Deck 3: Market Potential, market Demand, and Market Share

Question 1

At any point in time,a business has an existing pool of current and prospective customers who make up current market demand and a potential pool of prospective customers who provide the opportunity to grow market demand.

Answer 1

True

Question 2

A broad market definition differs from a narrow market definition in that a broad market definition ________.

A)includes the articulated needs of customers
B)includes all potential substitute products
C)results in unfulfilled market potential
D)enables managers to define their markets on the basis of the customers they currently serve
E)limits managers' perceptions and strategies

Answer 2

B

Question 3

One key benefit provided by a broad market definition is that it concentrates a business' focus on articulated customer needs.

Answer 3

False

Question 4

The annual NMCs grow and eventually peak in the early growth stage of the product life cycle.

Question 5

Adding the market development index and share development index to a sales forecast provides a way to understand the potential for future sales growth.

Question 6

A broad market definition includes all potential substitute products.

Question 7

A market definition that is limited to a particular product focus concentrates on ________ needs of customers.

A)unserved
B)future
C)articulated
D)unarticulated
E)hidden

Question 8

One disadvantage of the market share index is that it does not identify important sources of lost market share opportunity.

Question 9

The more similar one market is to another,the less likely the possibility that consumers will substitute products.

Question 10

New product-market penetration is determined by customer and product adoption forces.

Question 11

The ratio of total sales to current market demand is known as the share development index (SDI).

Question 12

A narrow market definition,one adopted by design,is not always a limitation.

Question 13

Three fundamental forces that capture the shape of the market growth curve and the rate of market growth are market potential,market penetration,and the rate at which new customers enter the market.

Question 14

Developing a broad vision of a market is the first step in understanding market demand.

Question 15

A positive NMC is the result of marketing and sales expenses exceeding gross profit during the introduction stage of the product life cycle.

Question 16

Which of the following is true of businesses with a narrow market vision?

A)Their view of market demand enables them to recognize emerging market opportunities.
B)Their view of market demand enables them to achieve maximum market potential.
C)They have the ability to see unserved needs that no one is addressing.
D)They do not see beyond the articulated needs of served customers.
E)They include all potential substitute products.

Question 17

New customers will be hard to find,once a market reaches ________.

A)the rapid growth stage
B)the early growth stage
C)its lowest market potential
D)its tipping point
E)saturation

Question 18

A broad market vision enables a business to see unserved needs that no one is addressing.

Question 19

Which of the following is true about market potential?

A)It refers to the number of customers who purchase a specific product at a given point in time.
B)It refers to the upper limit of the market demand for any technology.
C)It is preferable to use a time horizon greater than 10 years,while estimating a market's potential,as market potential remains constant over time.
D)It is easy to locate published information on the market potential for any given market.
E)It is easier to find new customers after a market reaches its full potential.

Question 20

For any technology,the market demand has an upper limit that can be exceeded without a change in technology or a new way of using the product.

Question 21

What is the current market demand for Valiant running shoes if its market development index is 64 and its market potential is 480 million?

A)1333.3 million
B)307.2 million
C)750 million
D)172.8 million
E)721.8 million

Question 22

Ryan's friends consider him an expert on electronic products.Ryan purchased quick read,one of the first electronic books launched by EasyTech Inc.years before any of his friends did.Ryan paid four times more for this product than they did.He wanted the benefits of an electronic book and was not concerned that his friends thought he was foolish to buy electronic reader when they first came out on the market.For EasyTech Inc. ,John is most likely to be classified as a(n)________ customer.

A)captive
B)lead
C)mainstream
D)laggard
E)early majority

Question 23

The last customers to adopt a new product or service are called ________.

A)early adopters
B)early majority customers
C)late majority customers
D)laggards
E)innovators

Question 24

________ customers are quality conscious,fairly well informed,and somewhat price sensitive.

A)Early majority
B)Early adopters
C)Innovators
D)Laggards
E)Late majority

Question 25

Which of the following refers to change along the technology innovation curve that allows for the development of products that are less expensive,smaller,and often easier to use?

A)discontinuous innovation
B)disruptive innovation
C)continuous innovation
D)end-user innovation
E)radical innovation

Question 26

Calculate the market potential of Royston light bulbs if it has a current market demand of 150 million bulbs at a market development index of 30.

