Marketing CH2
20) A company's mission statement provides the depth needed for all segments of the company to reach their goals.
FALSE
21) A mission statement is a document embodying an organization's short-term goals.
FALSE
25) "At Trader Joe's, our mission is to provide all our customers the best food and beverage values to be found anywhere, and the information to make informed buying decisions." This is a product-oriented business definition.
FALSE
26) A company's mission could appropriately be stated as "making more sales or profits."
FALSE
71) The major activity in strategic planning is product innovation.
FALSE
72) On the BCG matrix, "question marks" are high-growth, high-share businesses or products.
FALSE
73) Market penetration involves offering modified or new products to current markets.
FALSE
75) An American airline company started a grocery chain in Australia. This is an example of product development.
FALSE
76) Company growth through diversification involves offering modified or new products to the company's current markets.
FALSE
90) Since companies want to work together to attract customers, marketers do not need to practice partner relationship management.
FALSE
79) What type of strategy should a company use to manage its cash cows?
Since cash cows are low-growth, high-share businesses or products, and require less investment, a company should finance other SBUs with the help of cash cows.
78) What are stars according to the BCG growth-share matrix?
Stars are high-growth, high-share businesses or products. They often need heavy investments to finance their rapid growth.
27) How does strategic planning benefit companies?
Strategic planning sets the stage for all other planning in the firm. The strategic plan involves adapting the firm to take advantage of opportunities in its constantly changing environment.
19) The purpose of strategic planning is to find ways in which your company can best use its strengths to take advantage of attractive opportunities in the environment.
TRUE
22) A clear mission statement acts as an "invisible hand" that guides people in the organization.
TRUE
23) Mission statements should be market oriented.
TRUE
24) "At Joe's Diner, we serve great burgers" is a product-oriented business definition.
TRUE
74) Market development involves company growth by identifying and developing new market segments for current company products.
TRUE
88) Customer engagement and value are the key ingredients in the marketer's formula for success.
TRUE
89) Each department in a company can be thought of as a link in the company's internal value chain.
TRUE
The major activity in strategic planning is business portfolio analysis, whereby management evaluates the products and businesses that make up the company.
TRUE
12) A company's broad mission leads it to develop all of the following EXCEPT ________. A) budget objectives B) business objectives C) sales objectives D) marketing objectives E) customer engagement objectives
A
16) Which of the following is a market-oriented mission statement? A) "We empower customers to achieve their dreams." B) "We sell jumbo burgers." C) "We are an online library." D) "We are a low-cost airline." E) "We make porcelain figurines."
A
17) Mission statements should be ________. A) meaningful and specific yet motivating B) technology oriented C) written solely for public relations purposes D) focused on increasing sales or profits E) strictly product oriented
A
39) According to the Boston Consulting Group approach, ________ serves as a measure of company strength in the market. A) relative market share B) product development C) market diversification D) product attribute E) market segmentation
A
48) By harvesting its SBU, a company would most likely be ________. A) milking the SBU's short-term cash flow regardless of the long-term effect B) selling the SBU or phasing it out and using the resources elsewhere C) investing just enough to hold the SBU's current market share D) investing more in the business unit to build its share E) diversifying the company's product line
A
49) A company can ________ an SBU by selling it or phasing it out and using the resources elsewhere. A) divest B) promote C) expand D) harvest E) hold
A
63) Cleats, Unlimited developed a new style of soccer shoe. This is an example of ________. A) product development B) market development C) market penetration D) diversification E) product differentiation
A
95) Which of the following is an element of the marketing mix? A) place B) education C) needs D) wants E) esteem
A
RedFin manufactures diving equipment that is highly regarded by customers worldwide. Each department in RedFin contributes to its success and can be thought of as a(n) ________. A) link in the company's internal value chain B) separate organization C) independent subsidiary of the company D) separate market segment E) SBU
A
31) Which of the following is the first step of business portfolio planning? A) shaping the future portfolio by developing strategies for growth and downsizing B) determining which businesses should receive more, less, or no investment C) identifying internal strengths and weaknesses D) identifying future opportunities E) determining short-term goals
B
81) What is a business portfolio? What are the steps involved in business portfolio planning?
