Entrepreneurial Marketing Test Bank Docx Ch6

Questions for Chapter 6

True/False

1. Marketing is at the heart of an organization because its role is to identify and serve customers’ needs. (pg. 141)
2. The marketing of products and services are similar. (pg. 142)
3. Customer acquisition and retention are the core processes of marketing. (pg. 142)
4. The scope of marketing ranges only from advertising to promotion. (pg. 142)
5. Many entrepreneurs rely heavily on their cash expenditures to achieve a compelling image in a noisy marketplace. (pg. 142)
6. New ventures must differentiate their product or service to make its distinctiveness and value clear to customer. (pg. 142)
7. New ventures cannot survive in competition with larger corporations, since the latter can spend intimidating sums on marketing research, testing their strategies, or designing marketing campaigns. (pg. 142)
8. Entrepreneurs frequently stumble in their marketing, because of personal biases and beliefs. (pg. 143)
9. Marketing helps entrepreneurs acquire resources by selling their ideas to potential investors and partners. (pg. 143)
10. Intuition, personal expertise and passion are usually enough to fully assess opportunities in an entrepreneur’s marketplace. (pg. 143)
11. Some types of primary data are very difficult to collect, for instance, with personal interviews or focus groups. (pg. 144)
12. A segment is a group of customers defined by certain commonalities or characteristics that may be demographic, psychographic, or behavioral. (pg. 145)
13. Entrepreneurs should not initially consider their resources and capabilities when first developing their marketing strategies. (pg. 145)
14. Two inexpensive ways to identify the appropriate target market are to pursue multiple markets or to wait for one to emerge. (pgs. 145-146)
15. Customer value is the difference between total customer benefits and total customer costs, which are both monetary and nonmonetary. (pg. 148)
16. Unfortunately, product differentiation is important for initial product success but not for longer-term brand building. (pg. 148)
17. The stages of the product life cycle are introduction, growth, maturity, and introduction again. (pg. 149)
18. During the introduction phase of the product life cycle, marketers must cultivate customer loyalty and build the brand. (pg. 149)
19. The cost-based method of pricing is marking up a product based on its cost plus a desired profit margin. (pg. 151)
20. Perhaps the most important product attribute for entrepreneurs is quality, which serves as a powerful differentiator and is needed to gain the recommendation of customers. (pg. 150)
21. Price promotions are short term and use regular price levels as a base from which to discount. (pg. 151)
22. Distribution is not as problematic for service-based ventures as it is for those that manufacture goods. (pg. 152)
23. Marketing communications convey messages to the market; messages about the company’s products and services, as well as about the company itself. (pg. 154)
24. The three primary types of sales promotion are consumer promotions, trade promotions, and sales force promotions. (pg. 156)
25. Channel partnerships and relationships have important implications for entrepreneurs. In fact, the channel member with the most power will often prevail in a competitive market. (pg. 153)
26. Guerrilla marketing consists of activities that are non-traditional, grassroots, and captivating, which gain consumers’ attention and build awareness of the company. (pg. 163)
27. Effective guerrilla marketing tactics appeal to emotion and create drama. (pg. 164)
28. People usually use guerrilla tactics in wide-spread advertising, rather than in personal selling. (pg. 164)
29. Guerrilla tactics have become increasingly difficult to execute in recent years, because corporate marketing executives are now employing non-traditional tactics as well and have much larger budgets at their disposal. (pg. 164)
30. Brand equity is the combined result of brand awareness and brand image. (pg. 166)
31. Brand equity is always a positive influence for your company. (pg. 166)
32. The customer’s actual experience with the brand has a strong effect on brand image. (pg. 166)
33. Early stage companies often find it necessary to scale up or change focus. (pg. 166)

