Chapter 2
Company and Marketing Strategy:
Partnering to Build Customer Relationships
GENERAL CONTENT: Multiple-Choice Questions
1. _____ is the task of selecting an overall company strategy for long-run survival and
growth.
a. Strategic market planning
b. Annual market planning
c. Short-term planning
d. Advertising
e. None of the above is correct
(Answer: a; p. 37; Easy)
2. Adapting the firm to take advantage of opportunities in its constant changing
environment is called _____.
a. long-range planning
b. short-range planning
c. annual planning
d. strategic planning
e. environmental scanning
(Answer: d; p. 37; Easy)
3. What is our business? Who’s our customer? What do our customers value? What
should our business be? All these simple-sounding questions define a firm’s _____. .
a. objectives and goals
b. mission statement
c. business portfolio
d. marketing and functional strategies
e. operational strategies
(Answer: b; p. 37; Moderate)
4. A _____ defines a business in terms of satisfying basic customer needs.
a. market oriented mission statement
b. strategic plan
c. annual plan
d. operational plan
e. none of the above is correct
(Answer: a; p. 38; Moderate)
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5. All of the following are accurate descriptions of a company’s mission statement,
except which one?
a. Mission statement should be realistic.
b. Mission statement should be broad.
c. Mission statement should fit the market environment.
d. Mission statement should be written for “public relations” purpose.
e. Mission statement might outline employee growth options.
(Answer: b; p. 39; Moderate)
6. All of the following are market-oriented mission statements, except which one?
a. eBay’s mission is to connect individual buyers and sellers online.
b. Singapore Airlines is the world’s largest airline.
c. Girl Scouts of America, “where girls grow strong”
d. Wal-Mart, “we deliver low prices everyday.”
e. None of the above is a market-oriented mission statement.
(Answer: b; p. 38; Easy)
7. The collection of businesses and products that make up a company is called its _____.
a. strategic business unit
b. mission statement
c. strategic plan
d. business portfolio
e. operational factors
(Answer: d; p. 40; Easy)
8. _____ can be a company division, a product line within a division, or sometimes a
single product or brand.
a. A market
b. The BCG
c. An SBU
d. A PLC
e. An initiator
(Answer: c; p. 40; Easy)
9. The purpose of _____ is to find ways in which the company can best use its strengths
to take advantage of attractive opportunities in the environment.
a. a market
b. an SBU
c. strategic planning
d. short-term planning
e. operational planning
(Answer: c; p. 40; Moderate)
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10. The best known product portfolio planning method was developed by _____.
a. Philip Kotler
b. Harvard University
c. SRI Consulting Firm
d. Boston Consulting Group
e. James P. Hess
(Answer: d; p. 40; Easy)
11. Most portfolio analysis methods evaluate SBUs on two dimensions, namely _____
and _____.
a. market share; sales
b. market growth rate; relative market share
c. market attractiveness; market growth rate
d. market growth rate; profits
e. none of the above
(Answer: b; p. 40; Moderate)
12. The BCG growth-share matrix classifies four types off SBUs. They are _____, _____,
_____ and _____.
a. product; price; promotion; placement
b. sales; market share; price; promotion
c. stars; cash cows; question marks; dogs
d. planning; organizing; leading; controlling
e. north; south; east; west
(Answer: c; p. 41; Moderate)
13. In the BCG approach, _____ are high-share, high-growth businesses or products.
They need heavy investment to finance rapid growth. When their growth slows down,
they turn into _____.
a. cash cows; stars
b. question marks; dogs
c. stars; question marks
d. stars; cash cows
e. dogs; cash cows
(Answer: d; p. 41; Moderate)
14. All of the following phrases accurately reflect problems with the BCG matrix
approach, except which one?
a. They are easy to implement.
b. They can be costly.
c. They can be time consuming to implement.
d. It is difficult to define SBUs and measure market share and growth.
e. B and C
(Answer: a; p. 41; Moderate)
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15. Unlike former strategic-planning efforts, today’s strategic planning has been _____.
a. short-term oriented
b. decentralized
c. limitation-free
d. customer friendly
e. centralized
(Answer: b; p. 42; Moderate)
16. Making more sales to current customers without changing a firm’s products is _____.
a. market development
b. market growth
c. market penetration
d. product development
e. industry attractiveness
(Answer: c; p. 44; Moderate)
17. _____ are low-growth, high share businesses or products. They generate a lot of cash
that the firm uses to pay its bills and support other SBUs that need investment.
a. Stars
b. Cash cows
c. Question marks
d. Dogs
e. Cats
(Answer: b; p. 41; Moderate)
18. Management must think hard about which _____ it should try to build into stars, and
which should be phased out.
a. stars
b. dogs
c. 1uestion marks
d. cash cows
e. cats
(Answer: c; p. 41; Moderate)
19. Disney is identifying and developing new markets for its theme parks. Disney is
exploring possibilities for _____.
a. market penetration
b. market development
c. Japan
d. diversity
e. product development
(Answer: b; p. 44; Moderate)
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20. In 1999, Starbucks purchased Hear Music and began making compilation music CDs
to play and sell in its stores. It has also tested new restaurant concepts, such as
Circadia in San Francisco. Starbucks is considering _____.
a. new product development
b. market development
c. diversification
d. market penetration
e. product adaptation
(Answer: c; p. 45; Challenging)
21. Increasingly in today’s marketplace, competition takes place between the _____.
a. large and small competitors
b. number 1 and number 2 spot firms
c. entire value-delivery networks of firms
d. market leaders only
e. none of the above
(Answer: c; p. 48; Easy)
22. The process of dividing a market into distinct groups of buyers with different needs,
characteristics, or behaviors is called _____.
