Entrepreneurship: Successfully Launching New Ventures, 3e (Barringer/Ireland) Chapter 11 Unique Marketing Issues

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1 Entrepreneurship: Successfully Launching New Ventures, 3e (Barringer/Ireland) Chapter 11 Unique Marketing Issues 1) Miss Misa, the company profiled in the opening feature in Chapter 11, sells jewelry. Partly as a result of reading The Tipping Point by Malcolm Gladwell, Misa Chien, the company's founder, has transitioned the company's advertising from traditional techniques to: A) YouTube B) Google AdWords C) Google AdSense D) Facebook E) television Diff: 1 Page Ref: 353 2) Andy Sanders owns a sporting good store that appeals to hunters and fishermen. The market that Andy is trying to appeal to is called his: A) focal market B) objective market C) target market D) critical market E) intention market Answer: C Diff: 1 Page Ref: 355 3) The first step in selecting a target market is to study the industry in which the firm intends to compete and determine the different potential target markets in that industry. This process is called: A) market positioning B) market splitting C) market targeting D) market subdividing E) market segmentation Diff: 2 Page Ref: 355 1

2 4) Which of the following is the correct sequence of events in regard to the process of selecting a target market and position strategy? A) creating a unique positioning strategy, selecting a target market, segmenting the market B) segmenting the market, creating a unique positioning strategy, selecting a target market C) segmenting the market, selecting a target market, creating a unique positioning strategy D) selecting a target market, creating a unique positioning strategy, segmenting the market E) creating a unique positioning strategy, segmenting the market, selecting a target market Answer: C Diff: 2 Page Ref: 355 5) Brenda Berry is thinking about starting a computer company. After doing some research, she has decided that the computer industry can be divided into the following product categories: hand-held computers, laptops, PCs, minicomputers, and mainframes. She is now trying to decide which product category she is the most interested in competing in. The process that Brenda is going through is called: A) market splitting B) market subdividing C) market segmentation D) market dividing E) market separating Answer: C Diff: 2 Page Ref: 355 6) One a firm has segmented the market, the next step is to: A) decide on a position within the segment B) select a critical market C) select a target market D) select a focal market E) immediately decide on the "4Ps" of the marketing strategy Answer: C Diff: 2 Page Ref: 356 7) A is a place within a market segment that represents a narrower group of customers with similar interests. A) position market B) niche market C) slot market D) spot market E) gap market Answer: B Diff: 2 Page Ref: 356 2

3 8) Research in Motion (RIM) is a handheld computer company that focuses specifically on business users that need dependable access to and the Internet while away from their office. For RIM, this specific type of user within the large business market segment is referred to as its: A) gap market B) task market C) position market D) hole market E) niche market Diff: 2 Page Ref: 356 9) Which of the following selections is incorrect regarding a firm's "positioning" strategy? A) Position is concerned with how the firm is situated relative to its competitors. B) A firm's decision about how to position itself relative to its competitors starts with a product or service idea that is tested and refined through feasibility analysis and marketing research. C) Position is concerned with how a firm is situated relative to competitors. D) One a firm positions itself in a certain way, it must be able to follow through with a product or service offering that lives up to the image it has created. E) After selecting a positioning strategy, the firm's next step is to select a target market. Diff: 3 Page Ref: ) A illustrates a firm's positioning strategy relative to its major rivals. A) product attribute map B) positioning analysis grid C) positioning plot D) competitive analysis grid E) positioning diagram Diff: 2 Page Ref: ) A product attribute map is used to help a firm determine if its: A) if it is emphasizing benefits rather than features B) branding strategy is appropriate C) market segmentation is correct D) positioning strategy is appropriate E) target market is appropriate Diff: 2 Page Ref: 357 3

