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TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1)
Companies that have a strong market orientation focus on aligning all business activities and processes toward maximizing performance in the competitive marketplace.
1)
_______ 2)
Firms with a strong market orientation are not better than their competitors at market sensing.
2)
_______ 3)
A strategic business unit within an organization has its own management, resources, objectives and competitors resulting in the need to manage its business planning strategy separately.
3)
_______ 4)
A firm's mission statement serves to differentiate the firm from other firms; it communicates the company's reason for being to management, employees, customers and other stakeholders.
4)
_______ 5)
The goals of a company are always clearly measurable.
5)
_______ 6)
Some examples of objectives are market share, sales revenue, unit sales and gross margin.
6)
_______ 7)
A firm's strategy is developed prior to the company establishing its goals and objectives.
7)
_______ 8)
The three generic business strategies are cost leadership, differentiation and niche.
8)
_______ 9)
When a firm targets two or more market segments with a unique marketing program for each segment, it is practicing concentrated marketing.
9)
_______
10)
Sales people are tasked with positioning the company based on service and price when the product is a commodity or near commodity.
10)
______
11)
The importance of a sales force increases when the price of a product increases in absolute terms or relative to the competition.
11)
______
12)
When a company utilizes intermediaries to distribute its product, it can either sell to or sell through the channel intermediary.
12)
______
13)
The integration of a firm's marketing communications should consider the message being delivered by the company's sales force.
13)
______
14)
The percentage of a firm's work force employed in sales is higher for a manufacturing company than that of a service company.
14)
______
15)
The concept of 'right-sizing' the sales force implies that companies that are focused on growth through gaining market share, introducing new products or serving new markets will have to continually recruit, select and train new salespeople.
15)
______
16)
One method utilized to determine the right-sized sales force is the breakdown sales approach.
16)
______
17)
One of the biggest issues with the percentage of sales approach being utilized to determine the size of the sales force is that because forecasted sales are used there might be a premature decision made to downsize the sales force.
17)
______
18)
The workload approach used to determine the size of a sales force takes into consideration what can be realistically done by a single person.
18)
______
19)
When utilizing the incremental approach to determine sales force size the cost of adding one more salesperson to the sales force must be more than the contribution dollars that this person brings to the company.
19)
______
20)
When a sales manager is looking at downsizing the sales force, he/she must consider the impact of these severed relationships on people still working for the sales organization.
20)
______
21)
Once a company has downsized its sales force, it may also need to restructure its sales territories and make adjustments to the workload of the remaining salespeople.
21)
______
22)
A sales budget is utilized by a sales manager to help itemize planned sales.
22)
______
23)
If sales expenses are below budget, there will be a positive impact on sales.
23)
______
24)
Companies that reward sales managers for controlling sales budgets must consider sales expenses as a percentage of sales.
24)
______
25)
Sales budgets are prepared annually; they should never be adjusted throughout the year.
25)
______
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
26)
A company that has a strong market orientation:
26)
______ A)
focuses on aligning all business activities and processes toward maximizing performance in the competitive marketplace
B)
is not concerned with maintaining strong relationships with their marketing channel intermediaries C)
is not concerned with collecting and analyzing information about their customers D)
integrates all elements of the marketing mix into the mission statement E)
is not concerned with the competitive landscape of the industry
27)
Planning a business strategy can take place at the __________ and at the __________.
27)
______ A)
company level; department level B)
corporate level; divisional level C)
corporate level; strategic business unit level D)
international level; domestic level E)
strategic business unit level; departmental level
28)
The business strategy planning process begins with:
28)
______ A)
development of functional area strategies B)
a definition of the corporate or SBU mission C)
a SWOT analysis D)
the determination of goals and objectives E)
target market selection
29)
When conducting a SWOT analysis, it is important to remember that strengths and weaknesses are __________ while opportunities and threats are __________.
