Chapter 11: Dealing with Competition

GENERAL CONCEPT QUESTIONS

Multiple Choice

1. Michael Porter has identified five forces that determine the intrinsic long-run attractiveness of a market or market segment. Which of the following would NOT be among Porter’s five forces?

a. Industry competitors

b. Technological partners

c. Substitutes

d. Buyers

e. Potential entrants

2. Which of the following would be the most likely threat that is associated with potential new entrants in Porter’s segment structural attractiveness model?

a. Threat of positioning

b. Threat of response

c. Threat of delayed action

d. Threat of role reversal

e. Threat of mobility

3. A segment is unattractive when there are actual or potential ________ for the product.

a. contenders

b. competitors

c. substitutes

d. unclear demand

e. profit fluctuation

4. Wal-Mart is perhaps one of the best illustrations of the threat of ________ found in Porter’s model.

a. intense segment rivalry

b. new entrants

c. substitute products

d. buyers’ growing bargaining power

e. suppliers’ growing bargaining power

5. A segment is unattractive if the company’s suppliers are able to raise prices or reduce quantity supplied. Which of the following is the best illustration of the threat of suppliers’ growing bargaining power?

a. Wal-Mart has almost no competitors in its market space.

b. Oil companies must purchase a significant amount of their product from OPEC.

c. McDonald’s is the largest fast food franchise and is still growing.

d. The U.S. Post Office has merged package operations with FedEx.

e. Sears unsuccessfully attempted to compete with Wal-Mart and Kmart.

6. A(n) ________ is a group of firms that offer a product or class of products that are close substitutes for one another.

a. industry

b. cartel

c. cooperative

d. monopoly

e. demand field

7. When only one firm provides a certain product or service in a certain country or area a ________ exists.

a. duopoly

b. monopoly

c. oligopoly

d. monopolistic competition

e. pure competition

8. Which of the following would be the best illustration of a pure oligopoly?

a. Autos

b. Cameras

c. Steel

d. Pharmaceuticals

e. High fashion clothing

9. Which of the following is often considered to be a good illustration an industry structure type known as pure competition?

a. Oil

b. Plastics

c. Pharmaceuticals

d. High fashion clothing

e. Stock market

10. All of the following are considered to be major entry barriers in markets EXCEPT ________.

a. high capital requirements

b. economies of scale

c. patents and licensing requirements

d. product or service line

e. reputation requirements

11. If a marketer is facing government restrictions, high vertical integration, emotional barriers, low asset-salvage value due to obsolescence, and legal obligations to creditors, the marketer is most likely facing what are called ________ barriers in a marketplace.

a. exit

b. entrance

c. competitive

d. virtual

e. contrived

12. Major oil producers carry on oil exploration, oil drilling, oil refining, chemical manufacture, and service-station operation. When an organization does all of these separate tasks within a distribution channel they can be said to have achieved what is called ________.

a. vertical integration

b. horizontal integration

c. concentric integration

d. parallel marketing

e. conglomerate marketing

13. Using the market approach, ________ are companies that satisfy the same customer need.

a. partners

b. competitors

c. entrepreneurs

d. innovators

e. followers

 

14. A group of firms following the same strategy in a given target market is called ________.

a. cartel

b. cabal

c. cooperative

d. informal alliance

e. strategic group

15. An example of a strategic group in the appliance industry would be one where ________.

a. there was a large franchised dealer system

b. a common promotional theme used

c. competitors had broad lines, medium manufacturing costs, low service responsibility, and low prices

d. multinational operations are mandated

e. a value orientation rather than a cost orientation

16. Once a company has identified its main competitors and their strategies, it must next ask: ________?

a. What are the competitors’ objectives

b. What are the competitive brand attributes

c. What are the competitive promotion schemes

d. What is the attrition rate in the market

e. What are the subtle market entrance requirements

17. In general, a company should monitor the following variables when analyzing competitors: ________, share of mind, and share of market.

a. share of demand

b. share of profits

c. share of promotion

d. share of universe

e. share of heart

18. ________ is the percentage of customers who named the competitor in responding to the statement, “Name the company from which you would prefer to buy the product.”

a. Share of market

b. Share of mind

c. Share of heart

d. Share of competitive space

e. Share of psychological field

19. Most companies aim their competitive shots at ________ competitors, because this requires fewer resources per share point gained.