4 12) Nike's familiar phrase "Just do it" is an example of a: A) attention-line B) tagline C) notice-line D) catchline E) grabline Answer: B Diff: 2 Page Ref: ) Yelp's phrase "Real People. Real Reviews" is an example of a: A) tagline B) grabline C) notice-line D) catchline E) grabline Diff: 2 Page Ref: ) It is more effective to sell: A) features rather than benefits B) features and benefits are equal in their importance C) features are more important for service firms and benefits are more important for manufacturing firms D) benefits rather than features E) features are more important for manufacturing firms and benefits are more important for service firms Diff: 2 Page Ref: ) A is the set of attributes positive or negative that people associate with a company. A) emblem B) logo C) symbol D) brand E) trade name Diff: 2 Page Ref: 360 4

5 16) Some companies monitor the integrity of their brands through a program of: A) brand administration B) brand persistence C) brand determination D) brand resolution E) brand management Diff: 2 Page Ref: ) According to the textbook, a brand is all of the following except: A) reputation B) collection of memories C) a pledge D) a promise E) a written warrantee Diff: 3 Page Ref: ) Creating means creating awareness and a sense of anticipation about a company and its offerings. A) ruckus B) noise C) clatter D) clamor E) buzz Diff: 2 Page Ref: ) Which of the following statements is incorrect regarding the process of building a company's brand? A) A firm's name, logo, Web site design, and even its letterhead are part of its brand. B) One of the keys to effective branding is to create a strong personality for a firm. C) Some companies monitor the integrity of their brands through brand management. D) Startups must build a brand from scratch, which starts with selecting the company's name. E) Most experts recommend a heavy reliance on advertising in building a firm's brand. Diff: 3 Page Ref: 361 5

6 20) is a term that denotes the set of assets and liabilities that are linked to a brand and enable it to raise a firm's valuation. A) Trademark equity B) Brand equity C) Logo equity D) Trademark value-added E) Trade name strength Answer: B Diff: 2 Page Ref: ) According to the textbook, a successful brand can increase the market value of a company by: A) 5 to 10 percent B) 20 to 30 percent C) 40 to 50 percent D) 50 to 75 percent E) 75 to 100 percent Diff: 3 Page Ref: ) A firm's is the set of controllable, tactical marketing tools that is uses to produce the response it wants in the target market. A) tactical mix B) promotional blend C) organizational mix D) marketing mix E) selling mix Diff: 2 Page Ref: ) Which of the following is not one of the four elements that constitute a firm's marketing mix? A) price B) promotion C) passion D) place (or distribution) E) product Answer: C Diff: 2 Page Ref: 362 6

7 24) A firm's marketing mix consists of the following four elements: A) product, price, promotion, and place B) passion, pride, promotion, and place C) passion, pleasure, product, and price D) enthusiasm, passion, product, and price E) place, promotion, passion, and product Diff: 2 Page Ref: ) The What Went Wrong feature in Chapter 11 focuses on Quaker Oats' botched acquisition of Snapple. What was the major problem that Quaker Oats' experienced during the time it owned Snapple? A) poor pricing strategy B) poor promotions strategy C) focusing on features rather than benefits D) poor market segmentation E) failing to understand the real meaning of its brand Diff: 2 Page Ref: ) A firm's, in the context of its marketing mix, is the good or service it offers to its target market. A) conception B) idea C) formation D) product E) invention Diff: 2 Page Ref: ) A is something that takes on a physical form, such as an MP3 player or a laptop computer. A is an activity or benefit that is intangible, such as an airplane trip or advice from an attorney. A) product, service B) service, component C) component, service D) formation, service E) service, product Diff: 2 Page Ref: 364 7

8 28) A is an early user of a firm's product who is willing to give a testimonial regarding his or her experience with the product. A) tribute account B) reference account C) approval report D) appreciation account E) acknowledgment report Answer: B Diff: 2 Page Ref: ) Before Kim Green opened her jiffy print store, she processed several large print jobs for local merchants for free, to demonstrate the quality of her service and to solicit feedback. Two of the merchants wrote favorable review's of Kim's service, and agreed to let Kim post the review's on her company's Web site. The companies that wrote the favorable reviews are referred to as: A) appreciation reports B) acknowledgement accounts C) referent accounts D) tribute reports E) approval reports Answer: C Diff: 2 Page Ref: ) The amount of money consumers pay to buy a product is its: A) price B) fee C) value D) cost E) charge Diff: 1 Page Ref: ) Which element of the marketing mix is the only one that produces revenue? A) product B) place (or distribution) C) advertising D) price E) promotion Diff: 2 Page Ref: 365 8

