Ch.5

A) value-conscious buyers.

109) The target market of a best-cost provider is A) value-conscious buyers. B) brand-conscious buyers. C) price-sensitive buyers. D) middle-income buyers. E) young adults (in the 18-35 age group).

B) the potential for the preferences and needs of niche members to shift over time toward mainstream provider product attributes.

100) Focusing the ability can secure a competitive edge but also carries some risks that could be detrimental to the focused firm, such as A) the likelihood that a focused company will become so cost efficient it will achieve excessive profits. B) the potential for the preferences and needs of niche members to shift over time toward mainstream provider product attributes. C) the potential for the niche to become so attractive it will not attract new competitors thereby providing excessive market segment profits. D) the potential for technological advances to favor only low-cost providers. E) the likelihood that a focused company will become so cost inefficient it will achieve excessive profits

A) are a hybrid of low-cost provider and differentiation strategies that aim at providing desired attributes while beating rivals on price.

101) Best-cost provider strategies are those that A) are a hybrid of low-cost provider and differentiation strategies that aim at providing desired attributes while beating rivals on price. B) are rewarded by providing buyers with the best attributes at a premium. C) have strategy elements related to the lowest-cost provider in the largest and fastest- growing (or best) market segment. D) look for a low-cost advantage rather than a differentiation advantage. E) look for a differentiation advantage rather than a low-cost advantage.

D) incorporate attractive or upscale attributes into its product offering at a lower cost than rivals.

102) To profitably employ a best-cost provider strategy, a company must have the resources and capabilities to A) sell a product with the best cost at the best price. B) have the best cost (as compared to rivals) for each activity in the industry's value chain. C) provide buyers with the best attributes at the best cost. D) incorporate attractive or upscale attributes into its product offering at a lower cost than rivals. E) do a better job than rivals of adopting the best operating practices.

D) seeks to deliver superior value to buyers by satisfying their expectations on key attributes and beating rivals in meeting customer expectations on price.

103) A firm pursuing a best-cost provider strategy A) seeks to be the low-cost provider in the largest and fastest-growing (or best) market segment. B) tries to have the best cost (as compared to rivals) for each activity in the industry's value chain. C) tries to outcompete a low-cost provider by attracting buyers on the basis of charging the best price. D) seeks to deliver superior value to buyers by satisfying their expectations on key attributes and beating rivals in meeting customer expectations on price. E) seeks to achieve the best costs by using the best operating practices and incorporating the best features and attributes.

A) deliver superior value to value-conscious buyers at a comparatively lower price than rivals.

104) The objective of a best-cost provider strategy is to A) deliver superior value to value-conscious buyers at a comparatively lower price than rivals. B) offer buyers the industry's best-performing product at the best cost and best (lowest) price in the industry. C) attract buyers on the basis of having the industry's overall best-performing product at a price that is slightly below the industry-average price. D) outcompete rivals using low-cost provider strategies. E) translate its best-cost status into achieving the highest profit margins of any firm in the industry.

C) meet or exceed buyer expectations on key quality/performance/features/service attributes and beat their expectations on price (given what rivals are charging for much the same attributes).

105) The competitive objective of a best-cost provider strategy is to A) outmatch the resource strengths of both low-cost providers and differentiators. B) position the company outside the competitive arena of low-cost producers and differentiators. C) meet or exceed buyer expectations on key quality/performance/features/service attributes and beat their expectations on price (given what rivals are charging for much the same attributes). D) deliver superior value to buyers by doing such a good job of cost control that it ends up with the best cost (as compared to rivals) in performing each activity in its value chain. E) identify and concentrate on those differentiating features that are inexpensive to incorporate.

D) value-conscious buyers

106) What is the primary target market for a best-cost provider? A) value-hunting buyers B) price-conscious buyers C) best-price driven buyers D) value-conscious buyers E) brand-conscious buyer

C) its capability to incorporate upscale or attractive attributes into its product offerings at lower costs than rivals.

107) The competitive advantage of a best-cost provider like Trader Joe's is A) having the best value chain in the industry. B) its brand name reputation. C) its capability to incorporate upscale or attractive attributes into its product offerings at lower costs than rivals. D) a distinctive competence in delivering top-notch quality and customer service. E) a distinctive competence in supply chain management.

B) resource strengths and competitive capabilities that allow it to incorporate upscale

108) For a best-cost provider strategy to be successful, a company must have A) excellent marketing and sales skills in convincing buyers to pay a premium price for the attributes/features incorporated in its product. B) resource strengths and competitive capabilities that allow it to incorporate upscale attributes. C) access to greater learning/experience curve effects and scale economies than rivals. D) one of the best-known and most respected brand names in the industry. E) a short, low-cost value chain.

A) diverse buyer preferences make product differentiation the norm and where a large number of value-conscious buyers can be induced to purchase midrange products.

110) Best-cost provider strategies are appealing in those market situations where A) diverse buyer preferences make product differentiation the norm and where a large number of value-conscious buyers can be induced to purchase midrange products. B) a company is positioned between competitors who have ultra-low prices and competitors who have top-notch products in terms of both quality and performance. C) buyers are more quality-conscious than price-conscious. D) there are numerous buyer segments, buyer needs are diverse across these segments, only a few of the segments are growing rapidly, and sellers' products are strongly differentiated. E) buyers are more performance-conscious than value-conscious.

C) that rivals with low-cost provider strategies will be able to steal away some customers on the basis of a lower price, and high-end differentiators will be able to steal away customers with the appeal of better product attributes.

111) The big danger or risk of a best-cost provider strategy is A) that buyers will be highly skeptical about paying a relatively low price for upscale attributes/features. B) not establishing strong alliances and partnerships with key suppliers. C) that rivals with low-cost provider strategies will be able to steal away some customers on the basis of a lower price, and high-end differentiators will be able to steal away customers with the appeal of better product attributes. D) that it will be unable to achieve top-notch quality at a rock-bottom cost. E) becoming too highly integrated and not relying enough on outsourcing.

