Know Ch.

1-7
Essay question: Define and Explain
1. Explain how the result of a brand positioning analysis affects the final decision about
where to position a new brand or reposition an existing one? (CH7)
2. Do the same competitive strategies work for single-business firms and start-ups?-pg.66
3. Explain the adoption process: (Pg. 123) The adoption process involves the attitudinal
changes experienced by individuals from the time they first hear about the product until
they adopt it.
4. What are the major issues to be considered while designing marketing databases? (Pg.
132) The cost of collecting the data, the economic benefits of using such data, the ability
of the company to keep data current in todays mobile society, and the rapid advances in
technology that permit the data to be used to maximum advantage.
5. What are the various sources of synergy for a firm?
a. Businesses should seek synergy through the sharing of technology, engineering skills,
market knowledge-expertise that can help improve the success rate of their product
development efforts.
6. What is the primary focus of marketing-level strategies and what critical issues do they
focus on? (Pg. 10?) to effectively allocate and coordinate marketing resources and
activities to accomplish the firms objectives within a specific product market.
7. Why are some firms not very focused on their consumers or competitors? (Pg. 15)
Competitive conditions may enable a company to be successful in the short run without
being particularly sensitive to customers desires.
8. How should strategic business units be designed-Ch.3
A strategic business unit (SBU) should consist of the following characteristics: -pg.61-62
a. A homogeneous set of markets to serve with a limited number of related technologies:
minimizing diversity across a SBUs product-market entries enables the units manager to
better formulate and implement a coherent and internally consistent business strategy.
b. A unique set of product markets, in the sense that no other SBU within the firm competes
for the same customers with similar products. The firm avoids duplication of effort and
maximizes economies of scale within its SBUs.
c. Control over those factors necessary for successful performance, such as production,
R&D, and engineering, marketing, and distribution. This does not mean a SBU should not
share resources, such as a manufacturing plant or a salesforce, with one or more other
units. But the SBU should determine how its share of the joint resource is used to
effectively carry out its strategy.
d. Responsibility for their own profitability
How should strategic business units be decided?
1. Technical compatibility: with respect to product technologies and operational
requirements, such as the use of similar production facilities and engineering skills.
2. Customer needs: or the product benefits sought by customers in the target markets.
3. Personal characteristics: or behavior patterns of customers in the target markets.
The choice is often between technical/operational compatibility and customer homogeneity.
9. Be able to identify value-based planning: a resource allocation tool that attempts to address
such questions by assessing the shareholder value a given
Multiple Choice Questions
1. Know market value added: (economic value added, MVA) a firms MVA is calculated by
combining its debt and the market value of its stock and then subtracting the capital that has been
invested in the company. The result if positive shows how much wealth the company has created.
(CH2, pg 40)
2. Know offshoring: The relocation by a company of a business process from one country to
anothertypically an operational process, such as manufacturing,...yada yada.
3. increasing market penetration of current product: Pg. 42
4. know diversifying: involves learning new operations and dealing with unfamiliar customer
groups. Majority of large global firms are diversified to one degree or another. (CH2, pg 42-45)
5. know related diversification: (concentric diversification) occurs when a firm internally
develops or acquires another business that does not have products or customers in common with
its current businesses but that might contribute to internal synergy through sharing of production
facilities, brand names, R&D know how, or market and distribution skills. Empirical studies report
that related diversification is more conducive to capital productivity and other dimensions of
performance than is unrelated diversification. (CH2, pg 45)
6. know backward integration: occurs when a firm moves upstream by acquiring a supplier (CH2,
pg 44)
7. know forward vertical integration: occurs when a firm moves downstream in terms of the
product flow, as when a manufacturer integrates by acquiring or launching a wholesale distributor
or retail outlet. (CH2, pg 44)
8. know unrelated diversification: (conglomerate diversification) primarily financial rather than
operational. Involves two businesses that have no commonalities in products, customers,
production facilities, or functional areas of expertise. Occurs when a disproportionate number of
a firms current businesses face decline because of decreasing demand increased competition, or
product obsolescence. Riskiest growth strategy in terms of financial outcomes. (CH2, pg 45)
9. Know Porter's three strategies or competitive positions-Ch.3
i. Porter distinguishes 3 strategies, or competitive positions, that businesses
pursue to gain and maintain competitive advantages in their various product-
markets:
ii. 1) Overall cost leadership- have the lowest cost to consumers
iii. 2) Differentiation- building customer perceptions of superior product quality,
design, or service.
iv. 3) Focus- in which the business avoids direct confrontation with its major
competitors by concentrating on narrowly defined market niches.
v. Describes firms lacking distinctive strategy as stuck in the middle and predicts
they will perform poorly.
