Marketing Chapter 2 1 According to the BCG matrix, if a question mark cannot become a star, the firm should pull out of the market and target other markets with greater potential

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Indicate whether the statement is true or false.

1. According to the BCG matrix, if a question mark cannot become a star, the firm should pull out of the market

and target other markets with greater potential.

a. True

b. False

2. According to the BCG matrix, dog products can be sold to other firms, where they are a better fit.

a. True

b. False

3. The position of an SBU along the horizontal axis indicates the annual growth rate of the market.

a. True

b. False

4. Organizational objectives should include specific intentions, such as “Snapple Corporation seeks to increase

its share of the non-carbonated soft drink market to 25 percent within the next two years.”

a. True

b. False

5. Supervisory managers tend to focus exclusively on strategic planning.

a. True

b. False

6. The number of suppliers available to a manufacturer or retailer affects the bargaining power of buyers.

a. True

b. False

7. Cassidy is a divisional marketing manager with Kimberly Clarke and responsible for decisions related to

Huggies diapers. She recently had a meeting to plan licensing agreements where the company could screen

various licensed characters on the Huggies diapers and use their images on the packaging for promotional

purposes. Cassidy is engaging in operational planning.

a. True

b. False

8. Tactical plans typically determine an organization’s primary strategic objectives and exclude short-term

actions from their purview.

a. True

b. False

9. SWOT analysis refers to an examination of a firm that is limited to the variables of its stability, work ethic,

organizational structure, and technological expertise.

a. True

b. False

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10. Strategic business units are key business units within small companies that offer only a few items to its

customers.

a. True

b. False

11. An organization typically includes its basic objectives, or goals, in a marketing plan.

a. True

b. False

12. Employees at middle-management levels engage themselves in business unit budgets and divisional policies

and procedures.

a. True

b. False

13. Organizational objectives may specify time frames stating “Our organization aims to generate a 15 percent

profit over the next 24 months.”

a. True

b. False

14. Marketing plans once implemented should not be changed even if the actual performance does not meet the

desired results.

a. True

b. False

15. Skippy Peanut Butter and recently launched a new product called Peanut Butter Bites which contain high

levels of protein and are packaged in a convenient resealable snack container. The snack industry is high growth

but Skippy’s Peanut Butter Bites currently has a low level of market share in the snack food market. According

to the Boston Consulting Group, Peanut Butter Bites would be classified as stars.

a. True

b. False

16. Recently, top-level marketing managers of ToysRUs made the decision to close several stores due to lower

than expected sales revenue. Now, they will be able to redirect funds to support an increased web presence and

enhance their online marketing efforts. This decision demonstrates that marketing plans should be flexible and

allow managers to make changes if objectives are not being met.

a. True

b. False

17. Each SBU pursues its own distinct mission and often develops its own plans independently.

a. True

b. False

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18. Strategic planning activities are conducted by a firm’s senior or executive-level managers such as the CEO.

a. True

b. False

19. Planning often is classified on the basis of its scope or breadth.

a. True

b. False

20. A SWOT analysis helps planners compare internal organizational strengths and weaknesses with external

opportunities and threats.

a. True

b. False

21. When making tactical plans, managers don’t need to be rushed and can take their time to make decisions.

a. True

b. False

22. According to the Boston Consulting Group, Question Marks generate considerably more cash than they need

to maintain their position.

a. True

b. False

23. Competitive rivalry among competitors who are trying to differentiate themselves from the crowd may lead

to expensive advertising campaigns.

a. True

b. False

24. Strategic business units (SBUs) of a diversified firm have common managers, resources, objectives, and

competitors.

a. True

b. False

25. The disadvantage of core competencies is that they can be easily duplicated by competitors.

a. True

b. False

26. Porter’s Five Forces are potential new entrants, bargaining power of buyers, bargaining power of suppliers,

threat of substitute products, and rivalry among competitors.

a. True

b. False

27. Each strategic business unit (SBU) in a firm has to prepare its plans in collaboration with other units in the

organization.