B) getting squeezed between the strategies of firms employing low-cost provider strategies and high-end differentiation strategies.

112) Trader Joe's biggest vulnerability in employing a best-cost provider strategy is A) relying too heavily on outsourcing. B) getting squeezed between the strategies of firms employing low-cost provider strategies and high-end differentiation strategies. C) getting trapped in a price war with low-cost leaders. D) being timid in cutting its prices far enough below high-end differentiators to win away many of their customers. E) not having a sustainable distinctive competence in cost reduction.

A) achieving significantly lower costs in providing the upscale features.

113) Success with a best-cost provider strategy designed to outcompete high-end differentiators requires A) achieving significantly lower costs in providing the upscale features. B) providing significantly better product attributes in order to justify a price above what low-cost leaders are charging. C) matching the company's resources and capabilities to a low-cost provider status. D) motivating buyers to purchase upscale features that match rivals. E) achieving the lowest costs in the industry.

C) having resources and capabilities that rivals have trouble duplicating and for which there are no good substitutes.

114) For all types of generic strategies, a company's success in sustaining its competitive edge depends on A) its market and competitive environment, a defensible niche, and a homogeneous strategic group. B) establishing a central theme for how the company will endeavor to outcompete its rivals and engage complementors with cooperative strategies. C) having resources and capabilities that rivals have trouble duplicating and for which there are no good substitutes. D) defining its differences in terms of product line, production emphasis, location, joint ventures, and strategic alliances. E) defining its differences in terms of marketing emphasis, strategic group intracompetition, and the means of maintaining strategy.

C) emphasis on building differentiating features that buyers are willing to pay for and includes wide selection and many product variations.

115) The production emphasis of a company pursuing a broad differentiation strategy usually involves A) eliminating cost reduction and decreasing quality and essential features to boost profitability. B) strong efforts to be a leader in manufacturing process innovation. C) emphasis on building differentiating features that buyers are willing to pay for and includes wide selection and many product variations. D) the aggressive pursuit of economies of scale and experience-curve effects. E) developing a distinctive competence in zero-defect manufacturing techniques.

B) tout differentiating features and charge a premium price that more than covers the extra costs of differentiating features.

116) The marketing emphasis of a company pursuing a broad differentiation strategy usually is to A) underprice rival brands with comparable features. B) tout differentiating features and charge a premium price that more than covers the extra costs of differentiating features. C) out-advertise rivals and make frequent use of discount coupons. D) emphasize selling directly to end-users and promoting personalized customer service. E) communicate the product's ability to serve the customer's every need.

A) stress constant innovation to stay ahead of imitative rivals and to concentrate on a few differentiating features.

117) The keys to maintaining a broad differentiation strategy are to A) stress constant innovation to stay ahead of imitative rivals and to concentrate on a few differentiating features. B) charge a premium price that more than covers the extra costs of differentiating features and to convince customers to be brand loyal. C) out-innovate and out-advertise rivals. D) emphasize personalized customer service and to add as many differentiating features as possible. E) keep prices close to the average of all rivals and to spend heavily on new product R&D.

D) communicate the attractive features of a budget-priced product offering that fits niche members' expectations.

118) The marketing emphasis of a company pursuing a focused low-cost provider strategy usually is to A) tout the company's lower prices. B) tout the lack of frills and extras. C) out-advertise rivals and make frequent use of discount coupons. D) communicate the attractive features of a budget-priced product offering that fits niche members' expectations. E) communicate the product's ability to serve the customer's every need.

A) offer better goods at attractive prices.

119) The underlying criteria of a best-cost provider strategy usually is found in the ability of a company to A) offer better goods at attractive prices. B) create attributes that appeal specifically to niche members. C) lower overall costs more than rivals in serving niche members. D) offer buyers something attractively different from competitors' offerings. E) offer the best product at the industry's lowest possible price.

B) continuous cost reductions without sacrificing acceptable quality and essential features.

120) A production-based emphasis toward a low-cost provider strategy usually requires a company to strive for A) product superiority. B) continuous cost reductions without sacrificing acceptable quality and essential features. C) small-scale production or custom-made products that match the tastes and requirements of niche members. D) appealing features and better quality at lower costs than rivals. E) whatever differentiating features buyers are willing to pay for.

E) evolving the capabilities to simultaneously deliver lower-cost and higher- quality/differentiated features.

121) An approach that is unlikely to help a company's low-cost provider strategy succeed is A) possessing resources and capabilities to keep costs below those of its competitors. B) pursuing cost-effective management of value chain activities better than rivals. C) deploying effective leveraging of cost drivers. D) having the innovative capability to bypass certain value chain activities being performed by rivals. E) evolving the capabilities to simultaneously deliver lower-cost and higher- quality/differentiated features.

E) possesses the resources and capabilities to incorporate upscale product or service attributes at a lower cost than rivals.

122) You have been asked to advise Lexus on its generic strategy. Success in sustaining Lexus's best-cost strategy requires that the company A) possesses the resources and capabilities to keep costs below those of its competitors. B) possesses the resources and capabilities to leverage value drivers effectively and incorporate attributes into its product offering that a broad range of buyers will find appealing. C) possesses the capability to do an outstanding job of satisfying the needs and expectations of niche buyers. D) possesses the innovative capability to bypass certain value chain activities being performed by rivals. E) possesses the resources and capabilities to incorporate upscale product or service attributes at a lower cost than rivals.

B) Position itself between the strategies of firms using low-cost and high-end differentiation strategies.

