Market-Based Management Chapter 11: Portfolio Analysis and Strategic Market Planning

Under a defensive strategic market plan, calculate the market demand of a particular product that generates sales revenue of $32 million at a market share of 15 percent. A) $213.3 million B) $4.8 million C) $320 million D) $46.9 million E) $480 million

A) $213.3 million

Which of the following is true about a strategic market plan? A) It has a 3- to 5-year time horizon. B) It has a 1-year time horizon. C) It is a short-term marketing strategy. D) It lacks specific performance objectives. E) It is referred to as tactical marketing strategy.

A) It has a 3- to 5-year time horizon.

Which of the following is true about an optimize position strategy? A) It is usually used by a business when the growth potential is limited and competitive position is set. B) It involves making a conscious effort to increase customer base in order to reach a more profitable level of business. C) It is an offensive strategic market plan that seeks to improve a business's competitive position in an attractive segment of the market. D) It requires a large investment in marketing resources. E) It is used for maximizing profits and cash flow as a business slowly exits a product-market.

A) It is usually used by a business when the growth potential is limited and competitive position is set.

Steven & Meyer Inc. is an women's cosmetics manufacturing firm based in California. The firm sells its cosmetic products under the brand name GentleCare. After extensive market research, the firm launches a new line of household care products under the brand name White Oleander. The firm aims to increase the likelihood that its overall performance will be consistent because adverse conditions in one product-market will be offset by favorable conditions in the other. In this example, Steven & Meyer Inc. is using which of the following strategies? A) a diversification strategy B) a monetize position strategy C) a harvest strategy D) a horizontal integration strategy E) a vertical integration strategy

A) a diversification strategy

Which of the following strategies is referred to as the "workhorse" that has to succeed in order for the strategic market plan to achieve both short- and long-run performance objectives? A) a marketing mix strategy B) an offensive strategy C) a monetizing strategy D) a harvest strategy E) a defensive strategy

A) a marketing mix strategy

Which of the following is a defensive strategy that often occurs in the late and mature stages of the product life cycle when growth potential is limited and competitive position is set? A) an optimize position strategy B) a new market entry strategy C) an invest to grow strategy D) a vertical integration strategy E) an invest to improve position strategy

A) an optimize position strategy

Offensive portfolio strategies differ from defensive portfolio strategies in that offensive portfolio strategies ________. A) are more growth oriented B) are less likely to be used in attractive markets C) add significantly to short-run cash flow D) hinder long-run profit performance E) protect important strategic market positions

A) are more growth oriented

Defensive strategic market plans are strategies that ________. A) are not particularly effective at growing sales revenue B) require investment in order to produce sales growth C) improve the long-run share position D) limit short-run profit performance E) have a 3- to 5-year time horizon

A) are not particularly effective at growing sales revenue

Which of the following is considered a market force factor that influences a market's attractiveness? A) buyer power B) price rivalry C) number of competitors D) channel access E) sales requirements

A) buyer power

Which of the following is considered a market access factor that influences a market's attractiveness? A) channel access B) market size C) growth rate D) buyer power E) price rivalry

A) channel access

A marketing mix strategy differs from a strategic market plan in that a marketing mix strategy ________. A) needs to be reviewed each year B) has a 5-to 10-year time horizon C) has a 3- to 5-year time horizon D) has specific performance objectives E) is a long-term strategy

A) needs to be reviewed each year

In the long run, a growth-oriented marketing strategy will shift from a(n) ________ strategic market plan to a(n) ________ strategic market plan. A) offensive; defensive B) investment; tactical C) harvest; monetizing D) growth; hold E) hold; growth

A) offensive; defensive

Within a company's competitive position, which of the following is a part of the company's differentiation advantage? A) product quality B) market share C) marketing expenses D) distribution E) transaction cost

A) product quality

The three dimensions of competitive position are: a differentiation position, a cost position, and a ________. A) channel access position B) marketing position C) buyer power position D) price rivalry position E) revenue position

B) marketing position

The three dimensions of competitive position are ________. A) a revenue position, a sales position, and a brand position B) a differentiation position, a cost position, and a marketing position C) an aggressive strategy position, a passive strategy position, and a neutral strategy position D) an actual position, a past position, and a target position E) a target position, a perceived position, and a real position