9 32) In, the list price of an item is determined by adding a markup percentage to a product's cost. A) cost-based pricing B) compliance-based pricing C) value-based pricing D) competitive-based pricing E) economic-based pricing Diff: 2 Page Ref: ) Pat Walker owns an environmental services company. The way Pat prices her services is to figure her cost and then add a 22 percent markup. The method that Pat uses to determine her prices is called: A) economic-based pricing B) value-based pricing C) competitive-based pricing D) cost-based pricing E) conformity-based pricing Diff: 2 Page Ref: ) In, the list price is determined by estimating what consumers are willing to pay for a product and then backing off a bit to provide a cushion. A) value-based pricing B) tactical pricing C) strategic pricing D) cost-based pricing E) economic-based pricing Diff: 2 Page Ref: ) Michael Jones owns a Web design firm. The way Michael prices his products is to determine what consumers are willing to pay, and then he backs off a bit to provide a cushion. The method that Michael used to determine his prices is called: A) predatory pricing B) technical pricing C) cost-based pricing D) competitive-based pricing E) value-based pricing Diff: 2 Page Ref: 366 9

10 36) According to the textbook, most experts recommend pricing because it hinges on the perceived value of a product or service. A) value-based B) cost-based C) competitive-based D) tactical E) strategic Diff: 2 Page Ref: ) Karen Simon recently purchased a digital camera. She considered three cameras, a Kodak that was priced at $139.00, a Panasonic priced at $189.00, and a Nikon priced at $ Karen couldn't tell much difference between the cameras, so he bought the Nikon, figuring that because it was the most expensive of the three, it must be the best. According to the textbook, Karen was making a: A) price-quality attribution B) price-merit attribution C) cost-value acknowledgement D) cost-worth attribution E) price-worth acknowledgement Diff: 3 Page Ref: ) refers to the activities the firm takes to communicate the merits of its product to its target market. A) Sponsorship B) Advertising C) Endorsement D) Promotion E) Price Diff: 2 Page Ref: ) The Google program called allows advertisers to buy keywords on the Google Home Page. A) AdSense B) Adcenter C) AdWords D) Search Marketing E) AdGoogle Answer: C Diff: 2 Page Ref:

11 40) The Google program allows people who know a lot about a particular topic to launch a Web site, populate it with articles, tips, and videos, and make money by essentially selling access (via click thro through ads) to the people attracted to the Web site A) AdGoogle B) Adcenter C) Search Marketing D) AdSense E) AdWords Diff: 2 Page Ref: ) Efforts to establish and maintain a company's image with the public are referred to as: A) open relations B) public relations C) civic relations D) community relations E) advertising Answer: B Diff: 2 Page Ref: ) Which of the following is not one of the public relations techniques identified in the textbook? A) monthly newsletter B) blogging C) articles in industry press and periodicals D) radio advertising E) civic, social, and community involvement Diff: 2 Page Ref: ) Every year, thousands of electronic products manufacturers gather in Las Vegas to display their products and to see what their competitors are up to. This type of event is called a: A) trade show B) promotions show C) deal show D) goods show E) skill show Diff: 2 Page Ref:

