Principles of Marketing, 15e (Kotler/Armstrong)
Chapter 18 Creating Competitive Advantage
1) Gaining ________ requires delivering more value and satisfaction to target consumers than
competitors do.
A) competitive advantage
B) first-mover advantage
C) economies of scale
D) comparative advantage
E) differentiation
2) The first step in initiating competitive marketing strategies is to ________.
A) balance customer and competitor orientations
B) design broad competitive marketing strategies
C) assess long-term organizational objectives
D) conduct competitor analysis
E) conduct transaction analysis
3) A competitor analysis requires the assessment of all of the following EXCEPT the
competitors’ ________.
A) objectives
B) organizational hierarchy
C) strategies
D) strengths and weaknesses
E) reaction patterns
4) Strategies that strongly position the company against competitors and that give the company
the best possible strategic advantage are ________ strategies.
A) competitor analysis
B) customer relationship
C) competitive marketing
D) competitive relationship
E) customer identification
5) ________ involves first identifying and assessing competitors and then selecting which
competitors to attack or avoid.
A) Competitor analysis
B) Self-competition
C) Blue ocean strategy
D) Quantitative analysis
E) Perfect competition
6) To plan effective marketing strategies, a company needs to find out all it can about its
competitors. It must constantly compare its marketing strategies, products, prices, channels, and
promotions with those of close competitors. This is an example of ________.
A) blue ocean strategy
B) competitor analysis
C) organizational evaluation
D) perfect competition
E) quantitative analysis
7) Companies can identify their competitors from both ________ points of view.
A) industry and market
B) product and customer
C) customer and location
D) location and product
E) product and strategy
8) Companies can identify competitors from a(n) ________ point of view by defining
competitors as companies that are trying to satisfy the same customer need or build relationships
with the same customer group.
A) customer
B) blue ocean
C) market
D) myopic
E) industry
9) A company is guilty of ________ if the company forgets latent competitors and only focuses
on current competitors.
A) perfect competition
B) self-competition
C) Cournot competition
D) competitor backlinking
E) competitor myopia
10) Kodak’s film business didn’t lose out to direct competitor Fujifilm; it lost out to Sony, Canon,
and other digital camera makers, along with a host of digital image developers and online image
sharing services. This is an example of ________.
A) a blue ocean strategy
B) competitor backlinking
C) self-competition
D) competitor myopia
E) marketing myopia
11) Fosters and Mason House, two major coffee brands, competed neck and neck based on their
product attributes and price promotions. They were soon blindsided by the arrival of Starcoffeez,
which focused more on the coffee experience rather than the coffee. This resulted in major losses
for the two companies. This is an example of ________.
A) self-competition
B) competitor myopia
C) competitor backlinking
D) marketing myopia
E) perfect competition
12) From a(n) ________ point of view, Pepsi might see its competition as Coca-Cola, Dr Pepper,
7UP, and the makers of other soft drink brands. From a(n) ________ point of view, however, the
customer really wants “thirst quenching.”
A) market; industry
B) market; consumer
C) industry; competitive
D) industry; market
E) company’s; consumer
13) Nintendo, producer of the Wii video game console, might define its competitors as other
makers of physically interactive video games. But from a(n) ________ point of view, it would
include all firms making physically interactive recreational products.
A) industry
B) market
C) segment
D) niche
E) interdependent
14) From a market point of view, Universal Pictures might see its competition as ________.
A) Paramount Pictures
B) Warner Bros. Pictures
C) Walt Disney Pictures
D) 20th Century Fox
E) Broadway
15) From an industry point of view, Universal Pictures might see its competition as ________.
A) West End theatre
B) Columbia Pictures
C) Tomorrowland
D) Summerfest
E) HarperCollins
16) What is the LEAST relevant question to ask when assessing a firm’s main competitor?
A) What are the competitor’s objectives?
B) What is the competitor’s strategy?
C) What are the competitor’s strengths?
D) What are the competitor’s locations?
E) What are the competitor’s weaknesses?