B) a differentiation position, a cost position, and a marketing position

An optimize position strategy differs from a harvest strategy in that an optimize position strategy ________. A) is used to protect an attractive market position in which the business dominates with respect to competitive position B) involves a conscious effort to reduce the customer base in order to reach a more profitable level of business C) is an offensive strategic market plan that seeks to improve a business's competitive position in an attractive segment of the market D) is used to maximize profits and cash flow as a business slowly exits a product-market E) is used for exiting a market by selling or closing down the business or eliminating the product

B) involves a conscious effort to reduce the customer base in order to reach a more profitable level of business

A monetize strategy differs from a harvest strategy in that a monetize strategy ________. A) is a strategy for exiting a market by selling or closing down the business or eliminating the product B) manages prices and marketing resources in a way that maximizes cash flow without exiting the market C) is a defensive strategy D) protects an attractive market position in which the business dominates with respect to competitive position E) is used for maximizing profits and cash flow as a business slowly exits a product-market

B) manages prices and marketing resources in a way that maximizes cash flow without exiting the market

Maxim Computer has 10 percent of a $250 billion market. Maxim is a low-cost leader and realizes a 20% margin on sales, and marketing, and administrative expenses equaling 10% of sales. What is Maxim's gross profit? A) $25 billion B) $250 billion C) $5 billion D) $500 million E) $2.5 billion

C) $5 billion

Which of the following is true about defensive portfolio strategies? A) They aim to reduce short-run cash flow and profit performance, to promote growth in the long-run. B) They are more growth oriented than offensive portfolio strategies. C) They aim to protect important strategic market positions. D) They are most commonly implemented in attractive markets by businesses with a weak competitive position. E) They are most commonly implemented in unattractive markets by businesses with a high competitive position index.

C) They aim to protect important strategic market positions.

Which of the following is an offensive strategic market plan? A) an optimize position strategy B) a divest strategy C) a new market entry strategy D) a protect position strategy E) a monetize strategy

C) a new market entry strategy

Which of the following is considered a competitive environment factor that influences a market's attractiveness? A) buyer power B) sales requirements C) price rivalry D) channel access E) growth rate

C) price rivalry

The relative market share of a business is equal to the ________. A) ratio of the business's market share to its gross profit B) product of the business's market demand and market share C) ratio of the business's market share to the total share of its three largest competitors D) difference between the business's market share and its marketing and sales expenses E) product of the business's market demand, market share, and product price

C) ratio of the business's market share to the total share of its three largest competitors

Maxim Computer has a 10 percent of a $250 billion market. Maxim is the low-cost leader and realizes a 20% margin on sales, and marketing, sales, and administrative expenses equaling 10% of sales. What is Maxim's net marketing contribution? A) $500 million B) $25 billion C) $250 billion D) $2.5 billion E) $5 billion

D) $2.5 billion

Maxim Computer has a 10 percent of a $250 billion market. Maxim is the low-cost leader and realizes a 20% margin on sales, and marketing, sales, and administrative expenses equal 10% of sales. What are Maxim's sales revenues? A) $250 billion B) $2.5 billion C) $500 million D) $25 billion E) $5 billion

D) $25 billion

Under a defensive strategic market plan, calculate the market share of a company that generates sales revenue of $50 million in a market where the total demand is $493 million. A) 5.89% B) 25% C) 5.6% D) 10.14% E) 32.3%

D) 10.14%

Under a defensive strategic market plan, a particular product generates sales revenue of $32 million at a market share of 15 percent. If the business generates a gross profit of $7 million, calculate the percent margin on sales realized by the business. A) 38.6% B) 46.8% C) 15% D) 21.8% E) 10.5%

D) 21.8%

Which of the following statements is true? A) Offensive strategic market plans are geared to deliver above-average performance in the areas of sales growth, share position, and improved short-run profits. B) In the long run, all market strategy will shift from an offensive strategic market plan to a growth-oriented plan. C) Offensive strategic market plans require investment for growth, which limits long-run profit performance, but does not limit sales revenue. D) Defensive strategic market plans promote short-run profit performance but are not that effective in growing sales revenue. E) Defensive strategic market plans are not geared towards the protection of market share.

