Mini Test 3

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What is the difference between market potential and sales potential?

Market potential is the upper limit of sales for the industry as a whole, sales potential is the upper limit of sales for your company.

_____ is a strategy aimed at developing a specific marketing mix to influence customers' overall perception of a brand, product line, or organization in general?

Positioning.

Roxanne has completed her positioning analysis and has decided that she needs to reposition her product to a more attractive segment. In order to do this she needs to consider?

She needs to consider all of these things.

Bruce wanted to open a coffee shop. He knew his coffee was way better than anything Starbucks could do because he ran taste tests with people in the neighborhood. He found that people in his area preferred their coffee with just a hint of cinnamon in it. When he opened his first store across the street from a Starbucks store, he ran advertisements in the local paper claiming "Bruce's Brew is the spice of life," and offered a coupon good for a free cinnamon grinder with purchase of Bruce's Best. Bruce is using a _____ positioning strategy.

Differentiation.

Bruce wanted to open a coffee shop. He knew his coffee was way better than anything Starbucks could do so he opened his first store across the street from a Starbucks Store. He ran advertisements in the local paper claiming "Bruce's Brew is better than Starbucks Stuff" and offered a money back guarantee to any Starbucks customer who was willing to try a cup of Bruce's Coffee. Bruce is using a _____ positioning strategy.

Head to head.

A ______ is a means of displaying or graphing in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands relative to its own and then take marketing action?

Perceptual map.

The 80/20 principle holds that...?

20 percent of all customers generate 80 percent of the demand.

Which of the following is a condition that must be met before you can consider a group of people to be a market segment?

They must be similar to each other, at least with respect to you product and there must be a way to communicate with them.

One way to segment markets for business customers is by industry type. This approach is attractive because of ______ which makes it cost effective to measure the number of potential customers in an industry?

NAICS codes.

One way to segment markets for business customers is by industry type. This approach is attractive because many industries have _____ which makes it cost effective to communicate with businesses in that Industry?

Trade publications.

The Boston Consulting Group matrix is a 2x2 matrix with four positions: cash cows, stars, problem children (or question marks) and dogs. When looking at market segments, the portfolio approach is a useful tool for:

The BCG matrix is useful for all of these.

The VALS system identifies eight consumer segments based on (1) _____ and (2) _____?

Primary motivation, resources.

The point of discussing the different bases for segmenting markets was?

You can use any combination of segmentation variables to develop market segments that work for your organization.

According to your instructor, which of the bases for segmentation is most frequently used by marketers?

Demographic.

According to Michael Porter, there are two fundamental marketing strategies: being the low cost producer or to differentiate your product form the competition. Why is this important to understand in a discussion of market segmentation?

Because there is only room for one low-cost producer in an industry, everybody else will need to use a differentiation strategy. Market segmentation is a tool you can use to help differentiate your product.

Which of these statements about Porter's fundamental strategies is true?

There is only room for one low cost producer in a market.

Why is it important to develop contingency plans when you adopt a sales forecast?

Because once a plan is underway, there is a tendency to explain away unexpected results rather than try to adapt the plan to the new circumstances.

Santa Claus is trying to estimate demand for toys this Christmas. He know there will be 3.7 billion children because he monitors birth trends across the world. He knows from experience that 14% will be naughty this year and get coal rather than presents for Christmas. He recently commissioned a research study from Donner + Blitzen associates who found that children stop believing in Santa Clause when they are 5.8 years old. Santa is likely to use the _____ method to forecast demand for toys?

Chain ratio

The three steps for developing a market position (or for developing any strategy, really) are?

Figure out where you are now, figure out where you want to end up, develop a plan to get you from where you are to where you want to be.

Which of the following is a major disadvantage of the test-market approach to forecasting?

The time it takes to conduct the test market may put you at a competitive disadvantage in the marketplace.

Alexis is the furniture division sales manager for a textile (cloth) manufacturing company. He has a team of 15 salespeople who call on 200 customers regularly over the course of the year. These customers account for 85% of Alexis' company's sales and buy 80% of the textiles used for furniture in this country. Alexis is likely to use the _____ method to forecast demand?

Survey of buyer intentions.

A _____ is the estimated sales of a product for a defined future period?

Forecast.

