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The primary goal of a defensive strategy is to protect profitability and key strategic
share positions that are worth the investment.
Sales revenues, net profits, return on sales, assets as a percentage of sales, and return on
assets are measures of internal financial performance that provide a market-based view
of performance.
Entry into emerging markets requires significant investment to develop demand.
A strategic market plan sets the direction and provides guidelines for resource
allocation.
As a business approaches 100 percent of its share development index, additional growth
based on market share gains becomes increasingly difficult.
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.
The objective of offensive strategic market plans is to produce sales growth and
improve share position and future profit performance.
The financial metric of return on equity has owner's equity as its basis.
The best way to identify groups of similar customers is to segment customers on the
basis of demographics, lifestyles, and usage behaviors.
A defensive strategy to protect market share is the same as a hold-resources-constant
strategy.
The more similar one market is to another, the less likely the possibility that consumers
will substitute products.
The only source of positive cash flow is the customer.
Defensive strategic market plans are usually growth oriented and are more appropriate
for the growth stage of a product-market life cycle.
Communications that are targeted at industry gurus and consultants lead to secondary
marketing communications.
A direct marketing channel produces higher margins than an indirect channel, but the
business must bear the cost of channel management and all marketing and sales
expenses.
Gross rating points (GRPs) is a measure of advertising efficiency which is equal to
reach divided by frequency.
The perceived customer value is the sum of the relative performance and the relative
cost of purchase.
The purpose of needs-based segmentation is to offer product benefits that satisfy the
needs of target customers.
Lead users are users who purchase a product only after it has been used by the majority
of mainstream users.
The extent that a market share grows is directly dependent on the strength of a
business's product positioning and marketing effort.
The primary forces that shape the needs of consumers are demographic influences,
lifestyle influences, and usage behaviors.
Heavy-up message frequency involves the use of alternating exposure periods by
spending heavily during some periods and not at all during other periods.
Lifestyle forces that shape customer needs and market demand include how the product
is used, when it is used, and how much it is used.
To use single-segment pricing, a company bases the price of a product on the costs of
manufacturing and marketing the product, not on the attractive savings the customers
realize over the life of the product.
One way to grow net profit is to increase the variable cost per unit.
One of the most common reasons a marketing plan fails is because of a lack of
ownership.
In any competitive environment, reputation is the principal source of competitive
advantage.
The fundamental objective of all share leaders is to invest to protect market share.
A broad market definition includes all potential substitute products.
A market-based business with a strong competitor orientation across job functions has a
lower level of market sensitivity.
Products that complement a certain product will not be affected whenever that product's
price changes.
Customer use of social media gives marketers complete control over their brands.
Common to most assessments of segment attractiveness are measurements of market
demand, competitive intensity, and market access.
Marketing strategies rarely affect accounts receivable and inventory assets of a
company.
The objectives of a pull marketing communication are to build awareness, attraction,
and loyalty and to reduce search costs.
To complement a business's internal financial performance metrics, a business needs a
parallel set of external marketing metrics to track its market-based performance.
Measures of market performance, such as sales and market share, are backward-looking
measures of success or failure.
Gross rating points (GRPs) is a measure of advertising efficiency which is equal to
reach divided by frequency.
Within the dimensions of product performance, a poor performance in which of the
following would be a "quality killer"?
A) serviceability
B) features
C) appearance
D) conformance
E) reputation
Amtech Inc., an American firm that manufactures inkjet cartridges, also provides inkjet
refill services at all its stores. The firm manufactures and sells "do it yourself" kits that
allows customers to do their own inkjet refills. Amtech Inc. lowers the total cost of the
product by solving its customers' problem of throwing away empty cartridges, and also
enables customers to save money. In this example,
Amtech Inc. reduces which of the following costs for their customers?
A) resale costs
B) acquisition costs
C) repair costs
D) insurance costs
E) disposal costs
Which of the following is true of channel advantage?
A) It allows a business to control market access, but not channels in a market.
