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CHAPTER 2

STRATEGIC PLANNING AND THE MARKETING PROCESS MULTIPLE CHOICE QUESTIONS 1. Planning encourages management to think systematically about what has happened, what is happening, and ______________. a. when it is happening b. what might happen c. should something happen d. should something stop Answer: (b) Difficulty: (2) Page: 44 2. Three types of plans usually prepared by companies include annual plans, strategic plans, and __________ plans. a. hourly b. long-range c. model d. psychological Answer: (b) Difficulty: (1) Page: 44 3. The difference between annual and long-range plans versus a strategic plan is that the annual and long-range plans deal with the companys current businesses and how to keep them going, while the strategic plan deals with: a. functional activities. b. global activities. c. tactical decisions. d. adapting the firm to take advantage of opportunities in its constantly changing environment. Answer: (d) Difficulty: (3) Page: 44 4. _______________ is the process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities. a. Strategic planning b. Strategic control c. Strategic networking d. Functional development Answer: (a) Difficulty: (1) Page: 44 5. _______________ planning sets the stage for the rest of the planning in the firm. a. Functional 21

b. Strategic c. Operational d. Tactical Answer: (b) Difficulty: (2) Page: 44 6. For most companies, the first step in the strategic planning process is to: a. set company objectives and goals. b. design the business portfolio. c. define the company mission. d. review planning, marketing and other functional strategies. Answer: (c) Difficulty: (2) Page: 44, 45, Figure 2-1 7. A mission statement is a statement of the organizations: a. accounts and responsibilities. b. net worth. c. purpose. d. structure. Answer: (c) Difficulty: (1) Page: 45 8. Questions such as What is our business? and Who is the customer? are generally answered in a companys: a. objectives. b. plan. c. portfolio. d. mission statement. Answer: (d) Difficulty: (1) Page: 45 9. The statement of the organizations purpose that acts as an invisible hand in guiding people in the organization to action is called: a. the strategic plan. b. the mission statement. c. the target market. d. the company objective. Answer: (b) Difficulty: (2) Page: 45

10. Traditionally, companies have defined their businesses in product terms or in: a. motivation terms. b. global terms. c. functional terms. 22

d. technological terms. Answer: (d) Difficulty: (2) Page: 45 11. Wal-Mart has a mission statement that says We deliver low prices, every day. This mission statement would best be characterized as being: a. market-oriented. b. product-oriented. c. production-oriented. d. futuristic. Answer: (a) Difficulty: (2) Page: 49, Table 2-1 12. Mission statements should be all of the following EXCEPT: a. unlike any other mission statement in the industry. b. realistic. c. specific. d. motivating. Answer: (a) Difficulty: (2) Page: 48 13. The _____________________ is the collection of businesses and products that make up the company. a. business strategy group b. business portfolio c. business cartel d. business organization Answer: (b) Difficulty: (1) Page: 50

14. When using a business portfolio to manage its businesses, the organization must first analyze its current business portfolio and decide which businesses should receive more, less, or no investment, and second, the organization must: a. develop retraction strategies for the portfolio. b. develop tactical decisions for the portfolio. c. develop merger strategies for the portfolio. d. develop growth strategies for adding new products or businesses to the portfolio. Answer: (d) Difficulty: (3) Page: 50

15. _________________ is a tool by which management identifies and evaluates the various businesses that make up the company. a. Strategic planning b. Portfolio analysis c. Control recycling d. A strategy grid 23

