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Indicate whether the statement is true or false.
1. For a star, the best marketing tactic is to protect existing market share by reinvesting earnings in product improvement,
better distribution, more promotion, and production efficiency.
a. True
b. False
2. A business’ mission does not affect its long-run resource allocation, profitability, or survival.
a. True
b. False
3. A strategic business unit (SBU) is a single business or a collection of related businesses.
a. True
b. False
4. RegiSure is a strategic business unit that shows low growth but has a dominant market share. Because of its market
share, it should receive additional financing despite its low growth.
a. True
b. False
5. A firm’s assets are functions—customer service and promotions—that the firm performs better than its competitors.
a. True
b. False
6. An example of a market segment is a group of individuals from 11 to 16 years old who extensively use the Internet.
a. True
b. False
7. Market penetration refers to attracting new customers to existing products. Ideally, new uses for old products stimulate
additional sales among existing customers while also bringing in new buyers.
a. True
b. False
8. Environmental scanning refers to the process of collecting and interpreting information about forces, events, and
relationships in the external environment that may affect the future of the organization or the implementation of the
marketing plan.
a. True
b. False
9. If an organization has an SBU that it believes has the potential to be a star (and is probably a problem child at present),
building would be an appropriate goal.
a. True
b. False
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10. In terms of effective strategic planning, managers should establish new strategies but without challenging
longstanding assumptions about the firm and the environment.
a. True
b. False
11. Imitation by competitors indicates a lack of competitive advantage and almost ensures mediocre performance.
a. True
b. False
12. A company’s skills include patents, copyrights, and technology that are superior to those of the competition.
a. True
b. False
13. Product/service differentiation competitive advantage means that an organization provides something that is unique
and valuable to buyers beyond simply offering a lower price than that of the competition.
a. True
b. False
14. An operating decision is unlikely to have a great impact on the long-run profitability of a company.
a. True
b. False
15. The creation and implementation of a marketing plan allows the organization to achieve marketing objectives and
succeed.
a. True
b. False
16. Managers do not need to quantitatively measure whether or not an objective has been met.
a. True
b. False
17. The term marketing mix refers to a unique blend of product, place (distribution), promotion, and pricing strategies
(often referred to as the four Ps) designed to produce mutually satisfying exchanges with a target market.
a. True
b. False
18. The process that turns a marketing plan into action assignments and ensures that these assignments are executed in a
way that accomplishes the plan’s objectives is called evaluation.
a. True
b. False
19. According to the Boston Consulting Group model, the best strategy options in dealing with problem children are to
invest heavily to gain better market share, acquire competitors to get the necessary market share, or drop the SBU.
a. True
b. False
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20. According to the General Electric model for strategic alternatives, market conditions that have low overall
attractiveness are the best candidates for investment.
a. True
b. False
21. When examining an organization’s internal strengths and weaknesses during SWOT analysis, the marketing manager
may not focus on organizational resources such as production costs, marketing skills, financial resources, company or
brand image, employee capabilities, or available technology.
a. True
b. False
22. A diversification strategy is free of risk when a firm is entering unfamiliar markets.
a. True
b. False
23. According to Ansoff’s strategic opportunity matrix, both product development and diversification entail the creation
of new products.
a. True
b. False
24. Adjacent innovation involves decisions that result in brand-new markets, products, and often new businesses by
acquiring new assets to develop the type of breakthrough decisions that fall in this category.
a. True
b. False
25. A competitive advantage is a set of unique features of a company and its products that are perceived by the target
market as significant and superior to those of the competition.
a. True
b. False
26. SharpSheets is a paper manufacturing company that sells products made of recycled materials. Because no other paper
manufacturing company in the market has the ability to replicate its products, it can be said that SharpSheets has a
competitive advantage.
a. True
b. False
27. Imitating a rival’s competitive advantage requires a company to first identify the rival’s competitive advantage.
a. True
b. False
28. Market segments cannot be differentiated by ethnicity and multicultural aspects.
a. True
b. False
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29. Strategic planning is the managerial process of creating and maintaining a fit between the organization’s objectives
and resources and the evolving market opportunities.
a. True
b. False
30. Strategic planning should be an annual exercise in which managers quickly review the previous plan, retain the
majority of previous strategies, and make only a few changes going forward so they can more easily track the success of
new marketing tactics.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
31. Which of the following actions is primarily associated with a niche strategy?
a. Choosing a target market that is not crucial to the success of major competitors
b. Manufacturing products in bulk and targeting average customers
c. Selling products without extra frills or options
d. Creating cross-departmental teams across all strategic business units
32. Using the innovation matrix, the strategic decision to implement changes that use existing assets to provide added
convenience to existing customers and potentially entice customers from other brands is considered:
a. a core innovation.
b. an adjacent innovation.
c. a transformational innovation.
d. a diversification strategy.