29)
______ A)
internal; external B)
abundant; scarce C)
scarce; abundant D)
uncontrollable; controllable E)
external; internal
30)
Increasing overall market share from 12% to 18% is an example of a corporate:
30)
______ A)
business strategy B)
goal C)
objective D)
marketing strategy E)
mission
31)
An effective mission statement communicates to all of the following groups of people:
31)
______ A)
management, employees, customers and other stakeholders B)
management and employees C)
management and customers D)
employees and customers E)
stakeholders
32)
For goals to be effective, Bob Urichuck recommends that they are S.M.A.R.T. or:
32)
______ A)
simple, measurable, agreeable, reliable, trackable B)
smart, makeable, achievable, reliable, traceable C)
simple, meaningful, agreeable, reachable, tough D)
smart, meaningful, attainable, reliable, tough E)
specific, measurable, attainable, relevant, trackable
33)
According to Michael Porter, a firm that follows a low cost generic business strategy will:
33)
______ A)
focus on long-term buyer-seller relationships B)
focus on large or volume accounts C)
focus on consultative customers D)
better train and compensate their salespeople E)
focus on specific target markets being served
34)
Michael Porter's three generic business strategies are:
34)
______ A)
differentiated, concentrated and undifferentiated B)
push, pull and integrated C)
integrated, low cost and niche D)
differentiation, low cost and niche E)
differentiation, low cost and micromarketing
35)
Michael Porter's business strategies are termed generic because:
35)
______ A)
they have yet to be officially recognized in marketing B)
they haven't been trademarked C)
they may be employed by all firms that compete in the packaged goods industry D)
they may be employed by all firms, large or small, and regardless of industry E)
they haven't been branded
36)
The development of a marketing strategy involves a number or interrelated decisions beginning with:
36)
______ A)
target marketing B)
objectives setting C)
goal setting D)
positioning E)
market segmentation
37)
When a company decides to target a single market and allocate resources to gain a sales response from that single market, it is practicing:
37)
______ A)
undifferentiated targeting B)
target marketing C)
differentiated targeting D)
micromarketing E)
concentrated marketing
38)
When a firm is concerned about creating and maintaining a certain image with respect to its product, brand or itself in the minds of target customers, it is concerned about its __________ strategy.
38)
______ A)
pricing B)
product C)
promotion D)
positioning E)
marketing
39)
Since business goods are often more complex, more expensive and more customized:
39)
______ A)
they cannot be sold via the internet B)
advertising is never utilized as part of the promotional mix C)
trade publications are utilized to advertise the product D)
they require many salespeople to close the deal E)
sales people are needed to convey information and to allow for two way communication
40)
When it comes to the price of a product, salespeople play an important role when prices are higher:
40)
______ A)
relative to the competition B)
for consumer and business products C)
in absolute terms D)
in absolute terms and relative to the competition E)
for business products
41)
Companies that utilize intermediaries to sell products can either use a push strategy or a pull strategy to promote the product; the role of the sales force is:
41)
______ A)
not important when either a push strategy or a pull strategy is utilized B)
equally important when either a push strategy or a pull strategy is utilized C)
less valued when a pull strategy is utilized D)
underappreciated when either a push strategy or a pull strategy is utilized E)
less valued when a push strategy is utilized
42)
When a company's marketing communications sends a consistent, persuasive message to customers it is practicing:
42)
______ A)
target marketing B)
the art of communication C)
integrated marketing communications D)
positioning E)
the art of persuasion
43)
Integrated marketing communications increases the efficiency of promotion by __________ the communications budget.
43)
______ A)
reducing B)
doubling C)
adjusting D)
increasing E)
rationing
44)
It is a well known fact that companies spend more money on __________ than on any other form of marketing communications.
44)
______ A)
advertising B)
the internet C)
public relations D)
their sales force E)
sales promotion
45)
To help determine the right-sized sales force, a company can choose from one of __________ methods.
45)
______ A)
six
B)
two
C)
three
D)
five
E)
four
46)
The method utilized to determine the right sized sales force that considers the forecasted sales and the average sales per person is called the:
46)
______ A)
quick approach B)
incremental approach C)
percentage of sales approach D)
breakdown sales approach E)
workload approach
47)
According to the percentage of sales approach, if forecasted sales are $20 million and sales force expenses as a percentage of sales have historically been 10%, then the sales force budget should be:
47)
______ A)
$4 million B)
$12 million C)
$10 million D)
$2 million E)
$1 million
48)
A company that determines the right number of salespeople to be 40 based on a direct cost per salesperson being $200,000, has an established sales force budget of:
48)
______ A)
$8,000,000 B)
$2,000,000 C)
$4,000,000 D)
$6, 000,000 E)
$12,000,000
49)
Other sales force related expenses such as costs related to the sales manager, sales supervisors or administrative assistants, must be __________ before the sales force size is determined.