Multiple Choice

1. In addition to acquiring and retaining customers, marketing spans the boundaries between___. (pg. 141)
   1. Sales and service
   2. A company and its customers
   3. Products and services
   4. None of the above
   5. All of the above.
2. Four Ps of marketing includes all of these EXCEPT: (pg. 142)
   1. price
   2. product
   3. primary data
   4. place
   5. promotion
3. An important part of gaining the market’s acceptance is___. (pg. 142)
   1. Building brand awareness
   2. Reducing the product’s cost of goods sold
   3. Franchising the brand
   4. Building celebrity client network
   5. None of the above.
4. It is difficult for small companies to save money on “media buys” because ___. (pgs. 142-143)
   1. their range of advertising is limited.
   2. their marketing is not creative enough to generate viral exposure.
   3. their product mix is too diverse.
   4. they are the first in a new market.
   5. None of the above.
5. Entrepreneurs market to which of the following audiences? (pg. 143)
   1. Investors
   2. Business partners
   3. Customers
   4. Employees
   5. All of the above
6. Which of the following term describes the collection and analysis of any reliable information that improves managerial decisions? (pg. 143)
   1. The customer choice process
   2. Marketing research
   3. Segmentation
   4. Targeting
   5. The marketing mix
7. Which of the following marketers gather from already published sources like an industry association study or census reports? (pg. 143)
   1. The customer choice process
   2. Focus groups opinion
   3. Primary data
   4. Secondary data
   5. The marketing mix
8. Which of the following marketers collect specifically for a particular purpose through focus groups, surveys, or experiments? (pg. 143)
   1. The customer choice process
   2. Focus groups opinion
   3. Primary data
   4. Secondary data
   5. The marketing mix
9. Studies show that accurate pre-venture market analysis can reduce the failure rates of new ventures by what percent? (pg. 143)
   1. 10%
   2. 30%
   3. 60%
   4. 80%
   5. 95%
10. ______ are key marketing dimensions that set the strategic framework. (pg. 145)
    1. Segmentation, targeting, and positioning
    2. Price, Promotion and Product
    3. Global Brand Awareness
    4. Price setting
    5. None of the choices above
11. Customer understanding enables the entrepreneur to ______. (pg. 145)
    1. create value.
    2. capture value.
    3. communicate value.
    4. deliver value.
    5. All of the above
12. The entrepreneur’s decision on how to segment a market is critical because___. (pg. 146)
    1. the entrepreneurs cannot go back to revise them in the future
    2. waiting for one to emerge is an expensive strategy.
    3. the segmentation function will often be outsourced to a marketing firm who requires clear instructions.
    4. None of the above
13. Positioning describes a company’s offering relative to the product attributes that are most important to whom? (pg. 146)
    1. Investors
    2. Shareholders
    3. Competitors
    4. Customers
    5. Marketers
14. The core product is______, while the augmented product set of attributes is peripherally related to it. (pg. 146)
    1. The brand
    2. The technology
    3. The cost
    4. The essential good or service.
    5. None of the above
15. The attractiveness of a market segment is related to its size, growth rate, and ___. (pg. 146)
    1. cost
    2. price
    3. competitive advantage
    4. potential profit
    5. none of the above
16. While segmentation profiles a company’s customers, what does positioning outline? (pg. 146)
    1. Customer perceptions
    2. Cost
    3. Operational advantage
    4. Revenue
    5. None of the above
17. A positioning statement has which of the following: (pg. 148)
    1. Target group and need
    2. Brand and concept
    3. Point of difference
    4. All of the above
    5. None of the above
18. Why must a company continue new product development even after launching a successful product into the market? (pg. 149)
    1. To gain an advertising advantage
    2. Competition
    3. To keep the firm profitable
    4. To ensure maturity in the market
    5. Both B & C
19. Price discrimination happens when a company charges different prices to different ____ segments. (pg. 151)
    1. product
    2. customer
    3. risk
    4. A or B
    5. none of the above
20. Price discrimination is a pricing strategy that: (pg. 151)
    1. Limits sales to a specific demographic.
    2. Charges different prices to different customer segments.
    3. Prices below the prevailing market prices in order to gain market share.
    4. Sets the price at a predetermined level above the per unit cost of production.
    5. None of the above
21. Which of the following most directly affects revenue, profits, and how consumers perceive a product’s position in the market? (pgs. 150-151)
    1. Pricing
    2. Promotion
    3. Place
    4. Product
    5. None of the above
22. The selection of a company’s key communication tools is determined by: (pg. 154)
    1. Cost
    2. Target market
    3. Timing
    4. All of the above
    5. None of the above
23. The communications mix includes: (pg. 154)
    1. Advertising, cross selling, investor relations, personal selling, and direct marketing.
    2. Advertising, sales promotion, public relations, personal selling, and direct marketing.
    3. Sales promotion, advertising, consumer relations, multi-level reselling, personal selling.
    4. A and C only.
    5. A and B only.
24. What type of strategy aims to proactively move the volume of products through the channel using tools such as trade promotions, trade shows, and personal selling to distributors? (pg. 155)
    1. Pull strategy
    2. Push strategy
    3. Penetration pricing
    4. Product differentiation
    5. None of the above
25. Entrepreneurs discover the unique value they deliver by ___. (pg. 161)
    1. Examining the total benefits of the venture.
    2. Differentiating their value from existing competitors.
    3. Validating its value with its customers.
    4. All of the above.
    5. None of the above.
26. Which of the following is an approach to Guerrilla Marketing? (pgs. 163-164)
    1. Identifying challenges and developing creative solutions.
    2. Using the “inherent drama” in your offerings to your benefit.
    3. Capturing people’s attention by targeting the local news media with a public, promotional event.
    4. Creating an entertaining digital video that can be viewed and shared online.
    5. All of the above
27. Entrepreneurs must obtain information that will allow them to understand consumer buying behavior and customer expectations related to: (pg. 165)
    1. Product design, pricing, and distribution
    2. Product design, pricing, or distribution
    3. Product design or pricing
    4. Pricing and distribution
    5. Pricing or distribution
28. ______ is the customer's ability to recognize and recall the brand. (pg. 166)
    1. Technique awareness
    2. Brand awareness
    3. Value awareness
    4. All of the above
    5. None of the above
29. Brand awareness is created through a customer’s exposure to what? (pg. 166)
    1. Advertising or publicity
    2. Social media
    3. Education
    4. Promotion
    5. Price reductions
30. Some methods employed to develop a “listening system” include: (pg. 165)
    1. Transactional surveys
    2. Customer advisory panels
    3. Cookies planted in customers’ computers when they visit a ventures web page.
    4. B and C only
    5. A and B only
31. If a company can cultivate brand equity, what type of price can it expect loyal customers to pay? (pg. 166)
    1. A fair price
    2. A minimum price
    3. A premium price
    4. A discounted price
    5. All of the above
32. All entrepreneurs face the need for brand building, which is ___. (pg. 166)
    1. the task of building brand awareness.
    2. the task of building brand equity.
    3. the dual task of building brand awareness and building brand equity.
    4. building either brand awareness, or brand equity.
    5. the task of building other issues.

