Chapter 2: Competitive Advantage
Which of the following is an example of a company using a niche competitive marketing strategy? -A company that sells soda worldwide. -A company that makes clothing specifically for dogs. -A confectionery that sells both European and American chocolates. -A nationwide department store chain.
A company that makes clothing specifically for dogs.
If an SBU is a profitable cash cow, then the choice would be to hold and not invest anything but continue to reap the profits
A great example of this hold strategy is any of Apple's products which continue to sell strongly with little input.
What is environmental scanning? -A process of scanning financial information. -A process accomplished by analysing and understanding environmental conditions. -A process that analyses the capacity of your firm in order to help you understand your own strengths and weaknesses. -When a business scans competitors documents.
A process accomplished by analysing and understanding environmental conditions.
The Johnson Toy Company has developed a new toy for kids that they can use to build different things. They have made the items all different colors. What type of strategy did the Johnson Toy Company use? -A product strategy -A price strategy -A place strategy -A promotion strategy
A product strategy
The Dog Bone Company is creating a competitive advantage by using niche marketing, what information should they use to target dog owners? -Zip codes -Lifestyle information and demographic information -Income information -All answers are correct
All answers are correct
The Easy Electronic Company is using SWOT analysis to determine long-term trends. The company has found out one of its electronic devices may be obsolete in the future, what can The Easy Electronic Company do? -Provide information on this trend and its potential impact on the company -Replace the product -Begin documenting actions that can be taken to prevent obsolescence -All answers are correct
All answers are correct
The Rowland Picture Company is new and ready to open. They are trying to develop a marketing plan but don't know which of the 4 Ps of marketing are the most important. Which of the 4 Ps of marketing are the most important for The Rowland Picture Company to use? -Product -Place and Promotion -Price -All answers are correct
All answers are correct
Which of the following would be considered when analyzing opportunities and threats in a SWOT analysis? -Identify long-term trends that could eliminate a product -Determine competition to find business openings, and changes in government intervention -Find technology improvements -All answers are correct
All answers are correct
If a company has a star or a problem child that has great potential with some investment, a company will choose the first option: build
An example of a product that was a problem child but with good management and investment became a star is Proctor & Gamble's Pringles chips. Proctor & Gamble used three different people to develop the chip and brought the brand to the forefront with its catchy 'once you pop, you just can't stop' ad campaign
Jamerson Marketing is the only company in the world that uses both qualitative and quantitative analysis to create efficient marketing strategies. This method distinguishes them as a leading company in the field of marketing. Their competition work by using either qualitative or quantitative analysis. Why is this an example of a unique selling proposition (USP)? -Because Jamerson Marketing's revenue provides them with the opportunity to maintain a unique style of protection. -Because Jamerson Marketing's competition failed to research Jamerson's analysis methods. -Because Jamerson Marketing is a leader in their field. -Because Jamerson Marketing is the only company using both qualitative and quantitative analysis
Because Jamerson Marketing is the only company using both qualitative and quantitative analysis
Thomas owns a large IT company. He attempts to gain an upper hand in the market by using very skilled workers and inexpensive raw materials. Overall, he is very focused on controlling the costs in order to maximize the value of his products to consumers. How is this an example of cost-competitive advantage? -Because the focus is exclusively on minimizing the cost of materials. -All the answers are correct. -Because he advertises that his products are very cheap. -Because the overall focus is on controlling costs in every segment of production
Because the overall focus is on controlling costs in every segment of production.
Your company offers the best cars on the market at relatively affordable prices. You currently have no competitors regarding the features your cars have. Why is this an example of product differentiation? -Because the quality of your products is very high. -Because you are advertising the car as relatively affordable. -Because you are advertising the unique features of the product. -Because any kind of new product by a company is an example of product differentiation.
Because you are advertising the unique features of the product.
Four Ways to Allocate Resources for the Matrices
Build Hold Harvest Divest
Which of the following is an example of competitive advantage? -Buying a Michael Kors crossbody bag instead of Michael Kors tote bag. -Updating Windows 7 to Windows 10. -Buying an iPhone SE instead of iPhone 6. -Buying Burger King instead of McDonalds.
Buying Burger King instead of McDonalds.
Tom works for a large marketing firm and wants to form a new strategy about how his firm should operate. Before forming it, he wants to think about how he could maximize the capacity of his firm in comparison to the economic environment. How should he proceed in doing that? -By conducting a SWOT analysis to analyze the strengths and weaknesses of the environment and the opportunities and threats in the company. -By conducting a survey to analyze the strengths and weaknesses of the firm and the opportunities and threats in the environment. -By conducting a survey to analyze the strengths and weaknesses of the environment and the opportunities and threats in the company. -By conducting a SWOT analysis to analyze the strengths and weaknesses of the firm and the opportunities and threats in the environment.
