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Chapter 2—Strategic Planning in Contemporary Marketing

TRUE/FALSE

1. The planning process identifies objectives and determines which actions are needed to attain
those objectives.

ANS: T PTS: 1 DIF: 1 REF: 37

OBJ: 2-1
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing decision-making processes
MSC: KN

2. The planning process creates a blueprint that everyone in the organization must follow in order
to achieve the organizational objectives.

ANS: T PTS: 1 DIF: 1 REF: 37

OBJ: 2-1
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing decision-making processes
MSC: KN

3. The planning process defines checkpoints at which the organization can compare actual
performance with expectations to indicate whether current activities are close to achieving
organizational objectives.

ANS: T PTS: 1 DIF: 2 REF: 37

OBJ: 2-1
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing decision-making processes
MSC: KN

4. Marketing planning establishes the basis for a firm's overall strategy.

ANS: F PTS: 1 DIF: 2 REF: 38

OBJ: 2-1
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

5. Relationship-building goals and strategies are seldom included in the plans of business firms.

ANS: F PTS: 1 DIF: 1 REF: 39

OBJ: 2-1
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN
6. Good relationships with customers can equip a firm with vital strategic weapons.

ANS: T PTS: 1 DIF: 1 REF: 39

OBJ: 2-1
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

46
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
 Strategic Planning in Contemporary Marketing

7. Strategic planning has a critical impact on a firm's destiny because it provides short-term direction
for decision makers.

ANS: F PTS: 1 DIF: 1 REF: 39

OBJ: 2-1
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

8. The strategic planning process involves allocation of necessary resources.

ANS: T PTS: 1 DIF: 1 REF: 39

OBJ: 2-1
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

9. Tactical planning involves actions that focus on current and near-future activities that must
be completed in order to implement larger strategies.

ANS: T PTS: 1 DIF: 2 REF: 39

OBJ: 2-1
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

10. Tactical planning usually involves the production of quarterly and semi-annual plans, along
with divisional budgets, policies, and procedures.

ANS: T PTS: 1 DIF: 2 REF: 40

OBJ: 2-2
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

11. Middle and supervisory-level managers spend less time as compared to CEOs on planning activities.

ANS: T PTS: 1 DIF: 1 REF: 40

OBJ: 2-2
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing decision-making processes
MSC: KN

12. The chief executive officer (CEO) and vice president of marketing spend a greater proportion of
their time on operational planning than do managers at other organizational levels.

ANS: F PTS: 1 DIF: 2 REF: 40

OBJ: 2-2
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing administration & control
MSC: KN

47
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
 Strategic Planning in Contemporary Marketing

13. Operational planning that involves the creation and implementation of tactical plans for the
departments within an organization is primarily the responsibility of top-level management.

ANS: F PTS: 1 DIF: 2 REF: 40

OBJ: 2-2
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing administration & control
MSC: KN

14. The advertising director, marketing research manager, and other middle-level managers should be
involved in planning fundamental organization-wide strategies and the corporate budget.

ANS: F PTS: 1 DIF: 2 REF: 40

OBJ: 2-2
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing administration & control
MSC: KN

15. Organization-wide objectives, fundamental strategies, long-term plans, and total budget
formulation are examples of strategic planning activities handled by top management.

ANS: T PTS: 1 DIF: 2 REF: 40

OBJ: 2-2
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing administration & control
MSC: KN

16. To be most effective, the planning process should include input from a wide range of sources
both internal and external to the organization.

ANS: T PTS: 1 DIF: 1 REF: 40

OBJ: 2-2
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

17. As the senior vice-president of marketing, Naomi will be closely involved in her firm’s
strategic planning.

ANS: T PTS: 1 DIF: 2 REF: 40

OBJ: 2-2
NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Managing administration
& control MSC: AP

18. Middle-level managers tend to focus on strategic planning, which includes creating and
implementing tactical plans for their own units.