A business portfolio is the collection of businesses and products that make up a company. Business portfolio planning involves two steps. First, the company must analyze its current business portfolio and determine which businesses should receive more, less, or no investment. Second, it must shape the future portfolio by developing strategies for growth and downsizing.
91) What factors determine the success of a company's value chain?
A company's value chain is only as strong as its weakest link. Success depends on how well each department performs its work of adding customer value and on how the company coordinates the activities of various departments.
93) What is a value delivery network?
A value delivery network refers to the network of a company, its suppliers, its distributors, and, ultimately, its customers who partner with each other to improve the performance of the entire system. More companies today are partnering with other members of the supply chain—suppliers, distributors, and, ultimately, customers—to improve the performance of the customer value delivery network. Competition no longer takes place only between individual competitors. Rather, it takes place between the entire value delivery networks created by these competitors.
77) What is a strategic business unit (SBU)?
An SBU can be a company division, a product line within a division, or sometimes a single product or brand.
10) Mission statements should be defined in terms of ________. A) the advantages a company's products provide B) satisfying basic customer needs C) the value a company's products provide D) the profitability of a company's products E) the variety they offer to a customer
B
102) Which of the following refers to the process of dividing a market into distinct groups of buyers with different needs, characteristics, or behaviors? A) market diversification B) market segmentation C) downsizing D) customer relationship management E) prospecting
B
103) Rob has been asked by his manager to identify a group of potential customers who would respond in a similar way to a given set of marketing efforts. In this instance, Rob has been asked to identify a ________. A) new product B) market segment C) marketing intermediary D) brand E) product line
B
105) Paul Robinson has identified a group of potential customers who seem to respond in a similar way to a series of magazine and radio advertisements for his company's product. Paul has identified a ________. A) target market B) market segment C) niche market D) product attribute E) product design
B
106) Which of the following is true with regard to a market segment? A) A market segment consists of consumers with dissimilar needs and preferences. B) A market segment consists of consumers who respond in a similar way to a given set of marketing efforts. C) Very few markets have segments. D) Dividing the market into segments decreases the efficiency of the selling process. E) Dividing the market into segments reduces composite demand.
B
33) The best business portfolio is the one that ________. A) provides the greatest opportunity for increasing profits B) best fits the company's strengths and weaknesses to opportunities in the environment C) ensures that the company will realize increased share of market D) allows the company to decrease its overall costs E) entices customers to purchase even more products from the company
B
35) During portfolio analysis, a company ________ after identifying the key businesses that make up the company. A) formulates a short-term marketing plan B) assesses the attractiveness of its various SBUs C) assesses its strengths and weaknesses D) performs a SWOT analysis E) assesses the effectiveness of its various channel intermediaries
B
42) The key businesses of Kimberley and Price consist of a division that produces and sells breakfast cereals and another that manufactures gardening tools. Each of these businesses is called a ________. A) market segment B) strategic business unit C) question mark D) prospect E) product portfolio
B
44) ________ are low-growth, high-share businesses/products that need less investment to hold their market share. A) Stars B) Cash cows C) Question marks D) Dogs E) Bears
B
45) Which of the following is true with regard to cash cows? A) They are high-growth, high-share businesses or products. B) They can be used to help finance the company's question marks and stars. C) They require significant cash to maintain market share. D) They are low-share businesses and products. E) They do not promise to be large sources of cash.