49)
______ A)
deducted B)
increased C)
eliminated D)
included E)
reduced
50)
The most serious limitation of the percentage of sales approach is that:
50)
______ A)
industry averages are used B)
historical expenses as a percentage of sales is used C)
forecasted sales are used D)
historical expenses may be too high E)
historical expenses may be too low
51)
The __________ utilized to determine the right-sized sales force considers the total number of sales calls needed and the average number of sales calls per salesperson that can realistically be made.
51)
______ A)
niche approach B)
workload approach C)
percentage of sales approach D)
breakdown sales approach E)
incremental approach
52)
A company has decided that it needs 18,000 sales calls to be made in the upcoming year; right now it has 20 sales people who on average can make 600 calls per year. How many more salespeople does this company need in order to make the 18,000 sales calls?
52)
______ A)
15 salespeople B)
30 salespeople C)
20 salespeople D)
10 salespeople E)
5 salespeople
53)
The incremental approach determines the appropriate sales force size by adding additional salespeople until the cost of adding one more salesperson __________ the estimated additional contribution dollars the salesperson will generate.
53)
______ A)
exceeds by $50 B)
will not be covered by C)
exceeds by $100 D)
exceeds by $200 E)
exceeds by $150
54)
If the incremental cost of adding one more salesperson is $175,000 and the contribution margin is 30%, this new salesperson would have to generate at least __________ in sales in order to justify the new hire.
54)
______ A)
$575,000 B)
$600,000 C)
$550,000 D)
$500,000 E)
$525,000
55)
The incremental sales approach is generally not used in determining the size of a __________ sales force.
55)
______ A)
old B)
large C)
new D)
small E)
young
56)
When a company is determining the right size of its sales force, it may actually realize that it needs to __________ its sales force.
56)
______ A)
downsize B)
motivate C)
re-evaluate D)
re-train E)
transfer out
57)
When a decision has been made that downsizing is necessary, it is best to do it:
57)
______ A)
over a two week period B)
quickly C)
before next pay period D)
overnight E)
slowly
58)
When downsizing a sales force, sales managers must realize that problems may arise from changed relationships and from:
58)
______ A)
the loss of internal relationships B)
changed management C)
changed salespeople D)
the loss of external relationships E)
administrative issues
59)
Growing the sales force size may be necessary when a company:
59)
______ A)
decides to launch a new product B)
has more money to spend in its sales force budget C)
needs to balance out the female to male ratio of salespeople D)
does not advertise in any trade publications E)
realizes its older salespeople are not as productive as they were in their younger years
60)
Sometimes sales may continue in a territory even after sales resources have been reduced in that territory because of:
60)
______ A)
improper recording of sales by territory B)
salespeople refusing to let go of a territory C)
sales managers serving that territory D)
carryover effects E)
administrative assistants taking over the territory
61)
Smart companies realize that decisions pertaining to sales force productivity and sales force size need to be made:
61)
______ A)
routinely B)
concurrently C)
sequentially D)
independently E)
interdependently
62)
Over the years, the increased sales volume per salesperson can be most likely attributed to:
62)
______ A)
improved account management practices B)
larger company/customer size C)
better bribery techniques D)
increased compensation practices E)
the economic conditions
63)
The document that itemizes planned expenses and provides a basis for the sales manager to monitor and control sales activities is called a(n):
63)
______ A)
sales forecast B)
expense form C)
sales budget D)
sales receipt E)
cheque requisition
64)
A good starting point for preparing a future sales budget is the:
64)
______ A)
sales budget from another division B)
sales budget from a competitor C)
sales budget from another SBU D)
current sales budget E)
sales budget from another department
65)
When a sales manager realizes that a sales budget needs to be adjusted, he/she should make these adjustments:
65)
______ A)
before the next sales meeting B)
at the end of the calendar year C)
sooner rather than later D)
after the expense cheques have been completed E)
at the end of the fiscal year
MATCHING. Choose the item in column 2 that best matches each item in column 1. Match the following:
66)
Strong marketing orientation requires
A)
corporate parties
66)
______
67)
May take place at both the corporate level and the strategic business unit level
B)
internal communication
67)
______ C)
mission statement 68)
Differentiates your company fro m other firms
D)
company slogan
68)
______
E)
69)
Promotional mix element
external communication
69)
______
F)
brand name
G)
business strategy planning
H)
personal selling
70)
The means to achieve goals and objectives
A)
strategies
70)
______
B)
tactics 71)
Strategy that pursues cost reduction
71)
______
C)
promotional planning 72)
Dividing a market into smaller groups
72)
______
D)
micromarketing 73)
Targeting two or more segments with a unique marketing program for each segment
73)
______ E)
positioning
F)
74)
Creating an image within the minds of customers
sales budget
74)
______ G)
ratio analysis 75)
Promotion is directed toward channel intermediaries
H)
75)
______ percentage of sales approach
I)
76)
Practiced to provide a consistent persuasive message to customers
late orders
76)
______ J)
differentiated targeting 77)
Method suggests that sales should determine the number of salespeople
K)
77)
______ push strategy
L)
78)
Considers the needs of individual sales forces
focus
78)
______ M)
incremental approach 79)
Reason why sales continue in a territory after resources have been reduced
N)
79)
______ low Cost
O)
mapping 80)
Used to allow sales managers to monitor and control sales activities
80)
______ P)
breakdown sales approach
Q)
workload approach
R)
integrated marketing communications
S)
pull strategy
T)
carryover effects
U)
market segmentation
V)
concentrated targeting
SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
81)
Explain how firms with a strong market orientation differ from their competitors.
81)
_____________
82)
What value does a company derive from having an effective mission statement?
82)
_____________
83)
What are goals? What are objectives? Provide a specific example of each.
83)
_____________
84)
Michael Porter has developed three generic business strategies. What are they? Why are they termed generic?
84)
_____________
85)
Explain the three step process of segmentation, targeting and positioning.
85)
_____________
86)
Explain how sales management changes based on product strategy.
86)
_____________
87)
Explain the role of a sales force when a company utilizes a push strategy.
87)
_____________
88)
Explain the role of a sales force when a company utilizes a pull strategy.
88)
_____________
89)
Describe the breakdown sales approach to right sizing the sales force.
89)
_____________
90)
Describe the percentage of sales approach to right sizing the sales force.
90)
_____________
91)
Describe the workload approach to right sizing the sales force.
91)
_____________
92)
Describe the incremental approach to right sizing the sales force.
92)
_____________
93)
Explain how and why downsizing a sales force has a big impact on professional relationships.
93)
_____________
94)
Describe the relationship between productivity and sales force size.
94)
_____________
95)
Explain what a sales budget is and how it is administered.
95)
_____________
ESSAY. Write your answer in the space provided or on a separate sheet of paper. 96)
Describe the business strategy planning process from mission statement definition to marketing program development.
97)
Identify and describe Michael Porter's three generic business strategies. What are the sales force implications for each of these generic strategies?
98)
Identify and briefly describe the four methods that a company can use to determine the right sized sales force.
99)
The breakdown sales approach, the percentage of sales approach, the workload approach and the incremental approach are the four methods utilized to determine the right sized sales force. What are the pros and cons of these methods?
100)
The four other factors that impact the investment in the sales force are when and how to downsize, new product launches, new market entries and productivity enhancements. Explain these four factors in relation to the size of a sales force.