B) It is dependent on cost advantage.
C) It is dependent on differentiation advantage.
D) It is achieved through the use of reactive strategies.
E) It is a source of marketing advantage.
Martha has determined that along the share-development path, her business should
perform at a 91% level of product awareness, 73% in product preference, 86% in
intentions to purchase, and 76% in product availability. If the share potential index for
Martha's business is 26%, at what level of purchase rate should her business perform?
A) 90%
B) 80%
C) 70%
D) 60%
E) 50%
Market-based businesses differ from product-focused businesses in that market-based
businesses ________.
A) focus on products and services
B) are providers of solutions
C) have a narrow view of customers' underlying problems
D) lack a strong customer focus
E) lack knowledge of customer usage
________ purchase a variety of equipment from several manufacturers and package
them as a system.
A) Wholesalers
B) Value-added resellers
C) Brokers
D) Sales agents
E) Distributors
When the management team noted the increased interest in bikes as a mode of
commuting, bicycle manufacturer Sensta introduced utility bikes aimed at the urban
commuter. In which of the following cases is the company following a
multiple-segment pricing strategy?
A) Sensta entered the market with a bike priced at $2,500, and later, as more
competitors entered the market, reduced the price to $1,000.
B) As the market for bikes in a particular city became saturated, Sensta raised the prices
of its bikes hoping to gain maximum profit before exiting the market.
C) With several competitors with similar product features in the utility bike market,
Sensta concentrated on the sturdiness of its bikes, and raised the price of the basic
model from $500 to $1,000.
D) Sensta manufactures a basic model priced at $500, a bike with more features, priced
at $1,500 and a deluxe model priced at $3,000.
E) When Sensta entered the market, there were already competitors in the
$1,000-$2,000 price range. Sensta introduced three bike models in the $500-$700 price
range in order to capture market share, and later raised the prices of its products.
________ communication strategies are directed at channel intermediaries.
A) Push
B) Pull
C) Heavy-up
D) Centralized
E) Pulsing
Which of the following customer relationship marketing strategies allows customers to
become their own individual market segments?
A) mass-personalization
B) core-segment strategy
C) decentralization
D) mass-customization
E) database marketing
Calculate the average relative product quality of the product, if the business has a
customer value of 25, and above-average relative price of 125.
A) -25
B) 5
C) -100
D) 100
E) 150
Mason Enterprises' net marketing contribution of $50 million is derived from sales of
$200 million. If its marketing and sales expenses amount to $20 million, what is its
percentage of gross profit margin?
A) 40%
B) 35%
C) 20%
D) 25%
E) 30%
Zitko Inc. is a manufacturer of consumer goods products. It has 75 million shares in the
market and generates a net profit of $125 million. Its stock price is $60 and it has a
capital cost of 10% for $850 million of capital invested. Its other expenses, including
interest and taxes, amount to $240 million.
Mini-Case Question. What is Zitko's PE ratio?
A) 42.6
B) 35.3
C) 26.5
D) 15.5
E) 7.8
Within the dimensions of product performance, which of the following is a "quality
driver"?
A) conformance
B) durability
C) serviceability
D) reputation
E) reliability
In which stage of the product life cycle are maximum marketing profits attained?
A) introduction
B) early growth
C) late growth
D) late decline
E) early decline
Calculate the cost advantage index if the percentage cost of goods sold by the business
is 40% and the average percentage cost of goods sold by its top three competitors are
50%, 60%, and 70%, respectively.
A) 20
B) 40
C) 57
D) 67
E) 80
Calculate the cost of capital of Grantz Inc. when the net and economic profits generated
by the company are $180 million and $24 million, respectively, and the total invested
capital is $940 million.
A) 24.3%
B) 20.5%
C) 12.2%
D) 8.5%
E) 16.6%
Which of the following measures is used to assess the responsiveness of consumers to
advertising expenditures, calculated by dividing the percent change in sales by the
percent change in advertising expenses?
