Gathering Marketing Intelligence: The Systems Approach
Multiple Choice
e
1.
To design a marketing information system, analysts need to know
a.
what types of decisions each decision maker regularly makes.
b.
what types of special studies are periodically requested.
c.
what information is necessary to make decisions.
d.
the frequency with which information is expected.
e.
Analysts need to know all of the above.
d
2.
An MIS needs analysis investigates
a.
the form in which managers need information.
b.
the types of information managers need.
c.
the types of decisions managers make.
d.
All of the above are investigated.
e.
None of the above are investigated.
e
3.
Which of the following has(have) been (a) problem(s) in implementing marketing
information systems?
a.
The output of the system is not flexible enough for users.
b.
Managers are unwilling to disclose their information needs.
c.
Many systems are obsolete by the time they are installed.
d.
All of the above represent problems.
e.
None of the above represent problems.
c
4.
Which of the following would suggest that more of a marketing information
perspective rather than a project perspective on research is needed?
a.
An investigation of the potential demand for a new product the firm is
developing.
b.
An examination of the structure of the channels of distribution serving
a market the firm is considering entering.
c.
An examination of each salesperson's performance versus the
individual's sales quota for last year.
d.
The investigation of which of two pieces of advertising copy is more
favorably received by consumers.
e.
An investigation to determine which of three package designs produces
the greatest sales.
d
5.
Many MIS have separate data banks for
a.
sales data.
b.
market data.
c.
product data.
d.
All of the above are part of many MIS.
e.
MIS have only one data bank.
a
6.
Historically, one problem with a research project emphasis to gathering marketing
intelligence has been
a.
its "crisis response" orientation.
b.
its lack of validity.
c.
the lack of trained researchers.
d.
misinterpretation of data by decision makers.
e.
the lack of computer resources.
a
7.
Which of the following is TRUE?
a.
A marketing information system is a set of procedures and methods for
the regular planned collection, analysis, and presentation of information for use in
making marketing decisions.
b.
The primary difference between traditional marketing research and
marketing intelligence is that the intelligence system is computer-based while the
research project is a written survey.
c.
The emphasis in traditional marketing research is on continuously
monitoring normal business activities such as sales, market share, and product
positioning through a series of recurring research steps.
d.
The rapid growth of databases, on-line informational services, and DSS
systems will eventually replace the traditional project approach to market research.
e.
One of the major benefits of an MIS system is that it generates
information in a single report format that is useful for most managers.
c
8.
A key distinction of a MIS is that
a.
the information is accurate.
b.
it can only be used by marketing managers.
c.
information is collected on a regular basis.
d.
it does not involve focused projects.
e.
the information is used in making marketing decisions.
a
9.
Which of the following is TRUE?
a.
The most fundamental criterion in designing a marketing information
system is an accurate, objective assessment of each manager's decision-making
responsibilities, capabilities, and style.
b.
The proper way to define what information is to be provided by a
marketing information system is to ask each manager what information he or she
would like to have and then go about designing a system to provide that information.
c.
In a marketing information system it is important that data files be
aggregated as much as possible so as to prevent the manager from being inundated
with too many bits and pieces of information.
d.
Both a and b are true.
e.
All of the above are true.
b
10.
The set of procedures and methods for the regular planned collection, analysis and
presentation of information for use in making marketing decisions. This describes
a.
decision support systems.
b.
marketing information systems.
c.
research projects.
d.
verbal presentations.
e.
written presentations.
e
11. A fundamental difference between a MIS and a DSS is
a.
they use different types of data.
b.
a DSS relies on sophisticated statistical analysis; a MIS does not.
c.
a MIS uses data that is timelier than that used by a DSS.
d.
using a MIS requires extensive training; a DSS does not.
e.
a DSS is used interactively; a MIS is not.
b
12. What system relies most on the production of preformatted reports?
a.
Decision support systems
b.
Marketing information system
c.
Research project
d.
Intelligence gathering system
e.
Marketing analysis system
a
13. Which of the following statements regarding marketing information systems is TRUE?
a.
They have large data storage needs.
b.
Programmers are able to develop decision-calculus models that exactly
replicate managers' decision-making processes.
c.
They can forecast future economic trends.
d.
They can easily be adapted to new managers' needs.
e.