a. strong

b. weak

c. distant

d. “good”

e. unacknowledged

20. ________ competitors try to buy market share rather than earn it; take large risks; invest in overcapacity; and upset industrial equilibrium.

a. “Bad”

b. “Good”

c. Distant

d. Close

e. Strong

21. In general, a market leader will have about ________ of the total market in relation to other competitors.

a. 60 percent

b. 50 percent

c. 40 percent

d. 30 percent

e. 75 percent

22. The market nicher serves small market segments not being served by larger firms. Nichers account for about ________ of the market in relation to other competitors.

a. 30 percent

b. 25 percent

c. 20 percent

d. 15 percent

e. 10 percent

23. The aim of benchmarking is to copy or improve on ________, either within an industry or across industries.

a. profitability

b. manufacturing

c. ideation

d. aggressiveness

e. “best practices”

24. Being a market leader is often a difficult position to maintain and defend. The market leader must protect its current market share through good defensive and offensive actions. Second, the firm can try to increase its market share, even if the market size remains constant. What is the third course of action recommended for market leaders?

a. The firm must find be a cost leader.

b. The firm must find new, innovative technologies on a monthly basis.

c. The firm must strive to win promotional awards.

d. The firm must find ways to expand total market demand.

e. The firm must pursue markets others do not want.

25. As a marketing manager, you have decided to pursue new customers with your established products. Specifically, the new customers that you want are those who might use the product but do not at present. Which of the following strategies is recommended to pursue such a customer market?

a. Market-penetration strategy

b. New-market segment strategy

c. Geographical-expansion strategy

d. Needs-assessment strategy

e. Consolidation strategy

26. One of the market leader strategies for expanding the total market is to focus on more usage. Two avenues are open for doing this: increasing the frequency of consumption or ________.

a. increasing adherence to everyday low pricing

b. decreasing the number of product returns

c. increasing the level or quantity of consumption

d. increasing the level of promotional expenditures relative to market share percentage

e. decreasing sales-related expenses

27. To counter value-based players, it will be necessary to focus on areas where their business models give other companies room to maneuver. For example, instead of directly competing with Wal-Mart and other retailers, Walgreen’s emphasizes convenience across all elements of its business. Which of the following general strategies is Walgreen’s using as its main competitive focus?

a. Execution

b. Implementation

c. Vertical integration

d. Differentiation

e. Cost leadership

28. Market leaders are constantly under attack from large and small competitors alike. What is the most constructive response a market leader can make when defending its terrain?

a. Basic cost control.

b. Expanding expected benefits.

c. Expanding desired benefits.

d. Meet all challengers with a swift response.

e. Continuous innovation.

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29. Caterpillar has become dominant in the construction-equipment industry despite charging a premium price and being challenged by a number of able competitors. All of the following have been cited as policies used by Caterpillar to meet its competitors EXCEPT ________.

a. limited-line strategy

b. premium performance

c. superior service

d. extensive and efficient dealership system

e. good financing

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30. Sony is an unusual market leader. It gives its customers new products that they have never even asked for (e.g., Walkmans, VCRs, video cameras, CDs). This makes Sony a(n) ________ firm.

a. market-driven

b. market-driving

c. operations-driven

d. vision-driven

e. virtually-driven

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31. ________ defense involves occupying the most desirable market space in the minds of the consumers, making the brand almost impregnable.

a. Position

b. Flank

c. Preemptive

d. Mobile

e. Contraction

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32. A marketing manager has planned a strategy that will require that the organization erect outposts to protect its weak front-running brands. Because these outposts will be central to the organization’s new competitive strategy, we can say that a ________ defense is being used.

a. position

b. flank

c. preemptive

d. counteroffensive

e. mobile

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33. The “best defense is a good offense” would be a policy under which of the following market leader defensive strategies?

a. Position defense

b. Flank defense

c. Contraction defense

d. Preemptive defense

e. Lateral defense

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34. Market broadening and market diversification are likely tactics employed in which of the following market leader defensive strategies?

a. Position defense

b. Flank defense

c. Preemptive defense

d. Counteroffensive defense

e. Mobile defense

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35. Because the cost of buying higher market share may far exceed its revenue value, a company should consider four factors before pursuing increased market share. All of the following would be among those four factors EXCEPT ________.

a. the possibility of provoking antitrust action

b. economic cost

c. pursuing the wrong marketing-mix strategy

d. the likelihood that an award-winning promotional campaign can be generated

e. the effect of increased market share on actual and perceived quality

 

