Chapter 11

Entrepreneurship: Successfully Launching New Ventures, 4e (Barringer/Ireland)

Chapter 11 Unique Marketing Issues

1) True You Cosmetics, the company profiled in the opening feature in Chapter 11, sells cosmetics products. The company's marketing efforts to date have focused heavily on:

A) Google AdWords and AdSense

B) print advertising

C) radio

D) social media

E) television advertising

Answer: D

Diff: 1 Page Ref: 358

Topic: Selecting a Market and Establishing a Position

AACSB: Reflective Thinking

Objective: Apply the principles of marketing in the entrepreneurial/small business venture

2) Andy Sanders owns a sporting goods store that appeals to hunters and fishermen. The market that Andy is trying to appeal to is called his:

A) focal market

B) objective market

C) target market

D) critical market

E) intention market

Answer: C





3) The first step in selecting a target market is to study the industry in which the firm intends to compete and determine the different potential target markets in that industry. This process is called:

A) market positioning

B) market splitting

C) market targeting

D) market subdividing

E) market segmentation

Answer: E





4) Which of the following is the correct sequence of events in regard to the process of selecting a target market and position strategy?

A) creating a unique positioning strategy, selecting a target market, segmenting the market

B) segmenting the market, creating a unique positioning strategy, selecting a target market

C) segmenting the market, selecting a target market, creating a unique positioning strategy

D) selecting a target market, creating a unique positioning strategy, segmenting the market

E) creating a unique positioning strategy, segmenting the market, selecting a target market

Answer: C





5) Brenda Berry is thinking about starting a computer company. After doing some research, she has decided that the computer industry can be divided into the following product categories: handheld computers, laptops, tablet computers, PCs, minicomputers, and mainframes. She is now trying to decide which product category she is the most interested in competing in. The process that Brenda is going through is called:

A) market splitting

B) market subdividing

C) market segmentation

D) market dividing

E) market separating

Answer: C





6) Once a firm has segmented the market, the next step is to:

A) decide on a position within the segment

B) select a critical market

C) select a target market

D) select a focal market

E) immediately decide on the "4Ps" of the marketing strategy

Answer: C





7) A ________ is a place within a market segment that represents a narrower group of customers with similar interests.

A) position market

B) niche market

C) slot market

D) spot market

E) gap market

Answer: B





8) Research in Motion (RIM) is a handheld computer company that focuses specifically on business users that need dependable access to e-mail and the Internet while away from their office. For RIM, this specific type of user within the large business market segment is referred to as its:

A) gap market

B) task market

C) position market

D) hole market

E) niche market

Answer: E





9) A(n) ________ is the set of attributespositive or negativethat people associate with a company.

A) emblem

B) logo

C) symbol

D) brand

E) trade name

Answer: D


Topic: Key Marketing Issues for New Ventures



10) Which of the following selections is incorrect regarding a firm's "positioning" strategy?

A) Position is concerned with how the firm is situated relative to its competitors.

B) A firm's decision about how to position itself relative to its competitors starts with a product or service idea that is tested and refined through feasibility analysis and marketing research.

C) Position is concerned with how a firm is situated relative to competitors.

D) Once a firm positions itself in a certain way, it must be able to follow through with a product or service offering that lives up to the image it has created.

E) After selecting a positioning strategy, the firm's next step is to select a target market.

Answer: E





11) A ________ illustrates a firm's positioning strategy relative to its major rivals.

A) product attribute map

B) positioning analysis grid

C) positioning plot

D) competitive analysis grid

E) positioning diagram

Answer: A





12) A product attribute map is used to help a firm determine:

A) if it is emphasizing benefits rather than features

B) if its branding strategy is appropriate

C) if its market segmentation is correct

D) if its positioning strategy is appropriate

E) if its target market is appropriate

Answer: D





13) Nike's familiar phrase "Just do it" is an example of a(n):

A) attention-line

B) tagline

C) notice-line

D) catchline

E) grabline

Answer: B





14) InstyMed's phrase "We make patients better quicker" is an example of a(n):

A) tagline

B) grabline

C) notice-line

D) catchline

E) attention-line

Answer: A





15) Which of the following statements is correct regarding the concept of branding?

