Deck 16: Strategies for Mature and Declining Markets

Question 1

As a market matures,total volume stabilizes;replacement purchases rather than first-time buyers account for the vast majority of that volume.

Answer 1

True

Question 2

It is easy for a single business with sufficient resources to pursue both low-cost and differentiation strategies at the same time.

Answer 2

False

Question 3

The maturity stage is characterized by an absence of threats and opportunities.

Answer 3

False

Question 4

The choice between a differentiation and a low-cost strategy is the critical determinant of success in mature markets.

Question 5

Analyzers and defenders can attempt to sustain a competitive advantage in established product-markets through differentiation of their product offering or by maintaining a low-cost position.

Question 6

Businesses taking the low-cost approach offer the lowest prices which typically allow little room to cover the costs inherent in maintaining superior product quality,performance,or service over time.

Question 7

The quality dimension of serviceability refers to a customer's ability to obtain prompt and competent service when the product does break down.

Question 8

Empathy is a crucial dimension of service quality for online consumers.

Question 9

When consumers make unrealistic expectations due to a firm's marketing techniques,a gap between service quality specifications and service delivery occurs.

Question 10

Defenders in mature industries focus on product and market development to avoid being leapfrogged by competitors.

Question 11

The growing popularity of the internet has facilitated the ability of firms to tailor different levels of service and benefits to different customers based on each person's potential to produce a profit.

Question 12

The maturity phase of an industry's life cycle is often depicted as one of volatility characterized by changes in the market shares of leading competitors and unsteady prices.

Question 13

In some labor-intensive industries,a business can achieve a cost advantage,at least in the short term,by gaining access to inexpensive labor.

Question 14

Transition periods are commonly accompanied by a shakeout during which weaker businesses fail,withdraw from the industry,or are acquired by other firms.

Question 15

The reliability quality dimension can refer to the consistency of performance from purchase to purchase or to a product's uptime,the percentage of time that it can perform satisfactorily over its life.

Question 16

A gap between a customer's expectations and a marketer's perceptions can be removed by collecting necessary information to determine what service attributes customers consider important.

Question 17

Assurance refers to the knowledge and courtesy of employees and their ability to convey trust and confidence.

Question 18

Low-cost defender businesses typically spend little on processing R&D.

Question 19

The past few decades have been characterized by a shift from the "return on quality" approach to the "absolute quality" approach of products and services.

Question 20

The two objective performance dimensions of the service delivery system are assurance and empathy.

Question 21

Which of the following is true of the maturity phase of an industry?

A)It is depicted as one of instability characterized by fluctuating prices.
B)As the maturity stage progresses,a variety of threats and opportunities can disrupt an industry's stability.
C)As a market matures,first-time buyers account for the vast majority of total volume rather than replacement purchases.
D)During the maturity phase of an industry,profitability and public awareness begin to rise.

Question 22

During a _____,the growth rate in a product-market declines and weaker businesses fail,withdraw from the industry,or are acquired by other companies.

A)harvest stage
B)shakeout
C)market penetration
D)functional performance

Question 23

Conditions of demand help determine the strategic attractiveness of declining product markets.

Question 24

Harper Corporation,an electronics manufacturer,emphasizes that its products such as refrigerators,washing machines,and microwave ovens last for a very long time without any problems.Which of the following dimensions of product quality is being emphasized by the organization?

A)Functional performance
B)Variety of features
C)Broad product line
D)Durability

Question 25

Which of the following is a consequence of businesses pursuing low-cost strategies?

A)High pricing strategies
B)Low investments
C)Easy cost coverage
D)Odd pricing strategies

Question 26

An extended use strategy is appropriate for an industry's share leader because such firms can more likely gain and retain a substantial share of new customers than smaller firms with less-well-known brands.

Question 27

In a fragmented and heterogeneous market where some segments are less well developed than others,a market expansion strategy may generate substantial additional volume growth.

