Chapter 20 21 – Ensuring the Firm Implements the Marketing Offer as

Planned
True/False Questions

1. Firms with an internal orientation have better leaders of the change process than firms with an
external orientation.
False (easy)

2. The inverted pyramid model places customers at the top as the most important constituent, then
provides a comprehensive view of those elements that contribute to marketing becoming a true
capability, rather than just a function.
True (moderate)

3. A strategy is the description of an ideal future state, a picture of what the future should be.
False (moderate)

4. A vision is an impressionistic picture of what the future should be.

True (moderate)

4. A corporate vision describes the future organization as a whole.

True (moderate)

5. A common set of beliefs that guide the behavior of organization members is called values.
True (easy)

6. According to the text, integrity is an example of a “hard” value.

False (moderate)

7. Profitability is mentioned in the text as an example of a “soft” value.

False (moderate)

8. Market share is a “hard” value.

True (moderate)

9. Customer pre-eminence is a “soft” value.

True (moderate)

10. The firm with a well-developed mission stays focused in a limited arena where it is likely to be
successful.
True (moderate)

11. The firm’s game plan for the market, pointing the way to the firm’s actions, is the firm’s mission.
True (moderate)

12. An inclusion organization is mentioned in the text as a traditional organizational arrangement for
marketing organizations.
False (moderate)

13. According to the text, functional organizations tend to work best with homogeneous markets and
product lines.
True (easy)

14. Procter & Gamble was the company that originally developed the product management
organization.
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 True (easy)

15. Partly as a response to problems posed by internal competition, Procter & Gamble and many other
companies subordinated the brand management system to a functional organization.
False (moderate)

16. If a computer company’s individual business sector managers are responsible for the
manufacturing, banking, and financial services; transportation; and retailing industries, the
company is implementing market segment organization.
True (moderate)

17. The category management organization directs multiple brands in a complementary manner.
True (moderate)

17. The benefit of a market segment organization is that the firm is more closely aligned with its target
customers.
True (moderate)

18. A functional organization is mentioned in the text as a “newer” approach to marketing

organizations.
False (moderate)

19. The inclusion organization may work well in service organizations, where marketing and operations
are difficult to distinguish.
True (moderate)

19. According to the text, a critical problem with organizing by business processes concerns
recognition and reward.
True (difficult)

20. In many firms, “soft” systems are used mostly to improve operational efficiency and reduce costs,
rather than to increase strategic effectiveness and add value for customers.
False (moderate)

21. Good hard systems improve operational efficiency and also improves marketing effectiveness and
help secure differential advantage.
True (moderate)

21. According to the text, good planning is externally driven rather than internally driven.
True (easy)

22. The traditional tools of human resource management include profits and profitability.
False (moderate)

23. If a firm hires the right people and manages them appropriately, an internal orientation should
follow.
False (moderate)

23. One result of the functional specialization found in most organizations is that managers responsible
for critically important customer-based decisions may be organizationally far removed from the
market.
True (moderate)

24. Operational focus is mentioned in the text as a “new” way of ensuring the marketing offer is
implemented as planned.
False (difficult)
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25. According to the text, market-share orientation is a “new” way of ensuring the marketing offer is
implemented as planned.
False (difficult)

Multiple Choice Questions

26. Good vision statements set _____________ direction.

a.) narrow
b.) broad (easy)
c.) specific
d.) unrealistic

27. Which of the following is NOT a characteristic of a good vision statement?

a.) It is not too broad.
b.) It should inspire employees.
c.) It is not too specific.
d.) It is easily achievable. (easy)

28. A(n) _______________ is the description of an ideal future state, a picture of what the future
should be.
a.) objective
b.) strategy
c.) vision (moderate)
d.) rule

29. The _______________ places customers at the top as the most important constituent, then provides
a comprehensive view of those elements that contribute to marketing becoming a true capability,
rather than just a function.
a.) diverted pyramid model
b.) inverted pyramid model (moderate)
c.) diagonal pyramid model
d.) horizontal pyramid model

