Business Mission and Marketing Plan Part II

Answer Key 75. c 76. a 77. c 78. d 79. b 80. b 81. d 82. d 83. b 84. a 85. a 86. d 87. b 88. b 89. d 90. a 91. b 92. b 93. c 94. b 95. a 96. a 97. a 98. c 99. d 100. c 101. b 102. a 103. d 104. b 105. a 106. b 107. c 108. c 109. a 110. c 111. c 112. a 113. c 114. c 115. c 116. (Answers will vary). Effective strategic planning requires continual attention, creativity, and management commitment. Strategic planning should not be an annual exercise in which managers go through the motions and forget about strategic planning until the next year. It should be an ongoing process because the environment is continually changing and the firm’s resources and capabilities are continually evolving. Managers should challenge assumptions about the firm and the environment and establish new strategies. For example, major oil companies developed the concept of the gasoline service station in an age when cars needed frequent and rather elaborate servicing. These major companies held on to the full-service approach, but independents were quick to respond to new realities and moved to lower-cost selfservice and convenience store operations. Major companies took several decades to catch up. Perhaps the most critical element in successful strategic planning is top management’s support and participation. Google, for example, strongly supports educational and leadership programs for employees, as well as opportunities to address management with ideas and concerns. 117. (Answers will vary). One method for developing alternatives is Ansoff’s strategic opportunity matrix, which matches products with markets. Firms can explore these four options: 1. Market penetration: A firm using the market penetration alternative would try to increase market share among existing customers. Fast-food giant McDonald’s introduced all day Breakfast in 2015 in an attempt to encourage its breakfast-loving customers to visit the restaurant more often. 2. Market development: Market development means attracting new customers to existing products. Ideally, new uses for old products stimulate additional sales among existing customers while also bringing in new buyers. McDonald’s, for example, has opened restaurants in Russia, China, and Italy and is eagerly expanding into Eastern European countries. In the nonprofit arena, the growing emphasis on continuing education and executive development by colleges and universities is a market development strategy. 3. Product development: A product development strategy entails the creation of new products for present markets. In 2016, Abbott Laboratories introduced a new line of healthy snacks called Curate Bars to complement its Ensure and Glucerna meal-replacement lines and its Similac infant formula line. These bars feature unique flavors, rich textures, and healthy ingredients to appeal to the growing health-conscious market. 4. Diversification: Diversificationis a strategy of increasing sales by introducing new products into new markets. A diversification strategy can be risky when a firm is entering unfamiliar markets. However, it can be very profitable when a firm is entering markets with little or no competition. 118. (Answers will vary). The target market strategy identifies the market segment or segments on which a firm should focus. A market segment is a group of individuals or organizations who share one or more characteristics. They therefore may have relatively similar product needs. This process begins with a market opportunity analysis (MOA)—the description and estimation of the size and sales potential of market segments that are of interest to the firm and the assessment of key competitors in these market segments. After the firm describes the market segments, it may target one or more of them. Target markets can be selected by appealing to the entire market with one marketing mix, concentrating on one segment, or appealing to multiple market segments using multiple marketing mixes. Any market segment that is targeted must be fully described. Demographics, psychographics, and buyer behavior should be assessed. If segments are differentiated by ethnicity, multicultural aspects of the marketing mix should be examined. If the target market is international, it is important to describe differences in culture, economic and technological development, and political structure that may affect the marketing plan. 119. (Answers will vary). Implementation is the process that turns a marketing plan into action assignments and ensures that these assignments are executed in a way that accomplishes the plan’s objectives. Implementation activities may involve detailed job assignments, activity descriptions, time lines, budgets, and lots of communication. It requires delegating authority and responsibility, determining a time frame for completing tasks, and allocating resources. Sometimes a strategic plan also requires task force management. A task force is a tightly organized unit under the direction of a manager who, usually, has broad authority. A task force is established to accomplish a single goal or mission and thus works against a deadline. Implementing a plan has another dimension: gaining acceptance. New plans mean change, and change creates resistance. One reason people resist change is that they fear they will lose something. Misunderstanding and lack of trust also create opposition to change, but effective communication through open discussion and teamwork can be one way of overcoming resistance to change. These detailed communications may or may not be part of the written marketing plan. If they are not part of the plan, they should be specified elsewhere as soon as the plan has been communicated. Strong, forward-thinking leadership can overcome resistance to change, even in large, highly integrated companies where change seems very unlikely. 