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a. True

b. False

28. If a company has a business unit classified as a “Question Mark” due to its low relative market share in a

slow growth market, the company should consider withdrawal or divestiture unless the market share position

can be improved.

a. True

b. False

29. The chief executive officer (CEO) and chief marketing officer (CMO) spend a greater proportion of their

time on operational planning than do managers at all other organizational levels.

a. True

b. False

30. According to the BCG matrix, cash cow businesses produce strong cash flows and invest heavily in the

unit’s own promotions and production capacity.

a. True

b. False

31. A statement such as “to hit the 300 employee mark by the end of the year” is typically a part of the SWOT

analysis.

a. True

b. False

32. Procter & Gamble and other consumer products companies have experienced decreased profitability due to

its relationship with Walmart, the nation’s largest retailer, which demonstrates the impact of supplier power as

one of the competitive forces identified by Michael Porter.

a. True

b. False

33. Matching an external opportunity with an internal weakness produces a situation known as leverage.

a. True

b. False

34. According to the BCG matrix, stars require considerable inflows of cash to finance further growth.

a. True

b. False

35. Tactical planning involves specifying programs to meet goals related to the manager’s area of responsibility.

a. True

b. False

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36. A marketing plan is flexible and allows managers to re-evaluate and respond to changing factors in the

environment.

a. True

b. False

37. The planning process involves anticipating conditions and determining how best to attain organizational

objectives.

a. True

b. False

38. Marketers implement marketing strategies and monitor performance by tracking key performance indicators

to ensure that objectives are being achieved.

a. True

b. False

39. The planning process begins at the corporate level with the first step being the development of strategic

objectives.

a. True

b. False

40. The threat of new competitors occurs when a product or service can be replaced with goods and services

from a competing firm or industry.

a. True

b. False

41. Enterprise Holdings typically asks customers to respond to a customer satisfaction survey to identify their

level of satisfaction with their vehicle, rental experience, as well as likelihood to use Enterprise again in the

future for a rental vehicle. The company strives to achieve a 95% customer satisfaction rating when customers

respond on a scale from “1” which indicates not at all satisfied to “100” which indicates extremely

satisfied regarding their satisfaction with the rental experience. This is an example of a marketing strategy.

a. True

b. False

42. Tactical planning usually involves the production of quarterly and semiannual plans, along with divisional

budgets, policies, and procedures.

a. True

b. False

43. Middle and supervisory-level managers spend less time as compared to CEOs on planning activities.

a. True

b. False

Indicate the answer choice that best completes the statement or answers the question.

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44. A company typically modifies its strategy when:

a. Direct competition is strong.

b. Supplier power is high.

c. Its actual performance is not in line with expected results.

d. Customers control power in the relationship.

45. A company’s plans that focus largely on its current and near-future activities and are determined by its

middle level management are referred to as _____ plans.

a. strategic

b. long-term

c. operational

d. tactical

46. An automobile manufacturer is dependent on a single supplier for tires. Based on this information, which of

the following statements is true?

a. The barriers to market entry are low.

b. The buyer has greater bargaining power.

c. The threat of new entrants is high.

d. The supplier has significant bargaining power.

47. Which of the following is a dimension of Porter’s Five Forces model?

a. Bargaining power of buyers

b. Existence of second-movers

c. Existing firms in the business environment

d. Rivalry among strategic business units

48. You are the head of market strategies for a large media company, and you are responsible for leading the

enterprise through its annual marketing planning process. Which one of the following statements is true about

this process?

a. Your organization’s objectives are the essential set of statements that outlines its purpose and

differentiates it from other organizations.

b. Your organization’s objectives specify the organization’s goals and operational scope.

c. After your firm establishes its objectives, the next step in the marketing planning process is to develop

the marketing strategy.

d. The last step in your marketing planning process should include an analysis of the risks and

opportunities that you will face in striving to achieve your objectives.

e. Your organization’s objectives should be specific in describing what achievements are intended and

desired.

