Marketing: An Introduction, 11e (Armstrong)
Chapter 2 Company and Marketing Strategy: Partnering to Build Customer Relationships
1) Which of the following is true of strategic planning in a firm?
A) Strategic planning deals with maintaining the company's current business ventures.
B) Strategic planning focuses on the firm's internal environment rather than the external environment.
C) Strategic planning occurs at the business-unit, product, and market levels rather than a company-wide level.
D) Strategic planning deals with adapting the firm to take advantage of opportunities in its changing environment.
E) Strategic planning involves the formulation of supporting objectives for business units based on the company's mission statement.
Answer: D
Page Ref: 38; 39
Difficulty: Moderate
Chapter LO: 1
Course LO: Identify and describe the processes and tools of strategic marketing
2) Cosmetics firm SatinSilk is revamping its mission statement and advertising strategy. The planning team comes up with a list of options for the new mission statement. The CEO stresses that the new mission statement should be market-oriented rather than product-oriented. Which of the following mission statements should the company pick?
A) to create the best possible products and sell them at the best possible price
B) to sell cosmetics products that are hypoallergenic and made only from the finest natural materials
C) to give customers the complexion they dream about by providing a range of products suited to their needs
D) to sell affordably priced cosmetics in every cosmetics product category
E) to increase our market share in the cosmetics segment and increase profit margins
Answer: C
Page Ref: 38; 39
Difficulty: Moderate
Chapter LO: 1
AACSB: Analytic skills
Course LO: Identify and describe the processes and tools of strategic marketing
3) Which of the following is true of company mission statements?
A) Mission statements should be defined in terms of satisfying customer needs.
B) A firm's mission statement should be product-oriented, focusing on the products the company sells.
C) Mission statements should not be specific, as this reduces the company's potential for growth.
D) A company mission statement should be directed at the company's publics rather than at its employees.
E) Mission statements should focus both on the company's product as well as the technology used to produce it.
Answer: A
Page Ref: 40-41
Difficulty: Easy
Chapter LO: 1
Course LO: Identify and describe the processes and tools of strategic marketing
4) Which of the following best describes a company's business portfolio?
A) the company's sources of revenue and the investments it makes in a particular year
B) the various industries in which the company operates business ventures
C) the company's products or services in a particular market category
D) the collection of businesses and products that make up the company
E) the company's strengths in terms of technology, people, products, advertising, etc.
Answer: D
Page Ref: 41
Difficulty: Moderate
Chapter LO: 2
Course LO: Identify and describe the processes and tools of strategic marketing
5) Nathan is conducting a portfolio analysis for his company. Which of the following activities would this involve?
A) studying the products and strategies of competitors in order to improve the company's own products
B) collecting consumer feedback in order to better position the company's products in the minds of consumers
C) evaluating the attractiveness of an SBU's market and the strength of its position in the market
D) segmenting the company's markets to effectively reach the target consumers
E) conducting marketing research to estimate the efficiency and effectiveness of the company's marketing strategy
Answer: C
Page Ref: 41
Difficulty: Moderate
Chapter LO: 2
Course LO: Identify and describe the processes and tools of strategic marketing
6) Which of the following criteria does the Boston Consulting Group approach use to provide a measure of market attractiveness?
A) relative market share
B) market sentiment
C) return on marketing investment
D) market growth rate
E) marketing return on sales
Answer: D
Page Ref: 43
Difficulty: Easy
Chapter LO: 2
Course LO: Identify and describe the processes and tools of strategic marketing
7) Which of the following criteria does the Boston Consulting Group approach use to provide a measure of the company's strength in the market?
A) relative market share
B) return on marketing investment
C) market sentiment
D) market growth rate
E) marketing return on sales
Answer: A
Page Ref: 43
Difficulty: Easy
Chapter LO: 2
Course LO: Identify and describe the processes and tools of strategic marketing
8) In the BCG growth-share matrix, stars refer to ______.
