Chapter 6 Quiz

Microsoft's Live Maps and Virtual Earth 3D was a late entrant to the Internet mapping game. Users had already put in countless hours building resources that meshed with Google Maps and Google Earth. However, by adopting the same keyhole markup language (KML) standard used by Google, any work done by users for Google in KML could be used by Microsoft. What strategy of Microsoft has allowed it to catch up with Google? A. Making a new market a subset of its main offering B. Taking advantage of complementary products developed for a prior generation of technology C. Entering an uncontested, low-profit market instead of competing in saturated, high-profit markets D. Exchanging technical expertise in one area with another firm to effectively suit resource capabilities E. Making a new product compatible with the leading standard

E. Making a new product compatible with the leading standard

Metcalfe's Law is also known as: A. systemic events. B. cluster effects. C. group impressions. D. herd instincts. E. network externalities.

E. Network externalities

One-sided market

A market that derives most of its value from a single class of users (e.g. instant messaging).

Uber and PayPal used similar strategies when trying to jump start network effects that were vital in creating their dominance. What did each do? A. Preannounced their products, discouraging rivals from entering with competing offerings B. Leveraged viral customer promotions by giving incentives to consumers who helped recruit friends to the service.

B. Leveraged viral customer promotions by giving incentives to consumers who helped recruit friends to the service.

Customers who owned Nintendo's 8-bit video game console were unable to play the same games on the firm's new 16-bit Super Nintendo system. There was little incentive for existing Nintendo fans to stick with the firm. In this case, Nintendo's new offering suffered from a lack of: A. switching costs. B. backward compatibility. C. staying power. D. effective pricing. E. network effects.

B. backward compatibility

The video game console market offers important lessons for the strategist. The video game console market is a network market in which Sony's PlayStation 2 (PS2) dominated over Microsoft's Xbox offering. This has been possible due to: A. the low pricing of Xbox which eroded users' confidence in the product. B. game developers favoring PS2 for its larger user base obtained because the PS2 was launched months before the Xbox. C. the presence of several cheap, rival imitations which ate into Xbox's market share. D. PS2's technical superiority over the Xbox. E. the straddling strategy adopted by Microsoft to expand in both video game and DVD player markets.

B. game developers favoring PS2 its larger user base obtained because the PS2 was launched months before the Xbox

_____ are products or services that add additional value to the primary product or service that makes up a network. A. Quantum efforts B. Substitute components C. Complementary benefits D. Orthogonal gains E. Standby additions

C. Complementary benefits

_____ occfur(s) when increasing number of users lower the value of a product or service. A. Network internalities B. Market inflexibility C. Congestion effects D. Backward incompatibility E. Convergence

C. Congestion effects

_____ is said to occur when one market attempts to conquer a new market by making it a subset, component, or feature of its primary offering. A. Acquisition B. Greenfield investment C. Envelopment D. Market leapfrogging E. Monopolization

C. Envelopment

Staying power refers to the: A. relative abilities of parties in a situation to exert influence over each other. B. energy demands required to run a product or service. C. ability of a firm to produce a good or service at a lower opportunity cost than a rival. D. long-term viability of a product or service. E. ability to take advantage of complementary products developed for a prior generation of technology.

D. Long-term viability of a product or service

Viral promotion involves: A. offering rebates and incentives to customers for adopting a product or service. B. paying celebrities to use a product visibly to lure customers into unwittingly buying the product. C. emphasizing customer retention and satisfaction, rather than a dominant focus on sales transactions. D. leveraging a firm's customers to promote a product or service. E. sending a pre-written set of messages to customers or prospects over time.

D. leveraging a firm's customers to promote a product or service

Two-sided market

Network markets comprised of two distinct categories of participant, both of which that are needed to deliver value for the network to work (e.g. video game console owners and developers of video games)

Congestion effects

When increasing numbers of users lower the value of a product or service.