Only b and c are true.
b
14. The first step in designing a Marketing Information System is
a.
collecting as much data as possible.
b.
determining which decision makers will use the system.
c.
selecting the computer hardware needed for the system.
d.
identifying possible sources of the necessary data.
e.
hiring a special design team to put the system together.
e
15. Adoption of marketing information systems (MIS) is NOT generally hampered by
a.
managers' reluctance to disclose their decision processes.
b.
the enthusiastic support of high-level management.
c.
the cost of the MIS system.
d.
underestimation of time necessary to complete the system.
e.
All of the above have tended to restrict the adoption of MIS.
d
16. A decision support system consists of
a.
dialog systems.
b.
model systems.
c.
data systems.
d.
All of the above.
e.
Only b and c above.
c
17. The thing that most clearly differentiates DSS from MIS is
a.
data systems.
b.
model systems.
c.
dialog systems.
d.
type of hardware used.
e.
cost of installation.
d
18.
A coordinated collection of data, systems, tools, and techniques with supporting
software and hardware by which an organization gathers and interprets relevant information
from business and environment and turns it into a basis for marketing action is a(n)
a.
Marketing Information System.
b.
Action Development Program.
c.
Marketing Planning System.
d.
Decision Support System.
e.
Strategic Planning System.
b
19. Which of the following is NOT an advantage of DSS over MIS?
a.
Individual managers can specify their own report formats.
b.
A trained programmer acts as intermediary between the manager and
the computer in requesting information.
c.
Questions can be asked sequentially based on the information supplied
in response to the previous question.
d.
Data can be manipulated using a variety of analytical procedures in
addition to being merely accessed and retrieved.
e.
Managers can interact with the system directly.
d
20. Which of the following is TRUE?
a.
The thrust in designing a DSS is on detailed analysis of each decision
maker who might use the system.
b.
The customer information module of the DSS systems provides
information to managers on topics such as: who buys the product; competitive
information; and current interest rates.
c.
A DSS does not assist top managers with strategic planning.
d.
A DSS is more adaptable than MIS system.
e.
All of the above are false.
a
21. A decision support system concentrates on the design of
a.
data, model, and dialog systems.
b.
preformatted reports.
c.
new products.
d.
marketing strategies.
e.
marketing tactics.
c
22. The components of a data system in a typical DSS system include all EXCEPT
a.
processes used to retrieve data from internal sources.
b.
methods of receiving data from external sources.
c.
languages that allow managers to produce reports from the data.
d.
modules containing customer and competitive information.
e.
modules containing industry trend information.
d
23. The data system for a decision support system would hold data
a.
from a standard source in a standard form.
b.
from a standard source in a variety of forms.
c.
from a variety of sources in a standard form.
d.
from a variety of sources in a variety of forms.
e.
from none of the above.
a
24. The basic task of the data system in a DSS is to
a.
capture relevant marketing data in reasonable detail and put that data in
a truly accessible form.
b.
structure a problem so that is can be easily solved by a manager.
c.
provide each manager with the information they need in the exact form
in which they need it.
d.
allow each manager to be able to access the particular information that
is necessary to solve a given problem.
e.
organize data that the firm generates in-house.
b
25.
The routines that allow the user to manipulate the data in a DSS so as to conduct the
kind of analysis the individual desires are known as the
a.
data system.
b.
model system.
c.
dialog system.
d.
information system.
e.
research system.
b
26.
a.
b.
c.
d.
e.
The systems approach to marketing research is most accurately compared to a
flashbulb.
candle.
strobe light.
lantern.
flame.
c
27.
a.
b.
c.
d.
e.
The key word that differentiates marketing information systems from marketing
research projects is
procedural.
planned.
regular.
analytical.
methodical.
28.
a.
b.
c.
d.
e.
Both DSSs and MISs are concerned with
improving information processing to enable better marketing decisions.
incorporating features that make them easy to use in an interactive mode.
flexibility and adaptability.
DSS and MIS are concerned with all of the above.
DSS and MIS are concerned with none of the above.
a
b
c
a
29.
A firm might be expected to initiate a specific research project to supplement the DSS
in which of the following situations?
a.
Information is needed on projected inflation rates over the next five years.
b.
Information is needed on initial consumer response to the introduction
of a new product.
c.
Information is needed to evaluate the past performance of one of the
company's wholesale distributors.
d.
Information is needed to determine next year's goals for the company sales
force.
e.