What was your instructor talking about when he said America likes a Winner and gave those ridiculous - I mean interesting - examples about people landing on the moon?

When it comes to positioning, it is better to hold the position of category leader in a smaller category than to be second place on a larger category.

According to the instructor, which of the following sources of information is frequently ignored when determining a company's actual market position?

Complaints from dissatisfied customers.

According to Michael Porter's theory discussed in class, which is best strategy to use when you are not the low cost producer in an industry?

Differentiate your product.

Have you ever noticed that when you fill out a warranty card after making a purchase, the manufacturer frequently asks questions such as how old you are, what your ethnicity is and how much money you earn. These questions suggest that the manufacturer is using _____ to segment the market.

Demographics.

What is the point you instructor was trying to make when discussing the law of "truly large" numbers?

That if you have a large enough group of people there will probably be subgroups who are similar to each other at least in the way they perceive your product.

Baking soda is an ingredient in cooking. It also has the property of absorbing odors. The Arm and hammer company found that many people were leaving an open box of baking soda in their refrigerator to absorb food odors. In order to take advantage of this opportunity, they developed a special package with many air vents specifically for use as a refrigerator deodorant. Arm and hammer used _____ segmentation to develop this product?

Buying situation.

Roxanne has completed her positioning analysis and has decided that there is an opportunity to create an adult milk beverage that is enhanced with vitamins. Currently, her company does not make such a product, nor for that matter do any of her competitors. Roxanne has the opportunity to?

Create a new category by introducing a product that is different from anything else on the market.

Many small businesses choose to segment their customers geographically because they can effectively to communicate with their customers using _____?

Local newspapers.

A(n) _____ targeting strategy focuses on one specific marketing segment with one marketing mix?

Concentrated.

Roxanne has developed a new adult milk beverage that is enhanced with vitamins. There has never been a product like this before and she is wondering how many cases she should manufacture in the first year of production. Roxanne is likely to use the _____ method to forecast demand.

Test market.

Santa Claus is trying to forecast demand for coal this Christmas. For the past 300 years, the number of naughty children (who will get coal in their stockings) has increased by 3% each year. Santa is likely to use the _____ method to forecast demand.

Trend analysis.

What do we mean when we speak of the 80/20 rule?

A small fraction of a firm's customers provide a large fraction of a firms sales.

Why is it a good idea for a business to group its customers into market segments?

To be able to respond more effectively to the wants of groups of potential buyers.

Bruce recently went to the eye doctor because he couldn't see clearly enough to do the crossword puzzle in the newspaper. He could see well enough to drive, just not well enough to do the puzzle. His eye doctor said he had presbyopia, a condition that is common in people who are middle aged. The doctor said that Bruce could continue to do the crossword puzzle, but he would need to wear reading glasses. Clearly, a manufacturer of reading glasses would benefit from using a _____ segmentation approach.

Demographic.

Why does your instructor recommend the chain ratio method of sales forecasting?

Because it integrates sales forecasting into the strategic management process.

What is the 80-20 rule?

The understanding that 80% of your business comes from 20% of your customers.

OK, so you have successfully divided the potential market into three distinct market segments. What do you do next?

Create specific product/market offerings to satisfy unmet needs in each segment.

A(n) _____ targeting strategy uses a mass market approach to reach as many people as possible with the same marketing mix.

Undifferentiated.

Which of the following statements about forecasting is true?

. All forecasts are guesses.

According to Ries and Trout, consumers organize products into categories in their minds. The goal of positioning is to...?

Make it so that your product is the first thing that comes to mind when a category is mentioned.

Chun has developed a line of insect repellent with no bad chemicals in it. She used psychographic segmentation to define her primary segment as environmental activists. Which of the following is the WORST way that Chun could communicate with this segment?

Sponsor a fishing tournament where the first prize is a sport utility vehicle.

Roxanne has completed her positioning analysis and believes she understands why her adult milk beverage has been performing so badly. Her product was the first product to use aseptic packaging, which allows milk to be stored at room temperature for long periods of time. Introduced in 1999, the product was positioned as a survival food because everybody was worrying about Y2K problems at the turn of the century. Today people are more concerned about nutrition and her aseptic milk is very low in fat. To take advantage of this, she changes her advertising slogan from "It will keep you alive in the next century" to "A healthy beverage, ready and waiting". Roxanne is trying to?

