Developing Your Customers Chapter 6 Test Questions & Answers

Test Bank

Chapter 6: Developing Your Customers

Multiple Choice

1. How does a consumer differ from a customer?

a. The consumer pays for the product or service.

b. The consumer uses the product or service.

c. The consumer is a repeat purchaser of the product or service.

d. The consumer stays with a particular company for purchase of the product or service.

Learning Objective: 6.1: Define a customer and a market.

Cognitive Domain: Analysis

Answer Location: Customers and Markets

Difficulty Level: Easy

AACSB Standard: Application of knowledge

2. Which of the following best describes the concept of a market?

a. the demand that exists among potential customers for a product

b. the collection of suppliers and their goods and services

c. the sum total of customers and customer demand for a category of product or service

d. a place where a supply can be sold to those who wish to purchase it

Learning Objective: 6.1: Define a customer and a market.

Cognitive Domain: Comprehension

Answer Location: Customers and Markets

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

3. Which of the following is true of what makes up a market?

a. It includes both supply and demand, and it can be a physical or virtual location.

b. It includes both supply and demand, but cannot be defined by space.

c. It must have both customers and consumers.

d. It must have customers, but not necessarily consumers, and it is defined by the presence of demand but not necessarily supply.

Learning Objective: 6.1: Define a customer and a market.

Cognitive Domain: Comprehension

Answer Location: Customers and Markets

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

4. Which of the following is one of the four main elements that define a market?

a. a set of actual or potential customers who reference each other when making buying decisions

b. a business plan that encompasses an evaluation of the competition

c. a set of survey data from potential and existing customers

d. a brainstorming session that identifies potential customers, no matter how unlikely

Learning Objective: 6.1: Define a customer and a market.

Cognitive Domain: Knowledge

Answer Location: Customers and Markets

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

5. What is most likely to reveal a market opportunity for a specific product application?

a. cost/benefit analysis

b. recognition of low supply

c. degree of customer demand

d. lack of market penetration

Learning Objective: 6.1: Define a customer and a market.

Cognitive Domain: Analysis

Answer Location: Customers and Markets

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

6. Lucas is directing his business to develop a new product to bring to market after believing he has identified a market opportunity. Which of the following behaviors is likely to mark him as a new entrepreneur rather than an experienced one?

a. applying for patents or copyrights on the new product

b. focusing on the fact that his new product has never been seen before in any market

c. being too cautious and staying in the planning phase too long before introducing his product to market

d. focusing too much on the ability of his new product to generate money

Learning Objective: 6.1: Define a customer and a market.

Cognitive Domain: Application

Answer Location: Customers and Markets

Difficulty Level: Medium

AACSB Standard: Analytical thinking

7. Which of the following is the most challenging aspect of identifying and developing a new product or service for the market?

a. determining that there is a large enough market for the product

b. identifying the market opportunity

c. deciding on what the new product or service will be

d. doing research on potential competitors for the new product or service

Learning Objective: 6.1: Define a customer and a market.

Cognitive Domain: Knowledge

Answer Location: Customers and Markets

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

8. Which of the following represents the “chain of customers”?

a. customers, producers, influencers

b. purchasers, customers, influencers

c. customers, consumers, saboteurs

d. users, purchasers, influencers

Learning Objective: 6.2: Describe the different types of customers entrepreneurs may encounter.

Cognitive Domain: Knowledge

Answer Location: Types of Customers

Difficulty Level: Easy

AACSB Standard: Group and individual behaviors

9. When considering the types of customers, which of the following would best represent a saboteur?

a. Tali, who leaves a negative review online for a product.

b. Anna, who buys the product but doesn’t use it.

c. Gregor, who never buys the product at all.

d. Horace, who wants to purchase the product but lacks the resources to do so.

Learning Objective: 6.2: Describe the different types of customers entrepreneurs may encounter.

Cognitive Domain: Application

Answer Location: Types of Customers

Difficulty Level: Easy

AACSB Standard: Group and individual behaviors

10. When defining customer segments, you should ask about demographics, which includes ______.

a. what they’re willing to pay for your product

b. education level

c. what competitor products they purchase

d. how often they shop online

Learning Objective: 6.3: Identify your customers through segmentation.

