of a ________.
market nicher
Cinnabon's realization that it doesn't just sell cinnamon rolls but instead sells "irresistible indulgence" is an example of a firm taking a(n) ________.
market view
A ________ company watches both their customers and their competitors.
market-centered
A market nicher can most likely specialize along all of the following lines EXCEPT ________.
mass marketing
Sears, Levi-Strauss, and Holiday Inn encountered difficult times because they did not stand out as the lowest in cost, highest in perceived value, or best in serving some market segment. ________ try to be good on all strategic counts but end up being not very good at anything.
middle of the roaders
The market subsegment that a company exclusively caters to may dry up, or it might grow to the point that it attracts larger competitors. This is why such companies practice ________ dumping low-price strategies overall cost leadership multiple niching mass marketing
multiple niching
Fifty percent of the market is in the hands of Company A, 30 percent is in the hands of Company B, 15 percent is in the hands of Company C, and the remaining 5 percent is in the hands of Company D. Based on these hypothetical numbers, Company D is the market ________.
nicher
Computer mouse and interface device maker AdvTechPRO is only a fraction the size of software giant Terminal Time Software Inc. AdvTechPRO manufactures every variation of computer mouse imaginable (for left-handed people, wireless mice, shaped like actual mice, LED mice, etc.). Through skillful ________, the firm dominates the PC mouse market, with Terminal Time Software as its runner up.
niching
Most excellent companies focus on and excel at a single value discipline while meeting industry standards on the other two. For example, Walmart offers good customer service and an excellent product assortment. Still, it purposely offers less customer service than Nordstrom's and focuses obsessively on ________.
operational excellence
Using a strategy of ________, a company such as IKEA or Walmart provides superior value by leading its industry in price and convenience. It works to reduce costs and create a lean and efficient value delivery system.
operational excellence
Walmart, Costco, and Southwest Airlines serve customers who want reliable, good-quality products or services that are also reasonable and easily available. These companies are all known for pursuing a value discipline known as ________.
operational excellence
Which of the following are value discipline strategies?
operational excellence, customer intimacy, and product leadership
In this strategy, the company works hard to achieve the lowest production and distribution costs. Low costs let the company price lower than its competitors and win a large market share. Walmart, Lenovo, and Spirit Airlines are leading practitioners of this strategy. This strategy is called ________.
overall cost leadership
According to Michael Porter, what are three effective competitive positioning strategies?
overall cost leadership, differentiation, and focus
Apple has churned out one cutting-edge product after another. It all started with the sleek, affordable Apple Macintosh, the first personal computer ever to feature a graphic user interface and mouse. That was followed by an Apple-led revolution in which groundbreaking Apple products such as the iPod, iTunes, the iPhone, and the iPad all created whole new categories where none previously existed. Apple is an example of ________.
product leadership
If a company's aim is to make its own and competing products obsolete and serve customers who want state-of-the-art products and services, it is using a value discipline called ________.
product leadership
________ can adopt one of two competitive strategies: they can challenge the leader, or they can play along with competitors and not rock the boat.
runner up firms
Profitability increases as a business gains share relative to competitors in its ________.
served market
The key idea in niching is ________.
specialization
Country Kitchen and Perkins are both a chain of family restaurants featuring diner-like menus with reasonably priced items. These companies are in the same ________.
strategic group
In the major home appliance industry, Whirlpool, Maytag, and LG all follow similar strategies in the same market. These firms would be considered a(n) ________.
strategic group
The competitive intelligence system does all of the following EXCEPT ________.
takes action against the competitors once the data has been analyzed
All of the following are true of market follower strategies EXCEPT ________.
the follower must use a full frontal attack
Amazon at first defined itself in product terms-as online bookstore competing against physical bookstores by offering a huge selection of books, conveniently available and at market-beating prices. Before long, however, Amazon adopted a broader view. It defined itself as "the Earth's most customer-centric company," where customers could find and discover anything they might want to buy online. This is an example of ________.
the market concept of competition
A competitive analysis involves first identifying and assessing competitors and then selecting which competitors to attack or avoid.
true
A disadvantage of a competitor-centered company is that it ends up simply matching or extending industry practices rather than seeking innovative new ways to create more value for customers.
true
A market challenger may launch a full frontal attack, matching the competitor's product, advertising, price, and distribution efforts.