30. The firm’s ___________ is the game plan for the market, pointing the way to firm actions.
a.) values
b.) strategy (moderate)
c.) vision
d.) mission

31. All of the following represent elements of a firm’s internal architecture EXCEPT:
a.) HR practices
b.) Competitive strategy (moderate)
c.) organization structure
d.) organization systems

30. Which of the following describes the future organization as a whole?

e.) Business unit vision
f.) Corporate vision (easy)
g.) Functional vision
h.) Departmental vision

3132. A common set of beliefs that guide the behavior of organizational members is called
_______________.
a.) culture

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 b.) values (moderate)
c.) perception
d.) abilities

3233. Which of the following is NOT example of a “hard” value?

a.) Profitability
b.) Market share
c.) Revenues
d.) Integrity (easy)

3334. All of the following are mentioned in the text as “soft” values EXCEPT:
a.) Integrity
b.) Respect for others
c.) Pre-eminence of customers
d.) Profitability (moderate)

3435. Which of the following DOES NOT represent the internal architecture of a firm?
a.) Organizational structure
b.) Systems and processes
c.) HRM practices
d.) All represent the internal architecture of a firm. (moderate)

3536. Which of the following types of organizational designs places activities like marketing research,
distribution, advertising and promotion, marketing administration, and new product development in
a marketing department?
a.) The functional marketing organization (moderate)
b.) The product/brand management organization
c.) The segment-based organization
d.) The business process organization

3637. Which of the following types of organizational designs have the problems of internal brand
management competition and brand manager turnover?
a.) The functional marketing organization
b.) The product/brand management organization (moderate)
c.) The segment-based organization
d.) The business process organization

3738. According to the text, ________________ turns the product/brand management organization on its
side.
a.) the functional marketing organization
b.) the segment-based organization
c.) the business process organization
d.) the customer-focused organization (moderate)

3839. In which of the following types of organizational designs does the firm retain a classic functional
structure, but has the organizational output resulting from cross-functional teams?
a.) The functional marketing organization
b.) The segment-based organization
c.) The business process organization (moderate)
d.) The customer-focused management organization

3940. According to the text, firms with ________________ manage multiple brands in a complementary
manner.
a.) functional organization
b.) business process organization
c.) segment-based organization
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 d.) category management organization (moderate)

41. Which of the following is NOT an alternative traditional marketing organization?

a.) functional
b.) product/brand management
c.) category management
d.) business process (moderate)

40. A specific advantage of _______________ is that customer contact increases, and

customer portfolio managers gain significant customer insight.
e.) functional organization
f.) business process organization
g.) segment-based organization
h.) category management organization (moderate)

4142. Which of the following is NOT mentioned in the text as a traditional organizational arrangement for
marketing organizations?
a.) Functional organization
b.) Product/brand management organization
c.) Inclusion organization (difficult)
d.) Category management

4243. According to the text, _______________ tends to work best with homogeneous markets and
product lines.
a.) functional organization (difficult)
b.) product/brand management organization
c.) inclusion organization
d.) category management organization

4344. Which of the following companies originally developed the product/brand management
organization?
a.) Coca-Cola
b.) Microsoft
c.) IBM
d.) Procter & Gamble (moderate)

4445. Partly as a response to problems posed by internal competition, Procter & Gamble and many other
companies subordinated the brand management system to _______________.
a.) functional organization
b.) inclusion organization
c.) category management (difficult)
d.) market segment organization

4546. If a computer company’s individual business sector managers are responsible for the
manufacturing, banking, and financial services; transportation; and retailing industries, the
company is implementing _______________.
a.) functional organization
b.) market segment organization (moderate)
c.) product/brand management organization
d.) inclusion organization

46. The benefit of which of the following systems is that the firm is more closely aligned with its target
customers?
a.) Functional organization
b.) Market segment organization (moderate)
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 c.) Product/brand management organization
d.) Inclusion organization