a. target marketing
b. positioning
c. marketing strategy
d. market segmentation
e. market extension
(Answer: d; p. 50; Easy)
23. For Hyundai Corporation, customers who care about price and operating economy
make up the firm’s _____.
a. position
b. value network
c. market segment
d. customer extension
e. none of the above
(Answer: c; p. 50; Easy)
24. _____ entails reducing the business portfolio by eliminating products that no longer
fit the company’s overall strategy.
a. Market segmentation
b. BCG
c. Product line extension
d. Downsizing
e. Market redesign
(Answer: d; p. 45; Easy)
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25. _____ involves evaluating each market segment’s attractiveness and selecting one or
more segments to enter.
a. Market segmentation
b. Product differentiation
c. Target marketing
d. A and B
e. None of the above
(Answer: c; p. 50; Moderate)
26. _____ is the place a product occupies in the consumer’s mind relative to competition.
a. Product placement
b. Product positioning
c. Market segmentation
d. Target marketing
e. Perceptual map
(Answer: b; p. 50; Easy)
27. Saturn is “a different kind of company, different kind of a car”; the Hummer is “like
nothing else.” These statements reflect a firm’s _____.
a. product portfolio
b. target markets
c. market positioning
d. strategy
e. all of the above.
(Answer: c; p. 50; Moderate)
28. Effective positioning begins with actually _____ the company’s marketing offer so
that it gives consumers more value.
a. pricing
b. aligning
c. differentiating
d. promoting
e. extending
(Answer: c; p. 52; Moderate)
29. Most companies today enter a new market by serving a _____, and if this proves
successful, they _____.
a. single market segment; add segments
b. multitude of segments; add more segments
c. few segments; add more segments
d. niche; differentiate
e. none of the above
(Answer: a; p. 50; Challenging)
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30. _____ involves looking at whether a company’s basic strategies are well matched to
its opportunities.
a. Operating control
b. Marketing audit
c. Marketing control
d. Strategic control
e. Distribution
(Answer: d; p. 57; Challenging)
31. Evaluating the results of marketing strategies and plans and taking corrective action
to ensure that objectives are attained is called _____.
a. marketing control
b. strategic control
c. operating control
d. developmental control
e. efficiency
(Answer: a; p. 57; Easy)
32. To ensure that the company achieves the sales, profits, and other goals set out in its
annual marketing plan is called _____.
a. marketing control
b. operating control
c. strategic control
d. anticipatory control
e. marketing audit
(Answer: b; p. 57; Moderate)
33. The marketing control process entails the following steps in order: setting goals,
_____, evaluating performance, and _____.
a. evaluating goals; measuring performance
b. achieving goals; measuring performance
c. taking corrective action; measuring performance
d. measuring performance; taking corrective action
e. taking corrective action; follow-up
(Answer: d; p. 57; Challenging)
34. The _____ is normally conducted by an objective and experienced outside party. The
findings are later presented to management. Management then decides which actions
make sense and how and when to implement them.
a. marketing planning
b. marketing audit
c. advertising plan
d. marketing research
e. none of the above
(Answer: b; p. 57; Moderate)
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35. The uncontrollable macro forces to which a firm must adapt is called the ____.
a. micro environment
b. marketing environment
c. marketing audit
d. environmental scan
e. none of the above
(Answer: b; p. 38; Easy)
36. All of the following are steps in the strategic planning process, except which one?
a. Defining the company mission.
b. Setting company objectives and goals.
c. Planning marketing and other functional strategies.
d. Collaborating with suppliers on all fronts.
e. None of the above.
(Answer: d; p. 37; Moderate)
37. Starbucks has an annual plan in place to deal with the company’s current SBUs and
their operations. However, Starbucks as a growth-oriented firm is interested in both
domestic and international markets. This requires Starbucks to constantly monitor the
environment and adapt to the opportunities it is presented with. Starbucks needs a
_____ in place.
a. value-delivery network
b. mission statement
c. supporting objectives
d. profit analysis
e. strategic plan
(Answer: e; p. 37; Moderate)
38. Monsanto operates in many businesses, including pharmaceuticals and food products.
The company defines its _____ as creating “abundant food and a healthy
environment.”
a. objectives
b. goals
c. product portfolio
d. mission
e. value-delivery network
(Answer: d; p. 39; Moderate)
39. The mission statement of the Girl Scouts of America reads as follows: “where girls
grow strong.” This reflects the fact that mission statements must ____.
a. be realistic
b. be motivating
c. be narrow
d. fit the market environment
e. A and B
(Answer: d; p. 39; Moderate)
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40. All of the following are examples of market-oriented mission statements, except
which one?
a. We make the Internet buying experience fast, easy, and enjoyable.
b. We create customer connectivity anytime, anywhere.
c. We create fantasies.
d. We hold online auctions.
e. B and C
(Answer: d; p. 38; Moderate)
41. All of the following are examples of product-oriented mission statements, except
which one?
a. At America Online we provide online services.
b. In Disney, we run theme parks.
c. At Nike, we sell shoes.
d. At Wal-Mart, we deliver low prices every day.
e. B and C
(Answer: d; p. 38; Moderate)
42. _____ should be market oriented and defined in terms of _____.