true
A market-centered company most likely has a stronger competitor and customer focus than a customer-centered company.
true
According to the overall cost leadership competitive strategy, the company works hard to achieve the lowest production and distribution costs.
true
As a first step, companies can gather data on each competitor's goals, strategies, and performance over the past few years.
true
Benchmarking involves comparing the firm's products and processes to those of the competitors to identify best practices to improve quality and performance.
true
Companies can identify their competitors from an industry point of view.
true
Knowing a competitor's mix of objectives reveals whether the competitor is satisfied with its current situation and how it might react to different competitive actions.
true
Market leaders can expand the market by developing new users, new uses, and more usage of its products.
true
The aim of customer value analysis is to determine the benefits that target customers value and how customers rate the relative values of various competitors' offers.
true
The goal of a "blue ocean strategy" is to make competition irrelevant.
true
The market leader refuses to be content with the way things are and leads the industry in new products, customer services, distribution effectiveness, promotion, and cost cutting.
true
When benchmarking, you typically compare your firm to the leading firms in the industry.
true
Rather than competing head-to-head with established competitors, many companies seek out unoccupied positions in ________ market spaces. -international -uncontested -highly-competitive -strong -differentiated
uncontested
Each ________ defines a specific way to build lasting customer relationships.
value discipline
Tomorrow's leading companies will succeed by seeking out unoccupied positions in uncontested market spaces. Such strategic moves, termed ________, create powerful leaps in value for both the firm and its buyers, creating new demand for new products.
value innovation
Which of the following conditions would enable higher market share to produce higher profits?
when unit costs drop as market share increases
A market challenger must first define ________.
which competitors to challenge
The competitive intelligence system includes all of the following EXCEPT ________
with holding information from decision makers
Rather than competing against deeply entrenched, old-line credit card-processing companies, Square reinvented a card reader and the services behind it for the underserved small and medium-sized business (SMB) marketspace. This is an example of ________.
a market-leader strategy
Spirit Airlines competes strictly on rock-bottom prices, even if that means sacrificing service and extras. Its "Bare Fare" prices run as much as 90 percent lower than those of competing airlines. Thanks to its industry-lowest cost per seat-mile, Spirit still reaps industry-leading profit margins. Spirit's rebellious pricing causes headaches for competitors that can't match its low fares and make decent margins. Spirit is an example of a(n) ________.
bad competitor
What must the market leader NOT do to protect its position?
be content with the way things are
________ requires delivering more value and satisfaction to target customers than competitors do.
competitive advantage
Strategies that strongly position the company against competitors and give it the greatest possible competitive advantage are called ________.
competitive marketing strategies
Benchmarking is a powerful tool for increasing a company's ________.
competitiveness
A(n) ________ is the process of identifying, assessing, and selecting key competitors.
competitor analysis
Fosters and Mason House, two major coffee brands, competed neck and neck based on their product attributes and price promotions. They were soon blindsided by the arrival of Starcoffeez, which focused more on the coffee experience rather than the coffee. This resulted in major losses for the two companies. This is an example of ________.
competitor myopia
The once-blazing-hot video-rental superstore Blockbuster didn't go bankrupt at the hands of other traditional brick-and-mortar retailers. Instead, it fell victim first to unexpected competitors such as direct marketer Netflix. This is an example of ________.
competitor myopia
On the positive side, the ________ company develops a fighter orientation, watches for weaknesses in its own position, and searches out competitors' weaknesses.
competitor-centered
Many approaches to developing effective competitive marketing strategies exist. There may be ________ between the formulated side of marketing and the creative side, as creativity and passion help build and maintain success.
constant tension
Which of the following is the best response a company can make to competitive threats?
continuous innovation
The ________ company is in a better position to identify new opportunities and set long-run strategies that make sense.
customer centered
American Express will do almost anything to build long-term customer loyalty and to capture customer lifetime value. Which of the following competitive marketing strategies is being pursued by American Express?
