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True / False
1. Entrepreneurs identify their primary customers by recognizing a need, or pain, in the market.
a.
True
b.
False
2. The North American Industry Classification System (NAICS) is the classification system that was developed by the
United States, Canada, and Mexico to identify industries and to allow for common standards and statistics across North
America.
a.
True
b.
False
3. Industries remain static or stable over time, so it is easy for the entrepreneur to research and understand the industry.
a.
True
b.
False
4. There are seven stages in the industry life cycle.
a.
True
b.
False
5. For every industry, the life cycle stages occur at different times and vary in duration.
a.
True
b.
False
6. Radical change occurs in industries when an innovation results in the obsolescence of previous technology and drives
old-line companies out of business.
a.
True
b.
False
7. The government can limit entry to an industry or market through strict licensing requirements and by limiting access to
raw materials via laws or high taxes and to certain locations by means of zoning restrictions.
a.
True
b.
False
8. Target market research provides some of the least important data needed to decide who the first customer will be.
a.
True
b.
False
9. The market research process consists of seven steps.
a.
True
b.
False
10. The most important data that entrepreneurs can collect on potential customers are primary data derived from
observation, online or in-person surveys, phone surveys, interviews, and informal focus groups.
a.
True
b.
False
Multiple Choice
11. A/An ____ is a grouping of competitors that an entrepreneur targets.
a.
industry
b.
external environment
c.
target market
d.
market
e.
None of these choices
12. Which of the following is NOT a question one would ask when researching an industry?
a.
What does the industry look like?
b.
Is the industry growing?
c.
Where are the opportunities?
d.
How did the industry develop?
e.
What is the status of any new technology?
13. The industry in which a new venture will operate is the business's ____.
a.
external environment
b.
target demographic
c.
target market
d.
first customer
e.
None of these choices
14. Google, Wikipedia, journals, and trade magazines are examples of ____.
a.
industry analysis
b.
market research
c.
primary sources
d.
secondary sources
e.
None of these choices
15. To access the timeliest information, it is important to gather ____ on an industry.
a.
secondary data
b.
primary data
c.
blogs and social networking
d.
trade associations
e.
None of these choices
16. As more firms enter an industry, intense ____ occurs.
a.
growth
b.
adaptation
c.
differentiation
d.
shakeout
e.
decline
17. The ____ period moves the industry from many companies and high product costs, to a more stable industry with only
a few efficient firms.
a.
growth
b.
adaptation
c.
differentiation
d.
shakeout
e.
maturity
18. ____ change is found in industries where resources turn over frequently and must continually be replaced.
a.
Progressive
b.
Intermediating
c.
Radical
d.
Creative
e.
None of these choices
19. ____ has provided a way of effectively looking at the structure of an industry and at a company's competitive strength
and positioning relative to that industry and to the markets it serves.
a.
Porter's Five Forces
b.
PEST
c.
Market research
d.
Industry analysis
e.
None of these choices
20. Brand equity, advertising expense, and the rate of industry growth are part of which of Porter's forces?
a.
Threat of substitute products
b.
Customer bargaining power
c.
Supplier bargaining power
d.
Threat of new market entrants
e.
Intensity of competitive rivalry
21. The "first customer" is the customer who pays for the product or service and is the customer with the most ____.
a.
money
b.
time
c.
pain
d.
All of these choices
e.
None of these choices
22. "How is the industry described?," "Is the industry growing?," and "Where are the opportunities?" are all examples of
the questions that should be answered when conducting the ____.
a.
industry trajectories
b.
industry analysis
c.
PEST analysis
d.
target market analysis
e.
first customer analysis
23. It is best to begin researching the industry by using ____ information about the industry.
a.
primary
b.
secondary
c.
market life cycle
d.
customer bargaining power
e.
None of these choices
24. Birth, growth and adaptation, and shakeout are stages of the ____ life cycle.
a.
product
b.
market
c.
industry
d.
company
e.
All of these choices
25. A new industry goes through volatile and rapid changes as companies and their respective technologies jockey for
position and the right to determine industry standards. This is what stage of the industry life cycle?
a.