Cognitive Domain: Comprehension

Answer Location: Customer Segmentation

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

11. What is the problem with relying on demographics when creating an end user profile?

a. They emphasize behavior over purchasing capacity.

b. They tend to generate too narrow a customer base.

c. They offer no help in identifying target end user.

d. They don’t tell you much about attitudes or likes and dislikes.

Learning Objective: 6.3: Identify your customers through segmentation.

Cognitive Domain: Comprehension

Answer Location: Creating an End User Profile

Difficulty Level: Medium

AACSB Standard: Group and individual behaviors

12. For a running shoe maker developing an end user profile for a new product, a running club meeting would be a great option for which component of that process?

a. proxy product

b. watering hole

c. day in the life

d. motivator

Learning Objective: 6.3: Identify your customers through segmentation.

Cognitive Domain: Application

Answer Location: Creating an End User Profile

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

13. How does the targeting process in entrepreneurship differ from the targeting process in traditional marketing?

a. Entrepreneurs begin the process by identifying a viable customer segment.

b. Entrepreneurs begin the process with the idea for a new product.

c. Entrepreneurs begin the process by developing an end user profile.

d. Entrepreneurs often skip developing the psychological profile part of their potential customer base altogether.

Learning Objective: 6.4: Find your target customer.

Cognitive Domain: Analysis

Answer Location: Target Customer Group

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

14. What is the overall goal of Everett Rogers’ technology adoption life cycle?

a. describing the development of an end user profile for a new technology

b. describing the product life of a new technology, from conception to removal or replacement in the marketplace

c. describing the process of how to develop a new technology for market

d. describing how different groups of people accept new innovations over time

Learning Objective: 6.4: Find your target customer.

Cognitive Domain: Comprehension

Answer Location: Target Customer Group

Difficulty Level: Medium

AACSB Standard: Application of knowledge

15. In the technology adoption life cycle, which two groups represent the largest parts of the customer base?

a. early and late majorities

b. early adopters and early majorities

c. innovators and laggards

d. late majority and laggards

Learning Objective: 6.4: Find your target customer.

Cognitive Domain: Knowledge

Answer Location: Target Customer Group

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

16. According to Everett Rogers’ technology adoption life cycle, how do customers in the early majority group differ from those in the early adopter group?

a. They tend to be less risk-averse.

b. They are more swayed by mass market appeal.

c. They are not motivated by their enthusiasm for a new technology.

d. They tend to be more influential in business, government, and culture.

Learning Objective: 6.4: Find your target customer.

Cognitive Domain: Analysis

Answer Location: Target Customer Group

Difficulty Level: Medium

AACSB Standard: Group and individual behaviors

17. According to marketing expert Geoffrey Moore, where in the technology adoption life cycle is the “chasm”?

a. between early adopters and early majority

b. between innovators and early adopters

c. between early majority and late majority

d. between late majority and laggards

Learning Objective: 6.4: Find your target customer.

Cognitive Domain: Knowledge

Answer Location: Crossing the Chasm

Difficulty Level: Easy

AACSB Standard: Application of knowledge

18. What is the best strategy for crossing the “chasm”?

a. Avoid implementing marketing strategies beyond what it takes to win the innovators, and then let word of mouth carry the product further.

b. Seek to make the product or service on offer as similar as possible to current market-leading products.

c. Focus resources on multiple market segments simultaneously in order to improve statistical chances of finding a purchase for the product.

d. Focus limited resources on winning over a single, primary market, and then move on to capture larger markets.

Learning Objective: 6.4: Find your target customer.

Cognitive Domain: Comprehension

Answer Location: Crossing the Chasm

Difficulty Level: Easy

AACSB Standard: Analytical thinking

19. Which of the following is a core component of a beachhead market?

a. The customers are distributed in a relatively tight geographic area.

b. The product will not have to rely on word of mouth among customers.

c. The customers do not have expectations of value for the product.

d. The customers are already buying similar products.

Learning Objective: 6.4: Find your target customer.

Cognitive Domain: Comprehension

Answer Location: Crossing the Chasm

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

20. Why did Smart Skin Care choose to first seek out and market primarily to 30-somethings who engaged in extreme sports?

a. They needed to test the product with a real-life sample group before bringing it to a wider audience.

b. They needed this group as a beachhead market because the larger sunscreen market was too competitive and diverse.

c. Marketing suggested this was where the greatest profitability in the life cycle of their product could be found.

d. They knew that marketing to the “early majority” group would pay greater dividends faster than seeking out innovators and early adopters.

