BADM 770 MKTG Exam Review
All: here is some information you may find useful for the exam.
First: The exam is comprehensive, and covers chapters 1- 13 in the Walker Mullins text.
Second: the exam is made of two parts. The first is ten short-answer items randomly selected from the items listed
below. These questions were both sourced from the authors’ test bank and my personal test bank. Thus, the items
below reflect material that is both from the text and lectures. The second part of the exam is three questions regarding
a hypothetical firm and its decisions regarding segmentation. You will be asked to look at the feature of the firm and the
market, and decide the firms best target market.
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Strategy has three levels: corporate, business, and marketing. What is the primary focus of marketing-level
strategies? What critical issues do they focus?
a. Keith B
i. Primary focus is to effectively allocate marketing resources and activities to accomplish the
firm’s objectives within a specific product market. (pg 10)
ii. Critical focus is specifying the target market for a particular product or product line. Firms seek
competitive advantage and synergy through a well-integrated program of marketing mix
elements (4 P’s) tailored to the needs and wants of potential customers in that target market.
(pg 10)
What is a marketing plan? Explain its importance.
a. Keith B
i. Marketing Plan: A written document detailing current situation for customers, competitors, and
external environment that provides guidelines for objectives, marketing actions, and resource
allocations over a period for an existing or proposed product or service. (pg 24)
ii. Importance: Unless all elements are written down, there will be loopholes and
misunderstanding. It also provides concrete history of strategy and performance for the firm.
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Why are some firms not focused on their consumers or competitors but rather have a production or selling
orientation? Relate your response in three areas: early entrants in newly emerging industries, growth
industries, mature industries.
a. Drew K.
i. Why production or selling orientation? (Pages 14, 15, and 17)
1. Early entrants in newly emerging industries:
a. few relatively strong competitors during formative years
b. demand outstrips supply
c. production problems and resource constraints more pressing issues
d. Growth industries:
2. Growth industries:
a. Increased competition generates aggressive promotional activity(i.e. sales
orientation)
3. Mature industries:
a. Strategic inertia – automatic continuation of strategies successful in the past
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Describe the difference between a goal and an objective, and list the four components of an objective.
a. Keith B.
i. Goal: The thing that an organization hopes to achieve during its time in operation and vision for
future growth and success of the business. “A direction” (From Lecture Ch. 1)
ii. Objective: A statement of what it is to be accomplished thru business and marketing activities. “
A destination” (From Lecture Ch. 1)
1. A performance dimension
2. Measure of Index
3. Target or Hurdle Level
4. Time Frame
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Using Exhibit 2.5 (page 42 in the text), the Alternative Corporate Growth Strategies (also known as Ansoff’s
Product Market Growth Matrix), list the characteristics of each cell.
Amy DesLauriers Pg. 42-44
- Market penetration Strategy: increase market share & increase product usage (current product & market)
- Product Development Strategy: introduce a new or improved product to an existing or current market, this
could be an improvement to an existing product, a line extension or just a new product for the same market
(same market, new product)
- Market Development Strategy: expanding into a new market with an existing product to find new
customers, geographic expansion (same product, new market)
- Diversification Strategy: Seek out a new market to introduce a new product for that market, could be done
through vertical integration, concentric or similar business diversification or an unrelated conglomerate
diversification mainly done for financial reasons (new product to a new market)
Define and give an example for each cell in the BCG Matrix. (Gillian)
pg. 45-46 (1) Stars - Market leader in high growth industry; net users of cash in the short run
but as their industries mature, they become cash cows
(2) Cash Cows - They have a high share of low growth markets; they are the primary generators
of cash in a corporation
(3) Question Marks - Businesses in high growth industries with low market share; they require
large amounts of cash to build market share. Can become a star if successful or a dog if not.
(4) Dogs - Low share business in low growth market; may generate low profits or losses.
Kristen: (pg 46)
Star: High MGR & high market share = Apple iPhone
Cash cow: Low MGR & high market share = Coca-Cola
Question mark: High MGR & low market share = Apple computers
Dog: Low MGR & low market share = Blockbuster video
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List and describe the sources of synergy for a firm.
a. Ron P.