customer intimacy
Using the strategy of ________, the company provides superior value by precisely segmenting its markets and tailoring its products or services to exactly match the needs of targeted customers. -differentiation -customer intimacy -operational excellence -product leadership -overall cost leadership
customer intimacy
A market research firm conducts a survey of soft-drink consumers to assess Pepsi's and Coke's strengths and weaknesses in attributes valued by both company's target customers. The market research firm is using a ________. -customer value analysis -customer lifetime value estimation -blue ocean strategy -competitive marketing strategy -global marketing strategy
customer value analysis
Essential-Beauty is a rapidly growing firm that manufactures women's makeup, perfumes, and nail-care products. The company has established itself as a high-end cosmetic product brand available at most national drug stores. In the past, almost all of the advertising for Essential-Beauty has been in women's fashion magazines.The firm is now launching a new line of skin care products, p of its most frequent, loyal customers. The survey asked what makeup and skin care characteristics were most important to them. The company's marketing staff then ranked the performance of Essential-Beauty products in each of these categories. Essentials was conducting a(n) ________. Group of answer choices
customer value analysis
Marketing managers at Firm YYQ want to benchmark some performance metrics with their top competitors. They learned that in the most recent year (this year) the top three firms in this market have 83% of the overall market with the remaining 17% spread among about 12 other niche firms. Firm YYQ's management is concerned about declining performance and want to determine if their primary competitors are outperforming them and gaining market share or if it is simply due to a declining economy. They have compiled the following table of data to help them conduct their analysis. What was the percentage change in Firm YYQ's market share from the previous year?
-3.45%
Which of the following is a negative aspect of a competitor-centered company? -It develops a customer-relationship strategy. -It becomes too reactive. -It extends industry practices -It concentrates its resources on delivering superior value to target customers. -It ends up seeking innovative ways to create more value for customers.
It becomes too reactive.
Essential-Beauty is a rapidly growing firm that manufactures women's makeup, perfumes, and nail-care products. The company has established itself as a high-end cosmetic product brand available at most national drug stores. In the past, almost all of the advertising for Essential-Beauty has been in women's fashion magazines.The firm is now launching a new line of skin care products, ranging from facial cleansers to body lotion. These products are designed to be marketed to a broader audience, so the marketing team is exploring the effectiveness of different promotional mixes.Essential-Beauty e-mailed a survey to a group of its most frequent, loyal customers. The survey asked what makeup and skin care characteristics were most important to them. The company's marketing staff then ranked the performance of Essential-Beauty products in each of these categories. Essentials was conducting a(n) ________.
customer value analysis
The existence of competitors results in several strategic benefits to include all EXCEPT ________.
decreasing total demand
To gain competitive advantage, a company should do all of the following EXCEPT ________.
deliver value at the same price as competitors and decrease market share
Market leaders can expand the market by ________ and more usage of the product.
developing new users
Lovelies is the leading workout and fitness center for women. The regional chain of gyms has traditionally catered to women aged 40 and older who are interested in strength and cardiovascular training. Lovelies has recently begun promotions to bring younger women into its gyms. This is an example of how the market leader ________.
develops new users
If a company is a market leader in one category, and a market challenger or market nicher in other categories, it will follow ________ strategies for each category.
different
Nike and Caterpillar follow a(n) ________ strategy in apparel and heavy construction equipment. They concentrate on creating a product line and marketing program that comes across as the class leader in the industry. Most customers would prefer to own these brands if their prices were not high.
differentiation
An example of blue ocean competitors is the recent surge of ________.
direct to consumer brands
A company that pursues low-cost leadership will react much more strongly to a competitor's cost-reducing manufacturing breakthrough than to the same competitor's increase in advertising. This example shows that ________.
each competitor has a mix of objectives
When Gary Hirshberg started the Stonyfield Farm yogurt company, he stated that his company could do better with less advertising, less marketing research, and more guerrilla marketing. He came up with innovative marketing ideas to promote his products such as having sales personnel dress up as large yogurt cartons to distribute free yogurt samples. Which of the following marketing strategies was being implemented by Hirshberg?
entrepreneurial marketing
Which of the following is a market leader strategy?
expanding market share
Companies do not differ in how they approach the strategy-planning process.
false
Entrepreneurial marketing exclusively involves developing formal marketing strategies and adhering to them closely.
false
Ritz-Carlton focuses on the top 5 percent of corporate and leisure travelers. Bose concentrates on very high-quality electronics products that produce better sound. These companies serve a few market segments well rather than going after the whole market. They use a(n) ________ strategy
focus