123) What best-cost provider strategy would you be most unlikely to recommend for a small- sized boutique lodging company entering a highly segmented market, each segment with a complex set of needs and spending power? A) Deploy its innovative capability to bypass certain value chain activities being performed by rivals. B) Position itself between the strategies of firms using low-cost and high-end differentiation strategies. C) Deploy effective leveraging of cost drivers. D) Reconfigure its resources and capabilities to keep costs below those of its competitors. E) Pursue cost-effective management of value chain activities better than rivals.

B) Everclear must offer buyers significantly better product attributes to justify a price above what low-cost leaders like Clorox, Great Value bleach, and Good Neighbor family sanitizers are charging.

124) Luxco, the St. Louis-based manufacturer of Everclear, a 190-proof beverage made from grain alcohol, decided to reposition this brand as an effective upscale hand sanitizer and household germ killer during the novel coronavirus pandemic. What would be required for Luxco's best-cost generic strategy to become successful? A) Everclear must siphon customers away from a national brand like Clorox with the appeal of a lower price (despite less appealing product attributes). B) Everclear must offer buyers significantly better product attributes to justify a price above what low-cost leaders like Clorox, Great Value bleach, and Good Neighbor family sanitizers are charging. C) Everclear has to manage to lure customers away from Clorox with the appeal of better product attributes (even though their products carry a higher price tag). D) Everclear should decide to compete head-on with generic brands such as Great Value bleach and Good Neighbor family sanitizers. E) Everclear must decide to position itself between the strategies of firms like Clorox using low-cost strategies and firms like Organic to Green Clean using high-end differentiation strategies.

B) be well matched to its internal situation and predicated on leveraging its collection of competitively valuable resources and competencies.

25) A company's competitive strategy should A) ensure it is designed to concentrate on a small range of products so it can react quickly to competitive moves. B) be well matched to its internal situation and predicated on leveraging its collection of competitively valuable resources and competencies. C) be well matched to its resources and capabilities in order to incorporate standard attributes into its product offering. D) be supportive with its objective to become at least an average performer within its industry. E) be well attuned to doing an outstanding job of satisfying the needs and expectations of niche buyers

D) narrow differentiation.

26) The five generic competitive strategies include A) low-cost differentiation. B) no-cost provider. C) best-margin. D) narrow differentiation. E) high-cost

B) whether a company's target market is broad or narrow and whether the company is pursuing a low-cost or differentiation strategy

27) While there are many routes to competitive advantage, the two biggest factors that distinguish one competitive strategy from another are A) whether a company can build a brand name and an image that buyers trust. B) whether a company's target market is broad or narrow and whether the company is pursuing a low-cost or differentiation strategy. C) whether a company can achieve lower costs than rivals and whether the company is pursuing the industry's sales and market share leader's role. D) whether a company can offer the lowest possible prices and whether the company can get the best suppliers in the market. E) whether a company's overall costs are lower than competitors' and whether the company can achieve strong product differentiation.

A) offer customers something rivals can't, at least in terms of the level of satisfaction

74) The objective of differentiation is to A) offer customers something rivals can't, at least in terms of the level of satisfaction. B) develop strategies that are different from those of rivals. C) establish objectives that are measurable and meaningful when it comes to sales growth. D) offer customers a sustainable competitive advantage. E) offer a diverse range of comparable products with low switching costs.

D) performing value chain activities differently than rivals and building competitively valuable resources and capabilities that rivals cannot readily match

28) Whatever strategic approach is adopted by a company to deliver value, it nearly always requires A) that management undertake formal planning sessions with functional departments to ensure productivity improvement. B) the identification of strengths and weaknesses within the company. C) matching corporate identity with the corporate culture in order to integrate effort and build sales momentum. D) performing value chain activities differently than rivals and building competitively valuable resources and capabilities that rivals cannot readily match. E) constant efforts to thwart entry of new rivals and their attempts to create differentiated products with unit costs above price premium

C) whether a company's market target is broad or narrow and whether the company is pursuing a competitive advantage linked to low cost or differentiation

29) The biggest and most important differences among the competitive strategies of different companies boil down to A) how they go about building a brand name image that buyers trust and whether they are a risk-taker or risk-avoider. B) the different ways the companies try to cope with the five competitive forces. C) whether a company's market target is broad or narrow and whether the company is pursuing a competitive advantage linked to low cost or differentiation. D) the kinds of actions companies take to improve their competitive assets and reduce their competitive liabilities. E) the relative emphasis they place on offensive versus defensive strategies.

E) a best-cost provider strategy

30) A boutique hotel chain provides upscale rooms and superior customer service at value prices. What strategy is the hotelier using to gain competitive advantage? A) a low-cost provider strategy B) a broad differentiation strategy C) a focused low-cost strategy D) a focused differentiation strategy E) a best-cost provider strategy

C) low-cost provider, broad differentiation, best-cost provider, focused low-cost, and focused differentiation strategies

31) The generic types of competitive strategies include A) market share growth provider, sales revenue leader strategy, and market share retention strategy. B) offensive strategies, defensive strategies, and counter maneuvers strategies. C) low-cost provider, broad differentiation, best-cost provider, focused low-cost, and focused differentiation strategies. D) low-cost/low-price strategies, high-quality/high-price strategies, and medium quality/medium price strategies. E) price leader strategies, price follower strategies, technology leader strategies, and firstmover strategies

E) is well matched to a company's internal situation; underpinned by an appropriate set of resources, know-how, and competitive capabilities; and difficult for rivals to match.