Learning Objective: 6.4: Find your target customer.

Cognitive Domain: Comprehension

Answer Location: Crossing the Chasm

Difficulty Level: Medium

AACSB Standard: Application of knowledge

21. In the marketing and early growth of Facebook, what does Harvard represent?

a. the beachhead market

b. the early majority group

c. demand creation through direct sales

d. early adopters

Learning Objective: 6.4: Find your target customer.

Cognitive Domain: Application

Answer Location: Crossing the Chasm

Difficulty Level: Easy

AACSB Standard: Application of knowledge

22. In the process of crossing the chasm, what is the second step after identification of the beachhead market?

a. identifying early adopters

b. distributing the product through the right channels

c. making sure your product is fully complete and tested

d. positioning the product

Learning Objective: 6.4: Find your target customer.

Cognitive Domain: Knowledge

Answer Location: Crossing the Chasm

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

23. If your product enters the “tornado,” it triggers a particular need to ______.

a. cross the “chasm”

b. generate new demand for your product

c. meet customer demand efficiently

d. avoid the “period of calm”

Learning Objective: 6.4: Find your target customer.

Cognitive Domain: Analysis

Answer Location: Crossing the Chasm

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

24. Which of the following is true of your product if it has arrived on “main street?”

a. It has a strong market position.

b. It is likely to generate a “tornado.”

c. It is best to ease off marketing and distribution efforts.

d. It has achieved a high demand among the early majority, but still lacks proven success in the broader market.

Learning Objective: 6.4: Find your target customer.

Cognitive Domain: Analysis

Answer Location: Crossing the Chasm

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

25. Why, compared with a couple of decades ago, has it become even more important to understand your customer before you try to sell to that customer?

a. Competition and diversity of product have increased in most markets.

b. More customers make buying decisions without the input of the seller.

c. Analytical tools for forming psychological pictures of customers have improved.

d. The customer base itself is more diverse.

Learning Objective: 6.5: Acquire a deeper understanding of your customer through personas.

Cognitive Domain: Comprehension

Answer Location: Customer Personas

Difficulty Level: Medium

AACSB Standard: Analytical thinking

26. How does the combination of demographics and psychographics help the entrepreneur to create a buyer persona?

a. It both identifies the broad characteristics of the customer, and then analyzes their behavior profiles.

b. It largely doesn’t; at best, it helps the entrepreneur create a buyer profile.

c. It matches characteristics that determine product need with psychological aspects that would encourage purchase.

d. The combination of broad demographic characteristics and psychological components of a population yield reliable predictions of behavior.

Learning Objective: 6.5: Acquire a deeper understanding of your customer through personas.

Cognitive Domain: Comprehension

Answer Location: Customer Personas

Difficulty Level: Hard

AACSB Standard: Analytical thinking

27. Natalia has developed a new kind of roofing tile that is more expensive than most on the market but that has superior storm-survival properties. She wants to develop a buyer profile before going to market. What his her best first step toward accomplishing this?

a. doing demographic research to develop info on those who have spent on high-end tiles before

b. talking to local roofers who do the work of installing or replacing tiles

c. preparing psychographics on potential customers in areas where storms are common

d. interviewing homeowners in areas where storms are common

Learning Objective: 6.5: Acquire a deeper understanding of your customer through personas.

Cognitive Domain: Application

Answer Location: Customer Personas

Difficulty Level: Medium

AACSB Standard: Analytical thinking

28. Which of the following is likely to be an insight derived from the development of a buyer persona for a specific product?

a. a predicted lifespan for the product in this particular market

b. attitudes that turn potential buyers off of a product/service

c. where your customer lives

d. how your psychographics have worked in reality

Learning Objective: 6.5: Acquire a deeper understanding of your customer through personas.

Cognitive Domain: Analysis

Answer Location: Customer Personas

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

29. What should you avoid doing with people who fit your product’s exclusionary persona?

a. Allow them to purchase and review your product.

b. Consider that they might influence your product in the social sphere.

c. Spend resources trying to convert them into customers.

d. Engage with them.

Learning Objective: 6.5: Acquire a deeper understanding of your customer through personas.

