Small Business Management Study Questions - The Marketing Plan

Small Business Management Study Questions The Marketing Plan TRUE/FALSE 1. Small business marketing is best defined as the performance of distribution activities that affect the flow of goods and services from producer to consumer or user. ANS: F Small business marketing involves numerous activities, many of which occur even before a product is created or made ready for distribution or sale. 2. In order to achieve market success, a firm should concentrate on either providing an excellent product and/or service or devising an insightful marketing strategy. ANS: F As suggested by the consumer-oriented philosophy, a firm must also pursue customer satisfaction if it is to be successful. 3. Regardless of the type of business, the consumer-oriented marketing philosophy is the best choice among the competing alternatives. ANS: T 4. A marketing philosophy that originates with consumer needs is market-oriented. ANS: F It is a consumer-oriented marketing philosophy that begins with customer needs. 5. In a small business, the entrepreneur's marketing philosophy typically shapes the firm's marketing activities. ANS: T 6. Customer satisfaction is not the means to achieving a certain goal—it is the goal. ANS: T 7. Because many small business owners have strong production skills, they often attend mostly to the marketing side of the business to compensate. ANS: F Many small business owners have strong production skills and are weak in marketing ability, and therefore they attend primarily to production considerations. 8. A detailed analysis of competitors is an important part of a firm's formal marketing plan. ANS: T 9. Because of the costs involved, it is typical for a business to formulate only a single sales forecast. ANS: F Typically, the sales forecast is a composite of several sales forecasts that are merged together. 10. If an entrepreneur anticipates several target markets, each individual segment must have its own corresponding customer profile. ANS: T 11. The marketing strategy section provides the most detailed information in a formal marketing plan. ANS: T 12. Researchers typically achieve higher response rates from mail and telephone surveys than from personal interviews. ANS: F Personal interviews and telephone surveys typically achieve higher response rates than mail surveys. 13. If an entrepreneur is using their last name in the company’s name, they do not need register the name with local, state and federal agencies. ANS: F Company names should always be registered with the appropriate agencies for protection from use by another company. 14. Microsoft’s programming that operates Windows would be considered intellectual property. ANS: T 15. Marketing research is an effective supplement, but not a replacement, for the intuitive judgment of entrepreneurs. ANS: T 16. Marketing research is defined as the gathering, processing, reporting, and interpreting of marketing information. ANS: T 17. Small businesses typically conduct less marketing research than big businesses, partly because they lack an understanding of the basic marketing research process. ANS: T 18. Because of the considerable cost, time, and effort, pre-testing is generally considered necessary only in the case of extensive, complex questionnaires. ANS: F A questionnaire should be pre-tested by administering it to a small, but representative, sample of respondents. 19. Personal interview surveys are attractive as a marketing research method because these are inexpensive to conduct. ANS: F Personal interview surveys are expensive, especially compared to alternatives such as mail and telephone surveys. 20. Small business owners can now buy inexpensive personal computer software that can perform statistical calculations and generate report-quality graphics. ANS: T 21. It is best to write a marketing plan before collecting marketing research data. ANS: F A marketing plan is stronger with marketing research as a foundation. 22. A market is best defined as a geographical area that is of commercial interest to the entrepreneur. ANS: F A market is a group of customers or potential customers who have purchasing power and unsatisfied needs. 23. Determining market potential is the process of locating and investigating buying units that have purchasing power and needs that can be satisfied with the product and/or service being offered. ANS: T 24. When a strategist divides the total market for a product and/or service into groups with similar needs, so that each group is likely to respond to the same marketing strategy, he or she is engaging in a practice called market segmentation. ANS: T 25. A buildup process requires a small business to identify all potential buyers in a target market's submarkets and then combine these estimates to determine the calculated demand. ANS: T 26. Because of the relatively inconsequential amount of sales conducted by a typical small business, the majority of entrepreneurs need not be concerned with formulating accurate sales forecasts. ANS: F A sales forecast is a critical component of the business plan: therefore, entrepreneurs should engage in forecasting and do so with great care. 27. A small business can determine whether a market is adequate for its plans by checking the sales forecast. ANS: T 28. ANS: T Sales forecasts are typically expressed in dollars or units. 