Deck 10: Strategies for Mature and Declining Markets

Question 1

The gap between management perceptions and service quality specifications occurs when:

A)A firm's policies concerning customer service are unclear or haphazardly enforced.
B)A firm does not have an accurate understanding of service evaluation by customers.
C)A firm's marketing communications causes unrealistically high expectations in customers.
D)A firm fails to give its employees adequate reward structures for good performance.

Answer 1

A

Question 2

Which of the following is not a method of maintaining a low-cost position?

A)innovative product design
B)reductions in overhead
C)no-frills products
D)superior customer service

Answer 2

D

Question 3

Identify the market characteristic that affirms growth extension in maturing markets through application of an extended use strategy.

A)insufficient competencies to pre-empt underdeveloped applications segments
B)relatively heterogeneous market with a variety of segments
C)relatively high penetration but low frequency of use in one or more major segments
D)relatively low penetration in one or more segments

Answer 3

C

Question 4

Fort Howard Paper achieved a cost advantage by being the first major papermaker to rely exclusively on recycled pulp.The firm's lower cost gave it a competitive edge in the price-sensitive commercial market for toilet paper and other such products used in hotels, restaurants and office buildings.Which method of maintaining a low-cost position has the company used?

A)low-cost distribution
B)cheaper raw materials
C)no-frills product
D)innovative product design

Question 5

This quality dimension refers to the absence of defects:

A)reliability
B)durability
C)brand equity and fit and finish
D)conformance to specifications

Question 6

National Motors manufactures high-end automobiles.The attributes of their cars include excellent handling, acceleration, comfort and braking, providing the company with an advantage over its competitors.Identify the product quality dimension of these cars.

A)reliability
B)performance
C)durability
D)serviceability

Question 7

'A business may survive and prosper during the growth stage even though it has neither differentiated its offering from competitors nor attained the lowest-cost position in its industry, but not so in the transition period.This is true of which strategic trap?

A)failure to recognise the events signalling the beginning of the shakeout period
B)getting caught in the transition period without a clear strategic advantage
C)failure to recognise the declining importance of product differentiation and the increasing importance of service
D)giving up market share too easily in favour of short-run profit

Question 8

Which of the following is not a factor that helps determine the strategic attractiveness of declining product markets?

A)time to market
B)conditions of demand
C)exit barriers
D)intensity of future competitive rivalry

Question 9

A harvesting strategy can be used in all the following situations except:

A)when rivalry among remaining competitors is likely to be very intense
B)when the market's decline is inevitable
C)when the market's decline is likely to occur at a relatively slow and steady rate
D)when a firm has a strong competitive position in the market at the start of the decline

Question 10

What is true of the transition from market growth to maturity?

A)often accompanied by a shakeout, during which weaker businesses fail<
B)almost always followed by a period of competitive inertia
C)often begins after the product has been introduced
D)characterised by competitors underestimating future sales volume

Question 11

The quality dimension of _____ refers to a customer's ability to obtain prompt and competent service when the product does break down.

A)serviceability
B)reliability
C)brand equity
D)durability

Question 12

To develop a differentiated positioning focused on untapped segments using a market expansion strategy, a firm should:

A)encourage larger volume purchases for non-perishable products
B)stimulate additional primary demand by promoting new features
C)develop a differentiated flanker brand with more appealing unique features
D)move storage of the product closer to the point of end use by offering additional package sizes

Question 13

Which statement is most indicative of a maturing market?

A)Total sales volume stabilises.
B)First-time buyers account for a vast majority of sales volume.
C)The primary objective of firms is to find new markets for existing products.
D)Managers face the critical question of whether to divest or liquidate the company.

Question 14

Financial dimensions of performance are usually of greater interest than growth-oriented dimensions to defender businesses because they are concerned with:

A)maximising profitability over the remaining life of their existing product markets
B)creating new opportunities in one or more mature market segments
C)volume increases or new product success
D)passively defending their mature products

Question 15

Failure in anticipating transition from growth to maturity leads to all of the following consequences except:

A)Firms expand rapidly and production capacity overshoots demand as growth slows.
B)Firms reduce prices or increase promotion to increase their sales volume.
C)Firms experience large technological differentials as competitors leave the market.
D)Firm may make overly optimistic forecasts of future sales volume.