Information is needed to forecast demographic trends.
30. The primary purpose of dialog systems is to allow the marketing manager to
a.
write programs to control the flow of information between various
modules in the DSS.
b.
communicate via electronic mail with their salespeople.
c.
interact with the DSS to target and manipulate relevant information
contained in the DSS data base.
d.
collect data from primary sources and add it to the data base.
e.
collect data from secondary sources and add it to the data base.
31.
a.
b.
c.
d.
e.
All of the following terms are associated with the dialog system EXCEPT:
modeling system.
data mining.
parallel processing.
language system.
All of the terms are associated with the dialog system.
c
32. DSS and MIS differ in all but which of the following ways?
a.
Non-computer people find DSS easier to use personally than MIS.
b.
DSS is focused more on ill-structured decision situations than MIS.
c.
MIS combines models and analytic techniques with more traditional
data access and retrieval functions in greater detail than DSS.
d.
MIS is less flexible and adaptable than DSS.
e.
DSS responds to managers with answers faster than MIS.
c
33. Which of the following is true of decision support systems?
a.
They are more expensive than MIS.
b.
They are more difficult to use for noncomputer people than are MIS.
c.
They combine the use of models and analytic techniques and
procedures with the more traditional data access and retrieval functions.
d.
They do not allow the user to generate customized reports.
e.
They use very inflexible analysis procedures.
e
34.
Recently many firms have added the position of CIO to their organizational charts.
The primary role of the person filling this position is to
a.
assist the Vice-President of Marketing.
B.
concentrate on the technical aspects of programming within the DSS.
C.
gather relevant data for the DSS data base.
D.
serve as the liaison between the marketing department and other
departments such as finance, production, and accounting.
E.
run the company's information and computer systems like a business.
d
35. Expert systems
a.
include the procedures used to capture and the methods used to store the data.
b.
include all the routines that allow the user to manipulate the data to
conduct the kind of analysis the individual desires.
c.
are also called language systems.
d.
are computer based artificial intelligence systems.
e.
are none of the above.
e
36. The future of DSS systems
a.
appears good given the explosion of databases.
b.
means the end for traditional marketing research projects.
c.
is enhanced by the problems with MIS systems.
d.
is based on the growth of key demographic categories like women in the workforce.
e.
Both a and c above.
b
37.
Which of the following is TRUE?
a.
One of the problems with the systems approach is its nonrecurring nature.
b.
Most discussions of marketing research focus on the project approach.
c.
The DSS is primarily responsible for storing information.
d.
The MIS is primarily responsible for problems within the marketing function.
e.
Customer exit and reentry into a database make data storage a primary concern.
e
38.
Data systems most commonly hold information relating to
a.
existing customers.
b.
prospective customers.
c.
competitors.
d.
suppliers.
e.
All of the above may be held in a data system.
c
39.
The breakdown of questions into smaller computational tasks performed
simultaneously occurs during
a.
concurrent processing.
b.
data warehousing.
c.
parallel processing.
d.
data mining.
e.
Enterprise Resource Planning (ERP).
b
40.
A DSS combines all of the following EXCEPT:
a.
data systems.
b.
preformatted batch reports.
c.
model systems.
d.
dialog systems.
e.
A DSS combines all of the above components.
a
41.
Databases containing both current and historical information are called
a.
data warehouses.
b.
data mines.
c.
data portals.
d.
expert systems.
e.
data models.
42.
Greg’s Grocery Store is testing a new form of easy-pay system where shoppers can
use a portable, self-scanning, handheld scanner to record purchases as they fill their carts.
This wireless form of data capture is another example for the necessity of a(n)
a.
data warehouse.
b.
data mine.
c.
expert system.
d.
data portal.
e.
expert portal.
c
d
43.
Databases allow information to be shared easily. Such accessibility poses a privacy
issue for
a.
consumers.
b.
companies.
c.
salespeople.
d.
Both a and b have privacy issues.
e.
Both b and c have privacy issues.
d
44.
Data should only be added to a DSS database if they
a.
do not violate privacy protection.
b.
are relevant marketing data.
c.
can be put into a truly accessible form.
d.
All of the above are reasons to add data to a DSS database.
e.
Only b and c are reasons to add data to a DSS database.
b
45.