120. (Answers will vary). The foundation of any marketing plan is a firm’s mission statement, which answers the question "What business are we in?" The way a firm defines its business mission profoundly affects the firm’s long-run resource allocation, profitability, and survival. The mission statement is based on a careful analysis of benefits sought by present and potential customers and an analysis of existing and anticipated environmental conditions. The firm’s mission statement establishes boundaries for all subsequent decisions, objectives, and strategies. A mission statement should focus on the market or markets the organization is striving to serve rather than on the good or service offered. It should define its business in terms of the benefits customers seek. For example, Frito-Lay defines its mission as being in the snack-food business rather than in the corn chip business. The mission of sports teams is not just to play games but also to serve the interests of the fans. Business missions should not be stated too broadly. "To provide products of superior quality and value that improve the lives of the world’s consumers" is probably too broad a mission statement for any firm except Procter & Gamble. Care must be taken when stating what business a firm is in. 121. (Answers will vary). Of the four Ps (product, place/distribution, price, and promotion), the marketing mix typically starts with the product. The heart of the marketing mix, the starting point, is the product offering and product strategy. It is hard to design a place strategy, decide on a promotion campaign, or set a price without knowing the product to be marketed. The product includes not only the physical unit but also its package, warranty, after-sale service, brand name, company image, value, and many other factors. Consumers buy things not only for what they do (benefits) but also for what they mean to them (status, quality, or reputation). Products can be tangible goods such as computers, ideas like those offered by a consultant, or services such as medical care. Price is what a buyer must give up to obtain a product. It is often the most flexible of the four Ps—the quickest element to change. Marketers can raise or lower prices more frequently and easily than they can change other marketing mix variables. Price is an important competitive weapon and is very important to the organization because price multiplied by the number of units sold equals total revenue for the firm. 122. (Answers will vary). Target markets can be selected by appealing to the entire market with one marketing mix, concentrating on one segment, or appealing to multiple market segments using multiple marketing mixes. Target markets could be eighteen- to twenty-five-year-old females who are interested in fashion (Vogue magazine), people concerned about sugar and calories in their soft drinks (Diet Pepsi), or parents who do not have the time to potty train their children (Booty Camp classes where kids are potty trained). Any market segment that is targeted must be fully described. Demographics, psychographics, and buyer behavior should be assessed. If segments are differentiated by ethnicity, multicultural aspects of the marketing mix should be examined. If the target market is international, it is especially important to describe differences in culture, economic and technological development, and political structure that may affect the marketing plan. 123. (Answers will vary). A marketing objective is a statement of what is to be accomplished through marketing activities. Objectives must be consistent with and indicate the priorities of the organization. Specifically, objectives flow from the business mission statement to the rest of the marketing plan. Carefully specified objectives serve several functions. First, they communicate marketing management philosophies and provide direction for lower-level marketing managers so that marketing efforts are integrated and pointed in a consistent direction. Objectives also serve as motivators by creating something for employees to strive for. When objectives are attainable and challenging, they motivate those charged with achieving the objectives. Additionally, the process of writing specific objectives forces executives to clarify their thinking. Finally, objectives form a basis for control: the effectiveness of a plan can be gauged in light of the stated objectives. To be useful, stated objectives should be: Realistic: Managers should develop objectives that have a chance of being met. For example, it may be unrealistic for start-up firms or new products to command dominant market share, given other competitors in the marketplace. Measurable: Managers need to be able to quantitatively measure whether or not an objective has been met. Time specific: By what time should the objective be met? "To increase sales of Purina brand cat food between January 1, 2017 and December 31, 2017." Compared to a benchmark: If the objective is to increase sales by 15 percent, it is important to know the baseline against which the objective will be measured. Will it be current sales? Last year’s sales? 