a. Strategic plans; company needs
b. Annual plans; product needs
c. Long-range plans; company needs
d. Mission statements; customer needs
e. Objectives; customer wants
(Answer: d; p. 38; Moderate)
43. A vendor for Ford Motor Company received the following message from Ford’s
marketing managers: “As we move forward during the 21st century, it is incumbent
upon us to inform you that Ford is committed to building profitable customer
relationships by creating environmentally better cars and getting them to market
faster at lower costs.” The marketing manager is referring to Ford’s _____.
a. marketing strategy
b. market tactics
c. business portfolio
d. mission statement
e. competitive advantage
(Answer: d; p. 39; Moderate)
44. To increase its U.S. market share, Starbucks has stepped up efforts in the areas of
product availability and promotion. These are examples of broad _____.
a. marketing objectives
b. marketing strategies
c. marketing goals
d. marketing tactics
e. none of the above
(Answer: b; p. 40; Moderate)
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45. Revlon has clearly defined its “mission” of selling lifestyle and self-expression. As
the firm prepares to launch its strategic plan, the mission needs to be turned into
detailed _____ that guide the whole company.
a. sets of strategies
b. sets of tactics
c. sets of product mixes
d. supporting objectives
e. sets of promotional tools
(Answer: d; p. 39; Moderate)
46. McDonald’s has traditionally been preoccupied with its current businesses and how to
keep them going. It has been accused of being complacent when it comes to
opportunities in its constantly changing environment. _____ involves adapting
McDonald’s to capitalize upon opportunities in its constantly changing environment.
a. Long-range planning
b. Annual planning
c. Strategic planning
d. Operational planning
e. None of the above
(Answer: c; p. 37; Moderate)
47. Colgate toothpaste, the flagship product of Colgate-Palmolive Company, has been a
success for generations. The parent company’s success is so well known that it could
enter the solar energy business, but that would not take advantage of its core
competency, providing a plethora of brands to large groups of customers. This
reflects that Colgate-Palmolive should base its mission on its _____.
a. market environment
b. distinctive competencies
c. bottom-line orientation
d. resource strengths
e. sales forecast
(Answer: b; p. 39; Moderate)
48. All of the following are problems with matrix approaches, except which one?
a. Formal planning approaches can place too much emphasis on market-share
growth or growth through entry into new markets.
b. Many companies can plunge into unrelated and new high-growth businesses that
they did not know how to manage—with bad results.
c. Many companies often too quickly abandon, sell, or milk to death their healthy
mature businesses.
d. Many firms have dropped formal matrix methods in favor of more customized
approaches that are better suited to their specific situations.
e. A and B
(Answer: d; p. 41; Moderate)
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49. Starbucks has introduced a debit card that lets customers prepay for coffee and
snacks. Starbucks management is considering whether the company can achieve
deeper _____.
a. market development
b. product development
c. diversification
d. market penetration
e. product adaptation
(Answer: d; p. 44; Moderate)
50. Wal-Mart, the world’s largest retailer, has successfully launched its stores in Mexico,
Canada, the U.K., and Germany, among others. Wal-Mart is considering _____ as a
growth strategy.
a. market penetration
b. product development
c. demographic markets
d. geographical markets
e. A and C
(Answer: d; p. 44; Moderate)
51. All of the following are reasons that a firm might want to abandon products or
markets, except which one?
a. The market environment might change, making some of the products less
profitable.
b. A strong competitor has opened shop next door.
c. The economic climate is showing signs of recovery.
d. The firm has grown too fast.
e. Competition has increased.
(Answer: c; p. 45; Moderate)
52. Companies increasingly are partnering with other members of the supply chain to
improve the performance of the customer _____.
a. experience
b. satisfaction
c. value-delivery network
d. needs and wants
e. none of the above
(Answer: c; p. 47; Moderate)
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53. In its quest to create customer value, McDonald’s is effective only to the extent that
_____.
a. it pioneered the fast-food industry
b. McDonald’s finely tuned system delivers a high standard of quality and service.
c. it successfully partners with its franchises, suppliers, and others to jointly deliver
exceptionally high customer value.
d. McDonald’s hamburgers are loved all over the world.
e. customers relate to the promotional gimmicks being displayed.
(Answer: c; p. 47; Moderate)
54. Multinationals like Honda Motor Co. and Wal-Mart stores have designed programs to
work closely with their suppliers to help them reduce their costs and improve quality.
This illustrates the importance of an efficient _____.
a. business model
b. low-cost operator
c. product mix
d. value-delivery network
e. problem-solver
(Answer: d; p. 47; Moderate)
55. _____ is the marketing logic by which a company hopes to achieve profitable
customer relationships.
a. Price
b. Being a low-cost operator
c. A consistent product mix
d. Marketing strategy
e. Implementing a differentiation strategy
(Answer: d; p. 49; Challenging)
56. Holiday Inn has divided the total customer market into smaller segments and selected
the most promising segments. Deciding how to service these segments is called
_____.
a. targeting
b. segmentation
c. positioning
d. all of the above
e. none of the above
(Answer: c; p. 50; Moderate)
57. A company’s marketing strategy entails three steps: _____, _____, and _____.
a. product; price; promotion
b. market segmentation; target marketing; market positioning
c. marketing analysis; planning; implementation
d. analysis; implementation; control
e. problem identification; information search; decision
(Answer: b; p. 50; Moderate)
44
58. What is wrong with the following mission statement? “The goal of American
Furniture is to sell modern home furnishings to today’s consumer.”
a. It is product oriented.
b. It is vague.
c. It is too generic.
d. All of the above.
e. None of the above.