29. Because sales forecasts revolve around specific target markets, the market should be defined as precisely as possible. ANS: T 30. The forecasting process can be characterized by the point at which the process is started and the nature of the predicting variable. ANS: T 31. A chain-ratio method of sales forecasting, or a buildup process, is frequently used for consumer products forecasting. ANS: F Another term for the chain-ratio method of sales forecasting is the breakdown process, not the buildup process. PTS: 1 MULTIPLE CHOICE 1. Small business marketing involves a number of activities, including a. creating, developing, preparing, communicating, and delivering a bundle of satisfaction to a target market. b. planning for optimal production efficiency. c. identifying alternative technologies. d. establishing a sales-oriented marketing philosophy. ANS: A 2. a. b. c. d. A firm's marketing mix consists of ____ activities. pricing, promotion, and distribution product, pricing, and promotion product, promotion, and distribution product, pricing, promotion, and distribution ANS: D 3. a. b. c. d. Traditionally, marketing philosophies have been categorized as consumer-oriented and market-oriented. consumer-oriented, product-oriented, market-oriented, and volume-oriented. consumer-oriented, market-oriented, sales-oriented, and process-oriented. consumer-oriented, production-oriented, and sales-oriented. ANS: D 4. a. b. c. d. U.S. businesses have recently shifted their focus toward a ____ orientation. market consumer production sales ANS: B 5. A firm's marketing philosophy determines how strategic marketing activities are used to achieve a. efficiency. b. customer response. c. desirable thought patterns. d. business goals. ANS: D 6. a. b. c. d. In recent years, the emphasis in U.S. businesses has been on consumers. production. sales. time-honored values. ANS: A 7. a. b. c. d. The ____ marketing philosophy is the preferred approach for all businesses. product-oriented market-oriented sales-oriented consumer-oriented ANS: D 8. Every day, associates of Sewell Motors, a Dallas-based auto retailer, strive to exceed the company's expectations of treating the customer as its number one priority. Every action, policy, and ultimate sale is conducted professionally, with consumers' needs in mind. Sewell Motors subscribes to the ____ marketing philosophy. a. consumer-oriented b. market-oriented c. sales-oriented d. product-oriented ANS: A 9. Creators Plus, a modest-size manufacturer of quality crafts, expends considerable resources to ensure that its products are created in the most efficient manner. According to the owner, distribution and promotion are secondary considerations to managing an expedient production process. Creators Plus subscribes to the ____ marketing philosophy. a. process-oriented b. market-oriented c. sales-oriented d. production-oriented ANS: D 10. The consumer-oriented approach to marketing a. is just one more business philosophy. b. focuses on “pushing the product”. c. recognizes first and foremost the need for attaining production efficiency goals. d. is the recommended philosophy for all types of businesses. ANS: D 11. The decision to produce flavored spring water ice cubes in response to requests from its customers reflects Norway Ice Company’s ____ marketing philosophy. a. production-oriented b. sales-oriented c. consumer-oriented d. response-oriented ANS: C 12. Koldpak has focused principally on the development of revolutionary new ways of containerizing fresh produce for grocery stores. The firm’s marketing philosophy is a. consumer-oriented. b. market-oriented. c. production-oriented. d. sales-oriented. ANS: C 13. a. b. c. d. Adopting a consumer-oriented marketing philosophy is most consistent with quickly gaining highly profitable market returns. eventually achieving long-term market success. the revenue stabilizing effect of large market shares. focusing on the single most profitable consumer segment. ANS: B 14. In preparing a sales forecast, it is desirable to have forecasts covering the “most likely”, “best case” and “_____ case” scenarios. a. rapidly shifting b. pessimistic c. predominant d. worse ANS: D 15. Irene, owner of a small retail shop, is evaluating her customer profile. Which item is the most critical for her for her customer profile? a. the financial ratios to see how much her product costs the customer b. whether the marketing research was completed with primary or secondary information c. the customer benefits to verify they are consistent with the customer needs d. the customer demographics to determine new customers ANS: C 16. In the analysis of a market, the customer profile should include a a. description of consumer weaknesses. b. summary of production plans. c. a detailed discussion of major customer benefits provided by the product and/or service. d. a profile of major markets not targeted. ANS: C 17. a. b. c. d. The market analysis section of the marketing plan should include sales options. a customer profile. a statement of marketing tendencies. a summary of market philosophies. ANS: B 18. Spira Footwear, Inc. produces running and walking shoes with a patented technology. Therefore