Open Ended

1. In your own words, define “marketing”. (pg. 142)

• An organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stake holders.

1. Why is marketing critical for entrepreneurs? (pg. 142)

• Marketing is a vital process for entrepreneurs, because it builds awareness of your product and your company. Without brand awareness, even customers that would benefit from your service and would want to purchase your product will not.
• Marketing builds brand equity and imprints an image of your products in the minds of customers.

1. What are the “4 P’s” of marketing, and which activities define them? (pg. 142)

• The “4 P’s” of marketing are: product, price, place, and promotion.
• The process of acquiring and retaining customers is at the core of marketing. Entrepreneurs must create the offer (design the product and set the price), take the offer to the market (place and distribution), and, at the same time, tell the market about the offer (promotion).

1. Why is the marketing done by entrepreneurs different from marketing done by established companies? (pgs. 142-143)

• Entrepreneurial marketing is different from marketing done by established companies for a number of reasons:
  • First, entrepreneurial companies typically have limited resources – both financial limitations and time constraints.
  • Entrepreneurs have little or no market share and a confined geographic market. As a result, they enjoy few economies of scale.
  • Not only is market information limited, but decision-making can be muddled by strong, personal biases and beliefs. Early-stage companies often stumble in their marketing because of a product focus that is excessively narrow.
  • Entrepreneurs market to multiple audiences: investors, customers, employees, and business partners. Because none of these bonds is well established for early stage companies, entrepreneurs must be both customer-oriented and relationship-oriented.

1. What methods can an entrepreneur leverage to identify the most appropriate price for his or her product? (pgs. 150-151)

• Cost-based pricing, competitive pricing, and perceived value pricing are three options. Perceived value pricing is especially viable for pricing a new or innovative product.
• If possible, approach perceived value pricing with pre-market price testing, estimating the number of units customers will purchase at different price points.
• Two well known pricing strategies, which represent opposite ends of the pricing spectrum, are price skimming and penetration pricing.

