Chapter 11 1. The ________ has the largest market share and usually shows the way to other firms in price changes, new-product introductions, distribution coverage, and promotional intensity. A) market challenger B) market entrant C) market follower D) market nicher E) market leader Answer: E Rationale: The market leader, as the entity with the largest market share, typically sets the trends for the industry. Its actions regarding pricing, new product launches, distribution strategies, and promotional activities often serve as benchmarks for other firms in the market. 2. When the total market expands, the ________ usually gains the most. A) market challenger B) market leader C) market follower D) market nicher E) market entrant Answer: B Rationale: When the total market expands, the market leader tends to benefit the most due to its established position and resources. It can capture a larger share of the expanded market due to its brand recognition, distribution channels, and often greater resources for marketing and production. 3. When a firm looks for new users in groups that might use the product but do not, the firm is using the ________ strategy. A) new-market segment B) market-penetration C) geographical-expansion D) product development E) diversification Answer: B Rationale: Market-penetration strategy involves seeking new customers within existing market segments, which includes targeting groups that are not currently using the product but have the potential to do so. This strategy aims to increase market share by converting non-users into customers. 4. As the marketing manager of a company that manufactures floor tiles, Evans Smith is given a target to achieve 500 new customers by the end of summer. He decides to search the market for probable customers who might use the product but do not at present. Which of the following strategies is Evans pursuing to increase the market demand for his product? A) market-penetration strategy B) new-market segment strategy C) geographical-expansion strategy D) needs-assessment strategy E) consolidation strategy Answer: A Rationale: Evans Smith is pursuing a market-penetration strategy by targeting potential customers who are not currently using the product. This strategy aims to increase sales by penetrating deeper into the existing market. 5. When firms look for new users in groups that have never used the product before, the firm is using the ________ strategy. A) new-market segment B) market-penetration C) geographical-expansion D) product development E) diversification Answer: A Rationale: The new-market segment strategy involves targeting entirely new groups of customers who have never used the product before. This strategy aims to expand the customer base by identifying and entering new market segments. 6. When Starbucks introduced its Tazo Tea line to bring in new customers who had never gone to Starbucks because they don't drink coffee, Starbucks was employing a ________ strategy. A) market-penetration B) new-market segment C) geographical-expansion D) niche identification E) blue-ocean Answer: B Rationale: By introducing a tea line to attract customers who do not drink coffee, Starbucks is pursuing a new-market segment strategy. This involves targeting a new group of customers who have different preferences, thus expanding Starbucks' customer base. 7. Trendz Inc. is a leading brand of fashion clothing and accessories based in Houston. After gaining a strong foothold in the U.S., the company wants to foray into foreign markets. The management at Trends knows that people residing in other countries are likely to have different tastes and preferences, so they may have to redesign some of their offerings. Which of the following strategies is Trendz using? A) market-penetration strategy B) outsourcing strategy C) geographic-expansion strategy D) product differentiation strategy E) ethnocentric strategy Answer: C Rationale: Trendz Inc. is employing a geographical-expansion strategy by entering foreign markets. They acknowledge the need for product adaptation to suit the tastes and preferences of consumers in different countries, indicating an expansion into new geographic regions. 8. A market leader on the lookout for more usage from existing customers should focus on increasing the frequency of consumption and ________. A) decreasing the product price B) the product line C) the amount of consumption D) decreasing production turnover time E) diversifying into unrelated markets Answer: C Rationale: Increasing the amount of consumption involves encouraging existing customers to use the product more frequently, leading to higher sales and stronger customer loyalty. This can be achieved through various means such as offering incentives, promotions, or enhancing product features to meet customer needs. 9. Which of the following marketing strategies requires either identifying additional opportunities to use the brand in the same basic way or identifying completely new and different ways to use the brand? A) increasing the amount of consumption B) decreasing the level of consumption C) increasing dedication to consumption D) increasing product innovation E) increasing frequency of consumption Answer: E Rationale: Increasing the frequency of consumption involves finding new and different ways for customers to use the brand, thereby encouraging them to purchase and consume more frequently. This strategy focuses on expanding usage occasions or finding new applications for the brand. 10. When food product companies advertise recipes that use their branded products in entirely different ways, they are increasing the ________ of the brand. A) amount of consumption B) level of consumption C) dedication to consumption D) frequency of consumption E) awareness consumption Answer: D Rationale: By promoting recipes that encourage customers to use their products in different ways, food product companies are aiming to increase the frequency of consumption. This strategy encourages customers to consume the product more often in various contexts, thereby increasing overall consumption. 11. Oliver, a company that produces different types of olive oil, launched a promotional campaign focusing on the alternative uses of olive oil. What strategy is the company implementing to expand its total market demand? A) using the new-market segment strategy to attract new customers B) improving the current level of product performance C) advertising new and different applications of the brand D) protecting its market share E) using the market-penetration strategy to attract new customers Answer: C Rationale: By advertising new and different applications of the brand, such as alternative uses of olive oil, Oliver is implementing a strategy to expand its total market demand. This approach aims to attract new customers and increase consumption occasions, thereby expanding the overall market for olive oil. 12. Clorox runs ads stressing the many benefits of its bleach, such as how it eliminates kitchen odors, in order to generate additional opportunities to use the brand in the same basic way. This is an attempt to ________. A) increase the amount of consumption B) increase the level of consumption C) increase the perception of consumption D) increase the frequency of consumption E) increase the emotional implications of consumption Answer: D Rationale: Clorox's strategy of highlighting various benefits of its bleach aims to increase the frequency of consumption by encouraging consumers to use the product more often for different purposes, thereby expanding its usage occasions. 13. Which of the following is the most constructive response a market leader can make when defending its market share? A) maintain basic cost control B) innovate continuously C) provide desired benefits D) meet challengers with a swift response E) provide expected benefits Answer: B Rationale: Continuous innovation is the most constructive response for a market leader to defend its market share. By innovating continuously, the market leader can stay ahead of competitors, maintain customer loyalty, and adapt to changing market conditions, thus safeguarding its position. 14. To satisfy customers, a(n) ________ marketer finds a stated need and fills it. A) creative B) responsive C) anticipative D) laidback E) inexperienced Answer: B Rationale: A responsive marketer focuses on identifying customers' stated needs and fulfilling them promptly and effectively. This approach ensures customer satisfaction by addressing their immediate requirements. 15. A(n) ________ marketer looks ahead to needs customers may have in the near future. A) laidback B) creative C) inexperienced D) responsive E) anticipative Answer: E Rationale: An anticipative marketer anticipates the future needs of customers and prepares to address them proactively. This forward-thinking approach enables the marketer to stay ahead of competitors and meet evolving customer demands. 16. A(n) ________ marketer discovers solutions customers did not ask for but to which they enthusiastically respond. A) laidback B) responsive C) inexperienced D) creative E) anticipative Answer: D Rationale: A creative marketer identifies innovative solutions that customers may not have explicitly requested but respond to positively. This involves thinking outside the box and introducing novel ideas or products that resonate with customer needs and preferences. 