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1. Which of the following includes issues of implementation and control of marketing activities?
   • A. mission statement INCORRECT This is might be included as part of a document in another  answer.
   • B. vision statement INCORRECT This is might be included as part of a document in another  answer.
   • C. situation analysis INCORRECT A situation analysis focuses on an organization's internal  resources, strengths, and weaknesses and on opportunities  and threats in the external environment. The result should be an adjustment (or formulation) of objectives  and strategy, but not a complete implementation of that  strategy.
   • D. marketing plan CORRECT A marketing plan would typically include all of the above plus  with the addition of tactics, budgets, and such that  would be used in implementation and control of a  strategic plan.  See Answer C also.
2. Which is more brief and clear?
   • A. vision statement INCORRECT (usually) A mission statement briefly describes what is. A vision statement describes what an organization hopes  or wants to become.  As a generalization, describing  those hopes or wants is less clear and takes more space.
   • B. mission statement CORRECT (usually) A mission statement should be no more than a few sentences long. It should briefly address who are the organization's  stakeholders, what is its product and product position   and, what is its philosophy of doing business. If you can't say who you are and what is your purpose for  being in business in five sentence paragraph, then you  don't know the answer and you won't have customers who  can figure it out either. If you don't know where you are going, nobody will know when you get there.  See Answer A.
3. A statement of an organization's major business thrusts, customer orientation, and business philosophy is probably its:
   • A. mission statement. CORRECT  
   • B. value proposition. INCORRECT A value proposition is a statement that summarizes the  target customer's reason to buy an organization's product.
   • C. customer target. INCORRECT                                      
   • D. marketing mix. INCORRECT Yikes! Even guessing, you should know better.  
4. A statement that summarizes the target customer's reason to buy an organization's product is called:
   • A. a business plan. INCORRECT A business plan is (usually) lengthy document with strategies,   implementation, budgets, and such. This statement  might be an important part of a planning document, however.
   • B. a marketing plan. INCORRECT A marketing plan is (usually) lengthy document with strategies,   implementation, budgets, and such. This statement  might be an important part of a planning document, however.
   • C. a value proposition. CORRECT In addition to a mission statement, an organizatin might   also want to make a statement that is a value   proposition -- a statement that basically answers   the question, "Why do our customers want to   buy from us?"
   • D. a strategic objective. INCORRECT An objective is not a statement of what you are, but of what  you must become or achieve.
5. As a producer of liquid crystal displays used in cell phones makes and sells more product, it sees declines in cost, allowing it to price its product lower and lower over time.  This is due to:
   • A. a differential advantage. INCORRECT It has a cost advantage, and this cost advantage is  due to the issue of another answer.
   • B. a competitive advantage. INCORRECT Declining costs might or might not be a competitive  advantage. Importantly, in this case, declining costs are  presumably due to increases in production that are due to  increases in sales.
   • C. a phenomenon called the experience curve. CORRECT A penetration strategy that is based on pricing that  is tied to this cost curve is called "experience  curve pricing." Holding prices just above  this cost curve is called "riding the  experience curve."
   • D. the product life cycle curve. INCORRECT Declines in cost might correlate with movement along  the product life cycle curve, but not necessarily so.
6. As a producer of liquid crystal displays used in cell phones makes and sells more product, it is able to price its product lower and lower over time while maintaining healthy profits.  This is probably due to:
   • A. economies of scale. CORRECT Higher sales are often accompanied by little increase  in fixed costs. (Associated fixed cost increases  are often called semi-variable costs.) Rather  than taking greater revenues with higher sales,  the producer could lower its price and still  contribute to fixed costs. The lower price could  create a competitive advantage that leads to even  greater sales, which can then lead to even lower  prices. A reason for attempting to penetrate the  market with a lower price is to gain this volume  advantage, resulting in higher market share, which  ultimately can result in higher profits than  competitors with lower market share and lower  economies of scale.
   • B. better product positioning. INCORRECT Sales might or might not be due to a good positioning  strategy; the focus of the question is on declines  in cost and price.
