Module 16 - Marketing Strategies for Growth Markets

Question 1

1 Firms following a ‘market expansion’ strategy may have as one of their objectives to:
A.increase their customer base by focusing its resources on high growth segments.
B.increase their customer base by focusing on creating new products.
C.protect against losses of customers by beating its competitors’ prices.
D.protect against losses of customers by developing its own second entry.
E. increase the rate of purchase of its current customers.

Answer 1

B

Question 2

2 Firms following a ‘flanker’ strategy may have as one of their objectives to:
A.increase their customer base by focusing its resources on high growth segments.
B.increase their customer base by focusing on creating new products.
C.protect against losses of customers by beating its competitors’ prices.
D.protect against losses of customers by developing its own second entry.
E.increase the rate of purchase of its current customers.

Answer 2

D

Question 3

3 A flanker strategy is always used in conjunction with:
A.confrontation strategy.
B.fortress defence strategy.
C.leap frog strategy.
D.market expansion strategy.
E.contraction strategy.

Answer 3

B

Question 4

4 A market expansion strategy may involve any of the following actions EXCEPT:
A.developing line extensions.
B.building unique distribution channels.
C.increasing quality control.
D.designing multiple advertising campaigns.
E.designing multiple sales promotion campaigns

Answer 4

C

Question 5

5 Which of the following share growth strategies is appropriate for a challenger when the market is relatively homogenous?
A.frontal attack and leap frog.
B.leapfrog and flanking attack.
C.flanking attack and encirclement.
D.encirclement and frontal attack.
E.position defence.

Answer 5

A

Question 6

6 Which of the following share growth strategies is appropriate for a challenger when the market is relatively heterogeneous?
A.frontal attack and leap frog.
B.leapfrog and flanking attack.
C.flanking attack and encirclement.
D.encirclement and frontal attack.
E.position defence.

Answer 6

C

Question 7

7 Which of the following share growth strategies is appropriate for a challenger when one or more competitors already have relatively strong marketing and R&D resources and could probably withstand a direct attack?
A.frontal attack and leapfrog.
B.leapfrog and flanking attack.
C.flanking attack and encirclement.
D.encirclement and frontal attack.
E.position defence.

Answer 7

C

Question 8

8 An encirclement strategy involves: I. Targeting several smaller untapped or underdeveloped segments of the market simultaneously. II. Development of an adaptable management structure. III. Low operating costs. Which of the following is correct?
A.I and II only.
B.II and III only.
C.I and III only.
D.I, II and III.
E.neither I, II nor III.

Answer 8

A

Question 9

9 A challenger with the objective of attracting a substantial share of new customers in a variety of smaller specialised segments where customer’s needs are different from those of early adopters in the mass market is following a ____ strategy.
A.frontal attack
B.leapfrog
C.flanking attack
D.encirclement
E.position defence

Answer 9

D

Question 10

10 A challenger with the objective of inducing customers in the mass market to replace their current brand with the challenger’s superior product offering is following a ____ strategy.
A.frontal attack
B.leapfrog
C.flanking attack
D.encirclement
E.position defence

Answer 10

B

Question 11

1 Maintaining an early lead in relative market share in a growth market is difficult for all of the following reasons EXCEPT:
A.the increasing number of competitors.
B.the reduction in market segments.
C.the threat of product innovation from within the industry.
D.the threat of product innovation from outside the industry.
E.continuing need for investment.

Answer 11

B

Question 12

2 The most basic defensive strategy in a growing market is:
A.confrontation.
B.fortress.
C.flanker.
D.market expansion.
E.contraction.

Answer 12

B

Question 13

3 Marketing actions to maintain customer satisfaction and loyalty include all of the following EXCEPT:
A.increasing attention to quality control.
B.focusing advertising on selective demand.
C.continuing product modification and improvements.
D.expand post-service capabilities.
E.developing multiple-line extensions.