17) Each competitor has a mix of objectives. The company wants to know the relative
importance that a competitor places on all of the following EXCEPT ________.
A) company history
B) current profitability
C) market share growth
D) cash flow
E) technological leadership
18) A company that pursues ________ will react much more strongly to a competitor’s cost
reducing manufacturing breakthrough than to the same competitor’s advertising increase.
A) product differentiation
B) low-cost leadership
C) customer intimacy
D) a middle-of-the-roaders strategy
E) product leadership
19) In the context of identifying competitors’ strategies, the more that one firm’s strategy
resembles another firm’s strategy, the more likely the two firms are to ________.
A) merge
B) compete
C) globalize
D) form a partnership
E) become market leaders
20) Companies need to know each competitor’s product quality, features, and mix; customer
services; pricing policy; distribution coverage; sales force strategy; and advertising and sales
promotion programs. These are all the dimensions that identify ________ groups within the
industry.
A) target
B) focus
C) control
D) strategic
E) experimental
21) In the audio equipment industry, Philips and Sony belong to the same ________.
A) target group
B) strategic group
C) experimental group
D) control group
E) focus group
22) Country Kitchen and Perkins are both a chain of family restaurants featuring diner-like
menus with reasonably priced items. These companies are in the same ________.
A) focus group
B) strategic group
C) control group
D) target group
E) experimental group
23) Companies use secondary data, personal experience, and word of mouth to ________.
A) identify competitors’ target customers and strategies
B) identify competitors’ target locations and market share
C) learn about their competitors’ strengths and weaknesses
D) select competitors to attack or avoid
E) estimate competitors’ sales projections
24) ________ is the process of comparing the company’s products and processes to those of
competitors or leading firms in other industries to find ways to improve quality and performance.
A) Segmenting
B) Positioning
C) Sales promotion
D) Benchmarking
E) Publicity
25) Benchmarking has become a powerful tool for increasing a company’s ________.
A) product mix
B) mass appeal
C) employee training services
D) distribution channels
E) competitiveness
26) A firm should compete with ________ competitors in order to sharpen its abilities.
Succeeding against these competitors often provides greater returns.
A) strong
B) international
C) weak
D) distant
E) smaller
27) An analysis conducted to determine what benefits target customers value and how they rate
the relative value of various competitors’ offers is known as ________.
A) customer value analysis
B) customer lifetime value
C) quantitative analysis
D) brand value proposition
E) benchmarking
28) In conducting ________, the company first identifies the major attributes that customers
value and the importance customers place on these attributes. Next, it assesses its performance
against competitors on those valued attributes.
A) a customer value analysis
B) benchmarking
C) entrepreneurial marketing
D) intrapreneurial marketing
E) a customer lifetime value estimate
29) A market research firm conducts a survey of soft-drink consumers to assess Pepsi’s and
Coke’s strengths and weaknesses in product qualities valued by both company’s target customers.
The market research firm is using a(n) ________.
A) customer lifetime value estimation
B) global marketing strategy
C) competitive marketing strategy
D) customer value analysis
E) blue ocean strategy
30) If the company’s offer delivers greater value by exceeding the competitor’s offer on
important attributes, the company can charge a higher price and ________, or it can charge the
same price and ________.
A) earn lower profits; gain higher profits
B) earn higher profits; lose profits
C) earn higher profits; gain more market share
D) lose profits; gain more market share
E) lose profits; gain higher profits
31) Most companies will compete with ________ rather than ________.
A) distant competitors; close competitors
B) close competitors; distant competitors
C) benchmarkers; distant competitors
D) market challengers; market followers
E) market challengers; market nichers
32) A company’s close competitors are ________.
A) considered “bad” competitors
B) a serious threat and hence, must be destroyed immediately
C) those that most resemble the company’s operations
D) typically ignored as they seldom pose any threat
E) the sole focus of successful companies
33) Which of the following are examples of close competitors?
