Marketing Strategy Exam 1

According to the text, what is the definition of a 'strategy'?

A fundamental pattern of present and planned objectives, resource deployments, and environmental interactions.

Which component of strategy refers to the breadth of an organization's strategic domain and the industries it competes in?

Scope

What strategy component involves the allocation of limited financial and human resources across businesses and departments?

Resource deployments

In the hierarchy of strategies, which level focuses on how a business unit competes within its specific industry?

Business-level strategy

What are the five components of a well-defined strategy?

Scope, goals/objectives, resource deployments, sustainable competitive advantage, and synergy.

How is a 'market' distinct from an 'industry'?

Markets are composed of buyers (individuals or organizations), while industries are composed of sellers (firms).

What defines an 'industry' in strategic terms?

A group of firms offering products that are similar and close substitutes for one another.

Which strategic analytical foundation is composed of the '4 Cs'?

Company, Context, Competition, and Customer.

In the Seven Domains framework, what are the two levels at which markets and industries must be assessed?

Macro level and micro level.

At the micro level of market attractiveness, what establishes that a customer need exists?

A clearly identified source of customer pain that the offering resolves.

What is the 'springboard' effect in micro-level market analysis?

When a target segment provides a path for entering subsequent segments in the future.

Which test for micro-level industry attractiveness involves possessing something proprietary that is hard to duplicate?

Sustainable competitive advantage

What is the primary difference between a SWOT analysis and the Seven Domains framework?

The Seven Domains framework organizes information into answers for specific strategic questions like industry attractiveness.

According to the BCG Growth-Share Matrix, what characterizes a 'Star'?

A market leader in a high-growth industry.

In the BCG Matrix, what is a 'Cash Cow'?

A business with a high relative market share in a low-growth industry.

What is the typical strategic recommendation for a 'Dog' in the BCG Matrix?

Divestiture or harvesting to maximize short-term cash flow.

In the BCG Matrix, what are 'Question Marks'?

Businesses in high-growth industries with low relative market shares.

How is 'Relative Market Share' calculated in the BCG Matrix?

The business's absolute market share divided by the share of the leading competitor.

The growth strategy of focusing on current products in current markets to increase market share is called _____.

Market penetration

What growth strategy involves developing new products for existing markets?

Product development

The strategy of bringing existing products into new geographical or functional markets is known as _____.

Market development

What is 'Related Diversification'?

Entering a new business that shares useful resources or capabilities with current operations.

In the Ansoff Matrix, which strategy represents the highest risk by entering new markets with new products?

Diversification

What is 'Backward Integration'?

When a firm moves upstream by acquiring a supplier.

What is 'Forward Integration'?

When a firm moves downstream by acquiring retail stores or distribution channels.

What does the 'S' stand for in SMART objectives?

Specific

What does the 'R' stand for in SMART objectives?

Relevant

Economic Value Added (EVA) is calculated by taking a firm's combined debt and stock market value and subtracting the _____.

Capital invested in the company

In value-based planning, what is the 'discount rate' used to determine?

The present value of forecasted future cash flows.

What is a Strategic Business Unit (SBU)?

A component of a firm that independently decides its own objectives, markets, and competitive strategies.

According to Miles and Snow, which strategic type focuses on growth through new product and market development?

Prospector

Which Miles and Snow strategic type concentrates on maintaining a secure position in stable product-market areas?

Defender

What is an 'Analyzer' strategy in the Miles and Snow typology?

A hybrid strategy that maintains a core business while seeking expansion into related new product-markets.

What characterizes a 'Reactor' business unit?

The lack of any well-defined competitive strategy.

Porter's generic strategy of 'Overall Cost Leadership' focuses on having the _____.

Lowest cost structure in the industry.

Under Porter's typology, what is the 'Differentiation' strategy?

Providing a product or service that is perceived as unique by customers across the industry.

In Porter's Five Forces, when does the bargaining power of suppliers increase?

When switching costs are high or suppliers can realistically threaten forward integration.

In Porter's Five Forces, what are 'Substitutes'?