49. YOU Inc., a radio cassette manufacturer, sold its business due to poor market shares. According to the BCG

Matrix, the firm sold its business because the business had become a _____ as seen in its poor prospects and

performance.

a. star

b. question mark

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c. cash cow

d. dog

50. Enterprise Holdings seeks to achieve a 95% customer satisfaction rate, which is one of its marketing

objectives. One way the company can achieve high levels of customer satisfaction is through the vehicle

selection and maintaining strong relationships with automobile manufacturers to ensure Enterprise has the

vehicles in stock that customers desire to rent. If Enterprise were developing a written marketing plan, which

section of the plan would contain the information related to maintaining strong relationships with automobile

vendors to ensure they have the vehicles customers wish to rent?

a. Marketing strategies

b. Marketing tactics

c. Key performance indicators

d. SWOT analysis

51. Enterprise Rental Cars is able to secure favorable prices from major automobile manufacturers such as Ford

and Chevrolet for their rental fleets due to the large number of vehicles they purchase each year. This is an

example of _____, one of Porter’s Five Forces related to marketplace competition.

a. threat of new competitors

b. distinctive competency

c. buyer power

d. threat of substitutes

52. Which of the following is true of a strategic business unit?

a. A strategic unit directly adopts the mission of its parent organization.

b. Each strategic unit depends on plans of the other units in the organization.

c. A strategic unit has its own managers, resources, objectives, and competitors.

d. A strategic unit is a key business unit within a small company that does not differ significantly from the

parent company.

53. According to the BCG market share/market growth matrix, the revenues earned from cash cows should be

used to finance the growth of:

a. question marks and dogs.

b. dogs and stars.

c. stars and question marks.

d. question marks and cash cows.

54. Our Lady of the Lake Hospital has assembled a group of employees to engage in planning activities. If the

group comprises top executives such as the Chief Executive Officer, Chief Financial Officer, and Chief

Marketing Officer, they would likely create

a. long-term plans.

b. business unit budgets.

c. operational plans.

d. tactical plans.

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55. Preparation of quarterly and semiannual plans by personnel such as the general sales manager or advertising

director would be classified as _____ planning.

a. consumer

b. tactical

c. procedural

d. operational

56. Jamie is the regional sales manager for Sherwin Williams paint company and oversees a team of 40 outside

sales representatives. She meets with her sales managers on a monthly basis to review budgets and track the

team’s progress in meeting its sales quotas in order to reach company objectives. Jamie requires that each sales

manager collaborate with his or her individual sales representatives to develop weekly call schedules and

account plans. What type of planning is Jamie and her sales managers engaged in?

a. Operational planning

b. Strategic planning

c. Tactical planning

d. Constructive planning

57. A shoe manufacturer has multiple suppliers for leather. Based on this information, which of the following

statements is true?

a. The suppliers have lesser bargaining than the buyer.

b. The barriers to market entry are high.

c. The rivalry among competitors is low.

d. The buyer has lesser bargaining power than the suppliers.

58. According to the BCG market share/market growth matrix, the SBU that produces strong cash flows which

can be used to finance the growth of other SBUs is the:

a. dog.

b. question mark.

c. cash cow.

d. laggard.

59. Budweiser and its stable of beer brands including Michelob, Bud Lite and Budweiser Platinum have faced

significant inroads in sales by craft breweries such as Boston Beer Company and Sierra Nevada Brewing

Company. The craft breweries represent a(n) ______ to Budweiser.

a. threat

b. weakness

c. strategic window

d. opportunity

60. The BCG market share/market growth matrix classifies products with a low relative share of a high-growth

market as _____.

a. stars

b. question marks

c. cash cows

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d. dogs

61. You’ve just started a new job as Chief Marketing Officer for a restaurant chain, and you’ve learned that the marketing

planning process is already underway. In fact, the first two steps have been completed. What do you need to do now?

a. Define the chain’s mission.

b. Determine the chain’s specific objectives.

c. Formulate a marketing strategy.

d. Implement strategy.

e. Assess organizational resources and opportunities.