ANS: F PTS: 1 DIF: 2 REF: 40

OBJ: 2-2
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

48
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
 Strategic Planning in Contemporary Marketing

19. The planning process begins at the corporate level with the development of objectives.

ANS: F PTS: 1 DIF: 1 REF: 41

OBJ: 2-3
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing decision-making processes
MSC: KN

20. A firm's mission statement specifies its overall goals and operational scope and provides
general guidelines for future management actions.

ANS: T PTS: 1 DIF: 1 REF: 41

OBJ: 2-3
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing decision-making processes
MSC: KN

21. Organizations within the same industry usually have the same mission.

ANS: F PTS: 1 DIF: 2 REF: 41

OBJ: 2-3
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing decision-making processes
MSC: KN

22. Adjustments to a firm's mission statement typically occur during stable business environments and
unchanging management philosophies.

ANS: F PTS: 1 DIF: 1 REF: 41

OBJ: 2-3
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing decision-making processes
MSC: KN

23. A firm describes its overall goals and operational scope in its organization chart.

ANS: F PTS: 1 DIF: 1 REF: 41

OBJ: 2-3
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing decision-making processes
MSC: KN

24. In general, a mission statement can be described as a qualitative statement, whereas an objective
is often a quantitative statement.

ANS: T PTS: 1 DIF: 2 REF: 41

OBJ: 2-3
NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Managing decision-
making processes MSC: KN

49
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
 Strategic Planning in Contemporary Marketing

25. Statements such as “increase market share by 25 percent by 2009” or “open 50 to 75 new stores for
each of the next five years” are typically part of mission statements.

ANS: F PTS: 1 DIF: 2 REF: 41

OBJ: 2-3
NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Managing decision-
making processes MSC: AP

26. The second step in the planning process is corporate development of the organization's objectives.

ANS: T PTS: 1 DIF: 1 REF: 41

OBJ: 2-3
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing decision-making processes
MSC: KN

27. Detailed organizational objectives should state specific intentions, such as "Snapple Corporation seeks to
increase its share of the non-carbonated soft drink market to 25 percent within the next two years."

ANS: T PTS: 1 DIF: 2 REF: 41

OBJ: 2-3
NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Managing decision-
making processes MSC: AP

28. Well-phrased business objectives should specify time horizons for specific achievements, such as "It
is anticipated we will achieve our $77 million sales objective by March 31, 2009."

ANS: T PTS: 1 DIF: 2 REF: 41

OBJ: 2-3
NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Managing decision-
making processes MSC: AP

29. The third step of the planning process is to assess an organization’s strengths, weaknesses,
and available opportunities.

ANS: T PTS: 1 DIF: 2 REF: 42

OBJ: 2-3
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing decision-making processes
MSC: KN

30. Marketing strategy is an overall company-wide program for selecting a particular target market
and satisfying consumers through a careful blend of the elements of the marketing mix.

ANS: T PTS: 1 DIF: 1 REF: 42

OBJ: 2-3
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

50
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
 Strategic Planning in Contemporary Marketing

31. Each element of the marketing mix - product, price, distribution, and promotion - is a subset of the
overall marketing strategy.

ANS: T PTS: 1 DIF: 2 REF: 42

OBJ: 2-3
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

32. Strategies are static and, once implemented, should not be changed if the actual performance does
not meet the desired results.

ANS: F PTS: 1 DIF: 1 REF: 42

OBJ: 2-3
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

33. In the two final steps of the planning process, marketers put the marketing strategy into action;
then they monitor performance to ensure that objectives are being achieved.

ANS: T PTS: 1 DIF: 1 REF: 42

OBJ: 2-3
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

34. Planning strategies are influenced by the elements of Porter’s Five Forces model.

ANS: T PTS: 1 DIF: 1 REF: 43

OBJ: 2-4
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

35. Porter’s Five Forces are potential new entrants, bargaining power of buyers, bargaining power
of suppliers, threat of substitute products, and rivalry among competitors.