47. All of the following are mentioned in the text as “newer” approaches to marketing organizations
EXCEPT:
a.) Inclusion organization
b.) Organizing by business processes
c.) Customer management organization
d.) Functional organization (moderate)

48. Which of the following approaches to marketing organizations is mentioned in the text as having
considerable applicability in service businesses where it is often difficult to identify where
marketing starts and operations endsmarketing and operations are difficult to distinguish?
a.) Inclusion organization (difficult)
b.) Organizing by business processes
c.) Customer management organization
d.) Functional organization

49. All of the following are alternative newer marketing organizations EXCEPT:
a.) inclusion
b.) business process
c.) customer management
d.) category management (moderate)

49. Customer relationship management systems that allow firms to identify customers by name, buying
patterns, and history support which of the following types of organizations?
e.) Functional organization
f.) Business process organization
g.) Segment-based organization
h.) Category management organization (moderate)

50. In many firms, _______________ systems are used mostly to improve operational efficiency and
reduce costs, rather than to increase strategic effectiveness and add value for customers.
a.) “soft”
b.) “hard” (moderate)
c.) horizontal
d.) vertical

51. According to the text, good planning is _______________ rather than _______________ driven.
a.) internally; externally
b.) revenue; profit
c.) cost; revenue
d.) externally; internally (moderate)

52. The traditional tools of human resource management include all of the following EXCEPT:
a.) Recruitment and selection
b.) Training and development
c.) Profits and profitability (moderate)
d.) Work processes and career paths

53. Soft systems are ______________ and can also help the firm become more externally oriented.
a.) people based (moderate)
b.) technology based
c.) product based
d.) financially based

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54. Which of the following is NOT mentioned as a methodology for evolving and integrating systems
to make the firm more externally oriented?
a.) Re-engineering
b.) Best practice transfer
c.) Benchmarking
d.) Factor analysis (moderate)

55. The _____________ approach examines fundamental assumptions about the firm and seeks
alternative approaches for redesigning and improving its processes.
a.) re-engineering (moderate)
b.) best practice transfer
c.) benchmarking
d.) factor analysis

Essay Questions

56. In a short essay, list and discuss the three methodologies for evolving and integrating systems to
make the firm more externally oriented.

Answer
a.) Re-engineering – the re-engineering approach examines fundamental assumptions about the
firm and seeks alternative approaches for redesigning and improving its processes. Many
processes have a long history or tradition in organizations, but changes in customers,
competitors, technology, and other environmental factors make them obsolete.
b.) Best practice transfer – a best practice system helps identify and transmit superior processes,
knowledge, and expertise across the firm. Disseminating best practices, knowledge, and
expertise across the firm can be a major challenge.
c.) Benchmarking – benchmarking suppliers, customers, competitors, and firms in other industries
can improve the firm’s processes.
(moderate)

57. In a short essay, list and discuss five traditional organizational approaches to organizing marketing
in a firm.

Answer
a.) Functional marketing organization – in this approach, the firm places activities like advertising
and promotion, distribution, marketing administration, marketing research, and new product
development in a marketing department. Marketing is usually separate from the sales force and
functions like accounting, human resources, production and R&D. Functional organizations
tend to work best when markets and products are homogeneous.
b.) Product/Brand management organization – Product/brand managers develop market plans for
products and brands; they are responsible for volume, market share, and/or profits, but do not
control all input. In many firms, product/brand managers compete for resources like
promotional dollars and sales force time. Sometimes firms view internal brand manager
competition as healthy because it spurs extra effort, but it may undermine a coherent product-
line strategy.
c.) Category management organization – this approach attempts to address problems with the
product/brand management organization, in part by leveraging success from strong brands to
weaker brands. The category management organization directs multiple brands in a
complementary manner.
d.) Market segment organization – managers are responsible for individual market segments; The
market segment organization may overlie other marketing and sales functions. Business sector
managers may be responsible for broad industry categories like manufacturing, banking and
financial services, transportation, and retailing.