17. ________ marketers are not just market-driven, they are proactive market-driving firms. A) Creative B) Responsive C) Inexperienced D) Laidback E) Anticipative Answer: A Rationale: Creative marketers not only respond to market demands but also proactively shape and drive market trends through innovative products, services, and strategies. They lead the market rather than simply following it. 18. Sony is an unusual market leader. It gives its customers new products that they have never asked for (e.g., Walkmans, VCRs, video cameras, CDs). This makes Sony a(n) ________ firm. A) market-driven B) market-driving C) operations-driven D) vision-driven E) virtually-driven Answer: B Rationale: Sony is considered a market-driving firm because it introduces innovative products that redefine consumer preferences and shape market trends, rather than simply responding to existing demands. 19. Which of the following is true about proactive marketing? A) A company needs creative anticipation to see the writing on the wall. B) Proactive companies create new offers to serve unmet and unknown consumer needs. C) Proactive companies refrain from practicing uncertainty management. D) A company needs responsive anticipation to devise innovative solutions. E) Companies are winners when they are extremely risk-averse. Answer: B Rationale: Proactive marketing involves creating new offerings to address unmet and unknown consumer needs, thereby driving market innovation and growth. This approach requires forward-thinking and creativity to anticipate and respond to changing market dynamics. 20. ________ defense involves occupying the most desirable market space in the minds of the consumers and making the brand almost impregnable. A) Position B) Flank C) Preemptive D) Mobile E) Contraction Answer: A Rationale: Position defense entails establishing a strong presence in the minds of consumers and occupying the most desirable market space, making it difficult for competitors to challenge the brand's position. This involves building brand loyalty, differentiation, and a unique value proposition to defend market share effectively. 21. A marketing manager has planned a strategy that will require the organization to erect outposts to protect its weak front-running brands. In this ________ defense, the outposts will be central to the organization's new competitive strategy. A) position B) flank C) preemptive D) counteroffensive E) mobile Answer: B Rationale: In flank defense, the organization establishes outposts or subsidiary brands to protect its weaker front-running brands. These outposts serve as central elements of the organization's new competitive strategy, defending against attacks on vulnerable fronts. 22. ________ is an aggressive maneuver where the firm attacks first, perhaps with guerrilla action across the market and keeping everyone off balance. A) Position defense B) Flank defense C) Contraction defense D) Preemptive defense E) Lateral defense Answer: D Rationale: Preemptive defense involves an aggressive approach where the firm initiates attacks first, often with guerrilla tactics across the market. The goal is to keep competitors off balance and establish dominance. 23. The defensive marketing strategy wherein a stream of new products are introduced by a firm and are announced in advance are referred to as ________ defense. A) mobile B) counteroffensive C) preemptive D) contraction E) flank Answer: C Rationale: Preemptive defense involves introducing a stream of new products by a firm, announced in advance to thwart potential competitive threats. This strategy aims to preoccupy competitors and maintain market leadership. 24. If Microsoft announces plans for a new-product development, smaller firms may choose to concentrate their development efforts in other directions to avoid head-to-head competition. In this example, Microsoft is employing a ________ strategy. A) preemptive defense B) counteroffensive defense C) mobile defense D) flank defense E) contraction defense Answer: A Rationale: Microsoft's announcement of new-product development forces smaller firms to redirect their efforts, indicating a preemptive defense strategy. By announcing plans in advance, Microsoft aims to deter competitors and maintain its market position. 25. In a ________ defense strategy, the market leader can meet the attacker frontally and hit its flank, or launch a pincer movement so that it's forced to pull back to defend itself. A) position B) counteroffensive C) preemptive D) contraction E) flank Answer: B Rationale: Counteroffensive defense involves aggressive tactics by the market leader to meet attackers head-on while also targeting their flanks or launching pincer movements. This strategy aims to force competitors to retreat and defend themselves. 26. After Olay entered and took over the Indian market with its anti-aging lotion, Ponds decided to defend its home turf by investing heavily in a similar product, but one that used only natural ingredients. This is an example of a ________. A) position defense B) flank defense C) counteroffensive defense D) contraction defense E) mobile defense Answer: C Rationale: Ponds' decision to invest heavily in a similar product after Olay's entry into the market represents a counteroffensive defense strategy. By launching a competitive product, Ponds aims to defend its market position and counter the threat posed by Olay. 27. In ________, the market leader stretches its domain over new territories that can serve as future centers for defense and offense. A) counteroffensive defense B) flank defense C) contraction defense D) mobile defense E) position defense Answer: D Rationale: In mobile defense, the market leader expands its domain into new territories that can act as future centers for both defense and offense. This strategy involves proactive expansion to maintain market leadership. 28. Market broadening and market diversification are likely tactics employed in ________ strategies. A) position defense B) flank defense C) preemptive defense D) counteroffensive defense E) mobile defense Answer: E Rationale: Market broadening and diversification are common tactics in mobile defense strategies. By expanding into new markets or offering diversified products and services, the firm can strengthen its position and defend against competitive threats. 29. When "petroleum" companies such as BP sought to recast themselves as "energy" companies, increasing their research into the oil, coal, nuclear, hydroelectric, and chemical industries, these companies were employing a ________ strategy. A) preemptive defense B) counteroffensive defense C) mobile defense D) flank defense E) contraction defense Answer: C Rationale: The strategy employed by "petroleum" companies like BP to broaden their scope and research into various energy industries represents a mobile defense strategy. By expanding into new territories, these companies aim to defend their market leadership and adapt to changing market dynamics. 30. When large companies can no longer defend all their territory, they launch a ________ defense where they give up weaker markets and reassign resources to stronger ones. A) contraction B) preemptive C) flank D) mobile E) position Answer: A Rationale: In a contraction defense strategy, large companies strategically withdraw from weaker markets and reallocate resources to stronger ones. This allows them to focus their efforts and resources on areas where they can maintain a competitive advantage. 31. In 2006, Sara Lee spun off products that accounted for a large percentage of the company's revenues, including its strong Hanes hosiery brand, so it could concentrate on its well-known food brands. In this example, Sara Lee is employing a ________ strategy. A) preemptive defense B) counteroffensive defense C) mobile defense D) flank defense E) contraction defense Answer: E Rationale: Sara Lee's decision to divest certain product lines to focus on its core food brands represents a contraction defense strategy. By shedding non-core assets, Sara Lee aims to streamline its operations and allocate resources more efficiently to strengthen its position in the food market. 32. A firm that is willing to maintain its market share, and not attack the leader and other competitors in an aggressive bid for further market share, is known as a ________. A) market challenger B) market leader C) market follower D) market nicher E) market entrant Answer: C Rationale: A market follower is a firm that maintains its market share without aggressively challenging the leader or other competitors. Instead, it typically observes market dynamics and adopts strategies to emulate or respond to competitors' actions. 33. For a market challenger, attacking ________ is a high-risk but potentially high payoff strategy, which also allows it to distance itself from other challengers. A) a firm of its own size B) the market leader C) a regional firm D) an underfinanced firm E) a poorly performing firm Answer: B Rationale: Market challengers often target the market leader with their attacks, as successfully displacing the leader can result in significant gains. While this strategy is high-risk, it also offers high potential rewards and can help the challenger distinguish itself from other competitors. 