A) Brands cannot be built through advertising, public relations, sponsorships, social media, or similar techniques.

B) A company doesn't normally want its customers to identify with its brand.

C) Startups usually start with an established brand.

D) A brand can be one of a company's most valuable assets.

E) A brand can denote a negative impression of a company.

Answer: D


Topic: Branding



16) Some companies monitor the integrity of their brands through a program of:

A) brand administration

B) brand persistence

C) brand determination

D) brand resolution

E) brand management

Answer: E


Topic: Branding



17) The What Went Wrong feature in Chapter 11 focuses on Ugobe, the company that made Pleo, a small robotic baby dinosaur. Ugobe failed primarily because it didn't establish a clear:

A) positioning strategy

B) branding strategy

C) social media strategy

D) financial strategy

E) advertising strategy

Answer: A





18) According to the textbook, a brand is all of the following except:

A) reputation

B) collection of memories

C) a pledge

D) a promise

E) a written warranty

Answer: E





19) Creating ________ means creating awareness and a sense of anticipation about a company and its offerings.

A) ruckus

B) noise

C) clatter

D) clamor

E) buzz

Answer: E


Topic: Branding



20) Which of the following statements is incorrect regarding the process of building a company's brand?

A) A firm's name, logo, Web site design, and even its letterhead are part of its brand.

B) One of the keys to effective branding is to create a strong personality for a firm.

C) Some companies monitor the integrity of their brands through brand management.

D) Startups must build a brand from scratch, which starts with selecting the company's name.

E) Most experts recommend a heavy reliance on advertising in building a firm's brand.

Answer: E


Topic: Branding



21) ________ is a term that denotes the set of assets and liabilities that are linked to a brand and enable it to raise a firm's valuation.

A) Trademark equity

B) Brand equity

C) Logo equity

D) Trademark value-added

E) Trade name strength

Answer: B


Topic: Branding



22) According to the textbook, a successful brand can increase the market value of a company by:

A) 5 to 10 percent

B) 20 to 30 percent

C) 40 to 50 percent

D) 50 to 75 percent

E) 75 to 100 percent

Answer: D


Topic: Branding



23) The Savvy Entrepreneurial Firm feature in Chapter 11 focuses on Airbnb, the company that created a marketplace for people to list, discover, and book unique spaces in people's homes or apartments while traveling. According to the feature, Airbnb was able to generate substantial buzz about its service via the use of:

A) Facebook

B) Google AdSense

C) blogs

D) newspaper ads

E) Twitter

Answer: C





24) A firm's ________ is the set of controllable, tactical marketing tools that it uses to produce the response it wants in the target market.

A) tactical mix

B) promotional blend

C) organizational mix

D) marketing mix

E) selling mix

Answer: D


Topic: The Four Ps of Marketing for New Ventures



25) Which of the following is not one of the four elements that constitute a firm's marketing mix?

A) price

B) promotion

C) passion

D) place (or distribution)

E) product

Answer: C





26) A firm's marketing mix consists of the following four elements:

A) product, price, promotion, and place

B) passion, pride, promotion, and place

C) passion, pleasure, product, and price

D) enthusiasm, passion, product, and price

E) place, promotion, passion, and product

Answer: A





27) A firm's ________, in the context of its marketing mix, is the good or service it offers to its target market.

A) conception

B) idea

C) formation

D) product

E) invention

Answer: D





28) A ________ is something that takes on a physical form, such as an MP3 player or a laptop computer. A ________ is an activity or benefit that is intangible, such as an airplane trip or advice from an attorney.