Question 28

A niche strategy can be particularly effective when the target segment is too small to appeal to larger competitors or when the smaller firm can establish a strong differential advantage or brand preference in the segment.

Question 29

Which of the following will help analyzers and defenders to sustain a competitive advantage in established product-markets?

A)Low product differentiation
B)High market segmentation
C)Low-cost position
D)High product substitution

Question 30

The lower the exit barriers,the less hospitable a product-market will be during the decline phase of its life cycle.

Question 31

For consumer products,firms send technical advisories about new applications to the salesforce to present to their customers during regular sales calls.

Question 32

Which of the following is true of analyzer and defender strategies?

A)Analyzers may initiate some product improvements or line extensions to protect and strengthen their position in existing markets.
B)Defenders may do some product and market development to avoid being leapfrogged by competitors with more advanced products or being left behind in new applications segments.
C)Analyzer and defender strategies are appropriate for units with losses or with very less profitable shares of major segments in a mature industry.
D)Analyzers and defenders can attempt to sustain a competitive advantage in established product-markets through differentiation of their product offering.

Question 33

Which of the following is a primary marketing objective of all competitors in mature markets?

A)Acquisition of competing brands
B)High investments in R&D
C)Development of new products
D)Hold existing customers

Question 34

A harvesting strategy essentially involves additional investment in the business,increased marketing expenses,and in some cases,raising prices.

Question 35

When markets become more fragmented as they grow and mature,share leaders have to contract their product lines,or remove one or more flanker brands,to protect their position against competitive inroads.

Question 36

Market maturity is defined by a flattening of the growth rate.

Question 37

Defender strategies work best in industries:

A)that may have opportunities for continued growth.
B)where the basic technology is not very complex.
C)where heavy R&D investments need to be made.
D)where there is no clear well-defined competitive strategy.

Question 38

In a mature market,domestic geographic expansion is often viable.

Question 39

Which of the following strategies may be appropriate for units with a leading,or at least a profitable,share of one or more major segments in a mature industry?

A)Analyzer and defender
B)Prospector and defender
C)Reactor and defender
D)Prospector and analyzer

Question 40

_____ is most appropriate for developed industries that are still experiencing some technological change and may have opportunities for continued growth.

A)Prospector strategy
B)Defender strategy
C)Analyzer strategy
D)Reactor strategy

Question 41

A strategy designed to increase the proportion of users by converting current nonusers in one or more major market segments where the market is relatively homogeneous with only a few large segments is referred to as a(n)_____ growth extension strategy.

A)increased penetration
B)profitable survivor
C)extended use
D)market expansion

Question 42

Which of the following gaps can be removed by giving a clear description regarding the company's service policies to its employees?

A)Gap between management perceptions and service quality specifications
B)Gap between the customer's expectations and the marketer's perceptions
C)Gap between service quality specifications and service delivery
D)Gap between service delivery and external communications

Question 43

Which of the following is necessary is the first step in removing the gap between the customer's expectations and the marketer's perceptions?

A)Inform employees regarding company's service policies
B)Measure and evaluate service performance before service delivery
C)Provide employees with training,equipment,and time necessary to deliver good service
D)Collect information to determine what service attributes customers consider important

Question 44

Which of the following is usually of greater interest to analyzer and defender businesses?

A)Volume increase
B)New product success
C)Growth-oriented dimension
D)Return on investment

Question 45

Keith bought a second-hand car from Barry Automobiles Ltd.He had chosen that particular car as its body panels and trim were evenly spaced and aligned.Also,it did not have any dents or scratches.This implies that the _____ dimension helped him in making his buying decision.

A)performance
B)brand name
C)fit and finish
D)features

Question 46

The perceived value that customers associate with a particular brand name and its logo or symbol refers to its brand:

A)equity.
B)quality.
C)durability.
D)image.