The manager of Arthur’s Auto Center, while looking at the customer database, has a
preconceived idea of how the database works and is able to see the interesting and worthwhile
applications of the data. Such an idea is called a(n)
a.
hypothesis.
b.
model.
c.
manipulation.
d.
procedure.
e.
system.
c
46.
The Daily World newspaper has an advanced decision support system that tracks the
addresses of all subscribers. Using this database, the manager plans to manipulate the
information to determine which areas of town should be targeted for potential customers.
Such __________ will help the manager gain a better understanding of an important
marketing issue for The Daily World.
a.
ratios
b.
groupings
c.
procedures
d.
models
e.
planning
d
47.
The stop-and-go chain of convenient stores uses scanners that provide massive
amounts of data to the marketing managers. Since it would take so much time for even welltrained analysts to summarize the major trends of the data, the store uses a computer-based
artificial intelligence system to attempt to model how experts process information to solve
problems. Such a system is a(n)
a.
model system.
b.
data system.
c.
support system.
d.
expert system.
e.
dialog system.
a
48.
Which of the following is true of dialog systems?
a.
They put data at the decision maker’s fingertips.
b.
They include large amounts of data gathered from a single source.
c.
They allow managers to interact with programmers to request data.
d.
Both a and b are true.
e.
Only b and c are true.
d
49.
All of the following are true of the CIO EXCEPT:
a.
He or she serves as the liaison between the firm’s top management and its information
systems department.
b.
He or she is much more concerned with the firm’s outlook than with daily activities of
a department.
c.
He or she typically knows more about the business in general than the managers of the
information systems department.
d.
All of the above statements are true regarding the CIO.
e.
All of the above statements are false regarding the CIO.
b
50.
One of an organization’s greatest assets can be what its people know about customers,
its products, and its marketplace. An effort to systematically collect such information and
make it accessible to others is
a.
data mining.
b.
knowledge management.
c.
parallel processing.
d.
intellectual accounting.
e.
human resourcing.
e
51.
The person responsible for the ways an organization manages and shares information,
including those bits of knowledge that experienced people may use without giving conscious
thought to them, typically holds the title of
a.
Chief Information Officer.
b.
Human Resource Director.
c.
Marketing Resources Manager.
d.
Chief Executive Officer.
e.
Chief Knowledge Officer.
d
52.
A sophisticated software system that monitors and controls all of an organization’s
resource requirements, such as inventory, human resources, and production capacity is called
a(n)
a.
expert system.
b.
inventory model.
c.
radio frequency system.
d.
Enterprise Resource Planning system.
e.
model system.
b
53.
Last year Jason’s Deli installed a decision support system that included all the
procedures that allow the marketing manager to conduct any type of analysis. While looking
at the customer database, the marketing manager able to discover an interesting relationship
between sales and payment method. Such a system is called a(n)
a.
hypothesis.
b.
model system.
c.
manipulation.
d.
procedure.
e.
expert system.
b
54.
As CEO of a high-tech firm in Silicon Valley, John Smith likes to regularly tap into
his frontline sales force to determine what they know about their customers, products, and
marketplace. An effort to systematically collect such information and make it accessible to
others within the organization and channel members is called
a.
data mining.
b.
knowledge management.
c.
parallel processing.
d.
human resourcing.
e.
expert systems.
a
55.
HCA Corporation collects data regularly from multiple sources. It asks physicians to
maintain a diary, it asks patients to complete a questionnaire, and conducts telephone
interviews with ex-patients. The marketing department of HCA crunches this data and
presents the information to the CEO to make marketing decisions. The information is all part
of HCA’s
a.
marketing information system.
b.
knowledge management.
c.
expert systems.
d.
data mining.
e.
model system.
a
56.
A mail-order retailer found that its percent of loyal customers (those ordering $100 or
more of merchandise in two consecutive years) has declined from 15 percent to 8 percent.
Which form of marketing research was the retailer utilizing?
a.
Marketing information system
b.
An experiment
c.
Observation
d.
Focus group study
e.
None of the above could be utilized
True/False
a
b
57.
A decision support system has three major components; a data-driven system, a
model-driven system, and a dialog-driven system.
a. True
b. False
58.
Internal data breaches have declined and external data breaches have increased recently.
a. True
b. False
b
59.
Both sources of marketing intelligence illuminate the darkness. The project approach
is like a candle and the systems approach is like a flashbulb.
a. True
b. False
a
60.