Answer 13

E

Question 14

4 Marketing actions to encourage and simplify repeat purchase include all of the following EXCEPT:
A.expanding production capacity in advance of increasing demand.
B.improving inventory control.
C.expanding post-service capabilities.
D.developing automatic reorder systems.
E.continuing to build distribution channels

Answer 14

C

Question 15

5 The strategy being followed by a market leader who develops a second brand to compete directly against a competitor who develops a differentiated product offering to appeal to a segment where the leader is weak is a:
A.confrontation strategy.
B.fortress defence strategy.
C.flanker strategy.
D.market expansion strategy.
E.contraction strategy

Answer 15

C

Question 16

6 Firms following a ‘confrontation’ strategy may have as one of their objectives to:
A.increase its customer base by focusing its resources on high growth segments.
B.increase its customer base by focusing on creating new products.
C.protect against losses of customers by beating its competitors’ prices.
D.protect against losses of customers by developing its own second entry.
E.increase the rate of purchase of its current customers.

Answer 16

C

Question 17

7 Firms following a ‘contraction’ strategy may have as one of their objectives to:
A.increase its customer base by focusing its resources on high growth segments.
B.increase its customer base by focusing on creating new products.
C.protect against losses of customers by beating its competitors’ prices.
D.protect against losses of customers by developing its own second entry.
E.increase the rate of purchase of its current customers.

Answer 17

A

Question 18

8 The text describes internally consistent strategies that a challenger might employ to achieve share-growth objectives as:
A.fortress (position defence), flanker, confrontation, market expansion, and contraction (withdrawal) strategies.
B.frontal attack, leapfrog, flanking attack and encirclement.
C.fortress, flanker, confrontation and encirclement.
D.frontal attack, leapfrog, flanking attack and market expansion.
E.fortress, leapfrog, confrontation, encirclement and market expansion

Answer 18

B

Question 19

9 A challenger with the objective of attracting a substantial share of new customers in one or more major segments where customer’s needs are different from those of early adopters in the mass market is following a ____ strategy.
A.frontal attack
B.leapfrog
C.flanking attack
D.encirclement
E.position defence

Answer 19

C

Question 20

10 A challenger with the objective of capturing repeat/ replacement purchases from the target competitors’ current customers is following a ____ strategy.
A.frontal attack
B.leapfrog
C.flanking attack
D.encirclement
E.position defence

Answer 20

A

Question 21

Discuss the marketing actions and strategies to achieve the share-maintenance objectives of a market leader.

Answer 21

• not all actions are complementary and hence they are divided into five groups of mutual complementary actions
  
  • fortress or positive defense strategy
  • flanker strategy
  • confrontation strategy
  • market expansion strategy
  • contraction or strategic withdrawal strategy
• they are not purely defensive - can be used offensively to preempt expected future competition or to capture larger share of market
• the suitability of each of the five strategies depends on
  
  • the markets size and customer characteristics
  • number and relative strengths of the competitors
  • leaders own resources and competencies

Question 22

What marketing activities and strategies are needed for a challenger to achieve share growth?

Answer 22

• A challenger with visions of being a leader has two basic strategic options, each involving different objectives and actions
  
  • steal away some of the repeat purchase or replacement demand from the competitors current customers – looking for advantages in a head to head confrontation or leapfrog them in technology. this is used when leader has a substantial lead
  • where market is early in growth phase, challenger can focus on attracting a larger share of potential new customers who enter market for first time. Aim is to differentiate. good for fragmented markets
• five strategies are
  
  • frontal attack
  • leapfrog
  • flanking attack
  • encirclement
  • guerilla attack
• the suitability of each of the five strategies depends on
  
  • the markets size and customer characteristics
  • number and relative strengths of the competitors

Question 23

Conventional wisdom suggests that rapidly growing markets present attractive opportunities for future profits for each of the following reasons EXCEPT:
A. there is less risk of industry overcapacity.
B. it is easier to gain share in a growing market.
C. share gains are worth more in a growth market.
D. price competition is less likely to be intense.
E. early participation in a growth market is necessary to make sure that the firm keeps pace with technology

Answer 23

A

Question 24

The text describes internally consistent strategies that a market leader might employ to maintain its leading share position as:
A. fortress (position defence), flanker, confrontation, market-expansion and contraction (withdrawal) strategies.
B. frontal attack, leapfrog, flanking attack and encirclement.
C. fortress, flanker, confrontation and encirclement.
D. frontal attack, leapfrog, flanking attack, market expansion and contraction.
E. fortress, leapfrog, confrontation, encirclement and expansion

Answer 24

A

Question 25

Marketing actions particularly aimed at head-to-head positioning against competitive offerings or potential offerings include: A. making product modifications or improvements to match or beat superior competitive offerings and meeting or beating prices or promotion. B. increasing attention to quality control and focusing advertising on selective demand. C. expanding production capacity and improving inventory control. D. developing a second brand or product line and developing multiple line extensions. E. building unique distribution channels and multiple advertising and sales promotion campaigns.

Answer 25

A

Question 26

Strategies most appropriate for a market leader attempting to maintain its share lead depend upon: A. market size. B. competitor characteristics. C. number of competitors. D. the leader’s own resources. E. all of the above factors.

Answer 26

E

Question 27

Tide detergent’s repeated product improvements, such as adding ‘blue crystals’ and similar moves, are probably an example of a ____ share maintenance strategy. A. fortress (position defence). B. flanker. C. confrontation. D. market expansion. E. contraction (strategic withdrawal).

Answer 27

A

Question 28

Increasing satisfaction, loyalty and repeat purchase among current customers is an objective primarily associated with the ____ share maintenance strategy: A. fortress (position defence). B. flanker. C. confrontation. D. market expansion. E. contraction (withdrawal).

Answer 28

A

Question 29

Firms following a ‘fortress’ strategy may have as one of their objectives: A. to increase its customer base by focusing its resources on high growth segments. B. to increase its customer base by focusing on creating new products. C. to protect against losses of customers by beating its competitors’ prices. D. to protect against losses of customers by developing its own second entry. E. to increase the rate of purchase of its current customers.

Answer 29

E

Question 30

Which type of marketing strategy is represented by a company which develops a second brand with a price which is more appealing to a specific segment of its current customers who are purchasing one of its existing brands? A. Suicide squeeze strategy. B. Market expansion strategy. C. Flanker strategy. D. Confrontation strategy. E. Analyser strategy.

Answer 30

C

Question 31

A major auto tyre manufacturer, which already produces a premium tyre, decides to produce a low-price branded tyre as well. It is probably practising a ____ share maintenance strategy. A. fortress (position defence). B. confrontation. C. contraction (strategic withdrawal). D. flanker. E. market expansion.

Answer 31

D

Question 32

In its continual efforts to fend off MCI and Sprint, AT&T has employed a ____ marketing strategy which has essentially ____ their attacks. A. market expansion; stopped. B. market expansion; neutralised the effectiveness of. C. avoidance; neutralised the effectiveness of. D. confrontation; neutralised the effectiveness of. E. confrontation; stopped.

Answer 32

D

Question 33

When one company meets the price reductions of a direct competitor, it is pursuing a ____ share maintenance strategy. A. fortress (position defence). B. confrontation. C. contraction (strategic withdrawal). D. market expansion. E. flanker

Answer 33

B

Question 34

A confrontation strategy involves: A. a direct attack on a competitor’s product-market. B. an indirect attack on a competitor’s product-market. C. identification of new product-market opportunities. D. protection by the share leader of its primary product-market domain. E. a deliberate effort to reduce product-market domain.

Answer 34

A

Question 35

Which type of marketing strategy is represented by a company which develops additions to one of its existing product lines in order to better satisfy the needs of different segments of users in the market? A. Market expansion. B. Confrontation strategy. C. Strategic withdrawal strategy. D. Analyser strategy. E. None of the above.

Answer 35

A

Question 36

Firms following a ‘frontal’ strategy may have as one of their objectives: A. to increase its sales by stealing competitor’s customers. B. to increase its sales by getting customers to trade up. C. to increase share of new customers who have different needs. D. to increase share of customers in different segments who have different needs. E. to increase the rate of purchase of its current customers.

Answer 36

A

Question 37

When, a few years ago, Toyota introduced its top-of-the-line Lexus LS 400, it was likely pursuing which share-growth strategy? A. Flanker. B. Frontal. C. Encirclement. D. Leapfrog. E. The type of attack is contingent on the market segment Toyota was targeting.