33. Which of the following statements is true of effective strategic planning?
a. Subordinates must persuade the management to accept their demands.
b. Managers should challenge assumptions about the firm and the environment.
c. Sound strategic planning is based on a trial-and-error method of execution.
d. Strategic planning should be an annual exercise on a day specially designated for it.
34. According to Ansoff’s strategic opportunity matrix, which of the following factors is associated with market
development?
a. Limit production.
b. Increase the prices of existing products.
c. Add new uses to current products.
d. Limit resources used for promotion.
35. Delat Corp. is a large corporation that offers several product lines. On the company’s website, the following text is
highlighted: “The aim of our business is to achieve profitability by offering our customers high-quality products that are
manufactured in a cost-effective manner. Our goal is to provide value to our customers, serve the community, and
preserve the environment.” This text is most likely to be Delat Corp.’s __________________.
a. article of incorporation
b. statement of qualification
c. scenario planning
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d. mission statement
36. In the context of a marketing mix, which business activity is most closely related to a company’s distribution
strategies?
a. Attractiveness of the product packaging
b. Targeting market segments
c. Storage of raw materials
d. Selection of an advertising medium
37. In the context of the portfolio matrix, which statement is generally true of SBUs considered to be dogs?
a. Protection of existing market share is essential for dogs.
b. Dogs have a dominant market share in low-growth markets.
c. Typical marketing strategies for dogs are to harvest or divest.
d. Dogs escalate in the market if given strong financial funding.
38. Choqlate King Inc. is a large company that manufactures and sells chocolate bars. It plans to adopt a product
development strategy. In this case, Choqlate King will:
a. focus on attracting new customers and retain existing ones.
b. offer chocolates at competitive prices.
c. introduce a product line of low-calorie chocolates.
d. use existing assets to provide added convenience to existing customers.
39. Remvault Dairies witnessed a steady decline in the sales of its products due to increased competition in the local
market. Remvault Dairies plans to adopt the market development strategy. In this scenario, which of the following is the
best step the company can take to rejuvenate its financial losses?
a. Introduce new products into new markets.
b. Create new products for its present markets.
c. Attract existing customers rather than new customers.
d. Focus on promoting new uses for old products.
40. Which of the following firms is most likely to realize a competitive advantage through product/service differentiation?
a. A firm that sells its products at lower costs than its competitors
b. A firm that inhibits post-sale customer service relations
c. A firm that provides highly reliable products
d. A firm that solely relies on promotional strategies to increase its sales
41. Which of the following is characteristic of companies that embrace a niche market strategy?
a. The strategy is often adopted by small companies with limited resources.
b. The strategy is employed in a market segment that has low growth potential.
c. The strategy is used to position the company as the long-term, low-cost competitor in an industry.
d. The company typically removes frills and options from the product or service slated for its niche market.
42. Which of the following terms states that costs decline at a predictable rate as experience with a product increases?
a. Ansoff’s strategic opportunity matrix
b. Experience curve
c. Marketing myopia
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d. Market opportunity analysis (MOA)
43. Identify which statement correctly describes the effect price has in the marketing mix.
a. It does not affect a firm’s competitive advantage.
b. It is the least important of the four Ps of the marketing mix.
c. It is what a buyer must give up to obtain a product.
d. It is the hardest to change among the four Ps of the marketing mix.
44. Unlike a sustainable competitive advantage, a cost competitive advantage:
a. does not ensure satisfactory profit margins.
b. requires business firms to reduce after-purchase service options.
c. involves producing goods that cannot be copied by competitors.
d. is subject to continual erosion.
45. Which of the following statements is true of the innovation matrix?
a. As a company moves away from its core capabilities, it moves through a range of innovation.
b. If an SBU of a firm is in a market with low overall attractiveness, it must be harvested.
c. Products are matched with markets to develop alternative marketing strategies.
d. Clear-cut sectors define modern businesses’ growth better than the fluid growth model.