I.
pg. 51-53. Knowledge- Based Synergies. The performance of one business can be enhanced by the
transfer of competencies, knowledge, or customer-related intangibles- such as brand-name recognition
and reputation- from other units within the firm. Example: Canon- Image processing & quality
reputation transferred to office copier business. In part, a function of the corporation’s scope and
mission. Enhanced also by organizational structure and allocation of resources. Example: Centralized
R&D can be more effective for discovering new technologies with potential applications across multiple
businesses. Strong corporate-level coordination helps in global markets.
II.
Corporate Identity & the Corporate Brand. A strong corporate brand can help a firm stand out from
competitors and give it a sustainable advantage. Corporate identity flows from communications,
impressions, and personality projected by an organization. Shaped by a firm’s mission and values,
functional competencies, quality and design of its goods and services, marketing communications,
actions of personnel, the image generated by various corporate activities, other factors. Formal policies
and guidelines can help ensure all messages and sensory images reflect corporate values, personality,
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and competencies. Corporate identity programs help create synergies which enhance marketing efforts.
Product designs, packaging, advertising, promotional materials strengthen the impact of other
impressions the firm makes with customers, employees, shareholders, e.g. ‘bigger bang for the buck’.
Shared Resources. Sharing resources, functions, and facilities across business units can increase
economies of scale or experience-curve effects. It can improve the efficiency of each of the businesses
involved. May not produce positive synergies for all business units. Can limit flexibility and lower the
ability to adapt to changing markets, opportunities. If competitive strategy is focused on new-product
development and in rapidly changing markets, sharing operational facilities and functions may hinder
more than help.
List and describe the four characteristics of strategic business units. (Gillian)
pg. 60 (1) Homogeneous set of markets to serve with a limited number of related technologies
(2) A unique set of product markets (no other SBU in the firm competes for the same
customers)
(3) Control over factors needed for successful performance (such as production, engineering,
marketing and distribution)
(4) Responsibility for their own profitability
Ron P. pg. 60
...and describe:
I.
Minimizing diversity across a SBU’s product-market entries enables the unit’s manager to better formulate and
implement a coherent and internally consistent business strategy.
II.
No other SBU within the firm competes for the same customers with similar products. Thus, the firm avoids
duplication of effort and maximizes economies of scale within its SBUs.
III.
SBU may share resources, but should determine how its share of the joint resource, (factors such as production,
R&D and engineering, marketing, and distribution), is used to effectively carry out its strategy.
IV.
Each SBU should be profitable.
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Identify and describe the three dimensions that define the scope and mission of individual SBUs in a firm.
a. Erica V. (8th edition page 62)
i. Technical compatibility - particularly with respect to product technologies and operational
requirements, such as the use of similar production facilities and engineering skills.
ii. Similarity in customer needs - or the product benefits sought by customers in the target
markets.
iii. Similarity in the personal characteristics - or behavior patterns of customers in the target
markets.
Michael Porter distinguishes three business-level competitive strategies, (1) overall cost leadership, (2)
differentiation, (3) focus. Describe each.
a. Michelle K.
i. Overall Cost Leader: lowest price in the industry
ii. Differentiation: superior product quality, design or service
iii. Focus: avoids direct competition by concentrating (specializing) on niche markets
Robert Miles and Charles Snow classify business units into four strategic types: (1) prospectors, (2)
defenders, (3) analyzers, and (4) reactors. Briefly describe each.
a. Michelle K.
i. Prospectors: nimble, values being First Mover in new products/markets. Broad product-market
domain, heavy emphasis on new product development
ii. Defender: looking for stability, limited range of products, protects through lower prices, higher
quality or better services
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iii. Analyzer: Slow moving, maintains stable product line but carefully develops new products if
safely profitable, often second or third mover
iv. Reactor: lack of defined strategy, risk averse, not aggressive, responds when forced into action
by environment, no emphasis on new product development
Explain the appropriate conditions for a prospector strategy.
a. Erica V. (8th edition page 73-74) - Exhibit 3.5
i. Appropriate conditions for prospector strategy include:
● Unstable, rapidly changing environments resulting from new technology, shifting
customer needs, or both.