34. In a pure ________ attack, the attacker matches its opponent's product, advertising, price, and distribution. A) guerilla B) bypass C) encirclement D) frontal E) flank Answer: D Rationale: A frontal attack involves the attacker directly confronting the opponent by matching its product features, advertising, price, and distribution channels. This approach aims to compete head-on with the opponent to capture market share. 35. Epic Inc., a firm that produces chairs for offices, uses comparative advertising to inform the consumers that its products offer the same features and quality as the competitor's. This is an example of a(n) ________ attack. A) guerilla B) frontal C) encirclement D) bypass E) flank Answer: B Rationale: Epic Inc.'s use of comparative advertising to directly challenge the competitor's products is an example of a frontal attack. By highlighting similarities in features and quality, Epic Inc. aims to compete directly with the competitor in the market. 36. The ________ can be used when the challenger spots areas where the opponent is underperforming. A) encirclement attack B) frontal attack C) flank-geographic attack D) backwards-flank attack E) guerilla warfare Answer: C Rationale: A flank-geographic attack involves targeting geographic areas where the opponent is underperforming or vulnerable. By concentrating efforts in these areas, the challenger can gain market share and weaken the opponent's position. 37. Pepsodent launched a new product that could whiten teeth, fight decay, and maintain fresh breath. Observing that Pepsodent did not focus on the dental sensitivity aspect, Colgate introduced a toothpaste which did all of the above and also protected sensitive teeth. This is an example of a(n) ________ attack. A) frontal B) flank C) guerrilla D) encirclement E) bypass Answer: B Rationale: Colgate's introduction of a toothpaste that addresses additional needs not covered by Pepsodent's product is an example of a flank attack. By targeting a specific weakness in the opponent's offering, Colgate aims to capture market share in that segment. 38. A(n) ________ is another name for identifying shifts in market segments that are causing gaps to develop, then rushing in to fill the gaps and developing them into strong segments. A) frontal attack strategy B) flanking strategy C) encircling strategy D) counteroffensive strategy E) bypass strategy Answer: B Rationale: A flanking strategy involves identifying shifts in market segments and exploiting gaps to develop strong segments. By filling these gaps with innovative products or services, the firm can gain a competitive advantage and capture market share. 39. The ________ attack attempts to capture a significant share of the consumer market by launching a grand offensive on several fronts. A) frontal B) bypass C) flank D) encirclement E) guerrilla Answer: D Rationale: An encirclement attack involves launching a grand offensive on multiple fronts to capture a significant share of the consumer market. This aggressive strategy aims to weaken the opponent's position and gain market dominance. 40. Sally Seabrook is an up-and-coming marketing manager for a large department store chain. Ms. Seabrook has distinguished herself with bold strategies such as launching attacks on her primary competitor from several fronts, including advertising, new store openings, and new distributor alliances. Which of the following market challenger attack strategies is Ms. Seabrook using to attack her competition? A) frontal attack B) bypass attack C) guerrilla warfare D) flank attack E) encirclement attack Answer: E Rationale: Sally Seabrook's approach of launching attacks on her primary competitor from multiple fronts, including advertising, new store openings, and new distributor alliances, aligns with an encirclement attack strategy. This aggressive tactic aims to capture market share and weaken the competitor's position through various means. 41. The ________ attack offers the firm an opportunity to diversify into unrelated products, into new geographical markets, and leapfrogging into new technologies. A) bypass B) flank C) frontal D) guerrilla E) encirclement Answer: A Rationale: A bypass attack allows a firm to diversify into unrelated products, enter new geographical markets, and adopt new technologies without directly confronting competitors in their existing markets. This strategy enables the firm to leapfrog its competition by exploring alternative avenues for growth. 42. Appy Juices, a company that manufactures bottled water, diversified into soft drinks before any of its opponents could launch a diversified product. This would be an example of a(n) ________ attack. A) flank B) bypass C) guerrilla D) encirclement E) frontal Answer: B Rationale: Appy Juices' diversification into soft drinks before its competitors is an example of a bypass attack. By entering a new product category ahead of its competitors, Appy Juices aims to gain a competitive advantage and secure market share in the soft drinks segment. 43. A marketing manager has decided to "leapfrog" competition by moving into cutting-edge technologies. This indirect approach to attacking competition can be characterized as ________. A) flank attack B) encirclement attack C) bypass attack D) guerrilla warfare E) frontal attack Answer: C Rationale: Moving into cutting-edge technologies to leapfrog competition represents a bypass attack. By adopting new technologies, the firm can gain a competitive advantage and bypass direct competition, positioning itself ahead in the market. 44. Selective price cuts, intense promotional blitzes, and occasional legal action are commonplace in the strategic design of a(n) ________. A) frontal attack B) flank attack C) bypass attack D) encirclement attack E) guerilla warfare Answer: E Rationale: Guerilla warfare involves using tactics like selective price cuts, intense promotional blitzes, and occasional legal action to disrupt competitors and gain market share. This strategy is characterized by its unconventional and aggressive nature. 45. In his article, "Innovative Imitation", Theodore Levitt argues that ________. A) imitation is wrong and should be punished B) product imitation might be as profitable as product innovation C) innovation is not possible without substantial imitation D) innovation cannot begin unless dissatisfaction with imitation occurs E) imitation should be against the law because of the intellectual property decision involved Answer: B Rationale: Theodore Levitt suggests in "Innovative Imitation" that product imitation can be as profitable as product innovation. He argues that successful imitation can lead to competitive advantages and profitability for firms, similar to those achieved through innovation. 46. As a market follower strategy, the ________ duplicates the leader's product and packages and sells it on the black market or through disreputable dealers. A) innovator B) cloner C) imitator D) adapter E) counterfeiter Answer: E Rationale: A counterfeiter duplicates the leader's product and packaging and sells it illegally on the black market or through disreputable channels. This unethical strategy undermines the original brand's reputation and violates intellectual property rights. 47. Aron, a company manufacturing snack food and soft drinks, replicates its product taste and packaging from Lay's, a market leader in the snack food industry. Later, it sells these imitated products on the black market. This is an example of ________. A) cloning B) imitating C) counterfeiting D) adapting E) innovating Answer: C Rationale: Aron's replication of Lay's products and selling them on the black market constitutes counterfeiting. This unethical practice involves illegally copying and distributing products without authorization from the original brand owner. 48. As a market follower strategy, the ________ emulates the leader's products, name, and packaging, with slight variations. A) counterfeiter B) cloner C) imitator D) adapter E) innovator Answer: B Rationale: A cloner emulates the leader's products, name, and packaging with minor variations. This strategy aims to capitalize on the success of the original brand while offering slightly differentiated products to attract customers. 49. Amani, a company that manufactures cloth for suits, strives to be equal to Armani in product design, brand name, and product packaging. This is an example of ________. A) innovating B) adapting C) imitating D) cloning E) counterfeiting Answer: D Rationale: Amani's efforts to replicate Armani in product design, brand name, and packaging represent cloning. This strategy involves closely mimicking the leader's attributes to capitalize on its success and attract customers. 50. Tasteeos, Fruit Rings, and Corn Flakes sell for nearly $1 a box less than leading cereal brands. Which market follower strategy is being employed by the cereal manufacturer? A) counterfeiter B) cloner C) imitator D) adapter E) reverse innovator Answer: B Rationale: Selling cereals for a lower price than leading brands is an example of a cloner strategy. By offering similar products at a lower price point, the cereal manufacturer aims to attract price-sensitive consumers and compete with established brands. 51. The ________ copies some things from the leader but differentiates on packaging, advertising, pricing, or location. A) innovate B) adapt C) cloner D) imitator E) counterfeiter Answer: D Rationale: An imitator copies some aspects of the leader's offering but distinguishes itself through differences in packaging, advertising, pricing, or location. This strategy allows the imitator to emulate successful elements while adding its own unique touches to attract customers. 