1. What is the difference between price skimming and penetration pricing, and when will a skimming strategy be best? Why? (pg. 151)

• Price skimming sets high margins; entrepreneurs can expect to gain limited market share because their prices will be relatively high.
• Penetration pricing aims to gain high market share with lower margins and relatively lower prices. However, the lower price may signal lower quality, especially in regards to a new product.
• For entrepreneurs with a product that brings something new to the marketplace, a skimming strategy is usually best. Unless channels of distribution are very well established, a penetration strategy, generally reserved for mature products, is hard to use to your advantage.

1. Distribution channel strategy includes three types of channel coverage, please define them. (pg. 153)

• Distribution channel strategy includes three types of channel coverage: intensive, selective, and exclusive. The appropriate strategy depends on the type of product or service that entrepreneurs will sell.
• Intensive coverage works for consumer goods and other fast-moving products. The carbonated soft drink category is one of the most intensively distributed: products are sold in supermarkets, drug stores, convenience stores, restaurants, vending machines, sporting event concessions, and fast food outlets.
• Selective distribution brings the product to specific distributors, often limiting selection geographically by establishing a dealer network. Kate Spade sells her handbags and other fashion accessories to high-end department stores but not to mainstream retailers or mass merchandisers. Selective distribution can protect dealers and retailers from competition, while helping manufacturers maintain prices by thwarting price competition.
• Exclusive distribution is often used for luxury products. For some time, Neiman-Marcus had exclusive rights to distribute the Hermes line of very high-end leather goods and fashion accessories.

1. What is guerrilla marketing, and what are the main categories of guerilla marketing? (pg. 163)

• Guerrilla marketing consists of activities that are non-traditional, grassroots, and captivating – that gain consumers’ attention and build awareness of the company.
• Types of Guerrilla Marketing:
• Word-of-Mouth marketing: “Giving people a reason to talk about your products and services, and making it easier for that conversation to take place.”
• Buzz marketing: “Using high-profile entertainment or news to get people to talk about your brand.”
• Viral Marketing: “Creating entertaining or informative messages that are designed to be passed along in an exponential fashion, often electronically or by e-mail.”

1. Why is defining what guerrilla marketing does easier than defining what it is? (pg. 164)

Guerrilla marketing is heard above the noise in the marketplace and makes a unique impact:

• It makes people talk about the product and the company, in essence, relaying the brand message.
• It creates drama and interest and positive emotion.
• But, in fact, effective guerrilla marketing is as difficult – maybe more so – than good traditional marketing. Many companies are trying to do it, and because guerrilla marketing is nontraditional, tried and true marketing axioms seldom apply.

1. What are the key skills for managing growth and why? (pgs. 165-166)

• Two key areas for entrepreneurs to focus on are understanding and listening to customers and building a visible, enduring brand.
• Understanding the customer:
• Although intuition-based decision making can work well initially, it has limitations.
• Entrepreneurs must obtain information that will allow them to understand consumer buying behavior and customer expectations related to product design, pricing, and distribution.
• Entrepreneurs following a high growth strategy need to continuously find new customer segments to support that growth.
• There are a number of ways to listen to customers; some require formal research, and others use informal systems for soliciting information and scanning the market environment.
• Building the Brand
• All entrepreneurs face the need for brand building, which is the dual task of generating brand awareness and building brand equity.
• Brand awareness is the customer's ability to recognize and recall the brand. Marketing practices that create brand awareness also help shape customer perceptions.
• Brand equity is the cumulative value that customers associate with a company or product. Any positive perceptions and customer recognition add to a company’s brand equity.