the company’s profile should concentrate the most on a. the features the shoes offer the customer. b. the uniqueness of the product. c. the benefits to the customers. d. All of the above are equally important. ANS: C 19. a. b. c. d. Which discussion should not be included in the competitor analysis of a marketing plan? competitor's strengths and weaknesses a list of related products currently being marketed or tested by competitors the likelihood that competitors will enter the firm's target market the competitiveness of plans such as warranty and repair policies ANS: D 20. a. b. c. d. The most detailed and scrutinized section of a formal marketing plan is the competitor analysis. marketing strategy. market analysis. consumer analysis. ANS: B 21. a. b. c. d. The areas of marketing strategy that should be addressed within the marketing plan are promotional, pricing, distribution, and product and/or service plans. promotional and pricing plans. promotional and distribution plans. promotional, pricing, and distribution plans. ANS: A 22. John, a car repair shop owner, is developing the warranty and repair policies for his business. What area of the marketing strategy is he addressing? a. Promotional plan b. Product and/or Service plan c. Distribution plan d. Pricing plan ANS: B 23. a. b. c. d. The description of potential customers in a target market is commonly called a customer profile. demographic detailing. Simpkins matrix. target picture. ANS: A 24. a. b. c. d. In considering its marketing strategy a new venture will typically concentrate on mass marketing a multi-segmented market a select few target markets or just one the Internet. ANS: C 25. a. b. c. d. At minimum, the price of a product and/or service must cover the cost of bringing it to market. must demonstrate a substantial profit. must be at or below the competition. must be based exclusively on a break-even analysis. ANS: A 26. The section of the marketing plan which describes the entrepreneur’s approach to creating customer awareness of the product or service is the a. product and/or service section. b. promotion section. c. distribution section. d. pricing section. ANS: B 27. If a firms method of product delivery is exportation, which topic is not an important area to discuss in the distribution section of the marketing strategy? a. Relevant laws concerning exportation b. Product presentation c. Knowledge of exchange rates between currencies d. Relevant regulations concerning exportation ANS: B 28. a. b. c. d. The initial step in the marketing research process is to select a data collection method. identify consumer/business segments of interest. identify informational needs. conduct a preliminary information search. ANS: C 29. To determine credit card average purchases, managers of Component City Stereo and Appliances reviewed credit card sales receipts from the previous three months. Managers are conducting marketing research by collecting and analyzing a. primary data. b. observational data. c. questioning data. d. secondary data. ANS: D 30. Which observational method has gained increased use with small business owners recently? a. Web surveys b. Twitter c. Mystery Shoppers d. Consultants ANS: B 31. a. b. c. d. Which source of data would be the least helpful for secondary date use? libraries of higher education the Small Business Administration personal interviews the Internet ANS: C 32. a. b. c. d. Problems typically associated with the use of secondary data do not include outdated material. inconsistent units of measure. lack of credibility. limited number of data sources. ANS: D 33. a. b. c. d. Techniques used to collect primary data are often classified as ____ and ____ methods. internal/external observational/questioning exploratory/descriptive focus/comprehensive ANS: B 34. Mary, owner of Delany Salsas, is curious to know whether the new packaging for her line of salsas is being noticed by supermarket consumers. To collect information, she passively watches shopper reactions as they pass by the Delany Salsas display. Mary is collecting ____ data through ____ methods. a. secondary/observational b. primary/questioning c. primary/observational d. secondary/questioning ANS: C 35. a. b. c. d. Which statement about observational methods is not true? They can be very economical. They avoid potential biases. They can be conducted by a human or by mechanical devices. They are a form of secondary data collection. ANS: D 36. The basic instrument used to guide the researcher and the respondent when surveys are taken is known as a a. questionnaire. b. questioning form. c. interview outline. d. guide form. ANS: A 37. What is the proper order of the steps in the typical research process? 