A) product, service

B) service, component

C) component, service

D) formation, service

E) service, product

Answer: A





29) A(n) ________ is an early user of a firm's product who is willing to give a testimonial regarding his or her experience with the product.

A) tribute account

B) reference account

C) approval report

D) appreciation account

E) acknowledgment report

Answer: B





30) Before Kim Green opened her jiffy print store, she processed several large print jobs for local merchants for free, to demonstrate the quality of her service and to solicit feedback. Two of the merchants wrote favorable reviews of Kim's service, and agreed to let Kim post the reviews on her company's Web site. The companies that wrote the favorable reviews are referred to as:

A) appreciation reports

B) acknowledgement accounts

C) referent accounts

D) tribute reports

E) approval reports

Answer: C





31) The amount of money consumers pay to buy a product is its:

A) price

B) fee

C) value

D) cost

E) charge

Answer: A





32) Which element of the marketing mix is the only one that produces revenue?

A) product

B) place (or distribution)

C) advertising

D) price

E) promotion

Answer: D





33) In ________, the list price of an item is determined by adding a markup percentage to a product's cost.

A) cost-based pricing

B) compliance-based pricing

C) value-based pricing

D) competitive-based pricing

E) economic-based pricing

Answer: A





34) Pat Walker owns an environmental services company. The way Pat prices her services is to figure her cost and then add a 22 percent markup. The method that Pat uses to determine her prices is called:

A) economic-based pricing

B) value-based pricing

C) competitive-based pricing

D) cost-based pricing

E) conformity-based pricing

Answer: D





35) In ________, the list price is determined by estimating what consumers are willing to pay for a product and then backing off a bit to provide a cushion.

A) value-based pricing

B) tactical pricing

C) strategic pricing

D) cost-based pricing

E) economic-based pricing

Answer: A





36) Michael Jones owns a Web design firm. The way Michael prices his products is to determine what consumers are willing to pay, and then he backs off a bit to provide a cushion. The method that Michael used to determine his prices is called:

A) predatory pricing

B) technical pricing

C) cost-based pricing

D) competitive-based pricing

E) value-based pricing

Answer: E





37) According to the textbook, most experts recommend ________ pricing because it hinges on the perceived value of a product or service.

A) value-based

B) cost-based

C) competitive-based

D) tactical

E) strategic

Answer: A





38) Karen Simon recently purchased a digital camera. She considered three cameras, a Kodak that was priced at $139.00, a Panasonic priced at $189.00, and a Nikon priced at $229.00. Karen couldn't tell much difference between the cameras, so she bought the Nikon, figuring that because it was the most expensive of the three, it must be the best. According to the textbook, Karen was making a:

A) price-quality attribution

B) price-merit attribution

C) cost-value acknowledgement

D) cost-worth attribution

E) price-worth acknowledgement

Answer: A





39) ________ refers to the activities the firm takes to communicate the merits of its product to its target market.

A) Sponsorship

B) Advertising

C) Endorsement

D) Promotion

E) Price

Answer: D





40) The Google program called ________ allows advertisers to buy keywords on the Google Home Page.

A) AdSense

B) Adcenter

C) AdWords

D) Search Marketing

E) AdGoogle

Answer: C





41) Efforts to establish and maintain a company's image with the public are referred to as:

A) open relations

B) public relations

C) civic relations

D) community relations

E) advertising

Answer: B





42) Every year thousands of electronic products manufacturers gather in Las Vegas to display their products and to see what their competitors are up to. This type of event is called a:

A) trade show

B) promotions show

C) deal show

D) goods show

E) skill show

Answer: A





43) Twitter, Facebook and company blogs are examples of:

A) public media

B) group media

C) shared media

D) social media

E) community media

Answer: D





44) The idea behind blogs is that they:

A) familiarize people with a business and help build an emotional bond between a business and its customers

B) are an effective recruiting tool and they help businesses network with government officials

C) help build an emotional bond between a business and its customers and are an effective platform for product development