Cognitive Domain: Comprehension

Answer Location: Exclusionary Personas

Difficulty Level: Medium

AACSB Standard: Application of knowledge

30. What is a core benefit of building an exclusionary persona?

a. knowing who will rate your product poorly on social media

b. defining who your “laggard” customers will be

c. avoiding wasted effort marketing to people who will never buy your product

d. increasing the number of potential customers in the marketplace

Learning Objective: 6.5: Acquire a deeper understanding of your customer through personas.

Cognitive Domain: Comprehension

Answer Location: Exclusionary Personas

Difficulty Level: Medium

AACSB Standard: Application of knowledge

31. Which of the following is true of the customer journey map?

a. It charts the company’s experience with the customer.

b. It focuses on buyer characteristics and demographics.

c. It helps the entrepreneur better exploit customer weaknesses.

d. It is a visual representation.

Learning Objective: 6.6: Illustrate the customer journey mapping process.

Cognitive Domain: Comprehension

Answer Location: Customer Journey Mapping Process

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

32. How does a customer journey map differ from a buyer persona?

a. It focuses on profit motive rather than simple experience.

b. It focuses on buyer experience rather than characteristics.

c. It focuses on one buyer instead of many.

d. It does not include exclusionary personas.

Learning Objective: 6.6: Illustrate the customer journey mapping process.

Cognitive Domain: Analysis

Answer Location: Customer Journey Mapping Process

Difficulty Level: Medium

AACSB Standard: Analytical thinking

33. Which of the following best helps an entrepreneur develop empathy for the customer?

a. customer journey map

b. buyer persona

c. technology adoption life cycle

d. customer base segmentation

Learning Objective: 6.6: Illustrate the customer journey mapping process.

Cognitive Domain: Knowledge

Answer Location: Customer Journey Mapping Process

Difficulty Level: Medium

AACSB Standard: Application of knowledge

34. A journey map is necessary in which stage of your business?

a. only when (if) you’re considering an IPO

b. late stages

c. middle stages

d. early stages

Learning Objective: 6.6: Illustrate the customer journey mapping process.

Cognitive Domain: Comprehension

Answer Location: Customer Journey Mapping Process

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

35. Marian is developing a customer journey map for the new food truck she is introducing in the neighborhood. Of the following, which would be the first touchpoint in her customer journey map?

a. when the customer receives a flyer in the mail announcing the food truck

b. the first time a customer tastes the food from the food truck

c. when the customer visually sees the food truck for the first time

d. when the customer leaves their first review online about the food truck

Learning Objective: 6.6: Illustrate the customer journey mapping process.

Cognitive Domain: Comprehension

Answer Location: Customer Journey Mapping Process

Difficulty Level: Medium

AACSB Standard: Analytical thinking

36. Keenan is planning to start a catering business and throws an initial party to test out his food and services. He has developed a buyer persona and accumulated an enormous amount of data on his customers, and wonders if it is really necessary to make a customer journey map. What might his customer journey map reveal that the rest of his research could not?

a. would the guests attend a second party thrown by his company

b. how much food was consumed at the party

c. which foods proved more popular overall among the guests

d. which guests chose not to attend

Learning Objective: 6.6: Illustrate the customer journey mapping process.

Cognitive Domain: Application

Answer Location: Customer Journey Mapping Process

Difficulty Level: Medium

AACSB Standard: Analytical thinking

37. What are website analytics least likely to be able to provide?

a. customer location

b. your customer’s overall impression of your product

c. how often your customer engages with the product online

d. problems with the website that frustrate customers

Learning Objective: 6.6: Illustrate the customer journey mapping process.

Cognitive Domain: Comprehension

Answer Location: Website Analytics

Difficulty Level: Easy

AACSB Standard: Statistics/quantitative methods

38. As offered by the text’s “six basic steps” in creating a customer journey map, what is the last step in the process?

a. Identify customer pain points.

b. Reach out to customers to seek direct feedback.

c. Think about how to resolve customer problems.

d. Create a visual representation of the customer going through the process.

Learning Objective: 6.6: Illustrate the customer journey mapping process.

Cognitive Domain: Knowledge

Answer Location: Customer Journey Mapping Process

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

39. What are the five typical key stages of customer interaction with a company?

a. need, dialogue, purchase, experience, and review

b. need, research, discovery, purchase, and experience

c. discovery, research, purchase, delivery, and after the sale

d. discovery, purchase, experience, review, and termination of use

Learning Objective: 6.6: Illustrate the customer journey mapping process.

Cognitive Domain: Knowledge

Answer Location: Customer Journey Mapping Process

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

40. When asking further questions to add detail to your customer journey map, which of the following might you discover by learning more about the “tasks” factor?

a. The customer wants to understand more about the product before purchasing.

b. The customer wants to get the product to fix a specific problem.

c. The customer is feeling trepidation at spending money on the problem.

d. The customer was disappointed not to find the product offered online.

Learning Objective: 6.6: Illustrate the customer journey mapping process.

Cognitive Domain: Comprehension

Answer Location: Customer Journey Mapping Process

Difficulty Level: Medium

AACSB Standard: Analytical thinking

41. Which of the following best describes the process of market sizing?

a. estimating how much of your product or service should be produced or released based on a particular customer base and revenue potential

b. estimating the number of potential customers and possible revenue or profitability of a product or service

c. estimating the growth potential for a particular customer base and the future lifespan of the product or service in that market

d. determining the net value that a customer base is willing to put into your specific product or service

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Knowledge

Answer Location: Market Sizing

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

42. Of the following, which is likely to be smallest in size or number?

a. SOM

b. SAM

c. TAM

d. All are roughly equal in size, though they represent different segments of a potential customer base.

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Analysis

Answer Location: Market Sizing

Difficulty Level: Hard

AACSB Standard: Analytical thinking

43. SAM represents ______.

a. the entrepreneur-intended portion of the total available market for your product or service

b. the portion of the total available market for your product or service that is likely to purchase the product

c. the portion of the total available market that will likely be profitable for your product or service

d. the entire portion of the market that is a potential customer base for your product or service

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Knowledge

Answer Location: Market Sizing

Difficulty Level: Medium

AACSB Standard: Application of knowledge

44. As described in the text, what would be the TAM for a new restaurant in a major U.S. city?

a. the range of people who eat out at restaurants and who live in a reasonable travel distance from your restaurant

b. every possible customer who visits restaurants in the United States, has the income that matches your price point, and is likely to hear about your restaurant

c. every customer who visits restaurants in that city

d. every possible customer who visits restaurants in the United States

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Comprehension

Answer Location: Market Sizing

Difficulty Level: Medium

AACSB Standard: Analytical thinking

45. You are doing market sizing research for your new restaurant. One potential customer, Greg, lives two blocks from your new restaurant, has good disposable income, and eats out often. Which of the following does Greg definitively appear in?

a. TAM

b. TAM, SAM, and SOM

c. SAM and SOM

d. TAM and SAM

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Application

Answer Location: Market Sizing

Difficulty Level: Hard

AACSB Standard: Analytical thinking

46. Why is providing TAM, SAM, and SOM for a product or service unlikely to fully satisfy potential investors?

a. Even when well researched, they tend to be unreliable.

b. They tend to focus too much on competition.

c. They don’t provide information about where the market is going in the future.

d. They tend to be overly optimistic, especially about the customers your marketing is likely to reach.

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Comprehension

Answer Location: Market Sizing

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

47. What is one common aspect of the creation of a launch market, the bowling pin strategy, and the beachhead strategy?

a. the shared customer journey map

b. the need to prove the widespread appeal of your product or service

c. the need to show you have a group of ready customers who want your product or service

d. the need to begin with the “early majority” customer segment

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Analysis

Answer Location: Launch Market

Difficulty Level: Medium

AACSB Standard: Analytical thinking

48. What would the demonstration of a launch market communicate to potential investors?

a. You have empathy for your customers’ experience with the product or service.

b. You have identified early adopters who will also be influencers for future market segments.

c. You have a long-term profitability plan for your product or service.

d. You have a customer base who will buy your product or service as soon as it goes to market.

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Comprehension

Answer Location: Launch Market

Difficulty Level: Medium

AACSB Standard: Application of knowledge

49. What is the first step in calculating market size?

a. conducting a bottom-up analysis

b. conducting a top-down analysis

c. defining TAM

d. defining your market segment

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Knowledge

Answer Location: Calculating Market Size

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

50. Which of the following would be calculated first in a top-down analysis?

a. both SAM and SOM

b. TAM

c. SAM

d. SOM

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Analysis

Answer Location: Calculating Market Size

Difficulty Level: Hard

AACSB Standard: Systems and processes in organizations

51. In which of the following ways does a bottom-up analysis differ from a top-down analysis?

a. It produces more accurate results.

b. It is a simpler calculation.

c. It offers less information on potential sales but more on customer demographics and numbers.

d. It generates segmented potential sales, but not a total sales figure.

