MBA 706 EXAM 1: QUESTIONS WITH VERIFIED ANSWERS

MBA 706 EXAM 1: QUESTIONS WITH VERIFIED ANSWERS “What is marketing? - CORRECT ANSWER - Helps to build brand equity and the company reputations - Helps engage the customer and the company can learn from its customers relationships - Helps a company stay ahead of the competition" "5Cs - CORRECT ANSWER - Who? - Customer - Company - Context - Collaborators - Competitors" "STP - CORRECT ANSWER - Why/How? - Segmentation - Targeting - Positioning" "4Ps - CORRECT ANSWER - What? - Product - Price - Place - Promotion" "Conformity vs individuality - CORRECT ANSWER May vary over lifetime or in different situations" "Risk seeking vs risk adverse - CORRECT ANSWER Risk tolerance may vary with product knowledge" "Attitudes - CORRECT ANSWER - Influence whether consumers will buy a brand, repeat purchase, become loyal, or recommend to others - Mix of beliefs and importance weights" "Behavioral economics - CORRECT ANSWER - an approach to the study of consumer behavior that emphasizes psychological limitations and complications that potentially interfere with rational decision making - Two systems of thinking" "System 1 - CORRECT ANSWER - Our intuitive decision-making system, which is typically fast, automatic, effortless, implicit, and emotional. - Automatic, unconscious - Efficient, heuristics - Routine decisions - May optimize a consumers time" "System 2 - CORRECT ANSWER - Our more deliberative decision-making system, which is slower, conscious, effortful, explicit, and logical. - Effortful, conscious - Reasoned, thought through - Complex decisions - May optimize certain product features" "Psychology of prospect theory - CORRECT ANSWER - Describes how people make decisions when presented with alternatives that involve risk, probability, and uncertainty - Idea that consumers place more weight on perceived gains than losses" "Cultural differences - CORRECT ANSWER Socio Cultural differences influence consumer impressions/preference and produce shipping patterns" "Segmentation - CORRECT ANSWER - Breaking the market into more homogeneous consumer groups - A single product, price, or promotion is unlikely to satisfy all consumers need - Between mass marketing and one to one marketing" "VALS - CORRECT ANSWER - Psychographic segmentation tool based on three consumer motivations - Ideals - Achievement - Self expression" "Ideals - CORRECT ANSWER Consumers are guided by knowledge and principles" "Achievement - CORRECT ANSWER Some consumers will buy products and services to demonstrate success" "Self expression - CORRECT ANSWER Choice of brands express consumer personality to others" "Behavioral - CORRECT ANSWER - Intentions do not always equal behaviors - Behaviors help predicts future behavior - Patterns of co purchasing" "Patterns of co purchasing - CORRECT ANSWER - New house means new appliances - Create opportunities for cross selling" "Current users and nonusers - CORRECT ANSWER - Non users may use competitors or don't buy - 80:20 (80% of sales come from 205 of customers)" "Approaches to segment the market - CORRECT ANSWER - Managerial (top-down) - Customer based (bottom-up)" "Evaluation of segments - CORRECT ANSWER - Use data to identify and access segments - Segments need to be substantial in its size and profitable - Segmentation fits with corporate goals and brand image - Segments need to be actionable" "Segmentation strategies - CORRECT ANSWER - Breadth - Depth - Tailored" "Breadth - CORRECT ANSWER - Reaching multiple segments - Computer companies make monitors ultra compatible to the can be sold in desktop packed or second monitor for laptop" "Depth - CORRECT ANSWER - Serving one segment well - High end grocers know their shoppers want organic produce, fair trade coffees, and cosmetics that have not be animal tested" "Buyers - CORRECT ANSWER Consumers Bars/restaurants Hotels, etc." "Sellers - CORRECT ANSWER Cable companies Satellite companies Streaming companies Networks Pay-per-view Manufacturers of DVDs and video games, etc." "Marketspaces - CORRECT ANSWER offer consumers the ability to purchase offerings and exchange information online anytime and with far fewer geographical restrictions." "Value - CORRECT ANSWER center of everything marketing does" "Purpose of marketing strategy - CORRECT ANSWER · Achieving a superior competitive position within a defined market o 1. Segmentation: break the market into groups o 2. Targeting: select market segments o 3. Positioning: establish a distinctive superior position · Marketing defines how the