Strategic Management and Marketing Basics Questions and Answers

Answer: D

The first step is to identify and establish brand values and positioning strategy.

In Kevin Lane Keller's strategic brand management process, the steps are:

1. Identify and establish brand positioning and values.
2. Plan and implement brand marketing programmes.
3. Measure and interpret brand performance.
4. Grow and sustain brand equity.

Marketing programmes put the positioning into practice, so they come second. Measuring brand equity and managing the brand over its life cycle come later still, once the brand exists.

Answer: B

Services are produced and consumed simultaneously.

This is the inseparability of services: a haircut, a lecture or a flight is produced at the same time as the customer consumes it, usually with the customer present. A physical good, by contrast, is made, stored, sold and consumed later.

Inseparability, along with intangibility, variability and perishability, is one of the four characteristics that distinguish services. 'Launched', 'created' and 'maximized' do not describe the relationship between production and the customer.

Answer: D

Such firms are Reactors.

In Miles and Snow's typology of strategic types, reactors have no consistent strategy. They respond to environmental pressure as it comes, making ad hoc moves rather than following a plan, which the question likens to guerrilla warfare (printed 'guerilla').

Defenders protect a narrow, stable product-market domain through efficiency. Prospectors continually seek new products and markets. Analysers combine the two, holding a stable core while following promising innovations. All three have consistent strategies, unlike reactors.

Answer: C

Problem children have high growth and relatively low market share.

In the Boston Consulting Group matrix, products are placed by market growth rate and relative market share:

• Stars: high growth, high share.
• Problem children (question marks): high growth, low share.
• Cash cows: low growth, high share.
• Dogs: low growth, low share.

Problem children need heavy investment to gain share in a growing market and may become stars or fail. The other options describe cash cows, dogs and stars.

Answer: A

In the entrepreneurial mode, decisions are made by a single person.

Henry Mintzberg described three modes of strategy making. In the entrepreneurial mode, power rests with one strong leader, often the founder, who makes bold decisions on his or her own vision and judgement in pursuit of growth. It suits young and small firms.

In the adaptive mode, strategy emerges incrementally from bargaining among groups of people, and in the planning mode analysts and managers formulate strategy systematically. Boards of directors and production executives are not the decision makers of the entrepreneurial mode.

Answer: C

Such policies are termed corporate strategy.

Corporate strategy is set at the top of the organisation and decides the overall direction of the firm: which businesses to be in, how to grow (by expansion, diversification, acquisition) or retrench, and how to manage the portfolio as a whole.

Business strategy deals with how one business unit competes in its market, for example by cost leadership or differentiation. Functional strategy guides individual departments such as marketing or finance. Innovative strategy is a type of approach, not the level at which growth policy is set.

Answer: A

The answer is the consistency of the product mix.

Kotler defines four dimensions of a product mix: width (how many product lines the company carries), length (the total number of items in the lines), depth (how many variants each product is offered in) and consistency (how closely related the lines are in end use, production requirements, distribution channels or some other way).

The stem quotes the definition of consistency; width, depth and length each measure the size of the mix rather than how related its lines are.

Answer: C

The definition is of market demand.

Kotler defines market demand for a product as the total volume that would be bought by a defined customer group, in a defined geographical area, in a defined time period, in a defined marketing environment, under a defined marketing program, which is the wording of the stem.

Market potential is the limit that market demand approaches as industry marketing expenditure rises without bound. Market share is one firm's portion of total sales, and market supply is what sellers offer, not what buyers would take.

Answer: B

Phone-order delivery services are examples of direct marketing.

Direct marketing reaches customers directly and lets them order without going through a store or intermediary: by telephone, mail, catalogue, television or online. A restaurant that takes orders on the phone and delivers to the customer's door sells directly to the consumer.

Sales promotion is a short-term incentive such as a discount or coupon. Publicity is unpaid media coverage. Personal selling is face-to-face persuasion by a salesperson; taking a customer's phone order is not selling in that sense.

Answer: B

'Intel Inside' is a classic example of ingredient co-branding.

Ingredient branding creates brand equity for a component that is part of another branded product. Intel's campaign from 1991 made its processor visible to consumers through a logo on the outside of computers made by other companies, so buyers came to look for Intel inside their Dell or HP machine.

Bundling sells several products together as a package, a joint venture is a jointly owned business, and packaging is the container and wrapper of a product; none describes branding a component inside another brand.