MKGT 3310 Ch 2

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14) In the BCG matrix, ________ refer to low-growth, high-share businesses or products. A) stars B) cash cows C) question marks D) dogs E) heroes

: B Diff: 1 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

72) In the 4Ps of the marketing mix, promotion refers solely to advertising.

: FALSE Diff: 2 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence it.

7) "At CL Online, we create customer connectivity, anytime, anywhere" is a product-oriented mission statement.

: FALSE Diff: 2 LO: 2-1: Explain company-wide strategic planning and its four steps. AACSB: Analytical thinking

38) An SBU can be a company division or a product line within a division, but not a single product or brand.

: FALSE Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

41) Many SBUs start out as stars and move into the question mark category if they succeed.

: FALSE Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

42) The position of a strategic business unit in the growth-share matrix typically remains constant over time.

: FALSE Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

59) Which of the following best describes product positioning? A) differentiating a market offering to create superior customer value B) arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers C) identifying consumer needs and creating a product to meet those needs D) evaluating each market segment's attractiveness and selecting one or more segments to enter E) dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors

: B Diff: 2 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence it.

54) A ________ is made up of a company, its suppliers, its distributors, and its customers who partner with each other to improve the performance of the entire system. A) value chain B) shareholder network C) business portfolio D) value delivery network E) growth-share matrix

: D Diff: 2 LO: 2-3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value.

78) In a SWOT analysis, which of the following would be considered a weakness of a company? A) an unfavorable economic climate that discourages consumption B) the exit of a competitor from the market C) inflation that leads to higher prices of the company's products D) falling consumer interest in its products E) obsolete technologies used by the company

: E Diff: 3 LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. AACSB: Analytical thinking

49) Explain how a company's value chain works. Provide an example to illustrate your response.

: (Students' answers may vary. The answer given below is indicative.) A value chain is the series of departments within a firm that carry out value-creating activities to design, produce, market, deliver, and support a firm's products. Each company department can be thought of as a link in a company's internal value chain. The company's success depends not only on how well each department performs its work but also on how well the various departments coordinate their activities. For example, Walmart's goal is to create customer value and satisfaction by providing shoppers with the products they want at the lowest possible prices. Marketers at Walmart play an important role. They learn what customers need and stock the stores' shelves with the desired products at unbeatable low prices. They prepare advertising and merchandising programs and assist shoppers with customer service. Through these and other activities, Walmart's marketers help deliver value to customers. However, the marketing department needs help from the company's other departments. Walmart's ability to help customers "Save Money. Live Better." depends on the purchasing department's skill in developing the needed suppliers and buying from them at low cost. Walmart's information technology department must provide fast and accurate information about which products are selling in each store. Its operations people must provide effective, low-cost merchandise handling. 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. At Walmart, if purchasing can't obtain the lowest prices from suppliers, or if operations can't distribute merchandise at the lowest costs, then marketing can't deliver on its promise of unbeatable low prices. Diff: 3 LO: 2-2: Discuss how to design business portfolios and develop growth strategies. AACSB: Analytical thinking

100) Raintree Developers has been measuring its marketing return on investment (or marketing ROI) to assess its marketing performance for the past few years. Explain why this method may not accurately reflect the company's performance and what Raintree can use to better estimate its performance.

: (Students' answers may vary. The answer given below is indicative.) Marketing ROI is the net return from a marketing investment divided by the costs of the marketing investment. ROI is a measure of the profits generated by investments in marketing activities. Marketing ROI can be difficult to assess because the benefits of marketing are not always easily translated in dollar amounts. For instance, returns such as advertising and brand-building impact cannot be easily put into dollar returns. However, marketing ROI can be assessed in terms of more quantifiable standard marketing performance measures such as brand awareness, sales, or market share. Beyond standard performance measures, Raintree can also use customer-centered measures such as customer acquisition, customer engagement, customer retention, customer equity, and customer lifetime value. Diff: 3 LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. AACSB: Analytical thinking

96) ToyTrain is a toy company that sells its products in most regions of the United States. It produces a variety of toys for children of every age group, from toddlers to preteens. What are ToyTrain's options for organizing its marketing department? Briefly describe each structure as it would apply to ToyTrain. Which organization do you think would be best for ToyTrain? Why?