1. Interpreting the data gathered 2. Identifying the informational need 3. Collecting primary data 4. Searching for secondary data a. 3,4,2,1 b. 1,3,4,2 c. 1,2,3,4 d. 2,4,3,1 ANS: D 38. a. b. c. d. Marketing research should be viewed as a supplement to, not a replacement for _____. the observational method. questionnaires. mail surveys. intuitive judgement. ANS: D 39. a. b. c. d. The _____ method is probably the oldest form of research in existence. questioning secondary research observational interpretive ANS: C 40. A ____ is defined as a group of customers or potential customers who have purchasing power and unsatisfied needs. a. consumer segment b. target market c. market d. consumer market ANS: C 41. In order to be appropriately considered a market, a group of customers or potential customers must have a. purchasing power. b. market power. c. satisfied needs. d. correlated needs. ANS: A 42. What caused Tanya Finney, owner of Changes Therapeutic, to change her strategy? a. She realized she could make more money pursuing an unsegmented strategy. b. She realized the company had a competitive advantage in a single-segment. c. Over time, she realized the company had different targets with different needs and selected a multi-segment strategy. d. Because of the company’s change in management, she chose the multi-segment strategy to utilized those strengths. ANS: B 43. Meredith is opening a high end shoe store specializing in designer shoes. Which approach is probably the wisest strategy for the marketing efforts of this company? a. Unsegmented strategy since everyone wears shoes. b. Multi-segment strategy since she could concentrate on persons wanting shoes for different reasons. c. Single-segment strategy since only women with high disposable incomes would be a prospective customer. d. Bi-segment Strategy since the company won’t be able to sell to just one segment to survive. ANS: B 44. a. b. c. d. All of the following variables would be classified as demographic except for macroeconomic climate. age. income. occupation ANS: A 45. a. b. c. d. All of the following variables would be classified as benefit except for occupation. physical fitness. interest in food. language fluency. ANS: A 46. Entrepreneurs should base their market assessments, production schedules, inventory policies, and personnel decisions on a. techniques of observation. b. qualitative analysis. c. intuition alone. d. the sales forecast. ANS: D 47. a. b. c. d. Forecasting sales for a new venture will be the most difficult when the owner is unfamiliar with quantitative analysis. the owner is unfamiliar with qualitative analysis. the owner is starting another business in a new industry. All of the above are equally difficult. ANS: A 48. a. b. c. d. Which item is not a limitation encountered by small businesses when they forecast sales? Entrepreneurial inexperience Limited familiarity with the forecasting process Deficient quantitative analysis skills Lack of sources of current information about business trends ANS: D 49. A ____ estimates how much of a product and/or service will be purchased within a market over a defined period of time. a. market forecast b. market analysis c. sales forecast d. sales analysis ANS: C 50. The sales forecasting procedure in which the forecaster begins with a variable that has a very large scope and then systematically works down to the sales forecast is known as the a. breakdown process. b. buildup process. c. chain-linkage method. d. bottom-up method. ANS: A 51. Identifying all buyers in a market's submarkets and then adding up the estimated demand is known as the _____ sales forecasting approach. a. breakdown process b. buildup process c. chain-ratio method d. bottom-up ANS: B 52. Ideas Unlimited is a consulting firm that provided retailers with information about regional sales trends. To estimate demand in the market for its services, the firm's marketing department identifies all buyers in each category of retailers and determines how much business is possible. The market demand estimate is based on the a. aggregate forecasting process. b. breakdown forecasting process. c. buildup forecasting process. d. indirect forecasting process. ANS: C 53. a. b. c. d. What determines whether the sales forecasting process is direct or indirect? the industry orientation of the firm the nature of the predicting variable the ultimate goal of the entrepreneur the marketing philosophy of the company ANS: B 54. Using the number of births in a historical record to predict the number of driver licenses issued in subsequent years is an example of the use of a(n) ____ variable in forecasting. a. approximating b. indirect c. surrogate d. terminating ANS: C ESSAY 1. After identifying the three levels of a product and/or service’s benefit, provide an example for the US Postal Service. ANS: Using the US Postal Service, an example of the three levels would be as follows. 1. The core product/service (fundamental benefit or solution sought by customers) is the delivery of information. 2. The actual product/service (basic physical product and/or service that delivers those benefits) is the actual placing that information into a mailbox. 3. The augmented product/service (the basic product and/or service plus any extra or unsolicited benefits) is the convenience of that information being at a person’s home mailbox or at a box close to them. 2. Compare and contrast the three marketing philosophies discussed in the text. Give supporting evidence on why one method is stronger than the others. ANS: The three marketing perspectives are the production-oriented, sales-oriented, and consumeroriented philosophies. *A production-oriented philosophy emphasizes the product and concentrates resources on developing the product or service in the most efficient manner, even if other marketing activities are not treated equally. It is used most often by entrepreneurs who have a manufacturing or technology expertise. *A sales-oriented philosophy is know for pushing a product with achieving sales goals as a major objective for the company. It reemphasizes production and customer preferences. This approach is often used by new owners with a high knowledge of sales. * A consumer-oriented philosophy believes that all aspects of the marketing and company should concentrate on the consumer’s needs. This approach is be used by more companies who realize the customer is critical to the companies long-term success. 