e.
The marketing audit should only be performed by outside accounting firms.
112. What is the most critical element in effective strategic planning?
a.
creativity
b.
top management support and participation
c.
continual attention
d.
the use of a BCG portfolio matrix
e.
a stringent and narrow mission statement
NARRBEGIN: DeFeet International
DeFeet International
DeFeet International started as a cyclist sock company. The founder, Shane Cooper, said that the
existing socks for cyclists were just not of great quality so he made socks for his cycling team by
knitting them inside out. The socks were of special materials aimed at giving the cyclist the most
comfortable fit. These socks were not the traditional white socks but bright, bold, and flashy colored
socks with cool graphics. These high tech socks were priced around $10 a pair. Their web site says
“DeFeet is Made for Driven Soles.” Soon cycling elites like Lance Armstrong and Greg LeMond were
sporting the DeFeet brand. The company branched into running, hiking and snow gear. Their products
include socks, armskins, calfskins, boxer briefs, gloves, and shirts for the serious athlete. They also
have a custom department where socks, armskins, and gloves can be customized with any motif
including sponsor types of logos like Michelin, Pabst Blue Ribbon, or BP. Even kids can enjoy
DeFeet’s high quality socks. DeFeet’s products can be found in retailers across the world, in more than
twenty countries, like Israel, Australia, Belgium and the United States. More than two-dozen online
retailers also carry their products.
NARREND
113. Refer to DeFeet. If you were to define DeFeet’s mission which would be most appropriate?
a.
DeFeet makes socks.
b.
DeFeet makes clothes for athletes.
c.
DeFeet creates high-tech products for the serious athlete.
d.
DeFeet provides the highest quality apparel for customers who demand the best.
e.
DeFeet covers the world.
114. Refer to DeFeet. What kind of competitive advantage would you say DeFeet has?
a.
Low cost
b.
Niche
c.
Product/service differentiation
d.
Product Development
e.
Diversification
115. Refer to DeFeet. DeFeet branched from making socks for cyclists to making apparel for skiing, hiking,
corporate sponsors, and kids. This is an example of which of Ansoff’s strategic alternatives?
a.
Market penetration
b.
Market development
c.
Product development
d.
Diversification
e.
Concentration
116. Refer to DeFeet. What is DeFeet’s most likely target market strategy?
a.
Appeal to the entire market
b.
Concentrate on one segment of the market
c.
Appeal to multiple segments
d.
Appeal to athletes
e.
Appeal to the world
117. Refer to DeFeet. DeFeet’s _____ is high-tech apparel, the packaging it comes in, the brand name,
company image and value.
a.
product
b.
place
c.
price
d.
promotion
e.
position
118. Refer to DeFeet. DeFeet’s _____ includes retailers and online retailers throughout the world.
a.
product strategy
b.
place strategy
c.
price strategy
d.
promotion strategy
e.
positioning strategy
119. Refer to DeFeet. DeFeet’s _____ is what its customers give up to obtain their apparel.
a.
product strategy
b.
place strategy
c.
price strategy
d.
promotion strategy
e.
positioning strategy
120. Refer to DeFeet. DeFeet’s _____ includes advertising, public relations, sales promotions, and personal
selling.
a.
product
b.
place
c.
price
d.
promotion
e.
position
NARRBEGIN: Novartis
Novartis
Novartis, a Swiss drug maker, is planning to purchase a majority stake in Zhejiang Tianyuan Bio-
Pharmaceutical Company, a Chinese vaccine maker. Novartis has agreed to pay $125 million for the
company that holds a 3% share of China’s $1 billion vaccines market. The market for vaccines is
growing 20% or more in developing nations of Asia, Africa, and Australasia. In the past, vaccine use
has been limited to basic shots against diseases such as polio, tuberculosis, and measles, but as the
economies of these countries grow, government and private healthcare spending focuses on preventing
diseases such as hepatitis B, cholera and rotavirus, tetanus, and others. Some critics are against the
acquisition, claiming that prices will increase. Novartis claims it is not interested in raising prices but
rather to expand Tianyuan’s product offerings.
NARREND
121. Refer to Novartis. Novartis is creating and maintaining a fit between its objectives and resources and
evolving market opportunities in developing countries. Novartis is engaging in:
a.
strategic planning
b.
selective assessment
c.
functional planning
d.
environment scanning
e.
decision analysis
122. Refer to Novartis. Novartis assessed the opportunity presented by the growing potential markets in
developing countries and determined it was consistent with its internal quality production processes
and extensive R&D capabilities. This assessment process in which Novartis learned this about the
environment is called a(n):
a.
market audit
b.
situation analysis
c.
primary analysis
d.
profit and loss assessment
e.
strategic window search
123. Refer to Novartis. If Novartis goes through with the purchase of Tianyuan, it will become a subgroup
of its overall pharmaceutical business and organization. Tianyuan will then be considered a(n) _____
of Novartis.
a.
stock keeping unit (SKU)
b.
portfolio element
c.
strategic business unit (SBU)
d.
market segment
e.
business segment
124. Refer to Novartis. By acquiring Tianyuan, Novartis will be offering vaccines, which is a product that it
currently offers in its existing markets, to new markets for the company. This is an example of which
strategic alternative?
a.
strategic window
b.
market penetration
c.
product development
d.
diversification
e.
market development
125. Refer to Novartis. Tianyuan has a relatively small market share of a high-growth market in China.
How would this company be classified in Novartis’ portfolio matrix?
a.
problem child
b.
star
c.
cash cow
d.