A) products with a low market share in a niche market
B) products with a low relative market share in a market with high growth prospects
C) products that have a greater market share than all their competitors combined in a saturated market
D) products with a high market share in a market with a high growth rate
E) products with a low market share in a market that is set to decrease significantly
Answer: D
Page Ref: 43
Difficulty: Moderate
Chapter LO: 2
Course LO: Identify and describe the processes and tools of strategic marketing
9) In the BCG growth-share matrix, question marks refer to ______.
A) products with a low market share in a niche market
B) products with a low relative market share in a market with high growth prospects
C) products that have a greater market share than all their competitors combined in a saturated market
D) products with a high market share in a market with a high growth rate
E) products with a low market share in a market that is set to decrease significantly
Answer: B
Page Ref: 43
Difficulty: Moderate
Chapter LO: 2
Course LO: Identify and describe the processes and tools of strategic marketing
10) In the BCG matrix, ______refer to 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) black holes
Answer: B
Page Ref: 43
Difficulty: Easy
Chapter LO: 2
Course LO: Identify and describe the processes and tools of strategic marketing
11) Omni Healthcare's analgesic drug Cetaprin has a 40% share in the analgesics market in Terrania. Its closest competitor, Febex, has a 25% share in the market, while three other drugs split the remainder. Which of the following would most indicate that Cetaprin would be classified as a cash cow according to the BCG matrix?
A) Cetaprin is priced higher than other similar products in the market.
B) A customer survey revealed that Cetaprin has the highest brand-name recognition of any analgesic in the market.
C) The demand for analgesic drugs in the Terranian market is expected to remain stable.
D) Febex is rapidly gaining market share over Cetaprin as a result of aggressive marketing efforts.
E) The Terranian market for healthcare products is expanding rapidly.
Answer: C
Page Ref: 43
Difficulty: Challenging
Chapter LO: 2
AACSB: Analytic skills
Course LO: Identify and describe the processes and tools of strategic marketing
12) Omni Healthcare's analgesic drug Cetaprin has a 40% share in the analgesics market in Terrania. Its closest competitor, Febex, has a 25% share in the market, while three other drugs split the remainder. Which of the following would most indicate that Cetaprin would be classified as a star according to the BCG matrix?
A) Cetaprin is priced higher than other similar products in the market.
B) A customer survey revealed that Cetaprin has the highest brand-name recognition of any analgesic in the market.
C) The demand for analgesic drugs in the Terranian market is expected to remain stable.
D) Febex is rapidly gaining market share over Cetaprin as a result of aggressive marketing efforts.
E) The Terranian market for healthcare products is expanding rapidly.
Answer: E
Page Ref: 43
Difficulty: Challenging
Chapter LO: 2
AACSB: Analytic skills
Course LO: Identify and describe the processes and tools of strategic marketing
13) Which of the following products would CypressSound classify as a cash cow in on its BCG matrix?
A) Cyan, a cell phone that is specially designed for music lovers, has a very low market share, though the market is growing steadily.
B) The home entertainment system offered by CypressSound has a strong market share, and the market is likely to expand in the future.
C) Xpress, an MP3 player, has a high market share, but the market for MP3 players is not expected to grow significantly.
D) AutoPlay, the company's audio product for installation in cars, has a high market share, and the market for these systems has been growing constantly.
E) Unipress, a CD player, has a very low market share in a market that is shrinking rapidly.
Answer: C
Page Ref: 43
Difficulty: Challenging
Chapter LO: 2
AACSB: Analytic skills
Course LO: Identify and describe the processes and tools of strategic marketing
14) Which of the following products would CypressSound classify as a question mark in on its BCG matrix?
A) Cyan, a cell phone that is specially designed for music lovers, has a very low market share, though the market is growing steadily.
B) The home entertainment system offered by CypressSound has a strong market share, and the market is likely to expand in the future.
C) Xpress, an MP3 player, has a high market share, but the market for MP3 players is not expected to grow significantly.
