Marketing Strategy Exam 1

Strategy is a fundamental pattern of present and planned objectives, resource deployments, and _____ with markets and environmental factors.

Interactions

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

Scope

The strategy component that specifies the target level of performance to be achieved over a specific time frame is called _____.

Goals and objectives

Which strategy component involves the distribution of financial and human resources across businesses or product-markets?

Resource deployments

A sustainable competitive advantage is established by identifying a firm's unique _____ and leveraging them effectively.

Resources and competencies

Strategy component: Synergy

Definition: The effect where the joint performance of multiple businesses is greater than the sum of their individual parts.

The overall mission, growth strategy, and resource allocation across business units are primary concerns of _____ strategy.

Corporate

What type of strategy focuses on how a single business unit will compete within its specific industry?

Business strategy

A well-defined corporate mission statement helps guide managers on which market _____ to pursue.

Opportunities

Effective mission statements should define the organization's strategic domain in terms of customer _____ to be satisfied.

Needs

Why should a mission statement avoid being defined solely in physical terms like "the railroad business"?

Physical definitions can lead to slow reactions to technological or customer demand changes.

Ethics is concerned with the development of _____ standards by which actions and situations can be judged.

Moral

Marketers view extreme and unsubstantiated advertising claims, often legally termed "puffery," as _____.

Unethical

How does ethics differ from the law regarding social problems?

Ethics is proactive by anticipating social problems, whereas most laws emerge after negative consequences become apparent.

Unethical practices can damage the _____ between a firm and its customers, disrupting long-term relationships.

Trust

List the four components required for a corporate objective to be useful as a benchmark.

Performance dimension, measure/index, target level, and time frame.

What does the SMART acronym stand for in the context of specifying objectives?

Specific, Measurable, Attainable, Relevant, and Time-bound.

The ultimate corporate objective of increasing shareholder economic returns is measured by dividends plus _____.

Stock price appreciation

Formula: Market Value Added ($MVA$)

$MVA = (Market\ Value\ of\ Equity + Market\ Value\ of\ Debt) - Invested\ Capital$

What is the result of combining a firm's debt and market stock value and then subtracting the capital invested in the company?

Market Value Added

A narrow focus on short-term financial objectives can lead managers to overlook the actions necessary to provide _____.

Customer value

One way to reconcile conflicting goals is to state one goal as a _____ (e.g., meeting a minimum ROI hurdle).

Constraint

In the Ansoff Matrix, the growth strategy of increasing share in existing markets with current products is _____.

Market penetration

The growth strategy that involves selling existing products to new segments or geographic areas is called _____.

Market development

What corporate growth strategy focuses on introducing product-line extensions to current customers?

Product development

_____ diversification occurs when a firm moves into a new business that shares resources or competencies with current operations.

Related (or concentric)

_____ diversification occurs when a firm enters a business with no clear connection to its current products or skills.

Unrelated (or conglomerate)

Vertical integration: Forward integration

Definition: A firm moves downstream toward the customer by acquiring a distributor or retail outlet.

Vertical integration: Backward integration

Definition: A firm moves upstream by acquiring a supplier to gain control over volatile sources of supply.

Portfolio models categorize businesses based on market attractiveness and the business's _____.

Competitive strength

In the BCG Matrix, the vertical axis represents the industry's _____.

Market growth rate

In the BCG Matrix, the horizontal axis represents the business's _____.

Relative market share

Formula: Relative Market Share

$Relative\ Market\ Share = \frac{Business's\ Absolute\ Market\ Share}{Leading\ Competitor's\ Absolute\ Market\ Share}$

In the BCG Matrix, a "Relative Market Share" of $1.0$ or larger indicates that the business is the _____.

Market leader

BCG Matrix: Stars

Definition: Market leaders in high-growth industries that require significant investment to maintain share.

BCG Matrix: Cash Cows

Definition: High-share businesses in low-growth markets that generate primary profits and cash flow.

BCG Matrix: Question Marks

Definition: Low-share businesses in high-growth industries that require cash infusions to catch the leader.

BCG Matrix: Dogs

Definition: Low-share businesses in low-growth markets that typically generate low profits or losses.

The process of maximizing short-term cash flow from a "dog" business until it is phased out is called _____.

Harvesting

Value-based planning assesses strategy by examining the _____ the strategy will generate.

Cash flows

In value-based planning, the discount rate used for forecasted cash flows is the business's _____.

Risk-adjusted cost of capital

The amount of return a strategy generates in excess of the cost of capital is known as _____.

Economic Value Added (EVA)

What is the term for the sum of the lifetime values of a firm's current and future customers?

Customer equity

Knowledge-based synergies are created by transferring _____ or brand-name recognition across business units.

Core competencies

Corporate _____ flows from the personality, impressions, and communications projected by an organization.

Identity

Which branding strategy involves using the company's name and logo as the brand for all its products?

Corporate branding

Which branding strategy gives each product a unique brand while de-emphasizing the parent company's identity?

Individual branding

Sharing operational facilities across business units creates synergy by increasing _____.

Economies of scale

What is a Strategic Business Unit (SBU)?

A component of a firm engaged in a unique set of product-markets with responsibility for its own profitability.

SBUs should ideally serve a _____ set of markets with a limited number of related technologies.

Homogeneous

The three dimensions used to define individual SBUs are customer needs, customer characteristics, and _____.