52. As a(n) ________, BurgerJacks, a fast food chain selling low-price burgers, has differentiated on location by setting up base in the Middle East, a market which the current leader of the industry McDonald's has yet not exploited. A) cloner B) imitator C) counterfeiter D) adapter E) innovator Answer: B Rationale: BurgerJacks, by entering the Middle East market with low-price burgers, demonstrates characteristics of an imitator. While it mimics certain aspects of McDonald's fast food business model, it differentiates itself through location, catering to a market not yet tapped by the industry leader. 53. The TelePizza chain, which operates in Europe and Latin America, has copied Domino's service model but maintains differentiation in terms of location. TelePizza is an example of a(n) ________. A) counterfeiter B) adopter C) cloner D) imitator E) adapter Answer: D Rationale: TelePizza, by copying Domino's service model but maintaining differences in location, exhibits characteristics of an imitator. It emulates successful elements of Domino's business while adapting its strategy to suit different geographic markets. 54. As a market follower, the ________ may choose to sell to different markets, but often it grows into a future challenger. A) imitator B) adapter C) cloner D) counterfeiter E) innovator Answer: B Rationale: Market followers often differentiate themselves by targeting different markets or adapting their strategies to unique customer needs. This adaptability can lead them to grow into future challengers as they carve out their own niches in the market. 55. Redo is a market follower in the wristwatch industry. After noticing a shortfall in the market leader's product, Redo improves its product to suit consumer needs and becomes a challenger for the market leader. This is an example of ________. A) counterfeiter B) cloner C) imitator D) adapter E) innovator Answer: D Rationale: Redo's response to a shortfall in the market leader's product by improving its own product demonstrates characteristics of an adapter. By adapting to meet consumer needs, Redo positions itself as a challenger to the market leader. 56. An alternative to being a market follower in a large market is to be a leader in a small market. This type of competitor is called a ________. A) marketing king B) market nicher C) segment king D) guerrilla marketer E) strategic clone Answer: B Rationale: A market nicher specializes in serving small market segments that are not effectively served by larger firms. By focusing on specific niche markets, these competitors can become leaders in their respective segments. 57. A firm that serves small market segments that are not being served by bigger firms is known as a ________. A) market challenger B) market leader C) market follower D) market nicher E) market entrant Answer: D Rationale: A market nicher targets small, specialized market segments that larger firms may overlook or underserve. By catering to these niche markets, niche firms can differentiate themselves and capture market share within their specialized domains. 58. The market leader strategy ensures high sales volume, whereas the market nicher strategy allows firms to achieve ________. A) high margin B) low margin C) high promotability D) medium pricing E) lower demand Answer: A Rationale: The market nicher strategy allows firms to achieve high margins by catering to specialized market segments. While market leaders focus on high sales volume, niche firms can command premium prices and enjoy higher profit margins within their targeted niches. 59. Which of the following is true about market-nichers? A) They are market followers in small markets. B) They tend to have high manufacturing costs. C) Their return on investment exceeds that in larger markets. D) A nicher achieves high volume as against a mass marketer that achieves high margin. E) They usually experience long-term losses. Answer: C Rationale: Market-nichers often experience higher returns on investment than those in larger markets because they can command premium prices and incur lower marketing costs due to their targeted customer base. 60. The key idea in successful nichemanship is specialization. Which of the following specialists would most closely be identified with the characterization of being an organization that limits its selling to one customer? A) end-user specialist B) vertical-level specialist C) customer-size specialist D) specific-customer specialist E) quality-price specialist Answer: D Rationale: A specific-customer specialist is an organization that limits its selling to one customer, demonstrating a high degree of specialization. This type of specialist focuses exclusively on serving the needs of a single customer, often through customized products or services tailored to that customer's requirements. 61. Newman Inc. is a company that manufactures saddles specifically for horses that race in derbies in the U.S. and the UK. Within this context the firm is exhibiting the role of a ________ specialist. A) vertical-level B) customer-size C) product-line D) job-shop E) service Answer: C Rationale: Newman Inc. specializes in producing a specific type of product – saddles for racing horses. This specialization in a particular product line qualifies the company as a product-line specialist. 62. A market nicher is considered to be a(n) ________ specialist if the firm specializes in producing a certain type of product or product feature such as, Rent-a-Wreck, that rents only "beat-up" cars. A) end-user B) vertical-level C) customer-size D) channel E) product-feature Answer: E Rationale: A market nicher that specializes in producing a certain type of product or product feature, such as Rent-a-Wreck renting only "beat-up" cars, qualifies as a product-feature specialist. 63. A job-shop specialist ________. A) sells only in a certain locality, region, or area of the world B) customizes its products for individual customers C) operates at the low- or high-quality ends of the market D) offers one or more services not available from other firms E) specializes in serving only one channel of distribution Answer: B Rationale: A job-shop specialist customizes its products for individual customers, offering tailored solutions to meet specific needs. 64. A firm that is based in France designs jewelry and takes custom orders from around the world. They do not design more than 15 pieces of jewelry in a year and ensure that each design uses unique stones and is different from the other. Such nichemanship is an example of ________ specialist role. A) customer-size B) product C) product-feature D) job-shop E) quality-price Answer: D Rationale: The firm's focus on custom-designed jewelry with unique features and limited production quantities aligns with the characteristics of a job-shop specialist role. 65. When a bank takes loan requests over the phone and hand-delivers the money to the customer, it becomes a ________ specialist. A) geographic B) job-shop C) quality-price D) channel E) service Answer: E Rationale: By offering personalized loan services and hand-delivering money to customers, the bank demonstrates characteristics of a service specialist. 66. ________ is the period of slow sales growth and nonexistent profits. A) Growth B) Decline C) Maturity D) Introduction E) Stagnancy Answer: D Rationale: The introduction phase is characterized by slow sales growth and nonexistent profits as the product is introduced to the market. 67. Campbell Soups is a newly established company that specializes in preparing healthy but tasty food for children under the age of 5. It is incurring huge productions costs, nonexistent profits, and slow sales growth. The company is in the ________ phase of its life cycle. A) stagnancy B) introduction C) maturity D) decline E) growth Answer: B Rationale: Campbell Soups, experiencing slow sales growth, nonexistent profits, and incurring production costs, is in the introduction phase of its life cycle. 68. ________ is a period of rapid market acceptance and substantial profit improvement. A) Stagnancy B) Introduction C) Maturity D) Decline E) Growth Answer: E Rationale: Growth is characterized by rapid market acceptance and substantial profit improvement as the product gains traction in the market. 69. A dance school in the Bronx teaches professional hip-hop and salsa. It is experiencing an increase in student admissions, which is leading to substantial improvement in profits. The school is going through the ________ phase of its life cycle. A) decline B) stagnancy C) growth D) introduction E) maturity Answer: C Rationale: The dance school, experiencing increased student admissions and substantial profit improvement, is in the growth phase of its life cycle. 70. ________ is a slowdown in sales growth because the product has achieved acceptance by most potential buyers. A) Obsolescence B) Introduction C) Growth D) Decline E) Maturity Answer: E Rationale: Maturity is characterized by a slowdown in sales growth as the product achieves acceptance by most potential buyers and market saturation occurs. 