Exam 2-ch.5

Companies use differentiation strategies when consumers' preferences are ______. too diverse for a standardized product offering, fixated on cost reduction, too sophisticated for technological breakthroughs, indifferent to the needs of the company,

too diverse for a standardized product offering

What option do companies have for translating a low-cost advantage into profit performance?

underpricing competitors

The most systematic approach to achieving differentiation is to focus on ______. - value drivers - the Mercedes strategy - cost drivers - Ritz service

value drivers

What do hotels offer to differentiate their services from those of competitors? - Dining in the hotel - Larger rooms - An extensive range of guest amenities - Locks on all guest room doors

- An extensive range of guest amenities - Larger rooms - Dining in the hotel

To succeed with a low-cost provider strategy, what must a company have? - Employees who are eager to learn - The resources to keep costs lower than its rivals - Administrators who have superior negotiating skills - Superior customer-service training

The resources to keep costs lower than its rivals

True or false: If a company's efforts to differentiate its products are met with consumer disinterest, the company puts itself at risk for lower profits.

True; Reason: Differentiation entails some cost, so if consumers do not spend more for the differentiated product, the company's profits will suffer

Best-cost providers target which consumer groups? - Value-conscious buyers - Price-conscious buyers - Niche market buyers - Sophisticated buyers

Value-conscious buyers

A company that develops a strong relationship with its suppliers is more likely to have its supply needs prioritized in which of the following situations? - When the supplier is fighting with a competitor - When the supplier doubles its prices - When industry supply is insufficient to meet overall demand - When the shipping is misdirected

When industry supply is insufficient to meet overall demand (When the supplier is fighting with a competitor; Reason: Conflict with a competitor may not necessarily increase the likelihood that a company's needs are prioritized by a supplier; there is a better answer) (When the supplier doubles its prices; Reason: Price increases by the supplier are not the best reason for a company's supply needs to be prioritized)

Best-cost provider strategies are intended to provide value-conscious buyers with ______ - a quality product at a relatively low price - a poorly made product at a cheap price - a premium product at a relatively high price - a cheap product at an expensive price

a quality product at a relatively low price

A company that employs a best-cost strategy achieves profitability by ______ - overpricing rivals whose products are similar - reducing its marketing and human resources budget - adding features of incrementally little value to its products - adding premium features to its products at a lower cost than rivals

adding premium features to its products at a lower cost than rivals

Companies can create a differentiation-based competitive advantage by incorporating intangible features such as ______. - lowering buyer costs for repairs - sacrificing convenience for durability - appealing to buyer desires for prestige - raising the price of a product

appealing to buyer desires for prestige

Companies can provide superior customer value by offering products with features that ______ - reduce product safety for easier handling - reduce product usability - are cheaper for a consumer to use - increase the overall cost to the consumer

are cheaper for a consumer to use

To reduce costs, which amenities does Southwest Airlines NOT offer?

assigned seating baggage transfer between airlines first-class service

What can a business use to reduce production costs for a cost-advantage strategy?

automatic robotic technology computer-assisted design (CAD)

a company with a value chain system that sells directly consumers is able to ________

bypass the cost of distributors

A low-cost provider strategy is risky if a competitor ______.

discovers a low-cost value approach

The potential for the preferences of a niche market to change over time can present a problem for companies that employ a ______ - low-cost strategy - best-cost strategy - value strategy - focused strategy

focused strategy (low-cost strategy? Reason; this risk does not apply to a low-cost strategy, but may apply to a focused low-cost strategy)

If a low-cost provider has invested heavily in its current means of operating, ______. - the company will not alter its technology, no matter how innovative a new system might be - the company will sustain a competitive advantage even if rivals adopt new cost-saving technological breakthroughs - the company can quickly and smoothly adapt to new technologies and means of operation - it will be expensive for the provider to shift to a new technology

it will be expensive for the provider to shift to a new technology

Which of the following allow a company to sell directly to customers effectively?

maintaining a direct sales staff conducting sales through a company website

To create competitive advantage for a company, a differentiation strategy must ______. - match the resources of the company - support the vision of the company CEO - make use of company downsizing - stretch the resources of the company

match the resources of the company

Which of the following are results of successful differentiation strategies adopted by companies? - An increase in unit sales - An improvement in buyer loyalty - Cheaper prices for products - Cheaper distribution methods