Question 16

A period of competitive turbulence almost always accompanies the transition from market ______ in an industry.

A)growth to maturity
B)maturity to decline
C)peak to slowdown
D)maturity to growth

Question 17

The higher the ____, the less hospitable a product market will be during the decline phase of its life cycle.

A)switching cost for consumers
B)brand equity
C)economies of scale
D)exit barrier

Question 18

Conditions of demand, factors that help determine the strategic attractiveness of declining product markets, include demand characteristics such as the rate and the certainty of sales decline.What observation is true of the market conditions being affected by these characteristics?

A)A slow and gradual decline allows an orderly withdrawal of weaker competitors.
B)Overcapacity is more likely to become excessive and lead to predatory competitive behaviour.
C)Competitors who remain are less likely to make profits than in a quick or erratic decline.
D)Reduction of capacity is more likely to be erratic when industry managers believe market decline is predictable.

Question 19

The production of no frills goods to maintain a low-cost position:

A)involves removing all extras from the basic product or service
B)involves the use of customised component parts
C)always involves short-term profits through the use of inexpensive labour
D)involves replacing technology to personalised services

Question 20

A successful increased penetration strategy depends on discovering why non-users are uninterested in the product.Often, consumers do not perceive enough value in the product.Which of the following is not a suitable solution to enhance product value?

A)Add features or benefits, usually via line extensions.
B)Develop and sell integrated systems that help improve the basic product's performance or ease of use.
C)Offer services that improve its performance or ease of use for the potential customer.
D)Develop more convenient and accessible channels of distribution.

Question 21

Whereas there are eight dimensions of product quality there are only four dimensions of service quality, these being responsiveness, assurance, tangibles and empathy.

Question 22

A business may enhance a product's value by offering services that improve its performance or ease of use for the potential customer.Which of the following is an example of this?

A)the Australian Football League in Australia including Mandarin speakers in radio broadcasts to attract other ethnic groups
B)the removal of full-size spare tyres in motor vehicles
C)the deletion of product features
D)price increases

Question 23

Write a brief note on the profitable survivor strategy.Explain the conditions most appropriate for its use.

Question 24

The results of a number of surveys suggest that customers perceive all five dimensions of service quality to be very important regardless of the kind of service being evaluated.

Question 25

There are three strategies that a marketing manager can deploy in a declining market: a harvesting strategy, a maintenance strategy, a profitable survivor strategy.

Question 26

Which of the following is not a strategic trap businesses can fall into during the shake-out period?

A)failure to anticipate transition from growth to maturity
B)no clear competitive advantage as growth slows
C)assumption that an early advantage will insulate the business from price or service competition
D)not sacrificing market share in favour of short-run profit

Question 27

The biggest challenge for many managers in developed nations in future years will be making money in markets that grow slowly, if at all.

Question 28

In a mature market where few new customers buy the product for the first time, the business must continue to win its share of repeat purchases from existing customers.

Question 29

A primary marketing objective of all competitors in mature markets is simply to hold their existing customers-to sustain a meaningful competitive advantage that will help ensure the continued satisfaction and loyalty of those customers.

Question 30

At the most basic level, a business can attempt to differentiate its offering from competitors' by offering either superior product quality or superior service but not both.

Question 31

There are four common strategic traps that businesses need to avoid in order to survive the shake-out transition period from market growth to maturity.

Question 32

Regarding businesses in mature markets, the choice between a differentiation or a low-cost strategy is the critical determinant of success.

Question 33

The determinants of perceived service quality model has five gaps that can lead to dissatisfaction with service delivery.

Question 34

What are analyser and defender strategies? How are they similar and dissimilar from each other? List the conditions most appropriate for their use.

Question 35

Businesses should strive during the early years of market maturity to maximise the flow of profits over the remaining life of the product market.