1)
TRUE 2)
FALSE 3)
TRUE 4)
TRUE 5)
FALSE 6)
TRUE 7)
FALSE 8)
TRUE 9)
FALSE 10)
TRUE 11)
TRUE 12)
TRUE 13)
TRUE 14)
FALSE 15)
TRUE 16)
TRUE 17)
TRUE 18)
TRUE 19)
FALSE 20)
TRUE 21)
TRUE 22)
FALSE 23)
FALSE 24)
TRUE 25)
FALSE 26)
A 27)
C 28)
B 29)
A 30)
C 31)
A 32)
E 33)
B 34)
D 35)
D 36)
E 37)
E 38)
D 39)
E 40)
D 41)
B 42)
C 43)
A 44)
D 45)
E 46)
D 47)
D 48)
A 49)
A 50)
C 51)
B 52)
D 53)
B 54)
B 55)
C 56)
A 57)
B 58)
E 59)
A 60)
D 61)
D 62)
A 63)
C 64)
D 65)
C
66)
B 67)
G 68)
C 69)
H 70)
A 71)
N 72)
U 73)
J 74)
E 75)
K 76)
R 77)
P 78)
Q 79)
T 80)
F 81)
Firms with a strong market orientation differ from competitors in two ways...a) they are better at market sensing which means that they continually collect and analyze information about customers and competitors which helps them to identify market opportunities ahead of competitorsb) they develop and maintain stronger relationships with their marketing channel intermediaries and with their customers
82)
A firm's mission statement defines what the organization is and what it hopes to be; it is the firms reason for being. An effective mission statement will clearly communicate to management, employees, customers and other stakeholders what the firm does. It provides a guideline for opportunity analysis and strategic decision making.
83)
Goals are specific performance targets that a firm wishes to achieve such as product quality, market position, customer satisfaction or financial position. Objectives are goals expressed in more specific terms such as market share, sales revenue, unit sales or gross margin. See specific examples on Page 27 and Page 28.
84)
The three generic business strategies are low cost, differentiation and niche (focus). These three business strategies are termed generic because they can be employed by all firms in all industries.
85)
The three step process begins with market segmentation where the total market is divided into smaller, homogeneous groups. Through target marketing, one or more of these groups (market segments) are targeted through the allocation of resources to gain a sales response. A firm can decide to target the entire market, one segment or two or more segments of the market. Once a decision is made about targeting, the firm needs to decide on its positioning strategy. This means, that a firm must create and maintain a product, brand or corporate image in the minds of its target customers, relative to competition.
86)
Personal selling or salespeople are utilized in both consumer goods markets and business markets. But, how much a sales force is utilized depends on the characteristics of the products being sold. Since business goods are usually more complex, more expensive and more customized, salespeople are needed so that information can be shared, two-way communication can take place and negotiations can occur. With respect to commodities or near commodities, salespeople play a key role in positioning the product based on service or price. When the product can be clearly differentiated from its competitors, salespeople play a role in positioning the product based on the value or service.
87)
When a push strategy is utilized, it is the job of the sales force to sell to the intermediaries with the use of sales promotion tactics; ultimately, the idea is that the intermediary with sell to or push the product onto the next customer in the channel.
88)
When a pull strategy is utilized, it is the job of the sales force to sell through the channel intermediary by fulfilling a strong service role. The sales force fulfills its service role by ensuring that the intermediary has sufficient inventory, displays and promotes the product properly and has trained salespeople with the appropriate knowledge to sell and support the product.
89)
The breakdown sales approach looks at two numbers...the company's total sales forecast and the average expected sales per salesperson. By dividing the total sales forecast by the average sales per salesperson, the company determines the number of salespeople needed to support the level of forecasted sales.
90)
The percentage of sales approach looks at three numbers...the company's total sales forecast, a predetermined percentage (selling costs as a percentage of sales) used to estimate the sales force budget and the direct cost per salesperson. By dividing the sales force budget by the direct cost per salesperson, the company determines the number of salespeople that the company can afford.
91)
The workload approach looks at two numbers...the total number of sales calls needed to cover an entire region and the average number of sales calls that a salesperson can make. By dividing the total number of sales calls needed by the average number of sales calls per salesperson, the company can determine the number of salespeople needed to manage the entire workload.
92)
The incremental approach determines the appropriate sales force size by adding additional salespeople until the cost of adding one more salesperson will not be covered by the estimated additional contribution dollars the salesperson will generate.
93)
The decision to downsize a sales force has an impact on the relationships between the salesperson and customers, the salesperson and the company and the salesperson an fellow co-workers. When a salesperson leaves a company, the customers are forced to develop a relationship with a new salesperson. This may be an issue for those customers who preferred the familiar salesperson; other customers may see this change as an opportunity to change suppliers. There is the possibility that the salesperson that was terminated from the company begins to sell for a competitor; those customers that valued the relationship with that salesperson may follow this salesperson to the new company. The possibility also exists that the salespeople who remain with the company are not as motivated or attached to the company after that salesperson has left.