62. The Original Penguin clothing brand which features a cute penguin with a tie wrapped around its neck has

made a successful comeback to men’s fashions since 2003. The brand is popular among young men and the

company recently articulated its interest in generating a 10% increase in sales among college students in the

United States for the next year. Which step in the marketing planning process best corresponds to the

articulation of a 10% increase in sales?

a. Determine organizational objectives

b. Assess organizational resources and evaluate risks and opportunities

c. Formulate strategy

d. Implement strategy through operational plans

63. Caleb is the superintendent of a small school district in a rural area of Iowa with a population of 2,500

people. The school district participates in a wide variety of sports for girls and boys including softball, baseball,

basketball, volleyball, track, wrestling, and cross country. Students may also be a member of over 12 clubs and

organizations sponsored by the school. The school typically rates highly on state-wide tests and approximately

80% of high school graduates attend college. However, Caleb has difficulty in recruiting faculty to teach foreign

language, physics, calculus, and computer science classes. It’s difficult to recruit these teachers because they are

in high demand and are often attracted to larger school districts that can provide higher salaries. Caleb knows

the importance of STEM (science, technology, engineering, and math) to the United States and is concerned

that the district may fall behind in its ability to prepare students for their future. In addition, Caleb hopes to

increase the number of graduates who attend college since college degrees enable students to pursue careers

with higher salaries and benefits. Assume that you are helping Caleb conduct a SWOT analysis. The statement

related to the importance of STEM education in the United States would be categorized as a(n):

a. opportunity

b. weakness

c. threat

d. strength

64. You are excited about being promoted to general sales manager, a middle management job, but you feel a bit

overwhelmed as you anticipate the demands of the new position. A colleague tries to help, pointing out that you will also

be shedding some responsibilities. Which of the following will not be part of your new job?

a. Quarterly plans

b. Daily and weekly plans

c. Divisional policies

d. Divisional procedures

e. Semiannual plans

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65. Decisions regarding product lines, pricing, selection of appropriate distribution channels, and promotional

campaigns are____.

a. fixed and unchanging

b. determined by the top managers in the firm

c. typically detailed in a marketing plan

d. determined from a purely retrospective viewpoint

66. Cardio Kick is a fitness studio owned by Michelle that uses boxing training and plyometric exercises to

enhance the fitness of participants. Michelle is working on a SWOT analysis for the business and wondering

how to classify the consumer perception that boxing is violent and male dominated. How would you classify

this consumer perception about boxing?

a. Threat

b. Opportunity

c. Weakness

d. Strength

67. One distinction or difference between strategic planning and marketing planning is

a. strategic planning focuses on the long term.

b. marketing planning defines how specified activities will be implemented.

c. strategic planning is conducted by mid-level managers.

d. strategic planning emphasizes product, pricing, promotion, and distribution decisions.

68. Rick is the divisional manager for Kroger grocery store and oversees 20 stores in the Midwest region near

Cincinnati, Ohio. Rick has scheduled several meetings with the store managers in his area to make decisions

and develop plans. Which of the following would most likely be an outcome resulting from the meetings?

a. Specification of the local advertising budgets for each of the 20 stores

b. Identifying the advertising agency responsible to develop national advertising campaigns

c. Articulating the company’s policy regarding their commitment to reducing Kroger’s carbon footprint

d. Selection of vendors to produce Kroger’s private label canned vegetable products

69. Michelle, owner of the fitness studio, Cardio Kick has limited financial capital and must rely on word-of-

mouth and social media such as Facebook to promote her business. Using a SWOT framework, how would you

classify Michelle’s limited financial capital?

a. Weakness

b. Strength

c. Opportunity

d. Threat

70. The store manager of a Target store location in Evansville, Indiana has assembled her department managers

for an off-site one day planning meeting. Which of the following would be an example of the type of decisions

the department managers might make?