71. A music school in Boyles Height, LA, specializes in teaching the guitar and the violin. After a spurt in growth and a few successful years, the school is experiencing a slowdown in sales and stability in its profits due to an increase in competition. The school is in the ________ stage of its life cycle. A) introduction B) growth C) decline D) maturity E) obsolescence Answer: D Rationale: The music school has experienced growth but is now facing increased competition, leading to a slowdown in sales and stable profits. This indicates that the school has entered the maturity stage of its life cycle. 72. During the ________ stage of a product's life cycle, sales show a downward drift and profits erode. A) introduction B) growth C) decline D) obsolescence E) maturity Answer: C Rationale: In the decline stage of the product life cycle, sales begin to decline, leading to a erosion in profits as the product loses market appeal or faces increased competition. 73. After a couple of years of successful business, an experimental theatre company based in Aurora is unable to sell tickets for its theatre shows. They have been using profits from previous shows to run the business. The company is in the ________ phase of its life cycle. A) maturity B) obsolescence C) introduction D) growth E) decline Answer: E Rationale: The theatre company, experiencing a lack of ticket sales and relying on past profits to sustain operations, is in the decline phase of its life cycle. 74. According to Peter Golder and Gerald Tellis, a(n) ________ is the first to develop a working model of the product. A) developer B) creative pioneer C) market pioneer D) product pioneer E) inventor Answer: D Rationale: A product pioneer is the first to develop a working model of the product, introducing it to the market ahead of competitors. 75. One of the ways to change the course of a brand is to modify the product. Under product modification, ________ adds size, weight, materials, supplements, and accessories that expand the product's performance, versatility, safety, or convenience. A) feature improvement B) quality improvement C) style improvement D) size improvement E) technological improvement Answer: A Rationale: Feature improvement involves adding size, weight, materials, supplements, and accessories to enhance the product's performance, versatility, safety, or convenience. 76. An alternate way to increase sales volume is to expand the number of users. This can be done by ________. A) having consumers use the product on more occasions B) having consumers use more of the product on each occasion C) having consumers use the product in new ways D) remaining in the current market segment E) attracting competitors' customers Answer: E Rationale: Expanding the number of users involves attracting competitors' customers to increase sales volume. 77. An alternate way to increase sales volume is to increase the usage rate among users. This can be done by ________. A) converting nonusers B) having consumers use less of the product on each occasion C) having consumers use the product on more occasions D) attracting competitors' customers E) entering new market segments Answer: C Rationale: Increasing the usage rate among users involves having consumers use the product on more occasions to boost sales volume. 78. ________ is a distribution strategy that can be effectively used during the growth stage of the product life cycle. A) Building product awareness B) Phasing out unprofitable outlets C) Building selective distribution D) Building intensive distribution E) Stressing on brand differences Answer: D Rationale: Building intensive distribution, which involves making the product available in as many outlets as possible, is effective during the growth stage to ensure widespread availability and increase sales. 79. Which of the following strategies should be adopted by marketers during a recession? A) increase investment on marketing existing products B) focus on expanding the customer base and not on the retention of existing customers C) focus primarily on price reductions and discounts D) concentrate on communicating the brand value and product quality to consumers E) stick to the budget allocations adopted during the preceding years Answer: D Rationale: During a recession, marketers should concentrate on communicating the brand value and product quality to consumers to maintain competitiveness and appeal despite economic challenges. 80. Benz & Frendz Corp., a manufacturer of high end consumer durables, experienced a sluggish sales growth in most of its product categories during three consecutive quarters of 2009. However, market analysis revealed that its competitors' sales had also slackened during this period. Analysts pointed out that when all firms are losing sales, it is extremely important to adopt strategies that are aimed at retaining customers. This led the firm to reduce operation costs while maintaining product quality. They also revamped their marketing strategy to focus on the values created by their products. Which of the following can be inferred from the strategies adopted by the firm? A) The company was trying to protect its market share and continue to operate as a market leader. B) The company was focusing on geographical expansion. C) The company was aiming to capture a new market segment. D) The company was marketing its products amidst an economic downturn. E) The company was focusing on market penetration. Answer: D Rationale: The strategies adopted by Benz & Frendz Corp., such as reducing operational costs, maintaining product quality, and focusing on product values during a period of economic downturn, indicate that the company was marketing its products amidst an economic downturn to maintain competitiveness and customer loyalty. 81. When the total market expands, the dominant firm usually gains the most. Answer: True Rationale: When a market expands, it typically indicates increased demand or opportunities within that market. The dominant firm, already established and often possessing more resources and market presence, is in a prime position to capitalize on this expansion. Its existing infrastructure, brand recognition, and market share often allow it to capture the majority of the growth. 82. The market leader should look for new customers or more usage from existing customers. Answer: True Rationale: It is essential for market leaders to continually seek avenues for growth. This involves not only attracting new customers but also maximizing the value from existing ones. Encouraging increased usage from current customers through loyalty programs, product innovations, or cross-selling can be a fruitful strategy for sustaining and expanding market leadership. 83. A market-penetration strategy is one where a company searches for new customers in a group that has never used a product before. Answer: False Rationale: A market-penetration strategy involves gaining more market share within existing customer segments or markets where the product is already being sold. It aims to increase sales of existing products to existing markets rather than seeking entirely new customer groups. 84. One way to increase the frequency of consumption of a product by consumers is by introducing it in larger package sizes. Answer: False Rationale: Introducing larger package sizes might lead to less frequent purchases since consumers would take longer to consume the product. Strategies to increase consumption frequency typically involve smaller package sizes, encouraging more frequent purchases or usage occasions. 85. Increasing the amount of consumption requires identifying additional opportunities to use the brand in the same basic way. Answer: False Rationale: Increasing consumption often involves diversifying usage occasions rather than simply using the brand in the same basic way. Identifying new contexts or applications for the brand can expand its relevance and usage frequency among consumers. 86. A marketing program can communicate the appropriateness and advantages of using the brand. Answer: True Rationale: A well-crafted marketing program can effectively communicate the unique benefits and value proposition of a brand to its target audience. By highlighting the appropriateness and advantages of using the brand, marketing efforts aim to influence consumer perceptions and behavior, ultimately driving adoption and loyalty. 87. The most constructive response to protecting market share is continuous innovation. Answer: True Rationale: In dynamic markets, where competition is fierce and consumer preferences evolve rapidly, continuous innovation is essential for maintaining and growing market share. By consistently introducing new products, features, or improvements, a company can stay ahead of competitors, meet changing customer needs, and defend its market position. 88. A responsive marketer looks ahead to needs customers may have in the near future. Answer: False Rationale: A responsive marketer reacts to current needs and trends rather than looking ahead to anticipate future needs. While responsiveness is important for addressing immediate customer concerns, anticipating future needs requires proactive foresight and market research. 89. An anticipative marketer finds a stated need and fills it. Answer: False Rationale: An anticipative marketer doesn't merely respond to stated needs; instead, they anticipate latent needs or desires that customers may not have articulated. By identifying emerging trends, technological advancements, or shifts in consumer behavior, anticipative marketers innovate to create products or solutions that address these unmet needs. 90. A creative marketer discovers solutions customers did not ask for but to which they enthusiastically respond. Answer: True Rationale: Creative marketers go beyond traditional market research and customer feedback to identify opportunities for innovation. By understanding consumer behavior, preferences, and pain points, they can develop novel solutions that surprise and delight customers, generating enthusiastic responses even if those solutions weren't explicitly requested. 91. Position defense means occupying the most desirable market space in consumers' minds, making the brand almost impregnable. Answer: True Rationale: Position defense aims to establish a strong, favorable position in consumers' minds, making it difficult for competitors to challenge. By occupying a distinct and desirable market space, the brand becomes highly defensible, as consumers perceive it as offering unique value or benefits. 92. In counteroffensive marketing, the market leader can meet the attacker frontally and hit its flank, or launch a pincer movement so that it is forced to pull back to defend itself. Answer: True Rationale: Counteroffensive marketing involves strategies employed by a market leader to respond to attacks from competitors. These strategies may include directly confronting the attacker, exploiting their weaknesses, or launching counterattacks to regain lost ground or protect existing market share. 93. In contraction defense, the leader stretches its domain over new territories through market broadening and market diversification. Answer: False Rationale: Contraction defense involves retreating from certain markets or segments to focus resources more effectively. It typically involves reducing the company's scope or divesting from less profitable areas to strengthen its position in core markets. 94. Market diversification shifts the company's focus to unrelated industries. Answer: True Rationale: Market diversification involves expanding into new markets or industries that are unrelated to the company's current products or services. This strategy aims to spread risk and capitalize on new growth opportunities beyond the company's existing market space. 95. Market challengers are companies that attack the leader and other competitors in an aggressive bid for further market share. Answer: True Rationale: Market challengers are aggressive competitors that seek to challenge the dominant market leader and other competitors to gain market share. They often employ various strategies, such as price competition, product innovation, or aggressive marketing, to disrupt the existing market hierarchy. 96. Attacking the market leader proves successful and beneficial only when the leader is not serving the market well. Answer: True Rationale: Attacking the market leader can be successful if the leader is perceived as failing to meet customer needs or if there are significant gaps in the market that competitors can exploit. Effective attacks capitalize on weaknesses in the leader's offerings or service delivery, allowing challengers to attract customers away from the leader. 97. A frontal attacking strategy is another name for identifying shifts that are causing gaps to develop, then rushing to fill the gaps. Answer: False Rationale: A frontal attacking strategy involves directly challenging the market leader head-on, rather than identifying and filling gaps in the market. It often entails aggressive tactics aimed at weakening the leader's position and capturing market share through direct competition. 98. Encirclement attempts to capture a wide slice of territory by launching a grand offensive on several fronts. Answer: True Rationale: Encirclement involves attacking the market leader or dominant competitor from multiple directions simultaneously. This strategy aims to overwhelm the leader by launching coordinated attacks on various fronts, such as product lines, distribution channels, or customer segments. 99. Guerrilla attacks consist of small, intermittent attacks, conventional and unconventional, including selective price cuts, intense promotional blitzes, and occasional legal action. Answer: True Rationale: Guerrilla attacks involve using unconventional tactics, often characterized by small, intermittent actions aimed at disrupting the market or competitors. These actions may include selective price cuts, intense promotional campaigns, or legal maneuvers, all designed to achieve maximum impact with minimal resources. 100. As a market-follower strategy, a counterfeiter emulates the leader's products, name, and packaging, with slight variations. Answer: False Rationale: Counterfeiting involves illegally replicating or imitating the leader's products, often without authorization and with the intent to deceive consumers. It is not a legitimate market-follower strategy but rather a form of intellectual property infringement and unfair competition. 101. As a market-follower strategy, an imitator duplicates the leader's product and packages and sells it on the black market or through disreputable dealers. Answer: False Rationale: While imitation may be a strategy for market followers, selling counterfeit products on the black market or through disreputable channels is illegal and unethical. Legitimate market followers seek to emulate or imitate the leader's products through legal means and compete in the market openly and ethically. 102. As a market-follower strategy, an adapter takes the leader's products and adapts or improves them. Answer: True Rationale: Adapting or improving the leader's products is a common strategy for market followers. By identifying areas for enhancement or customization, adapters can differentiate their offerings while leveraging the existing market presence of the leader. 103. Firms with low shares of the total market can become highly profitable through smart niching. Answer: True Rationale: Smart niching involves targeting specific segments or niches within the market where the firm can excel and serve customers effectively. Even with a low overall market share, focusing on profitable niche markets can lead to significant profitability and success. 104. An alternative to being a follower in a large market is to be a leader in a small market. Answer: True Rationale: Rather than attempting to compete directly with market leaders in large markets, some firms choose to become leaders in smaller, specialized markets or niches. By focusing on serving the needs of a specific customer segment exceptionally well, these firms can achieve leadership positions and enjoy competitive advantages. 105. The nicher achieves high sales volume, whereas the mass marketer achieves high margin. Answer: False Rationale: The nicher typically focuses on serving a narrow market segment with specialized products or services, which may result in lower sales volume but potentially higher margins due to reduced competition. On the other hand, mass marketers target larger market segments with broader appeal, aiming for higher sales volume with typically lower margins per unit. 106. The growth stage of a product's life cycle is a period of rapid market acceptance and substantial profit improvement. Answer: True Rationale: During the growth stage of the product life cycle, consumer acceptance of the product increases rapidly, leading to substantial sales growth and profit improvement. This stage is characterized by expanding market penetration, increasing competition, and rising profitability as economies of scale are realized. 107. During the maturity stage of a product life cycle, profits stabilize or decline because of increased competition. Answer: True Rationale: In the maturity stage, the market for a product becomes saturated, and competition intensifies. As a result, price competition may erode profit margins, and overall profits may stabilize or decline. Firms often focus on differentiation strategies or cost-cutting measures to maintain profitability in this stage. 108. A fashion is a basic and distinctive mode of expression appearing in a field of human endeavor. Answer: False Rationale: A fashion refers to a prevailing trend or style in clothing, accessories, or behavior that gains popularity within a specific context or culture. It is not limited to modes of expression but can encompass various aspects of culture, including clothing, music, art, and lifestyle. 109. Fads are fashions that come quickly into public view, are adopted with great zeal, peak early, and decline very fast. Answer: True Rationale: Fads are short-lived trends or crazes that experience rapid adoption by consumers but also decline quickly once the novelty wears off. They often emerge suddenly, gain widespread popularity, peak rapidly, and then fade away as consumer interest shifts to new trends. 110. An inventor is the first to develop a working model while a product pioneer is the first to develop patents in a new-product category. Answer: False Rationale: An inventor is indeed the first to develop a working model or concept of a new product or technology. However, a product pioneer is typically the first to introduce and successfully commercialize a new product in the market, regardless of patents. Patents may or may not be involved in the pioneering process. 