Chapter 4: Analyzing the Market, Customers, and Competition

True/False

1. Entrepreneurs usually engage in marketing research for two reasons: (1) to identify the need and opportunity for the venture and (2) to understand marketing and customer issues that relate to the product or service.
2. Fortunately, market research is not a costly exercise for a startup company.
3. Google also offers free software tools to monitor web site effectiveness called Google Maps.
4. Marketing objectives are likely to be based on sales revenues and market share.
5. Given the rising cost of target marketing, generic marketing is the strategy used by most successful businesses today.
6. One-to-one marketing is rapidly becoming a competitive imperative.
7. Marketing plans often place a great deal of emphasis on acquisition but not on customer loyalty.
8. Once the marketing analysis and competition review are established, the entrepreneur should begin to develop the product research plan.
9. The advantage of using sales agents is that they usually sell other competitors’ products or services as part of a complete line.
10. After the trade show, the company should develop screening questions to identify solid sales leads.

Short Answer / Fill in the Blank

1. The ________ is the first step in determining what further information is required to build out a marketing plan, and is the basis for a method for collecting information, analyzing results, and communicating findings.
2. A(n) ________ is a small segment of a large market ignored by other companies.
3. Marketing tactics are developed for each target market, which is called ________.
4. _________ marketing required learning the profile or details about individual customers to identify which are most valuable to the company.
5. _______ segmentation divides customers into cultural groups, value groups, social sets, or other interesting categories that might be useful for classifying customers.
6. ________ is the process of establishing and maintaining a distinctive place in the market for the start-up and/or its products offerings.
7. __________ is the difference between variable cost of selling an extra unit of service and the money received from the buyer of that service.
8. The ________ is a group of salespeople who work directly for the company and are paid straight salary, salary plus bonus, or straight commission.
9. _________ are good places to exhibit and sell products.
10. ________ is a term used to describe mechanisms by which customers are triggered and motivated to recommend a product or service to other potential customers.

Multiple Choice

1. Which type of marketing is a small segment of a large market ignored by other companies?
   1. Niche marketing
   2. Mass marketing
   3. Value marketing
   4. Just-in-time marketing
2. All of the following are key steps to becoming a one-to-one marketer except:
   1. Link customers’ identities to their transactions
   2. Calculate individual customer lifetime value
   3. Mass market to customers using generic approach to satisfy all
   4. Practice just-in-time marketing
3. All of the following are factors that often underlie hidden profit potential except:
   1. Profit from Price Premium
   2. Profit from Reduced Operating Costs
   3. Profit Derived from Decreased Purchases
   4. Profit from Referrals to Other Customers
4. Demographic segmentation divides a market by all of the following except:
   1. age
   2. income
   3. gender
   4. geography
5. All of the following are ways that a market can be segmented except:
   1. Viral segmentation
   2. Geographic segmentation
   3. Business demographics
   4. Psychographic segmentation
6. _______ segmentation is very important for retail businesses, restaurants, and services addressing their local surroundings only.
   1. Geographic segmentation
   2. Business demographics
   3. Ethnic segmentation
   4. Viral segmentation
7. Which type of segmentation is somewhat uncomfortable for people living in a county with a history of ethnic-based discrimination?
   1. Combination segmentation
   2. Ethnic segmentation
   3. Psychographic segmentation
   4. Demographic segmentation
8. In a combination segmentation, which two types of segmentation are combined?
   1. Ethnic and Psychographic segmentation
   2. Demographic and Psychographic segmentation
   3. Demographic and Geographic segmentation
   4. Geographic and Viral segmentation
9. Market Segmentation by Demographics includes:
   1. Defining targeted customers by income level.
   2. Defining targeted customers by value groups.
   3. Defining targeted customers by business level.
   4. Defining targeted customers by location.
10. Market Segmentation by Geography includes:
    1. Defining targeted customers by where they were born.
    2. Defining targeted customers by where they went to school.
    3. Defining targeted customers by the value group they belong to.
    4. Defining targeted customers by where they live.
11. All of the following are questions for effective segmentation except:
    1. Do potential customer groups have different needs?
    2. Are customers both willing and able to pay?
    3. Can the segment be influenced to respond favorably?
    4. Is the segment small enough to be profitable?
12. _______ is the process of establishing and maintaining a distinctive place in the market for the start-up and/or its product offerings.
    1. Positioning
    2. Viral marketing
    3. Combination segmentation
    4. Mass marketing
13. What is the key to the process of controlling costs and showing a profit?
    1. Pricing
    2. Market analysis
    3. Supply and demand
    4. Sales strategy
14. Demonstrating _________ is part of pricing a new strategy.
    1. rationale
    2. costs
    3. value
    4. contribution
15. Which type of cost is the economic cost associated with service for an additional customer?
    1. Fixed
    2. Variable
    3. Semivariable
    4. Contribution
16. Which type of cost represents expenses that rise or fall in stepwise fashion as the business volume increases or decreases?
    1. Fixed
    2. Variable
    3. Semivariable
    4. Contribution
17. Which type of cost is the difference between variable cost of selling an extra unit or service and the money received from the buyer of that service?
    1. Fixed
    2. Variable
    3. Semivariable
    4. Contribution
18. What type of pricing objective aims to maximize the surplus of income over expenditures?
    1. Revenue oriented
    2. Operations oriented
    3. Patronage oriented
    4. Contribution oriented
19. What type of pricing objective aims to attract customers, even at a loss, typical of grand-opening sales?
    1. Revenue oriented
    2. Operations oriented
    3. Patronage oriented
    4. Viral oriented
20. Which of the following works as a subcontractor to sell products or services?
    1. Direct salesforce
    2. Sales Agents
    3. Trade shows
    4. Entrepreneurs
21. All of the following are disadvantages of using sales agents except:
    1. The entrepreneur has little control over the sales agents.
    2. Sales agents usually sell other products or services as part of a complete line.
    3. Sales costs are not incurred until the product is sold.
    4. Sales agents tend to push the easier-to-sell products or services.
22. Which of the following is not an advantage of trade shows?
    1. The competition cannot be quickly assessed.
    2. The company can initiate a business relationship by inviting the customer to a follow-up meeting.
    3. It is an excellent opportunity to interact with many people in the industry whom the entrepreneur might not have otherwise met.
    4. The company can demonstrate the products and answer any questions from prospective customers about the product or service.
23. To determine the best type of advertising, entrepreneurs should consider all of the following except:
    1. Variables of targeted audience
    2. Type of product
    3. Cost
    4. Entrepreneurial personality
24. The best advocate for a company’s products or services is the:
    1. New customer
    2. Existing customer
    3. Entrepreneur
    4. Sales Representative
25. Which type of marketing describes mechanisms by which customers are triggered and
    1. Motivated to recommend a product or service to other potential customers?
    2. Viral marketing
    3. Niche marketing
    4. One-to-one marketing
    5. Value marketing