Question 47

While making an online payment for his credit card,Bono got stuck as the server crashed.He was unable to move forward with the payment and was worried if he would be charged a late fee.When he made a call to his bank,the customer service staff at the bank requested him to wait for 24 hours and informed him that if the issue was not solved within 24 hours,he could make a complaint.He was also assured that he would not be charged any penalty.Which of the following service quality dimensions is demonstrated by the customer service staff in this scenario?

A)Responsiveness
B)Reliability
C)Empathy
D)Performance

Question 48

An American firm produces mobile phones and music players.The final assembly of these instruments is done in China due to the low wage rates in the country.Which of the following is being applied by the American firm in order to maintain minimized costs?

A)A no-frills strategy
B)An innovative production process
C)An innovative product design
D)A low-cost distribution

Question 49

Snowball Hotels provides rewards such as incentives,pay raises,or promotions to their employees who perform well.This is done by measuring and evaluating the service performance of employees on certain pre-specified criteria.The senior executives focus mainly on the hospitality rendered by the employees while attending to customers' needs.The employees are provided with regular training to prepare them for delivering such hospitality.Which of the following gaps would most likely be absent in the organization?

A)Gap between customer's expectations and marketers perceptions
B)Gap between service quality specifications and service delivery
C)Gap between management's perceptions and service quality specifications
D)Gap between service delivery and external communications

Question 50

Q&Q Ltd. ,an electronics manufacturer,advertises its refrigerators as refrigerators that emit low noise,have an automatic defrost system,have a massive storage capacity with slim profiles,and so on This implies that the company is relying on the quality dimension of _____ in order to promote its refrigerators.

A)functional performance
B)durability
C)features
D)conformance to specifications

Question 51

The quality dimension of _____ refers to the consistency of performance from purchase to purchase or to a product's uptime,the percentage of time that it can perform satisfactorily over its life.

A)reliability
B)functional performance
C)variety
D)durability

Question 52

Carter & Stockdale,a seaside resort,believes in giving feedback forms to its guests to understand their opinions of the services that they offer and to work on the areas for which they receive poor feedback.The managers of the resort aim to maximize their lifetime value with the help of the responses from a variety of consumers.Which of the following is the resort involved in?

A)Innovative production process
B)Low-cost distribution
C)Measurement of customer satisfaction
D)Quantity analysis

Question 53

An airline's TV ads include scenes of caring stewardesses attending to customer's needs.The stewardesses are seen serving passengers with good food,playing with children,turning off the lights when passengers fall asleep,and so on.Which of the following service quality dimensions is illustrated in these ads?

A)Tangibility
B)Reliability
C)Empathy
D)Conformance

Question 54

Stintson Automobiles Ltd.provides cars for rent.The music systems installed in the rental cars were removed by the firm in order to obtain a low-cost position.This implies that Stintson Automobiles Ltd.had applied a(n):

A)innovative production process.
B)low-cost distribution strategy.
C)no-frills strategy.
D)outsourcing strategy.

Question 55

Peter Joplin Inc. ,a car repair help shop,has an expert mechanic who carefully inspects consumers' car brakes,car oil,battery,and ensures that the repairs meet customers' satisfaction.This implies that the store is applying the service quality dimension of _____ to attract customers.

A)responsiveness
B)tangibles
C)empathy
D)assurance

Question 56

Hugh's cell phone stopped working while transferring files to a friend's cell phone via Bluetooth.He approached a customer care center of his cell phone company.The customer care representative informed him that his phone had been infected by a virus and that she has removed it now.This indicates that the cell phone brand has a quality dimension of _____.

A)reliability
B)serviceability
C)conformance to specifications
D)durability

Question 57

As a dimension of service quality,empathy is defined as the:

A)believability and honesty of employees.
B)friendliness of customer contact.
C)amount of caring,individualized attention the firm provides its customers.
D)ability to perform the promised service properly the first time.

Question 58

Which of the following is the critical determinant of success in mature markets?