organization interacts with its marketplace · Marketing can be more than a functional activity. It can be adopted as a business philosophy - marketing orientation · Establish the organization's marketing mix (4Ps) - product, price, promotion, and place · Marketing strategy developed in 3-stages: analysis, formulation, and implementation" "Business orientations - CORRECT ANSWER · A company's orientation defines its fundamental business philosophy, highlighting what is perceived as the primary route to success · Production · Product · Sales · Market: success derived from understanding and meeting customer needs; uses actual customer demand as a means of focus resources" "The five elements of a marketing orientation philosophy - CORRECT ANSWER § Customer focused § Competitor focused § Integrate marketing into the business § Strategic vision § Realistic expectations" "Identifying competitors - CORRECT ANSWER · Identify strategic groups: orgs in same industry pursuing equivalent strategies · Based on: company size, assets and skills, scope of operation, breadth of product range, distribution channel, product quality, brand image" "Competitor analysis components - CORRECT ANSWER o Competitor Objectives § does current performance fulfill objectives?, likelihood to commit further investment, likely future direction o Competitor Current and Past Strategies § current markets, how they compete in these markets, current vs. past strategies o Competitor Capabilities § management, marketing, innovation, production, financial o Competitor future strategies and reactions § 4 types of responses: certain retaliation, failure to react, specific reactions, inconsistent reactions" "Problems with competitive analysis: - CORRECT ANSWER o Overlooking smaller competitors o Ignoring potential new entrants o Disregarding international competitors" "Purpose of market analysis - CORRECT ANSWER · Build picture of potentially profitable segments · Builds picture of the consumer - how they use the product, benefits sought, how they judge quality · Actual and potential market size: Key sub-markets, potential growth areas o Trends o Customers o Customer Segments o Distribution Channels" "What is competitive intelligence? - CORRECT ANSWER · A structured, ethical, and legal process designed to gather, analyze and distribute data/information relating to current and potential competitors. · The key: providing actionable intelligence · Stresses the need to protect your business activities against competitors' intelligence gathering · Need for CI: globalization & rapid tech changes >> more competitors >> more CI needed" "Historical reference to competitive intelligence - CORRECT ANSWER · Sun Tzu's Art of War (>2,000 years ago): "Know the enemy and know yourself, in a hundred battles you will never be defeated."" "What should competitive intelligence do for decision makers? - CORRECT ANSWER · Provide timely, appropriate, actionable intel that facilitates action. · Enables managers to look forward" "How does competitive intelligence support an organization? - CORRECT ANSWER · Anticipating competitors' activities · Analyzing industry trends · Learning and innovation · Improved communication o Delivery of concise, timely info to info to decision-makers o Ability to share info across functional boundaries" "Purpose of each step in the competitive intelligence cycle - CORRECT ANSWER 1. Planning and directing: establish intel requirements; balancing 'target intel' and 'awareness intel' (general intel) 2. Collection: utilize key intelligence indicators and intelligence questions in gathering intel 3. Analysis: converting raw data into information a. Classify, evaluate, collate, synthesize i. Classify: Facts, info, direct info, indirect info, sourcing b. SWOT, behavioral traits, war gaming, synthesis reports, mission statement analysis 4. Dissemination: tailoring CI to meet user needs; determine what is critical and present information" "Purpose of segmentation - CORRECT ANSWER · Meet customer needs more precisely · Increase profits (get the price right) · Segment leadership (gain dominance in a segment) · Retain customers · Focus marketing communication" "Purpose of auditing tools - CORRECT ANSWER · Thorough analysis of company's resources to establish assets and competencies that could assist the marketing function. o Marketing strategy, structure, systems, and functions (marketing mix) o Productivity (financial aspects) · Providing useful insights into the company's situation o Value chain: primary and support activities