10. Know Robert Miles and Charles Snow's business set of strategies- Ch.3- pg.64-
65(chart)
i. Business strategies that depend on the intended rate of product market
development.
ii. Classify business units into 4 strategic types
1. Prospector- Focus on growth through the development of new products
and markets
2. Defenders concentrate on maintaining their positions in their established
product markets, while paying less attention to new product
development.
3. Analyzer strategy falls in between these two, attempting to maintain a
strong position in its core product markets while seeking to expand into
new- usually closely related- product markets.
4. Reactors are a business with no clearly defined strategy
11. Know how customer equity can be used to estimate the value of alternative marketing
actions: Pg 50
12. Know regulatory environments and consumer markets, and technological environments
and industrial marketers: RE=Pg88, CM=Pg 14
13. Know geographic segmentation- pg.146- Segmenting customers to target based upon
their geographic area.
Marketers targeting emerging markets in the developing world must pay particular
attention to market segmentation within the geographic regions they target.
Treating people of any developing country as a single market segment is not likely to
bring success.
In emerging and developed markets alike, many segmentation schemes involve both
demographic and geographic factors.
Reports from Claritas that are based on Census data are useful in assessing size and
market potential of a market segment defined by a particular trade area.
Retailers want to usually know about the people living within a 2-5 mile radius of their
proposed new store.
Geodemographics attempts to predict consumer behavior by making demographic,
psychographic, and consumer information available at the block and zip code or postal
code levels.
14. Know demographic segmentation- pg. 144- Segmenting consumer markets to target by
criteria such as age, sex, income, occupation, education, race and ethic origin.
Demographic descriptors are also important in the segmentation of industrial markets,
which are segmented in two stagesMacrosegmentation and Microsegmentation
15. Know macrosegmentation- -pg. 146- Divides the market according to the characteristics of
the buying organization using such attributes as age of firm, firm size, and industry affiliation (SIC
code in the US)
16. Know microsegmentation: pg.146- Groups customers by the characteristics of the individuals
who influence the purchasing decision- for instance, age, sex, and position within the
organization.
Targeting very small segments of the population. This trend accelerated in some
industries by new technology such as computer aided design, enabling firms to mass-
customize many products as diverse as T-shirts and coffee mugs, even designer jeans
and cars.
17. Know market-oriented organizations (CH1, pg 15)
18. product-oriented organizations: (CH1, pg 15) focus most of their attention and resources on
such functions as product and process engineering, finance in order to acquire and manage the
resources necessary to keep pace with growing demand
19. Know value-based planning: (CH2, pg 49) a resource allocation tool that attempts to address
such questions by assessing the shareholder value a given strategy is likely to create. Provides a
basis for comparing the economic returns to be gained from investing in different businesses
pursuing different strategies or from alternative strategies that might be adopted by a given
business unit. Share three basic features:
they assess the economic value a strategy is likely to produce by examining the cash
flows it will generate, rather than relying on distorted accounting measures, such as
return on investment.
they estimate the shareholders value that a strategy will produce by discounting its
forecasted cash flows by the businesss risk-adjusted cost of capital.
they evaluate strategies based on the likelihood that the investments required by a
strategy will deliver returns greater than the cost of capital.
20. Know statistical forecasting methods-not an essay question-Ch.5
21. Know surveys, observations, analogies-Ch.5
22. Know Porter's Five Competitive Forces: Ch. 4- pg.99
Major forces that determine industry attractiveness
i. Threat of new entrants-pg100
ii. Threat of substitute products-pg.102
iii. Bargaining Power of suppliers-pg.101
iv. Bargaining power of buyers-pg.101
v. Rivalry among existing competitors-99
23. Know forecasting:-ch. 5
24. Know parentage, comparison, ingredients and pro-environment- pg.170
Determinant attributes when positioning a product or service, common bases
i. Parentage- includes who makes it, and also prior products.
ii. Comparison-with a competitors product is common
iii. Ingredients- illustrated by some clothing manufacturers saying their shirts are
made only from organic cotton.
25. Explain the features of both positioning and value propositions-ch.7- pg.179
Positioning statement- 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.
Value Proposition- 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.
Both positioning statements and value propositions should generally reflect a unique
selling proposition (USP) that the product embodies.