By conducting a SWOT analysis to analyze the strengths and weaknesses of the firm and the opportunities and threats in the environment.
How does a large company place its SBU's on the portfolio matrix ? -By the market share and growth potential for each SBU -By whether they provide a product or a service -By where each SBU does business -By the newness of each SBU's products
By the market share and growth potential for each SBU
Problem children, dogs, and cash cows all have the option of the harvest allocation of resources. Harvesting is when a company runs operations for short-term cash flow and does not plan for the future of the product
Companies that harvest their products usually do not spend any money on promotion or advertising. A great product example is Shredded Wheat cereal which continues to sell well without bold advertising or reinvention.
Having a unique set of features that causes the company and its products to be perceived as superior by the target market is an example of _____. -Competitive advantage -Marketing opportunity analysis -SWOT analysis -Product strategy
Competitive advantage
John is a marketer that is trying to target the government market. Which is the BEST way to reach his target audience? -Contact buyers in local government agencies via phone -Give flyers to a clothing store -Advertise on a local rap radio station -All answers are correct
Contact buyers in local government agencies via phone
Walmart is a mass marketer that has a substantial competitive advantage because of its size and power. Which type of competitive advantage is Walmart part of? -Cost advantage -Product differentiation -Price advantage -Niche
Cost advantage
James' company owns several supermarkets. His company has decided to install self-checkout lanes in order to decrease their costs. What method is James' company using? -Creating a new delivery method. -Product design. -Service differentiation. -Re-engineering.
Creating a new delivery method.
Assess the strategy that is used to increase sales by creating new products that can be targeted to new markets. -Market Penetration -Product Development -Sales Growth -Diversification
Diversification
Internal Strengths and Weaknesses
Finances, engineering, marketing, employees, production cover these parts of a SWOT analysis.
The Mission Statement Cannot Be Too Broad
For example, if Sugar Rush LLC decided to create a statement that said they would make products to improve the overall quality of life, it would be too broad. This would be providing no direction for the business overall, and this is a difficult statement upon which to create an effective marketing plan.
Evaluate the effect of market penetration. -It is a marketing strategy that tries to increase market share among stakeholders. -It is a marketing strategy that tries to decrease market share among existing customers. -It is a marketing strategy that tries to increase market share among existing customers. -It is a marketing strategy that tries to decrease market share among stakeholders.
It is a marketing strategy that tries to increase market share among existing customers.
What is marketing myopia? -It is defining a business in terms of goods and services rather than in terms of the benefits that customers seek. -It is defining a mission statement based on last year's marketing data. -It is defining a business in terms that are too broad -It is when the marketing team does not define the business plan properly. -It is not seeing the big picture of the overall plan.
It is defining a business in terms of goods and services rather than in terms of the benefits that customers seek.
What is marketing myopia? -It is defining a business in terms that are too broad -It is when the marketing team does not define the business plan properly. -It is not seeing the big picture of the overall plan. -It is defining a mission statement based on last year's marketing data. -It is defining a business in terms of goods and services rather than in terms of the benefits that customers seek.
It is defining a business in terms of goods and services rather than in terms of the benefits that customers seek.
How does a business mission statement relate to marketing? -It tells the marketing team where to sell the product. -It is the foundation of the marketing plan. -It explains why consumers are important. -It sets the price of the marketing product. -It helps the marketing team create the correct product.
It is the foundation of the marketing plan.
The Atlantic Shoewear company is a new company that needs help determining how they should write their mission statement. What is an essential characteristic for the company to have? -It should have a clear reason why the company is selling the good or service -It should include all of their prices -It should be very brief -It should use big words to make it sound official
It should have a clear reason why the company is selling the good or service
Which is the BEST way to describe market penetration? -Make a product 'buy one get one half off' -Create an advertisement for a product -Make products really expensive -Create a niche for a product
Make a product 'buy one get one half off'
What is a marketing strategy that is based on attracting new customers to current products? -International marketing -Market Development -Market Penetration -Product Diversification
Market Development
A sports equipment store decides to send out coupons for a new home gym to entice customers to buy the product. What is this an example of? -Market development -HR -Sales -Product differentiation
Market development
What are the four different strategic alternatives? -Stars, cash cows, problem children and dogs -Market penetration, market development, product development, diversification -Market penetration, market development, target market, market response -Penetration, development, target market and stars
Market penetration, market development, product development, diversification
External Opportunities and Threats
Marketing managers analyze the overall marketing environment
To effectively communicate with the target market is the purpose of which of the following? -Marketing mix -Customers -Marketing power -HR
Marketing mix
What type of market segmentation strategy is used by Disney? -Concentrating on one segment of the market. -Multiple market segmentation. -Single product segmentation. -Niche marketing
Multiple market segmentation.