Birth
b.
Shakeout
c.
Differentiation and competition
d.
Growth and adaptation
e.
Maturity and decline
26. ____ change takes place as companies in the industry grow geographically and increase profits through innovations in
operations, processes, distribution, and technology.
a.
Radical
b.
Creative
c.
Progressive
d.
Intermediating
e.
Internet
27. The model most commonly used to help an entrepreneur analyze an industry is ____.
a.
Porter's Four Forces Model
b.
Porter's Five Forces Model
c.
the PEST Model
d.
the SWOT Analysis Model
e.
None of these choices
28. What is the phrase that is associated with the costs to produce a product when those costs have declined relative to the
price of industry's goods and services?
a.
Threat of new entrants
b.
Price and quality of alternatives
c.
Switching costs
d.
Economies of scale
e.
Costs of inputs
29. The concept that customers are not likely to switch easily to something new is:
a.
a SWOT analysis
b.
Inertia
c.
Brand loyalty
d.
All of these choices
e.
None of these choices
30. The key questions to be asked to discover your first customer include all of these except:
a.
What are the potential markets for the product or service?
b.
Of these markets, which customers are most likely to purchase
c.
How much is the customer willing to pay?
d.
How often does the customer buy?
e.
All of these choices
31. Identifying and profiling the first customer, estimating potential demand from that customer, and identifying
subsequent customer segments and needs to grow the company are goals of market research for ____.
a.
a new company
b.
a mature company
c.
all companies, large and small
d.
companies in decline
e.
All of these choices
32. The ____ represents an unserved niche that enables the entrepreneur to enter a market with no direct competition for a
time.
a.
general customer base
b.
first customer
c.
supplier
d.
industry
e.
None of these choices
33. A good starting point for gathering secondary market data is ____.
a.
the library
b.
other companies
c.
the Internet
d.
the buying habits of potential customers
e.
All of these choices
34. The ethnographic approach to market research has ____ steps.
a.
seven
b.
five
c.
four
d.
nine
e.
two
35. The second step in the market research process is ____.
a.
assessing information needs
b.
measuring the target market with primary research
c.
determining what methods of analysis will be used
d.
researching secondary data
e.
forecasting demand for the product or service
36. Observation, online or in-person surveys, phone surveys, interviews, and informal focus group are all ways to collect
____ data.
a.
secondary
b.
primary
c.
third-party
d.
sample
e.
All of these choices
37. Which of the following is NOT part of an ethnographic approach to customer observation?
a.
Learn from observation
b.
Explain what was observed
c.
Develop a plan
d.
Test the theory
e.
Conclusions
38. Providing more opportunity for clarification and discussion, the observation of nonverbal communication, and the
high response rate are all examples of the advantages of ____.
a.
in-person surveys
b.
structured interviews
c.
informal focus groups
d.
phone surveys
e.
anthropological observation
39. Age, income level, education, and buying habits are all components of the ____.
a.
competitor profile
b.
customer profile
c.
supplier profile
d.
industry profile
e.
SurveyMonkey profile
40. A/An ____ lays out the benefits, distribution channel, product/service, and potential competition for each identified
customer segment.
a.
customer matrix
b.
market matrix
c.
customer profile
d.
industry profile
e.
None of these choices
Subjective Short Answer
41. Briefly discuss how an entrepreneur would collect competitor data.
42. Cite five of the issues that should be addressed in the industry analysis.
43. Discuss the purpose of the North American Industry Classification System (NAICS), and indicate what countries are
part of the system.
44. Briefly discuss the six sources of primary industry data.
45. Briefly discuss the components/elements of the industry life cycle.
46. Discuss the four major industry trajectories that signal how fast change occurs in a particular industry.
47. Briefly discuss Porter's Five Forces Framework that is used to analyze an industry.
48. Porter’s Five Forces work has been challenged on several levels. What re the bases of these challenges?
49. Briefly discuss the Four-Step Market Research Process.
50. Discuss some of the things that should be taken into account when constructing a questionnaire.