A) Applebee’s and Subway
B) Taco Bell and T.G.I. Friday’s
C) Pizza Hut and Burger King
D) McDonald’s and Taco Bell
E) McDonald’s and Burger King
34) What is most likely a strategic benefit of the existence of competitors?
A) Competitors seldom lead to product differentiation.
B) Competitors help legitimize new technologies.
C) Competitors exclusively serve more-attractive segments.
D) Competitors fracture the target market.
E) Competitors decrease the total demand.
35) An industry often contains “good” and “bad” competitors. Good competitors ________.
A) break the rules of fair competition
B) ensure minimum competition between firms
C) play by the rules of the industry
D) typically dominate the market
E) share their marketing strategies with other firms
36) Most competitors in the music download industry see Apple’s iTunes Music Store as a
________ because it created a closed system with mass appeal.
A) good competitor
B) marginal competitor
C) bad competitor
D) weak competitor
E) distant competitor
37) Rather than competing head to head with established competitors, many companies seek out
unoccupied positions in uncontested market spaces. They try to create products and services for
which there are no direct competitors. This is called a ________.
A) horizontal integration approach
B) commercialization process
C) guerrilla marketing technique
D) blue ocean strategy
E) lean dynamics approach
38) An example of a company exhibiting a blue ocean strategy is ________.
A) Amazon’s online shopping convenience
B) a Starbucks opening in the same vicinity of an independent coffee house
C) Nike’s brand image of the “swoosh”
D) Whirlpool’s full line of medium-priced, energy-saving appliances
E) the first digital tablet iPad released by Apple
39) Tomorrow’s leading companies will succeed by seeking out unoccupied positions in
uncontested market spaces. Such strategic moves, termed ________, create powerful leaps in
value for both the firm and its buyers, creating new demand for new products.
A) customer lifetime value
B) customer equity
C) value innovation
D) market segmentation
E) customer intimacy
40) Which of the following is the first step taken in the competitive intelligence system?
A) collect published data and information from the field
B) check, interpret, and organize gathered information
C) identify the vital types of competitive information needed
D) respond to inquiries from managers about competitors
E) create a new brand image and marketing concept for the firm
41) The competitive intelligence system continuously collects information from the field through
________.
A) government publications
B) online monitoring
C) speeches
D) online databases
E) market surveys
42) Smaller companies may assign specific executives to watch particular competitors. A
manager who used to work for a competitor might follow that competitor closely to see what it
does in the marketplace. Such a manager would be considered the company’s ________ on that
competitor.
A) market leader
B) market challenger
C) surrogate consumer
D) in-house expert
E) laggard
43) Which of the following statements is true of the approaches to marketing strategy?
A) Intrepreneurial marketing applies to companies that sometimes lose their marketing creativity
and passion that they had at the start.
B) As small companies achieve success, they inevitably move away from more-formulated
marketing.
C) Within a company, a single strategy exclusively applies to all different businesses and
products.
D) Formulated marketing seldom involves developing formal marketing strategies and adhering
to them closely.
E) Formulated marketing encourages more marketing initiative and “intrepreneurship” at the
local level.
44) Companies that operate large marketing departments, conduct expensive marketing research,
spell out elaborate competitive strategies, and spend huge sums on advertising are using
________ marketing strategies.
A) informal
B) formal competitive
C) entrepreneurial
D) intrepreneurial
E) blue ocean
45) What are the stages that the approaches to marketing strategy and practice usually pass
through?
A) ambush marketing, multi-level marketing, and guerrilla marketing
B) guerrilla marketing, ambush marketing, and affinity marketing
C) multi-level marketing, undercover marketing, and evangelism marketing
D) entrepreneurial marketing, formulated marketing, and intrepreneurial marketing
E) undercover marketing, affinity marketing, and ambush marketing
46) Most companies are started by individuals who live by their wits. They visualize an
opportunity, take risks, and knock on every door to gain attention. Which of the following stages
in marketing strategy is being illustrated here?