111. Price, distribution, and communication are the nonproduct elements that marketers modify to increase product sales. Answer: True Rationale: Price, distribution (placement), and promotion (communication) are key elements of the marketing mix that marketers can adjust to influence consumer behavior and increase product sales. These elements help shape the overall marketing strategy and affect how the product is perceived and accessed by consumers. 112. An alternate way to increase sales volume is to expand the number of users by having them consume more of the product on each occasion. Answer: False Rationale: This statement describes increasing consumption per use rather than increasing the number of users. To expand sales volume by increasing the number of users, marketers would focus on strategies to attract new customers or convert non-users to consumers of the product. 113. An alternate way to increase sales volume is to expand the number of users by converting nonusers. Answer: True Rationale: Converting non-users into consumers of the product is a viable strategy for increasing sales volume. This may involve targeted marketing efforts to raise awareness, address barriers to adoption, or highlight the benefits of the product to previously untapped market segments. 114. An alternate way to increase sales volume is to increase the usage rates among users by having consumers use the product in new ways. Answer: True Rationale: Increasing usage rates among existing users can be achieved by encouraging them to use the product more frequently or in new ways. This may involve product innovation, diversification of product offerings, or targeted marketing campaigns to highlight additional usage occasions. 115. An alternate way to increase sales volume is to increase the usage rates among users by entering new market segments. Answer: False Rationale: Entering new market segments would involve expanding the customer base rather than focusing on increasing usage rates among existing users. Strategies to increase sales volume by entering new market segments would typically involve targeting different demographics, industries, or geographic regions. 116. The prime objective, during the introduction stage of a product life cycle, is to maximize market share. Answer: False Rationale: During the introduction stage of the product life cycle, the primary objective is often to establish a market presence and build product awareness rather than maximizing market share. The focus is on creating demand, generating trial, and establishing a foothold in the market. 117. The product strategy during the maturity stage of the product life cycle should be to build more intensive distribution. Answer: False Rationale: During the maturity stage, the market is often saturated, and competition is intense. Rather than focusing on expanding distribution, the product strategy may involve differentiating the product, enhancing brand loyalty, or exploring new market segments to maintain or grow market share. 118. During an economic downturn, the potential value and profitability of some target consumers may change. Answer: True Rationale: Economic downturns can significantly impact consumer behavior and purchasing power. As a result, the potential value and profitability of target consumers may shift as their preferences, spending habits, and financial circumstances change in response to economic conditions. 119. Heavy focus on price reductions and discounts during a recession allows firms to improve long-term brand equity and price integrity. Answer: False Rationale: Heavy reliance on price reductions and discounts during a recession can erode brand equity and undermine price integrity in the long term. While discounting may stimulate short-term sales, it can also diminish the perceived value of the brand and condition consumers to expect lower prices, making it challenging to regain premium pricing levels once economic conditions improve. 120. Which three groups of customers can help expand a firm's market demand? Answer: Every product class has the potential to attract buyers who are unaware of the product or are resisting it because of price or lack of certain features. A company can search for new users among three groups: those who might use it but do not (market-penetration strategy), those who have never used it (new-market segment strategy), or those who live elsewhere (geographical-expansion strategy. 121. Which three groups of marketers help satisfy a customer's needs? Answer: In satisfying customer needs, one can draw a distinction between responsive marketing, anticipative marketing, and creative marketing. A responsive marketer finds a stated need and fills it. An anticipative marketer looks ahead to needs customers may have in the near future. A creative marketer discovers solutions customers did not ask for but to which they enthusiastically respond. Creative marketers are proactive market-driving firms, not just market-driven ones. 122. What is counteroffensive defense? Explain with an example. Answer: In a counteroffensive, the market leader can meet the attacker frontally and hit its flank, or launch a pincer movement so it will have to pull back to defend itself. After FedEx watched UPS successfully invade its airborne delivery system, it invested heavily in ground delivery through a series of acquisitions to challenge UPS on its home turf. Another common form of counteroffensive is the exercise of economic or political clout. The leader may try to crush a competitor by subsidizing lower prices for the vulnerable product with revenue from its more profitable products, or it may prematurely announce a product upgrade to prevent customers from buying the competitor's product. Or the leader may lobby legislators to take political action to inhibit the competition. 123. Characterize the four broad strategies often employed by market followers to meet their competitors. Answer: These broad strategies include: (1) counterfeiter - the counterfeiter duplicates the leader's product and package and sells it on the black market or through disreputable dealers; (2) cloner - the cloner emulates the leader's products, name, and packaging, with slight variations; (3) imitator - the imitator copies some things from the leader but maintains differentiation in terms of packaging, advertising, pricing, or location; and (4) adapter - the adapter takes the leader's products and adapts or improves them. 124. What are end-user and vertical-level specialists? Answer: The key idea in successful nichemanship is specialization. A firm that specializes in one type of end-use customer is an end-user specialist. For example, a value-added reseller (VAR)customizes computer hardware and software for specific customer segments and earns a price premium in the process. A firm that specializes at some vertical level of the production-distribution value chain is a vertical-level specialist. A copper firm may concentrate on producing raw copper, copper components, or finished copper products. 125. What is fashion? Answer: Fashion is one of the three special categories of product life cycles. A fashion is a currently accepted or popular style in a given field. Fashions pass through four stages: distinctiveness, emulation, mass fashion, and decline. The length of a fashion cycle is hard to predict. One view is that fashions end because they represent a purchase compromise, and consumers soon start looking for the missing attributes. Another explanation is that too many consumers adopt the fashion, thus turning others away. Still another is that the length of a particular fashion cycle depends on the extent to which the fashion meets a genuine need, is consistent with other trends in the society, satisfies societal norms and values, and keeps within technological limits as it develops. 126. What must the firm do to sustain rapid market share growth? Answer: To sustain rapid market share growth now, the firm must: • improve product quality and add new features and improved styling. • add new models and flanker products (of different sizes, flavors, and so forth) to protect the main product. • enter new market segments. • increase its distribution coverage and enter new distribution channels. • shift from awareness and trial communications to preference and loyalty communications. • lower prices to attract the next layer of price-sensitive buyers. By spending money on product improvement, promotion, and distribution, the firm can capture a dominant position. It can trade off maximum current profit for high market share and the hope of even greater profits in the maturity stage. 127. Which are the three ways to change the course for a brand? Answer: Three ways to change the course for a brand are market, product, and marketing program modifications. Market modification: A company might try to expand the market for its mature brand by working with the two factors that make up sales volume: Volume = number of brand users * usage rate per user. This may also be matched by competitors. Product modification: Managers also try to stimulate sales by improving quality, features, or style. Quality improvement increases functional performance by launching a "new and improved" product. Feature improvement adds size, weight, materials, supplements, and accessories that expand the product's performance, versatility, safety, or convenience. Style improvement increases the product's esthetic appeal. Any of these can attract consumer attention. Marketing program modification: Finally, brand managers might also try to stimulate sales by modifying nonproduct elements - price, distribution, and communications in particular. They should assess the likely success of any changes in terms of effects on new and existing customers. 