The element of a DSS that clearly separates it from an MIS is its dialog-driven system,
also called a language system.
a. True
b. False
a
61.
A typical approach to data mining uses a super computer to link a number of personal
computers.
a. True
b. False
b
62.
A CIO’s major role is to systematically collect employee knowledge about customers,
products and the marketplace.
a. True
b. False
a
63.
A problem with the systems approach is that managers are limited to the data available
in the system.
a. True
b. False
b
64.
The explosion in databases and the emergence of DSS have eliminated traditional
marketing research projects for gathering marketing intelligence.
a. True
b. False
Fill in the Blank
65.
Historically, one problem with a research project emphasis to gathering marketing
intelligence has been its __________ orientation. (“crisis response”)
66.
A __________ is a set of procedures and methods for the regular planned collection,
analysis, and presentation of information for use in making marketing decisions. (marketing
information system)
67.
Databases containing both current and historical information are called __________.
(data warehouses)
68.
Having a preconceived idea of how a database works and having the ability to see the
interesting and worthwhile applications of the data is called a __________. (model)
69.
__________ is an effort to systematically collect information about customers, its
products, and its marketplace and make it accessible to others in the organization.
(Knowledge management)
Essay
70. Discuss at least four common reasons that have restricted the adoption of a MIS.
(The adoption of Marketing Information Systems (MIS) have tended to be restricted by (1)
managers’ reluctance to disclose their decision processes, (2) lack of enthusiastic support of
high-level management, (3) cost of such systems, and (4) underestimation of time necessary to
complete the system.)
71.
Compare and contrast DSS and MIS.
(Both are concerned with improving information processing to enable better marketing
decisions. A DSS is used interactively; a MIS is not. Non-computer people find DSS easier to
use personally than MIS. DSS is focused more on ill-structured decision situations than MIS.
MIS is less flexible and adaptable than DSS. DSS responds to managers with answers faster
than MIS.)
Markets and Competitive Space
True/False Questions
1. When modularization occurs, products become commodities.
Answer: True
2. The influence of competing brands becomes weaker with closer substitutability and more direct
competition.
Answer: False
3. The product-variant product-market structure includes a broad group of products that satisfy a general, yet
similar, need.
Answer: False
4. Customer function considers the role or purpose of the good or service.
Answer: True
5. It is important to focus on the distributor of a product when defining the market, since the distributor
drives demand for the product.
Answer: False
6. The value chain analysis considers the vertical network of firms involved in production.
Answer: True
7. A new competitor entering a market is likely to come from companies competing in other geographical
regions with similar products.
Answer: True
8. Sales forecasts, typically, fall short of market potential.
Answer: True
9. In the initial stage of competition, the competitors concentrate on market share for end products and
profits.
Answer: False
10. In the final phase of competition, companies involve in partnering with the objective of controlling
industry standards.
Answer: False
Multiple Choice Questions
11. _____ refers to firms using simpler and less costly ways to match the value requirements offered by the
products of incumbent firms serving the market.
A. Modularization
B. Commoditization of product designs
C. Disruptive innovation
D. Creating new market space
Answer: C
12. _____ changes products into commodities, making it difficult for companies to earn anything more than
subsistence returns from those products.
A. Disruptive innovation
B. Modularization
C. Cannibalization
D. Segmentation
Answer: B
13. The purpose of _____ is to target new opportunities where buyers' value requirements are not being
satisfied by existing products.
A. disruptive innovation
B. commoditization of products
C. benchmarking
D. creating new market space
Answer: D
14. The _____ product-market includes a broad group of products that satisfy a larger common need.
A. generic
B. product-type
C. product-variant
D. larger-type
Answer: A
15. Which of the following is the first step in defining and analyzing product-markets?
A. Forecasting market size
B. Determining the boundaries of the market
C. Analyzing competition
D. Predicting rate of change of the market
Answer: B
16. Which of the following is the second step in analyzing product-markets?
A. Analyze competition
B. Form the product-market
C. Forecast market size and rate of change
D. Analyze end users
Answer: B
17. Which of the following is the final step in analyzing the competition?
A. Anticipating actions by competitors
B. Evaluating key competitors
C. Identifying and evaluating potential competitors
D. Identifying key competitors
Answer: C
18. Which of the following is the most direct type of competition?
A. Budget competition
B. Generic competition
C. Product-category competition
D. Product-variant competition
Answer: D
19. _____ analysis is horizontal and only covers similar types of firms and operating practices of the firms.
A. Value chain
B. Industry
C. Market segmentation
D. Customer profile
Answer: B
20. According to Porter’s five competitive forces, _____ recognizes that active competition among industry
members helps determine industry performance and it is the most direct and intense form of competition.
A. rivalry among existing firms
B. threat of new entrants
C. threat of substitute products
D. bargaining power of suppliers
Answer: A
21. If critical inputs are in jeopardy or prices of those inputs are extraordinarily high, companies may pursue
vertical integration strategies or develop collaborative relationships to reduce the:
A. rivalry among existing firms.
B. bargaining power of buyers.
C. threat of substitute products.
D. bargaining power of suppliers.
Answer: D
22. _____ is measured by comparing the share of the firm against the competitor with the highest market
share in the segment.
A. Market segmentation
B. Relative market position
C. Product differentiation
D. Customer segment
Answer: B
23. Market entry by a new competitor is likely under which of the following conditions?
A. When markets have matured and growth is slow
B. When major market-entry barriers are present
C. When competition is limited to one or a few competitors
D. When market incumbents’ profit margins have declined
Answer: C
24. _____ is the maximum amount of product sales that can be obtained from a defined product-market
during a specified time period.
A. Market potential
B. Sales forecast
C. Market share
D. Modularization
Answer: A
25. Which of the following is a major source for new competitors?
A. Companies already targeting similar customer groups with other products.
B. Companies competing in the same regions with different products.
C. Companies competing in a different product-market.
D. Companies with advanced unrelated technologies.
Answer: A
26. _____ is the upper limit of sales that can be achieved by all firms for a specified product-market over an
indicated time period.
A. Market potential
B. Market share
C. Differential pressure
D. Absolute threshold
Answer: A
27. _____ refers to the expected sales for a defined product-market during a specified time period.
A. Market potential
B. Sales forecast
C. Market share
D. Modularization
Answer: B
28. Company sales divided by the total sales of all firms for a specified product-market determines the _____
of a particular firm.
A. market potential
B. absolute threshold
C. relative market position
D. market share
Answer: D
29. Which of the following is an advantage of using the time-series analysis in sales forecasting?
A. It utilizes historical data when forecasting.
B. It consumes the least amount of time in forecasting.
C. It is a very subjective type of analysis.
D. It is most effective when forecasting new or innovative products.
Answer: A
30. Which of the following is the final phase of competition?
A. Partnering of companies with the objective of controlling industry standards
B. Companies competing in identifying product concepts
C. Competitors concentrating on market share for end products and profits
D. Firms focusing on building competencies
Answer: C
Essay Questions
31. Explain the competitive box. Why is there a need for strategic thinkers to “think outside the competitive
box”?
Answer: There is a tendency for executives to think in terms of a stable "competitive box" around their
businesses―defined by technology, geography, competitors and the existing customer base. This frame of
reference enables analytical tools to be successfully applied, research to be carried out, and plans can be
made. This traditional perspective is logical in stable markets but fails to address the reality that the real
threats as well as exciting opportunities may be present outside the conventional competitive box.
Increasingly, new markets, new types of competition, and new business designs are emerging that fuel
market growth and cannibalize the existing customer base of incumbents' markets. Importantly, effective
processes for understanding markets and competitive space and guiding the strategic initiatives appropriate
for the markets require strategic thinking outside the competitive box.
32. Discuss the differences between a generic product-market and a product-type product-market.
Answer: The generic product-market includes a broad group of products that satisfy a general, yet similar,
need. The starting point in determining product-market boundaries is to identify the particular need or want
that a group of products satisfies. Since people with a similar need may not satisfy the need in the same
manner, generic product-markets are often heterogeneous, containing different end-user groups and several
types of related products.
The product-type product-market includes all brands of a particular product type. The product type is a
product category or product classification that offers a specific set of benefits intended to satisfy a customer's
need or want in a specific way. Differences in the products within a product-type product-market may exist,
creating product-variants.
33. Identify the three guidelines for defining a product-market.
Answer: In defining the product-market, it is helpful to indicate (1) the basis for identifying buyers in the
product-market of interest (geographical area, consumer/business etc.), (2) the market size and
characteristics, and (3) the brand and/or product categories competing for the needs and wants of the buyers
included in the product-market.