(Answer: d; pp. 38–39; Moderate)
59. When the makers of a ballpoint pen state they are in the communication equipment
business, they are defining their mission too _____.
a. narrowly
b. realistically
c. specifically
d. broadly
e. early
(Answer: d; p. 38; Easy)
60. The first step in strategic planning is to _____.
a. set objectives and goals
b. develop the business portfolio
c. define the company mission
d. plan marketing strategies
e. identify a problem
(Answer: c; p. 37; Easy)
61. The first step in the marketing control process is to _____.
a. measure performance
b. evaluate performance
c. set goals
d. take corrective action
e. study the production process
(Answer: c; p. 57; Easy)
62. As Starbucks continues to grow, it is faced with myriad challenges during the
implementation of marketing plans. Hence, the marketing department must practice
constant _____.
a. strategic control
b. corrective action
c. performance measurement
d. marketing control
e. environmental scanning
(Answer: d; p. 57; Easy)
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63. The steps in the marketing control process include all, except which one?
a. Setting goals.
b. Measuring performance.
c. Taking corrective action.
d. Defining the mission.
e. None of the above.
(Answer: d; p. 57; Challenging)
64. To be successful at planning good strategies, companies must also be effective at
_____.
a. marketing analysis
b. marketing implementation
c. marketing control
d. marketing audits
e. C and D
(Answer: b; pp. 55–566; Moderate)
65. An increasingly large number of firms are changing their organizational focus from
_____ to _____.
a. product management; functional management
b. product management; territory management
c. brand management; customer relationship management
d. territory management; functional management
e. global management; regional management
(Answer: c; p. 57; Challenging)
66. According to the authors of your text, many managers think “implementation” is as
important as or even more important than “_____.”
a. analysis
b. control
c. strategy
d. customer focus
e. all of the above
(Answer: c; p. 55; Challenging)
67. Under the _____ organizational format of marketing departments, different marketing
activities are headed by a functional specialist.
a. geographic
b. product management
c. market management
d. customer-centered
e. functional
(Answer: e; p. 56; Moderate)
46
68. Modern marketing departments are arranged into the following ways, except which
one?
a. Functional organization.
b. Market management organization.
c. Product management organization.
d. Vertical organization.
e. Horizontal organization.
(Answer: d; p. 56; Moderate)
69. The _____ organizational format was founded by Procter and Gamble in 1929.
a. functional
b. market management
c. geographic
d. product management
e. vertical
(Answer: d; p. 56; Moderate)
70. The _____ organizational system’s main advantage is that the company is organized
around the needs of specific market segments.
a. product management
b. market management
c. geographic management
d. vertical management
e. functional management
(Answer: b; p. 57; Challenging)
71. More and more companies are shifting their brand management focus toward _____.
a. ERP
b. CRM
c. BCG
d. BPOs
e. ABCs
(Answer: b; p. 61; Moderate)
72. In the BCG matrix, income from _____ will help finance the company’s question
marks and stars.
a. dogs
b. SBUs
c. cash cows
d. sales revenue
e. overseas operations
(Answer: c; p. 41; Moderate)
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73. In the Boston Consulting Group approach, _____ provide(s) a measure of market
attractiveness.
a. relative market share
b. SBUs
c. cash cows
d. market growth rate
e. dogs
(Answer: d; p. 40; Moderate)
74. In the Boston Consulting Group approach, _____ serve(s) as a measure of company
strength in the market.
a. relative market share
b. SBUs
c. cash cows
d. market growth rate
e. none of the above
(Answer: a; p. 40; Moderate)
75. The Bank of New York bought Pershing, a part off-shore BPO firm with operations
in India, from Credit Suisse First Boston. The Bank of New York is pursing _____
for growth.
a. product development strategy
b. market development strategy
c. diversification strategy
d. market penetration strategy
e. product adaptation
(Answer: c; p. 45; Moderate)
True/False
76. In the Boston Consulting Group approach, relative market share provides a measure
of market attractiveness.
(Answer: False; p. 40; Moderate)
77. The product management organizational format was founded by Procter and Gamble.
(Answer: True; pp. 56–57; Moderate)
78. Marketing strategy is the marketing logic by which a company hopes to achieve
profitable customer relationships.
(Answer: True; p. 49; Challenging)
79. Starbucks has introduced a debit card that lets customers prepay for coffee and
snacks. Starbucks management is considering whether the company can achieve
deeper product development.
(Answer: False; p. 45; Moderate)
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80. The first step in strategic planning is to define the company mission.
(Answer: True; p. 37; Moderate)
81. The first step in the marketing control process is to measure performance.
(Answer: True; p. 57; Moderate)
82. The image a product reflects in the minds of consumers is called market
segmentation.
(Answer: False; p. 50; Easy)
83. Strategic control involves looking at whether a company’s basic strategies are well
matched to its opportunities.
(Answer: True; p. 57; Moderate)
84. Strategic market planning is the task of selecting an overall company strategy for
long-run survival and growth.
(Answer: True; p. 54; Moderate)
85. A market segment consists of consumers who respond in different ways to a given set
of marketing efforts.
(Answer: False; p. 50; Moderate)
86. Through annual marketing planning, the company decides what it wants to do with
each business unit.
(Answer: False; p. 54; Moderate)
87. Guided by marketing strategy, the company designs a marketing mix made up of
factors under its control—product, price, place, and promotion.
(Answer: True; p. 52; Moderate)
88. A company with limited resources might decide to serve all segments of a market.
(Answer: False; p. 50; Moderate)
89. Marketing mix is the set of uncontrollable, marketing tools that the firm can use to
influence the demand for its product.