Answer: (b) Difficulty: (2) Page: 50 16. If an organization were to identify a unit that has a separate mission and objectives and that can be planned independently from other company businesses, it would be called a(n): a. strategic business unit. b. control unit. c. product/market expansion unit. d. development unit. Answer: (a) Difficulty: (1) Page: 51 17. The purpose of strategic planning is to find ways in which the company can best: a. overcome losses. b. use its strengths to take advantage of attractive opportunities in the environment. c. avoid paying taxes. d. avoid the expense of costly research and development while still getting the benefits. Answer: (b) Difficulty: (2) Page: 51 18. The best known portfolio-planning method was developed by: a. the Department of Commerce. b. the University of Chicago. c. the Boston Consulting Group. d. the A. C. Nielson Consulting Group. Answer: (c) Difficulty: (1) Page: 51 19. According to the growth-share matrix portfolio-planning method, a companys strategic business units can be evaluated in terms of their: a. market growth rate and their relative profitability. b. market growth rate and their expansion curve tendency. c. structure and target markets. d. market growth rate and relative market share. Answer: (d) Difficulty: (3) Page: 51, 52, Figure 2-2 20. Under the BCG growth-share matrix, relative market share provides: a. a measure of the companys strength in the market. b. the primary information for investment/divestiture decisions. c. a measure of market attractiveness. d. a measure of profitability for all products. Answer: (a) Difficulty: (2) Page: 51

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21. Under the BCG growth-share matrix, high-growth, high-share businesses or products are called: a. stars. b. cash cows. c. question marks. d. dogs. Answer: (a) Difficulty: (1) Page: 51, 52, Figure 2-2 22. Under the BCG growth-share matrix, low-growth, high-share businesses or products are called: a. stars. b. cash cows. c. question marks. d. dogs. Answer: (b) Difficulty: (1) Page: 52, Figure 2-2 23. Under the BCG growth-share matrix, low-share, high-growth businesses or products are called: a. stars. b. cash cows. c. question marks. d. dogs. Answer: (c) Difficulty: (1) Page: 52, Figure 2-2 24. According to the BCG growth-share matrix, which types of SBUs listed below often need heavy investment to finance their rapid growth? a. Stars. b. Cash cows. c. Question marks. d. Dogs. Answer: (a) Difficulty: (2) Page: 51

25. According to the BCG growth-share matrix, which types of SBUs listed below often produces profits that help to support other SBUs in need of investment? a. Stars. b. Cash cows. c. Question marks. d. Dogs. Answer: (b) Difficulty: (2) Page: 52 26. If a company makes the decision to phase out an SBU and use the resources 25

elsewhere in the company, this decision is called a(n) ________________ strategy. a. build b. divest c. control d. harvest Answer: (b) Difficulty: (2) Page: 52 27. Some firms choose to milk an SBUs short-term cash flow regardless of the long-term effect on the SBU. This strategy is generally called a(n) ________________ strategy. a. build b. divest c. control d. harvest Answer: (d) Difficulty: (1) Page: 52 28. All of the following can be limitations to using matrix approaches for strategic planning EXCEPT: a. they can be difficult. b. they can be time-consuming. c. they primarily focus on future planning. d. they can be costly to implement. Answer: (c) Difficulty: (3) Page: 52, 53 29. The ________________ is a portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification. a. Boston Consulting Group approach b. GE business-screen c. input-output analysis approach d. product/market expansion grid Answer: (d) Difficulty: (2) Page: 53 30. According to research reports, Starbucks Coffee has used all of the following growth strategies to fuel its growth and expansion EXCEPT: a. more store growth. b. deep discounting to wholesalers. c. new retail channels. d. new products and store concepts. Answer: (b) Difficulty: (2) Page: 54-56, Marketing at Work 2-2 31. Under the product/market expansion grid, the strategy of making more sales of 26

current products to current market segments without altering the product is called: a. market penetration. b. market development. c. product development. d. diversification. Answer: (a) Difficulty: (2) Page: 56 32. Considering the strategies available in the product/market expansion grid, assume that a company cuts prices, increases advertising, tries to get its products into more stores, and tries to obtain better in-store displays. Which of the following strategies would the company most likely be pursuing based on the above actions? a. market penetration b. market development c. product development d. diversification Answer: (a) Difficulty: (2) Page: 56 33. Under the product/market expansion grid, the strategy of finding new market segments for current company products is called: a. market penetration. b. market development. c. product development. d. diversification. Answer: (b) Difficulty: (2) Page: 56

