MKT 4385 EXAM 2 QUESTIONS WITH VERIFIED
ANSWERS
Ch. 4 - Explain marketing principle #3 and why firms require sustainable competitive
advantage - Answers - Marketing Principle #3: all competitors react and an effective
marketing strategy must manager the firm's sustainable competitive advantage (SCA)
- A natural next step is to build and maintain strong barriers around customers to
withstand competitive attacks, now and in the future, which is the essence of MP#3.
Define SCA - Answers - A firm has a sustainable competitive advantage (SCA) when it
is able to generate more customer value than competitive firms in its industry for the
same set of products and service categories and when these other firms are unable to
duplicate its effective strategy
Identify and discuss the three conditions in marketing that produce SCA - Answers - 1.
Customers care about what this SCA offers
2. The firm does it better than competitors, which generates a relative advantage
3. The SCA must be hard to duplicate or substitute, even with significant resources
Describe the three sources of SCA: brands, offerings, and relationships - Answers -
Brands - is most effective in large consumer markets
- More effective for consumer goods
- Advertising, PR, sponsors
Offerings - effective because new and innovative products and services have the
potential to disrupt virtually any market segment
- R&D
- New products and services
- New technologies
Relationships - most effective in business-to-business, service, and complex offering
settings
- More effective for B2B goods, services, intangibles, and complex or risky offerings
- Salespeople, any boundary spanner, online relationships
Explain how competitors can undermine a firm's SCA - Answers - Competitors have
many ways to undermine a firm's SCA, including technical innovations, exploiting
customers' changed desires, finding better solutions to a problem, and introducing "me-
too" offerings with greater efficiency.
Describe a customer equity perspective - Answers - A customer equity perspective
implies that customers should be considered assets, managed and tracked that way, to
, improve firm performance. Investments in brands, offerings, and relationships represent
important sources of customer equity.
Identify the three inputs and two outputs of the SCA framework - Answers - - There are
three inputs to the SCA framework: the output of MP#1 about what customers want and
how the firm should position itself, the output of MP#2 about the most effective AER
strategies as customers change, and long-term environmental trends
- The two outputs of the SCA framework are: a description of a firm's SCA now and in
the future and a description of the BOR strategies needed to achieve it.
Detail the three step process for developing and managing SCA - Answers - The three-
step process for managing SCA includes an AER Strategy Grid, an analysis of key
environmental trends, and a BOR Equity Grid.
Ch. 5 - Define Brand Equity - Answers - A firm's brand equity often represents a
substantial portion of its overall value
Brand equity is the set of assets and liabilities linked to a brand, its name, and its
symbol, which add to or subtract from the value provided by the firm's offering and
relationships
- Brand equity "lies in the mind of the customer," which means that it is difficult for
competitors to copy it, adding to the sustainability of brand-based barriers
- This also makes it hard for firms to adapt or change their brand identity
Identify key benefits of brand equity - Answers - Benefits from strong brand equity
include sales, profit enhancement, and loyalty effects.
Describe the associative network memory model of brand equity and how it works -
Answers - The associative network memory model argues that the mind is a network of
nodes and connecting links. The key characteristics of a brand that influence brand
equity can be captured as nodes and linkages.
Discuss the key elements of a brand strategy: brand positioning, brand architecture and
brand extensions - Answers - - Brand positioning reflects how and where the firm hopes
to appear in customers' mind
- Brand architecture defines both the rationale and the structure among the firm, its
products, and its brand/product extensions—in essence, how the brand is used at
different levels in the organization
-- One extreme is a house of brand architecture (individual brands), such that the firm
focuses on branding each major product with its own unique set of brand elements
-- Other extreme is a branded house architecture (family brands), where a firm uses a
single set of brand elements for all of its products
ANSWERS
Ch. 4 - Explain marketing principle #3 and why firms require sustainable competitive
advantage - Answers - Marketing Principle #3: all competitors react and an effective
marketing strategy must manager the firm's sustainable competitive advantage (SCA)
- A natural next step is to build and maintain strong barriers around customers to
withstand competitive attacks, now and in the future, which is the essence of MP#3.
Define SCA - Answers - A firm has a sustainable competitive advantage (SCA) when it
is able to generate more customer value than competitive firms in its industry for the
same set of products and service categories and when these other firms are unable to
duplicate its effective strategy
Identify and discuss the three conditions in marketing that produce SCA - Answers - 1.
Customers care about what this SCA offers
2. The firm does it better than competitors, which generates a relative advantage
3. The SCA must be hard to duplicate or substitute, even with significant resources
Describe the three sources of SCA: brands, offerings, and relationships - Answers -
Brands - is most effective in large consumer markets
- More effective for consumer goods
- Advertising, PR, sponsors
Offerings - effective because new and innovative products and services have the
potential to disrupt virtually any market segment
- R&D
- New products and services
- New technologies
Relationships - most effective in business-to-business, service, and complex offering
settings
- More effective for B2B goods, services, intangibles, and complex or risky offerings
- Salespeople, any boundary spanner, online relationships
Explain how competitors can undermine a firm's SCA - Answers - Competitors have
many ways to undermine a firm's SCA, including technical innovations, exploiting
customers' changed desires, finding better solutions to a problem, and introducing "me-
too" offerings with greater efficiency.
Describe a customer equity perspective - Answers - A customer equity perspective
implies that customers should be considered assets, managed and tracked that way, to
, improve firm performance. Investments in brands, offerings, and relationships represent
important sources of customer equity.
Identify the three inputs and two outputs of the SCA framework - Answers - - There are
three inputs to the SCA framework: the output of MP#1 about what customers want and
how the firm should position itself, the output of MP#2 about the most effective AER
strategies as customers change, and long-term environmental trends
- The two outputs of the SCA framework are: a description of a firm's SCA now and in
the future and a description of the BOR strategies needed to achieve it.
Detail the three step process for developing and managing SCA - Answers - The three-
step process for managing SCA includes an AER Strategy Grid, an analysis of key
environmental trends, and a BOR Equity Grid.
Ch. 5 - Define Brand Equity - Answers - A firm's brand equity often represents a
substantial portion of its overall value
Brand equity is the set of assets and liabilities linked to a brand, its name, and its
symbol, which add to or subtract from the value provided by the firm's offering and
relationships
- Brand equity "lies in the mind of the customer," which means that it is difficult for
competitors to copy it, adding to the sustainability of brand-based barriers
- This also makes it hard for firms to adapt or change their brand identity
Identify key benefits of brand equity - Answers - Benefits from strong brand equity
include sales, profit enhancement, and loyalty effects.
Describe the associative network memory model of brand equity and how it works -
Answers - The associative network memory model argues that the mind is a network of
nodes and connecting links. The key characteristics of a brand that influence brand
equity can be captured as nodes and linkages.
Discuss the key elements of a brand strategy: brand positioning, brand architecture and
brand extensions - Answers - - Brand positioning reflects how and where the firm hopes
to appear in customers' mind
- Brand architecture defines both the rationale and the structure among the firm, its
products, and its brand/product extensions—in essence, how the brand is used at
different levels in the organization
-- One extreme is a house of brand architecture (individual brands), such that the firm
focuses on branding each major product with its own unique set of brand elements
-- Other extreme is a branded house architecture (family brands), where a firm uses a
single set of brand elements for all of its products