Alternative product types from other industries that perform the same function.

What is the 'Planning Fallacy' in forecasting?

The tendency to make decisions based on delusional optimism rather than rational weighting of gains and losses.

What is 'Top-down Forecasting'?

When a central person prepares an overall forecast using aggregate economic data or sales trends.

What is 'Bottom-up Forecasting'?

Summing anticipated demand from individual market segments or product lines to create a summary forecast.

In the diffusion of innovation, which group is the first to adopt a new product?

Innovators

What is the 'Chasm' in the diffusion process described by Geoffrey Moore?

The difficult transition between early adopters and the early majority.

What is 'Customer Lifetime Value' (CLV)?

The margins a customer generates over their lifetime minus the cost of serving them.

What is the primary purpose of Customer Relationship Management (CRM)?

To develop a unified view of the customer to increase profitability and shareholder value.

What is 'Competitive Intelligence' (CI)?

A systematic and ethical approach for gathering and analyzing information about competitors and business trends.

What is 'Market Segmentation'?

Dividing customers into subsets with similar needs and characteristics that lead to similar responses to a marketing program.

Which targeting strategy involves serving a specialized benefit to a small but sufficient number of customers?

Niche-market strategy

In a 'Mass-Market Strategy', the firm aims for the largest number of customers by using a _____.

Single product and marketing program.

The process of designing an offering to emphasize benefits that distinguish it from competitors in a target segment is called _____.

Positioning

What are the vertical and horizontal axes of the Market Attractiveness/Competitive Position Matrix?

Market attractiveness (vertical) and competitive position (horizontal).

What constitutes 'synergy' in a corporate strategy?

The sharing of resources, competencies, or programs across businesses to create more value than if they operated independently.

Which demographic descriptor includes categories like 'Young, single' and 'Older couples with dependent children'?

Household life cycle

What is the first step in the market segmentation process?

Identify a homogeneous segment that differs from other segments.

A market-oriented organization focuses primarily on _____.

Identifying and satisfying customer needs and market opportunities.

What is the 'Resource-Based View' of the firm?

The argument that gathering valuable, rare, and inimitable resources provides the best path to competitive advantage.

Which environmental factor favors a 'Prospector' strategy?

An industry in the introductory or early growth stage of its life cycle.

Which business strategy is most likely to have high expenditures on R&D and product engineering?

Prospector

What is a 'Differentiated Defender'?

A business that protects its position in a mature market by offering superior quality or service.

In the Seven Domains framework, what do 'Critical Success Factors' (CSFs) represent?

The few specific things a company must do right to be successful in a particular industry.

What is 'Market Knowledge'?

An understanding of market and competitive conditions and what buyers want and need, based on data.

What is 'Market Potential'?

The likely demand from all actual and potential buyers of a product class.

In marketing research, what is 'Qualitative Research' best suited for?

Gaining deep insights into consumer behavior and identifying unmet needs.

In marketing research, what is 'Quantitative Research' best suited for?

Measuring a population's attitudes and likely responses to marketing programs.

What is the 'planning duration' or 'value growth duration' in value-based planning?

The number of years the investments are expected to deliver returns greater than the cost of capital.

Which business strategy is most likely to prioritize 'Efficiency (ROI)' as its primary goal?

Low-cost defender

What is 'Production Orientation'?

A focus on functional performance and cost, selling what the company can make.

A 'Market Opportunity Analysis' involves a look at the 4Cs, which are _____.

Company, context, competitors, and customers.

Which document spells out the actions and timing necessary to achieve specific marketing objectives?

Marketing plan

What are 'Macro Trends'?

Broad environmental forces, such as demographic or technological shifts, that affect all firms in an industry.

Which stage of the product life cycle is most favorable for a 'Defender' strategy?

Maturity or decline

In the Seven Domains, 'Connectedness' refers to a team's links up, down, and across the _____.

Value chain

What does a 'Value Proposition' outline?

The benefits a product provides to the target customer to differentiate it from other offerings.

Which component of the marketing plan details what to do if certain changes occur in the competitive environment?

Contingency plan