   • C. being in the decline stage of the PLC. INCORRECT Declines in cost might correlate with movement along  the product life cycle curve, but not necessarily  so. What makes this answer absolutely wrong is that  decreases in cost due to experience curve effects  are likely to occur in the introductory and growth  stages of the PLC; costs should be at their lowest  by the maturity stage.
   • D. the value proposition. INCORRECT You're guessing.                                                   
7. In the maturity stage of the PLC, industry sales are:
   • A. growing. INCORRECT You're guessing.                                                   
   • B. stagnant. CORRECT Sales are high but no longer growing. As a  generalization, the only way for one firm  to increase sales is to take market share away  from competitors. This is usually much more  difficult to do in the mature stage than in the  growth stage. the  
   • C. declining INCORRECT You're guessing.                                                   
   • D. irrelevant. INCORRECT So what does the y-axis represent?                                             
8. The number of competitors is most likely to be increasing at which stage of the PLC?
   • A. introduction INCORRECT This is where market pioneers are entering the market while  others wait to see what happens. E.g., IBM waited several  years for Commodore, Radio Shack, and Apple to create  a market for microcomputers before entering that market.
   • B. growth CORRECT By now it is clear that a market exists. Sales gains  for an individual competitor can be had by merely  holding a constant market share since industry  sales are growing. An important strategic objective  at this point is to gain as much market share as  possible in order to hold a dominant position when  industry sales become stagnant (maturity stage).
   • C. maturity INCORRECT For a long list of reasons, it is usually difficult to  enter the market at this point.
   • D. decline INCORRECT This is the point where we typically see harvest and  divest strategies. We could see new entrants into  a market at this stage, but they will probably be  small "niche" players buying a divested  business from a larger player who is leaving the  market.
9. We are most likely to see a price skimming strategy at which stage of the PLC?
   • A. introduction CORRECT When a product class is new, buyers might use price as  a surrogate indicator of quality if experience  with the product class is lacking. A competitor  could, then, sell more product with higher prices  than with lower prices. Additionally, a competitor  that believes it does not have good long-term  prospects to survive in the market might also use  a skimming strategy to maximize profits in the  short run. As the market approaches maturity, we  often will see more price sensitivity as products  become commodities. Price skimming could also be  a strategy used in other stages, however - read  other answers.
   • B. growth INCORRECT Price skimming is more likely to be used in another stage,  but it is possible that a competitor who sees low  prospects for long-term survival in the market to  maximize profits in the short run with a skimming  strategy. Read other answers as well.  
   • C. maturity INCORRECT Price skimming is more likely to be used in another stage;  see answers B and D.
   • D. decline INCORRECT Price skimming is more likely to be used in another stage;  see answer B. Prices can increase in the decline  stage, however, as competitors leave the market to  niche players. E.g., you can still buy cameral film  and can still have it processed, but prices are higher  than during the mature stage and the few sellers of  film and processing might be making higher profits  than during the mature stage.
10. We are most likely to see a price penetration strategy at which stage of the PLC?
    • A. introduction CORRECT As a generalization, we would want to have a  dominant (high relative to competitors) market  share by the time the industry reaches the mature  stage. In the early stages of the PLC, we often  can gain sales by keeping prices low. This  decreases profits but gains market share (i.e.  helps us penetrate the market). Once we have a  dominant position in a mature market (with its  low sales growth), we can raise our prices and  enjoy higher profits. Answer B is also correct  for this same reason.
    • B. growth CORRECT As a generalization, we would want to have a  dominant (high relative to competitors) market  share by the time the industry reaches the mature  stage. In the early stages of the PLC, we often  can gain sales by keeping prices low. This  decreases profits but gains market share (i.e.  helps us penetrate the market). Once we have a  dominant position in a mature market (with its  low sales growth), we can raise our prices and  enjoy higher profits. Answer A is also correct  for this same reason.