B
5) A ________ documents an organization's purpose—what it wants to accomplish in the larger environment. A) vision statement B) mission statement C) business portfolio D) value proposition E) product strategy
B
50) Modern strategic planning ________. A) exclusively consists of a company's short-term goals B) is decentralized C) does not involve cross-functional teams D) does not take the overall mission of the company into consideration E) is highly centralized
B
51) The BCG matrix approach is problematic in that it ________. A) focuses on planning for the future at the cost of ignoring the present B) focuses solely on current businesses and provides little scope for future planning C) tends to undermine the importance of market growth rate as a measure of market attractiveness D) tends to undermine the importance of relative market share as a measure of company strength in the market E) fails to classify SBUs
B
56) Lark Inc., an American electronics company, is currently reviewing new geographical markets to sell its highly popular televisions. By 2020, it plans to open new stores across all the major South Asian cities. Lark is most likely following a ________ strategy. A) local marketing B) market development C) diversification D) product adaptation E) product development
B
59) FencePro, a local company, has developed an entirely new mounting system for chain link fences. After acquiring a distributor, FencePro now has the ability to market its products nationwide. FencePro is most likely following a ________ strategy. A) market penetration B) market development C) downsizing D) product adaptation E) product development
B
8) Which of the following is NOT a market-oriented business definition? A) "We empower customers to realize their dreams." B) "We make high-quality consumer food products." C) "We sell success and status." D) "We create the Hilton experience." E) "We bring innovation to every home."
B
97) Which of the following is NOT an element of the marketing mix? A) place B) purchase C) product D) price E) promotion
B
Making more sales to current customers without changing a firm's products is known as ________. A) market segmentation B) market penetration C) product diversification D) product development E) prospecting
B
Marketing plays a key role in the company's strategic planning in all of these ways EXCEPT ________. A) providing input to identify attractive market opportunities B) designing new products from scratch C) creating customer value and building profitable relationships with customer groups D) designing strategies for reaching a unit's objective E) providing a guiding philosophy
B
Which of the following is true with regard to the product/expansion grid? A) It classifies SBUs into four distinct categories. B) It is a useful device for identifying growth opportunities. C) It helps companies analyze their internal strengths and weaknesses. D) It functions on the premise that firms should downsize to regain market share. E) It is a useful device for segregating customers into distinct categories.
B
100) Teenagers are expected to respond in a similar way to a set of marketing efforts. In other words, this group represents a ________. A) channel intermediary B) line extension C) market segment D) product attribute E) brand personality
C
104) The process of evaluating each market segment's attractiveness and selecting one or more segments to enter is known as ________. A) market segmentation B) diversification C) market targeting D) prospecting E) downsizing
C
3) Which of the following is the first step in strategic planning? A) setting short-term goals B) developing the business portfolio C) defining the organizational mission D) formulating the key marketing strategies E) identifying the organization's weaknesses and the threats it faces
C
32) The major activity in strategic planning is ________, whereby management evaluates the products and businesses that make up the company. A) SWOT analysis B) benchmarking C) business portfolio analysis D) breakeven analysis E) prospecting
C
34) Which of the following best describes a strategic business unit? A) the internal value chain of a company B) the supply chain of a company C) the key businesses that make up a company D) the key channel intermediaries of a service company E) the key competitors of a company
C
37) Most standard portfolio analysis methods evaluate SBUs on the ________. A) potential for niche or global marketing B) degree of product differentiation C) strength of the market or industry position D) accessibility to rural markets E) number of successful business acquisitions
C
40) Which of the following is true of the BCG matrix approach? A) It is inexpensive to implement. B) It does not have any limitations. C) It considers market growth rate to be a measure of market attractiveness. D) It describes consumer motivations and needs. E) It does not consider relative market share to be a measure of company strength in the market.
C
43) ________ are a type of SBU that often require heavy investments to finance their rapid growth. A) Cash cows B) Question marks C) Stars D) Dogs E) Bears
C
46) ________ are low-share business units in high-growth markets that require a lot of cash to hold their share. A) Stars B) Dogs C) Question marks D) Cash cows E) Bears
C
47) The pharmaceuticals division of Omni Healthcare holds low market share in a high-growth market. According to the BCG matrix, the pharmaceuticals division of Omni can be classified as a ________. A) star B) bear C) question mark D) cash cow E) dog
C
52) Which of the following is a portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification? A) BCG matrix B) analysis of variance C) product/market expansion grid D) Harris matrix E) SWOT analysis
C
60) Amor, a successful brand of women's clothing, recently introduced a line of fitness equipment. This is an example of ________. A) mass customization B) niche marketing C) diversification D) prospecting E) product adaptation
C
64) Companies may want to downsize their business portfolios for all but which of the following reasons? A) The firm may have grown too fast. B) The firm may have entered areas where it lacks experience. C) The customers may have purchased all they need. D) The market environment might change. E) The products might simply age.