32) All other things being equal, the "best" generic competitive strategy for a company to employ is a strategy that A) seeks to underprice rivals on comparable products that attract a broad spectrum of buyers. B) seeks to differentiate product offerings from rivals by offering superior attributes that attract a broad spectrum of buyers. C) concentrates on a narrow buyer segment and outcompetes rivals by offering niche members customized attributes. D) concentrates on value-conscious buyers and outcompetes rivals by offering products at attractive prices. E) is well matched to a company's internal situation; underpinned by an appropriate set of resources, know-how, and competitive capabilities; and difficult for rivals to match

D) provide buyers superior value relative to the offerings of rival sellers in order to attain a competitive advantage

33) The objective of a competitive strategy is to A) establish a competitively powerful value chain. B) grow revenues at a faster annual rate than rivals are able to grow their revenues. C) lend greater detail to the company's business model. D) provide buyers superior value relative to the offerings of rival sellers in order to attain a competitive advantage. E) get the company into the best strategic group and then dominate it.

D) meaningful lower overall costs than rivals on comparable products

34) A low-cost leader's basis for competitive advantage is A) lowest possible prices for comparable products. B) a low-cost/moderate price approach to gain the biggest market share. C) high buyer switching costs. D) meaningful lower overall costs than rivals on comparable products. E) higher unit sales than rivals

B) perform value chain activities more cost-effectively than rivals and be proactive in revamping the firm's overall value chain to eliminate or bypass "nonessential" cost-producing activities

35) In order to be successful with a low-cost leadership strategy, company managers have to A) eliminate wholesale and retail intermediaries and instead sell directly to users of their product or service. B) perform value chain activities more cost-effectively than rivals and be proactive in revamping the firm's overall value chain to eliminate or bypass "nonessential" cost-producing activities. C) outsource the majority of value chain activities to nations that have lower wage rates and fewer regulations. D) develop and market products and services at that absolute lowest possible cost. E) pursue backward or forward integration to deter suppliers or buyers with considerable bargaining power and leverage.

A) have outmanaged rivals in finding ways to perform value chain activities more cost effectively.

36) Low-cost leaders who have the lowest industry costs are likely to A) have outmanaged rivals in finding ways to perform value chain activities more cost effectively. B) be considering exiting the current product market and use their competitive low-cost strength to gain a competitive advantage in other product arenas. C) be favorites to win the game of strategy in the long run. D) understand that driving costs to the lowest possible level is the only way to sell cheap products to consumers. E) understand that they have lower bargaining power with suppliers than rivals who employ a different strategy

A) whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs

37) How valuable a low-cost leader's cost advantage is depends on A) whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs. B) how easy it is for the low-cost leader to gain the biggest market share. C) the aggressiveness with which the low-cost leader pursues converting the cost advantage into the absolute lowest possible costs. D) the leader's ability to combine the cost advantage with a reputation for good quality. E) the low-cost leader's ability to be the industry leader in manufacturing innovation so as to keep lowering its manufacturing costs

B) maintaining the present price and using the lower-cost edge to earn a higher profit margin on each unit sold.

38) A low-cost leader can translate its low-cost advantage over rivals into superior profit performance by A) underpricing rivals and attracting quality-sensitive buyers in great enough numbers. B) maintaining the present price and using the lower-cost edge to earn a higher profit margin on each unit sold. C) going all out to use its cost advantage to capture a dominant share of the market. D) spending heavily on advertising to promote its cost advantage to build strong customer loyalty. E) outproducing rivals and thus having more available units for sale

A) serves buyers in a target market niche at a lower cost and a lower price than rival competitors

39) Hampton by Hilton's focused low-cost strategy in the lodging industry was different from a low-cost leadership strategy in that the company A) serves buyers in a target market niche at a lower cost and a lower price than rival competitors. B) created a new reservations system. C) gave a sense of exclusivity to its customers. D) coordinated with suppliers to lower its cost of linens and fixtures. E) emphasized low-wage human resource management policies.

A) performing value chain activities more cost effectively than rivals or revamping the firm's overall value chain to eliminate or bypass some cost-producing activities.

40) The major avenues for achieving a cost advantage over rivals include A) performing value chain activities more cost effectively than rivals or revamping the firm's overall value chain to eliminate or bypass some cost-producing activities. B) having a management team that is highly skilled in cutting costs. C) being a first-mover in adopting the latest state-of-the-art technologies, especially those relating to low-cost manufacture. D) outsourcing high-cost activities to cost-efficient vendors. E) paying lower wages and salaries than rivals

C) selling a mostly standard product and increasing the scale of operation.

41) Achieving a sure-cost advantage over rivals entails A) concentrating on the primary activities portion of the value chain and outsourcing all support activities. B) being a first-mover in pursuing backward and forward integration and controlling as much of the industry value chain as possible. C) selling a mostly standard product and increasing the scale of operation. D) minimizing R&D expenses and paying below-average wages and salaries to conserve on labor costs. E) producing a standard product, redesigning the product infrequently, and having minimal advertising

A) supply chain efficiencies

42) A fast-food restaurant stocks bread, meat, sauces, and other main ingredients, but does not assemble and cook its burgers and sandwiches until a customer places an order. Which cost driver is the restaurant efficiently using to cut costs? A) supply chain efficiencies B) economies of scale C) incentive systems and culture D) bargaining power E) capacity utilization

D) redesigning the company's value chain system in ways that eliminate costly work steps and entirely bypass certain cost-producing value chain activities

43) Dramatic cost advantages can often emerge from A) using distributors and wholesalers exclusively to move products through the forward supply chain. B) operating facilities at partial capacity to reduce energy usage. C) increasing reliance on suppliers distant from the company's own facilities. D) redesigning the company's value chain system in ways that eliminate costly work steps and entirely bypass certain cost-producing value chain activities. E) over-differentiating so that product features exceed the needs of most buyers.