(Answer: False; p. 52; Moderate)
90. The elements of the marketing mix commonly known as the “four Ps” include:
product, price, place, and promotion.
(Answer: True; p. 52; Easy)
91. Holiday Inn has divided the total customer market into smaller segments and selected
the most promising segments. Deciding what position it wants to occupy in these
segments is called targeting.
(Answer: False; p. 50; Moderate)
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92. At America Online, “we create customer connectivity, anytime, anywhere,” is a
product-oriented business definition.
(Answer: False; p. 38; Moderate)
93. At America Online, “we provide online services,” is a market-oriented business
definition.
(Answer: False; p. 38; Moderate)
94. “At Nike, we sell shoes” is a market-oriented business definition.
(Answer: False; p. 38; Moderate)
95. Revlon has clearly defined its “mission” of selling lifestyle and self-expression. As
the firm prepares to launch its strategic plan, the mission needs to be turned into a
detailed set of objectives that guide the whole company.
(Answer: True; p. 39; Moderate)
96. Making more sales to current customers without changing a firm’s products is market
penetration.
(Answer: True; p. 44; Moderate)
97. Unlike former strategic planning efforts, today’s strategic planning has been
centralized.
(Answer: False; p. 42; Moderate)
98. Mission statements must fit the market environment, as indicated here by the Girl
Scouts of America’s mission: “where girls grow strong.”
(Answer: True; p. 39; Moderate)
99. The collection of businesses and products that make up a company is called its
marketing strategy.
(Answer: False; p. 49; Easy)
100. An SBU can be a company division, a product line within a division, or sometimes a
single product or brand.
(Answer: True; p. 40; Easy)
101. In the Boston Consulting Group approach, relative market share serves as a measure
of company strength in the market.
(Answer: False; p. 40; Easy)
102. More and more companies are shifting their brand management focus toward
customer relationship management.
(Answer: True; p. 61; Easy)
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103. ABC Fortunes has just developed a formal statement of its purpose. This firm has put
together a mission statement.
(Answer: True; p. 38; Easy)
104. Mission statements should be realistic and general in nature.
(Answer: False; p. 39; Moderate)
105. Mission statements should both fit the market environment and be motivating.
(Answer: True; p. 39; Easy)
Essay
106. Define strategic planning. Discuss the steps involved.
The process of developing and maintaining a strategic fit between the organization’s
goals and capabilities and its changing marketing opportunities is called strategic
market planning. At the outset, beginning at the corporate level, each company must
define its overall purpose and mission. What is our business? Who is the customer?
What do our customers value? Answers to these questions are crucial in writing a
clear mission statement. Thus, mission statements need to be carefully defined in
terms of customer needs. Missions should be realistic, motivating, and fit the market
environment. Missions lead to setting business and marketing objectives/goals in the
planning process. This is followed by decisions regarding what portfolio of
businesses and products is best for the company and how much support to give each
one. Next, each business and product develops detailed marketing and other
functional strategies. In this step, plans are drawn at the business unit, product, and
market levels in support of company wide plans.
(p. 37; Moderate)
107. What is business portfolio planning? Discuss the Boston Consulting Group’s product
portfolio analysis method.
A business portfolio is the collection of businesses and products that make up the
company. Business portfolio planning entails two steps. First, there is an analysis of
the company’s current business portfolio, followed by what businesses should receive
more, less, or no investment. Second, it must shape the future portfolio by developing
strategies for growth and downsizing. The Boston Consulting group matrix evaluates
SBUs on two important dimensions: the attractiveness of the SBU’s market or
industry growth rate and the strength of the SBU’s position or relative market share in
that market or industry. The growth-share matrix defines four types of SBUs: stars,
cash cows, question marks, and dogs.
(pp. 40–41; Moderate)
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108. What are some problems with matrix approaches?
The BCG and other portfolio planning approaches can be difficult to execute, time
consuming, and also costly to implement. Defining SBUs and the measurement of
relative market share and growth can be a difficult task too. A serious flaw with these
approaches is that although the approaches are helpful for classifying current
businesses, little or no advice is available for future planning. There are several
examples of firms that have plunged into new unrelated market, only to scale back
and get back to basics based on their core competencies.
(pp. 40–411; Moderate)
109. The BCG is a useful approach to evaluate current businesses. What devices are
available to firms to identify growth opportunities in the future?
The product/market expansion grid is a useful device for identifying growth
opportunities in the future. There are four strategies available to companies: market
penetration, market development, product development, and diversification. Market
penetration entails making more sales to current customers without changing
products. Market development involves identifying and developing new markets for a
company’s products. New markets include demographic groups and geographic
regions, among others. Companies can consider product development, offering
modified or new products to current markets. Diversifying companies might consider
acquiring or starting new businesses unrelated to their core competencies.
Diversifying too broadly can be detrimental tin the long run.
(p. 44; Moderate)
110. What does the term “value-delivery network” mean? Explain.
For decades, marketers have traditionally created value to satisfy customer needs and
wants. Today, the manufacturer or retailer needs to look beyond its own value chain
and into the value chains of suppliers and distributors. More companies are partnering
with other members of the supply chain to improve the performance of the customer
value-delivery network. When Wal-Mart supplies vital sales data to P&G regarding
its brands, it is helping P&G streamline its operations and reduce costs. This
information in turn gets transmitted to P&G’s vendors, who save money in turn. An
efficient supply chain process benefits customers.
(p. 47; Moderate)
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111. According to the authors of your text, the four Ps concept of the marketing mix takes
a seller’s view of the market, not the buyer’s view. Explain.