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Analysis

Answer Location: Calculating Market Size

Difficulty Level: Medium

AACSB Standard: Analytical thinking

52. Which of the following is a recommended strategy when conducting a bottom-up analysis?

a. Make optimistic sales estimates in order to attract potential investors.

b. Keep your product launch limited to a relatively small and manageable geographic area.

c. Determine product price point without relying on comparisons to similar products already on the market.

d. Be quite conservative in initial sales and profit estimates.

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Comprehension

Answer Location: Calculating Market Size

Difficulty Level: Hard

AACSB Standard: Systems and processes in organizations

53. Jakara has determined market size for her new line of high-end juicers. In her bottom-up analysis, she has calculated that she could reasonably sell 1500 juicers in the first six months of launch. If she wanted to estimate what kind of market and sales numbers she might expand to a year or more down the road, she would do best to calculate ______.

a. SOM

b. SAM

c. TAM

d. total market size

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Application

Answer Location: Calculating Market Size

Difficulty Level: Hard

AACSB Standard: Analytical thinking

54. What is the last step in the process of calculating market size?

a. competition research

b. sanity review of calculations

c. developing an advertising plan

d. contacting early adopter customers directly

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Knowledge

Answer Location: Calculating Market Size

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

55. Which of the following hypothetical bits of data would most likely be part of a top-down analysis?

a. quality and longevity of competitor products in the market

b. number of potential customers living in a drivable radius

c. daily lifestyle habits of potential customers

d. psychological characteristics of potential customers

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Application

Answer Location: Calculating Market Size

Difficulty Level: Hard

AACSB Standard: Analytical thinking

56. Match the order of the following calculations with the correct order of their likely matching names in the answer choices below: the population of the U.S. city in which the product is released; the population of the United States; the immediate neighborhood surrounding the available location of the newly released product.

a. SAM, SOM, TAM

b. TAM, SAM, SOM

c. SAM, TAM, SOM

d. SOM, SAM, TAM

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Analysis

Answer Location: Market Sizing

Difficulty Level: Medium

AACSB Standard: Analytical thinking

57. What is a product application?

a. the degree of customer or market demand for a specific product

b. the goods or services created to meet a customer or market demand

c. the need a customer has that spurs creation of a specific product

d. the potential profitability and market penetration of a new product

Learning Objective: 6.1: Define a customer and a market.

Cognitive Domain: Knowledge

Answer Location: Customers and Markets

Difficulty Level: Easy

AACSB Standard: Application of knowledge

58. Before creating an end-user profile, you must ______.

a. define a target customer group

b. carry out the customer segmentation process

c. build a buyer persona

d. conduct market sizing

Learning Objective: 6.1: Define a customer and a market.

Cognitive Domain: Analysis

Answer Location: Customers and Markets

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

59. Of the following, which would be safest for an entrepreneur to ignore when launching a new product or service?

a. laggards

b. late majority

c. early majority

d. innovators

Learning Objective: 6.1: Define a customer and a market.

Cognitive Domain: Comprehension

Answer Location: Customers and Markets

Difficulty Level: Easy

AACSB Standard: Analytical thinking

True/False

1. Markets are, by definition, virtual spaces.

Learning Objective: 6.1: Define a customer and a market.

Cognitive Domain: Knowledge

Answer Location: Customers and Markets

Difficulty Level: Easy

AACSB Standard: Analytical thinking

2. The existence of some saboteurs as a type of customer for a particular product could be the result of a mistake or practice on the part of the entrepreneur.

Learning Objective: 6.2: Describe the different types of customers entrepreneurs may encounter.

Cognitive Domain: Comprehension

Answer Location: Types of Customers

Difficulty Level: Medium

AACSB Standard: Analytical thinking

3. Customers can be divided into different segments if you anticipate the same level of profitability from them.

Learning Objective: 6.3: Identify your customers through segmentation.