34. Explain how buyers make choices in products and brands.
Answer: Buyers normally follow a decision process. They begin by recognizing a need (problem
recognition); next, they seek information; then, they identify and evaluate alternative products; and finally,
they purchase a brand. The length and complexity of this process varies by product and purchasing situation.
Decisions for frequently purchased products with which a buyer has past experience tend to be routine. One
part of studying buyer decision processes is finding out what criteria people use in making decisions.
35. Identify Porter's five competitive forces that impact industry performance.
Answer: Michael Porter's five competitive forces that impact industry performance are: 1. Rivalry among
existing firms, 2. Threat of new entrants, 3. Threat of substitute products, 4. Bargaining power of suppliers,
5. Bargaining power of buyers.
Strategic Marketing
Situation Assessment - The External Environment
1) Which stage of the marketing process primarily involves monitoring the environment, evaluating the
firm's core competencies, and anticipating future events?
A) market segmentation
B) situation assessment
C) budget analysis
D) positioning
Answer: B
2) In the marketing process, which of the following is NOT one of the four Cs considered essential during a
situation assessment?
A) context
B) customers
C) conversions
D) competition
Answer: C
3) Which of the following would most likely occur during an assessment of the external marketing
environment?
A) analyzing the specific industry
B) evaluating core competencies
C) contacting financial resources
D) establishing strategic moves
Answer: A
4) For the most effective situation assessment, which of the following should occur first?
A) determining a marketing mix
B) reviewing customer needs
C) evaluating technology
D) defining the market
Answer: D
5) In a concentric market, which of the following is the core?
A) generic competition
B) product form
C) budget competition
D) product category
Answer: B
6) What is the broadest level of a concentric market?
A) product form
B) product category
C) budget competition
D) generic competition
Answer: C
7) A supply side approach to market definition focuses on the ________.
A) primary industry
B) budget competition
C) alternative products
D) customers' perspectives
Answer: A
8) Marketers should be aware of tax codes, operating rules, and guidelines that affect business and industry
in a given society. This is the ________ context.
A) social
B) political
C) economic
D) physical
Answer: B
9) Demographics, norms, and lifestyles are factors in the ________ context that marketers must always
consider.
A) social
B) political
C) physical
D) regulatory
Answer: A
10) A marketer who is conducting a broad exploration of customer insights and emerging market trends is
most likely involved with ________.
A) segmentation
B) strategy formation
C) customer assessment
D) customer relationship management
Answer: C
11) What is the primary goal of customer assessment?
A) analyzing historical consumer trends
B) attracting interest among new customers
C) customizing product offerings to consumers
D) predicting future patterns of customer needs
Answer: D
12) Findings about customers discovered through ________ techniques often lead to marketing
opportunities.
A) data mining
B) value networking
C) data warehousing
D) product branding
Answer: A
13) A broad, subjective search for trends across media and other environments is known as ________.
A) targeting
B) coolhunting
C) positioning
D) data mining
Answer: B
14) According to the text, identifying customer insights is the first step in ________.
A) implementing the marketing mix
B) maintaining economies of scale
C) discovering new markets
D) branding products
Answer: C
15) Which of the following would most likely be used by a marketer gathering customer insights about
unmet and unrecognized customer needs?
A) trendspotting
B) in-depth interviews
C) data mining
D) loyalty surveys
Answer: B
16) Which of the following is NOT one of the forces that drive industry analysis?
A) competitive rivalry
B) threat of new entrants
C) product-market evolution
D) bargaining power of buyers
Answer: C
17) Competitive rivalry, the bargaining power of suppliers and customers, and the threat of substitute
products and new entrants are the forces that jointly influence ________.
A) industry profitability
B) economies of scope
C) product scale effects
D) demographic trends
Answer: A
18) Which of the following is NOT a challenge presented to marketers by the product life cycle?
A) Sales and profits for all products eventually decline.
B) It is difficult to plot the life cycle stages as a product goes through them.
C) A firm must be effective at adapting its marketing strategies for different life cycle stages.
D) Changing tastes and technologies affect the marketing of a product as it passes through life cycle stages.
Answer: B
19) Major strategic gains and losses will most likely occur at which stage of the product life cycle?
A) introduction
B) maturity
C) decline
D) growth
Answer: D
20) Marketers can most likely use the product life cycle concept as a tool for ________.