36. Some market leaders have increased profitability by selectively ________ market share in weaker areas.

a. decreasing

b. increasing

c. protecting

d. sharing

e. trading

37. All of the following companies have been characterized as being market challengers in their respective fields EXCEPT ________.

a. Toyota

b. British Airways

c. Boeing

d. Honda

e. Proctor & Gamble

38. A market challenger must decide who to attack. All of the following are considered as likely possible targets (as per information found in the text) EXCEPT ________.

a. it can attack the market leader

b. it can attack firms its own size that are not doing the job

c. it can attack firms its own size that are underfinanced

d. it can attack a global conglomerate that is market hungry

e. it can attack small local firms

39. All of the following are considered to be viable attack strategies that can be employed by a market challenger EXCEPT ________.

a. counteroffensive attack

b. frontal attack

c. flank attack

d. bypass attack

e. guerilla warfareAnswer: a

40. According to attack strategies available to the market challenger, the ________ can be used when the challenger spots areas where the opponent is underperforming.

a. encirclement attack

b. frontal attack

c. flank-geographic-attack

d. backwards-flank-attack

e. guerilla warfare

41. Sally Seabrook is an up-and-coming marketing manager for a large department store chain. Ms. Seabrook has distinguished herself with bold strategies such as launching attacks on her primary competitor from several fronts (including advertising, new store openings, price cuts, new distributor alliances, and creative merchandising). Her “blitz” is comparable to any done by the military in time of war. Which of the following market challenger attack strategies is Ms. Seabrook using to attack her competition?

a. Frontal attack

b. Bypass attack

c. Guerrilla warfare

d. Flank attack

e. Encirclement attack

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42. A marketing manager of a market challenger-type organization has decided to “leapfrog” competition by moving into cutting-edge technologies. This indirect approach to attacking competition can be characterized as being what is called the ________.

a. flank attack

b. encirclement attack

c. bypass attack

d. guerrilla warfare

e. frontal attack

43. A market challenger strategist must carefully consider all attack options before moving forwards. If the strategist chooses the ________ approach, selective price cuts, intense promotional blitzes, and occasional legal action will probably be commonplace in the strategic design.

a. frontal attack

b. flank attack

c. bypass attack

d. encirclement attack

e. guerilla warfare

44. All of the following are considered to be valid market challenger attack strategies EXCEPT ________.

a. price discounts

b. lower price goods

c. prestige goods

d. partnerships with rival market leaders

e. product proliferation

45. Avon became a major cosmetics company by perfecting door-to-door selling instead of battling other cosmetic firms in conventional stores. This is an example of which of the following specific market challenger attack strategies?

a. Manufacturing-cost reduction

b. Intensive advertising promotion

c. Distribution innovation

d. Product innovation

e. Product proliferation

46. Which of the following best describes the premise of Theodore Levitt’s “Innovative Imitation” article?

a. Imitation is wrong and should be punished.

b. Product imitation might be as profitable as a strategy of product innovation.

c. Innovation is not possible without substantial imitation.

d. Innovation cannot begin unless dissatisfaction with imitation occurs.

e. Imitation should be against the law because of the intellectual property decision involved.

47. Many companies prefer to follow rather than challenge the market leader. Patterns of ________ are common in capital-intensive, homogeneous-product industries, such as steel, fertilizers, and chemicals. Competitors present similar offers to buyers, usually by copying the leader. Market shares show high stability.

a. “conscious parallelism”

b. “feature fashion”

c. “covert security analysis”

d. “supply delay”

e. “predatory pricing”

48. All of the following are considered to be viable market follower strategies EXCEPT ________.

a. counterfeiter

b. cloner

c. imitator

d. innovator

e. adapter

49. As a market follower strategy, the ________ emulates the leader’s products, name, and packaging, with slight variations.

a. counterfeiter

b. cloner

c. imitator

d. adapter

e. innovator

50. As a market follower strategy, the ________ copies some things from the leader but maintains differentiation in terms of packaging, advertising, pricing, or location. This strategy is tolerated by the market leader as long as the follower’s aggressiveness does not mount.

a. counterfeiter

b. cloner

c. imitator

d. adapter

e. innovator

51. An alternative to being a market follower in a large market is to be a leader in a small market. This type of competitor is called a(n) ________.

a. marketing knave

b. market nicher

c. segment king

d. guerilla marketer

e. strategic clone