Answer 37

E

Question 38

Share-growth strategies described in the text include: A. fortress (position defence), flanker, confrontation, market expansion and contraction (withdrawal). B. frontal attack, leapfrog, flanking attack and encirclement. C. fortress, flanker, confrontation and encirclement. D. frontal attack, leapfrog, flanking attack, market expansion and contraction. E. fortress, leapfrog, confrontation, encirclement and expansion

Answer 38

B

Question 39

What type of marketing strategy did Honda Motor Company use in the early 1960s when it introduced a small, low-priced sedan into the California market? A. Flank attack. B. Encirclement. C. Leapfrog. D. None of the above. E. Both A and C above.

Answer 39

A

Question 40

Firms following a ‘leapfrog’ strategy may have as one of their objectives: A. to increase sales by stealing competitors’ customers. B. to increase sales by getting customers to trade up. C. to increase their share of new customers who have different needs. D. to increase their share of customers in different segments who have different needs. E. to increase the rate of purchase of their current customers.

Answer 40

B

Question 41

The market characteristics facing firms following a ‘flank’ strategy are: A. relative homogeneity in one segment. B. relative homogeneity in multiple segments. C. two or more distinct segments. D. relative heterogeneity in one segment. E. relative heterogeneity in multiple segments

Answer 41

C

Question 42

The market characteristics facing firms following an ‘encirclement’ strategy are: A. relative homogeneity in one segment. B. relative homogeneity in multiple segments. C. two or more distinct segments. D. relative heterogeneity in one segment. E. relative heterogeneity in multiple segments.

Answer 42

E

Question 43

Stouffer’s Foods holds a commanding share of the growing market for low-calorie frozen entrées with its Lean Cuisine product line. To maintain its lead as the market continues to grow, what strategic marketing objectives should Stouffer focus on and why?

Answer 43

Stouffer should focus on retaining current customers by: (1) maintaining and improving satisfaction and loyalty; (2) encouraging and simplifying repeat purchases; and (3) reducing the attractiveness of switching. It should also stimulate selective demand among late adopters by: (1) head-to-head positioning against competitive offerings or potential offerings; and (2) differentiated positioning against competi- tive offerings or potential offerings.

Question 44

Given your answer to Question 16.23, which specific marketing actions would you recommend for accomplishing Stouffer’s objectives? Be specific with regard to each of the 4 Ps in the firm’s marketing programme.

Answer 44

Question 45

A number of years ago General Foods’ Cool Whip frozen dessert topping held nearly a two-thirds share of the market, but it was gradually losing share to low-priced private label competitors in many regional markets. Describe two strategies that General Foods might have adopted to defend its leading share position and the marketing actions necessary to implement them. Which of the two would you recommend and why?

Answer 45

Question 46

How would you characterise the early strategies of the major Japanese auto makers (e.g., Toyota, Nissan, and Honda) when they first entered the US auto market in the 1960s and 1970s? What marketing variables do you think were critical to the ultimate success of their strategies?

Answer 46

Initially the Japanese auto makers pursued a flank attack, providing automobiles for a segment of the US market seeking fuel-efficient, inexpensive, reasonably reliable transportation. Important marketing variables were product (reliability, as measured by such indicators as frequency of repairs) and price (relatively low).

Question 47

If you had been the top marketing executive at General Motors during the early years of the Japanese invasion of the US car market, which strategy would you have recommended to defend GM’s leading market share against this new competitive threat? Why do you think GM failed to adopt such a strategy at the time?

Answer 47

Major US car makers probably should have pursued a flanker maintenance strategy, designing and producing cars for the segment(s) of the market seeking fuel-efficient, inexpensive, reasonably reliable transportation. There are probably several reasons this approach was not pursued. First, car plant construction, or retooling of existing plants, is expensive and requires a long lead time. US car makers may have avoided the expense until too late, and then the lead time prevented share maintenance. Second, the larger, more expensive models produced by US firms had higher margins, and US car makers were probably reluctant to divert attention from that market (or perhaps to admit it was declining). Third, Japanese production systems are a unique combination of culture and cultivation achieved over a long period. Not all US car makers demonstrated an ability to make cars of such quality.