Deck 3: Industry Analysis

Question 1

The ability of a firm to attract desirable middlemen and display space is affected by the "attractiveness" of its products.

Answer 1

True

Question 2

Large markets are especially attractive to small, entrepreneurs.

Answer 2

False

Question 3

By definition, no product is profitable during the decline stage of its life cycle.

Answer 3

False

Question 4

Erecting barriers to new competition entry is not legally permitted.

Question 5

Slotting allowances charged by chain retailers may have the effect of erecting entry barriers that may make it difficult for new or small, firms to compete.

Question 6

If a seller can differentiate its offering, it can escape commodity status and enhance its market power.

Question 7

Product managers can seek to reduce supplier power by finding new sources of supply and substitute materials.

Question 8

Since the product manager cannot control the environment in which he / she must operate, environmental factors have no place in the analysis of category attractiveness.

Question 9

Political considerations are especially relevant to evaluation of products with substantial foreign markets.

Question 10

Lifestyle and demographic trends exert a strong influence upon consumer goods firms-but, have little impact upon business-to-business products.

Question 11

The product portfolio approach to evaluating category attractiveness popularized by the Boston Consulting Group emphasized

A) Market growth rates
B) Environmental impact
C) Profitability
D) Ease of entry
E) Substitutability

Question 12

Category attractiveness analysis is important to both the product manager for the manufacturer or service provider and to the

A) Distribution channel
B) Trade union
C) Environmental group
D) End user
E) Employees

Question 13

All of the following are aggregate category factors EXCEPT

A) Category size
B) Category growth
C) Stage in product life cycle
D) Seasonality
E) Threat of new entrants

Question 14

This variable, if highly positive, would enhance market attractiveness.

A) Sales cyclicity
B) Profit variability
C) Market growth
D) Sales seasonality
E) Intrayear cycles in sales

Question 15

Which of the following is NOT a major market factor that impacts market attractiveness?

A) Sales cyclicity
B) Regulatory factors
C) Sales seasonality
D) Profit level
E) Profit variability

Question 16

According to the product life cycle, a product's sales can be broken down into all of the following four segments EXCEPT

A) Development
B) Introduction
C) Growth
D) Maturity
E) Decline

Question 17

Category size is LARGE during which stage of the product life cycle?

A) Introduction
B) Growth
C) Maturity
D) Decline
E) Category size remains constant throughout the PLC

Question 18

During this stage of the product life cycle, category growth is the HIGH.

A) Decline
B) Growth
C) Introduction
D) Maturity
E) Growth rates remain constant throughout the PLC

Question 19

Category attractiveness is typically HIGH during this stage of the product life cycle.

A) Growth
B) Introduction
C) Maturity
D) Decline
E) Attractive categories remain so throughout the plc

Question 20

Inter-year variation in demand is BEST described as

A) Seasonality
B) Sales cyclicity
C) Supply variability
D) Profitability
E) Depreciation cost

Question 21

Which of the following is BEST described as intra-year cycles in sales?

A) Seasonality
B) Sales cyclicity
C) Supply variability
D) Economic downturn
E) Depreciation cost

Question 22

Identify the INCORRECT statement regarding profitability

A) Profits vary across products or brands in a category
B) Differences in profitability may be due to factors of production
C) Large inter-industry differences in profits exist
D) Profitability remains constant over time
E) Variance in profitability is often used as a measure of industry risk

Question 23

Which of the following is NOT one of the factors considered by Porter, in his model for assessing the structure of industries?

A) The threat of new entrants
B) The bargaining power of buyers and suppliers
C) The amount of intra-category rivalry
D) The threat of substitute products or services
E) The production or service capacity

Question 24

The threat of new entrants

A) If low diminishes the attractiveness of a category
B) Leads to higher profits and lower competitiveness
C) Can be reduced by erecting barriers to competition
D) Cannot be diminished by legal means
E) Helps a market to expand in the later stages of market development

Question 25

When firms with well-established brand names or company reputations dominate the market, making it difficult for new competitors to enter, they can BEST be described as benefiting from barriers to entry based on

A) Economics of scale
B) Product differentiation
C) Capital differentiation
D) Switching costs
E) High distribution costs

Question 26

Sony video games have security devices in their game cartridges and proprietary hardware that allow only games made by the company or its licensees to be used with each system. Sony is using which of the following barriers to entry to make it difficult for competitors to convert its existing customers.