- An increase in unit sales - An improvement in buyer loyalty

What mistakes do companies often make while implementing a differentiation strategy? - Charging too high a price for differentiated products - Offering too many product features and options - Finding a balance between differentiation cost and distinguishing product features - Pursuing a policy of product innovation

- Charging too high a price for differentiated products - Offering too many product features and options

A company that employs a best-cost provider strategy is vulnerable to which of the following? - Companies that employ a competitive strategy - Companies that employ a low-cost strategy - Companies that employ a niche market strategy - Companies that employ a high-end differentiation strategy

- Companies that employ a low-cost strategy - Companies that employ a high-end differentiation strategy

In terms of a company strategy based on differentiation, what are the risks of offering mostly insignificant improvements in quality or service? - Greater competition with rivals - Decreased customer loyalty - Lower company profits - Increased low-cost advantage

- Decreased customer loyalty - Lower company profits

Which of the following situations make it more likely for a focused differentiation strategy to be successful? - Competitors find it easy to meet the needs of niche buyers - Few rivals attempt to specialize in the same niche - The industry has many different niches - The target market niche is very small - Industry leaders choose not to compete in the niche

- Few rivals attempt to specialize in the same niche - The industry has many different niches - Industry leaders choose not to compete in the niche

Which news networks have differentiated themselves by devoting extensive airtime to major news events? - CSPAN - Local news - Fox News - PBS - CNN

- Fox News - CNN

As part of a differentiation strategy, what signals tell customers that the company's products have superior value? - Higher-quality sales materials - More appealing packaging than that of competing products - Lower prices than those of competing products - Ads emphasizing a product's notable attributes

- Higher-quality sales materials - More appealing packaging than that of competing products - Ads emphasizing a product's notable attributes

Which company employs the differentiation strategies of wide selection and one-stop shopping? - Gucci - Tiffany - Rolex - Home Depot

- Home Depot

In terms of differentiation strategy, fast-paced technological change and quickly evolving product features can do which of the following? - Reduce competition - Increase buyer interest - Hinder a company's ability to create a distinct differentiating strategy - Help companies set themselves apart with different products

- Increase buyer interest - Help companies set themselves apart with different products

What can a company do to make its products more economical for customers? - Increase product reliability - Increase maintenance requirements - Incorporate energy-efficient features - Decrease product reliability

- Increase product reliability - Incorporate energy-efficient features

Which of the following occur when a company increases coordination with retailers? - It increases the prices of products - It creates additional competition - It fills orders more accurately - It enhances the buying experience - It improves the company's image

- It fills orders more accurately - It enhances the buying experience - It improves the company's image

What does Whole Foods Market offer in employing a focused differentiation-based strategy? - Cheap, mostly non-organic foods - Locally grown foods - Cash rewards for repeat customers - High standards for food quality - Organic, minimally processed foods

- Locally grown foods - High standards for food quality - Organic, minimally processed foods

What pitfalls should low-cost providers avoid? - Regularly assessing overall company performance - Advertising the low prices of the products they sell - Relying on a cost-reduction approach that is easy to copy - Using employee training as an approach to cost reduction - Fixating on cost reduction to the exclusion of product features

- Relying on a cost-reduction approach that is easy to copy - Fixating on cost reduction to the exclusion of product features

Revamping the value chain by coordinating with suppliers can be expected to do which of the following? - Increase delivery times - Speed up new product development cycles - Speed delivery to end customers - Introduce inaccuracies into order filling

- Speed up new product development cycles - Speed delivery to end customers

Which strategies are recommended for enhancing differentiation based on value drivers? - Striving to achieve technological advances - Creating product features that appeal to a wide range of buyers - Reducing the functional attributes of a product - Pursuing quality improvement - Avoiding innovative strategies that are hard to replicate

- Striving to achieve technological advances -Pursuing quality improvement - Creating product features that appeal to a wide range of buyers

Which companies employ a focused low-cost strategy? - Super 8 - Sleep-Inn - Motel 6 - Hilton - Ritz-Carlton

- Super 8 - Sleep-Inn - Motel 6

Which companies have a well-defined market niche? - Blue Nile (online jewelry) - Fox News Channel (cable television journalism) - Coca Cola (soft drinks and other beverages) - Toyota (automobiles) - Tesla Motors (electric cars)

- Tesla Motors (electric cars) - Fox News Channel (cable television journalism) - Blue Nile (online jewelry)

What components must be favorable before a generic strategy can succeed? - Positioning - The political environment - The competitive context - The company's internal situation