34. If a company (in reviewing its product/market expansion grid) decides to pursue new demographic markets and expand into new geographic markets with existing products, the company would be following which of the general strategies below? a. market penetration b. market development c. product development d. diversification Answer: (b) Difficulty: (2) Page: 56 35. Under the product/market expansion grid, the strategy of offering new products to current markets is called: a. market penetration. b. market development. 27

c. product development. d. diversification. Answer: (c) Difficulty: (2) Page: 56 36. If a company chooses (considering its options on the product/market expansion grid) to offer new styles, sizes, or colors to its existing market, the company would be following which of the general strategies listed below? a. market penetration b. market development c. product development d. diversification Answer: (c) Difficulty: (2) Page: 56 37. Under the product/market expansion grid, the strategy of entering a new market(s) with new products is called: a. market penetration. b. market development. c. product development. d. diversification. Answer: (d) Difficulty: (2) Page: 53, 56, Figure 2-3 38. If a company (considering its options on the product/market expansion grid) chooses to move into different unrelated fields (from what it has ever done before) with new products as a means to stimulate growth, the company would be following which of the following general strategies? a. market penetration b. market development c. product development d. diversification Answer: (d) Difficulty: (2) Page: 53, 56, Figure 2-3 39. All of the following are ways that marketing plays a key role in the companys strategic planning EXCEPT: a. marketing provides a guiding philosophy. b. marketing is the only discipline that can provide a formal structure for the planning effort. c. marketing provides inputs to strategic planners by helping to identify attractive market opportunities. d. within individual business units, marketing designs strategies for reaching the units objectives. Answer: (b) Difficulty: (3) Page: 57

40. When Wal-Marts purchasing department obtains the lowest prices possible from 28

suppliers so that Wal-Mart can sell at low prices to the consumer, the purchasing department becomes part of a ______________. a. product life-cycle b. synergistic function c. value chain d. promotion network Answer: (c) Difficulty: (1) Page: 57 41. Honda has designed a program for working closely with its suppliers to help them reduce their costs and improve quality. This form of program becomes part of Hondas _____________. a. circulation cycle b. financial network c. small business chain d. value delivery network Answer: (d) Difficulty: (2) Page: 58 42. The first step in the marketing process is to: a. select target markets. b. develop the marketing mix. c. manage the marketing effort. d. analyze marketing opportunities. Answer: (d) Difficulty: (2) Page: 60

43. At the center of any well founded marketing process is the: a. profit maximization motive. b. target customer. c. shipping department. d. advertising. Answer: (b) Difficulty: (1) Page: 60, Figure 2-4 44. Each company must divide up the total market, choose the best segments, and design strategies for profitably serving chosen segments better than its competitors do. This process involves three steps. Which of the following IS NOT one of those steps? a. market delineation b. market segmentation c. market targeting d. market positioning Answer: (a) Difficulty: (3) Page: 61, 62 29

45. ________________ consists of dividing a market into distinct groups of buyers on the basis of needs, characteristics, or behavior who might require separate products or marketing mixes. a. Product differentiation b. Market segmentation c. Market targeting d. Market positioning Answer: (b) Difficulty: (2) Page: 61 46. A ______________ consists of consumers who respond in a similar way to a given set of marketing efforts. a. market b. market segment c. market position d. target Answer: (b) Difficulty: (1) Page: 61 47. With respect to market targets, a company should target segments in which: a. there are the most customers. b. there are the most customers with the most money to spend. c. the company can profitably generate the greatest customer value and sustain it over time. d. there are the fewest competitors and there are the lowest costs. Answer: (c) Difficulty: (3) Page: 61 48. A products __________ is the place the product occupies relative to competitors in consumers minds. a. image b. position c. niche d. segment Answer: (b) Difficulty: (2) Page: 62 49. When the Chevy Blazer is described as being like a rock, it is an example of: a. market segmentation. b. product differentiation. c. market targeting. d. market positioning. Answer: (d) Difficulty: (3) Page: 62 50. In positioning its product, the company first identifies possible: a. market segments. 30

b. market targets. c. competitive advantages on which to build the position. d. costs and profit pitfalls. Answer: (c) Difficulty: (1) Page: 62 51. Product, price, place, and promotion are all controllable tactical marketing tools found in the companys ________________. a. positioning plan b. marketing analysis division c. marketing mix d. marketing support system Answer: (c) Difficulty: (2) Page: 63 52. Design, quality, features, brand name, packaging, services, and variety are all items found in which of the following marketing mix variables? a. product b. price c. place d. promotion Answer: (a) Difficulty: (2) Page: 63, Figure 2-5