In today’s day and age of customer relationship marketing, the four Ps are described
as the four Cs. In lieu of product, there is customer solution; that is, customers buy
solutions to their problems or look for value in products. Customers are more
interested in the total costs of obtaining, using, and disposing of a product. That is,
customer cost replaces price in customer relationships. The place element of the
marketing mix focuses on convenience. Convenience in availability is the central
focus of customers. Finally, customers and marketers want to-way communication.
(p. 53; Challenging)
112. Define marketing strategy. Discuss the steps in formulating marketing strategy.
The marketing logic by which a company hopes to achieve profitable relationships is
called its marketing strategy. Marketing strategy formulation entails three specific
steps: market segmentation, targeting, and positioning. The process of dividing a
market into distinct groups of buyers with different needs, characteristics, or behavior
is called market segmentation. Target marketing involves evaluating each market
segment’s attractiveness and selecting one or more segments to enter. A company
should target segments in which it can profitably generate the greatest customer value
and sustain it over time. Positioning is defined as the image a product projects in the
eyes of consumers. Effective positioning begins with actually differentiating the
company’s marketing offer so that it gives consumers greater value.
(p. 55; Moderate)
113. Define marketing planning. Briefly outline the major steps in a marketing plan.
Marketing planning involves deciding on marketing strategies that will help the
company achieve its overall strategic objectives. A detailed marketing plan is needed
at the business, product, or brand level. An executive summary is the first step in the
plan. It contains a brief summary of the main goals and recommendations of the plan
for management review. The current marketing situation describing the target market
and company’s position in it, including information about the market, product
performance, competition, and distribution is presented. In the next section, major
threats and opportunities are presented. The plan then states major objectives for the
brand and outlines the specifics of a marketing strategy for achieving them. In
addition, action programs for implementing the marketing strategy along with the
details of a supporting marketing budget are presented. The final section outlines the
controls used to monitor progress and corrective action.
(p. 54; Moderate)
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114. Marketing departments are organized in several ways. Discuss the most common
forms of marketing organizations.
Some common forms of marketing department organization include functional
organization, geographical organization, product management organization and
market management organization. Under a functional department organization, a
functional specialist-sales manager, advertising manager, or market research manager
is responsible for all marketing activities. Under a geographic organization, sales and
marketing people are assigned to specific countries, regions, and districts. Product
management organization first appeared at P&G in the 1930s. Under this approach, a
product manager develops and implements a complete strategy and marketing
program for a specific product or brand. Under a market or customer management
organization, the company is organized around the needs of specific customer
segments. Herein, one product line is sold to many different types of markets and
customers that have different needs and preferences.
(p. 56; Moderate)
115. Briefly mention the components of a strategic plan.
A strategic plan consists of a market-oriented mission statement. This plan must also
set company objectives and goals. It designates the business portfolio of businesses
and products it will pursue. Strategies for growth and downsizing must be put in
place. Last but not least, a plan for partnering to build customer relationships must be
added.
(p. 37; Easy)
APPLICATION CONTENT: Multiple-Choice Questions
116. The company you work for is on the “right track” because its mission statement fits
the _____ environment.
a. economic
b. political-legal
c. social-cultural
d. market
e. natural
(Answer: d; p. 39; Moderate)
117. Paul Pierce is busy working with other managers evaluating the products and
businesses making up their company. Paul is engaged in ____.
a. strategic business unit analysis
b. preparing a business portfolio
c. portfolio analysis
d. marketing planning
e. marketing auditing
(Answer: c; p. 40; Moderate)
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118. Kimball Gardens is a company that operates as two distinctive businesses—one that
sells lawn and garden products and one that markets booklets. Each business is called
a _____.
a. separate entity
b. strategic business unit (SBU)
c. profit center
d. division
e. business portfolio
(Answer: b; p. 40; Challenging)
119. Mountain Home Farms is now using the product/market expansion grid. The owners
have found it to be quite useful for identifying _____.
a. target markets
b. growth opportunities
c. key customers
d. new products
e. suppliers
(Answer: b; p. 44; Easy)
120. You have been given the assignment to develop new markets for your current
products and services. Which of the following might work?
a. Reviewing new demographic markets.
b. Reviewing new geographic markets.
c. Reviewing current sales records.
d. Reviewing current customer attitudes.
e. A and B
(Answer: d; p. 44; Challenging)
121. Your textbook suggested that Starbucks might consider a _____ strategy. This
strategy would allow the company to start up or buy businesses outside of its current
products and markets.
a. product development
b. market development
c. market penetration
d. diversification
e. B or C
(Answer: d; p. 45; Easy)
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122. Lucy Ortiz has just prepared a PowerPoint presentation of the marketing process to
show at a sales meeting. If you look closely, you will see that _____ stand(s) in the
center.
a. sales goals
b. customers
c. company objectives
d. customer retention
e. A and C
(Answer: b; p. 46; Moderate)
123. TelStar Plastics is in the process of dividing a market into distinct groups of buyers
with different needs, characteristics, or behavior who might require separate products
or marketing programs. Which is this firm doing?
a. Market development.
b. Market diversification.
c. Market penetration.
d. Market skimming.
e. Market segmentation.
(Answer: e; p. 50; Easy)
124. Paul Pendergraff has discovered a group of potential customers who seem to respond
in a similar way to a given set of marketing efforts. Paul has discovered a(n) ______.
a. target market
b. market segment
c. market
d. gold mine
e. undefined niche
(Answer: b; p. 50; Moderate)
125. Paul Pendergraff is evaluating each market segment’s attractiveness and is in the
process of selecting one or more segments to enter. What is Paul doing?
a. Target marketing.
b. Marketing segmenting.
c. Marketing.
d. Market positioning.
e. Selecting VALS.
