Principles of Marketing, 17e, Global Edition (Kotler/Armstrong)
Chapter 2 Company and Marketing Strategy: Partnering to Build Customer Engagement,
Value, and Relationships
1) ________ is the process of developing and maintaining a crucial fit between the
organization’s goals and capabilities and its changing marketing opportunities.
A) Benchmarking
B) SWOT analysis
C) Market segmentation
D) Strategic planning
E) Diversification
2) Which of the following is true with regard to strategic planning?
A) At the corporate level, the company starts the strategic planning process by determining
what portfolio of businesses and products is best for the company.
B) A strategic plan deals with a company’s short-term goals.
C) The focus of strategic planning is to define a game plan for long-run survival and growth.
D) The strategic plan is a statement of an organization’s purpose.
E) Strategic planning involves identifying segments of consumers with identical preferences.
3) Which of the following is the first step in strategic planning?
A) setting short-term goals
B) developing the business portfolio
C) defining the organizational mission
D) formulating the key marketing strategies
E) identifying the organization’s weaknesses and the threats it faces
4) Which of the following is NOT a step in the strategic planning process?
A) defining the company mission
B) setting company objectives and goals
C) designing the business portfolio
D) planning marketing and other functional strategies
E) evaluating members of the company’s value chain
5) A ________ documents an organization’s purpose—what it wants to accomplish in the larger
environment.
A) vision statement
B) mission statement
C) business portfolio
D) value proposition
E) product strategy
6) Mission statements should ________ and be defined in terms of ________.
A) be technology oriented; meeting the self-actualization needs of customers
B) be product oriented; satisfying the esteem needs of customers
C) embody the company’s short-term plans; current opportunities
D) be market oriented; satisfying basic customer needs
E) address sales and profits; the net return on investments
7) A mission statement serves as a ________.
A) statement of the organization’s net profits
B) plan for short-term sustainability
C) statement of the organization’s purpose
D) statement of the organization’s current liabilities
E) reward plan for the organization’s highly skilled employees
8) Which of the following is NOT a market-oriented business definition?
A) “We empower customers to realize their dreams.”
B) “We make high-quality consumer food products.”
C) “We sell success and status.”
D) “We create the Hilton experience.”
E) “We bring innovation to every home.”
9) Companies that define their missions in terms of products or technologies are considered
myopic primarily because ________.
A) products and technologies result in low returns on investment
B) consumer preferences with regard to products and technology are difficult to predict
C) consumer preferences for different product categories vary from time to time
D) products and technologies eventually become outdated
E) most consumers are not comfortable using sophisticated technology during the buying
process
10) Mission statements should be defined in terms of ________.
A) the advantages a company’s products provide
B) satisfying basic customer needs
C) the value a company’s products provide
D) the profitability of a company’s products
E) the variety they offer to a customer
11) Orion Inc. operates in many industries, including pharmaceuticals and food products. The
company’s goal is to create “abundant and affordable food for all and a healthy environment.”
This represents Orion’s ________.
A) marketing plan
B) product mix
C) business portfolio
D) marketing mix
E) mission statement
12) A company’s broad mission leads it to develop all of the following EXCEPT ________.
A) budget objectives
B) business objectives
C) sales objectives
D) marketing objectives
E) customer engagement objectives
13) Which of the following companies has a product-oriented business definition?
A) A luxury hotel, whose business definition is: “We sell out-of-the-world experiences to our
guests.”
B) A real estate company, whose business definition is: “We sell dreams.”
C) A cosmetic company, whose business definition is: “We offer hope and self-expression.”
D) A shoe manufacturer, whose business definition is: “We manufacture affordable and long-
lasting shoes for all.”
E) A high-technology company, whose business definition is: “We sell inspirations.”
14) Which of the following companies has a market-oriented business definition?
A) An electronics company, whose business definition is: “We produce microchips.”
B) A hotel, whose business definition is: “We rent rooms.”
C) An apparel company, whose business definition is: “We make and sell women’s clothing.”
D) A cosmetic company, whose business definition is: “We sell hope and self-esteem.”
E) A pizzeria, whose business definition is: “We sell the world’s most delicious thin-crust
pizzas.”
15) Which of the following is NOT an example of product-oriented mission statements?
A) “We are an online library.”
B) “We run theme parks.”
C) “We sell athletic shoes.”
D) “We sell memorable experiences.”
E) “We rent hotel rooms.”
16) Which of the following is a market-oriented mission statement?
A) “We empower customers to achieve their dreams.”
B) “We sell jumbo burgers.”
C) “We are an online library.”
D) “We are a low-cost airline.”
E) “We make porcelain figurines.”
17) Mission statements should be ________.
A) meaningful and specific yet motivating
B) technology oriented
C) written solely for public relations purposes
D) focused on increasing sales or profits
E) strictly product oriented
18) A company’s broad mission leads to ________.