: (Students' answers may vary. The answer given below is indicative.) Modern marketing departments can be arranged in several ways. The most common form of marketing organization is the functional organization. Under a functional organization, different marketing activities are headed by a functional specialist — a sales manager, an advertising manager, a marketing research manager, a customer-service manager, or a new product manager. As ToyTrain is based only in the United States, a functional organization may be appropriate if marketing strategies and messages need to be consistent across the region. Under a geographic organization, sales and marketing people are assigned to specific countries, regions, and districts. A company that sells across a country could benefit from a geographic organization. As ToyTrain sells products across the country, organizing its sales and marketing personnel by region may also be appropriate. Under a product management organization, a product manager develops and implements a complete strategy and marketing program for a specific product or brand. Unless the company has a few standout brands, this system will not benefit it as much as other methods. Under a market or customer management organization, the company is organized around the needs of specific customer segments. In firms that use this organization, one product line is sold to many different types of markets and customers that have different needs and preferences. ToyTrain could use this method and organize its departments according to the age groups of the children it caters to and the types of toys suitable for each group. The company could also use some combination of these organizational forms. Diff: 3 LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. AACSB: Reflective thinking

47) Should a company use the BCG matrix to classify its products or brands? Give reasons for your answer.

: (Students' answers may vary. The answer given below is indicative.) The Boston Consulting Group matrix evaluates SBUs on two important dimensions: the attractiveness of the SBU's market or industry growth rate and the strength of the SBU's position or relative market share in that market or industry. The growth-share matrix defines four types of SBUs: stars, cash cows, question marks, and dogs. Once each SBU has been defined, a company can determine what role each will play in the firm's future, using strategies of building, holding, harvesting, or divesting each SBU. However, the BCG and other portfolio planning approaches can be difficult to execute, time consuming, and also costly to implement. Defining SBUs and measuring relative market share and growth can be difficult tasks as well. A serious flaw with these approaches is that while they are helpful for classifying current businesses, they offer little or no advice for future planning. Diff: 3 LO: 2-2: Discuss how to design business portfolios and develop growth strategies. AACSB: Analytical thinking

29) ToyBox is a toy manufacturer based in the United Kingdom. Which of the following indicates that the company is following a market penetration strategy? A) It introduces a line of children's clothing in the United Kingdom. B) It acquires toy rights for a popular cartoon character to boost its sales. C) It introduces its toys in the Indian and South-East Asian markets. D) It enters the U.S. market with a line of children's clothing. E) It develops a new line of educational software targeted at the current market.

: B Diff: 3 LO: 2-2: Discuss how to design business portfolios and develop growth strategies. AACSB: Analytical thinking

97) RTF Developers is a construction company with a presence in several countries. The company currently organizes its marketing department using a functional system of organization, but this seems inefficient. Explain why a geographic organization would benefit the company more than a functional organization.

: (Students' answers may vary. The answer given below is indicative.) Under a functional organization, different marketing activities are headed by a functional specialist — a sales manager, an advertising manager, a marketing research manager, a customer service manager, or a new product manager. Under a geographic organization, sales and marketing people are assigned to specific countries, regions, and districts. As RTF has a presence in many countries, a geographic system might benefit it more than a functional system. Organizing its marketing department by country would allow its marketing plans and messages to be tailored to the culture and customers of that particular country and may produce a better result than centralized planning across countries. A geographic organization also allows salespeople to settle into a territory, get to know their customers, and work with a minimum of travel time and cost. Diff: 3 LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. AACSB: Reflective thinking

95) Kawaii Electronics sells air conditioning systems for office buildings. The company's marketing department is currently structured as a functional organization. However, Kawaii is considering changing the structure to either a product management or a customer management organization. In a brief essay, describe each type of organization: functional, product management, and customer management. What are the advantages and/or disadvantages of each structure for Kawaii? Which structure do you recommend for Kawaii? Why?

: (Students' answers may vary. The answer given below is indicative.) Under the functional organization, different marketing activities are headed by a functional specialist — a sales manager, an advertising manager, a marketing research manager, a customer service manager, or a new product manager. Under a product management organization, a product manager develops and implements a complete strategy and marketing program for a specific product or brand. Unless the company has a few standout products, this system will not benefit it as much as other methods. Considering that the company sells one basic product type, this system may not be profitable for the company. Under a market or customer management organization, the company is organized around the needs of specific customer segments. In firms that use this organization, one product line is sold to many different types of markets and customers that have different needs and preferences. Though the firm sells a single type of product and product line, all its customers are offices and significant differences will most likely not exist. Though the company may segment its market based on office size, this may be an inefficient use of company resources. Diff: 3 LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. AACSB: Reflective thinking

11) The two dimensions the BCG approach uses to evaluate and manage SBUs are ________. A) market growth rate and relative market share B) market growth rate and market penetration C) market growth rate and market development D) relative market share and product development E) relative market share and market penetration

: A Diff: 1 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

25) A firm's decision to identify and develop new markets for existing products is a ________ strategy. A) market development B) market differentiation C) market penetration D) product development E) diversification

: A Diff: 1 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

80) In a SWOT analysis, ________ refer to unfavorable external factors or trends that may present challenges to performance. A) threats B) strategies C) weaknesses D) opportunities E) strengths