D) Defensive strategic market plans promote short-run profit performance but are not that effective in growing sales revenue.

Which of the following is true about portfolio diversification? A) It reduces opportunity for growth. B) It reduces performance stability. C) It restricts a business to a single market. D) It allows a business to take advantage of offsetting product life cycles. E) It increases dependence on a single product.

D) It allows a business to take advantage of offsetting product life cycles.

Which type of strategy is best utilized for exiting a market by selling or closing down the business or eliminating the product? A) a harvest strategy B) a horizontal integration strategy C) a vertical integration strategy D) a divest strategy E) a monetize strategy

D) a divest strategy

Which of the following is a defensive strategy that strives to maximize profits and cash flow as a business slowly exits a product-market? A) a divest strategy B) a horizontal integration strategy C) a monetize strategy D) a harvest strategy E) a vertical integration strategy

D) a harvest strategy

The offensive strategic market plan to invest marketing and sales resources to expand the market or a product's position in a market is known as ________. A) a protect position strategy B) a divest strategy C) a monetize strategy D) an invest to grow strategy E) a harvest investment strategy

D) an invest to grow strategy

A ________ is a long-term strategy with a 3- to 5-year time horizon and specific performance objectives. A) marketing mix strategy B) workhorse plan C) tactical marketing plan D) strategic market plan E) vertical integration strategy

D) strategic market plan

Which of the following is true about monetize strategy? A) It is an offensive strategy that is used to enter new attractive markets. B) It is a defensive strategy for exiting a market by selling or closing down the business. C) It is used to protect an attractive market position in which the business dominates with respect to competitive position. D) It seeks to improve a business's competitive position in an attractive segment of the market. E) It is a defensive strategy used in less attractive markets.

E) It is a defensive strategy used in less attractive markets.

Which of the following is a defensive strategic market plan? A) a new market entry strategy B) an improve position strategy C) a horizontal integration strategy D) a vertical integration strategy E) a harvest strategy

E) a harvest strategy

Offensive strategic market plans are strategies that ________. A) result in short-term profits without any additional investment B) are ineffective at growing sales revenue C) have a 1-year time horizon D) reduce the long-run share position E) limit short-run profit performance

E) limit short-run profit performance

A marketing mix strategy is a long-term strategy with a 3- to 5-year time horizon and specific performance objectives.

False

A portfolio analysis model typically has two dimensions of performance: a revenue model and a cost model.

False

Diversification decreases the likelihood that a firm's overall performance will be consistent.

False

Potential strategies used to implement offensive strategic marketing plans are protect position, optimize position, and monetize strategy.

False

Product-markets with low indexes for both market attractiveness and competitive position have the strongest portfolio position and the best opportunities for profit performance.

False

The strategic market plan called "optimize position" is an offensive strategy often used in the early stages of the product life cycle.

False

The strategic market plan of "investing to improve position" is an offensive strategic market plan to invest marketing resources to grow the market.

False

Name and describe three offensive strategic market plans and three defensive strategic market plans.

Offensive: Invest to Grow Invest to Improve Position New Market Entry Defensive: Protect Position Optimize Position Monetize Position

A portfolio analysis is an evaluation of a business, product, or market with respect to market attractiveness and competitive position as an aid in identifying the most appropriate strategic plan.

True

A strategic market plan sets the direction and provides guidelines for resource allocation.

True

Exiting a product-market is simply a way to cut losses quickly and reallocate marketing resources to more productive endeavors.

True

Factors that shape a market's attractiveness are market forces, competitive environment, and market access.

True

In the long run, a growth-oriented market strategy will shift from an offensive strategic market plan to a defensive strategic market plan.

True

The dimensions of competitive position are differentiation position, cost position, and marketing position.

True

The marketing mix strategy involves tactics with respect to the product, price, promotion, and service.

True

The strategic market planning process begins with a careful assessment of market attractiveness and competitive position for each product-market that a business serves or is considering serving.

True