53. ________________ includes the company activities that make the product available to target customers. a. Product b. Price c. Place d. Promotion Answer: (c) Difficulty: (2) Page: 63, Figure 2-5 54. From the buyers point of view in this age of connectedness, the four Ps of the marketing mix might be better described as the four Cs. Which of the following Cs would match to the Place variable in the marketing mix? a. Customer solution b. Customer cost c. Convenience d. Communication Answer: (c) Difficulty: (2) Page: 64 55. The marketing function that identifies the companys strengths and weaknesses while considering its opportunities and threats is called: a. marketing analysis. 31

b. marketing planning. c. marketing control. d. marketing implementation. Answer: (a) Difficulty: (3) Page: 65 56. ______________ involves deciding on marketing strategies that will help the company attain its overall strategic objectives. a. Marketing analysis b. Marketing planning c. Marketing control d. Marketing implementation Answer: (b) Difficulty: (3) Page: 65 57. A(n) ____________ is the marketing logic whereby the company hopes to achieve its marketing objectives. a. marketing tactic b. marketing theory c. marketing concept d. marketing strategy Answer: (d) Difficulty: (2) Page: 65 58. The ________________ presents a brief summary of the main goals and recommendations of the plan for management review, helping top management to find the plans major points quickly. a. executive summary b. current marketing situation c. objectives and issues d. threats and opportunity analysis Answer: (a) Difficulty: (1) Page: 66, Table 2-2 59. Areas that are included in assessing the current marketing situation include all of the following EXCEPT: a. a review of production action programs. b. a market description. c. a product review. d. a review of competition. Answer: (a) Difficulty: (3) Page: 66, Table 2-2 60. ___________________ outlines the broad marketing logic by which the business unit hopes to achieve its marketing objectives and the specifics of target markets, positioning, and marketing expenditure levels. a. The current market situation b. Objectives and issues 32

c. Marketing strategy d. Action programs Answer: (c) Difficulty: (2) Page: 66, Table 2-2 61. The process that turns marketing strategies and plans into marketing actions in order to accomplish strategic marketing objectives is called: a. marketing strategy. b. marketing control. c. marketing analysis. d. marketing implementation. Answer: (d) Difficulty: (2) Page: 66 62. Successful ________________ depends on how well a company blends its people, organizational structure, decision and reward systems, and company culture into a cohesive program that supports its strategies. a. marketing strategy b. marketing control c. marketing analysis d. marketing implementation Answer: (d) Difficulty: (3) Page: 67 63. The most common form of marketing organization is the: a. functional organization. b. geographic organization. c. product management organization. d. market management organization. Answer: (a) Difficulty: (1) Page: 67 64. Companies that sell a single product to many different types of customers who have different needs and preferences often use what type of marketing department organization? a. functional organization b. geographic organization c. product management organization d. market or customer management organization Answer: (d) Difficulty: (2) Page: 68 65. ______________ is the process of measuring and evaluating the results of marketing strategies and plans, and taking corrective action to ensure that marketing objectives are achieved. a. Strategic control b. Operating control c. Functional control 33