: A Diff: 1 LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

85) Evaluating the results of marketing strategies and plans and taking corrective action to ensure that the objectives are attained is called ________. A) marketing control B) marketing implementation C) market planning D) marketing development E) market targeting

: A Diff: 1 LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

12) According to the BCG matrix, products or businesses with a high market share in a high-growth market are classified as ________. A) stars B) cash cows C) question marks D) dogs E) heroes

: A Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

20) Which of the following statements is true in the context of the BCG growth-share matrix? A) Stars often need heavy investment to finance their rapid growth in a market. B) The positions of SBUs in the growth-share matrix rarely change over time. C) The income from one SBU cannot be used to support other business units. D) Dogs promise to be large sources of cash. E) Cash cows typically turn into stars.

: A Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

21) P&G's decision to eliminate dozens of major brands from its portfolio including Crisco, Folgers, and Jif to focus on household care, beauty, and grooming products is an example of ________. A) pruning B) harvesting C) market segmentation D) diversification E) market saturation

: A Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies. AACSB: Analytical thinking

27) Under Armour increasing its advertising spending and offering an ever-increasing range of styles and colors in its original apparel line is an example of a ________ strategy. A) market penetration B) market development C) product diversification D) business harvesting E) product development

: A Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies. AACSB: Analytical thinking

32) Both market penetration strategies and market development strategies primarily involve ________. A) selling a company's current products B) modifying the company's product line C) selling in new as well as existing markets D) developing a new product E) leaving the current market

: A Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies. AACSB: Analytical thinking

63) Design, packaging, service, and features are elements of the ________ component of a company's marketing mix. A) product B) price C) promotion D) place E) people

: A Diff: 2 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence it.

4) Most firms begin the strategic planning process by developing detailed marketing and departmental plans that support a company-wide plan.

: FALSE Diff: 2 LO: 2-1: Explain company-wide strategic planning and its four steps.

18) Vertigo is an electronics company. According to the BCG matrix, which of the following products of Vertigo would most likely classify as a question mark? A) Blue — a cell phone that is designed for music lovers and has a very low market share in a market that is growing steadily B) Electra — a home entertainment system that has a strong market share in a market that is likely to expand in the future C) Jump — an MP3 player that has a high market share in a market that is not expected to grow significantly D) SpinDrive — a car audio system that has a high market share in a market that has been growing constantly E) SoLo — a CD player that has a very low market share in a market that is shrinking rapidly

: A Diff: 3 LO: 2-2: Discuss how to design business portfolios and develop growth strategies. AACSB: Analytical thinking

76) CVS Pharmacy changed its name to CVS Health, reshaping and broadening its lines of products and services to align more appropriately with its revamped "better health" mission. For example, it stopped selling tobacco products altogether. How would this be classified in a SWOT analysis? A) strength B) weakness C) opportunity D) threat E) barrier to entry

: A Diff: 3 LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. AACSB: Analytical thinking; Ethical understanding and reasoning

19) According to the BCG matrix, products or businesses with a low share of market in a high-growth industry are considered ________. A) dogs B) cash cows C) black holes D) stars E) question marks

: A actually question marks Diff: 1 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

45) What is a business portfolio? How does a company typically conduct a portfolio analysis?

: 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. The major activity in strategic planning is business portfolio analysis, whereby management evaluates the products and businesses that make up the company. The company will want to put strong resources into its more profitable businesses and phase down or drop its weaker ones. Management's first step is to identify the key businesses that make up the company, called strategic business units (SBUs). An SBU can be a company division, a product line within a division, or sometimes a single product or brand. The company next assesses the attractiveness of its various SBUs and decides how much support each deserves. When designing a business portfolio, it's a good idea to add and support products and businesses that fit closely with the firm's core philosophy and competencies. The purpose of strategic planning is to find ways in which the company can best use its strengths to take advantage of attractive opportunities in the environment. Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies. AACSB: Analytical thinking

99) What are marketing dashboards? How do they benefit marketers?

: A company can assess marketing ROI in terms of standard marketing performance measures, such as brand awareness, sales, or market share. Many companies are assembling such measures into marketing dashboards — meaningful sets of marketing performance measures in a single display used to monitor strategic marketing performance. Just as automobile dashboards present drivers with details on how their cars are performing, the marketing dashboard gives marketers the detailed measures they need to assess and adjust their marketing strategies. Diff: 2 LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. AACSB: Analytical thinking

62) Which component of the marketing mix refers to the goods-and-services combination a company offers to its target market? A) promotion B) product C) price D) place E) position

: B Diff: 1 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence it.