12 44) When Hotmail first started distributing free accounts, it put a tagline on every message sent out by Hotmail users that read "Get free with Hotmail." This technique, which encouraged people to pass along Hotmail's marketing message to others, is called: A) echo marketing B) duplicate marketing C) infectious marketing D) repeat marketing E) viral marketing Diff: 2 Page Ref: ) marketing is a low-budget approach to marketing that relies on ingenuity, cleverness, and surprise rather than traditional techniques. A) Rebel B) Bug C) Catching D) Guerrilla E) Revolutionary Diff: 2 Page Ref: ) A is a route a product takes form the place it is made to the customer who is the end user. A) trade channel B) product channel C) allotment channel D) promotion channel E) distribution channel Diff: 2 Page Ref: ) The Savvy Entrepreneurial Firm feature in Chapter 10 provides several examples of firms that created positive awareness of its product of service by producing cleaver video spots. According to the feature, the firms were utilizing: A) viral marketing techniques B) echo marketing techniques C) nontraditional marketing techniques D) spot marketing techniques E) guerrilla marketing techniques Diff: 2 Page Ref:

13 48) The process of eliminating layers of middlemen, such as distributors and retailers, to sell directly to customer is called: A) middleman lockout B) channel conflict C) disintermediation D) value chain reduction E) dislocation Answer: C Diff: 2 Page Ref: ) occurs when two or more separate marketing channels are in conflict over their roles in selling a firm's products or services. A) Channel conflict B) Disintermediation C) Marketing clash D) Channel clash E) Channel inconsistency Diff: 2 Page Ref: ) A firm runs the risk of upsetting its channel partners if it sells through two channels simultaneously which compete for the same customer. For example, if Electronic Arts sold its electronic games through retailers like Wal-Mart and Best Buy, and then started selling the same games online, Wal-Mart and Best Buy might get upset, because the online sales undermine their ability to sell the games through their stores. This type of situation is referred to as: A) channel clash B) marketing clash C) channel piracy D) disintermediation E) channel conflict Diff: 2 Page Ref: ) A firm's target market is the limited group of individuals or businesses that it goes after or tries to appeal to. Diff: 1 Page Ref: ) The proper sequence in selecting a target market and positioning strategy is (1) craft a unique positioning strategy, (2) select a target market, and (3) segment the market. Answer: FALSE Diff: 2 Page Ref:

14 53) Markets can be segmented in a number of ways, including by product type, price point, distribution channel used, and customers served. Diff: 2 Page Ref: ) A niche market is a place within a market segment that represents a narrow group of customers with similar interests. Diff: 2 Page Ref: ) A firm's "position" is concerned with how it is situated relative to its rivals. Diff: 2 Page Ref: ) A product attribute map illustrated the strength of a firm's niche (or target) market relative to competing markets. Answer: FALSE Diff: 2 Page Ref: ) It is better to emphasize a product or service's features rather than its benefits. Answer: FALSE Diff: 2 Page Ref: ) A brand is the set of attributes positive or negative that people associate with a company. Diff: 2 Page Ref: ) Creating buzz means creating awareness and a sense of anticipation about a company and its offerings. Diff: 2 Page Ref: ) Brand premium is the term that denotes the set of assets and liabilities that are linked to a brand and enable it to raise a firm's valuation. Answer: FALSE Diff: 2 Page Ref:

15 61) A firm's marketing mix is the assortment of products and services that it sells. Answer: FALSE Diff: 2 Page Ref: ) An important distinction should be made between a firm's core product and its actual product. While the core product may be a CD that contains an antivirus software program, the actual product may have a number of characteristics, include a quality level, features, design, a brand name, and packaging. Diff: 2 Page Ref: ) A reference account is an early user of a firm's product who is willing to give a testimonial regarding his or her experience with the product. Diff: 2 Page Ref: ) Promotion is the only element in the marketing mix that produces revenue; all other elements represent costs. Answer: FALSE Diff: 2 Page Ref: ) In value-based pricing, the list price is determined by estimating what customers are willing to pay for a product and then backing off a bit to provide a cushion. Diff: 2 Page Ref: ) Because of the weaknesses associated with advertising, most startups do not advertise their products broadly. Diff: 1 Page Ref: ) The Google AdWords program allows advertisers to buy ads that will be shown on other Web sites instead of Google's Home Page. Answer: FALSE Diff: 2 Page Ref: ) Many start-ups emphasize advertising over public relations primarily because it's cheaper and helps build the firm's creditability. Answer: FALSE Diff: 2 Page Ref:

16 69) A distribution channel is the route a product takes from the place it is made to the customer who is the end user. Diff: 2 Page Ref: ) Channel conflict occurs when two or more separate marketing channels are in conflict over their roles in selling a firm's products. Diff: 2 Page Ref: ) What is the purpose of market segmentation? How are market typically segmented? Can a company segment its market on more than one dimension? Answer: The first step in selecting a target market is to study the industry in which the firm intends to compete and determine the different potential niche or target markets in that industry. This process is called market segmentation and is important because a new firm typically only has enough resources to target one market segment, at least initially. Markets can be segmented in many ways, such as by geography (city, state, country), demographic variables (age, gender, family size, income), behavioral variables (benefits sought, product usage rate, brand loyalty) and product type. Sometimes a firm segments its market on more than one dimension to drill down to a specific market that the firm thinks it is uniquely capable of serving. For example, in its market segmentation, GreatCall, the cell phone service provider for older people, probably segmented the cell phone market by age and by benefits sought. Helio (a cell phone designed for young people) likely used this same segmentation strategy by targeting younger users and featuring a more sophisticated set of options. Diff: 2 Page Ref: ) What is a tagline? Provide an example of a popular tagline, and discuss why you think it has been effective? Answer: Firms often develop a tagline to reinforce the position they have staked out in their market, or a phrase that is used consistently in a company's literature, advertisements, promotions, stationery, and even invoices and thus becomes associated with that company. An example is Nike's familiar tagline, "Just do it." The Nike tagline implies that people don't need to be told they should exercise they already know that. The challenge is to "Just do it." The beauty of this simple three-word expression is that it applies equally to a 21-year old triathlete and a 65- year old mall walker. This clever tagline, along with Nike's positioning strategy, helped it expand its product line beyond running shoes to athletic products for all age-groups. Diff: 2 Page Ref:

17 73) Why is it better to sell benefits rather than features? Provide an example that illustrated this point. marketing strategy that focuses on the features of a product, such as its technical merits, is usually much less effective than a campaign focusing on what the merits of the product can do. Consider a cell phone manufacturer that claims, "Our cell phones are equipped with sufficient memory to store 1,000phone numbers." The ability to store 1,000 phone numbers is a feature rather than a benefit. While features are nice, they typically don't entice someone to buy a product. A better way for the manufacturer to market the same cell phone would be to say, "Our cell phone lets you store up to 1,000 phone numbers, giving you the phone numbers of your family, your friends, and people you only phone once a year right at your fingertips." This statement focuses on benefits. It tells a prospect how buying the product will enhance his or her life. Diff: 2 Page Ref: ) What is a brand? How does a new firm develop a brand? brand is the set of attributes positive or negative that people associate with a company. These attributes can be positive, such as trustworthy and dependable, or they can be negative, such as cheap and unreliable. The customer loyalty a company creates through its brand it one of its most valuable assets. To develop a brand, a new firm must have meaning in its customer's lives something for which customers are willing to pay. On a more pragmatic level, brands are built through a number of techniques, including advertising, public relations, sponsorships, and good performance. Diff: 2 Page Ref: ) Describe the concept of guerrilla marketing. Why is guerrilla market particularly suitable for entrepreneurial firms? Answer: Guerrilla marketing is a low-budget approach to marketing that relies on ingenuity, cleverness, and surprise rather than traditional techniques. The point is to create awareness of a firm and its products, often in unconventional and memorable ways. Guerrilla marketing is particularly suitable for entrepreneurial firms, which are often on a tight budget but have creativity, enthusiasm, and passion to draw from. Firms often use very entertaining and engaging guerilla marketing techniques to build awareness for their products and services. Diff: 3 Page Ref: