Deck 9: Strategies for Growth Markets

Question 1

The primary objective of encirclement strategy is to:

A)attract significant share of new customers in specialised,smaller segments
B)capture a modest share of repeat purchases in several market segments
C)stimulate current customers to purchase superior new offering
D)capture substantial repeat purchases from target competitor's current customers

Answer 1

A

Question 2

A firm develops differentiated product offerings targeted at one large or several smaller segments in which no competitor currently holds a strong position.What strategy is being used here?

A)frontal attack
B)leapfrog
C)guerrilla attack
D)encirclement

Answer 2

D

Question 3

Identify a market leader's action aimed at stimulating selective demand among later adopters.

A)maintaining/improving customer satisfaction and loyalty
B)encouraging/simplifying repeat purchase
C)differentiated positioning against competitive offerings
D)reducing attractiveness of switching

Answer 3

C

Question 4

The marketing action of developing a product line with features that are more appealing to a specific segment of potential customers is characteristic of the:

A)market expansion strategy
B)contraction strategy
C)flanker strategy
D)confrontation strategy

Question 5

Which of the following is a marketing objective for share leaders?

A)delineate into niche target markets in product growth stage
B)stimulate selective demand among innovators
C)retain existing customers and ensure brand loyalty
D)stimulate secondary demand to help speed up overall market growth

Question 6

Strategic withdrawal strategy is best suited when:

A)A firm is unable to defend itself adequately in all segments due to competitors having more resources.
B)A firm's primary objective is to capture a large share of new customers who may prefer something different from the initial offering.
C)A competitor chooses to attack the leader head to head and attempts to steal customers in the target market.
D)A firm is trying to beat the attractive features of a competitor's offering only after the challenger's success has become obvious.

Question 7

All of the following are reasons why followers are attracted to rapidly growing markets except:

A)It is easier to gain share when a market is growing.
B)The price competition is likely to be less intense.
C)The share gains are seldom worth more in a growth market than in a mature market.
D)It is necessary to make sure that the firm keeps pace with the technology.

Question 8

Sony was the pioneer and early share leader in the videocassette recorder industry with its Betamax technology.But Matsushita's longer-playing and lower-priced VHS format equipment proved much more popular with consumers and dethroned Sony as industry leader.This example underlines that:

A)Firms cannot always rely on their competencies to maintain share leadership in a market.
B)The number of firms competing for a share of the market will decrease if there are few barriers to entry.
C)Market fragmentation will occur if potential customers have homogeneous functional needs.
D)Pioneers in new product-markets always manage to leverage their competitive advantages as the market grows.

Question 9

Identify the primary objective of the confrontation share maintenance strategy.

A)appeal to late adopters with same attributes and benefits offered to early adopters
B)improve ability to retain current customers as market fragments
C)increase ability to attract new customers in selected high-growth segments by focusing resources on them
D)improve ability to win new customers who might otherwise be attracted to competitor's offering

Question 10

What is the major marketing objective for followers?

A)defend market position
B)develop only a niche strategy
C)attain share growth
D)start discrete price wars

Question 11

When Samsung decided to withdraw from the most price-sensitive consumer electronics segments and from US discount retailers such as WalMart,it was engaging in a typical:

A)strategic withdrawal strategy
B)leapfrog strategy
C)flanker strategy
D)backward integration strategy

Question 12

A firm develops line extensions,new brands or alternative product forms utilising similar technologies to appeal to multiple market segments.Identify the strategy employed here.

A)flanker strategy
B)fortress strategy
C)confrontation strategy
D)market expansion strategy

Question 13

What strategy would a challenger be pursuing if its primary objective is to capture a modest share of repeat purchases in several market segments?

A)frontal attack strategy
B)leapfrog strategy
C)guerrilla attack strategy
D)encirclement strategy

Question 14

A firm can implement any combination of the given strategies to maintain its leading share position.A firm can choose the preferred combination for a particular product market based on all of the following except:

A)the market's size and its customers' characteristics
B)the number and relative strengths of the potential competitors in that market
C)the leader's own resources and competencies
D)rhe leader's organisational history and culture

Question 15

Toyota Motors has introduced a new line of cars aimed at creating an appeal for young car buyers looking for good quality,funky designs and low-prices.Their intent is to protect their primary brands from direct competition in the same category and from low-price competitors.What is the strategy employed by Toyota?