A) ferreting out cost-saving opportunities in every part of the value chain

44) Vanguard, one of the world's largest investment management companies, has attained cost leadership via A) ferreting out cost-saving opportunities in every part of the value chain. B) undertaking an operations functionality redesign. C) establishing sales productivity and operating practices guidelines. D) re-creating rivals' assembly plant structuration savings. E) pursuing a differentiation strategy that can be easily copied

B) focused low cost: using proprietary technology and a streamlined care system

45) Clinícas del Azúcar is addressing diabetes, a major health issue in Mexico, by using a generic strategy that is known as A) focused differentiation: providing only specialized diabetes treatments at selected facilities. B) focused low cost: using proprietary technology and a streamlined care system. C) best-cost leadership: making multiple referrals to other care providers to eliminate the need and expense for professionals and equipment to be brought under the roof of one facility. D) broad differentiation: charging a price premium for upscale high-quality care for up to 80 percent of the population. E) broad low cost: using aggressive cost reduction and price cutting to attract patients.

C) spur worker pride in productivity and continuous improvement.

46) The culture of a company can be a cost-efficient value chain activity because it can A) allow for safeguarding internalized operating benefits. B) distinguish a company's capacity integration efforts. C) spur worker pride in productivity and continuous improvement. D) foster quality technological enhancements. E) increase a company's bargaining power with suppliers.

C) via higher rates of capacity utilization to allow depreciation and other fixed costs to be spread over a larger unit volume, thereby lowering fixed costs per unit

47) How can a capital-intensive company achieve a cost advantage by revamping its value chain? A) downsizing a direct sales force and utilizing distributors and dealers exclusively B) eliminating sales operations at the company's website C) via higher rates of capacity utilization to allow depreciation and other fixed costs to be spread over a larger unit volume, thereby lowering fixed costs per unit D) centralizing facilities and outsourcing shipping and handling activities E) expanding operations by eliminating low value-added or unnecessary work steps and activities

A) have suppliers locate their plants close to companies' own facilities

48) An example of how companies can revamp their value chain to reduce costs is to A) have suppliers locate their plants close to companies' own facilities. B) continue to utilize traditional methods of distribution and sales. C) not make any changes in product manufacturing but change end distribution methods. D) increase extra services to increase staffing requirements. E) facilitate the learning curve by providing superior training to new employees

B) Bowdon Designs captures supply chain efficiencies via partnerships with its suppliers to streamline ordering and purchasing and to reduce inventory carrying costs

49) Choose the best example of a women's fashion retailer that uses cost drivers effectively to manage its value chain activities. A) Callie's Closet orders large amounts of supplies and keeps them stocked until customer demand rises to prevent falling behind schedule in meeting customer needs. B) Bowdon Designs captures supply chain efficiencies via partnerships with its suppliers to streamline ordering and purchasing and to reduce inventory carrying costs. C) Molly's Made-to-Measure collects customer requests first and starts processing them only after reaching a certain number. D) Aubergine routes all its supplies to a warehouse for storage and then transports them to individual factories for processing. E) Tamarind substitutes lower-cost inputs with high-quality, high-cost inputs to gain customer attention and loyalty

A) The manufacturer has effectively used vertical integration to increase its bargaining position and reduce transaction costs

50) A potato chip manufacturer purchases a potato farm. Which of the following regarding its strategy is true? A) The manufacturer has effectively used vertical integration to increase its bargaining position and reduce transaction costs. B) The manufacturer has efficiently capitalized on the experience and learning-curve effects within the company. C) The manufacturer has enhanced utilization by allowing depreciation and other fixed costs to be spread over a larger unit volume. D) The manufacturer has sacrificed quality by using a lower-cost input. E) The manufacturer has effectively reduced its operating costs by outsourcing its activities.

D) most buyers use the product in much the same ways, with user requirements calling for a standardized product

51) A competitive strategy of striving to be the low-cost provider is particularly attractive when A) buyers are not very price-conscious. B) most rivals are trying to be best-cost providers. C) there are many ways to achieve product differentiation that have value to buyers. D) most buyers use the product in much the same ways, with user requirements calling for a standardized product. E) most rivals are pursuing focused low-cost or focused differentiation strategies.

C) putting a firm in the best position to win the business of price-sensitive customers and earn profits by setting the floor on market price

52) Being the overall low-cost provider in an industry has the attractive advantage of A) building strong customer loyalty and locking customers into its product because customers have high switching costs. B) giving the firm a very appealing brand image. C) putting a firm in the best position to win the business of price-sensitive customers and earn profits by setting the floor on market price. D) putting the company in a strong position to be more profitable than companies pursuing a differentiation strategy. E) greatly reducing the strong bargaining power of rivals with the key distributors

D) industry newcomers use introductory low prices to attract buyers and build a customer base.

53) A competitive strategy to be the low-cost provider in an industry works well when A) price competition among rival sellers is especially sluggish. B) there are numerous ways to achieve product differentiation that have no value to buyers. C) buyers incur high costs in switching their purchases from one seller/brand to another. D) industry newcomers use introductory low prices to attract buyers and build a customer base. E) industry newcomers use high introductory prices to let buyers know they have a superior product to build a customer base

A) buyers of the product or service use the product or service in the same ways

54) A low-cost leadership strategy becomes competitively powerful when A) buyers of the product or service use the product or service in the same ways. B) the offerings of rival firms are essentially unique, different, and customized to end users. C) price competition among rivals is absent. D) buyers prefer that the products/services of competing sellers have widely varying attributes and prices. E) buyers have high switching costs

A) offerings of Vanguard's rivals that are essentially identical and readily available from many eager sellers

55) Vanguard's generic strategy to become the financial services industry's overall low-cost provider is particularly well matched to a customer-market characterized by A) offerings of Vanguard's rivals that are essentially identical and readily available from many eager sellers. B) multiple possibilities to achieve differentiation that have value to buyers. C) buyers are willing to pay a price premium for Vanguard's portfolio management services. D) widely varying financial services customers' needs and special requirements, and the prices of substitute services are relatively high. E) many small investors seeking premium financial services account for the preponderance of industry sales.