Cognitive Domain: Knowledge

Answer Location: Customer Segmentation

Difficulty Level: Medium

AACSB Standard: Application of knowledge

4. Behavior is one of the four core ways in which customer segments can be defined.

Learning Objective: 6.3: Identify your customers through segmentation.

Cognitive Domain: Knowledge

Answer Location: Customer Segmentation

Difficulty Level: Medium

AACSB Standard: Application of knowledge

5. Proxy products can sometimes offer psychological information about a customer.

Learning Objective: 6.3: Identify your customers through segmentation.

Cognitive Domain: Knowledge

Answer Location: Creating an End User Profile

Difficulty Level: Easy

AACSB Standard: Application of knowledge

6. It is wise for an entrepreneur to try to win over the late majority customer group.

Learning Objective: 6.4: Find your target customer.

Cognitive Domain: Comprehension

Answer Location: Target Customer Group

Difficulty Level: Easy

AACSB Standard: Analytical thinking

7. If you have successfully “crossed the chasm,” you have captured the early majority customer group.

Learning Objective: 6.4: Find your target customer.

Cognitive Domain: Comprehension

Answer Location: Crossing the Chasm

Difficulty Level: Easy

AACSB Standard: Application of knowledge

8. A buyer profile yields more information than a buyer persona.

Learning Objective: 6.5: Acquire a deeper understanding of your customer through personas.

Cognitive Domain: Knowledge

Answer Location: Customer personas

Difficulty Level: Easy

AACSB Standard: Application of knowledge

9. In recent years, the best way to build buyer personas is by conducting real interviews with potential customers.

Learning Objective: 6.5: Acquire a deeper understanding of your customer through personas.

Cognitive Domain: Knowledge

Answer Location: Customer personas

Difficulty Level: Easy

AACSB Standard: Application of knowledge

10. When crossing the chasm, it is important to work out kinks in the product before distributing wider because the early majority will be less forgiving of glitches than your early adopters.

Learning Objective: 6.4: Find your target customer.

Cognitive Domain: Comprehension

Answer Location: Crossing the Chasm

Difficulty Level: Easy

AACSB Standard: Analytical thinking

11. A poorly executed bowling strategy is likely to cause your product to end up in the tornado.

Learning Objective: 6.4: Find your target customer.

Cognitive Domain: Comprehension

Answer Location: Crossing the Chasm

Difficulty Level: Easy

AACSB Standard: Analytical thinking

12. Today, buying decisions are more commonly made through the input of the seller than through social media networks, though social media influence is growing rapidly.

Learning Objective: 6.5: Acquire a deeper understanding of your customer through personas.

Cognitive Domain: Knowledge

Answer Location: Customer Personas

Difficulty Level: Easy

AACSB Standard: Group and individual behaviors

13. Buyer personas provide the entrepreneur with more behavioral information about potential customers than psychographics.

Learning Objective: 6.5: Acquire a deeper understanding of your customer through personas.

Cognitive Domain: Knowledge

Answer Location: Customer Personas

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

14. Creating exclusionary personas helps the entrepreneur better understand both who their customers are and who they are not.

Learning Objective: 6.5: Acquire a deeper understanding of your customer through personas.

Cognitive Domain: Knowledge

Answer Location: Exclusionary Personas

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

15. Journey mapping is key to developing empathy for your customers.

Learning Objective: 6.6: Illustrate the customer journey mapping process.

Cognitive Domain: Knowledge

Answer Location: Customer Journey Mapping Process

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

16. The first touchpoint in the visual customer journey map is typically the first time the customer uses or directly encounters the product.

Learning Objective: 6.6: Illustrate the customer journey mapping process.

Cognitive Domain: Knowledge

Answer Location: Customer Journey Mapping Process

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

17. Direct customer interviews are a challenging but effective way to verify the findings of a customer journey map.

Learning Objective: 6.6: Illustrate the customer journey mapping process.

Cognitive Domain: Knowledge

Answer Location: Customer Journey Mapping Process

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

18. In the six basic steps for creating a customer journey map, you should seek to identify up to 10 specific aspects of the customer experience to explore.

Learning Objective: 6.6: Illustrate the customer journey mapping process.