o Portfolio Analysis: current position of an org's business units or products o Boston Consultancy Group (BCG) growth share matrix: generation and use of cash o General Electric multifactor portfolio matrix: market attractiveness & competitive strength o Shell directional policy matrix: competitive capabilities & prospects for sector availability o SWOT analysis" "Identifying long-term issues - CORRECT ANSWER · Forecasting: managers have full understanding of market; establish strategic issues that could impact business long-term · Trend extrapolation: assumes what happened in the past will continue in the future · Modeling: identify key variables and model their interactions · Intuitive forecasting: by a single expert · Consensus forecasting: o Jury: group of executives, seek consensus, subject to groupthink o Delphi forecasts: panel of experts kept physically apart, may not know each other · Scenario planning: identify a diverse range of potential futures 1. Identify critical variables 2. Develop possible strings of events 3. Refine scenarios 4. Identify the issues arising · Market sensing: similar to scenario planning; emphasis on need for mgrs to understand market · Important aspect: facilitating constructive but critical group dynamics that can generate insights" "Describe strategic responses to future events anticipated in the environment - CORRECT ANSWER · Ask strategic questions o Immediacy? o Impact? · For high impact, high immediacy: in depth analysis, strategy development · High impact, low immediacy: contingent strategies, monitor and analyze · Low impact, low immediacy: monitor · Low impact, high immediacy: monitor and analyze" "Marketing Myopia - CORRECT ANSWER Fatal business flaw: not knowing who is really your customer, what business you are really in" "Marketing Myopia: conditions that lead to self-deceiving cycle of bountiful expansion and undetected decay - CORRECT ANSWER o 1. Ever-expanding / affluent population ensures growth o 2. No competitive substitute for our industry's major product o 3. We can protect ourselves through mass production o 4. Technical research and development will ensure growth" "What is Strategy? - CORRECT ANSWER · Operational effectiveness: performing activities better than rivals; can be easily emulated · Productivity frontier: max value a company can deliver at a given cost; it shifts outward, lowering costs and improving value · Competitive convergence: companies become indistinguishable from each other · Strategic positioning: achieve sustainable competitive advantage by preserving what is distinctive about a company. Performing different activities or performing similar activities in a different way" "What is Strategy?: Idea in Practice - CORRECT ANSWER 1. Strategy = creation of a unique and valuable position, involving a different set of activities 2. Strategy requires trade-offs in competing - choose what not to do 3. Strategy involves creating "fit" among a company's activities. Fit = how a company's activities interact and reinforce one another" "The Five Competitive Forces That Shape Strategy - CORRECT ANSWER · Savvy customers can drive down prices by playing you against your rivals · Powerful suppliers can constrain your profits by charging higher prices · Entrants can ratchet up investment needed by your firm · Substitute offerings can lure customers away · Established rivals · We already watch our established rivals, but are we looking beyond our direct competitors?" "The Five Competitive Forces That Shape Strategy: Ideas in Practice - CORRECT ANSWER o Position your company where the forces are weakest o Exploit changes in the forces o Reshape forces in your favor § Neutralize supplier power by standardizing specifications so you can easily switch suppliers § Counter customer power be expanding your services to increase switching costs § Temper price wars with established rivals by differentiating § Scare off new entrants: elevate fixed costs of competing (increase your R&D spend) § Limit threat of substitutes: offer better value through wider product accessibility" "What can be marketed? - CORRECT ANSWER - Goods - Services - Experiences - Events - Persons - Places - Properties - Organizations - Information - Ideas" "Product/production orientation - CORRECT ANSWER - Focus on building a better gadget - Ford Model T" "Sales orientation - CORRECT ANSWER Focus on convincing the custom that your product works the best for them" "Customer orientation - CORRECT ANSWER Focus on identifying customers wants before