C
65) Elmo Corp., a manufacturer of personal computers and printers, recently established an office furniture exporting business. This is an example of ________. A) niche marketing B) local marketing C) diversification D) product adaptation E) downsizing
C
7) A mission statement serves as a ________. A) statement of the organization's net profits B) plan for short-term sustainability C) statement of the organization's purpose D) statement of the organization's current liabilities E) reward plan for the organization's highly skilled employees
C
96) Which of the following is NOT part of a company's decision about which customers it will serve and how? A) differentiation B) targeting C) budgeting D) segmentation E) positioning
C
98) Customers can be grouped and served in various ways based on several factors. These include all of the following EXCEPT ________ factors. A) psychographic B) behavioral C) technological D) demographic E) geographic
C
Which of the following is true with regard to strategic planning? A) At the corporate level, the company starts the strategic planning process by determining what portfolio of businesses and products is best for the company. B) A strategic plan deals with a company's short-term goals. C) The focus of strategic planning is to define a game plan for long-run survival and growth. D) The strategic plan is a statement of an organization's purpose.
C
1) ________ is the process of developing and maintaining a crucial fit between the organization's goals and capabilities and its changing marketing opportunities. A) Benchmarking B) SWOT analysis C) Market segmentation D) Strategic planning E) Diversification
D
101) Each company must divide up the total market, choose the best segments, and design strategies for profitably serving chosen segments. This process involves market segmentation, ________, differentiation, and positioning. A) price discrimination B) supply-chain analysis C) marketing implementation D) market targeting E) market diversification
D
14) Which of the following companies has a market-oriented business definition? A) An electronics company, whose business definition is: "We produce microchips." B) A hotel, whose business definition is: "We rent rooms." C) An apparel company, whose business definition is: "We make and sell women's clothing." D) A cosmetic company, whose business definition is: "We sell hope and self-esteem." E) A pizzeria, whose business definition is: "We sell the world's most delicious thin-crust pizzas."
D
15) Which of the following is NOT an example of product-oriented mission statements? A) "We are an online library." B) "We run theme parks." C) "We sell athletic shoes." D) "We sell memorable experiences." E) "We rent hotel rooms."
D
18) A company's broad mission leads to ________. A) increasing profits and more customers B) increasing sales and decreasing costs C) a higher share price D) a hierarchy of objectives, including business objective and marketing objectives E) increased market share and increasing profitability
D
36) Which of the following is NOT something a company must determine when analyzing its current business portfolio? A) which businesses should receive more investment B) which businesses should receive less investment C) which businesses should receive no investment D) which businesses should be sold or closed E) which businesses shape the future portfolio
D
38) According to the Boston Consulting Group approach, ________ provides a measure of market attractiveness. A) product attribute B) product design C) market penetration D) market growth rate E) market segmentation
D
41) Within a company, who is most likely to perform strategic planning? A) the president and vice presidents B) the accounting and finance departments C) the marketing and sales departments D) cross-functional teams of divisional managers close to their markets E) the manufacturing and production departments
D
57) The managers of Arrow, an American retail chain, are currently reviewing new demographic markets to sell the firm's current products. This is an example of ________. A) market penetration B) product development C) mass marketing D) market development E) product adaptation
D
6) Mission statements should ________ and be defined in terms of ________. A) be technology oriented; meeting the self-actualization needs of customers B) be product oriented; satisfying the esteem needs of customers C) embody the company's short-term plans; current opportunities D) be market oriented; satisfying basic customer needs E) address sales and profits; the net return on investments
D
61) Sunny Brews is a coffeehouse chain based in Boston. It recently introduced Eva, a mild roast, which became immensely popular. This exemplifies ________. A) benchmarking B) diversification C) mass customization D) product development E) downsizing
D
62) A women's apparel manufacturer in California recently acquired a Houston-based company that manufactures office furniture. This is an example of ________. A) product development B) market development C) market penetration D) diversification E) product differentiation