d. Marketing control Answer: (d) Difficulty: (2) Page: 68 66. _____________ involves checking ongoing performance against the annual plan and taking corrective action when necessary. a. Strategic control b. Engineering control c. Operating control d. Matrix control Answer: (c) Difficulty: (2) Page: 68 67. The ____________ is a comprehensive, systematic, independent, and periodic examination of a companys environment, objectives, strategies, and activities to determine problem areas and opportunities. a. marketing plan b. marketing strategy c. marketing audit d. marketing profile Answer: (c) Difficulty: (3) Page: 69 TRUE/FALSE QUESTIONS 68. Strategic planning involves defining a clear company mission and other activities. Answer: (True) Difficulty: (1) Page: 44 69. Many companies operate without formal plans. Answer: (True) Difficulty: (1) Page: 44 70. The first step in strategic planning is to set company objectives and goals. Answer: (False) Difficulty: (2) Page: 45, Figure 2-1 71. Management should always make its mission statement as broad as possible. Answer: (False) Difficulty: (2) Page: 48 72. To do business correctly, mission statements should be product-oriented. Answer: (False) Difficulty: (2) Page: 49, Table 2-1 73. We run theme parks would be an example of a market-oriented mission for the Disney company. 34

Answer: (False) Difficulty: (2) Page: 49, Table 2-1 74. If Home Depots mission were product-oriented, it might contain the following phraseWe sell tools and home repair and improvement items. Answer: (True) Difficulty: (2) Page: 49, Table 2-1 75. A strategic business unit (SBU) is a unit of the company that has a separate mission and objectives that can be planned independently from other company businesses. Answer: (True) Difficulty: (1) Page: 51 76. The Boston Consulting Group growth-share matrix measures portfolio performance by market growth rate versus relative market share. Answer: (True) Difficulty: (1) Page: 51 77. Using the BCG growth-share matrix approach, a star is characterized as being a lowshare business unit in high-growth markets. Answer: (False) Difficulty: (2) Page: 51 78. Using the BCG growth-share matrix approach, a question mark is an SEU where the company is approaching globalization as a primary strategy. Answer: (False) Difficulty: (2) Page: 52 79. If a firm wants to milk its short-term cash flow regardless of the long-term effect, then a strategy of harvesting should be considered. Answer: (True) Difficulty: (2) Page: 52 80. According to the product/market expansion grid, market penetration would suggest that a company grow with an established product in an established market. Answer: (True) Difficulty: (2) Page: 53, 56 81. According to the product/market expansion grid, market development allows managers to pursue new demographic and geographic markets with existing products. Answer: (True) Difficulty: (2) Page: 53, 56 82. When each department within an organization carries out value-creating activities to design, produce, market, deliver, and support the firms products, the department is part of what is called a value chain. Answer: (True) Difficulty: (1) Page: 57 35

83. A market position consists of consumers who respond in a similar way to a given set of marketing efforts. Answer: (False) Difficulty: (2) Page: 61 84. Marketing targeting involves evaluating each market segments attractiveness and selecting one or more segments to enter. Answer: (True) Difficulty: (1) Page: 61 85. If Ford Taurus establishes itself as a car that is built to last, it has established a market position. Answer: (True) Difficulty: (1) Page: 62 86. The most important of the 4 Ps is promotion because without promotion no one would know about the products. Answer: (False) Difficulty: (2) Page: 63 87. The text indicates that 4 Cs match the 4 Ps of the marketing mix. The C that would match the Product component of the 4 Ps would be Customer goods. Answer: (False) Difficulty: (2) Page: 64 88. Marketing strategy is what is used by the marketer to develop the projected profitand-loss statement. Answer: (False) Difficulty: (2) Page: 65, 66, Table 2-2 89. The element of the marketing plan that is used to present a brief summary of the main goals and recommendations of the plan for management review is the marketing audit. Answer: (False) Difficulty: (2) Page: 66, 69, Table 2-2 90. The most common form of marketing organization is the functional organization. Answer: (True) Difficulty: (1) Page: 67 ESSAY QUESTIONS 91. For more than 25 years, Intel has dominated the microprocessor market for personal computers. Intels stunning success results from strong strategic planning and its relentless dedication to a simple marketing strategy. Identify this simple strategy and