A) net sales expenditure
B) gross advertising index
C) advertising elasticity
D) advertising return on investment
E) push rating
A larger production volume allows for production and purchasing economies that lower
the unit cost of a product, thereby producing a ________ effect.
A) scale
B) scope
C) cluster
D) network
E) Mohring
A market-based business looks at customers as ________.
A) lifetime partners
B) individual purchase transactions
C) conquests
D) short-term relationships
E) extraneous variables
Calculate the economic profit generated by a business with a capital cost of 5% for
$680 million of capital invested and a net profit of $40 million.
A) $18.5 million
B) $10 million
C) $6 million
D) $35 million
E) $22.5 million
Which of the following forces that shape segment attractiveness include market size,
growth rate, and growth potential?
A) competitive intensity
B) market access
C) market demand
D) profitability
E) feasibility
Marketing channel performance is evaluated based on the operational components of
________.
A) customer reach, operating efficiency, and service quality
B) customer value, sales revenues, and profitability
C) return on sales, brand image, and sales margin
D) product quality, product assortment, and product form
E) product costs, branding strategy, and customer loyalty
Which of the following is true of backward-looking metrics?
A) They tell a company where it stands with respect to current performance.
B) They provide insights on future performance.
C) They are applied at regular intervals during an operating period.
D) They include company metrics such as late deliveries and late payments.
E) They include marketing metrics such as customer awareness and customer
satisfaction.
Which of the following formulas is used to calculate a company's relative market share?
A) (Company's Market Share/Company's Potential Market Share) x 100
B) (Company's Total Sales/Total Sales of the Largest Competitor) x 100
C) Company's Targeted Sales - Company's Net Sales
D) (Company's Market Share/Total Share of Three Largest Competitors) x 100
E) Total Sales of the Largest Competitor - Company's Total Sales
A close examination of profitable high-share and profitable low-share niche businesses
reveals only two areas of commonality: relative sales force expense and ________.
A) relative price
B) product breadth
C) relative product quality
D) relative advertising
E) product depth
In order to develop a performance plan, a business first translates the objectives of the
market share strategy into a ________.
A) communications strategy plan
B) break-even plan
C) revenue plan
D) situational analysis plan
E) SWOT analysis plan
M.L. Manufacturers Inc. is an American clothes manufacturing firm that sells women's
fashion apparel under the brand name DressChic. After extensive market research, the
firm introduces a line of children's clothes under the brand name Mischief and a line of
affordable work wear for women under the brand name DressSmart. In this example,
M.L. Manufacturers Inc. uses which of the following strategies?
A) a vertical brand-line extension strategy
B) a horizontal brand-line extension strategy
C) a new product-market brand extension strategy
D) a cobranding strategy
E) a product bundling strategy
The market demand for a certain product from Silkskin Cosmetics is 10,000 units. The
market share is 20%. The average selling price of a unit is $10 and the average cost
price is $5. Calculate the gross profit for the product.
A) $10,000
B) $5,000
C) $20,000
D) $15,000
E) $30,000
________ customers are quality conscious, fairly well informed, and somewhat price
sensitive.
A) Early majority
B) Early adopters
C) Innovators
D) Laggards
E) Late majority
Which of the following is a customer relationship marketing strategy?
A) mass-market strategy
B) mass-customization strategy
C) core-segment strategy
D) sub-segment strategy
E) decentralization strategy
The formula used to calculate the operating income is ________.
A) operating income = sales revenues + cost of goods
B) operating income = sales revenues - cost of goods - SGA expenses - other operating
expenses
C) operating income = cost of goods + SGA expenses + other operating expenses
D) operating income = sales revenues - SGA expanses
E) operating income = sales revenues + cost of goods + SGA expenses + other
operating expenses
A broad market definition differs from a narrow market definition in that a broad
market definition ________.
A) includes the articulated needs of customers
B) includes all potential substitute products
C) results in unfulfilled market potential
D) enables managers to define their markets on the basis of the customers they
currently serve
E) limits managers' perceptions and strategies