Reposition her product against itself

According to your instructor, what is the hard way to become the category leader?

Use the marketing mix to create a superior product offering in the category and then spend what it takes to communicate the superiority of your product to consumers.

Shamiya is the marketing manager for a leading mattress manufacturer. She is in the process of developing a market segmentation scheme for her company. Because delivery costs are very high for mattresses, she is likely to consider ______________ along with other variables as she develops her plan?

Geography

The best understanding of market dynamics comes when market size is expressed in:

Both dollars and units

According to your instructor, why is it that many businesses may be unaware of how they are actually perceived in the market place?

Because much of the information executives get is from people who are paid by the company

The Boston Consulting Group matrix is a 2x2 matrix with ___________ on one axis and ___________ on the other axis. This creates four positions: cash cows, stars, problem children (or question marks) and dogs.

market growth rate, relative market share

A(n) _____________ is a relatively homogeneous group of prospective buyers who are similar to each other in terms of their consumption behavior.

Market segment

Many national magazines such as Time or Business Week contain have advertising that is different depending on where in the country the magazine is purchased. These regional editions are useful for marketers trying to communicate with customers who have been segmented according to ____________?

Geography

What is a major disadvantage of the market factor analysis method of forecasting?

In order to use it, there has to be a known market factor that correlates with your product's sales.

According to your instructor, what is a major disadvantage of the trend analysis method to forecasting?

Relying on statistical analysis means you risk ignoring foreseeable environmental factors

What is the relationship between the law of truly large numbers and market segmentation?

The law of large numbers is an abstract concept that helps us understand why market segmentation works

Marketers recognize that people living in one part of the country may have tastes that are different than people in other parts of the country. For example, when traveling in the southern United States, Iced tea is served with the sweetener already in it while in the Northern states, iced tea is served unsweetened. These differences are the reason that __________ segmentation can be useful for many products.

Geographic

Which of the following assumptions about using ethnicity as a segmentation variable is correct?

Both race and culture play a role in consumption patterns.

According to your instructor, how many segments should a company target?

The number that allows you to maximize profits with the resources available to you.

Julio is the sales manager for Champion Spark Plugs. Julio knows that there will be a need for 4.6 sparkplugs (on average) for every new car built this year and a need for 0.7 replacement sparkplugs for every car built in the last seven years. Julio is likely to use the ___________ method for forecasting demand?

Market Factor Analysis

Psychographics, the practice of combining psychology, lifestyle and demographic information to segments markets can provide useful insight about consumer motivations and buying patterns. One of the weaknesses of using this approach for market segmentation is that it is difficult to ___________ psychographic segments.

Measure

A(n) ______________ targeting strategy develops more than one distinct marketing mix?

Multisegment

Which of the following explains the law of truly large numbers as discussed in class?

Given a large enough group of people, we can predict what a subset will do with respect to your product.

The most attractive market segment for fast food restaraunts is heavy users (no pun intended). These customers visit fast food restaraunts 14 or more times per month on average. This is an example of _______________ segmentation in the fast food industry?

Buying situation

Roxanne has completed her positioning analysis and now understands why her line of adult milk beverages has been performing so badly. There are too many competitors out there and she hasn't been able to gain market share from the category leader - Bruce's Power Gulp, a vitamin enhanced milk beverage. She believes there are people out there who would prefer a less-processed product at a lower price. She decides to change her advertising slogan to "The Fresh Alternative to enhanced milk beverages". Roxanne is trying to?

Reposition her product against the competition

According to your instructor, what is the easiest way to become the category leader for a product category?

Develop a brand new product that is different from anything else on the market

Which of the following was NOT one of the bases for market segmentation discussed in class?

statistics

Roxanne has completed her positioning analysis and now understands why her line of adult milk beverages has been performing so badly. There are too many competitors out there and she hasn't been able to gain market share from the category leader - Bruce's Power Gulp, a vitamin enhanced milk beverage. She believes there are people out there who would prefer a less-processed product at a lower price. She decides to change her advertising slogan to "The Fresh Alternative to enhanced milk beverages". Roxanne is trying to?

Reposition her product against the competition

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