Chapter 6: Market Structure and Competitor Analysis

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Which of the following is the biggest of all subscription-based information services?

A: DIALOG

Generic competition is inward orientated.

A: False

In assessing the strengths and weaknesses of a competitor, it is vital to know the political affiliation of its CEO.

A: False

Solutions to game theory models require you to determine the game's equilibrium, commonly called the Budget Equilibrium.

A: False

The strengths and weaknesses of competitors and their current and likely future strategies is known as a market structure analysis.

A: False

The main issues for game theory regarding new product entrants include all of the following except

A: Is the market a high technology category?

__________ is a list of strategies, one for each player, with the property that no manager wants to unilaterally change his or her strategy.

A: Nash equilibrium

A good primary source of market information is your sales force and customers.

A: True

Economists often use cross-elasticity of demand as an indicator of substitutability.

A: True

For industrial products and services, the marketing manager can determine the customer and competitor targets by consulting product sales literature, his own sales force, and trade advertising.

A: True

One approach to classifying or identifying competitors is to divide them into classes: supply-based and demand-based.

A: True

One level of competition, based on products that have similar features and provide the same basic function, is called product class or product category competition.

A: True

Rather than simply reacting to your competitors' moves, it is beneficial to anticipate them and act in a preemptory fashion.

A: True

If a marketing manager observes that a competitor has increased his price decreased his marketing budget, it would be an example of which of the following?

A: a retreat, although only temporary

List and briefly describe some of the best secondary sources mentioned in the text.

A: a. Annual reports - you can comb through the report and find interesting financial information, plant locations, and general strategic thrusts from a corporate perspective. b. Patent and trademark filings - these are available from on-line companies such as CompuServe and from Micro Patent. c. General business and trade publications - much information can be obtained from publications that are widely distributed or from those that are targeted towards specific industries. d. Trade associations - these associations are usually formed for public relations or lobbying purposes, but they often perform market research for the member firms, which may provide industry data on market shares and price levels. e. Help-wanted ads - a casual examination of the wanted ads in the Wall Street Journal or the Financial Times shows that companies disclose a good deal of information about their new products, areas of emphasis, job qualifications and standards, new plant or facility locations, and other information. f. Electronic data services - the Web has a number of sites that are of particular interest for analysis.

List and briefly describe the four different levels of competition.

A: a. Product form/type - the narrowest definition of competition that results in the fewest competitors and includes only products or services of the same product type. b. Product class/category - a broader definition than product form that results in a product segment of the industry. c. Generic competition - incorporates the customer's notions about substitutability. At this level, competition is defined as the products or services that the customer views as fulfilling the same need. d. Budget competition - a product that is substitutable in the customer's budget.

__________ should be recognizable as a group of products that are close substitutes, are available to a common group of buyers, and are distant substitutes for all products not included in the industry.

A: an industry

According to the text, all of the following are primary sources of information except:

A: annual reports

The final level of competition and the most general is called which of the following?

A: budget competition

According to the text, all of the following are approaches to predicting a Competitor's future strategies except:

A: corporate espionage

Which of the following is not a good example of secondary source of information?

A: employees

One method of anticipating a competitor's future strategies is to use a mathematical approach called __________.

A: game theory

At the __________ level, marketers must convince customers that their product category solution to the customer's problem is superior to the solution provided by other product categories.

A: generic competition

The brand strategy of pursuing a profit objective at the expense of share loss is usually called a __________ if the ultimate intention is to drop the product.

A: harvest objective

All of the following are mentioned in the text as important attributes of a competitor's marketing communications except:

A: how they use price discrimination

Which of the following types of industries tend to be good application areas for game theory and strategic thinking?

A: industries subject to strong competition

Which of the following is the best example of generic competition in the coffee drip machine category?

A: juicers and water purifiers

The concept of __________ is often the case in industries where one company has historically chosen to be the first to change price or make some other marketing mix or strategic decision.

A: leader-follower

Because privately-owned firms do not have to account to stock analysts:

A: long-term profits may be more important than showing consistent positive quarterly returns

A rival marketing manager who is trying to expand a brand's market share will spend money on which of the following types of activities?

A: market development-related activities

A __________ will identify the competitors for your product or service.

A: market structure analysis

For consumer products, which of the following is best in tracking a competitor's segmentation and target market strategy.

A: media advertising

Which of the below best describes a brand that is aggressive in its pursuit of market share?

A: must be viewed as a different kind of competitor than one that is attempting to maximize profits

Other than objectives, all of the following are major elements of the strategy that the marketing manager must monitor except:

A: nonprofit contributions

A SWOT analysis focuses on which of the following?

A: on your business only

Which of the below is a good example of competition in "product form" in the coffee drip machine category?

A: other brands of coffee drip machines

Which of the following examples best represents product form competition in drip coffee machine category?

A: percolators and espresso machines

Scenario planning is used most often in which of the following types of industries?

A: petroleum

The kind of game, in which competition leads to a less-than-optimum outcome for both managers, is called __________.

A: prisoner's dilemma game

This kind of game is seen often in highly competitive industries where companies, such as Coke and Pepsi, compete.

A: prisoner's dilemma game

At which of the following levels of competition must the marketer customers that product form is the best in the product category?

A: product category competition

The narrowest definition of competition that results in the fewest competitors that includes only products or services of the same product types is called __________.

A: product form competition

Which of the following best describes different specific combinations of features within each product type?

A: product variants and brands

Which of the following best describes a sophisticated, long-term version of the simulation process?

A: scenario planning

To analyze the strengths and weakness of a competitor, assessment of all of the following categories are important except:

A: the ability to price discriminate effectively

The central importance of game theory is best described by which of the following?

A: the disciplined thinking it imposes on managers

If cross-elasticity with respect to price is positive, then which of the following is true?

A: the two products in question are considered to be competitive

payoff matrix

In game theory, a graphic depiction of the rewards or costs to each player for each possible combination of strategies

industry

a group of products that are close substitutes to buyers, are available to a common group of buyers, and are distant substitutes for all products not included in the industry

product form competition

a level of competition in which only products or services of the same product type are considered

product class or product category competition

a level of competition in which products or services that have similar features and provide the same function are considered

generic competition

a level of competition that includes all products or services that the customer views as fulfilling the need requiring satisfaction on a particular purchase or use occasion

budget competition

a level of competition that includes any product, related or unrelated, that could be viewed as substitutable in a budget

brands

a name, term, sign, symbol, or design, or a (combination of thereof) intended to identify the goods and services of a seller and differentiate them from the competition

prisoner's dilemma game

a particular form of competitive game in which neither participant wants to change his or her current strategy because if one does and the competitor matches, both will be worse off

SWOT analysis

a planning tool used to analyze an organization's strengths, weaknesses, opportunities, and threats

product variants

also called product brands, different specific combinations of features within a specific product type

market structure analysis

an analysis in which the marketing manager seeks to better understand who the competition is and thus define the market

competitor analysis

an analysis in which the strengths and weaknesses of competitors and their current and likely future strategies are examined

product types

group of products that are functional substitutes

Nash equilibrium

in game theory, the most common form of equilibrium, which involves a list of strategies, one for each player, with the property that no manager wants to change its strategy unilaterally

product class/category

one particular product segment of a particular industry

scenario planning

planning that involves asking "what-if" questions to produce forecasts of alternative outcomes based on different assumptions about advertising spending, price levels, competitor actions, and other variables

cross-elasticity of demand

the percentage of change in one product's sales caused by a percentage change in a marketing variable for another product


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