A) predicting sales trends
B) targeting niche consumers
C) conducting advertising tests
D) collecting data for product analysis
Answer: A
21) In which stage of the product life cycle would share building most likely be difficult and lead to price
competition?
A) growth
B) decline
C) maturity
D) introduction
Answer: C
22) Which term best describes the effect that occurs when production volume increases and unit costs
decline?
A) competitive advantage
B) experience curve
C) virtuous circles
D) single sourcing
Answer: B
23) Which of the following would most likely lower unit costs while increasing reliability and conformance
quality?
A) network effects
B) economies of scope
C) diseconomies of scale
D) learning curve effects
Answer: D
24) Producing more than one product and lowering the cost of production of all products is best known as
________.
A) experience curve effects
B) diseconomies of scale
C) economies of scope
D) virtuous circles
Answer: C
25) ________ occurs when a product provides more value to each customer when more overall customers
own or use the product.
A) Network effect
B) Virtuous circle
C) Economy
D) Synergy
Answer: A
26) Which term refers to increases in unit costs as production increases?
A) vicious circle
B) economies of scope
C) diseconomies of scale
D) experience curve effects
Answer: C
27) Which of the following best describes a situation in which more people are buying a product, more
retailers are wanting to stock the product, and sales of the product are increasing?
A) synergy
B) virtuous circles
C) economies of scope
D) learning curve effects
Answer: B
28) Economies of scale are primarily increased by ________.
A) strict industrial standards
B) knowledge retention rates
C) major quality modifications
D) higher units of production
Answer: D
29) PIMS data shows a strong correlation between ________ and ________.
A) market share; profitability
B) unit costs; marketing strategy
C) market share; product quality
D) profitability; marketing success
Answer: A
30) Which of the following is most likely to result from higher market share?
A) higher unit costs
B) lower reliability
C) higher profits
D) lower volume
Answer: C
31) In order to be the most effective, the scope of a market definition should be fixed.
Answer: FALSE
32) The micro environment consists of larger societal forces that affect a company, such as demographic,
economic, political, and cultural forces.
Answer: FALSE
33) Using interviews and ethnographies to gather customer insights produces general findings that can be
applied to the mass market.
Answer: FALSE
34) The product life cycle, scale effects, and market share effects are generalizations in strategic marketing
that cannot be changed.
Answer: TRUE
35) Most significant strategic gains and losses occurring during the growth phase of a market.
Answer: TRUE
36) Why is it important to conduct a situation assessment? What are the primary external factors to consider
during a situation assessment?
Answer: Situation assessment involves monitoring the environment (external forces) while also scrutinizing
the company itself (internal factors). Understanding external and internal factors at a given time and,
importantly, anticipating future events, trends, and conditions is critical to creating and advancing effective
strategies. External assessment includes the analysis of the dynamics of the specific industry within which
the firm operates and the understanding of some prominent and powerful regularities or "laws of marketing"
such as changes in the market as it evolves, the cost benefits of economies of scale, or the profitability
advantages of market share.
37) Why is it important to define the market when conducting a situation assessment?
Answer: Before assessing "the situation" it is necessary to first specify exactly what situation should be
assessed. In what market does the firm participate? Who are its competitors? Who are its customers? How
the market or the submarket as defined is critical to all marketing activities? If we define the market too
broadly, our marketing activities lose focus. If we define the market too narrowly, we risk missing
opportunities. Market definition is the basis upon which we measure our participation, or market share. Even
the labeling of the market tends to define the boundaries of the firm's efforts and its vision. Because all
markets are constantly evolving, market definition is also important to understand the dynamics in the
market. Is the market growing or declining, and how do these dynamics relate to customer needs, wants,
expectations, and requirements?
38) How do marketers benefit from understanding where a product and an industry are in the product life
cycle?
Answer: Markets behave differently at different stages: competitors compete differently, sales are more
profitable or less profitable, customers buy differently, and different customers buy. Different strategies and
tactics work better than others at various stages in the product life cycle. Thus, understanding where a
product and an industry are in the life cycle facilitates better prediction of competitor actions, of customer
responses, and of sales trends and will inform considerations about what strategies are typically effective.
Recognizing when the market is evolving from one "stage" to another—that is, anticipating "inflection"
points—can create a significant advantage; missing such a shift can be a substantial disadvantage.