D) are an effective tool for product development and familiarize people with a business

E) are an effective tool for recruiting and they familiarize people with a business

Answer: A





45) The Partnering for Success feature in Chapter 11 focuses on Moxsie, an online retailer that sells fashion items made by independent designers. Moxsie has accelerated its growth by:

A) partnering with an influential Web site and soliciting feedback from customers

B) running Google AdSense ads and soliciting feedback from customers

C) utilizing viral marketing and putting in place a formal sales process

D) utilizing guerrilla marketing techniques and entering into a strategic alliance with Google

E) co-branding its site with another online retailer and putting a formal sales process in place

Answer: A





46) ________ marketing is a low-budget approach to marketing that relies on ingenuity, cleverness, and surprise rather than traditional techniques.

A) Rebel

B) Bug

C) Catching

D) Guerrilla

E) Revolutionary

Answer: D





47) A(n) ________ is a route a product takes from the place it is made to the customer who is the end user.

A) trade channel

B) product channel

C) allotment channel

D) promotion channel

E) distribution channel

Answer: E





48) A firm's sales process:

A) is typically not put in place until a year or more after a startup launches

B) describes a firm's branding strategy

C) depicts the steps it goes through to identify prospects and close sales

D) describes its social media strategy

E) depicts the steps it goes through to identify its target market and positioning strategy

Answer: C





49) The first step in the formal sales process described in the book is:

A) qualify the lead

B) make the sales presentation

C) prospect for sales leads

D) meet objections and concerns

E) make the initial contact

Answer: C


Topic: Sales Process and Related Issues



50) Which of the following statements is untrue regarding a firm's sales process?

A) A formal sales process helps a firm fine tune its approach to sales and build uniformity into the process.

B) Following a formal or structured process to generate and close sales benefits a firm.

C) A "sales process" is equally valuable whether a firm is selling directly to customers or through intermediaries.

D) A firm's sales process depicts the steps it goes through to identify its target market.

E) A formal sales process involves a number of identifiable steps.

Answer: D


Topic: Sales Process and Related Issues


Objective: Explain the process of funding an entrepreneurial business venture

51) A firm's target market is the limited group of individuals or businesses that it goes after or tries to appeal to.

Answer: TRUE





52) The proper sequence in selecting a target market and positioning strategy is (1) craft a unique positioning strategy, (2) select a target market, and (3) segment the market.

Answer: FALSE





53) Markets can be segmented in a number of ways, including by product type, price point, distribution channel used, and customers served.

Answer: TRUE





54) A niche market is a place within a market segment that represents a narrow group of customers with similar interests.

Answer: TRUE





55) A firm's "position" is concerned with how it is situated relative to its rivals.

Answer: TRUE





56) A product attribute map illustrated the strength of a firm's niche (or target) market relative to competing markets.

Answer: FALSE





57) A tagline is a catchy phrase that's used consistently in a company's literature, advertisements, and even invoices and thus becomes associated with a companyto reinforce their position in the market.

Answer: TRUE





58) A brand is the set of attributespositive or negativethat people associate with a company.

Answer: TRUE


Topic: Branding



59) Creating buzz means creating awareness and a sense of anticipation about a company and its offerings.

Answer: TRUE


Topic: Branding



60) "Brand premium" is the term that denotes the set of assets and liabilities that are linked to a brand and enable it to raise a firm's valuation.

Answer: FALSE


Topic: Branding



61) A firm's marketing mix is the assortment of products and services that it sells.

Answer: FALSE





62) An important distinction should be made between a firm's core product and its actual product. While the core product may be a CD that contains an antivirus software program, the actual product may have a number of characteristics, include a quality level, features, design, a brand name, and packaging.

Answer: TRUE





63) A referent account is an early user of a firm's product who is willing to give a testimonial regarding his or her experience with the product.

Answer: TRUE





64) Price is the only element in the marketing mix that produces revenue; all other elements represent costs.