46. In the context of SWOT analysis, which of the following can be considered a strength of an organization?
a. Imitable products and services
b. A new unserved market
c. A superior production technology
d. Increased taxes on products
47. Providing something to a target market that is unique and valuable beyond simply offering a lower price than that of
the competition is called ________.
a. product/service differentiation
b. a niche competitive advantage
c. a sustainable competitive advantage
d. reengineering
48. Freulia Inc. manufactures and sells stationery and office supplies. It is beginning to lose its competitive advantage
with the entry of new competitors. In this case, to gain a sustainable competitive advantage, what should Freulia do?
a. Imitate the products of its competitors
b. Depend on government subsidies
c. Develop the skills and assets of the organization
d. Aim at being the low-cost competitor in the industry
49. Which of the following is an example of a competitive advantage due to a product/service differentiation?
a. Receipt of government subsidies
b. Control of overhead costs
c. Establishment of a brand name
d. Procurement of inexpensive raw materials
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50. Which of the following encompasses the activities of selecting and describing one or more target markets and
developing and maintaining a marketing mix that will produce mutually satisfying exchanges with target markets?
a. Marketing strategy
b. Marketing objective
c. Marketing mix
d. Market opportunity analysis
51. If an organization has an SBU that it believes has the potential to be a star, the best allocation of future resources
would be to _________ that SBU.
a. build
b. harvest
c. divest
d. hold
52. In the portfolio matrix, a business unit that has low growth potential and a small market share is called a:
a. dog.
b. cash cow.
c. star.
d. problem child.
53. Drafi Arts Corp. makes and sells original handicraft products. The management of the company has been successfully
using a niche strategy for years. In this case, which of the following is the most likely to be true of Drafi Arts Corp.?
a. It serves only a limited geographic market.
b. It offers products at a lower price than that of the competition.
c. It develops products that are similar to those of its competitors.
d. It lowers costs by removing frills and options from its products.
54. In the context of SWOT analysis, marketers can identify strengths and weaknesses by focusing on:
a. employee capabilities.
b. aspects of the marketing environment.
c. demographic forces.
d. macroenvironmental factors.
55. Which of the following strategies can enable companies to gain a cost competitive advantage?
a. Removing frills from products
b. Focusing on serving marginal customers
c. Eliminating reverse engineering efforts
d. Developing additional, exclusive functional departments
56. One component of promotion within the context of a marketing mix includes ________.
a. public relations activities
b. pricing strategies
c. after-purchase services
d. storage and transportation of finished products
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57. Varion Air, an airline company, is providing a promotional offer to mark its first anniversary. Customers will receive a
complimentary ticket upon purchase of three business class tickets. In this case, which of the following is a likely outcome
of its promotional strategy?
a. It will satisfy the customers and not the management of Varion Air.
b. It may be ineffective because the role of promotion in the marketing mix does not apply to services.
c. It may increase the sales of Varion Air.
d. This particular promotion will work independently of the other three elements of the marketing mix.
58. Which of the following activities is carried out during the implementation of a marketing plan?
a. Defining the business mission
b. Performing marketing audit
c. Setting up strategic business units
d. Creating and managing a task force
59. A statement of what is to be accomplished through marketing activities is called __________.
a. the marketing mix
b. a marketing objective
c. market opportunity analysis
d. a competitive advantage
60. Synergy Corp., a large seller of energy-efficient light bulbs, uses extensive promotional strategies to stimulate sales.
Marketers at Synergy Corp. have noticed that a competitor is steadily gaining market share, and they want to counter the
competition immediately by increasing the sales of Synergy Corp.’s bulbs. Given the situation, which of the following is
the quickest step that Synergy’s marketers can take to stimulate the sales of its products?
a. Changing the pricing strategy
b. Creating complex production techniques
c. Entering into new supplier contracts
d. Adopting a divesting strategy
61. In the context of a marketing mix, the product includes:
a. the name of the brand.
b. the point of purchase.
c. the elements of advanced strategic planning.
d. personal selling.
62. Which of these statements is correct with regard to the implementation of marketing objectives?
a. Implementation gauges the extent to which marketing objectives have been achieved during the specified time
period.
b. Brilliant marketing plans succeed even without proper implementation.
c. A lot of ongoing communication is involved when executing a plan.
d. Managers hold the power to decide and implement decisions rather than delegating it.
