Chapter 05 - Capabilities for Learning about Customers and Markets

Strategic Marketing 10th Edition Cravens

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Chapter 05
Capabilities for Learning About Customers and Markets

True/False Questions

1. Investments in enhancing and shaping interpretation may create a more durable competitive
advantage than investments in obtaining additional information.
Answer: True
Difficulty: Easy
Page: 133

2. Market sensing is concerned with the ability of organizations to continuously learn about
their markets, and acts as an antecedent to market orientation.
Answer: True
Difficulty: Easy
Page: 134

3. Market orientation is both a culture and a process committed to achieving superior supplier
value.
Answer: False
Difficulty: Easy
Page: 134

4. Searching for latent customer needs primarily involves understanding customer needs
through interaction with front-line employees who are in direct contact with customers.
Answer: False
Difficulty: Easy
Page: 135

5. Market-driven organizations are primarily interested in static events, rather than factors that
cause change, in the markets.
Answer: False
Difficulty: Easy
Page: 135

6. Knowledge intensity identifies both market risk and new opportunities for growth.
Answer: True
Difficulty: Easy
Page: 135
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Chapter 05 - Capabilities for Learning about Customers and Markets

7. The markets are best understood if the firm has a fixed view on what information will
influence the firm.
Answer: False
Difficulty: Easy
Page: 137

8. Unbundling information from its physical carrier will provide access as well as speed in
organizations.
Answer: True
Difficulty: Easy
Page: 138

9. Market-oriented firms emphasize enhanced operating efficiency and reduced costs through
automating information processing.
Answer: False
Difficulty: Easy
Page: 151

10. Typically, the MIS does not interact in the decision-making process and is primarily used
in collecting data.
Answer: True
Difficulty: Easy
Page: 153

Multiple Choice Questions

11. Strategic _____ refers to a firm’s awareness of what is happening and what is going to
happen next, as a basis for rapidly developing effective responses to change or new
opportunities.
A. sensitivity
B. alliance
C. equity
D. network optimization
Answer: A
Difficulty: Easy
Page: 132

12. Strategic _____ refers to a firm’s capability to consistently identify and seize
opportunities more quickly and effectively than rivals.
A. alliance
B. agility
C. stock
D. equity
Answer: B
Difficulty: Easy

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Chapter 05 - Capabilities for Learning about Customers and Markets

Page: 132

13. _____ is a key capability of the market-driven organization, concerned with the ability of
organizations to continuously learn about their markets, and acts as an antecedent to market
orientation.
A. Market penetration
B. Market capitalization
C. Market sensing
D. Market segmentation
Answer: C
Difficulty: Easy
Page: 134

14. _____ is both a culture and a process that consists of information acquisition, broad
information dissemination, and shared diagnosis leading to coordinated action.
A. Market liquidity
B. Market valuation
C. Market capitalization
D. Market orientation
Answer: D
Difficulty: Easy
Page: 134

15. The market sensing process of _____ helps to study and understand changes that occur in
the markets and avoid complacency in reacting to such changes.
A. building open-minded inquiry
B. analyzing competitors' actions
C. listening to front-line employees
D. searching for latent customer needs
Answer: A
Difficulty: Easy
Page: 135

16. The market sensing process of _____ gives detailed attention to rivals' tactics and
strategies to develop understanding of their plans and capabilities.
A. building open-minded inquiry
B. analyzing competitors' actions
C. listening to front-line employees
D. searching for latent customer needs
Answer: B
Difficulty: Easy
Page: 135

17. The market sensing process of _____ includes motivating the involvement of staff who
are in contact with customers in building understanding of change, new opportunities and
threats.