● Tend to be at early stage in life cycles and offer many opportunities for new product
market entries.
● Industry structure is unstable because of few competitors are present.
● Most successful prospectors are usually strong in and devote resources to R&D and
product engineering and market research.
Business strategies differ in scope. First, define strategic scope, and second describe the strategic scope for
defenders, prospectors and analyzers.
a. Jeremy H. / Courtney
i. Pg. 68 - Strategic Scope is the breadth and stability of a business’s domain it intends to operate
in. Defenders have a mature/stable/well defined domain, mature technology and customer
segments. Prospectors have broad/dynamic domains and technology and customer segments
that are not well established. Analyzers have a mixture of defender and prospector strategies.
Business strategies differ in synergy. First, define strategic synergy, and second describe the strategic
synergy for defenders, prospectors and analyzers.
a. Jeremy H. / Courtney
i. Pg. 70 - Strategic synergy is a strategy companies use to increase productivity by the sharing of
facilities or programs. Defenders should seek synergies that will make them more efficient and
increase economies of scale by reducing unit costs. Prospectors should avoid sharing facilities
and programs because it will hurt the ability needed to adapt quickly to changes in the market.
It’s better for prospectors to share technology / marketing skills. Analyzers are similar to
prospectors, but not as extreme.
There are three criteria to measure goals and objectives: (1) effectiveness, (2) efficiency, and (3)
adaptability. Define each and indicate which criteria defenders are superior, and which criteria prospectors
are superior.
a. Jeremy H. / Courtney
i. Pg. 68-69 ● Effectiveness is the success of a business’s products and programs relative to those of its
competitors in the market. Effectiveness is commonly measured by such items as sales
growth relative to competitors or changes in market share. Prospectors are superior at
effectiveness.
● Efficiency is the outcomes of a business’s programs relative to the resources used in
implementing them. Measured in profitability as a percent of sales and return on
investment. Defenders are superior at efficiency.
● Adaptability is the business’s success in responding over time to changing conditions
and opportunities in the environment. Typically measured by the number of new
products introduced or the percentage of sales account for by products introduced.
Prospectors are superior adaptors.
Define market and industry, and describe why it is important for decision makers to understand the
difference between the two.
a. (Kayla Sorsen)
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i. A market is defined as being composed of individuals or organizations who are interested in and
willing to buy a good or service to obtain benefits that will satisfy a particular need or who want
and have the resources to engage in such a transaction. (87)
ii. An industry is a group of firms that offer a product or class of products that are similar and are
close substitutes for one another. (87)
iii. Markets are comprised of buyers; industries are comprised of sellers. (87)
iv. Decision makers need to be aware of the distinction between markets and industries, because
by only viewing those within one’s own industry as competition, a marketer can be overlooking
real rivals and risks (87)
Describe the purpose of Porter’s Five Competitive Forces model, and identify what the model does (or
explains) for managers.
a. (Kayla Sorsen)
i. The purpose of Porter’s 5 Forces Model is to determine an industry’s attractiveness in the longterm. This is determined by (96):
● rivalry among present competitors
● threat of new entrants into the industry
● the bargaining power of suppliers
● the bargaining power of buyers
● threat of substitute products
ii. This model helps managers explain why some industries are consistently more profitable than
others, and provides insight into which resources are required and which strategies should be
adopted to be successful (96).
Porter’s Five Forces model suggests that industries with high rivalry are less attractive than industries with
low rivalry. First, indicate why this thesis is valid, and second, list the conditions that influence rivalry.
a. Kayla Sorsen (pg 96, 97)
i. The thesis is valid. As rivalry increases, profitability decreases
ii. Rivalry is greater under the following conditions:
● There is high investment intensity, that is, the amount of fixed and working capital
required to produce a dollar of sales is large
● there are many small firms in an industry or no dominant firms exist
● There is little product differentiation
● it’s easy for customers to switch from one seller’s products to those of others
Part of our understanding markets at the micro level suggests that there ought to be a clearly identified
source of customer pain. What does that mean?
a. (Gilbert Tsoi, Page 101)
i. This means that a product must provide a benefit to the target customer. The product must be
able to clearly identify a group of potential customers, based on its ability to address their
concerns or pain.