63. Magnira Inc. plans to implement a market penetration strategy to increase its market share. According to Ansoff’s
strategic opportunity matrix, which of the following scenarios is most likely to happen?
a. It will try to attract new customers to its products.
b. It will try to increase its market share among existing customers.
c. It will create new products for its existing customers.
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d. It will move away from its core capabilities and diversify its business.
64. Addoso Inc. manufactures electronic gadgets. The marketing managers at Addoso have found that a new competitor is
gaining more customers. In the context of SWOT analysis, which of the following actions should be prioritized by
Addoso’s marketing managers?
a. They must analyze aspects of its marketing environment.
b. They must focus on organizational resources.
c. They should ignore macroenvironmental forces.
d. They should focus on lowering product prices.
65. Which of the following strategies seeks to target and effectively serve a single segment of the market?
a. Niche competitive advantage
b. Sustainable competitive advantage
c. Product/service differentiation
d. Cost competitive advantage
66. Critics of Ansoff’s matrix mention that the matrix does not:
a. provide firms with different marketing strategies.
b. reflect the reality of how businesses grow.
c. indicate which types of markets can be created or entered given a company’s core capabilities.
d. outline clear-cut sectors for businesses.
67. In the context of the innovation matrix, which of the following decisions is designed to take company strengths into
new markets?
a. Transformational innovations
b. Retroactive innovations
c. Adjacent innovations
d. Core innovations
68. Fourlotts Inc. is a renowned technological firm. It manages many strategic business units (SBUs) in which each SBU:
a. has its own return on investment.
b. shares the same goals and employs the same strategies as Fourlotts Inc.
c. plans collaboratively with Fourlotts Inc.’s other SBUs.
d. refrains from performing manufacturing functions.
69. Which of the following does a business exhibit when it describes itself in terms of goods and services rather than in
terms of the benefits customers seek?
a. Marketing myopia
b. Marketing inertia
c. Marketing dissonance
d. Marketing blockage
70. The marketers at Gemini Inc. have prepared a marketing plan for the company’s air conditioners. The managers at
Gemini have outlined several activities for their subordinates based on this marketing plan and set a deadline and
allocated a budget for each activity. Which of the following stages of the marketing plan is illustrated in this scenario?
a. Evaluation
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b. Implementation
c. Control
d. Vertical integration
71. A company is most likely to fail to achieve a marketing objective if there are changes in the environment ______.
a. before the objective is specified and after the strategy is debated
b. before the objective is specified and the strategy is implemented
c. after the objective is specified and the strategy is implemented
d. after the objective is specified and before the strategy is implemented
72. Which of the following generally does NOT result in a cost competitive advantage?
a. Efficient labor
b. Government subsidies
c. Product design
d. Maintaining older service delivery methods
73. In the context of the Boston Consulting Group’s (BCG’s) portfolio matrix, which of the following is true of SBUs
considered to be question marks?
a. They operate in a high-growth industry with a low market share.
b. They generate more cash than they need to maintain their market share.
c. They have low growth potential and a small market share.
d. They do not require any cash to maintain their market.
74. In the case of SBUs that are cash cows, problem children, or dogs, the basic goal of _______________ is to increase
short-term cash return without increased concern for long-run impact.
a. building
b. holding
c. harvesting
d. divesting
75. Which of the following statements is true of a marketing audit?
a. It should be carried out on a regular schedule.
b. It is always conducted by an inside party.
c. It covers just the trouble spots of an organization.
d. It is a process for implementing a marketing plan.
76. MaxNutri Inc. sells cookies and nutrition bars. The marketers at MaxNutri are trying to come up with new and
attractive packaging designs for its cookies. In this scenario, MaxNutri is working on its _____.
a. purchase strategy
b. distribution strategy
c. advertising strategy
d. product strategy
77. Which of the following states the function of a distribution strategy in a marketing mix?
a. Distribution strategy is about transporting raw materials or finished products.
b. Distribution strategy is about educating customers about product benefits.
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c. Distribution strategy is about providing after-purchase services to customers.
d. Distribution strategy is about public relations activities.
78. A marketing mix typically involves:
a. distribution strategies.
b. divestiture strategies.
c. restrictive covenants.
d. federal regulations.