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discuss how Intel has implemented it. Additionally, comment on what you believe are Intels strongest strategic plans. Answer: Intels simple strategy is to provide the most value and satisfaction to customers through product leadership. Intels strategy rests on delivering superior value by creating a continuous stream of leading-edge products. Then it communicates its superior value to consumers. This has built intense customer loyalty and preference. Since Intels growth depends on increasing demand for microprocessors, which in turn depends on growth in PC applications and sales, the company has an intense interest in the PC industry and its fate. To control its own destiny the company is now developing applications on the PC itself. Its investment in technology and market development has paid off. Intels advertising campaigns have made the companys name a household word. Additionally, Intel is working with small companies to spur the next killer app. Students should think carefully about what they perceive to be Intels best strategy, be it advertising, market development, or technology. Any of these can be justified with detailed explanations taken from the introductory example in the text. Difficulty: (2) Page: 41-44 92. Describe the strategic planning process. Identify the four steps of the strategic planning process. Answer: Strategic planning is defined as the process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities. The four steps in the strategic planning process include: (1) defining the company mission (a statement of purpose), (2) setting company objectives and goals (what do we want to accomplish), (3) designing business portfolios, and (4) planning marketing and other related strategies. Difficulty: (2) Page: 44, Figure 2-1 93. Define a mission statement. Characterize what good mission statements should be. Answer: A mission statement is a statement of the organizations purposewhat it wants to accomplish in the larger environment. A mission statement should be realistic, specific, fit the market environment, and be motivating. Difficulty: (1) Page: 45, 48 94. Define a business portfolio. Next, indicate the nature of the Boston Consulting Group portfolio model. Discuss this model in detail.

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Answer: A business portfolio is the collection of businesses and products that make up the company. The Boston Consulting Group approach is a growth-share matrix where strategic business units are evaluated in terms of their market growth rate and relative market share. The BCG approach identified four types of Strategic Business Unitsstars, cash cows, question marks, and dogs. Stars are high-growth, high-share businesses or products. Cash cows are low-growth, high-share businesses or products. Question marks are low-share business units in high-growth business markets. Dogs are low-growth, lowshare business units in high-growth markets. (See text for additional details.) Difficulty: (2) Page: 50-53, and Figure 2-2 95. Describe the four growth possibilities present on the product/market expansion grid. Answer: This grid is a portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, and diversification. Strategies for each include: (1) market penetrationincrease sales of current products to current market segments without changing the product, (2) market developmentidentify and develop new markets (demographic or geographic) for existing company products, (3) product developmentoffer modified or new products to current market segments, and (4) diversificationoffer new products to new market segments. Difficulty: (2) Page: 53-57, and Figure 2-3 96. Starbucks Coffee has had phenomenal growth in the last decade. List and briefly discuss the key elements of their multipronged growth strategy. Answer: a). More store growth. More than 85 percent of Starbucks sales comes from its stores. b). New retail channels. Starbucks has pushed into supermarkets. c). New products and store concepts. Bottled drinks, ice cream, and cafes have led the way. Difficulty: (2) Page: 54-56, and Marketing at Work 2-2 97. Describe a value chain. Answer: A value chain is a series of departments which carry out value-creating activities to design, produce, market, deliver, and support a firms products. The text uses the illustration of Wal-Mart. If the instructor desires the students to discuss a different example, this should be made clear in directions. This answer can also be expanded to include a value delivery network. Difficulty: (2) Page: 57-59

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98. Describe the marketing management process and the forces that influence it. Answer: The marketing management process involves helping each business unit of the company reach its strategic objectives in relation to creating value for target consumers while fulfilling company goals. Factors that influence this process include the process for targeting consumers; marketing mix decisions; planning, implementation, and analysis and control procedures; and micro- and macro-environmental forces. Students should carefully explain each portion of Figure 2-4 and demonstrate the relationships contained therein. Difficulty: (2) Page: 60 and Figure 2-4 99. Discuss the differences between market segmentation, market targeting, and market positioning. Answer: Market segmentation is the process of dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes. Market targeting is the process of evaluating each market segments attractiveness and selecting one or more segments to enter. Market positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. Difficulty: (2) Page: 61-62 100. Compare the 4 Ps of the marketing mix against the 4 Cs that might result from the new age of connectedness. Answer: As suggested in the chapter, the 4 Ps are: Product Price Place Promotion Difficulty: (2) Page: 64 101. Marketing planning involves deciding on marketing strategies that will help the company attain its overall strategic objectives. In order to carry out effective planning a detailed marketing plan is needed for each business. List and briefly identify the primary steps (contents) of a marketing plan. Be specific in your listing and identifications. Answer: The steps and a brief description of a marketing plan include: a). Executive summarypresents a brief summary of the main goals and recommendations of the plan for management review, helping management to find the plans major points quickly. 39 the 4 Cs are: Customer solution Customer cost Convenience Communication.