What does it mean that entering a market without a source of sustainable competitive advantage is a trap?
Indicate the three questions that test whether a firm has a competitive advantage.
Lisa V – page 103:
When entering a market with something new, it is important to have a sustainable competitive
advantage otherwise the competitors will just copy what you do. Thus, entering a market without a
source of sustainable competitive advantage is a trap.
The three questions that test whether a firm has a competitive advantage include:
Does the business posses something proprietary that other companies cannot easily duplicate or
imitate?
Does the business have or can develop superior organizational processes, capabilities, or
resources that others would find it difficult to imitate or duplicate?
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Is the company’s business model economically viable?
What is a critical success factor (CSF)? Give two examples of CSFs.
Lisa V – page 104 - 105:
Critical success factors (CSF) are factors that separate the winners from the also-rans.
Location is a CSF in the retailing industry. Having a well-connected team is also a CSF for many
industries.
Define the marketing research task.
Lisa V – page 129 - 130:
Marketing research task is the design, collection, analysis, and reporting of research intended to gather
data pertinent to a particular marketing challenge or situation. Marketing research is intended to
address carefully defined marketing problems or opportunities.
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How is marketing research conducted?
Nicolette H: (130 - Exhibit 5.13)
1. Identify managerial problem and establish research objectives.
2. Determine data sources and types of data and research approaches required.
3. Design research; type of study, data collection approach, sample, etc.
4. Collect data.
5. Analyze data.
6. Report results to the decision-maker.
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Outline the diffusion of innovation process and identify the two adopter groups who will pay the highest
prices for an innovation.
C. Ben Uphoff
Page 120
The diffusion of innovation theory seeks to explain the adoption of an innovative product or
service over time among a group of potential buyers. Lack of awareness and limited distribution typically
limit early adoption. This is useful to managers in predicting the likely adoption rate for new and
innovative goods or services. The two adopter groups who pay the highest for innovation are first off,
the innovators, who are more adventurous and tend to have high incomes, will pay more. Also, the early
adopters, who serve as opinion leaders, will spend more on innovation as well.
What is an evidence based forecast?
a. Colin Oster
i. Pg. 114 - Evidence based forecast is the opposite of a wild guess. It uses techniques such as
quantitative methods, observations, surveys, analogies, judgements, and market tests. These
methods are used to estimate market potential and forecasting sales.
Define and describe the difference between top-down and bottom-up forecasting.
a. Colin Oster
i. Pg. 114 - Top-down forecasting consists of a central person or persons who take the
responsibility for forecasting and prepare an overall forecast, perhaps using aggregate economic
data, current sales trends, or other methods. Under the bottom-up approach, which is common
in decentralized firms, each part of the firm prepares its own sales forecast, and the parts are
aggregated to create the forecast for the firm as a whole.
Describe the analogy research technique, and list its advantages and disadvantages.
a. Colin Oster
i. Pg. 117 - The analogy approach is often used when neither statistical methods nor observations
are possible. Under this method, the product is compared with similar historical data that are
available. This method is also used for new-to-the-world technology products. Rather than
conduct surveys to customers about a product they can’t imagine, forecasters consider related
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product introductions in which the new products may be compared. Advantages - Beneficial for
new-to-the-world products for which prototypes are not available or expensive to produce.
Limitations - The new product and its pricing are never exactly like that to which the analogy is
drawn. Second, market and competitive conditions may vary from when the analogous product
was launched.
Explain Step 5 of constructing a market-attractiveness/competitive-position matrix for evaluating potential
target markets
a. .John Abbate (pg. 148) Choose segments to target, allocate resources: should be positive on one of two
dimensions of market attractiveness and potential competitive position and moderately positive on the
other. However managers may decide to enter market without these requisites under these conditions:
1. Market attractiveness and competitive position likely to improve in near future. 2. These markets are
seen as stepping stones to larger, more attractive markets 3. Shared costs or synergies are present,
benefiting their entry.
Explain the niche-market targeting strategy.
a. Kristen - Pg. 149: The niche-market targeting strategy entails serving one or more specific segments that
consist of a sufficient number of customers seeking somewhat specialized benefits from a good or
service. This strategy is designed to avoid direct competition with bigger firms that are pursuing bigger
segments. An example of a firm employing a niche-market targeting strategy is Starbucks coffee.