What is included in promotional strategies? -Advertising, social media networking, pricing, and promotional ads. -Personal selling, advertising, sales promotion, and public relations. -Advertising, marketing, and sales. -Personal selling, advertising, pricing, and distribution
Personal selling, advertising, sales promotion, and public relations.
The Gumball Company is a new company that started in one distribution channel but is now trying to enter multiple different stores. Which of the 4 Ps BEST describes what the Gumball Company is focusing on? -Place -Promotion -Price -Product
Place
When a company offers multiple locations to reduce travel time, which strategy is it using? -Place strategy for a good or service -Promotion strategy for a good or service -Price strategy for a good or service -Product strategy for a good or service
Place strategy for a good or service
Which of the following would NOT be an external threat to a marketing manager? -Government intervention in the industry. -New government taxes. -Poor employee work habits. -A new competitor.
Poor employee work habits.
What is the overall sacrifice a consumer is willing to make to acquire a specific product or service? -Compromise -Price -Venture -Giveaway -Product
Price
Which part of the marketing mix is the most flexible and easiest to change? -Price -Product design -Promotion -Place
Price
Which of the following is a strategy when a company pursues the development of a new product for a current market? -Market Development -Product Development -Sales Development -Product Diversification
Product Development
Which of the following is a strategy when a company pursues the development of a new product for a current market? -Market Development -Sales Development -Product Development -Product Diversification
Product Development
The marketing mix consists of -Planning, Profit, Product and Price -Product, Profit, Place and Promotion -Product, Personnel, Profit and Price -Profit, Price, Performance and Product -Product, Place, Promotion and Price
Product, Place, Promotion and Price
What is it called when a company communicates the value of the product through media? -Promotion -Market research -Sales -Pricing
Promotion
The Bubble Gum Company wants to determine the company's strengths and weaknesses. They also want to identify the company's current position in the marketplace compared to their competitors. They are also looking for long-term trends in the candy industry, and also external threats that can harm their business. Which of the following will BEST help The Bubble Gum Company gain the best information they are looking for? -SWOT analysis -Product differentiation -Win-Loss statement -Niche strategy
SWOT analysis
Which of the following is used to understand the current and potential environment? -SWOT analysis -Marketing Opportunity Analysis -The marketing mix -Place strategy
SWOT analysis
Which of these products would be classified as a star on the portfolio matrix ? -Cable television -Laptop computers -Smartphones -Self-driving vehicles -Landline phone service
Self-driving vehicles
Which of the following would a company do when it decides to 'harvest' a product made by an SBU? -Increase spending on developing a social media presence -Put the SBU up for sale -Focus on growing the product's market share -Close down the SBU as soon as the product inventory is sold -Spend as little on advertising and promotions as possible
Spend as little on advertising and promotions as possible
What type of market consists of a defined group most likely to buy a company's products or services? -Concentration zone -Objective market -Focus group -Target market
Target market
_____ must each be customized to appeal to the target market -The 4 P's of marketing -PR -Sales -HR
The 4 P's of marketing
External Strengths and Weaknesses
The economy, events, demographics, and social, political, and technological changes cover these parts of a SWOT analysis.
business mission statement
The foundation of any marketing plan is the firm's mission statement. A mission statement explains the purpose of why a company is in business, and what it is trying to accomplish. A mission statement should be focused on the market and environment and not just on a company's products or services.
If a business created a mission statement that said, 'We will make products to make the world a better place,' then what type of mission statement development mistake has occurred? -Marketing myopia -The mission statement is too wordy. -It's just right. There is no mistake. -The mission statement is too broad. -The mission statement does not explain the price.
The mission statement is too broad.
The three strategies for selecting target markets
The three strategies to achieve this are: taking on the entire market with one marketing mix, focuses on one segment of the market, or going after many market segments with multiple marketing mixes.
Service
These are products that you can't actually touch or see, and expire almost immediately.
Product, Place, Promotion, and Price
These make up the Four Ps.