A)45 million
B)4,500 million
C)50 million
D)500 million
E)450 million

Question 27

The market development index is equal to the ________.

A)product of current market demand and market potential
B)ratio of market potential and market growth
C)ratio of the current market demand to net marketing expenditure
D)ratio of current market demand to market potential
E)product of market potential and market growth

Question 28

Disruptive innovation differs from discontinuous innovation in that disruptive innovation ________.

A)refers to a major shift from an old technology
B)usually offers new customer benefits
C)refers to change along the technology innovation curve
D)refers to the development of technology and improved products for a given product market
E)allows for the development of products that are more expensive

Question 29

Which of the following groups of customers are characterized as skeptics,who wait to see whether the product or service will really deliver meaningful benefits ?

A)innovators
B)laggards
C)early majority
D)late majority
E)early adopters

Question 30

Which of the following terms refers to the development of technology and improved products for a given product market?

A)discontinuous innovation
B)radical innovation
C)continuous innovation
D)market penetration
E)market development

Question 31

Customers in the mainstream market are ________.

A)less dependent on what others think than are most people
B)less willing to put up with less-than-complete solutions
C)more knowledgeable than the average customer
D)less price sensitive than the average customer
E)the first set of buyers for a new product or service

Question 32

Which of the following terms refers to the number of customers who have entered a market at a certain point in time?

A)current market potential
B)market penetration
C)maximum market entry
D)market potential index
E)rate of entry

Question 33

During the ________ stage of the product life cycle,the negative NMC is the result of marketing and sales expense exceeding the gross profits.

A)introduction
B)middle growth
C)late growth
D)maturity
E)decline

Question 34

Which of the following results in a major shift from an old technology to a new technology that usually offers new customer benefits?

A)discontinuous innovation
B)disruptive innovation
C)continuous innovation
D)market penetration
E)market development

Question 35

Which of the following is true about lead customers?

A)They are more price sensitive.
B)They are benefit driven.
C)They possess less market knowledge.
D)They are more dependent on what others do or think than most people.
E)They do not purchase products that the mainstream market does not buy.

Question 36

Calculate the market development index if the current market demand of the product is 240 million and the potential for market growth is 400 million.

A)60
B)80
C)160
D)166.67
E)640

Question 37

When a market reaches the maturity stage ________.

A)gains in volume can be achieved only with gains in market share
B)the volume is derived from both market demand and market share
C)declining volumes are avoidable
D)rate of growth increases
E)the net marketing contribution is negative

Question 38

Which of the following is a customer adoption force?

A)felt need
B)affordability
C)easy of use
D)preferred availability
E)desired performance

Question 39

The maximum number of customers who can enter the market given a specific served market definition is known as ________.

A)market penetration
B)market potential
C)rate of entry
D)current market demand
E)market diversification

Question 40

Which of the following is a product adoption force affecting new product penetration?

A)felt need
B)personal risk
C)ease of use
D)trialability
E)observability

Question 41

If a company sold 54 million units of a particular product,which represents a 6% market share,calculate the market demand for the product.

A)900 million
B)90 million
C)9 million
D)324 million
E)648 million

Question 42

A business' sales are the product of ________.

A)average selling price and average margin percentage
B)market potential and market demand
C)market demand in units and price per unit
D)market share and price per unit
E)market demand in units and market share

Question 43

Calculate the share potential index if a business is achieving a share development index of 45 at a market share index of 25%.

A)20%
B)55.6%
C)70%
D)35%
E)60%

Question 44

Modern Shades,a firm that manufactures cosmetic products for women,should have had a market share of 8% in the cosmetics market,but owing to a variety of other factors,its actual market share was only 5%.Furthermore,it was estimated that the business' market share index potential would be 15% if the business achieved the desired level of customer response along the share development path.What is Modern Lip's share development index (SDI)?

A)20
B)33.3
C)53.3
D)67.5
E)86.7

Question 45

Calculate the total volume of music players sold by MyTunes Inc.if the total market demand is 280 million units and the company has a 15% market share.

A)42 million units
B)96 million units
C)136 million units
D)180 million units
E)238 million units

Question 46

Share development index is the ratio of ________.

A)market share index and share potential index
B)current performance and potential performance
C)market demand and market share
D)volume sold and market share
E)current market demand and market potential

Question 47

Prices tend to flatten out as products reach the ________ stage of the product life cycle.