124. (Answers will vary). The three types of competitive advantages are: cost, product/service differentiation, and niche. Having a cost competitive advantage means being the low-cost competitor in an industry while maintaining satisfactory profit margins. Cost leadership can result from obtaining inexpensive raw materials, creating an efficient scale of plant operations, designing products for ease of manufacture, controlling overhead costs, and avoiding marginal customers. Because cost competitive advantages are subject to continual erosion, product/service differentiation tends to provide a longer-lasting competitive advantage. The durability of this strategy tends to make it more attractive to many top managers. A product/service differentiation competitive advantage exists when a firm provides something that is unique and valuable to buyers beyond simply offering a lower price than that of the competition. A niche competitive advantage seeks to target and effectively serve a single segment of the market. For small companies with limited resources that potentially face giant competitors, niche targeting may be the only viable option. A market segment that has good growth potential but is not crucial to the success of major competitors is a good candidate for developing a niche strategy. 125. (Answers will vary). A strategic business unit (SBU) is a subgroup of a single business or collection of related businesses within a larger organization. For example, large companies may manage a number of very different businesses or SBUs that each has its own rate of return on investment, growth potential, and associated risks. Additionally, each requires its own strategies and funding. A properly created and functioning SBU: Has a distinct mission and a specific target market Controls its own resources Has its own competitors Has a single business or a collection of related businesses Plans independently of the other SBUs in the total organization. In theory, an SBU should have its own resources for handling basic business functions: accounting, engineering, manufacturing, and marketing. In practice, however, because of company tradition, management philosophy, and production and distribution economies, SBUs sometimes share manufacturing facilities, distribution channels, and even top managers. 126. (Answers will vary). Marketers must understand the current and potential environment in which their product or service will be marketed. A situation analysis is sometimes referred to as a SWOT analysis—that is, the firm should identify its internal strengths (S) and weaknesses (W) and also examine external opportunities (O) and threats (T). When examining internal strengths and weaknesses, the marketing manager should focus on organizational resources such as production costs, marketing skills, financial resources, company or brand image, employee capabilities, and available technology. When examining external opportunities and threats, marketing managers must analyze aspects of the marketing environment. This process is called environmental scanning—the collection and interpretation of information about forces, events, and relationships in the external environment that may affect the future of the organization or the implementation of the marketing plan. Environmental scanning helps identify market opportunities and threats and provides guidelines for the design of marketing strategy. The six most often studied macroenvironmental forces are social, demographic, economic, technological, political and legal, and competitive. 127. (Answers will vary). Strategic planning is the managerial process of creating and maintaining a fit between the organization’s objectives, available resources, and the evolving market opportunities. Strategic marketing management addresses two questions: (1) what the organization’s main activity is at a given time and (2) how the organization will achieve its goals. The goal of strategic planning is long-run profitability and growth. Thus, strategic decisions require a long-term commitment of resources. A strategic error can threaten a firm’s survival. On the other hand, good strategic planning can help protect and grow the resources of the firm. 75. Varion Air, an airline company, is providing a promotional offer to mark its first anniversary. Customers will receive a complimentary ticket upon purchase of three business class tickets. In this case, which of the following is a likely outcome of its promotional strategy? a. It will satisfy the customers and not the management of Varion Air. b. It may be ineffective because the role of promotion in the marketing mix does not apply to services. c. It may increase the sales of Varion Air. d. This particular promotion will work independently of the other three elements of the marketing mix. 76. The thorough, systematic, periodic evaluation of the objectives, strategies, structure, and performance of the marketing organization is called ________. a. the marketing audit b. evaluation and control c. post-audit tasks d. post-implementation audit 77. A company is most likely to fail to achieve a marketing objective if there are changes in the environment ______. a. before the objective is specified and after the strategy is debated b. before the objective is specified and the strategy is implemented c. after the objective is specified and the strategy is implemented d. after the objective is specified and before the strategy is implemented 78. Delat Corp. is a large corporation that offers several product lines. On the company’s website, the following text is highlighted: “The aim of our business is to achieve profitability by offering our customers high-quality products that are manufactured in a cost-effective manner. Our goal is to provide value to our customers, serve the community, and preserve the environment.” This text is most likely to be Delat Corp.’s __________________. a. article of incorporation b. statement of qualification c. scenario planning d. mission statement 79. Which of the following statements is true of a niche strategy? a. Only large companies can implement a niche strategy. b. Companies that adopt a niche strategy target a single market segment. c. Only companies that do not have competitors can adopt a niche strategy. d. Companies that adopt a niche strategy can only gain a price advantage over competitors. 