A) Switching costs
B) Capital requirements
C) Distribution costs
D) Product standardization
E) Economies of scale

Question 27

Chain retailers charging slotting allowances create barriers to entry based on

A) Switching costs
B) Capital requirements
C) Distribution
D) Product standardization
E) Economies of scale

Question 28

Managers can do all of the following to make it more difficult for a new entrant or even a current competitor to compete against their products, EXCEPT

A) Make the products more undifferentiated
B) Raise the stakes required to compete effectively
C) Build in switching costs
D) Lock up distribution and / or supply to the extent it is legal
E) IF appropriate, signal their intention to strongly retaliate

Question 29

In which of the following scenarios would buyers enjoy LESS power?

A) When the seller's product if a commodity
B) When there are many substitutes
C) When the buyer can utilize backwards integration
D) When the buyer purchases in large quantities
E) When the product bought is highly differentiated

Question 30

Identify the situation where suppliers would NOT enjoy greater bargaining power.

A) When suppliers are highly concentrated
B) When there are substitutes for the product
C) When the supplier has differentiated its product
D) When supply is limited
E) When the supplier has built in switching costs

Question 31

Intense rivalry in a category

A) Tends to decrease marketing expenditures
B) Often spawns price wars
C) Always discourages employee raids
D) Results in increased competitor welfare
E) Makes product categories more attractive

Question 32

Intense category rivalry tends to be associated with all of the following EXCEPT:

A) Many / balanced competitors
B) Rapid growth
C) High fixed costs
D) Lack of product differentiation
E) Personal rivalries

Question 33

Identify the INCORRECT statement pertaining to pressure from substitutes.

A) Categories for products having a large number of substitutes are less attractive
B) Almost all categories suffer from the availability of substitutes
C) Some of the highest rates of return are earned in categories with a small range of substitutes
D) Availability of substitutes is always a determinant of an unattractive product category
E) Categories that uniquely fill customer needs are more attractive than those with lots of substitutes

Question 34

All of the following statements about the impact of capacity upon category attractiveness are true,EXCEPT

A) Chronic overcapacity is critical to high profits
B) Operating at capacity drives costs down
C) Operating at capacity enhances the firm's buying power
D) Operating at capacity is an indicator of category health
E) Overcapacity can lead to low bargaining power with buyers

Question 35

The _____ is composed of those external factors unrelated to the product's customers and competitors that affect marketing strategies.

A) Product category
B) Industry
C) Environment
D) Market segment
E) Target market

Question 36

Which of the following is NOT an environmental factor that needs to be examined to assess category attractiveness?

A) Technological factors
B) Category rivalry
C) Economic factors
D) Social trends
E) Political risk

Question 37

In the technological environment model, the "_____" dimension draws a distinction between the development of a new product, the introduction of the product and the spread of the product through the population.

A) Process
B) Impetus
C) Growth
D) Commercial
E) Energy

Question 38

Which of the following is LEAST likely to be a source of political risk?

A) Competing political philosophies
B) Social unrest and disorder
C) Rise of the Internet globally
D) Internal rebellions for political power
E) New international alliances

Question 39

All of the following are economic factors that may affect categories, EXCEPT:

A) Interest rate fluctuations
B) Currency exchange rates
C) Employment conditions
D) Fluctuations in GDP growth
E) Intra-year cycles in sales

Question 40

Industrial markets are unique in

A) The extreme profitability of the firms serving them
B) The fact the demand is derived from consumer markets
C) Their reliance upon automation
D) Their use of outsourcing
E) The freedom from regulation they enjoy

Question 41

The major demographic trends shaping consumer demand include:

A) The aging of the baby-boomers
B) The increasing importance of children as consumers
C) A growing gap between society's haves and have-nots
D) Fast paced changes in technology
E) The increased numbers of older adults

Question 42

All of the following are characteristics of the net-generation EXCEPT:

A) Fierce independence
B) Sensitivity to corporate interest
C) Emotional / intellectual rigidity
D) Immediacy
E) Free expression of strong views

Question 43

Which of the following is NOT a key force driving the era of the consumers?

A) More free time
B) Connectedness
C) Higher value placed on the "spiritual"
D) Individualism
E) The shrinking day

Question 44

Products and services are "tailored" to small groups through the process of

A) Mass production
B) Computerization
C) Mass customization
D) Specialization
E) Web "surfing"

Question 45

BRIEFLY describe the product life cycle (PLC) and how it affects category attractiveness.

Question 46

How might a firm protect itself against competitive entry?

Question 47

BRIEFLY describe the basic factors employed in assessing the structure of industries and their impact on attractiveness.

Question 48

In the "technology age" how can technology generate problems for a firm?

Question 49

Why MUST product managers be concerned with broad demographic / social trends?