A) increasing profits and more customers
B) increasing sales and decreasing costs
C) a higher share price
D) a hierarchy of objectives, including business objective and marketing objectives
E) increased market share and increasing profitability
19) The purpose of strategic planning is to find ways in which your company can best use its
strengths to take advantage of attractive opportunities in the environment.
20) A company’s mission statement provides the depth needed for all segments of the company
to reach their goals.
21) A mission statement is a document embodying an organization’s short-term goals.
22) A clear mission statement acts as an “invisible hand” that guides people in the organization.
23) Mission statements should be market oriented.
24) “At Joe’s Diner, we serve great burgers” is a product-oriented business definition.
25) “At Trader Joe’s, our mission is to provide all our customers the best food and beverage
values to be found anywhere, and the information to make informed buying decisions.” This is
a product-oriented business definition.
26) A company’s mission could appropriately be stated as “making more sales or profits.”
27) How does strategic planning benefit companies?
28) Why should mission statements be market oriented instead of product or technology
oriented?
29) Define strategic planning. Discuss the steps involved.
30) The collection of businesses and products that make up a company is called its ________.
A) strategic business unit
B) supply chain
C) strategic plan
D) business portfolio
E) internal value chain
31) Which of the following is the first step of business portfolio planning?
A) shaping the future portfolio by developing strategies for growth and downsizing
B) determining which businesses should receive more, less, or no investment
C) identifying internal strengths and weaknesses
D) identifying future opportunities
E) determining short-term goals
32) The major activity in strategic planning is ________, whereby management evaluates the
products and businesses that make up the company.
A) SWOT analysis
B) benchmarking
C) business portfolio analysis
D) breakeven analysis
E) prospecting
33) The best business portfolio is the one that ________.
A) provides the greatest opportunity for increasing profits
B) best fits the company’s strengths and weaknesses to opportunities in the environment
C) ensures that the company will realize increased share of market
D) allows the company to decrease its overall costs
E) entices customers to purchase even more products from the company
34) Which of the following best describes a strategic business unit?
A) the internal value chain of a company
B) the supply chain of a company
C) the key businesses that make up a company
D) the key channel intermediaries of a service company
E) the key competitors of a company
35) During portfolio analysis, a company ________ after identifying the key businesses that
make up the company.
A) formulates a short-term marketing plan
B) assesses the attractiveness of its various SBUs
C) assesses its strengths and weaknesses
D) performs a SWOT analysis
E) assesses the effectiveness of its various channel intermediaries
36) Which of the following is NOT something a company must determine when analyzing its
current business portfolio?
A) which businesses should receive more investment
B) which businesses should receive less investment
C) which businesses should receive no investment
D) which businesses should be sold or closed
E) which businesses shape the future portfolio
37) Most standard portfolio analysis methods evaluate SBUs on the ________.
A) potential for niche or global marketing
B) degree of product differentiation
C) strength of the market or industry position
D) accessibility to rural markets
E) number of successful business acquisitions
38) According to the Boston Consulting Group approach, ________ provides a measure of
market attractiveness.
A) product attribute
B) product design
C) market penetration
D) market growth rate
E) market segmentation
39) According to the Boston Consulting Group approach, ________ serves as a measure of
company strength in the market.
A) relative market share
B) product development
C) market diversification
D) product attribute
E) market segmentation
40) Which of the following is true of the BCG matrix approach?
A) It is inexpensive to implement.
B) It does not have any limitations.
C) It considers market growth rate to be a measure of market attractiveness.
D) It describes consumer motivations and needs.
E) It does not consider relative market share to be a measure of company strength in the
market.
41) Within a company, who is most likely to perform strategic planning?
A) the president and vice presidents
B) the accounting and finance departments
C) the marketing and sales departments
D) cross-functional teams of divisional managers close to their markets
E) the manufacturing and production departments
42) The key businesses of Kimberley and Price consist of a division that produces and sells
breakfast cereals and another that manufactures gardening tools. Each of these businesses is
called a ________.
A) market segment
B) strategic business unit
C) question mark
D) prospect
E) product portfolio
43) ________ are a type of SBU that often require heavy investments to finance their rapid
growth.
A) Cash cows
B) Question marks
C) Stars
D) Dogs
E) Bears
44) ________ are low-growth, high-share businesses/products that need less investment to hold
their market share.
A) Stars
B) Cash cows
C) Question marks
D) Dogs
E) Bears
45) Which of the following is true with regard to cash cows?
A) They are high-growth, high-share businesses or products.
B) They can be used to help finance the company’s question marks and stars.
C) They require significant cash to maintain market share.
D) They are low-share businesses and products.
E) They do not promise to be large sources of cash.
46) ________ are low-share business units in high-growth markets that require a lot of cash to
hold their share.