- The competitive context - The company's internal situation

Which of the following are tangible features that companies can incorporate to increase customer satisfaction? - Updated styling - Improved functions - More appealing product specifications - Excessive complexity

- Updated styling - Improved functions - More appealing product specifications

What must companies do to achieve a cost advantage in a market niche? - Increase company personnel - Offer products that appeal to all buyer groups - Use cost drivers to keep production costs low - Omit nonessential steps

- Use cost drivers to keep production costs low - Omit nonessential steps

Differentiation strategies fail when which of the following occur? - When competitors match a company's differentiation strategy - When the number of buyers wanting to buy a differentiated product increases - When buyers don't value a product or brand's uniqueness - When buyers are willing to pay more for a differentiated product

- When competitors match a company's differentiation strategy - When buyers don't value a product or brand's uniqueness

When can differentiation strategies increase a company's profitability? - When product prices can be raised sufficiently - When the differentiation does not affect the value chain system - When increased sales are more than enough to cover the costs of differentiation - When the strategies lead to additional differentiation costs

- When increased sales are more than enough to cover the costs of differentiation - When product prices can be raised sufficiently

A differentiation strategy might fail in which situations? - When products and services can be quickly imitated - When consumers see little value in the unique features of a product - When a firm searches for new ways to create product value - When consumers are interested in a company's unique product

- When products and services can be quickly imitated - When consumers see little value in the unique features of a product

Companies can create differentiation by investing in human resource management activities that ______. - improve the skills of company employees - boost employee fringe benefits - reduce the number of employees - reduce input quality

- improve the skills of company employees

A low-cost provider can use low prices to ______. - persuade potential customers to switch brands - offer premium features and services for its customers - increase its number of employees - encourage best-cost providers to change competitive strategies

- persuade potential customers to switch brands

Companies use differentiation strategies when consumers' preferences are ______. - too sophisticated for technological breakthroughs - too diverse for a standardized product offering - fixated on cost reduction - indifferent to the needs of the company

- too diverse for a standardized product offering

Red Bull and Listerine employ a differentiation strategy centered on ______. - unique taste - wide product selection - fancy packaging - prestige

- unique taste

With which partners can companies coordinate to enhance customer value and revamp the value chain system? - employees -customers -dealers -distributors

-dealers -distributors

Best-Cost

Better cost and value than the average rival

Which companies are noted for their successful use of low-cost provider strategies? Natures Path Bic Starbucks EasyJet Uber

Bic EasyJet Uber

How can marketing help create differentiation? - By increasing the perceived value of a product - By reducing customer awareness of a product - By reducing a product's perceived value - By increasing customer satisfaction

By increasing the perceived value of a product

In a market where buyer preferences are diverse, how can industry rivals differentiate their products? - By offering products that appeal to specific buyers - By offering competitors advice on customer service - By offering free products to lure customers away from competitors - By offering the same products that competitors have

By offering products that appeal to specific buyers

Which of the following are likely to be the results of developing a strong company culture?

Continuous improvement from employees, Increased workforce productivity,

Low-Cost

Cost advantage over rivals

Improving customer service or adding extra services are ways to manage the value chain to create product

Differentiation

True or false: Differentiation strategies are best created and developed within marketing and advertising departments.

False; Differentiation opportunities exist all along a company's value chain and are not merely hatched in a marketing or advertising department.

Focused low-cost strategies are common for companies that produce what? - Name-brand goods that imitate generic products - Generic goods that require extra marketing - Luxury items that a company wants to discount - Generic goods that imitate name-brand products

Generic goods that imitate name-brand products

Differentiation

Greater perceived value for customers

What must a best-cost provider do to remain competitive? - It must offer consumers a more attractive value proposition - It must offer products at the same price as rival companies - It must offer better products at higher prices - It must offer rivals a reason to change their product lines

It must offer consumers a more attractive value proposition

What are the three approaches that companies can use to gain a competitive advantage? - low-cost - best-cost - differentiation - low-value

Low-cost Best-cost Differentiation

Which company offers premium products and services to upscale buyers? - Safeway - Rite-Aid - Target - Rolls-Royce

Rolls-Royce

How do companies with a focused, low-cost strategy strive to secure a competitive advantage? - Serving niche market customers at a lower cost than rivals - Putting rivals out of business - Serving a broader market segment at the same cost as rivals - Offering a wide range of products and services

Serving niche market customers at a lower cost than rivals

What factor is necessary for the success of a generic strategy? - Creative genius - Skillful execution of the strategy - Ambitious long-term plans for expansion - Frequent reworking of the strategy