Explain how place strategies work. -They set the price of the product to match the price of the competitor's product. -They make the product available to the consumers when they want and need them. -They are used to make sure the product is well designed for the target consumers. -They come up with ideas on how to promote the product on social media networks.
They make the product available to the consumers when they want and need them.
What should a very large company with many different business units do for their mission statement? -The mission statement should be one with marketing myopia. -They should try to create a generalized mission statement to cover all units. -They do not need a mission statement. -They should create a mission statement for each separate business unit. -They should survey consumers about what their mission statement should be.
They should create a mission statement for each separate business unit.
Product
This component of the marketing mix is something of value that is provided with a voluntary marketing exchange.
Cost-Competitive Advantage
This happens when a company is able to take a workforce and combine it with a low-cost production process to create maximum value to consumers.
Marketing Mix
This is a how a company combines the four Ps within a marketing plan to target a specific market.
Marketing Opportunity Analysis (MOA)
This is a process that companies use to analyze the size of the market, what profits can be made, and who might be the competition.
marketing strategy
This is a thought process and plan that is developed so that a company can look at what markets to target for a product or service.
SWOT analysis
This is a type of business analysis that takes into account internal strengths, internal weaknesses, external opportunities, and external threats before making a decision.
niche competitive advantage
This is a way that smaller companies target a specific segment of the market.
Business Mission statement
This is developed to inform consumers and investors why a company is selling a certain product.
competitive advantage
This is something a company believes gives it an edge because of the exclusive features of the company and/or its products that rival similar businesses.
Pricing
This is the amount a consumer must give up to obtain a product or service.
enviromental scanning
This is used to determine a company's external strengths and weaknesses.
Target Market
This is usually a small group of consumers that is likely to buy a company's products or services.
Product Differentiation
This is what separates a company's product or service when it offers something unique as compared to other companies.
Promotion
This part of the marketing mix is where marketers use the media to tout the value of their products or services.
Place
This piece of the marketing mix is a location that can be physical or virtual, but it is exists so that products or services can be purchased.
diversification
This strategy has the most risk because it is when a company not only develops new products, but also pushes into new markets (Disney went from making movies to building theme parks)
Diversification
This type of marketing strategy develops when a company designs a new product for new markets.
Market Development
This type of marketing strategy focuses on getting more new customers to buy existing products.
Market Penetration
This type of marketing strategy focuses on ways to expand customers and market share.
Product development
This type of marketing strategy is one where a company develops new products for current customers.
a company can plan to divest, or 'un-invest' its SBU because of low profits and small market share
Usually the dogs find themselves in these situations if a company cannot turn them around. Divest is the opposite of invest, so instead of putting more money into failing brands like Oldsmobile, Betamax, and record players, the companies decided to divest themselves of these SBUs.
What question does a business mission statement answer? -Who is our customer? -What is our reason for being in business and what is the purpose of the product in relationship to the consumer? -What type of marketing do we need? -Why are we in business and what is our sales goal? -What is our direction?
What is our reason for being in business and what is the purpose of the product in relationship to the consumer?
marketing myopia
When a business mission statement is too narrow, it's called marketing myopia. It means defining a business in terms of goods and services rather than in terms of the benefits customers seek.
The Mission Statement Cannot Be Too Narrow
When a business mission statement is too narrow, it's called marketing myopia. It means defining a business in terms of goods and services rather than in terms of the benefits customers seek. (For example, Sugar Rush should not have a statement that says, 'We make lollipops.' This is too limited a statement and does not fully explain the benefits the company provides. It also is a limiting statement in what products Sugar Rush produces for the market.)
A successful marketing mix must have all four Ps. Which of the following BEST describes an example of the first P, product? -When a company changes the color of packaging for an item -When a company chooses its distribution channels -When a company increases marketing -When a company places an advertisement
When a company changes the color of packaging for an item
marketing myopia
When a company focuses too closely on its products or services rather than benefits to consumers,
Which is the BEST example of a mission statement? -When a company writes the reason their company is doing business -When a company advertises a product -When a company writes the prices of their products -When a company writes headlines on their website
When a company writes the reason their company is doing business
Situational Analysis
When businesses have to research and analyze choices before choosing a path. Their decision-making process is called conducting a SWOT analysis aka situational analysis.
What question should a business mission statement answer? -Why a company is in business and what they are trying to accomplish. -Why a company sells the products to the consumer. -How a company plans to market specific products to the domestic market. -How a company goes to market and increases its revenue.