Answer: TRUE





65) In value-based pricing, the list price is determined by estimating what customers are willing to pay for a product and then backing off a bit to provide a cushion.

Answer: TRUE





66) Because of the weaknesses associated with advertising, most startups do not advertise their products broadly.

Answer: TRUE





67) The Google AdWords program allows advertisers to buy ads that will be shown on other Web sites instead of Google's Home Page.

Answer: FALSE





68) Many startups emphasize advertising over public relations primarily because it's cheaper and helps build the firm's credibility.

Answer: FALSE





69) Social plugins are tools that Web sites can use to provide users with personalized social experiences.

Answer: TRUE





70) A firm's sales process depicts the steps it goes through to identify prospects and close sales.

Answer: TRUE





71) What is the purpose of market segmentation? How are markets typically segmented? Can a company segment its market on more than one dimension?

Answer: The first step in selecting a target market is to study the industry in which the firm intends to compete and determine the different potential niche or target markets in that industry. This process is called market segmentation and is important because a new firm typically only has enough resources to target one market segment, at least initially. Markets can be segmented in many ways, such as by geography (city, state, country), demographic variables (age, gender, family size, income), behavioral variables (benefits sought, product usage rate, brand loyalty) and product type. Sometimes a firm segments its market on more than one dimension to drill down to a specific market that the firm thinks it is uniquely capable of serving. For example, in its market segmentation, GreatCall, the cell phone service provider for older people, probably segmented the cell phone market by age and by benefits sought. Helio (a cell phone designed for young people) likely used this same segmentation strategy by targeting younger users and featuring a more sophisticated set of options.





72) What is a tagline? Provide an example of a popular tagline, and discuss why you think it has been effective?

Answer: Firms often develop a tagline to reinforce the position they have staked out in their market, or a phrase that is used consistently in a company's literature, advertisements, promotions, stationery, and even invoices and thus becomes associated with that company. An example is Nike's familiar tagline, "Just do it." The Nike tagline implies that people don't need to be told they should exercisethey already know that. The challenge is to "Just do it." The beauty of this simple three-word expression is that it applies equally to a 21-year-old triathlete and a 65-year-old mall walker. This clever tagline, along with Nike's positioning strategy, helped it expand its product line beyond running shoes to athletic products for all age groups.





73) What is a brand? How does a new firm develop a brand?

Answer: A brand is the set of attributespositive or negativethat people associate with a company. These attributes can be positive, such as trustworthy and dependable, or they can be negative, such as cheap and unreliable. The customer loyalty a company creates through its brand is one of its most valuable assets. To develop a brand, a new firm must have meaning in its customers' livessomething for which customers are willing to pay. On a more pragmatic level, brands are built through a number of techniques, including advertising, public relations, sponsorships, and good performance.





74) Describe the concept of guerrilla marketing. Why is guerrilla marketing particularly suitable for entrepreneurial firms?

Answer: Guerrilla marketing is a low-budget approach to marketing that relies on ingenuity, cleverness, and surprise rather than traditional techniques. The point is to create awareness of a firm and its products, often in unconventional and memorable ways. Guerrilla marketing is particularly suitable for entrepreneurial firms, which are often on a tight budget but have creativity, enthusiasm, and passion to draw from. Firms often use very entertaining and engaging guerilla marketing techniques to build awareness for their products and services.





75) What is an exclusive distribution agreement? Why do firms enter into exclusive distribution agreements with other firms?

Answer: Exclusive distribution agreements give a retailer or other intermediary the exclusive rights to sell a company's products. The advantage to giving out an exclusive distribution agreement is to motivate a retailer or other intermediary to make a concerted effort to sell a firm's products without having to worry about direct competition. For example, if Nokia granted AT&T the exclusive rights to sell a new type of cell phone, AT&T would be more motivated to advertise and push the phone than if many or all cell phone companies had access to the same phone.





1Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 11

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