dog
e.
emergent
126. Refer to Novartis. One thing Novarti plans to do is increase sales to governments and to the United
Nations agencies because these are the typical buyers of vaccines to distribute in poor countries. Thus,
the company is willing to give up short-term profits to increase market share for this company. In
terms of the Boston Consulting Group’s portfolio matrix, which basic strategy will Novartis be
implementing?
a.
hold
b.
harvest
c.
divest
d.
build
e.
divert
NARRBEGIN: Delta Faucet
Delta Faucet Company
Masco is the name of a well-recognized company in the construction industry. It produces cabinetry,
furniture, lighting, and plumbing fixtures for the upper-end homeowner and builder. One of the
divisions of Masco is the Delta Faucet Company, which is the leader in the faucet industry. Delta
Faucet was founded in 1955. Over the decades, it has developed a legacy based on well-crafted, high-
quality products. Since the 1970s, Delta has focused its energies on building loyalty with the builder
marketplace. Research in 2002 showed that while builders respect the Delta faucet for its quality,
durability, and dependability, household consumers were not enamored with Delta products. Due to
the number of new magazines and television programs devoted to home style, homeowners wanted
faucets that were chic and stylish. This was not the image of the Delta Faucet. To change its image,
Delta Faucet began a marketing program in which it committed itself to developing new products to
appeal to homeowners. It adopted a new slogan, “Beautifully Engineered.”
NARREND
127. Refer to Delta Faucet Company. The marketing program, which Delta designed to develop new
products to appeal to homeowners, is an example of:
a.
strategic planning
b.
a mission statement
c.
mass marketing
d.
production-oriented marketing
e.
tactical planning
128. Refer to Delta Faucet Company. The Delta Faucet Company is a _____ of Masco.
a.
target market
b.
transactional division
c.
strategic business unit (SBU)
d.
share-bearing unit (SBU)
e.
situational business usage (SBU)
129. Refer to Delta Faucet Company. Delta Faucet would most likely have gathered the information about
how homeowners perceive its products through the use of a(n):
a.
break-even analysis
b.
correlation analysis
c.
sales potential assessment
d.
situation analysis
e.
economic forecast
130. Refer to Delta Faucet Company. The reputation the Delta faucet has for its quality, durability, and
dependability among builders is an example of a(n):
a.
tactical threat
b.
competitive advantage
c.
experience curve
d.
economy of scale
e.
market differentiator
131. Refer to Delta Faucet Company. Since Delta was already marketing to homeowners (although not very
successfully), its development of new styles of faucets to appeal to this underserved market would be
an example of a _____ strategy.
a.
market penetration
b.
product diversification
c.
market development
d.
product development
e.
product penetration
132. Refer to Delta Faucet Company. While new home construction is not growing as rapidly as it once did,
the number of homeowners who are remodeling bathrooms and kitchens is growing. According to the
portfolio matrix, Masco would consider Delta a(n):
a.
question mark
b.
exclamation point
c.
star
d.
cash cow
e.
problem child
133. Refer to Delta Faucet Company. Delta’s decision to make more stylish faucets represents a change in
the _____ element of its marketing mix.
a.
product
b.
promotion
c.
place
d.
production
e.
distribution
134. Refer to Delta Faucet Company. Delta’s development of a new slogan represents a change in the _____
element of its marketing mix.
a.
product
b.
promotion
c.
place
d.
production
e.
distribution
ESSAY
1. What is the difference between planning, strategic planning, and marketing planning?
2. What is marketing myopia? If a movie theater company had a myopic orientation, how might it state
its business purpose? If the movie theater company avoided a myopic orientation, how would its
business purpose change?
3. What is an SBU? If properly created, what characteristics should an SBU have?
4. What is a SWOT analysis? How does it relate to strategic planning?
5. What is a marketing objective? Name three criteria for good marketing objectives. Use the criteria to
write an objective for a business with which you are familiar.
6. What is environmental scanning? Name four environmental forces that affect marketing decision-
making.
7. Stump’s Hot Olives are manufactured by a family business in Wisconsin and are sold in Midwestern
grocery stores, through mail order, and to a few local restaurants. The company has been in operation
since 1998 and relies on labor from family and friends to produce and package olives in attractive,
reusable glass containers. They use store demonstrations to introduce their spicy olives to new
customers. Discuss how this company can establish or maintain at least one of the three types of
competitive advantage.
8. What is a competitive advantage? What makes a competitive advantage sustainable?
9. Name and describe the four strategic alternatives in Ansoff’s strategic opportunity matrix, which
matches products with markets. For each of the four strategic alternatives, give a specific example of a
firm following that strategy.
10. List the four basic strategies used once an organization has identified its SBUs in terms of the portfolio
matrix. Describe when each is used.
11. An essential part of marketing strategy is target market strategy. Selection of target market(s) drives
marketing objectives and selection of the marketing mix (the four Ps). What are the three general
strategies for selecting target markets?
12. The marketing mix refers to a unique blend of marketing variables known as the four Ps. Name and
briefly describe each of the 4 Ps.
13. Perhaps the broadest control device available to marketing management is the marketing audit.
Describe this tool and its characteristics.
14. The Heritage Bank is unaware of all the many tools available that will let marketers examine a firm’s
processes and identify potential areas for improvement. This firm wants to examine all of its goals,
strategies and structure, to ensure it’s on the right track and doing things well. The Heritage Bank has
hired you as an outside consultant to recommend a plan of action. What do you suggest and why?
15. Name and describe the three requirements for effective strategic planning.