Explain the growth-market targeting strategy.
a. Jim Donovan(pg 150)
i. The growth-market strategy often targets one or more fast-growing segments, even though
these segments may not currently be very large. It is a strategy favored by smaller companies to
avoid direct confrontations with larger firms while building volume and share. This strategy
usually requires strong R&D and marketing capabilities to identify and develop products
appealing to newly emerging user segments, plus the resources to finance rapid growth. The
problem is that fast growth, if sustained, attracts large competitors.
Outline and describe the three important steps in the market segmentation process.
a. Kristen – Pg. 137: The three important steps in the market segmentation process are:
i. Identify a homogenous segment that differs from other segments: identify one or more groups
of prospective buyers in regard to their wants, needs and/or likely responses to differences in
the 4Ps (product, price, promotion, place)
ii. Specify criteria that define the segment: this criteria should describe the segments clearly so
members can be easily identified so marketers can easily reach the segment’s customers and
can determine whether or not an individual is within the target market.
iii. Determine segment size and potential: the size and market potential of each segment should be
determined to be utilized in prioritizing which segments to pursue.
What is segmentation, and describe why it is necessary.
a. Sajjad Ibrahim (pg 135)
i. Market Segmentation is the process by which a market is divided into distinct subsets of
customers with similar needs and characteristics that lead them to respond in similar ways to a
particular product offerings and marketing program.
ii. Why: because most markets are heterogeneous. Segmentation is needed to address the diverse
needs, wants, and benefit sought of the various groups of consumers.
What are positioning statements and value propositions? Briefly explain their features.
a. Steve Lamecker
i. (p. 169) A positioning statement is a succinct statement that identifies the target market for
which the product is intended and the product category in which it competes and states the
unique benefit the product offers.
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ii. (p. 169) A value proposition is similarly explicit about what the product does for the customer
(and sometimes, what it does not do) and typically also includes information about pricing
relative to competitors.
iii. Example from Exhibit 7.11 (p. 169) for Volvo Automobiles in the US
● Positioning Statement:
○ “For upscale American families, Volvo is the automobile that offers the utmost
in safety.”
● Value Proposition:
○ Target Market: Upscale American families
○ Benefits offered: Safety
○ Price Range: 20% premium over similar cars
Define position and positioning. Describe the difference between the two.
a. Steve Lamecker
i. (p. 159-167) Position is the distinct place a brand resides among competitors in a given set
based on specific (typically two or more) product attributes.
ii. (p. 154) Brand Positioning refers to both the place a brand occupies in customers’ minds
relative to their needs and competing brands and to the marketer’s decision-making intended to
create such a position. Positioning comprises both competitive and customer considerations.
iii. The difference is that Position refers to the current state and Positioning is the desired state of
a brand.
Define physical and perceptual positioning. Describe the difference between the two.
a. Amy DesLauriers (pg 155-157)
i. Physical positioning refers to how different brands compare on a set of objective physical
characteristics, such as technical specifications or product dimensions.
ii. Perceptual positioning refers to how different brands compare on a set of subjective attributes
related to the benefits they provide to consumers, such as what the product does instead of
what it is.
iii. The main difference between the two is one is objective and the other is subjective.
What is price skimming? What conditions are appropriate for a price skimming tactic?
a. Brian G. - Price Skimming is a pricing policy whereby a firm charges a high introductory price, often
coupled with heavy promotion. (Ch8 PPT Slide 7) It is designed to obtain as much margin per unit as
possible, which enables the company to recover its new product investments more quickly. Price
skimming should be used in the introductory stage and is best for niche markets where consumers are
relatively price insensitive. (p. 181)
Under what conditions do pioneer strategies each have the greatest probability of long-term success?
a. Brian G. – A pioneering firm stands the best chance for long-term success in market-share leadership
and profitability when: (1) It exploits sustainable competitive advantage: (2) The new product-market is
insulated from the entry of competitors, at least for a while, by: (barriers to entry) (3) The firm has
sufficient size, resources, and competencies to take full advantage of its pioneering position and
preserve it in the face of later competitive entries. (Ch8 PPT Slide 21)
Under what conditions do follower strategies each have the greatest probability of long-term success?