3. Identify and discuss the three components of the marketing plan and the three marketing activities used to generate information for the marketing plan. Based on the book’s chapter spotlight, Mayan Pigments, analyze what the company completed for each component and supporting activity.. ANS: Mayan Pigments completed the following items for their marketing plan. Marketing Plan *market analysis (locating and describing potential customers): Initially industrial manufacturers. Later moved to being a supplier so customer became Clementine Art *competition (other companies in the market):Initially larger more established customers. With move to being a supplier, competition became much smaller. *marketing strategy (Product/Service, Distribution, Promotion, Pricing): Obtained patents on pigments to protect their competitive advantage of product. Used website as an effective promotional tool Supporting Activities *marketing research (gathering information): Did research on pigment colors and stability. Gathered information on competition and their market share *market segmentation (selection of market groups): Initially had segments of printing inks, paints, coatings, plastics, textiles, leathers, paper, paperboard. Later moved to customers with a benefit variable of “natural and green” and more niche segments. *sales forecasting (predicting sales): Initially used secondary data for global and domestic markets. With move to Clementine Art, thought sales might be smaller but increased due to international growth. 4. What are problems with secondary data use? How can a new entrepreneur neutralize these problems? ANS: Problems include: * Secondary data can quickly become dated and thereby less useful. * The units of measure used in the research may not match the a new entrepreneur needs. For example, sales reported in dollars may need to be stated in units or in euros. * Some sources of secondary data are less trustworthy than others. A new entrepreneur should: * Compare many different secondary sources to see if the sources are reporting similar results. * Concentrate on sources that have a solid reputation such as the SBA or academic organizations. * Check the identify of all sources. 5. What are some of the guidelines that should be followed in developing a questionnaire? ANS:  Ask questions that relate to the issue under consideration.  Select the form of question that is appropriate for the subject and the conditions of the survey; open-ended and multiple-choice forms are two popular options.  Consider the order of the questions carefully to reduce biases.  Ask the more sensitive questions near the end of the questionnaire.  Select the words of each question carefully. They should be as simple, clear, and objective as possible.  Pre-test the questionnaire using a small representative sample of respondents. 6. What techniques used in collecting primary data? Give examples to support the answer. ANS: *Observational Methods: Learning by observing while avoiding interpersonal contact between respondents and researcher. Examples include counting customers in a store or observing reactions to products *Questioning Methods: Learning by conducting surveys or performing experiments which involve interaction between the respondents and researcher. Examples include mail, Internet or telephone surveys or personal interviews. 7. Define the term market and explain the key ingredients of that definition. ANS: The word market means different things to different people. However, the textbook defines this term as "a group of customers or potential customers who have purchasing power and unsatisfied needs." The specifics of this definition include three key ingredients:  The market must have buying units or customers; thus it is more than a geographic area.  Customers in a market must have purchasing power, since no transaction can occur without it.  Unsatisfied needs provide the buyer with the motivation to complete a purchase. 8. Holley is starting a new business and is trying to forecast sales. She has owned two other businesses, one of which was in the same industry as this new venture. Discuss the implications for forecasting for the new business. What could she do to increase her forecasting success? ANS: Conditions that will make forecasting easier include her past experience and should be familiar with forecasting techniques since she has owned a business in the same industry before this proposed operation. However, forecasting could be more difficult because the operation is new. Joining the trade association of her industry might provide her current information. Also subscribing to a professional forecasting service would be an option for general business knowledge,