a. Identifying the store’s policy regarding donations of food product to local food banks

b. Developing Target’s employee termination policy related to unexcused absences, no shows, or

tardiness

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c. Planning the expected revenue targets for all stores in Target’s system

d. Identifying the products to feature and promote on Target.com

71. Michelle is the owner of Cardio Kick, a fitness studio that uses boxing training and plyometrics to help

members stay in shape or get in shape. Michelle is very creative and changes the workout everyday so that a

different body part is emphasized during the workout. This helps balance training, improve results for members,

and decrease boredom among members. If Michelle were performing a SWOT analysis, how would you

classify her ability to be creative and change daily workouts?

a. Strength

b. Weakness

c. Opportunity

d. Threat

72. Which of the following would qualify as an example of a firm’s weakness?

a. A bill passed by the government regarding the work timings of all organizations

b. A competitor planning to open a new branch close to the firm’s place of operations

c. The firm’s failure to pay its taxes on time leading to a poor reputation in the market

d. A ban imposed on the use of animals for testing cosmetics

73. Jose is the social media manager for a children’s museum and is making decisions about the best mix of

social media tools to utilize in order to achieve the objective of increasing the number of family memberships

by 10% during the year. Jose likes to use Twitter, Instagram, Facebook, and Pinterest to reach the museum’s

desired target market but he spends most of his time developing the appropriate content and determining the

frequency of posts. Which term best describes Jose’s activity related to determining the use of social media?

a. Tactical planning

b. Media scheduling

c. Strategic planning

d. Operations planning

74. Michelle is the owner of Cardio Kick, a fitness studio and is performing a SWOT analysis as part of a

strategic planning exercise. She knows that consumers aged 18–30 are especially interested in staying fit, eating

clean, and looking attractive and is wondering how she should classify this trend. How would you advise

Michelle on this item?

a. Opportunity

b. Threat

c. Strength

d. Weakness

75. An example of a firm’s strength discovered by a SWOT analysis might be:

a. ownership of valuable patents.

b. a narrow current product line.

c. changing buyer tastes in the marketplace.

d. existing government policies favoring the industry.

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76. Which of the following statements is true of tactical planning?

a. It is conducted exclusively by the top management.

b. It is used to generate long-term plans, departmental rules, and procedures.

c. It is the basis for operational planning.

d. It is performed as a substitute to the strategic planning process in large organizations.

77. The first step of the marketing planning process involves:

a. writing the mission statement.

b. establishing organizational objectives.

c. formulating a marketing plan.

d. hiring a senior planner.

78. The strategic business unit (SBU) concept is best identified as a:

a. planning tool that separates tactical and operational issues for analysis.

b. strategic approach used primarily to separate marketing costs from production expenses.

c. marketing planning tool that best suits the needs of large, diversified organizations.

d. marketing approach appropriate for small enterprises producing a single product.

79. Long-term plans focusing on those organizational objectives that will significantly affect a firm are usually

referred to as _____ plans.

a. strategic

b. marketing

c. economic

d. tactical

80. An example of a threat to a firm discovered by a SWOT analysis might be:

a. the presence of cost advantages due to advanced technology.

b. the chance to acquire firms with the needed technology.

c. the entry of new competitors in the industry.

d. the narrow product line produced by the firm.

81. If an automobile manufacturer was planning to introduce a sports car powered by a hydrogen-oxygen fuel

cell when the price of gasoline in the United States reached $4 per gallon, this would best be described as a

direct result of its _____ plan.

a. short-term

b. operational

c. strategic

d. tactical

82. The BCG (Boston Consulting Group) matrix places strategic business units into which of the following four-

quadrants:

a. Strengths, Weaknesses, Opportunities, and Threats

b. Oligopoly, Monopoly, Monopolistic Competition, and Perfect Competition

c. Micro, Small, Medium, and Large

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d. North, South, East, and West

e. Stars, Cash Cows, Question Marks, and Dogs

83. Michelle is the owner of a fitness studio called Cardio Kick and has been a personal trainer and certified

trainer for 10 years. Her certification and experience in personal training would be classified as a(n) _____

when performing a SWOT analysis.

a. strength

b. weakness

c. opportunity

d. threat

84. A SWOT analysis is designed to reveal, among other things, a firm’s core competencies, which reflect its:

a. threats.

b. strengths.

c. opportunities.

d. vulnerabilities.