a. Brian G. – Followers have the greatest probability of long-term success when they have a larger entry
scale than the pioneer and when leapfrogging the pioneer. (Ch8 PPT Slide 23)
Define primary and secondary demand. What is the difference between the two?
a. Brian G. – Primary demand is advertising to stimulate desire for the product class rather than the
specific brand, since there are few competitors with the same product. Secondary demand or selective
demand is advertising to stimulate desire for the specific product once the consumer becomes familiar
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with the product class, and competition becomes more intense. The difference is that primary demand
is not brand specific whereas secondary is. (Ch8 PPT Slide 8)
Discuss the features of the shakeout stage of the product life cycle. Include facets of the market and
competition as well as the marketing mix.
a. Chris Y. (pg 182/183) This stage is a competitively turbulent stage which is signaled by a drop in the
overall growth rate from strong price competition and is usually marked by substantial price cuts.
i. Marketing and Competition: marginal competitors will leave the market, brand equity is very
important to solidify the place in the marketplace
ii. Product: usually see a cut in unprofitable lines
iii. Price: substantial price cuts are often seen
iv. Promotion: there is usually lots of money spent on promotional offers
v. Place: attempting to trim inventory/product line, emphasis moves to make the supply chain
more efficient
Explain how share gains are worth more in a growth market than in a mature market.
a. Chris Y. (pg 209) Share gains are worth more in the growth market because share gains are more
valuable when the market is growing (a company can hold its relative share as the market grows). This
stems from the expectation that earnings produced by each share point continue to expand as the
market expands. This assumption depends upon:
i. Existence of positive network effects (ebay)
ii. Future changes in technology or other key success factors (leapfrogging)
iii. Future competitive structure of the industry (high entry barriers are good)
iv. Future fragmentation of the market (little to no fragmentation)
Explain the four ways a challenger can target competitors established in the market.
a. Chris Y. (pg 207) A challenging firms strategic objective is to build its share by expanding sales faster
than the overall market growth rate. To do so, challenging firms must steal existing customers away
from competitors and/or capture a larger share of new customers than competitors. There are 4
strategies used to accomplish this:
i. Develop a superior product technology
ii. Differentiating through rapid production innovations, line extensions, or customer service
iii. Offering lower prices
iv. focusing on market niches where the leader is not well established.
b. John P. (page 222)
i. Frontal attack: Capture substantial repeat/replacement purchases from target competitor’s current
customers; attract new customers among later adopters by offering lower price or more attractive features.
ii. Leapfrog – Induce current customers in mass market to replace their current brand with superior new
offering; attract new customers by providing enhanced benefits.
iii. Flank Attack – Attract substantial share of new customers in one or more major segments where
customers’ needs are different from those of early adopters in the mass market.
iv. Encirclement – Attract a substantial share of new customers in a variety of smaller, specialized segments
where customers’ needs or preferences differ from those of early adopters in the mass market.
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What are the two basic marketing objectives for share leaders?
a. John P. ( page 211) – First, the firm must retain its current customers, ensuring that those customers
remain brand loyal when making repeat or replacement purchases. Second, the firm must stimulate
selective demand among later adopters to ensure that it captures a large share of the continuing growth
in industry sales.
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What is a flanker strategy and a flanker brand?
a. Laurie B.
i. Pg. 217 - A flanker strategy is to defend against an attack directed at a weakness in current
offerings by developing a second brand to compete directly against a challengers offering. For
example, Toyota developing the Lexus brand for the luxury segment.
ii. Pg. 217 - A flanker brand is a second brand to compete against an attacker, usually lower
quality, low price.
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What are analyzer and defender strategies? How are they similar and dissimilar from each other?
a. Chris F.
i. Pg. 62-63- The analyzer strategy attempts to maintain a strong position in its core productmarket(s) but also seeks to expand into new - usually closely related - product-markets.
ii. Pg. 62-63- A defender strategy concentrates on maintaining its positions in established productmarkets while paying less attention to new product development.
iii. Pg. 69 - Analyzer and defender strategies both have well-established core business to defend.