    • C. maturity INCORRECT A penetration pricing strategy could be used at the mature  stage, but it could be difficult to make it work if  future profit is the motive. There is already likely  to be a high amount of price competition with industry  profits tending to be low in this stage. That is, it  would be difficult to lower prices below what they  already are, and so an investment in low prices is  likely to have a low future pay-off with regard to  profits gained from market share increases. This is  why we generally try to capture market share before  reaching the maturity stage.
    • D. decline INCORRECT As a generalization, there would be no reason to try to  use any sort of penetration strategy in this market;  it is left to niche players.  
11. Marketing strategy has to do with:
    • A. the 4Ps CORRECT Product, price, promotion, and distribution are   controllable factors.  Internal resources   and the external environment are, for the most   part, uncontrollable.  Given the   uncontrollable constraints and opportunities   that these present, the firm attempts to reach   its objectives by manipulating the controllable   factors -- that's strategy.  The individual activities that are part of implementing   the 4Ps are called *tactics*.
    • B. exceeding the firm's objectives and goals. INCORRECT What is the meaning of "exceeding objectives"?  If   a military unit has the objective of destroying   a particular building, shooting a missile that   "goes the extra mile" and hits a residential   neighborhood isn't an achievement that deserves   deserves a medal.  Destroying an entire   city block rather than a specific building is   also not worthy of a medal.  Strategy has to do with designing a set of tactics that,   when implemented, will achieve an identifiable,   specific, measurable goal.
    • C. exceeding customer expectations. INCORRECT So a customer expected delivery of one ton of decorative   landscaping stones and you thought it would be nice   to exceed that expectation by dumping two tons in   her driveway:  "Strategy" has to do with a plan to achieve   an organization's objectives.  Giving a   customer too much gravel is a "tactic" that would   be used in implementation of some strategy.  But I can't figure out what kind of strategy would be   implemented by leaving a customer with an extra  ton of rocks sitting in her driveway!
12. According to many authors and your own professor, SWOT analysis can be:
    • A. a great waste of time. CORRECT If done haphazardly or incorrectly, it can lead to a   strategy that makes no sense.  I've seen the SWOT charts created by many so-called   professional consultants who clearly don't know   the difference between internal strengths and  weaknesses and external opportunities and threats.  If you can't even tell the difference between internal   resource constraints and external threats -- if   you can't tell the difference between bullets   remaining in your own weapons and bullets that   the enemy is shooting at you -- then you are   likely to devise a strategy that puts the   organization in position to be destroyed.
    • B. another name for marketing plan. INCORRECT SWOT analysis is merely a tool that is helpful in   an organization's internal strengths and weaknesses   and external opportunities and threats.  By   itself, it really isn't a strategy or plan.  HOWEVER, documents that we (including me) often call   a situation analysis or SWOT analysis often end   with strategic or even tactical recommendations. If the document contains very much in the way of   implementation (tactics), budgets, etc., then you   really should call it a marketing plan.
13. In a SWOT analysis, one's own reputation for superior product quality would be classified as a(n):
    • A. strength CORRECT A good reputation is a resource that is possessed, so   it is internal, and it is positive.
    • B. weakness INCORRECT  
    • C. opportunity INCORRECT Having a good reputation is an internal resource.
    • D. threat INCORRECT Having a good reputation is an internal resource. "Good reputation" is only a threat if we mean it   in the context of being possessed by a competitor.
14. Having a good reputation for product quality is a competitive advantage.
    • A. true INCORRECT It cannot be a competitive advantage unless buyers   perceive meaningful differences between sellers.  
    • B. false CORRECT If all competitors have a similarly good or even better   reputation, then this doesn't create an   advantage over competitors.
15. "Scanning for opportunities and threats" means that we are collecting information about:
    • A. our organization's objectives. INCORRECT                                          
    • B. our organization's internal resources. INCORRECT Our own abilities give us strengths and weaknesses that  allow us to take advantage of external opportunities  and to steer clear of or ward off external threats.
    • C. the marketing mix. INCORRECT Our formulation of the marketing mix is the way we take  advantage of external opportunities and steer clear  of or ward off external threats.
    • D. the external environment. CORRECT Opportunities and threats are presented to us by  competitors, technology, economic conditions,  government regulation, and such.