formulating attractive solutions" "Evolution of modern marketing - CORRECT ANSWER - Product/production orientations > Sales orientation > Customer orientation - Degree of customization increased from product to customer orientation" "Marketing management framework - CORRECT ANSWER - 5Cs, STP, and 4Ps - Interdependent" "Patterns of consumer behavior - CORRECT ANSWER - Phases consumers go through when making a purchase - Different kinds of purchases that consumers make - How consumers sense and perceive, become motivated, form attitudes, and make decisions - The cultural differences that influence consumers" "Purchase process - CORRECT ANSWER - Pre-purchase - Purchase - Post-purchase" "Pre-purchase - CORRECT ANSWER - Identify need/want - Search for solutions - Consideration set" "Puchase - CORRECT ANSWER - Narrow consideration se - Decide on retail channel" "Post-purchase - CORRECT ANSWER - Customer satisfaction - Likelihood of repeat - Generate word of mouth" "Purchase process users - CORRECT ANSWER - B2B and B2C - The amount of time spent on particular stage depends of what is being bought" "Purchase types - CORRECT ANSWER - Consumer - Business" "Consumer purchases - CORRECT ANSWER - Convivence - Shopping - Specialty" "Business purchases - CORRECT ANSWER - Straight rebuy - Modified rebuy - New buy" "Convenience - CORRECT ANSWER - Low involvement - Standard/ Frequent/ Impulse - Not much time spent thinking or panning" "Shopping - CORRECT ANSWER - Medium involvement - Not as frequent Spent time and effort prior to purchase" "Specialty - CORRECT ANSWER - High involvement - Occasional, Expensive, more thought out - Put in effort" "Straight rebuy - CORRECT ANSWER - Low involvement- - Purchase same as last time with little thought" "Modified rebuy - CORRECT ANSWER - Medium involvement - Something was altered - Some thought" "New buy - CORRECT ANSWER - High involvement - Hasn't been purchased - Much though and planning" "Low involvement - CORRECT ANSWER - B2C: Convenience - B2B: Straight rebuy - Action: Add to Cart/Click to Buy - Price sensitivity - Price discounts - Not much word of mouth - Extensive distribution - How to capture consumers attention" "Medium involvement - CORRECT ANSWER - B2C: Shopping - B2B: Modified rebuy - Action: Needs some thought" "High involvement - CORRECT ANSWER - B2C: Specialty - B2B: New buy - Action: Needs research and serious thought - Less price sensitivity - Brand communities and events - Word of mouth - Selective distribution - Provide consumers with information" "Marketing science of consumer behavior - CORRECT ANSWER - Sensation and perception - Learning, memory, and emotions - Motivation - Attitudes - Behavioral economics" "Sensation and perception - CORRECT ANSWER - Brand associations - Senses convey info - Repeated exposure to an ad brings familiarity - Color and font make a brand impression" "Learning, memory, and emotions - CORRECT ANSWER Short term memory to long term memory through repetition and elaboration" "Motivation - CORRECT ANSWER - Maslow's hierarchy of needs - Utilitarian vs hedonic - Conformity vs individuality - Risk seeking vs risk adverse" "Maslow's hierarchy of needs - CORRECT ANSWER - People must meet basic needs before moving on to abstract needs - Marketers may identify products with aspiration groups - Marketers may offer an extended brand line for customer at different levels of hierarchy" "Utilitarian vs hedonic - CORRECT ANSWER - Needs vs wants - Useful vs pleasure - Suit for interviews vs Armani suit" "Market segment - CORRECT ANSWER A group of customers who share similar inclinations towards a brand" "Mass Marketing - CORRECT ANSWER - All customers are treated the same - Usually more efficient by may not meet customer needs" "One to one marketing - CORRECT ANSWER - Each customer serves as a segment - Product is tailored for each person's desires - Is usually more effective in meeting customers needs, but hard to achieve efficiently and may involve quality issues" "Bases for segmentation - CORRECT ANSWER - Demographic - Geographic - Psychological - VALS - Behavioral" "Demographic - CORRECT ANSWER - Gender, age, education, etc - Variables are clear and easy to recognize - Simple stereotypes" "Geographic - CORRECT ANSWER - Cultural differences between countries or states - Urban living is different than small town - Hot climates require different products" "Psychological - CORRECT ANSWER - Get subside head and heart of customers - Attitudes - Knowledge and awareness - Wants and needs - Affiliations - Traits - Expertise and