Skillful execution of the strategy

For which of the following types of firms, focusing on a single market niche is an attractive strategy? - Large companies that have trouble managing their finances and inventory - Small companies that are on the verge of filing bankruptcy - Small companies that lack the resources to pursue a broader customer base - Medium-sized companies with the resources to pursue a broader customer base

Small companies that lack the resources to pursue a broader customer base

Large companies often employ multibrand strategies to better compete with ______ - companies that employ an employee-focused strategy - companies that employ a mass-market advertising strategy - companies that employ a multi-regional differentiation strategy - companies that employ a focused differentiation strategy

companies that employ a focused differentiation strategy (companies that employ a multiregional differentiation strategy Reason: By employing multi-brand strategies, large companies can appeal to buyers in various niches; contending with multiple regions is not the motivation for the strategies) (companies that employ a mass-market advertising strategy Reason: The purpose of creating multiple brands is to appeal to multiple niches, not compete with a company that has a broader consumer base)

Focused strategies differ from low-cost provider and differentiation strategies by ______ - concentrating attention on a market niche - concentrating attention on a large segment of a particular market - offering free merchandise to returning customers - teaming up with rivals to create new markets

concentrating attention on a market niche

which of the following are good opportunities for a company pursuing a low-cost provider strategy?

consumers use a product offered b rival companies in the same way, rivals offer virtually identical products, price competition among competitors is vigorous

switching to a lower-cost item to save money is an example of _______

cost-efficient management

Low-cost providers need to be especially careful NOT to make the mistake of ______.

cutting prices too aggresively

To increase the number of flights per day, Southwest Airlines ______. decreased turnaround time at the gates, sold off surplus planes, refused to let passengers check bags, decreased turnaround time at the gates,

decreased turnaround time at the gates

a factor that has a strong influence on a company's costs is called a cost _______

driver

Nucor Corporation eliminates many steps in the steel manufacturing process by using what equipment?

electric arc furnaces

companies can reduce costs associated with a value chain system by _______

eliminating unnecessary steps

Best-cost providers differ from low-cost providers by ______ - minimizing employee training and initiatives - lowering customer-service expectations - providing basic products at the lowest prices - offering attractive features at a lower cost than competitors

offering attractive features at a lower cost than competitors

In the management of Value Chain Activities, what would most likely increase workers productivity?

offering incentives

Although successful low-cost providers continually look for ways to save money, they also understand the importance of spending money on ______.

resources that further eliminate costs

Companies that pursue a focused differentiation strategy are at risk from ______ - ineffective competition by rival firms - inventory complexity - rivals with more brands or great expertise and capabilities - personnel issues related to a narrow customer base

rivals with more brands or great expertise and capabilities

A company that pursues a focused strategy must have the resources to _____ - offer employee initiatives to please customers - create products that appeal to a broad range of buyers - sell brand-name products at cheap prices - satisfy the needs of its niche market

satisfy the needs of its niche market (offer employee initiatives to please customers Reason: a focused strategy does not specifically concern employee initiatives) (create products that appeal to a broad range of buyers Reason: focused refers to a narrower range of buyers)

What can companies reduce by positioning themselves near their suppliers?

shipping costs, materials handeling

How does Nucor Corporation produce steel at a far lower cost than traditional steel mills? multiple industry awards, smaller workforce, lower capital investment, lower operating costs,

smaller workforce, lower capital investment, lower operating cost,

A company that employs a focused differentiation strategy may experience intense competition if ______ - segment profits begin to splinter - rivals employ a low-cost provider strategy - the market segment becomes too attractive - differences across buyer segments erode

the market segment becomes too attractive (rivals employ a low-cost provider strategy Reason: rivals employing a low-cost provider strategy would not necessarily be brought into greater competition with a company employing a focused differentiation strategy) (differences across buyer segments erode Reason: if differences across buyer segments erode, competition may begin)

Signaling product value as a differentiation strategy is especially important when ______. - the buyers are sophisticated - consumers will know what to expect from their purchase - repurchase of the product is frequent - the nature of the differentiation is based on intangible features

the nature of the differentiation is based on intangible features

A particular differentiation strategy has a better chance of succeeding when ______ - competitors chase the same buyers with the same products - a company encounters many rivals using the same approach - strategy overcrowding occurs within the same industry - there are few rival companies using the same approach

there are few rival companies using the same approach