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Chapter 05 - Capabilities for Learning about Customers and Markets

A. building open-minded inquiry

B. analyzing competitors' actions
C. listening to front-line employees
D. searching for latent customer needs
Answer: C
Difficulty: Easy
Page: 135

18. The market sensing process of _____ includes finding discontent through dialogue,
observation, and engagement with clients.
A. building open-minded inquiry
B. analyzing competitors' actions
C. listening to front-line employees
D. searching for latent customer needs
Answer: D
Difficulty: Easy
Page: 135

19. The market sensing process of _____ includes actively looking for new opportunities in
the market.
A. scanning the periphery of the market
B. encouraging experimentation
C. listening to front-line employees
D. searching for latent customer needs
Answer: A
Difficulty: Easy
Page: 135

20. The market sensing process of _____ includes building a culture and process around
continuous curiosity and new ideas.
A. scanning the periphery of the market
B. encouraging experimentation
C. listening to front-line employees
D. searching for latent customer needs
Answer: B
Difficulty: Easy
Page: 135

21. Megagro, a groceries retail chain, demonstrated the market sensing process of _____
when it hired researchers to survey the refrigerator contents and lifestyles of 90 families—
checking average family size, gross family income, what the families ate for breakfast, and
how often they shopped for groceries.
A. scanning the periphery of the market
B. encouraging experimentation
C. searching for latent customer needs
D. analyzing competitors’ actions

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Chapter 05 - Capabilities for Learning about Customers and Markets

Answer: C
Difficulty: Challenging
Page: 135

22. The learning processes of market-oriented companies include a sequence of activities

beginning with _____.
A. information distribution for synergy
B. objective inquiry
C. mutually informed interpretations
D. accessible memory
Answer: B
Difficulty: Moderate
Page: 137

23. Which of the following learning process activities can leverage the value of the
information by cutting across business functions to share information on customers, channels
of distribution, suppliers and competitors?
A. Objective inquiry
B. Mutually informed interpretations
C. Information distribution for synergy
D. Accessible memory
Answer: C
Difficulty: Moderate
Page: 138

24. Which of the following activities is to be avoided when engaging in the process of market
learning?
A. Searching for new ideas without a fixed view
B. Interpreting collected information based on managers’ views
C. Bundling information based on specific business functions
D. Accessing prior information
Answer: C
Difficulty: Moderate
Page: 138

25. Which of the following learning process activities involves matching the vision of
executives, like managers, to the information collected?
A. Mutually informed interpretations
B. Information distribution for synergy
C. Accessible memory
D. Objective inquiry
Answer: A
Difficulty: Moderate
Page: 138

26. _____ is the part of the learning process of market-oriented companies that emphasizes

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Chapter 05 - Capabilities for Learning about Customers and Markets

the importance of keeping and valuing prior information.

A. Objective inquiry
B. Information distribution for synergy
C. Mutually informed interpretations
D. Accessible memory
Answer: D
Difficulty: Moderate
Page: 138

27. Which of the following organizational scanning initiatives would require the use of
external consultants for fresh perspectives on the business to be incorporated in strategic
decision making?
A. Using existing functional groups
B. Outsourcing
C. Creating ad hoc issue groups
D. Establishing a high-level lookout team
Answer: B
Difficulty: Easy
Page: 142

28. _____ is “the systematic gathering, recording, processing, and analyzing of marketing
data, which—when interpreted—will help the marketing executive to uncover opportunities
and to reduce risks in decision making.”
A. Marketing research
B. Systemic marketing
C. Marginal analysis
D. Market segmentation
Answer: A
Difficulty: Easy
Page: 143

29. A _____ provides raw data to decision makers throughout a firm.

A. marketing decision-support system
B. marketing information system
C. management information system
D. market function team
Answer: C
Difficulty: Easy
Page: 152

30. _____ integrates data that are not easily found, assimilated, formatted or readily
manipulated with software and hardware into a decision-making process that provides the
marketing decision maker with assistance when needed.
A. Market sensing
B. Management information system
C. Marketing information system

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Chapter 05 - Capabilities for Learning about Customers and Markets

D. Marketing decision-support system

Answer: D
Difficulty: Moderate
Page: 153

Essay Questions

31. List the market-sensing processes used by market-driven companies.

Answer: Market-driven companies deploy multiple approaches to understand the
opportunities and threats emerging in their markets, and to predict how customers will react to
changes in marketing strategy. They include:
• Building open-minded inquiry processes —market-driven organizations show an openness
to studying change, avoiding complacency.
• Analyzing competitors’ actions— giving detailed attention to rivals’ tactics and strategies to
develop understanding of their plans and capabilities.
• Listening to front-line employees —motivating the involvement of staff who are in contact
with customers in building understanding of change and new opportunities and threats.
• Searching for latent customer needs— finding unserved needs through dialogue,
observation, and engagement with customers.
• Scanning the periphery of the market— actively looking for new opportunities in the
market.
• Encouraging experimentation— building culture and process around continuous curiosity
and new ideas.
Difficulty: Moderate
Page: 135