(Answer: a; p. 50; Easy)
126. Jill Reno has researched new markets and has decided which segments to enter. Next
she should decide what _____ her company should occupy in those segments.
a. position
b. place
c. rank
d. rating
e. percentage of space
(Answer: a; p. 50; Easy)
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127. Environmental Service Company wants to practice effective positioning. The owners
have discovered that it begins with actually _____ the company’s marketing offer so
that it gives consumers more value.
a. differentiating
b. promoting
c. advertising
d. selling
e. representing
(Answer: a; p. 52; Moderate)
128. Favorite Memories specializes in serving market segments that major competitors
overlook and ignore. What strategy does this firm use?
a. Market follower.
b. Marketer challenger.
c. Market seeker.
d. Market nicher.
e. None of the above.
(Answer: d; p. 50; Easy)
129. Emerson Studios, a chain of 25 portrait stores in five states, has organized its
marketing organization in to different marketing activities that are headed by
specialists. What is this organization called?
a. Geographic.
b. Product.
c. Organic.
d. Functional.
e. Market.
(Answer: d; p. 56; Moderate)
130. Peter Cramer is involved in evaluating the results of marketing strategies and plans
and taking corrective action to ensure that objectives are attained. What do we call
Peter’s current work?
a. Marketing control.
b. Marketing planning.
c. Strategic planning.
d. Tactical planning.
e. Auditing.
(Answer: a; p. 57; Moderate)
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131. Juanita Castro is looking at whether her company’s strategies are well matched to its
opportunities. It seems that Juanita is into _____.
a. marketing control
b. operating control
c. strategic control
d. loss of control
e. marketing auditing
(Answer: c; p. 57; Easy)
132. The pharmaceuticals division of Omni Healthcare holds low market share in a highgrowth market. In order to increase market share, managers may decide to _____.
a. continually add new products in the market
b. implement a harvest strategy
c. use money from a cash cow to promote the pharmaceuticals division
d. divest the SBU
e. A or C
(Answer: e; p. 58; Challenging)
133. Acme, Inc., has modified the production processes of its widgets and gadgets in order
to tap into the Eastern European market. Acme is likely following a _____ strategy.
a. market penetration
b. market development
c. diversification
d. A or C
e. product development
(Answer: b; p. 44; Challenging)
134. Wal-Mart relies on sound relationships with its low-cost suppliers in order to pass
low prices on to consumers. Thus, forming a _____ is crucial to Wal-Mart’s success.
a. value-delivery network
b. value chain
c. customer relationship management policy
d. market concept philosophy
e. diversification strategy
(Answer: a; p. 47; Challenging)
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135. To move a question mark to a star, what might a marketer have to do?
a. Promote aggressively.
b. Hold market share at the same level.
c. Increase price.
d. increase market share.
e. A or D
(Answer: e; p. 41; Challenging)
Short Answer
136. Why should a mission statement be market oriented instead of product or technology
oriented?
A market-oriented mission statement defines the business in terms of customer needs;
products and technologies become outdated, but basic market needs may last forever.
(p. 38; Moderate)
137. Why should a mission statement be “motivating” instead of stated in terms of sales or
profits?
Sales and profits are only a reward for undertaking a useful activity; a company’s
employees need to feel that their work is significant.
(p. 39; Moderate)
138. What provides the best business portfolio?
The best business portfolio is the one that best fits the company’s strengths and
weaknesses to environmental opportunities.
(p. 40; Challenging)
139. What is a strategic business unit (SBU)?
An SBU is a key part of a business—whether a product, product line, department, or
an entire division—where managers place a major emphasis; an SBU is typically a
major profit center with a separate mission.
(p. 40; Easy)
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140. Into what BCG quadrant does a high-share, high-growth SBU fall?
It falls into the “star” category.
(p. 41; Easy)
141. What type of strategy might a cash cow follow?
A cash cow will generate cash that could, in turn, be used to finance and/or promote
question marks.
(p. 41; Easy)
142. According to the product/market expansion grid, what strategy would Starbucks
follow when attempting to increase sales of current products to current customers?
Starbucks would follow a market penetration strategy in this scenario.
(p. 44; Moderate)
143. How might Starbucks implement a market development strategy?
Starbucks might attempt to identify and develop new markets for its current products.
(p. 44; Challenging)
144. According to the product/market expansion grid, what strategy would McDonald’s
follow when offering a salad bar option during lunch hours?
In this scenario, McDonald’s would follow a product development strategy.
(p. 45; Moderate)
145. Explain how a company begins the strategic planning process at the corporate level.
At the corporate level, the company starts the strategic planning process by defining
its overall purpose and mission; the mission is then turned into detailed supporting
objectives.
(p. 37; Challenging)
146. How might the BCG matrix represent a life cycle?
Many SBUs start out as question marks, then move into the star category if they
succeed; stars eventually become cash cows, then perhaps, dogs.
(p. 41; Moderate)
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147. Into what quadrant of the product/market expansion grid would a “new and
improved” product fall?
The “new and improved” product would fall into the product development quadrant.
(p. 45; Moderate)
148. Give two situations in which a company may develop strategies for downsizing its
business portfolio.
Such strategies may prevail if a company has grown too fast or has entered areas
where it lacks experience, for example.