94)
Companies today are looking to improve the productivity of their sales force. What happens when productivity increases is that companies look to reduce selling costs which often means reducing the size of the sales force. Good companies realize that any decisions about sales force size and sales force productivity should be made independently.
95)
A sales budget is a document that itemizes planned expenses and provides a basis for the sales manager to monitor and control activities. A sales budget is useful in that it helps a sales manager to identify where problems may exist. If sales are below forecast or above forecast or if sales budgets need to be adjusted, a good sales manager will make the necessary changes so that the sales budget remains an effective tool for managing the sales force.
96)
Business strategy planning can take place at both the corporate level and the strategic business unit level. The following steps are part of the business strategy planning process...a) Creation of a mission statement...statement of the firms goals and objectivesb) Definition of goals and objectives...performance targetsc) Assessment of the company strengths, weaknesses, opportunities and threats.d) Development of functional level strategies...production, human resources, information technology, finance and marketing.e) Establishment of goals and objectives for the functional level strategy...in this case marketing.f) Target market selection.g) Establishment of product price, promotion and distribution...the marketing mix!
97)
The three generic business strategies are...a) Low Cost...the company looks to be the low cost provider in the industry by aggressively pursuing cost reductionsImplications...focus on large accounts, transactional customers and order takingb)Differentiation...the company looks to be recognized for its uniqueness and superiority which leads to high brand loyalty and price insensitivity within customers.Implications...focus on long-term buyer-seller relationships, consultative selling, requires better trained and compensated salespeople, may require considerable prospecting and qualifying of customers c) Niche or Focus...the company looks to meet the specific needs of a particular target market better than any competitor Implications...focus on understanding specific target market being served, superior knowledge of customers, competitors, products and company policies and capabilities is required
98)
The four methods that a company can use to determine the right sized sales force are...a) Breakdown sales approach...the company's total sales forecast is divided by the average expected sales per salesperson with the result being the number of salespeople who are needed to support the level of forecasted sales.b) Percentage of sales approach...the company's total sales forecast is multiplied by a predetermined percentage to estimate the sales force budget. The sales force budget is divided by the direct cost per salesperson which determines the number of salespeople that the company can afford. To estimate the sales force budget, the company can utilize historical costs as a percentage of sales for its predetermined percentage.c) Workload approach...the sales manager determines the total number of sales calls needed to cover an entire sales region and then divides that number by the average number of sales calls that a salesperson can make; this results in three things...the workload that is necessary, the work that can realistically be done by one salesperson and the number of salespeople needed to manage the entire workload.d) Incremental approach...the company determines the appropriate sales force size by adding additional salespeople until the cost of adding one more salesperson will not be covered by the estimated additional contribution dollars the salesperson will generate.
99)
The breakdown sales approach is easy to use; the problem with it is that it suggests sales should determine the number of salespeople needed.The percentage of sales approach is easy to understand and use; the problems with this method are that historical expenses as a percentage of sales figure is used and that forecasted sales are used to determine the size of the sales force The strength of the workload approach is that it can be tailored to meet the needs of individual sales forces. The incremental approach is limited in its use; it is not generally used to determine the size of a new sales force because this would require the sales manager to estimate relatively complex sales response functions to predict what sales would be at different sales force sizes.
100)
Downsizing the sales force may be necessary when profits are eroding or higher than necessary prices are being charged to customers. Downsizing is a critical decision that can have a long- lasting, negative impact on the customers, employees and company. When making the decision to reduce the sales force size, a sales manager must consider the relationships that have been developed over the years. When a decision is made to launch new products or to enter new markets, the sales manager most likely will need to hire additional salespeople. However, there are times when the existing sales force is tasked with the responsibility of representing these new products or developing these new markets. What this means for existing customers is that less sales resources are allocated to them; these long-time customers may reduce the sales volume ordered from that supplier. What is important for sales managers to realize is that adjustments to the sales force in number or in organization may be necessary when a new product is developed or a new market is explored. Over time, sales managers will realize productivity enhancements with their sales force...effectively, sales revenue increases as sales resources are better used. Often, a sales manager may look to reducing the sales of his/her sales force as productivity increases; however, good sales managers will realize that sales force productivity decisions and sales force size decisions should be made independently.