32. What are the activities included in the learning processes of market-oriented companies?
Answer: The learning processes of market-oriented companies include:
• Objective Inquiry—one danger to be avoided is not exploring new views about markets and
competition, because they are not taken seriously. Search for information is of little value if
management already has a fixed view, on which new information will have no influence
whatever it indicates.
• Information Distribution for Synergy—the widespread distribution of information in the
organization can leverage the value of the information by cutting across business functions to
share information on customers, channels of distribution, suppliers, and competitors.
Synergistic distribution works to remove functional hurdles and practices.
• Mutually Informed Interpretations—the mental model of the market guides managers’
interpretation of information. The intent is to reach a shared vision about the market and about
the impact that new information has on this vision. Market-oriented culture encourages
market sensing, but the process requires more than gathering and studying information.
• Accessible Memory—this part of the learning process emphasizes the importance of keeping
and gaining access to prior learning. The objective is not to lose valuable information that can
continue to be used. Doing this involves integrating the information into the organizational
memory, and not losing information when people leave the organization.
Difficulty: Moderate
Page: 137

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Chapter 05 - Capabilities for Learning about Customers and Markets

Page: 138

33. Give an account of the barriers that affect the market learning processes.
Answer: In some situations learning processes may be ineffective. If managers do not
understand or accept the value of new information and insight from the marketplace, they are
likely to maintain existing perspectives and reject new ones. Rigid organizational structures
and inflexible information systems may stand in the way of learning and knowledge sharing
in an organization. Political interests may defend the status quo, or the pressure of existing
business operations may block the capacity of managers to take on new ideas. While
investment in market sensing and learning process is mandated by both market orientation and
the speed of market change, it is important to recognize that making these processes effective
may require decisive management action to address organizational barriers. Learning and
knowledge creation disrupt existing business models and open the way to new ones.
Difficulty: Moderate
Page: 138
Page: 139

34. Give an account of how internet-based research helps in creating new market information.
Answer: The impact of Internet resources on the ability to collect new market information is
considerable. New and speedy ways of conducting survey studies using electronic
questionnaires, e-mail questionnaires, and electronic panels are expanding rapidly. Online
market research services offer less expensive and more rapidly available market research
surveys. Useful insights can also be built by examining customer online behavior. Key words
entered into search engines provide insight into competitive preferences and purchase
intentions, bearing in mind that nearly 80 percent of all online purchases start at a major
search engine. User clicks on a company’s website can be counted to identify successful
promotions and cross-sells between products. The importance of online research of this kind
is underlined by customer multiple channel behavior— it is estimated that almost 90 percent
of online shoppers actually complete their purchase by buying offline at the store.
Difficulty: Moderate
Page: 150
Page: 151

35. What is the role of management information systems (MISs) in data collection?
Answer: Management information systems (MISs) provide raw data to decision makers
throughout
a firm. The system collects data on the transactions and operations of the firm and may
include competitor and environmental information. The decision makers (and systems
analysts) are responsible for extracting the data relevant for a decision and in the appropriate
format to facilitate the process. The system can provide information for decisions at all
levels of the organization. Lower- and middle-level managers are likely to use the system
most often for operating decisions. The system may generate routine reports for frequent
operating decisions, such as weekly sales by product, or may be queried for special analyses
on an as-needed basis. Nonroutine decisions may consist of tracking the sales performance
of a sales district over several months, determining the number of customer returns for a
particular good, or listing all customers or suppliers within a given geographic area. The basic

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Chapter 05 - Capabilities for Learning about Customers and Markets

MIS collects data and allows for retrieval and manipulation of format in an organized manner.
Typically, the MIS does not interact in the decision-making process. More advanced MIS
capabilities provide important decision analysis capabilities.
Difficulty: Moderate
Page: 152
Page: 153

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any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.