Technical compatibility

In Porter's generic strategies, _____ involves building customer perceptions of superior quality, design, or service.

Differentiation

Porter's "focus" strategy involves concentrating on narrowly defined market _____.

Niches

Miles and Snow: Prospector

Strategy: Focuses on growth through the aggressive development of new products and markets.

Miles and Snow: Defender

Strategy: Concentrates on maintaining a secure position in stable product areas through efficiency or quality.

Miles and Snow: Analyzer

Strategy: An intermediate type that defends a core business while carefully following promising industry developments.

Which Miles and Snow strategic type lacks any well-defined competitive strategy?

Reactor

Why is the distinction between business-level and marketing strategy often blurred in single-business firms?

The firm's competitive strategy and its market positioning essentially blend into one.

A _____ is an activity or benefit that is essentially intangible and does not result in ownership.

Service

Performance dimension: Effectiveness

Measure: Success relative to competitors, often measured by sales growth or market share changes.

Performance dimension: Efficiency

Measure: Outcomes relative to resources used, commonly measured by profitability as a percentage of sales or ROI.

Performance dimension: Adaptability

Measure: Success in responding to environmental changes, often measured by the percentage of sales from new products.

Prospector businesses typically outperform defenders on market-share growth but have lower _____.

Return on Investment (ROI)

Which Miles and Snow strategy is most appropriate for unstable, rapidly changing environments with new technology?

Prospector

A _____ strategy works best in mature industries where the basic technology is stable and unlikely to change.

Defender

Successful low-cost defenders usually require high sales _____ from the beginning to gain economies of scale.

Volume

In terms of product policy, prospector businesses should favor _____ product lines compared to competitors.

Broader

Differentiated defenders often use high _____ quality to maintain a competitive advantage in established markets.

Service

Low price is the primary competitive weapon of a _____ business strategy.

Low-cost defender

Prospectors rely heavily on independent channel members and often devote a larger percentage of sales to _____ promotion.

Trade

Because prospectors must build primary demand for new products, they tend to have high _____ expenses as a percent of sales.

Advertising

The _____ strategy focuses on maintaining loyalty through an extensive, well-trained salesforce.

Differentiated defender

What should a marketing manager do if a product's market matures but the SBU it belongs to is a "prospector"?

Recommend moving the product to an analyzer or defender SBU better suited to reaping profits.

An opportunity/threat matrix classifies environmental events based on their degree of impact and their _____.

Probability of occurrence

On an opportunity/threat matrix, events in the upper left-hand box have high probability and _____ impact.

High

What is the first step in the targeting process according to the provided material?

Choose criteria to measure market attractiveness and competitive position.

What is "dual branding"?

A strategy where each product carries both a corporate identifier and an individual product brand.

Firms with strong corporate brands often have more _____ decision-making structures.

Centralized

The goal of a corporate strategy for growth is to develop a compatible _____ of businesses to which the firm can add value.

Portfolio

A "market development" strategy might involve targeting occasional-user segments or expanding into new _____.

Countries

Why is unrelated diversification considered the riskiest growth strategy?

It involves learning new operations and dealing with unfamiliar customer groups without operational synergy.

What is a Japanese "keiretsu"?

A coalition of financial and manufacturing firms grouped around a trading company to coordinate activities.

The BCG Matrix assumes that a firm must generate cash from mature markets to fund attractive _____ opportunities.

Future

One limitation of the growth-share matrix is that relative market share is an inadequate descriptor of overall _____.

Competitive strength

What value-based planning driver represents the number of years a strategy produces returns exceeding the cost of capital?

Duration of value growth

Customer equity data is estimated from purchase frequency, quantity, contribution margin, and historical _____.

Brand-switching patterns

Synergy exists when the total performance of related businesses is _____ than it would be otherwise.

Greater

Strategy is a functional pattern of present and planned objectives, resource deployments, and _____ of an organization with markets and competitors.

Interactions

Which strategy component refers to the breadth of an organization's strategic domain, such as the industries or markets it operates in?

Scope

In the context of strategy, what component involves the specification of targets to be achieved, such as a $15\%$ increase in subscribers?

Goals and objectives

Strategy Component: Resource deployments

Definition: Decisions about how to allocate limited financial and human resources across various businesses or product-markets.

Strategy Component: Identification of sustainable competitive advantage

Definition: Determining how the organization will compete effectively to gain a lasting edge over rivals.

What strategy component occurs when two or more businesses complement each other so that their total performance is greater than the sum of their parts?

Synergy

A corporate _____ statement guides managers on which market opportunities to pursue and which fall outside the firm's strategic domain.

Mission

What fundamental question should a mission statement answer regarding the future of the organization?

What should our business be in the future?

Ethics is considered more _____ than the law because it attempts to anticipate and avoid social problems before they become illegal.

Proactive

True or False: Particular actions may be legal but still considered unethical by marketers and customers.

TRUE

According to the textbook, what is the ultimate objective of most publicly held corporations?

Enhancing shareholder value

What acronym is used to ensure corporate objectives are specific, measurable, attainable, relevant, and time-bound?

SMART

The formula for Market Value Added (MVA) is $MVA = (Market\ Value\ of\ Equity + Market\ Value\ of\ Debt) - \text{_____}$.

Invested Capital