A) exponential marketing
B) formulated marketing
C) entrepreneurial marketing
D) affinity marketing
E) ambush marketing
47) When Gary Hirshberg started the Stonyfield Farm yogurt company, he stated that his
company could do better with less advertising, less marketing research, and more guerrilla
marketing. He came up with innovative marketing ideas to promote his products such as having
sales personnel dress up as large yogurt cartons to distribute free yogurt samples. Which of the
following marketing strategies was being implemented by Hirshberg?
A) formulated marketing
B) entrepreneurial marketing
C) ambush marketing
D) undercover marketing
E) intrepreneurial marketing
48) As small companies achieve success, they inevitably move toward more ________
marketing. They adopt more-developed marketing tools and adhere to them closely.
A) ambush
B) formulated
C) entrepreneurial
D) intrepreneurial
E) multi-level
49) Companies that have been in existence for some time often lose the marketing creativity and
passion that they had at the start. They now need to refresh their marketing strategies and try new
approaches, which is known as ________.
A) multi-level marketing
B) formulated marketing
C) ambush marketing
D) intrepreneurial marketing
E) affinity marketing
50) According to Michael Porter, what are three effective competitive positioning strategies?
A) middle-of-the-roaders, focus, and overall cost leadership
B) focus, differentiation, and middle-of-the-roaders
C) overall cost leadership, differentiation, and middle-of-the-roaders
D) overall cost leadership, differentiation, and focus
E) differentiation, market segmentation, and focus
51) Dell produces and delivers PCs of competitive quality at lower costs. The company
constantly aims to achieve low production and distribution costs to win a large market share.
Dell utilizes a(n) ________ strategy very effectively.
A) overall cost leadership
B) differentiation
C) focus
D) blue ocean
E) market segmentation
52) Porsche is a German automobile manufacturer that competes against BMW and Audi, but
only in the sports car and SUV segments of the automobile market. Porsche utilizes a(n)
________ strategy.
A) overall cost leadership
B) focus
C) middle-of-the-roaders
D) market segmentation
E) blue ocean
53) Companies that pursue a clear strategy will likely perform well. Firms that do not pursue a
clear strategy are called ________.
A) jack-of-all-trades
B) middle-of-the-roaders
C) niches
D) red oceans
E) laggards
54) Sears and Holiday Inn encountered difficult times because they did not stand out as the
lowest in cost, highest in perceived value, or best in serving some market segment. Both
companies are ________.
A) niches
B) jack-of-all-trades
C) middle-of the roaders
D) red oceans
E) laggards
55) Which of the following are value discipline strategies?
A) operational excellence, overall cost leadership, and differentiation
B) customer intimacy, operational excellence, and focus
C) employee relations, product leadership, and overall cost leadership
D) product leadership, customer intimacy, and focus
E) operational excellence, customer intimacy, and product leadership
56) When a company provides superior value by leading its industry in price and convenience, it
has obtained ________.
A) product leadership
B) focus
C) operational excellence
D) customer intimacy
E) differentiation
57) Walmart, Costco, and Southwest Airlines serve customers who want reliable, good-quality
products or services that are also reasonable and easily available. These companies are all known
for pursuing a value discipline known as ________.
A) operational excellence
B) customer intimacy
C) product differentiation
D) product leadership
E) focus
58) When companies serve customers who are willing to pay a premium to get precisely what
they want and the company responds quickly to satisfy these customers’ needs, the company has
achieved ________.
A) customer intimacy
B) product differentiation
C) operational excellence
D) product leadership
E) focus
59) American Express will do almost anything to build long-term customer loyalty and to
capture customer lifetime value. Which of the following competitive marketing strategies is
being pursued by American Express?
A) consumer capitalism
B) customer equity
C) product differentiation
D) product leadership
E) customer intimacy
60) If a company’s aim is to make its own and competing products obsolete and serve customers
who want state-of-the-art products and services, it is using a value discipline called ________.
A) overall cost leadership
B) product activation
C) product binning
D) product leadership
E) customer intimacy