79. One component of product in a marketing mix is ________.
a. sales promotion
b. the company image
c. the point of purchase
d. personal selling
80. Nessca Inc. is a pharmaceutical company that designs its products to suit the needs of a group of people with similar
characteristics. In this case, Nessca should target which of the following market segments?
a. A group of individuals who are diabetic
b. A group of individuals who work in the same organization
c. A group of individuals who are working professionals
d. A group of individuals who reside in the same residential area
81. According to Ansoff’s strategic opportunity matrix, a firm using the market penetration alternative would try to:
a. increase market share among existing customers.
b. attract new customers to existing products.
c. create new products for present markets.
d. introduce new products into new markets.
82. According to Ansoff’s strategic opportunity matrix, unlike market development, product development:
a. focuses on attracting present customers to existing products.
b. involves creating new products for present markets.
c. involves entering new markets as competitors.
d. focuses on using existing assets to provide added convenience to existing customers.
83. When an SBU has become a _____________, it is essential to either invest in it heavily to gain better market share,
acquire competitors to get the necessary market share, reposition its products, or drop it.
a. cash cow
b. star
c. dog
d. problem child
84. The total revenue of a firm is calculated by multiplying the number of units sold by the ___________ of each unit.
a. profit margin
b. price
c. discount
d. overhead cost
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85. In the context of the innovation matrix, decisions taken at the _____ level implement changes that use existing assets
to provide added convenience to existing customers and potentially entice customers from other brands.
a. divestment
b. diversification
c. adjacent innovation
d. core innovation
86. Which of the following is correct about a sustainable competitive advantage?
a. It is not attractive because of its durability.
b. It cannot be copied by the competition.
c. It lowers costs by removing frills.
d. It does not offer any low-priced products.
87. With reference to the General Electric model for selecting strategic alternatives, which of the following refers to how
well placed in a market an organization needs to be to take advantage of opportunities?
a. Business position
b. Experience curve
c. Market attractiveness
d. Marketing myopia
88. Nile Inc. is one of the leading shoe manufacturing companies in Baltonia. It manufactures canvas shoes that are
similar to those produced by other brands. The management of the company has decided to adopt a product/service
differentiation competitive strategy. In this scenario, what would Nile be likely to do?
a. Offer its products at the lowest rates in the market
b. Produce aerobic, tennis, and baseball shoes that have specialized features
c. Advertise their products through more media outlets than before
d. Sell products to markets outside Baltonia
89. Within the context of the marketing plan, implementation involves:
a. allocating resources.
b. identifying market segments.
c. defining the business mission.
d. assessing internal capabilities of a firm.
90. When properly created, a strategic business unit (SBU) of a large company:
a. has a specific target market.
b. plans collaboratively with other SBUs of the company.
c. has no competitors.
d. shares the mission of its parent company.
91. Which of the following firms is most likely to follow a niche strategy?
a. Libra Inc., a motor company, adopts new production techniques to achieve economies of scale.
b. Alpha Electronics dissolves one of its strategic business units.
c. Venus Inc. sells health and beauty products similar to the ones available in the market.
d. Relish, a confectionery store, sells handcrafted chocolates in only one city.
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92. Which of the following is the process that turns a marketing plan into action assignments and ensures that these
assignments are executed in a way that accomplishes the plan’s objectives?
a. Implementation
b. Evaluation
c. Control
d. Marketing audit
93. Which of the following statements is true about a marketing plan?
a. It is a set of orally communicated rules and is seldom written down.
b. It is developed independently of the external business environment.
c. It defines the business mission and objectives.
d. It lacks the elements of advanced strategic planning.
94. In the portfolio matrix, a business unit that generates more cash than it needs to maintain its market share is called a:
a. star.
b. cash cow.
c. problem child.
d. dog.
95. Which of the following is correct about the product development strategy of Ansoff’s strategic opportunity matrix?
a. It is a marketing strategy that tries to increase market share among existing customers.
b. It is a marketing strategy that entails attracting new customers to existing products.
c. It is a marketing strategy that entails the creation of new products for present markets.
d. It is a strategy of increasing sales by introducing new products into new markets.
96. __________ is the process of anticipating future events and determining strategies to achieve organizational objectives
in the future.
a. Divesting
b. Planning
c. Holding
d. Harvesting
97. The strategy in which an SBU preserves market share so that it can take advantage of a very positive cash flow is
called ______________.
a. divesting
b. holding
c. harvesting
d. building
98. When following up on a marketing plan, the _____ process provides the mechanisms for evaluating marketing results
in light of the plan’s objectives and for correcting actions that do not help the organization reach those objectives within
budget guidelines.
a. implementation
b. control
c. environmental scanning
d. post-audit