C) relying on approaches to reduce costs that can be easily copied.

58) A major drawback of using a low-cost provider strategy is A) industry cost leadership. B) capturing volume gains and achieving economies of scale. C) relying on approaches to reduce costs that can be easily copied. D) beneficial and sustainable cost reduction. E) development of a cost-saving technological breakthrough that cannot be readily adopted by rival firms

D) Uber

59) From the list below, identify the company that is not the lowest-cost provider in its industry. A) Southwest Airlines B) Walmart C) Nucor Steel D) Uber E) Nordstro

E) utilizing just-in-time inventories and made-to-order products when customer demand rises and that buyers consider worth the cost

60) Value drivers of a broad differentiation strategy tend not to include A) creating product features that appeal to a wide range of buyers. B) improving customer service or adding extra services. C) seeking out high-quality inputs. D) emphasizing human resource management activities that improve the skills, expertise, and knowledge of company personnel. E) utilizing just-in-time inventories and made-to-order products when customer demand rises and that buyers consider worth the cost.

B) enhance differentiation throughout the value chain system to better address customer needs.

61) Companies like Dell in personal computers and Ducati in motorcycles pursue close coordination and collaboration with their channel suppliers in order to A) retrain managers to improve their skills, expertise, and knowledge. B) enhance differentiation throughout the value chain system to better address customer needs. C) replace outdated production capacity to better address customer needs. D) coordinate with channel allies on premium pricing to support consumer desires for status, image, prestige, upscale fashion, superior craftsmanship, and the finer things in life. E) achieve economies of scale throughout the value chain system

E) offer unique product attributes in ways that are valuable and appealing and that buyers consider the cost worth it.

62) The essence of a broad differentiation strategy is to A) appeal to the high-end part of the market and concentrate on providing a top-of-theline product to consumers. B) incorporate a greater number of differentiating features into its product/service than rivals. C) lower buyer switching costs. D) outspend rivals on advertising and promotion in order to inform and convince buyers of the value of its differentiating attributes. E) offer unique product attributes in ways that are valuable and appealing and that buyers consider the cost worth it.

A) studying buyer needs and behavior carefully to learn what buyers consider important, what they think has value, and what they are willing to pay for

63) Prada, Gucci, and Burberry are among the high-fashion design companies that are attempting to be successful with a broad differentiation strategy via A) studying buyer needs and behavior carefully to learn what buyers consider important, what they think has value, and what they are willing to pay for. B) incorporating more differentiating features into their fashion items than rivals. C) concentrating on marketing and advertising (where almost all differentiating features are created). D) investing in a dazzling array of features that exceed the needs of most buyers. E) concentrating on offering advanced features, regardless of their value to customers, to create one-of-a-kind fashion products

D) command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand.

64) Successful broad differentiation allows a firm to A) be the industry's best-cost provider. B) set the industry ceiling on price. C) avoid being dragged into a price war with industry rivals and not be overly concerned about whether entry barriers into the industry are high or low. D) command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand. E) take sales and market share away from rivals by undercutting them on price

E) seek out sources of value creation that are time consuming or burdensome for rivals to match

65) A company that succeeds in differentiating its product offering from those of its rivals should A) compete via price gouging. B) provide a dazzling array of features and options for its products. C) offer minor or trivial improvements in quality or performance. D) attract mainly price-conscious buyers. E) seek out sources of value creation that are time consuming or burdensome for rivals to match

D) the higher price the product commands exceeds the added costs of achieving the differentiation

66) A broad differentiation strategy improves profitability when A) it is focused on product innovation. B) differentiating enhances product performance and quality. C) the differentiating features appeal to sophisticated and prestigious buyers. D) the higher price the product commands exceeds the added costs of achieving the differentiation. E) the differentiator charges a price that is only fractionally higher than the industry's low-cost provider

C) most buyers accept the customer value proposition as unique and the product can produce sufficient unit sales to cover the costs of achieving the differentiation.

67) Whether a broad differentiation strategy ends up enhancing a company's profitability depends mainly on whether A) many buyers view the product's differentiating features as having value. B) most buyers have similar needs and use the product in the same ways. C) most buyers accept the customer value proposition as unique and the product can produce sufficient unit sales to cover the costs of achieving the differentiation. D) buyer switching costs are low and customer loyalty to any one brand is low. E) buyers are prone to shop the market for sellers offering the best price.

C) can exist in activities all along an industry's value chain

68) Opportunities to differentiate a company's product offering A) are most reliably found in the R&D portion of the value chain. B) are typically located in the sales and marketing portion of the value chain. C) can exist in activities all along an industry's value chain. D) usually are tied to product quality and customer service. E) are most frequently attached to a company's manufacturing expertise and to its ability to achieve economies of scale in production

A) a set of factors (analogous to cost drivers) that are particularly effective in having a strong differentiation effect

69) What are value drivers? A) a set of factors (analogous to cost drivers) that are particularly effective in having a strong differentiation effect B) a firm's hidden success factor for creating over-the-top product features that will command the highest price in the industry C) a technique for easily identifying factors that validate a firm's performance D) a set of factors that verify the unique nature of a firm E) a set of guidelines for identifying the most promising upscale attributes to incorporate into a product

A) technological change is fast-paced and competition revolves around rapidly evolving product features

70) A differentiation strategy works best when A) technological change is fast-paced and competition revolves around rapidly evolving product features. B) buyers' needs are homogeneous. C) many rival firms are also pursuing a differentiation approach. D) there are few other ways to make a product unique to buyers. E) firms have ample excess cash to invest in R&D activities.