60) Ferrari sells only 2,200 of its very high-performance cars in North America each year at very high prices. The company is appealing to a specific ________. A) value chain B) market segment C) financial public D) business portfolio E) market position

: B Diff: 1 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence it.

82) The process that turns marketing plans into marketing actions to accomplish strategic marketing objectives is called marketing ________. A) analysis B) implementation C) control D) planning E) design

: B Diff: 1 LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

13) In the BCG growth-share matrix, question marks refer to products or businesses with a ________. A) low market share in a niche market B) low market share in a market with high growth prospects C) greater market share than all their competitors combined in a saturated market D) high market share in a market with a high growth rate E) low market share in a market that is set to shrink significantly

: B Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

16) Due to the limitations of the BCG and other formal portfolio planning models, many companies are placing responsibility for strategic planning in the hands of cross-functional teams of divisional managers who are close to their markets. In such organizations, strategic planning is ________. A) centralized B) decentralized C) purposeful D) limited E) informal

: B Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies. AACSB: Analytical thinking

52) True Value Hardware relies on its ________ to coordinate and carry out activities that provide shoppers with the hardware and home improvement products they need at affordable prices along with top-notch customer service. A) suppliers B) internal value chain C) distributors D) portfolio network E) internal supply chain

: B Diff: 2 LO: 2-3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value.

24) A strategy for company growth that involves increasing sales to current market segments without changing the product is known as ________. A) market development B) market differentiation C) market penetration D) product development E) diversification

: C Diff: 1 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

58) ________ refers to the process of evaluating each market segment's attractiveness and selecting one or more segments to enter. A) Market divesting B) Market diversification C) Market targeting D) Market mixing E) Market positioning

: C Diff: 1 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence it.

2) Cosmetics firm SatinSilk is revamping its mission statement and advertising strategy. The CEO stresses that the new mission statement should be market-oriented rather than product-oriented. Which of the following mission statements will best suit the company? A) to create the best possible products and sell them at the best possible prices B) to sell hypoallergenic cosmetics products made only from the finest organic ingredients C) to give customers the complexion they dream about by providing products suited to their needs D) to become a market leader in every cosmetics product category E) to increase our market share in the cosmetics segment and increase profit margins

: C Diff: 2 LO: 2-1: Explain company-wide strategic planning and its four steps. AACSB: Analytical thinking

22) When a company chooses to divest a particular strategic business unit, it ________. A) increases the advertising budget for that strategic business unit B) invests more in the strategic business unit to build its market share C) sells off or phases out the strategic business unit D) invests just enough in the strategic business unit to keep its market share at the current level E) gradually increases investment in the strategic business unit over time to maximize profits

: C Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

35) A strategy for company growth through starting up or acquiring businesses outside the company's current products and markets is called ________. A) vertical integration B) market development C) diversification D) market penetration E) product development

: C Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

9) Business portfolio analysis is defined as the process in which management ________. A) studies the products and strategies of competitors to improve the company's own products B) analyzes consumer feedback in order to better position the company's brand image C) assesses the attractiveness of an SBU's market and the strength of its position in the market D) segments the company's markets to reach target consumers effectively E) conducts marketing research to evaluate the company's marketing strategy

: C Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

53) Which of the following groups is included in both a company's value chain and its value delivery network? A) customers B) suppliers C) employees D) distributors E) competitors

: C Diff: 2 LO: 2-3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value.

67) The 4Ps model has been challenged because it omits or underemphasizes important activities such as services. It's also been criticized for taking a seller's, rather than a buyer's, viewpoint. The more recent 4As framework complements the traditional model and includes ________. A) adaptability, affordability, availability and awareness B) adaptability, affordability, accessibility and awareness C) acceptability, affordability, accessibility and awareness D) acceptability, affordability, accessibility and aptitude E) adaptability, affordability, availability and aptitude

: C Diff: 2 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence it. AACSB: Analytical thinking

81) Nike's goal to increase sales of its running shoes by 25 percent during the first 6 months of the new fiscal year is an example of a ________. A) differentiation objective B) positioning objective C) marketing objective D) marketing strategy E) target market strategy

: C Diff: 2 LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

15) Omni Healthcare's analgesic drug Cetaprin has a 40% share in the analgesics market in the country of Terrania. Its closest competitor, Febex, has a 25% share in the market, while four other analgesic brands split the remainder. Which statement indicates that Cetaprin is a cash cow according to the BCG matrix? A) Omni Healthcare often takes money from other strategic business units to support Cetaprin. B) A customer survey shows that Cetaprin users do not prefer it to other analgesics in the market. C) The demand for analgesic drugs in the Terrania market is expected to remain stable. D) Febex is rapidly gaining market share over Cetaprin due to aggressive marketing efforts. E) The Terrania market for healthcare products is expanding rapidly.