b). Current marketing situationdescribes the target market and the companys position in it, including information about the market, product performance, competition, and distribution. c). Threats and opportunity analysisassesses major threats and opportunities that the product might face, helping management to anticipate important positive or negative developments that might have an impact on the firm and its strategies. d). Objectives and issuesstates the marketing objectives that the company would like to attain during the plans terms and discusses key issues that will affect their attainment. e). Marketing strategyoutlines the broad marketing logic by which the business unit hopes to achieve its marketing objectives and the specifics of target markets, positioning, and marketing expenditure levels. f). Action programsspells out how marketing strategies will be turned into specific action programs that answer the following questions: What will be done? When will it be done? Who is responsible for doing it? And how much will it cost? g). Budgetsdetails a supporting marketing budget that is essentially a projected profitand-loss statement. h). Controlsoutlines the controls that will be used to monitor progress and allow higher management to review implementation results and spot products that are not meeting their goals. Difficulty: (3) Page: 66, Table 2-2 102. Modern marketing departments can be arranged in several ways. List and briefly describe the ways cited in the text. Answer: a). Functional organizationthe most common form of marketing organization. Different marketing activities are headed by a functional specialist (a sales manager, advertising manager, marketing research manager, et cetera). b). Geographic organizationsales and marketing people are assigned to specific countries, regions, and districts. Geographic organization allows sales people to settle into a territory, get to know their customers, and work with a minimum of travel time and cost. c). Product management organizationa product manager develops and implements a complete strategy and marketing program for a specific product or brand. d). Market or customer management organizationmarketing managers are responsible for developing marketing strategies and plans for their specific markets or customers. e). Combination plans. Difficulty: (3) Page: 67, 68 APPLICATION QUESTION 103. To be effective in the marketplace, a company must divide up the total market available, choose the best market segments, and design strategies for profitably serving chosen segments better than its competitors. One company that seems to have done this extremely well is Ty Corporation with its line of Beanie Babies. The products seem to sell 40

well to young and old alike. Taking what you know about the company and its products, develop a plan for applying market segmentation, market targeting, and market positioning to the companys current line of Beanie Babies (be sure to address each of these issues separately). You may make assumptions; however, be sure to state them. Remember to look for new market segments to keep the company viable in the future, and carefully consider how to position the company for success in the next century. Answer: Prior to giving this question the instructor can give outside reading assignments on the company or can refer students to the companys Web site at www.ty.com where a wealth of information exists on the company. In fact, the company claims that over 2 billion hits have occurred on the Web site since its inceptionthats amazing! The first section that should be discussed is a plan for market segmentation. Students can be creative with this, however, they should be sure to include information about children, senior citizens, mothers, and serious collectors as potential segments that might explored by the company. The different needs, characteristics, or behavior of these groups would be a good starting point for discussion. Next, students should outline their plan for picking a target market that should be what they perceive to be the most attractive of the market segments mentioned above. Their pick should be justified. Special niches can be identified, however, a primary target market should be identified as well. See Marketing At Work 2-2 for an additional example. Lastly, students should consider the communication and promotion opportunities facing the company in its positioning strategy. Consider the competitive advantages of the company and how it could build on these advantages. Remember, the company must be willing to deliver on its promises. How can Ty sustain its growth? How can it deal with negatives or short supply of its products or how prices charged by collectors or scalpers? Each of these issues might be side issues in the question. Difficulty: (2) Page: 54-56, Marketing at Work 2-2, 61

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