E) seeking out low-quality inputs

71) Hilton Hotels has diversified its lodging brands by adding Curio Collection, Tapestry Collection, and Canopy by Hilton, properties that offer stylish, distinctive decors and personalized services that appeal to young professionals seeking distinctive lodging alternatives. Managers can enhance the differentiation of these new brands based on all of these value drivers except A) striving to create superior product features, design, and performance. B) striving for innovation and technological advances. C) pursuing continuous quality improvement. D) increasing the intensity of marketing, brand building, and sales activities. E) seeking out low-quality inputs

E) coordinating with channel allies to enhance customer value

73) Approaches to enhancing differentiation through changes in the value chain include A) coordinating with customers to enhance the buying experience and build a company's image. B) working with distributors to speed up new product development cycles. C) colluding with distributors or shippers to raise product or service costs. D) collaborating with employees to outsource nonessential activities. E) coordinating with channel allies to enhance customer value

B) incorporating tangible features that add functionality, and increase customer satisfaction with the product specifications, functions, and styling

75) A route to take in developing a differentiation advantage includes A) incorporating product attributes and user features that raise the buyer's overall costs, but keep the price minimal. B) incorporating tangible features that add functionality, and increase customer satisfaction with the product specifications, functions, and styling. C) signaling value by targeting sophisticated buyers. D) incorporating intangible features that enhance buyer satisfaction in economic ways. E) emphasizing high quality and performance of products through a standard and simple, no-fuss packaging

D) appeal to buyers who are sophisticated and shop hard for the best, stand-out differentiating attributes

78) To attain a differentiation-based competitive advantage, a company would be unlikely to A) deliver value to customers via the company's resources, competencies, and value chain activities that rivals don't have or can't afford to match and are well matched to the requirements of the strategy. B) utilize research and development to incorporate tangible features that raise product performance and increase customer satisfaction with the product. C) incorporate product attributes and user features that lower the buyer's overall costs of using the company's product. D) appeal to buyers who are sophisticated and shop hard for the best, stand-out differentiating attributes. E) build in product design features that enhance buyer satisfaction in intangible or noneconomic ways

A) a rise in the perceived value of the differentiated good, giving the differentiator a clear competitive advantage over the average rival.

79) According to the value-price-cost framework, deploying a differentiation strategy involves costs that might well exceed those of the average competitor, but with a successful differentiation strategy, that disadvantage is more than made up for by A) a rise in the perceived value of the differentiated good, giving the differentiator a clear competitive advantage over the average rival. B) a rise in the price of the differentiated good, giving the differentiator a clear value advantage over the average rival. C) no change in the price of the differentiated good, giving the differentiator a clear value advantage over the average rival. D) no change in the perceived value of the differentiated good, giving the differentiator a clear competitive advantage over the average rival. E) a drop in the price of the differentiated good, giving the differentiator a clear competitive advantage over the average rival.

B) buyers seldom will pay for value they don't perceive, no matter how real the value of the differentiating extras may be..

80) Perceived value and signaling value are often an important part of a successful differentiation strategy because A) of the standardization of buyer needs and preferences. B) buyers seldom will pay for value they don't perceive, no matter how real the value of the differentiating extras may be. C) buyer satisfaction cannot be achieved until a product's value is promoted through clever ads. D) differentiation is all about selling products to sophisticated buyers. E) there are no other ways to differentiate a product

A) there are many ways to differentiate the product or service that has value to buyers

81) Broad differentiation strategies are well suited for market circumstances where A) there are many ways to differentiate the product or service that has value to buyers. B) most buyers have the same needs and use the product in the same ways. C) technological changes are slow paced. D) barriers to entry are high and suppliers have a low degree of bargaining power. E) price competition is especially vigorous.

D) Prada, because it can command a high price premium for its high-fashion designs.

82) A broad differentiation strategy would work best for which of these companies? A) American Giant, because it possesses the capability to incorporate attractive or upscale attributes at a lower cost than rivals B) Canada Goose, because using small-scale production or custom-made products, it focuses on product features and attributes that appeal specifically to niche members C) Clinícas del Azúcar, because it is able to use technology to lower its costs significantly by limiting its customer base to a well-defined buyer segment D) Prada, because it can command a high price premium for its high-fashion designs. E) Vanguard, because the products of rival sellers are essentially identical and are readily available from several sellers

E) buyer needs and uses of the product or service are diverse.

83) A broad differentiation strategy works best in situations where A) technological change is slow paced and new or improved products are infrequent. B) buyer needs and uses of the product or service are very similar. C) buyers incur low costs in switching their purchases to rival brands. D) buyers have a low degree of bargaining power and purchase the product frequently. E) buyer needs and uses of the product or service are diverse.

B) few rival firms are following a similar differentiation approach

84) A broad differentiation strategy generally produces the best results in situations where A) buyer brand loyalty is low. B) few rival firms are following a similar differentiation approach. C) new and improved products are introduced only infrequently. D) most rivals are pursuing a differentiation strategy and are seeking to differentiate their products on most of the same features and attributes. E) perceived value of a product is not of great importance.

C) products of rivals are weakly differentiated.

85) A broad differentiation strategy is generally not suitable for attaining a competitive advantage when A) buyer needs and preferences are too diverse to be fully satisfied by a standardized product. B) few rivals are pursuing a similar differentiation approach. C) products of rivals are weakly differentiated. D) there are many ways to differentiate a product or a service and many buyers perceive these differences valuable. E) technological change is fast paced and competition revolves around rapidly evolving product features.

E) customers are basically satisfied and don't think extra attributes are worth a higher price

86) A low-cost provider strategy can defeat a differentiation strategy when A) sellers are not charging a price premium. B) many rivals are pursuing a similar differentiation approach. C) a company can offset thinner profit margins per unit by selling enough additional units to increase total profits. D) there are few ways to differentiate a product or a service and many buyers perceive these differences valuable. E) customers are basically satisfied and don't think extra attributes are worth a higher price.