D
94) What is the marketing logic by which a company hopes to create customer value and achieve profitable customer relationships? A) price B) marketing implementation C) value chain D) marketing strategy E) downsizing
D
Companies that define their missions in terms of products or technologies are considered myopic primarily because ________. A) products and technologies result in low returns on investment B) consumer preferences with regard to products and technology are difficult to predict C) consumer preferences for different product categories vary from time to time D) products and technologies eventually become outdated
D
Each department in a company that carries out value-creating activities can be thought of as a link in the company's ________. A) channel of intermediaries B) external value stream C) demand chain D) internal value chain E) supplier chain
D
Phoenix, a popular coffee shop chain in North America, recently opened 400 stores to cater to its rapidly increasing number of patrons. This exemplifies ________. A) product differentiation B) product development C) diversification D) market penetration E) market segmentation
D
The collection of businesses and products that make up a company is called its ________. A) strategic business unit B) supply chain C) strategic plan D) business portfolio E) internal value chain
D
The network made up of the company, its suppliers, its distributors, and, ultimately, its customers who partner with each other to improve the performance of the entire system is known as the ________. A) business portfolio B) supply chain C) marketing mix D) value delivery network E) internal value chain
D
Which of the following companies has a product-oriented business definition? A) A luxury hotel, whose business definition is: "We sell out-of-the-world experiences to our guests." B) A real estate company, whose business definition is: "We sell dreams." C) A cosmetic company, whose business definition is: "We offer hope and self-expression." D) A shoe manufacturer, whose business definition is: "We manufacture affordable and long-lasting shoes for all."
D
11) Orion Inc. operates in many industries, including pharmaceuticals and food products. The company's goal is to create "abundant and affordable food for all and a healthy environment." This represents Orion's ________. A) marketing plan B) product mix C) business portfolio D) marketing mix E) mission statement
E
4) Which of the following is NOT a step in the strategic planning process? A) defining the company mission B) setting company objectives and goals C) designing the business portfolio D) planning marketing and other functional strategies E) evaluating members of the company's value chain
E
99) What is the process of dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate marketing programs? A) market targeting B) marketing implementation C) market diversification D) market penetration E) market segmentation
E
80) Define market penetration.
Market penetration refers to company growth by increasing sales of current products to current market segments without changing the product.
Why should mission statements be market oriented instead of product or technology oriented?
Mission statements should be market oriented and defined in terms of satisfying basic customer needs. Products and technologies eventually become outdated, but basic market needs may last forever.
83) What are some of the problems associated with matrix approaches?
The BCG and other formal methods revolutionized strategic planning. However, such centralized approaches have limitations: They can be difficult, time-consuming, and costly to implement. Management may find it difficult to define SBUs and measure market share and growth. In addition, these approaches focus on classifying current businesses but provide little advice for future planning.
Define strategic planning. Discuss the steps involved.
The process of developing and maintaining a strategic fit between the organization's goals and capabilities and its marketing opportunities is called strategic planning. At the corporate level, the company starts the strategic planning process by defining its overall purpose and mission. This mission is then turned into detailed supporting objectives that guide the entire company. Next, headquarters decides what portfolio of businesses and products is best for the company and how much support to give each one. In turn, each business and product develops detailed marketing and other departmental plans that support the companywide plan. Thus, marketing planning occurs at the business-unit, product, and market levels. It supports company strategic planning with more detailed plans for specific marketing opportunities.
92) What are the various components of the value delivery network of a company?
The value delivery network is made up of the company, its suppliers, its distributors, and, ultimately, its customers who partner with each other to improve the performance of the entire system.