A)Correct choice between a differentiation and a low-cost strategy
B)Continuous functioning of a business to improve the value of its offerings
C)Increases in volume of a business
D)New product successes of a business

Question 59

A software called Positron launched by GCZ Ltd.is known for absolute prevention and removal of malware and computer viruses.Which of the following service quality dimensions does Positron software have?

A)Responsiveness
B)Reliability
C)Empathy
D)Tangibility

Question 60

The key to a differentiation strategy based on providing superior service is to:

A)underestimate the customer expectations and meet them successfully.
B)meet or exceed target customers' service quality expectations.
C)encourage customers to set unrealistically high and different expectations.
D)have sympathy rather than empathy toward their customers.

Question 61

Omnibus Inc.is a library well-known for its rare and wonderful collection of books.Initially it had very few members,as many people had trouble reaching the store and it had only one branch.Hence,the library hired a bus and now it travels to different towns every weekend and satisfies the needs of various book lovers.This method of increasing members is a way of implementing the _____ strategy.

A)increased penetration
B)profitable survivor
C)market expansion
D)extended use

Question 62

Explain the aspects of a harvesting strategy and a maintenance strategy.

Question 63

Which of the following strategies often results in reduced margins and profits in the short term?

A)Harvesting strategy
B)Profitable survivor strategy
C)Maintenance strategy
D)Niche strategy

Question 64

What are the two sets of strategic actions required for success in mature markets?

Question 65

What are the methods of maintaining a low-cost position?

Question 66

A niche strategy is indicated when:

A)a firm holds a relatively strong competitive position in the market at the start of the decline.
B)future market decline is certain but likely to occur at a slow and steady rate.
C)the future direction of market decline is difficult to predict.
D)one or more segments will remain or decay slowly in an overall market that is rapidly declining.

Question 67

What are the requirements for measures of satisfaction to be useful analytical tools?

Question 68

The objective of a _____ strategy is to generate cash quickly by maximizing cash flow over a relatively short term.

A)harvesting
B)maintenance
C)profitable survivor
D)niche

Question 69

Which of the following strategies is appropriate when a firm expects a gradual decline in market demand?

A)Harvesting strategy
B)Profitable survivor strategy
C)Maintenance strategy
D)Niche strategy

Question 70

Describe the aspects of a profitable survivor strategy and a niche strategy.

Question 71

Describe the various ways through which an increased penetration strategy can be implemented.

Question 72

Strawberry Fields Inc. ,a supermarket offers discounts on a number of products in order to encourage larger volume purchases.Which of the following strategies is being implemented by the supermarket?

A)Increased penetration
B)Market expansion
C)Extended use
D)Profitable survivor

Question 73

Describe the major gaps in service quality.

Question 74

Mention the benefits of maintaining customer retention and loyalty.

Question 75

A(n)_____ growth extension strategy involves increasing the amount of product used by the average customer by increasing the frequency of use or developing new and more varied ways to use the product.

A)increased penetration
B)profitable survivor
C)market expansion
D)extended use

Question 76

A _____ strategy avoids any additional long-term investments in plant,equipment,or R&D.

A)niche
B)maintenance
C)profitable survivor
D)harvesting

Question 77

Describe the challenges in mature markets.

Question 78

Briefly describe the factors that help determine the strategic attractiveness of declining product markets.

Question 79

A market expansion strategy seeks to:

A)gain new customers by targeting new or underdeveloped geographic markets new customer segments.
B)increase the amount of product used by the average customer by increasing frequency of use or developing new and more varied ways to use the product.
C)maintain share in the short term as the market declines.
D)increase the proportion of users by converting current nonusers in one or more major market categories.

Question 80

Hawthorne Inc. ,a firm that produces skin care products,uses advertisements that ask consumers to apply their products twice daily.Which of the following strategies is being implemented by the firm?

A)Increased penetration
B)Extended use
C)Market expansion
D)Profitable survivor