A) trying to differentiate on the basis of attributes or features that are easily and quickly copied

87) A pitfall to avoid in pursuing a differentiation strategy is A) trying to differentiate on the basis of attributes or features that are easily and quickly copied. B) choosing a product offering that supports buyers' indifference to rival brands' offerings. C) charging a premium price for the differentiating features. D) meeting and exceeding the meaningful gaps in quality, performance, service, and other attractive differentiating attributes offered by rivals. E) spending on activities to differentiate the company's product to enhance profitability.

A) strive to create value for customers

88) Differentiation strategies A) strive to create value for customers. B) offer trivial improvements in quality, service, or performance features. C) often result in overcharging for the differentiating features. D) add so many frills and extra features that the end product exceeds the needs of buyers. E) often result in overspending on efforts to differentiate the company's product offering

A) the market is composed of distinctly different buyer groups who have different needs or use the product in different ways

89) Focused strategies keyed either to low cost or differentiation are especially appropriate for situations where A) the market is composed of distinctly different buyer groups who have different needs or use the product in different ways. B) most other rival firms are using a best-cost producer strategy. C) buyers have strong bargaining power and entry barriers are low. D) most industry rivals have weakly differentiated products. E) most industry participants are also using a focused differentiation strategy.

B) their concentrated attention on serving the needs of buyers in a narrow piece of the overall market

90) What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is A) the extra attention paid to top-notch product performance and product quality. B) their concentrated attention on serving the needs of buyers in a narrow piece of the overall market. C) greater opportunity for competitive advantage. D) their suitability for market situations where most industry rivals have weakly differentiated products. E) their objective of delivering more value for the least money

E) serving buyers in a narrow piece of the total market (target market niche) at a lower cost and lower price than rivals

91) A focused low-cost strategy seeks to achieve competitive advantage by A) outmatching competitors in offering niche members an absolute rock-bottom price. B) delivering more value for lesser money than other competitors. C) performing the primary value chain activities at a lower cost per unit than can the industry's low-cost leaders. D) dominating more market niches in the industry via a lower cost and a lower price than any other rival. E) serving buyers in a narrow piece of the total market (target market niche) at a lower cost and lower price than rivals

E) a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment

92) A focused low-cost strategy can lead to attractive competitive advantage when A) buyers are looking for the best value at the best price. B) buyers are looking for a budget-priced product. C) buyers are price sensitive and are attracted to brands with low switching costs. D) a market is emerging and demand in the target market niche is growing rapidly and is served by industry-wide competitors. E) a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment.

E) few, if any, rivals that are attempting to specialize in the same target segmen

93) Market circumstances that make a focused low-cost or focused differentiation strategy attractive are characterized by A) a target market niche that is too small to be profitable and offers low growth potential. B) an industry that has few or no segments and market niches, thereby precluding the choice of an attractive niche suited to a company's resource strengths and capabilities. C) high costs or increased difficulty for multisegment rivals to meet the specialized needs of the target market niche and at the same time satisfy the expectations of their mainstream customers. D) intense competition from industry leaders in the niche or focused segment. E) few, if any, rivals that are attempting to specialize in the same target segment.

C) offering a product carefully designed to appeal to the unique preferences and needs of a narrow, well-defined group of buyers

94) A focused differentiation strategy aims at securing competitive advantage by A) providing niche members with a top-of-the-line product at a premium price. B) catering to buyers looking for an upscale product at an attractively low price. C) offering a product carefully designed to appeal to the unique preferences and needs of a narrow, well-defined group of buyers. D) developing product attributes that no other company in the industry has. E) convincing a narrow, well-defined group of buyers that the company has a truly world-class product.

C) size of the buyer group to which a company is appealing.

95) The major difference between a low-cost provider strategy and a focused low-cost strategy is the A) amount of outsourcing involved. B) length of the managerial experience curve. C) size of the buyer group to which a company is appealing. D) number of upscale attributes incorporated into the product offering. E) production methods being used to achieve a low-cost competitive advantage

A) outsourcing

96) A drink manufacturer finds setting up a plant to make its own bottle caps expensive and technically difficult. Which of the following will be most helpful in solving the manufacturer's problem? A) outsourcing B) achieving economies of scale C) lowering input costs D) increasing bargaining power E) going for a vertical integration with a distributor

E) vertical integration

97) A government oil company is having trouble with the private refineries and transporters to whom it delegates important stages of production. It decides to become more active along the entire supply chain from locating deposits to retailing the fuel to consumers. Which of the following does it intend to achieve? A) outsourcing B) economies of scale C) increase inputs D) advanced production technology E) vertical integration

B) potential for the preferences and needs of niche members to shift over time toward product attributes desired by buyers in the mainstream portion of the market.

98) The risks of a focused strategy for a company like Canada Goose are the A) chance that niche customers will bargain more aggressively for good deals than customers in the overall marketplace. B) potential for the preferences and needs of niche members to shift over time toward product attributes desired by buyers in the mainstream portion of the market. C) potential for the segment to be highly vulnerable to economic cycles. D) potential for segment growth to race beyond the production or service capabilities of incumbent firms. E) potential for the segment to become too specialized for other multisegmented rivals to enter.

B) chance that competitors will find effective ways to match the focused firm's capabilities in serving the target market.

99) Focusing carries several risks, one of which is the A) chance that niche customers will bargain more aggressively for good deals than customers in the overall marketplace. B) chance that competitors will find effective ways to match the focused firm's capabilities in serving the target market. C) potential for the segment to be highly vulnerable to economic cycles. D) potential for the segment to become too specialized for other multisegmented rivals to enter. E) inability of a company to compete industry-wide.