Cognitive Domain: Knowledge

Answer Location: Customer Journey Mapping Process

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

19. The SAM is the section of the TAM that your product is realistically likely to reach.

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Knowledge

Answer Location: Market Sizing

Difficulty Level: Easy

AACSB Standard: Application of knowledge

20. A bottom-up analysis aims will generate a more accurate predicted total sales figure than will a top-down analysis.

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Analysis

Answer Location: Calculating Market Size

Difficulty Level: Medium

AACSB Standard: Analytical thinking

21. A product application refers to the proposal through which a new product will be created.

Learning Objective: 6.1: Define a customer and a market.

Cognitive Domain: Knowledge

Answer Location: Customers and Markets

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

22. The act of calculating market size is a vital step for any startup.

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Comprehension

Answer Location: Launch Market

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

23. The age of social media tools has greatly diminished the importance of sitting down and talking with your customers.

Learning Objective: 6.6: Illustrate the customer journey mapping process.

Cognitive Domain: Comprehension

Answer Location: Direct Customer Contact

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

24. Sanity checks are necessary when calculating your market size just to be certain you aren’t overlooking something obvious.

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Knowledge

Answer Location: Calculating Market Size

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

25. People in the early majority category are both practical and extremely risk-tolerant.

Learning Objective: 6.4: Find your target customer.

Cognitive Domain: Knowledge

Answer Location: Target Customer Group

Difficulty Level: Easy

AACSB Standard: Group and individual behaviors

Essay

1. Define a market and describe some of its characteristics.

Learning Objective: 6.1: Define a customer and a market.

Cognitive Domain: Comprehension

Answer Location: Customers and Markets

Difficulty Level: Medium

AACSB Standard: Contexts of organizations in a global society

2. Under what conditions can customers be divided into segments? Why is customer segmentation a good idea for an entrepreneur?

Learning Objective: 6.2: Describe the different types of customers entrepreneurs may encounter.

Cognitive Domain: Comprehension

Answer Location: Customer Segmentation

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

3. Allan is trying to create an end user profile for his roofing business, and specifically he is working on the biggest fears and motivators aspect of the profile. How should he go about it, and what might parts of his conclusion look like?

Learning Objective: 6.3: Identify your customers through segmentation.

Cognitive Domain: Application

Answer Location: Creating an End User Profile

Difficulty Level: Hard

AACSB Standard: Application of knowledge

4. Janelle is planning to release a new brand of mini-tablet into the technology market. Based on the technology adoption life cycle, explain how innovators, early adopters, and the early majority will differ from each other in their response to her.

Learning Objective: 6.3: Identify your customers through segmentation.

Cognitive Domain: Analysis

Answer Location: Creating an End User Profile

Difficulty Level: Medium

AACSB Standard: Group and individual behaviors

5. Once you have identified your beachhead market, what steps must you take to “cross the chasm” and what has occurred if you do successfully cross it?

Learning Objective: 6.4: Find your target customer.

Cognitive Domain: Comprehension

Answer Location: Crossing the Chasm

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

6. Why is building a buyer persona better than developing research in customer demographics and psychographics?

Learning Objective: 6.5: Acquire a deeper understanding of your customer through personas.

Cognitive Domain: Comprehension

Answer Location: Customer Personas

Difficulty Level: Medium

AACSB Standard: Application of knowledge

7. In the process of developing buying personas for her gourmet cold-press coffee shop, Maria also develops an exclusionary persona. What might that exclusionary persona look like?

Learning Objective: 6.5: Acquire a deeper understanding of your customer through personas.

Cognitive Domain: Application

Answer Location: Customer Personas

Difficulty Level: Medium

AACSB Standard: Application of knowledge

8. What is the benefit of making a customer journey map?

Learning Objective: 6.6: Illustrate the customer journey mapping process.

Cognitive Domain:

Answer Location: Customer Journey Mapping Process

Difficulty Level: Medium

AACSB Standard: Analytical thinking

9. Describe the three broad ways in which an entrepreneur can verify the findings of the customer mapping process.

Learning Objective: 6.6: Illustrate the customer journey mapping process.

Cognitive Domain: Comprehension

Answer Location: Confirming Your Findings

Difficulty Level: Easy

AACSB Standard: Application of knowledge

10. Compare and contrast the benefits and weakness of each calculation--TAM, SAM, and SOM.

Learning Objective: 6.7: Explain the importance of market sizing in growing your customer base.

Cognitive Domain: Analysis

Answer Location: Market Sizing

Difficulty Level: Hard

AACSB Standard: Analytical thinking