involvement - Brand attributes sough - Risk orientation - Aspirations" "Tailored - CORRECT ANSWER - Customizing for segments - Lots of beverage companies follow strategy - Coke targeted to youth and Diet to parents" Marketing - CORRECT ANSWER defined by the American Marketing Association as "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large."" "4 activities, or components, of marketing - CORRECT ANSWER Creating Communicating Delivering Exchanging" "Creating - CORRECT ANSWER The process of collaborating with suppliers and customers to create offerings that have value. Offerings are closely associated with products, which can be goods, services, ideas or one of many other offerings discussed later in the chapter." "Communicating - CORRECT ANSWER Broadly, describing those offerings to targeted customers in a manner which emphasizes value, as well as learning from customers what they desire and value in an offering." "Delivering - CORRECT ANSWER Getting those offerings to the consumer in a way that optimizes value." "market - CORRECT ANSWER a collection of buyers and sellers, in which a group of individuals (consumers) or institutions (business, government, non-profits) share a need that can be satisfied by an offering" "What does value mean? - CORRECT ANSWER the benefits buyers receive that meet their needs. It is what the customer gets by purchasing and consuming a company's offering. It may be cost savings, great convenience, faster delivery, greater safety, peace-of-mind or some other benefit important to the consumer. Although the offering is created by the company, the value is determined by the customer." Relationship between strategy and change - CORRECT ANSWER There is a lot of change in the market (new tech, change in political and cultural circumstances), requiring companies to be adaptive. Because we cannot predict what will happen, having a solid, adaptable strategy will help us determine what actions to take in different circumstances. Strategic management recognizes the importance of IMPLEMENTATION and MANAGING CHANGE" "How Change is an integral part of strategy - CORRECT ANSWER o 1. Drivers of Change (political, economic, social, technical - PEST) o 2. Impact of Change (volatility, globalization, intense competition, redefine) o 3. Results of Change (opportunity, strategic drift)" "Contribution of strategic marketing to business - CORRECT ANSWER · Strategy is concerned with making major decisions affecting the long-term direction of the business" "Strategic Marketing Management - CORRECT ANSWER o Ensuring that market strategy is: a) relative to current/future business environment b) sustainable c) generating optional benefits to both the org and customers d) correctly implemented" "Concept of marketing - CORRECT ANSWER · The concept of marketing is inherently simple - business success through a process of understanding and meeting customer needs · Defines how the organization interacts with its marketplace · Marketing involves many activities: Advertising, Branding, Pricing, Research, Personal Selling" "Focus of strategic business decisions - CORRECT ANSWER · The purpose of strategy is to simplify managerial decision making when it comes to marketing decisions · Business definition: what business we are in (Marketing Myopia) · Core competencies: what do we well / what's sustainable / competitive advantages / resources needed · Integrating functional areas within the organization: coordinating marketing with other departments · Consistency of approach and focus" "Types of change - CORRECT ANSWER · Cyclical: repetitive, predictable (seasonal, variance with economic fluctuations) · Evolutionary: fundamental shift, sudden or gradual" "Balanced scorecard for measuring success - CORRECT ANSWER · financial / non-financial measures of success · 1. Financial measures: how firm is perceived by stakeholders · 2. Customers: how customers view firm · 3. Internal activities: identify key areas which deliver customer satisfaction · 4. Innovation & learning · Becomes the basis for evaluating strategy" "Macro-environmental forces that can affect a business & Examples - CORRECT ANSWER PEST · Political/Legal o Taxation, monopoly, EPA, employment law, foreign trade agreements, stability of government · Economic Factors o Interest rates, inflation, $ supply, business cycles, unemployment, GNP/GDP trends · Social/cultural Issues o Age profiles, social mobility, lifestyle changes, family structures, education level, work behavior, dist of income, patterns of ownership, attitudes