However, analyzer businesses are often in industries that are still growing or experiencing
technological changes, whereas defender businesses tend to operate in relatively well-defined,
narrow, and stable domains where both the product technology and the customer segments are
mature.
List the conditions most appropriate for analyzer and defender strategies.
a. Laurie B.
i. Analyzer: Best suited for a well developed industry that is experiencing some growth and change as a
result of changing customer needs or evolving technologies.
ii. Defender: Best suited for an industry where basic technology is not complex or where it is unlikely to
change significantly over the short term. (pg 74)
What is the profitable survivor strategy? Explain the conditions most appropriate for its use.
a. Chris F.
i. Pg. 259- A profitable survivor strategy is an aggressive alternative for a business with a strong
share position and a sustainable competitive advantage in a declining product-market. The idea
is to invest enough to increase its share position and establish itself as the industry leader for
the remainder of the market’s decline.
ii. Pg. 259- Conditions most appropriate for its use is when the firm expects a gradual decline in
market demand or when substantial pockets of continuing demand are likely well into the
future. Also when a firm’s declining business is closely intertwined with other SBUs through
shared facilities and programs or common customer segments.
Firms in declining markets have four basic strategies: harvesting, maintenance, profitable survivor, and niche
strategy. Describe the objectives and possible marketing actions of the harvesting strategy
Ninfa Pg. 258 - Exhibit 10.12
Harvesting Strategy:
Maximize short-term cash flow; maintain or increase margins even at the expense of market share decline.
Possible Marketing Actions:
- Eliminate R&D expenditures and capital investments related to the business.
● Reduce marketing and sales budgets.
● Greatly reduce or eliminate advertising and sales promotion expenditures with the possible exception
of periodic reminder advertising targeted at current customers.
● Reduce trade promotions to minimum level necessary to percent rapid loss of distribution coverage.
● Focus sales force efforts on attaining repeat purchases from current customers.
- Seek ways to reduce production costs, even at the expense of slow erosion in product quality.
- Raise price if necessary to maintain margins.
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Firms in declining markets have four basic strategies: harvesting, maintenance, profitable survivor, and niche
strategy. Describe the objectives and possible marketing actions of the maintenance strategy.
Ninfa Pg. 258 - Exhibit 10.12
Maintenance Strategy:
Primary objective: Maintain market share for the short term, even at the expense or margins.
Possible Marketing Actions:
- Design service programs to reduce the perceived risks of trail and/or solve the unique problems faced by potential
customers in one or multiple underdeveloped segments (e.g., systems engineering, installation, operator training,
extended warranties, service hotline, or website).
- Continue product and process R&D expenditures in short term aimed at maintaining or improving product quality.
- Continue maintenance levels of advertising and sales promotion targeted at current users.
- Continue trade promotion at levels sufficient to avoid any reduction in distribution coverage.
- Focus sales force efforts on attaining repeat purchases from current users.
- Lower prices if necessary to maintain share, even at the expense of reduced margins.
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What are some causes for market decline?
Technological advances, changing customer demographics, tastes, or lifestyles; and development of
substitutes result in declining demand for most product forms and brands (pg 233)
Demand in product-market declines for a number of reasons. Technological advances product substitute
products, often with higher quality or lower cost. (electronic calculators for slide rules) Demographic
shifts lead to a shrinking target market. (baby food) Customer needs, tastes, or lifestyles change. (falling
consumption of high-carb foods) Finally the cost of inputs of complementary products rises and shrinks
demand. (the effects of rising gasoline prices on sales of recreational vehicles) (pg 254) **Janessa
51.
The J. B. Kunz Corporation, the leading manufacturer of passbooks and other printed forms for financial
institutions, saw its market gradually decline during the 1980s and 1990s because the switch to electronic
banking was making its product superfluous. Nevertheless, the firm bought up the assets of a number of
smaller competitors, greatly increased its market share within its industry, and managed to earn a very high
return on investment. What kind of strategy was the company pursuing? Why do you think the firm was able
to achieve a high ROI in the face of industry decline?
Profitable Survivor. A strong competitor often can improve its share position in a declining market at
relatively low cost because other competitors may be harvesting their businesses or preparing to exit.