(p. 45; Challenging)
149. How are partner relationship management and the value chain related?
Marketers must work closely with partners in other company departments to form an
effective value chain that serves the customer.
(p. 46; Easy)
150. Explain how a marketer of baking soda may attempt to attract more than one market
segment.
Some consumers buy baking soda as a baking ingredient and some consumers buy
baking soda to use as a deodorizer, for example. The marketer will focus on both uses
in the marketing mix, such as how the product is promoted.
(p. 50; Challenging)
151. Give an example of a product for which segmenting the market would not be useful.
There are numerous examples of such products that can be mass marketed. One
example is Tylenol; focusing on demographics or geographics, for example, would
not be useful.
(p. 50; Moderate)
152. How might a marketer of pens alter the “product” portion of the marketing mix when
targeting female college students versus male college students?
The marketer may use feminine colors and a spiral-flower stripe, for example, when
marketing its pens to the females; when targeting males, more neutral colors might be
used.
(p. 52; Moderate)
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153. What role does the marketing mix play in positioning?
The marketing mix creates a portion of the marketer’s image in the marketplace. The
marketing mix creates a “package” with which consumers can compare competitors.
(p. 53; Easy)
154. Why is marketing analysis such an important part of marketing management?
This function allows the marketer to analyze environmental opportunities and threats
which, in turn, allows the marketer to determine which opportunities to pursue. From
this starting point, the market can continue with planning, implementation, and
control.
(p. 54; Challenging)
155. Give a situation in which the suggested strategy for a dog might not be to divest.
Consider a new technology that is being launched into the market. If managers of the
dog are merely waiting to implement that new technology or to somehow incorporate
it into the dog, moving the dog into a different BCG quadrant, divesting would not
have been practical.
(p. 41; Moderate)
Scenario
Fun-Spot Fun Park began as a small amusement park in 1985. With nothing more
than a merry-go-round, a slide, pony rides, and an ice cream stand, Fun-Spot grew into a
popular family attraction with 20 rides, a restaurant, and an outdoor performing arts
theater.
“My wife, Gail, and I didn’t know what we were getting into,” commented Ron
Hart, the owner. “We just knew that weekenders coming to the lakes in our rural area
represented an untapped market.”
Today, thousands of visitors flock to Fun-Spot—families, children of all ages,
even senior citizens who enjoy strolling through the gardens and arbor.
“There’s something here for everyone,” Gail Hart said with a smile. “Dozens of
companies hold annual company picnics here. We have welcomed class field trips. And
we even had one wedding here at the park!”
“Here’s the funny thing,” Ron chimed in. “We really don’t know why we’ve been
so successful! There is nothing else like Fun-Spot Fun Park in the area. We were just
lucky.”
“I think it’s the ambience of the park,” Gail added, “that has brought so many
visitors. We provide a ‘total package’ of entertainment. Plus, we try to change our rides
and various attractions from time to time.”
Ron and Gail Hart admitted that making every visitor happy is a priority. “That
has always been our philosophy,” they said. “And we’ve always been able to deliver on
that because we’ve never allowed ourselves to grow too big too quickly.”
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156. Describe two critical factors impacting the strategic plan at Fun-Spot.
Answers will vary; however, Ron and Gail’s continued success will depend on their
ability to make visitors as happy as possible and their ability to continue to provide a
variety of entertainment options.
(p. 37; Moderate)
157. Would you consider Fun-Spot’s mission statement to be market oriented? Explain.
The mission at Fun-Spot is defined in terms of customer needs. Providing the fastest
roller coaster, the greatest variety of ice cream flavors, or the scariest spook house is
not as important, for example, as providing top-notch customer attention and
attractions appealing to a variety of visitors at this small, rural park.
(p. 38; Moderate)
158. At this point, how do Ron and Gail monitor Fun-Spot’s business portfolio?
Ron and Gail make a continuous assessment of Fun-Spot’s strengths and weaknesses,
compared to the opportunities in the environment. If a competitor should appear
within a relatively close distance, for example, Ron and Gail will likely have to alter
the business portfolio to offset the competition.
(p. 40; Challenging)
159. Into which quadrant of the BCG matrix does Fun-Spot fall? Why?
Fun-Spot Fun Park is a star, currently situated in a high-growth, high-share position.
(p. 41; Easy)
160. How might Ron and Gail implement a market penetration strategy at Fun-Spot?
Ron and Gail would maintain their current entertainment offering and continue to
deliver customer attention to their existing customers.
(p. 44; Moderate)
161. In what way do Ron and Gail implement a product development strategy at FunSpot?
The owners at Fun-Spot strive to provide new offerings and entertainment options for
their visitors.
(p. 45; Moderate)
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162. What are three possible emerging conditions that may cause the Hart’s to develop a
downsizing strategy at Fun-Spot?
Over time, less profitable operations might need to be eliminated; for example,
children may love pony rides but maintaining the animals in a zoo setting may
become costly. An economic recession or a new, close-by competitor may lead to
downsizing.
(p. 45; Challenging)
163. Who comprises Fun-Spot’s target market?
The target market here includes anyone who desires a relaxing, fun day or evening at
a small amusement park. Families with children are likely the primary target market.
(p. 50; Easy)
164. If you had to select a primary market segment that is crucial to the success of FunSpot, who would it be? Why?
Answers will vary; however, on a weekly basis, Fun-Spot likely relies on families
with children for a steady stream of revenues.
(p. 50; Moderate)
165. What role do service products play at Fun-Spot?
With the exception of meals and refreshments, most of what visitors receive at FunSpot are service products.
(p. 53; Easy)
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