A) Stars
B) Dogs
C) Question marks
D) Cash cows
E) Bears
47) The pharmaceuticals division of Omni Healthcare holds low market share in a high-growth
market. According to the BCG matrix, the pharmaceuticals division of Omni can be classified
as a ________.
A) star
B) bear
C) question mark
D) cash cow
E) dog
48) By harvesting its SBU, a company would most likely be ________.
A) milking the SBU’s short-term cash flow regardless of the long-term effect
B) selling the SBU or phasing it out and using the resources elsewhere
C) investing just enough to hold the SBU’s current market share
D) investing more in the business unit to build its share
E) diversifying the company’s product line
49) A company can ________ an SBU by selling it or phasing it out and using the resources
elsewhere.
A) divest
B) promote
C) expand
D) harvest
E) hold
50) Modern strategic planning ________.
A) exclusively consists of a company’s short-term goals
B) is decentralized
C) does not involve cross-functional teams
D) does not take the overall mission of the company into consideration
E) is highly centralized
51) The BCG matrix approach is problematic in that it ________.
A) focuses on planning for the future at the cost of ignoring the present
B) focuses solely on current businesses and provides little scope for future planning
C) tends to undermine the importance of market growth rate as a measure of market
attractiveness
D) tends to undermine the importance of relative market share as a measure of company
strength in the market
E) fails to classify SBUs
52) Which of the following is a portfolio-planning tool for identifying company growth
opportunities through market penetration, market development, product development, or
diversification?
A) BCG matrix
B) analysis of variance
C) product/market expansion grid
D) Harris matrix
E) SWOT analysis
53) Phoenix, a popular coffee shop chain in North America, recently opened 400 stores to cater
to its rapidly increasing number of patrons. This exemplifies ________.
A) product differentiation
B) product development
C) diversification
D) market penetration
E) market segmentation
54) Which of the following is true with regard to the product/expansion grid?
A) It classifies SBUs into four distinct categories.
B) It is a useful device for identifying growth opportunities.
C) It helps companies analyze their internal strengths and weaknesses.
D) It functions on the premise that firms should downsize to regain market share.
E) It is a useful device for segregating customers into distinct categories.
55) Making more sales to current customers without changing a firm’s products is known as
________.
A) market segmentation
B) market penetration
C) product diversification
D) product development
E) prospecting
56) Lark Inc., an American electronics company, is currently reviewing new geographical
markets to sell its highly popular televisions. By 2020, it plans to open new stores across all the
major South Asian cities. Lark is most likely following a ________ strategy.
A) local marketing
B) market development
C) diversification
D) product adaptation
E) product development
57) The managers of Arrow, an American retail chain, are currently reviewing new
demographic markets to sell the firm’s current products. This is an example of ________.
A) market penetration
B) product development
C) mass marketing
D) market development
E) product adaptation
58) The managers of Alfredo’s Pizza, a popular pizzeria in New York City, have been
increasingly encouraging senior citizens to visit the pizzeria’s numerous outlets spread across
the city. Anticipating a rise in the population of senior citizens in the area, the management of
Alfredo’s Pizza is seeking to tap into this promising segment that consists of retired, affluent
consumers. In this instance, the managers of Alfredo’s Pizza are anticipating company growth
through ________.
A) market development
B) product development
C) mass customization
D) niche marketing
E) product differentiation
59) FencePro, a local company, has developed an entirely new mounting system for chain link
fences. After acquiring a distributor, FencePro now has the ability to market its products
nationwide. FencePro is most likely following a ________ strategy.
A) market penetration
B) market development
C) downsizing
D) product adaptation
E) product development
60) Amor, a successful brand of women’s clothing, recently introduced a line of fitness
equipment. This is an example of ________.
A) mass customization
B) niche marketing
C) diversification
D) prospecting
E) product adaptation
61) Sunny Brews is a coffeehouse chain based in Boston. It recently introduced Eva, a mild
roast, which became immensely popular. This exemplifies ________.
A) benchmarking
B) diversification
C) mass customization
D) product development
E) downsizing
62) A women’s apparel manufacturer in California recently acquired a Houston-based company
that manufactures office furniture. This is an example of ________.
A) product development
B) market development
C) market penetration
D) diversification
E) product differentiation
63) Cleats, Unlimited developed a new style of soccer shoe. This is an example of ________.
A) product development
B) market development
C) market penetration
D) diversification
E) product differentiation
64) Companies may want to downsize their business portfolios for all but which of the
following reasons?
A) The firm may have grown too fast.
B) The firm may have entered areas where it lacks experience.
C) The customers may have purchased all they need.
D) The market environment might change.
E) The products might simply age.
65) Elmo Corp., a manufacturer of personal computers and printers, recently established an
office furniture exporting business. This is an example of ________.
A) niche marketing
B) local marketing
C) diversification
D) product adaptation
E) downsizing