80. Critics of Ansoff’s matrix mention that the matrix does not: a. provide firms with different marketing strategies. b. reflect the reality of how businesses grow. c. indicate which types of markets can be created or entered given a company’s core capabilities. d. outline clear-cut sectors for businesses. 81. Unlike a sustainable competitive advantage, a cost competitive advantage: a. does not ensure satisfactory profit margins. b. requires business firms to reduce after-purchase service options. c. involves producing goods that cannot be copied by competitors. d. is subject to continual erosion. 82. Which of the following is NOT a characteristic of marketing audit? a. It is a comprehensive process. b. It is a systematic process. c. It is an objective process. d. It is an infrequent process. 83. Which of the following terms states that costs decline at a predictable rate as experience with a product increases? a. Ansoff’s strategic opportunity matrix b. Experience curve c. Marketing myopia d. Market opportunity analysis (MOA) 84. Nessca Inc. is a pharmaceutical company that designs its products to suit the needs of a group of people with similar characteristics. In this case, Nessca should target which of the following market segments? a. A group of individuals who are diabetic b. A group of individuals who work in the same organization c. A group of individuals who are working professionals d. A group of individuals who reside in the same residential area 85. Which of the following actions is primarily associated with a niche strategy? a. Choosing a target market that is not crucial to the success of major competitors b. Manufacturing products in bulk and targeting average customers c. Selling products without extra frills or options d. Creating cross-departmental teams across all strategic business units 86. Which of the following firms is most likely to follow a niche strategy? a. Libra Inc., a motor company, adopts new production techniques to achieve economies of scale. b. Alpha Electronics dissolves one of its strategic business units. c. Venus Inc. sells health and beauty products similar to the ones available in the market. d. Relish, a confectionery store, sells handcrafted chocolates in only one city. 87. A statement of what is to be accomplished through marketing activities is called __________. a. the marketing mix b. a marketing objective c. market opportunity analysis d. a competitive advantage 88. Which of the following is correct about a sustainable competitive advantage? a. It is not attractive because of its durability. b. It cannot be copied by the competition. c. It lowers costs by removing frills. d. It does not offer any low-priced products. 89. When an SBU has become a _____________, it is essential to either invest in it heavily to gain better market share, acquire competitors to get the necessary market share, reposition its products, or drop it. a. cash cow b. star c. dog d. problem child 90. Which of the following statements is true of a marketing audit? a. It should be carried out on a regular schedule. b. It is always conducted by an inside party. c. It covers just the trouble spots of an organization. d. It is a process for implementing a marketing plan. 91. When following up on a marketing plan, the _____ process provides the mechanisms for evaluating marketing results in light of the plan’s objectives and for correcting actions that do not help the organization reach those objectives within budget guidelines. a. implementation b. control c. environmental scanning d. post-audit 92. One component of product in a marketing mix is ________. a. sales promotion b. the company image c. the point of purchase d. personal selling 93. In the context of the innovation matrix, which of the following decisions is designed to take company strengths into new markets? a. Transformational innovations b. Retroactive innovations c. Adjacent innovations d. Core innovations 94. __________ is the process of anticipating future events and determining strategies to achieve organizational objectives in the future. a. Divesting b. Planning c. Holding d. Harvestin g 95. In the portfolio matrix, a business unit that has low growth potential and a small market share is called a: a. dog. b. cash cow. c. star. d. problem child. 96. The price component of a marketing mix is: a. a competitive weapon for companies. b. the basis for achieving a product differentiation advantage. c. the starting point of the marketing mix. d. the least flexible element of the marketing mix. 97. In the context of a marketing mix, the product includes: a. the name of the brand. b. the point of purchase. c. the elements of advanced strategic planning. d. personal selling. 