One of the possible marketing actions of a profitable survivor is to consider agreements to product
replacement parts or private labels for smaller competitors considering getting out of production. The
ultimate way to remove competitors an exit barrier is to purchase their operations and either improve
their efficiency or remove them from the industry to avoid excess capacity. With continued decline in
industry sales a certainty, smaller competitors may be forced to sell their assets at a book value price
low enough for the survivor to reap high returns on its investments. (page 259, under profitable survivor
strategy) **Janessa
52.
What is syndication of information? List the three types of syndication. Explain how syndication of
information helps in the new-economy.
a. Chris N. Page 283 of edition 8.
i. Syndication involves the sale of the same good-typically an informational good-to many
customers, who may then combine it with information from other sources and distribute it.
Three types:
1. Originator of syndicated content
2. Syndicator provides information to other sites
3. Distributor brings together from many sources content relevant to its clientele
Syndication helps the new economy by allowing a person or company to syndicate the same
informational goods or services to an infinite number of customers with little incremental cost.
Secondly, the syndication process can be digitized, enabling syndicated networks to be created,
expanded, and flexibly adapted far more quickly than would be possible in the physical world.
53.
Identify and explain the various tools that a savvy web marketer would choose for product promotion and
brand building.
a. Chris N. Page 292 Edition 8
Tools include banner ads, search engine marketing (SEM), search engine optimization (SEO), email marketing, blogs, and promotional websites.
SEO refers to a set of techniques that helps ensure a company's web pages are ranked highly
when consumers search for information using Google, etc. Page 350 8e
SEM involves buying key words so that paid links will come up in a search engine, such as
Google. Page 351 8e
54.
How do new-economy (web-based) applications improve customer service?
c. Kara N.
The growing number of Web-based customer service applications offers the tantalizing combination of
better service and significant cost savings. Companies are using the web to provide answers to
frequently asked questions, build communities among users by using bulletin boards, chat rooms, and
other e-techniques, and provide shipment tracking information.
Direct words from book: Textbook pages 281-282 (7th edition)
55.
As director of marketing of a medium-sized Canadian sporting goods manufacturer that produces helmets
for use in sports, such as cycling, skiing, hockey, and football, you have been considering using the Internet
as a marketing tool. Although your helmets are sold in retail stores and to schools and athletic programs
across Canada, you believe the company could reach a bigger audience and sell more helmets if the
company also sold the product online at the company’s Web site. What arguments would you use to
convince the CEO that online marketing is a good strategy?
b. Kara N.
1) Barriers to entry on the Web are low (page 284 7th edition)
2) May provide easy, timely, and 24/7 access to customers (page 284 7th edition)
3) The growing market acceptance of the Internet and other new-economy technologies (page 266 7th
edition)
Direct words from book: Various pages in CH 11 (7th edition)
56.
Organizational structures can be described by three traits: formalization, centralization, and specialization.
Describe each.
Maycee G.
Pg. 302
Formalization is the degree to which formal rules and standard policies and procedures govern decisions and
working relationships.
Centralization refers to the location of decision authority and control within an organization’s hierarchy.
Specialization refers to the division of tasks and activities across positions within the organizational unit.
57.
Describe the features of functional organizational design.
Maycee pg 302 - The functional organizational design is the most centralized and formalized organization form and relies
primarily on hierarchical mechanisms for resolving conflicts across functional areas. Also, because top managers perform
their coordination activities across all product-markets in the SBU, there is little specialization by product or customer
type. These make the functional form simple, efficient, and particularly suitable for companies operating in stable and
slow-growth industries where the environments are predictable.
58.
What are the four essential questions in designing marketing metrics?
Maycee G.
Pg. 330
1. Who needs what information?
2. When and how often is the information needed?
3. In what media and in what format(s) or levels of aggregation should the information be provided?
4. What contingencies should be planned for?
59.
What is a balanced scorecard, and why is it important?
Jonathan B. (323)
The balanced scorecard is a composition of metrics that a company feels better reflect how their managers
and customers think about issues that drive the firm’s success.
Balanced scorecards are important as the place emphasis on areas other than financial performance.