D) AutoPlay, the company's audio product for installation in cars, has a high market share, and the market for these systems has been growing constantly.
E) Unipress, a CD player, has a very low market share in a market that is shrinking rapidly.
Answer: A
Page Ref: 43
Difficulty: Challenging
Chapter LO: 2
AACSB: Analytic skills
Course LO: Identify and describe the processes and tools of strategic marketing
15) In the BCG matrix, ______are low-share businesses and products in a market that is not expected to grow. They may generate enough cash to maintain themselves but do not promise to be large sources of cash.
A) dogs
B) cash cows
C) black holes
D) stars
E) question marks
Answer: A
Page Ref: 43
Difficulty: Easy
Chapter LO: 2
Course LO: Identify and describe the processes and tools of strategic marketing
16) Which of the following is true of the growth-share matrix?
A) A company should invest in a question mark rather than a dog.
B) The positions of SBUs in the growth-share matrix do not change over time.
C) Stars are those SBUs with a high market share in a market that does not have a high growth rate.
D) All products go through all four categories of the BCG matrix over their life cycles.
E) The most appropriate strategy for a question mark SBU is divestment.
Answer: A
Page Ref: 43
Difficulty: Moderate
Chapter LO: 2
Course LO: Identify and describe the processes and tools of strategic marketing
17) When using a harvesting strategy for a particular strategic business unit, a company ______.
A) focuses on gaining short-term cash flow regardless of long-term concerns
B) invests more in the business unit to build its market share
C) sells off the strategic business unit and invests its resources elsewhere
D) invests just enough in the strategic business unit to keep its market share at the current level
E) gradually increases investment in the strategic business unit over time, to maximize profits
Answer: A
Page Ref: 44
Difficulty: Moderate
Chapter LO: 2
Course LO: Identify and describe the processes and tools of strategic marketing
18) When divesting a particular strategic business unit, a company ______.
A) focuses on gaining short-term cash flow regardless of long-term concerns
B) invests more in the business unit to build its market share
C) sells off or phases out the strategic business unit
D) invests just enough in the strategic business unit to keep its market share at the current level
E) gradually increases investment in the strategic business unit over time, to maximize profits
Answer: C
Page Ref: 44
Difficulty: Moderate
Chapter LO: 2
Course LO: Identify and describe the processes and tools of strategic marketing
19) Which of the following companies is using a divesting strategy?
A) Juggernaut Bikes aims to maintain its market share, but does not have the resources to increase its share.
B) Noting the potential for growing its market share, LBD Inc. steps up investments in advertising and promotion.
C) When sales of its clothing division decline, Blackstone's sells off the division to a competitor.
D) Getix Computers is increasing the price of its products in order to maximize its short-term profits.
E) Harlow's market share remains steady over two years even though the company does not increase investment in the product in that time.
Answer: C
Page Ref: 44
Difficulty: Challenging
Chapter LO: 2
AACSB: Analytic skills
Course LO: Identify and describe the processes and tools of strategic marketing
20) A company's increasing its sales in a particular market without modifying its products is referred to as ______.
A) market development
B) market differentiation
C) market penetration
D) product development
E) diversification
Answer: C
Page Ref: 45
Difficulty: Easy
Chapter LO: 2
Course LO: Identify and describe the processes and tools of strategic marketing
21) Starbucks has introduced a debit card that lets its customers prepay for coffee and snacks. This effort by Starbucks management is an example of ______.
A) market development
B) product development
C) diversification
D) market penetration
E) product adaptation
Answer: D
Page Ref: 45
Difficulty: Moderate
Chapter LO: 2
AACSB: Analytic skills
Course LO: Identify and describe the processes and tools of strategic marketing
22) Acme Inc., has modified the production processes of its widgets and gadgets in order to enter the Eastern European market. Acme is likely following a ______strategy.
A) market penetration
B) market development
C) diversification
D) harvesting
E) product development