98. Identify which statement correctly describes the effect price has in the marketing mix. a. It does not affect a firm’s competitive advantage. b. It is the least important of the four Ps of the marketing mix. c. It is what a buyer must give up to obtain a product. d. It is the hardest to change among the four Ps of the marketing mix. 99. In the context of the innovation matrix, decisions taken at the _____ level implement changes that use existing assets to provide added convenience to existing customers and potentially entice customers from other brands. a. divestment b. diversification c. adjacent innovation d. core innovation 100. Which of these statements is correct with regard to the implementation of marketing objectives? a. Implementation gauges the extent to which marketing objectives have been achieved during the specified time period. b.Brilliant marketing plans succeed even without proper implementation. c. A lot of ongoing communication is involved when executing a plan. d.Managers hold the power to decide and implement decisions rather than delegating it. 101. Which statement is true of implementing a task force? a. Authority is equally vested in each of its members. b. A task force is established to accomplish a single goal or mission. c. It works independently of a specific deadline. d. It is primarily used for strategic planning rather than for implementing marketing plans. 102. The basic goal of ________ is to increase the short-term cash return without too much concern for the long-run impact. a. harvestin g b. holding c. building d. divesting 103. MaxNutri Inc. sells cookies and nutrition bars. The marketers at MaxNutri are trying to come up with new and attractive packaging designs for its cookies. In this scenario, MaxNutri is working on its _____. a. purchase strategy b. distribution strategy c. advertising strategy d. product strategy 104. Tropical Horizons has opened spas in Thailand, Indonesia, and Malaysia and is aggressively expanding into countries around the Mediterranean. This illustrates which of the following strategies of Ansoff’s strategic opportunity matrix? a. Market penetration b. Market development c. Product development d. Diversification 105. Which of the following is an element of a marketing mix? a. Pricing strategies b. Divestment strategies c. Investment strategies d. Trade restraint strategies 106. In the portfolio matrix, a business unit that generates more cash than it needs to maintain its market share is called a: a. star. b. cash cow. c. problem child. d. dog. 107. Which of the following is an example of a competitive advantage due to a product/service differentiation? a. Receipt of government subsidies b. Control of overhead costs c. Establishment of a brand name d. Procurement of inexpensive raw materials 108. In the case of SBUs that are cash cows, problem children, or dogs, the basic goal of _______________ is to increase short-term cash return without increased concern for long-run impact. a. building b. holding c. harvestin g d. divesting 109. Which of the following strategies seeks to target and effectively serve a single segment of the market? a. Niche competitive advantage b. Sustainable competitive advantage c. Product/service differentiation d. Cost competitive advantage 110. In the context of a marketing mix, which business activity is most closely related to a company’s distribution strategies? a. Attractiveness of the product packaging b. Targeting market segments c. Storage of raw materials d. Selection of an advertising medium 111. Which of the following statements is true about a marketing plan? a. It is a set of orally communicated rules and is seldom written down. b. It is developed independently of the external business environment. c. It defines the business mission and objectives. d. It lacks the elements of advanced strategic planning. 112. According to Ansoff’s strategic opportunity matrix, a firm using the market penetration alternative would try to: a. increase market share among existing customers. b. attract new customers to existing products. c. create new products for present markets. d. introduce new products into new markets. 113. In the context of the portfolio matrix, which statement is generally true of SBUs considered to be dogs? a. Protection of existing market share is essential for dogs. b. Dogs have a dominant market share in low-growth markets. c. Typical marketing strategies for dogs are to harvest or divest. d. Dogs escalate in the market if given strong financial funding. 114. A premise of the Boston Consulting Group model states which of the following? a. Diversification strategies can be risky when firms enter unfamiliar markets, even with little or no competition in those markets segments. b.The cash generated from cash cows should be allotted to SBUs considered to be question marks and dogs, instead of stars. c. Management must find a balance among the SBUs that yields the overall organization’s desired growth and profits with an acceptable level of risk. d.Companies must rely on new, unfamiliar assets to develop the type of breakthrough decisions that would determine their sustainability in the future. 115. In the context of SWOT analysis, which of the following can be considered a strength of an organization? a. Imitable products and services b. A new unserved market c. A superior production technology d. Increased taxes on products 116. Discuss how to make strategic planning effective. 117. Discuss the market penetration strategy of Ansoff’s strategic opportunity matrix, and provide examples of how companies implement this strategy. 118. Discuss the process of market opportunity analysis. 119. Discuss the process of implementing a marketing plan. 120. What is a mission statement, and how should a firm define its business mission? Give examples to illustrate the components of a good mission statement. 121. Discuss product strategies and pricing strategies in the context of the marketing mix. 122. Discuss the general strategies for selecting target markets. 123. Discuss the factors that make marketing objectives effective. 124. Discuss the three types of competitive advantages. 125. Define the characteristics of strategic business units (SBUs). 126. Explain what is meant by SWOT analysis. 127. Describe the nature of strategic planning.