85. The smartphone market is growing rapidly as more consumers adopt the technology and wireless providers

offer economical packages for consumers. Google’s Pixel phone has a relatively low level of market share in the

industry, which is dominated by brands such as Apple, Samsung, and LG. For Google, the Pixel phone is likely

classified as a _____ according to the Boston Consulting Group.

a. question mark

b. star

c. cash cow

d. dog

86. Consumers are increasingly showing a preference for fulfilling their product needs via smartphone

applications and online shopping. The relative ease of creating a web-based storefront is posing a significant

threat to brick-and-mortar retailers and driving many established retailers to close their doors. According to

Michael Porter, this is an example of

a. threat of new competitors.

b. supplier power.

c. buyer power.

d. threat of substitutes.

87. The product manager for a line of mousetraps informs the board of directors at the company’s annual

meeting that the product has been classified as a “dog” according to the BCG market share/market growth

matrix. This means the product:

a. requires a “go/no go” decision within the next several years.

b. has low market share of a high-growth rate market.

c. should be withdrawn from the market or sold off as quickly as possible.

d. needs heavy investment to make it a star.

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88. One of General Electric’s business units produces a variety of light bulbs and generates healthy revenue. The

revenues of this business unit are used to finance the growth of other business units with higher growth

potentials. How would this unit be classified on the BCG market share/market growth matrix?

a. Cash cow

b. Star

c. Question mark

d. Dog

89. In terms of the BCG Matrix, which of the following SBUs are characterized by earning only low market

shares in low-growth markets?

a. Stars

b. Question marks

c. Dogs

d. Cash cows

90. Taylor is an account executive with Enterprise Holdings and works the counter at airport. She always strives

to be upbeat, professional, polished, friendly, and fast since the company routinely asks customers about their

experience when renting a vehicle. Taylor believes her customer service skills are a key component to achieving

high customer satisfaction scores. Taylor’s activities would be described as ________ that could become part of

the company’s marketing plan.

a. marketing tactics

b. marketing strategies

c. key performance indicators

d. marketing objectives

91. In a(n) _____, firms evaluate their products and divisions to determine the strongest and weakest.

a. organizational appraisal

b. market analysis

c. utilization analysis

d. portfolio analysis

92. Kraft Mac & Cheese first hit the shelves in 1937 and remains a favorite product for families. The product

has undergone changes in formulation as well as packaging over the years and Kraft recently reformulated the

product so it does not contain any artificial ingredients. Sales of Kraft Mac & Cheese in the familiar blue box

continue to be strong and help Kraft fund other products since it generates such a strong cash flow. Kraft

continues to invest in its Mac & Cheese brand through both research and development as well as promotional

activities. It’s likely that Kraft views Mac & Cheese as a ______ according the BCG matrix.

a. star

b. cash cow

c. quotation mark

d. dog

93. Single serve beverage makers using a k-pod system are very popular and have had high levels of growth in

the last several years. Mr. Coffee offers a k-cup brewing system as well as its traditional 8–10 cup drip coffee

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maker but growth in the market for carafe-style coffee makers has been declining. Mr. Coffee has a strong

market share for its carafe-style makers but a low relative market share for its individual k-pod systems.

Therefore, the carafe-style brewing system would be described as a ______ and the individual brewing system

would be classified as a ______ according to the Boston Consulting Group.

a. cash cow, question mark

b. star, question mark

c. question mark, cash cow

d. question mark, cash cow

94. The executive officers including the President, Provost, Chief Financial Officer, and Vice President of

Development of a private university spent approximately three months to develop a long-term plan for the

university, which included their goals to build the endowment through a capital campaign and the amount of

funds that should be made available to support the various areas of the university such as academics, athletics,

and building and maintenance. This is an example of _____ planning.

a. strategic

b. tactical

c. operational

d. developmental

95. Caleb is the superintendent of a small school district in a rural area of Iowa with a population of 2,500