A)confrontation strategy
B)position defence strategy
C)flanker strategy
D)market expansion strategy

Question 16

Which strategy has a market characteristic of a relatively homogeneous market in relation to customer needs and purchase criteria?

A)fortress or position defence strategy
B)market expansion strategy
C)contraction or strategic withdrawal strategy
D)flanker strategy

Question 17

What action step must a leader take to improve customer satisfaction as competition enters,or prepares to enter the market?

A)Leader should take steps to improve not only the physical product but customers' perceptions of it as well.
B)Leader's sales promotion emphasis should shift from building selective demand to stimulating primary demand.
C)Leader should continue sales promotion efforts aimed only at stimulating trial among later adopters.
D)Sales-force efforts should shift from servicing existing customers to prospecting for new accounts.

Question 18

Which of the following statements is associated with the fortress strategy?

A)leader develops a strong position when potential customers have relatively homogeneous needs
B)leader develops a second brand to compete directly against the challenger's offering
C)leader changes the marketing program before a suspected competitive challenge occurs
D)leader defends its relative market share by expanding into a number of market segments

Question 19

When growth in the personal computer (PC)market slumped in 2000 due to the dot-com crash and other factors,Dell Computer decided to:

A)launch a brutal price war aimed at taking more business away from competitors
B)invest heavily in research and development in order to compete in new markets
C)launch a superior customer service program aimed at capturing customers from competing firms in the computer industry
D)invest heavily in TV advertising to convince consumers of the benefits of using computers

Question 20

Attacking the leader within its primary target market involves which of the following strategies?

A)flanker strategy
B)frontal attack strategy
C)encirclement strategy
D)guerrilla attack strategy

Question 21

Relative to a leader,a challenger is often at a cost disadvantage.This is mainly because of:

A)the relative brand equity of the leader
B)the experience curve effects established by the leader
C)diminishing returns to scale experienced by the challenger
D)the network effects enjoyed by the leader

Question 22

Short-term price reductions through sales promotion campaigns are a particularly favoured guerrilla tactic in consumer goods markets.

Question 23

In growth markets the market leaders stand the best chance of leapfrogging a competitor and attracting repeat or replacement purchases from a target competitor's current customers.

Question 24

More competitors,fragmenting market segments and the threat of product innovation are the three factors that make maintaining an early lead in relative market share very difficult for market leaders.

Question 25

A fortress or position defence strategy is used by challengers to defend or continually strengthen a position they have taken from a target competitor.

Question 26

Explain the various ways a challenger can target competitors established in the market.

Question 27

The Starbury One,a stylish but very low-priced US basketball shoe endorsed by a prominent professional basketball player has had enormous sales success and is perceived as being cool by young consumers.This is an example of a successful growth market strategy in a product category dominated by Nike.

Question 28

Followers are attracted to rapid growth markets because share gains are worth more and easier to gain,price competition is less and the latest technologies are used.Thus,it is less likely that followers will be affected by a shake out if market growth slows.

Question 29

Rather than try to compete with Coke and Pepsi in the US soft drink market,Cadbury-Schweppes offers a wide variety of flavours such as cream soda,root beer and ginger ale-almost anything but cola-to appeal to small groups of customers with unique tastes.This is an example of a challenger deploying an encirclement strategy.

Question 30

Explain how share gains are worth more in a growth market than in a mature market.

Question 31

When BMW rolled out the Mini Cooper it targeted younger and less affluent customers and instead of using TV commercials its ad agency put giant rubbish bins and pay phones in airports,and hung Mini billboards beside them reading,'makes everything else seem a little too big'.This is an example of a guerrilla attack.

Question 32

The basic premise behind flanking and encirclement strategies is to focus on a competitor's weakness rather than on a strength.