and values · Technical Factors o Focus of government research, rate of tech. transfer, materials, developing tech. processes" "Conducting an industry analysis - CORRECT ANSWER · Nature of competition with an industry · Conducted at individual business unit, not whole organization · Explores nature of competition within an industry · Org must understand nation of relationships within its industry to be able to develop strategies to take advantage of current relationships · Porter's five forces model can be used to help understand relationships and competition" "Porter's five forces (for industry analysis) - CORRECT ANSWER · Suppliers o more powerful when fewer, strong brand, more customers · Buyers o more powerful when fewer buyers, more small suppliers, supplier's product undifferentiated · Potential entrants o barriers to entry: cap investment, well-entrenched competitor with cost advantages, achieving economies of scale, gov legislation · Substitutes o new product removes need for previous product, generic substitution · Competitive rivalry o stage of industry life cycle, relative size of competitors, high fixed costs, barriers to withdrawing from industry" "Describe the marketing mix - CORRECT ANSWER · product, price, promotion, and place (established by marketing strategy) · tools used to pursue marketing objectives in target market · Everyone in a segment has a similar response to the marketing mix - distinct from other groups" "Criteria for segment - CORRECT ANSWER · Similar response to marketing mix · Distinct response from other groups · Group is large enough to provide ROI · Group must be operational (able to be targeted and serviced) · Profile variables: characteristics o Age o Gender o Life cycle (family status) o Socio-economic: occupation, education, income, place of residence o Geographic o Geodemographics · Behavioral variables: o benefits sought o usage - non, occasional, medium, heavy users o purchase occasion · Psychographic variables: attitudes, opinions, interests >> lifestyle profile including consumption patterns o VALS framework: 9 lifestyle groups and 3 dev phases o Monitor framework: 3 groups w/ subgroups" "How perception influences a person's reaction - CORRECT ANSWER · How an individual perceives external stimuli will influence their reaction. · Why do people have different reactions to the same stimulus? o Selective attention: people screen out most stimulants o Selective distortion: adjusting perceptions to conform to their current mindset o Selective retention: info that reinforces attitudes and beliefs is more likely to be retained; forgetting the rest" "The role of involvement in the buying process - CORRECT ANSWER · High involvement = both the information search and use of referent group consultation and post-purchase evaluation is extensive and occurs when the following factors are involved: o Self-image o Perceived risk o Social factors o Hedonic factors" "Organizational macro and micro market segmentation - CORRECT ANSWER · Markets can be segmented according to the characteristics of the organization as a whole (macro segmentation) or the characteristics of the DMU (micro-segmentation) · Nest approach: starts with macro segmentation and moves to micro, hierarchal" "Macro-segmentation (characteristics of the org) - CORRECT ANSWER o Industry sector o size of org o geographic location o end-use application" "Micro-segmentation (characteristics of the DMU - decision-making unit) - CORRECT ANSWER o Structure of the DMU o Decision-making process o Structure of buying function (centralized / decentralized) o Attitude toward innovation o Key criteria used in reaching a decision on a purchase (quality, price, support, etc.) o Personal characteristics of decision-makers" "Purpose of internal analysis - CORRECT ANSWER · Evaluate the enterprise's relative ability to compete and satisfy customer needs in attractive market areas. Once completed, the organization can develop a competitive position that matches organizational capabilities and the needs of customers. · Identify key assets and competencies" "Difference between organization assets and competencies - CORRECT ANSWER · Assets: tangible and intangible capital of the organization o Financial, physical, operational, people, legally enforceable, systems, marketing (customer-based, distribution-based, internally-based, alliance-based) · Competencies: skills contained within the organization o Strategic, functional, operational, team, corporate-level · Assets + Competencies = Capabilities"