Why a company is in business and what they are trying to accomplish.
A star
a market leader with tremendous growth potential. Most stars require a large amount of cash investment for product development and promotion to stay ahead of competition
Internal Strengths and Weaknesses
a marketing manager looks internally at the company's resources, such as finances, engineering, marketing, employees and production, to see where the company excels or needs improvement. Marketing managers should not just look at the current situation of the firm, but also look at historical sales, profit and cost data.
market development.
a marketing strategy that entails attracting new customers to existing products. One key way of achieving this is to find new ways to use existing products. Another way companies can increase their new customers is to target new markets. (Arm & Hammer Baking Soda constantly find new ways to bring in additional customers, McDonald's find more customers in Eastern)
When a company offers free samples in the local supermarket, this is an example of _____ -a price strategy -a place strategy -a promotion strategy -a sales strategy
a promotion strategy
portfolio matrix
a tool for allocating resources among products or strategic business units on the basis of relative market share and market growth rate. The portfolio matrix consists of four matrix areas: stars, cash cows, problem children, and dogs.
The four types of promotion are -advertising, public relations, product and promotion -advertising, promotion, pricing and profit -product, place, price and profit -advertising, public relations, sales promotion and personal selling -advertising, social media, product, and billboards
advertising, public relations, sales promotion and personal selling
product development
companies create new products for current markets (Xbox game, M&M)
Cost, product differentiation, and niche are all examples of _____ -competitive advantage -promotion -sales -HR practices
competitive advantage
If a manufacturer of candy decides to open a theme park, this would be an example of a _____ strategic alternative. -development -diversification -market development -market penetration
diversification
A problem child
has good growth potential but very poor profit margins. Just like a star, problem children also need a large amount of cash or they will end up as dogs.
A dog
has very low growth opportunity and very small market share. These poor-performing products eventually become extinct (CD, VCR)
product/service differentiation
having a valuable, unique offering for its consumers resulting in consumer loyalty
SWOT analysis stands for
internal strengths internal weaknesses external opportunities external threats
Competitive advantage
is a set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition
cash cow
is an SBU that generates heaps of cash and does not need a large investment to maintain market share and sales. Laptop computers would be considered cash cows, because they sell consistently in a slower-growth industry and don't require much investment
Strategic Alternatives
is the game plan that a company chooses in order to get the largest growth and profits with the lowest risk.
Four Strategic Alternatives
market penetration market development product development diversification
A planned mix of the 4 Ps of marketing as defined in a marketing plan is also known as a _____ -marketing mix -advertising mix -promotion mix -sales mix
marketing mix
The Mission Statement Should Be Balanced
mission statement is just right and balanced to reflect the product's purpose and consumer benefit. It has to focus on its markets, explain who is served, describe the benefits reached and define what its customers seek.
Anything of value to a consumer and offered through voluntary marketing exchange is a _____. -product -promotion -sale -risk
product
Brenda's Beauty Salon offers customers hair styling. This is a _____. performance -tangible product -stored product -physical product -service
service
SBUs
strategic business units. SBUs are business divisions set up to make the larger organizations more nimble and provide flexibility and control in the marketplace. (Campbell Soup has their large company divided into smaller SBUs such as USA, Bakery & Confectionery, and International Grocery)
niche competitive advantage
targeting a single segment of the market
In order to establish an effective marketing strategy, a company must create a business mission statement
that defines the company's purpose and reason for selling its product or service
The price of a product includes _____ -the financial amount charged plus the time and effort put forth by the purchaser. -only what the retailer paid for it. -only the financial amount charged to the purchaser. -the amount of product sold to each customer. -only the time and effort put forth by the purchaser.
the financial amount charged plus the time and effort put forth by the purchaser.
What is a strategic alternative? -the biggest challenge for a company -the last recipe for success for a company -the game plan for the company to grow profits and market share -another way of thinking about marketing
the game plan for the company to grow profits and market share
What is a strategic alternative? -the last recipe for success for a company -the biggest challenge for a company -the game plan for the company to grow profits and market share -another way of thinking about marketing
the game plan for the company to grow profits and market share
market penetration
the strategy would plan to increase profits by increasing market share among existing customers. (Hershey Candy offers two bags of candy for five dollars)
USP
unique selling proposition: is something that your company does very well, but your competition does not
cost competitive advantage
when a company is able to utilize its skilled workforce, inexpensive raw materials, controlled costs, and efficient operations to create maximum value to consumers. Companies can use product design, reengineering, and new delivery methods as well to keep costs down