ANS: T PTS: 1 DIF: 2 REF: 43

OBJ: 2-4
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

36. The Internet has impacted business for new firms by increasing the barriers to market entry.

ANS: F PTS: 1 DIF: 1 REF: 44

OBJ: 2-4
NAT: AACSB Technology | CB&E Model Marketing Plan | R&D Knowledge of technology, design,
& production MSC: KN

51
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
 Strategic Planning in Contemporary Marketing

37. The number of suppliers available to a manufacturer or retailer affects the bargaining power of buyers.

ANS: F PTS: 1 DIF: 1 REF: 44

OBJ: 2-4
NAT: AACSB Analytic | CB&E Model Strategy | R&D Managing strategy & innovation
MSC: KN

38. Consumers can now obtain detailed pricing information on the Internet, which has increased
their bargaining power with car dealers.

ANS: T PTS: 1 DIF: 2 REF: 44

OBJ: 2-4
NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Knowledge of technology,
design, & production MSC: AP

39. Apple iTunes is an example of a successful first mover.

ANS: T PTS: 1 DIF: 1 REF: 45

OBJ: 2-4
NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Managing strategy &
innovation MSC: AP

40. Data suggests that business owners who adopt the first mover strategy will always be long-term
market winners.

ANS: F PTS: 1 DIF: 2 REF: 45

OBJ: 2-4
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

41. The idea of first movers being completely replaced by second movers and the resulting
disappearance of first movers from the marketplace is a myth.

ANS: F PTS: 1 DIF: 2 REF: 45

OBJ: 2-4
NAT: AACSB Analytic | CB&E Model Strategy | R&D Managing strategy & innovation
MSC: KN

42. SWOT analysis refers to examination of a firm's stability, work ethic, organizational structure,
and technological expertise.

ANS: F PTS: 1 DIF: 1 REF: 45

OBJ: 2-4
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

52
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
 Strategic Planning in Contemporary Marketing

43. A SWOT analysis helps planners compare internal organizational strengths and weaknesses
with external opportunities and threats.

ANS: T PTS: 1 DIF: 1 REF: 45

OBJ: 2-4
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

44. Core competencies are actions done well by a firm that its customers value and competitors
find difficult to duplicate.

ANS: T PTS: 1 DIF: 1 REF: 45

OBJ: 2-4
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

45. Matching an external opportunity with an internal weakness produces a situation known as leverage.

ANS: F PTS: 1 DIF: 2 REF: 45

OBJ: 2-4
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

46. In a SWOT analysis, marketers face a problem when environmental threats attack their
organization's weaknesses.

ANS: T PTS: 1 DIF: 2 REF: 45

OBJ: 2-4
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

47. SWOT analysis provides an uncritical view of an organization's internal and external environments
to managers and helps them evaluate the firm's fulfillment of its basic objectives.

ANS: F PTS: 1 DIF: 2 REF: 45

OBJ: 2-4
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

48. A strategic window represents an extended period of time during which the key requirements of
a market and the particular competencies of a firm best fit together.

ANS: F PTS: 1 DIF: 2 REF: 46

OBJ: 2-4
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

53
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
 Strategic Planning in Contemporary Marketing

49. A customer-driven organization begins its marketing strategy with a detailed description of its
target market.

ANS: T PTS: 1 DIF: 1 REF: 47

OBJ: 2-5
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

50. A target market is a group of customers toward whom a firm directs its marketing efforts.

ANS: T PTS: 1 DIF: 1 REF: 47

OBJ: 2-5
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

51. Diversity in the U.S. population plays an increasing role in targeting markets.

ANS: T PTS: 1 DIF: 1 REF: 48

OBJ: 2-5
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

52. Technology is changing the distribution methods of traditional print media. If corporations change
their strategic plans to account for distribution variables in the marketing mix, there will be changes
to the remaining three variables in the marketing mix, as well.

ANS: T PTS: 1 DIF: 3 REF: 48

OBJ: 2-5
NAT: AACSB Technology | CB&E Model Distribution | R&D Managing logistics & technology
MSC: AP

53. The Barnes & Noble Web site, which sells books, CDs, and DVDs is an example of a
traditional retailer responding to distribution opportunities afforded by new technologies.