A)early growth
B)maturity
C)late growth
D)decline
E)introduction

Question 48

If a business had a 100 percent market share,then ________.

A)it would be unable to achieve full market potential
B)it would see beyond the articulated needs of served customers
C)its sales would equal the market demand
D)its net marketing contribution would be negative
E)marketing and sales expenses would exceed gross profit

Question 49

If 63% of consumers are aware of JM Manufacturers Inc.'s 3-D television,38% of that group likes the product's benefit,54% of that group finds the price acceptable,21% of that group intend to buy the product,and 48% of that group actually purchase the product from JM Manufacturers,then the share potential index for the 3-D television is ________.

A)1.3%
B)2.7%
C)3.4%
D)6.2%
E)10.1%

Question 50

If 75% of consumers are aware of Ace Motors' newly launched line of hybrid cars called the Opus,and 45% of that group likes the product's benefit,and 44% of that group finds the price acceptable,and 51% of that group intends to buy the product in their local market,and 75% of that group actually purchase the product from Ace Motors and its dealers,then the market share index for the Opus is ________.

A)1.2%
B)3.6%
C)5.7%
D)7.5%
E)12.9%

Question 51

The share development index is equal to ________.

A)market share index multiplied by share potential index
B)market share index divided by share potential index
C)market share index divided by the total volume of units sold
D)share potential index divided by the total volume of units sold
E)share potential index multiplied by the total volume of units sold

Question 52

MINI-CASE
Ace Motors recently introduced a hybrid automobile named Opus.Since its introduction,this offering has achieved a 1.2% market share in this market.Ace Motors has conducted research in an effort to assess its opportunity for market share development.The table below indicates consumers' current response at each step along the share performance path for Ace Motors' Opus hybrid automobile as well as the potential performance for each of the share performance metrics:

Mini-Case Question.What is Opus's market share potential index?

A)6.2%
B)14%
C)20.2%
D)31.5%
E)38.9%

Question 53

Calculate the market share index of a business if its share development index is 85 and it has a share potential index of 12.2%.

A)87.8%
B)74.6%
C)14.4%
D)12.2%
E)10.4%

Question 54

A valuable planning matrix that will reveal opportunities of growth can be created by combining the ________.

A)market development index with the share development index
B)market share index with the share potential index
C)market share index with the share development index
D)current market demand with the market potential
E)current market demand with the market development index

Question 55

Compare and contrast a narrow market definition with a broad market definition.List three key benefits of using a broad market definition.

Question 56

A business is achieving 36% of its potential market share performance at a share potential index of 24%.Calculate the business's market share index.

A)60%
B)8.6%
C)12%
D)66.7%
E)30%

Question 57

MINI-CASE
Ace Motors recently introduced a hybrid automobile named Opus.Since its introduction,this offering has achieved a 1.2% market share in this market.Ace Motors has conducted research in an effort to assess its opportunity for market share development.The table below indicates consumers' current response at each step along the share performance path for Ace Motors' Opus hybrid automobile as well as the potential performance for each of the share performance metrics:

Mini-Case Question.What is Opus's current market share index?

A)-14%
B)1.2%
C)5.9%
D)6.2%
E)20.2%

Question 58

Which of the following is true of the product life cycle?

A)In the early stages of the product life cycle,the NMC is positive.
B)As the product moves into the declining stage,it reaches a break-even NMC.
C)As the market matures,flat market demand,and lowered marketing and sales expenses results in higher NMCs.
D)At a break-even NMC,the gross profit is equal to the marketing and sales expenses.
E)At the early growth stage,the annual NMCs grow and eventually peak.

Question 59

MINI-CASE
Ace Motors recently introduced a hybrid automobile named Opus.Since its introduction,this offering has achieved a 1.2% market share in this market.Ace Motors has conducted research in an effort to assess its opportunity for market share development.The table below indicates consumers' current response at each step along the share performance path for Ace Motors' Opus hybrid automobile as well as the potential performance for each of the share performance metrics:

Mini-Case Question.Calculate the share performance gap between the actual and desired customer response.

A)-14%
B)-6.2%
C)6.2%
D)14%
E)20.2%

Question 60

Discuss three customer adoption forces and three product adoption forces affecting new product-market penetration.