1. Describe how an entrepreneur may think about selected primary and secondary target audiences from a segmented market. (pgs. 145-146)
   • Consider how critical your value proposition is to the customer segment. Are you selling “oxygen or Tylenol?” How essential is your product or service to THIS segment?
   • Can you access this segment NOW? Do you have the resources, knowledge, and capability etc. to link your value chain to this specific segment? If yes, how much of the segment?
   • How quickly does this segment require a product or services again to fulfill its needs after value is delivered the first time? Once a year, weekly, or three times per day?
   • How many competitors can serve this segment with an equal or greater value proposition?
   • What will be the effect of your marketing effects on this segment? Can you create loyal customers? Raving fans? One-time customers?
   • Can this segment be recognized clearly or does it require a lot of effort to actually know a member of a given segment is standing in front of you? Age, gender, and geographic locations are easily recognized. Ethnicity, religion, and language are recognized with a little more effort. However cultural proclivity, temperament, education level, and favorite color can take more effort to ascertain.
2. Explain how your marketing listening system and market segmentation are intertwined. (pgs. 146, 165)
   • A listening system is a portfolio of methods for use to scan the marketing environment.
   • Segmentation is the process by which marketers select the “right” customers for its products and services; the tools in a listening system are used to implement that process.
   • Listening systems measure customer satisfaction, get feedback and advice from customers, track and address customer complaints. At the same time, they work in assessing the total market – customers and noncustomers.
   • A recent example of this is Maker’s Mark bourbon. Maker’s Mark’s CEO set aside intuition and studied the market to understand where he would find his new customers. Noting that the bourbon connoisseur market segment was nearing saturation. To grow, the company would have to reach drinkers of other types of alcohol.
3. With all the discussion of the disadvantages an entrepreneur faces in marketing relative to large established companies, what would be some of the advantages? (pgs. 142-143)
   • Entrepreneurs are forced to be more resourceful and creative.
   • Entrepreneurs take the opportunity to involve the customer in the product design process.
   • Entrepreneurs leverage scarce resources through innovative business practices – from online surveys to free libraries.
   • It is easier for entrepreneurs to engage in internal marketing, as their employees are more enthusiastic and proud of the company’s products.
4. Describe the role of public relations (PR) in entrepreneurial marketing. (pgs. 156-158)
   • Savvy entrepreneurs with fledgling companies are good at managing their own PR. They send out press releases announcing new products, key executive hires, and other significant company events to newspapers, trade magazines, and online media outlets.
   • PR is most effective when entrepreneurs recognize that the best PR is not necessarily free PR. Effective PR takes time, effort, sometimes money, and the ability to leverage connections to generate good PR.
   • Publicity and corporate communications are the two elements of PR. Publicity is key to building brand awareness, and communication, particularly with customers, is key to cultivating an entrepreneurial company’s brand image. Focusing on tactics before strategy. The principle job of the entrepreneur is to set strategy. Trial and error can modify and refine tactics, but this will only waster limited resources (including time) if not tied to a solid strategy. Military strategist Sun Tzu famously observed that “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”
   • Placing too great an emphasis on detailed marketing planning using secondary information at the expense of creating a simple base plan designed for flexibility with multiple conceptual-level contingency plans that will enable the entrepreneur to rapidly adapt and pivot as primary market data is gained through initial operations.
   • Failing to realize that the condition which the original marketing plan was based on have changed substantially, turning the present plan from a profitable to unprofitable course of action. Entrepreneurs can fall in love with their marketing objectives, but not with the tactics that achieve those objectives. They must remain flexible to change, because changing faster than the competition are one of the entrepreneurs few competitive advantages.
5. For a rapidly growing company seeking greater growth, a large established channel partner who wishes to place large orders at high prices would seem like a great opportunity. What factors could make this a terrible idea for a new venture that an entrepreneur must first look at? (pg. 153)
   • Will you need to incur fixed costs to serve this channel partner, and what share of your present, and near-term revenue is this partner representing? This is necessary to avoid entering into a situation where your channel partners bargaining power is too great and where you will be unable to cover your fixed costs if they demand a lower price or volume in the future.
   • Does this channel partner compete with your other channel partners? There’s a reason many sports supplement companies only sell through certain outlets in certain regions. Channel conflict will result in price and promotion competition between channel partners in the same geographic (or virtual) marketplaces, and they will discount your product until their margin is too small for them to continue to be your partner, or until you refuse to lower your margin to preserve theirs. Future efforts to raise your price again through a new channel partner could be futile once the customer’s price expectations have been set lower.
   • Will the new channel partner require you to create new marketing initiatives that have little to nothing in common with your present efforts in existing segments? The impact of a new channel partner must be examined across your entire value chain to include advertising, productions, etc. A large customer could offer better gross margins, but force inefficiencies at scale that reduce your net margin.