128. Explain how luxury brands can benefit during an economic recession from having lower-priced brands or sub-brands in their portfolio. Answer: They can review product portfolios and brand architecture to confirm that brands and sub-brands are clearly differentiated, targeted, and supported based on their prospects. Luxury brands can benefit from lower-priced brands or sub-brands in their portfolios. Because different brands or sub-brands appeal to different economic segments, those that target the lower end of the socioeconomic spectrum may be particularly important during a recession. Value-driven companies such as McDonald's, Walmart, Costco, Aldi, Dell, E*TRADE, Southwest Airlines, and IKEA are likely to benefit most. Spam, the oft-maligned gelatinous 12-ounce rectangle of spiced ham and pork, found its sales soaring during the recession. Affordably priced and requiring no refrigeration, Spam is, its maker Hormel claims, "like meat with a pause button." 129. Describe the three strategies that are necessary for a market leader to accomplish to stay on top. Answer: The three primary strategies that may be used by the market leader are: (1) expanding the total market by attracting new customers and by stimulating more usage of product; (2) defending market share; and (3) expanding market share. 130. Your marketing manager has asked you to develop a new customer strategy for your company. Additionally, you have been asked to develop, specifically, a market-penetration strategy to assist in gaining new customers. Describe a market-penetration strategy in this context. Answer: The market-penetration strategy in this context would seek to get new customers from a group that might use the product but as yet do not. 131. Assume that your firm is a market leader in manufacturing detergent. How would the firm use position defense as a defensive marketing strategy to maintain its share? Answer: Position defense means occupying the most desirable market space in consumers' minds, making the brand almost impregnable. Tide, as a popular laundry detergent, has become synonymous with washing machine detergent. Student answers may vary. 132. If you were asked to develop a mobile defense for your products that are likely to come under attack from a market challenger, what would you suggest? Answer: In mobile defense, the leader stretches its domain over new territories through market broadening and market diversification. Market broadening shifts the company's focus from the current product to the underlying generic need. 133. As a brand manager of a firm that manufactures denim jeans, how will you implement a preemptive defense marketing strategy to meet an anticipated competitive challenge? Answer: A preemptive defense is a more aggressive maneuver that has as its purpose to attack before the enemy starts its offense. You can launch a preemptive defense by waging a guerrilla action across the market and keep everyone off balance. Another way to launch a preemptive defense is by introducing a stream of new products like denim jackets and skirts in various colors. Student answers may vary. 134. The cost of buying higher market share through acquisition may far exceed its revenue value. Which are the four factors a company should consider before doing so? Answer: The four factors to be considered before buying higher market share are: the possibility of provoking antitrust action, economic cost, the danger of pursuing the wrong marketing activities, and the effect of increased market share on actual and perceived quality. 135. Who are the ideal opponents of a market challenger? Answer: The opponents of a market challenger are: (1) the industry leader; (2) firms its own size that are not doing the job and are underfinanced; or (3) small local and regional firms. 136. Describe frontal attack as a general market-challenger attack strategy. Answer: In a pure frontal attack, the attacker matches its opponent's product, advertising, price, and distribution. The principle of force says the side with the greater resources will win. A modified frontal attack, such as cutting price, can work if the market leader doesn't retaliate, and if the competitor convinces the market its product is equal to the leader's. 137. Assume that you are the marketing manager of a firm that manufactures athletic shoes. How will you launch an encirclement attack on your competitor? Answer: Encirclement attempts to capture a wide slice of territory by launching a grand offensive on several fronts. It makes sense when the challenger commands superior resources. In an attack on your archrival, you can launch your product in all the major cites of the globe together and surprise your rival. Student answers may vary. 138. The marketing manager of a firm that manufactures cotton cloth has chosen the bypass attack as a means of responding to an industry leader. How will the manager go about launching this type of attack? Answer: The bypass attack is an indirect assault. The marketing manager can diversify into unrelated products like ready-made garments. The manager can also diversify into new geographical markets or adopt new technologies to manufacture its product. Student answers may vary. 139. What is a guerilla attack? Answer: Guerrilla attacks consist of small, intermittent attacks, conventional and unconventional, including selective price cuts, intense promotional blitzes, and occasional legal action, to harass the opponent and eventually secure permanent footholds. A guerrilla campaign can be expensive, although less so than a frontal, encirclement, or flank attack, but it typically must be backed by a stronger attack to beat the opponent. 140. How can a firm choose a specific attack? Answer: Any aspect of the marketing program can serve as the basis for attack, such as lower-priced or discounted products, new or improved products and services, a wider variety of offerings, and innovative distribution strategies. A challenger's success depends on combining several, more specific, strategies to improve its position over time. 141. Describe a counterfeiter as a market-follower. Answer: A counterfeiter duplicates the leader's product and package and sells it on the black market or through disreputable dealers. Music firms, Apple, and Rolex have been plagued by the counterfeiter problem, especially in Asia. 142. If your company, which is a market follower, was labeled as an imitator, what would its primary strategies for meeting competition be? Answer: The imitator copies some things from the leader but maintains differentiation in terms of packaging, advertising, pricing, or location. The leader does not mind the imitator as long as the imitator does not attack the leader aggressively. 143. Who is a market-nicher? Answer: An alternative to being a follower in a large market is to be a leader in a small market or niche. Smaller firms normally avoid competing with larger firms by targeting small markets of little or no interest to the larger firms. But even large, profitable firms may choose to use niching strategies for some of their business units or companies. 144. The market nicher is a specialist. Characterize the end-user specialist role that can be assumed by the market nicher. Answer: When the firm assumes the end-user specialist role, it specializes in one type of end-use customer. For example, a value-added reseller (VAR) customizes computer hardware and software for specific customer segments and earns a price premium in the process. 145. What is a product-feature specialist? Answer: As a product-feature specialist specializes in producing a certain type of product or product feature. Zipcar's car-sharing services target people who live and work in seven major U.S. cities, frequently use public transportation, but still need a car a few times a month. 146. What are fads? Answer: Fads are fashions that come quickly into public view, are adopted with great zeal, peak early, and decline very fast. Their acceptance cycle is short, and they tend to attract only a limited following who are searching for excitement or want to distinguish themselves from others. Fads fail to survive because they don't normally satisfy a strong need. The marketing winners are those who recognize fads early and leverage them into products with staying power. 147. What is the criticism of the product life-cycle concept? Answer: The product life-cycle theory has its share of critics, who claim life-cycle patterns are too variable in shape and duration to be generalized, and that marketers can seldom tell what stage their product is in. A product may appear mature when it has actually reached a plateau prior to another upsurge. Critics also charge that, rather than an inevitable course, the product life-cycle pattern is the self-fulfilling result of marketing strategies, and that skillful marketing can in fact lead to continued growth. Test Bank for Marketing Management Philip T Kotler, Kevin Lane Keller 9780132102926, 9780273753360, 9781292092621, 9780133856460, 9789332587403, 9780136009986
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