ANS: T PTS: 1 DIF: 2 REF: 49

OBJ: 2-5
NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics &
technology MSC: AP

54. The ability to download Microsoft and IBM software products directly from the Internet is part of
each firms' pricing strategy.

ANS: F PTS: 1 DIF: 2 REF: 49

OBJ: 2-5
NAT: AACSB Reflective Thinking | CB&E Model Distribution | R&D Managing logistics &
technology MSC: AP

54
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
 Strategic Planning in Contemporary Marketing

55. As part of the communication link between buyers and sellers, organizations may communicate
promotional messages directly through salespeople or indirectly using advertisements and promotions.

ANS: T PTS: 1 DIF: 2 REF: 49

OBJ: 2-5
NAT: AACSB Analytic | CB&E Model Promotion | R&D Knowledge of media communications &
delivery MSC: KN

56. Pricing strategy is an area of marketing that is not closely regulated or subject to public scrutiny.

ANS: F PTS: 1 DIF: 2 REF: 50

OBJ: 2-5
NAT: AACSB Analytic | CB&E Model Pricing | R&D Managing strategy & innovation
MSC: KN

57. Fred’s Wholesale Club sends emails and catalogs to all members. Additionally, in-store pamphlets
promote the benefits of certain products. All of these materials are part of the integrated marketing
communications intended to send a consistent and unified promotional message.

ANS: T PTS: 1 DIF: 2 REF: 50

OBJ: 2-5
NAT: AACSB Reflective Thinking | CB&E Model Promotion | R&D Knowledge of media
communications & delivery MSC: AP

58. The five dimensions of the marketing environment are competitive, political-legal,
economic, technological, and social-cultural.

ANS: T PTS: 1 DIF: 1 REF: 50

OBJ: 2-6
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing the task environment
MSC: KN

59. Marketers make decisions about target markets and marketing mix variables in a vacuum, without
taking into account the dynamic nature of the five dimensions of the marketing environment.

ANS: F PTS: 1 DIF: 2 REF: 50

OBJ: 2-6
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing the task environment
MSC: KN

60. Toyota’s introduction of the hybrid-powered Prius is an example of how it has turned public
concerns and legal issues about the natural environment into an opportunity.

ANS: T PTS: 1 DIF: 1 REF: 51

OBJ: 2-6
NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Managing the task
environment MSC: AP

55
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
 Strategic Planning in Contemporary Marketing

61. The rule of three states that the third company in an industry has little chance of survival.

ANS: F PTS: 1 DIF: 1 REF: 51

OBJ: 2-6
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Knowledge of general business
functions MSC: KN

62. One reason for organizing into strategic business units (SBUs) is to help a company make decisions
about which product lines warrant commitment of additional resources and which should be
removed from the firm's portfolio.

ANS: T PTS: 1 DIF: 2 REF: 53

OBJ: 2-7
NAT: AACSB Reflective Thinking | CB&E Model Marketing Plan | R&D Managing strategy &
innovation MSC: AP

63. Strategic business units (SBUs) of a diversified firm have common managers, resources,
objectives, and competitors.

ANS: F PTS: 1 DIF: 1 REF: 53

OBJ: 2-7
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

64. Each (strategic business unit) SBU in a firm prepares its plans in collaboration with other units in
the organization.

ANS: F PTS: 1 DIF: 1 REF: 53

OBJ: 2-7
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

65. Each strategic business unit (SBU) of a diversified company pursues the company mission; it has
no specific mission of its own.

ANS: F PTS: 1 DIF: 1 REF: 53

OBJ: 2-7
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

66. Strategic business units (SBUs) focus the attention of company managers so they can
respond effectively to changing consumer demand within limited markets.

ANS: T PTS: 1 DIF: 2 REF: 53

OBJ: 2-7
NAT: AACSB Analytic | CB&E Model Marketing Plan | R&D Managing strategy & innovation
MSC: KN

56
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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