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 e.) Combined product/brand management/market segment organizations – the problem with the
product/brand, category, and market segment organizations is that each omits a crucial
dimension. In the product/brand and category management organizations, no one is specifically
responsible for market segments; in the market segment organization, no one is specifically
responsible for individual products. Some firms have incorporated both organizations.
(moderate)

58. In a short essay, list and discuss three of the newer approaches to marketing organization.

Answer
a.) Inclusion organizations – this structure organizes a firm’s functional departments so as to make
the majority of organizational activities accountable to marketing. This approach may have
considerable applicability in service businesses, where marketing and operations are difficult to
distinguish. However, it is not appropriate for all organizations.
b.) Business process organization – one outgrowth of the re-engineering movement is the attempt
by some companies to organize around business processes. The firm retains a classic functional
structure, but much organizational output results from cross-functional process teams.
c.) Customer-management organizations – this organization focuses specifically on customers.
This organizational form is expected to become more popular as firms become increasingly
aware of the customer lifetime value concept and the importance of customer retention.
(moderate)

59. In a short essay, discuss the concepts of “hard” systems and “soft” systems as they relate to
management systems and processes.

Answer
a.) “Hard” systems – hard systems improve operational efficiency and reduce costs. But they can
also contribute to creating an external orientation, improve marketing effectiveness, optimize
sales force efforts, and help secure differential advantage. Perhaps the most popular hard
systems in major firms are enterprise resource planning (ERP). ERP software contains
customer-focused modules and attempts to integrate many departments and functions across the
firm.
b.) “Soft” systems – people-based soft systems can also help the firm become more externally
oriented. Consider the planning process. Good planning is externally driven and is
collaborative-participative. Outputs from market planning set firm direction; they also play a
critical role in driving an external orientation via monitor and control processes.
(moderate)

60. In a short essay, list and discuss at least five challenges a firm is likely to experience when
developing and sustaining an external orientation.

Answer
a.) Accounting systems – the firm must produce data in a form that supports an external
perspective. Many firms collect profit only by product; they should also measure profits by
customer and/or customer group.
b.) Bureaucracy – as firms grow, departmentalization and task specialization are efficient ways to
complete repetitive tasks. But rules and behaviors, reinforced by day-to-day work pressures,
become embedded in the organization.
c.) Centralization versus decentralization – centralization and standardizing can have great value,
especially for cost reduction. But excessive centralization leads to standardized actions, rather
than customer responsiveness.
d.) Excessive focus on organization efficiency – many firms work extremely hard to reduce costs
by improving organization efficiency. They use techniques like Six Sigma to make continuous
incremental improvements in processes. But an organizational culture dominated by Six Sigma
can become internally focused, less innovative, and drive out behavior addressing external
challenges.
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 e.) Functional divisions – firms develop specialized functions to increase expertise in key areas.
But specialization can lead to silo thinking and divisiveness among specialties.
f.) Functional view of marketing – the firm must distinguish between marketing as a philosophy
and marketing as a department. The firm that delegates all marketing problems to a marketing
department will neither create nor deliver fully integrated offers.
g.) Internal politics – the CEO and/or business head must actively support institutionalizing an
external orientation and frequently communicate this support. If not, some functions will be
suspicious of customer-focused initiatives.
h.) Inward-oriented marketing departments – marketing departments are sometimes their own
worst enemies. They implement not-invented-here syndrome that quashes foreign ideas and
initiatives to protect their turf.
i.) Misaligned incentives – people in organizations do what is inspected of them, not what is
expected of them. They behave in ways that earn rewards.
j.) Social fabric of institutions – firm employees know each other and interact daily. Customers,
competitors, and suppliers are viewed as occasional intruders who interrupt daily life.
(moderate)
56. In a short essay, list and discuss the three methodologies for evolving and integrating systems to
make the firm more externally oriented.

Answer
Re-engineering – the re-engineering approach examines fundamental assumptions about the firm and
seeks alternative approaches for redesigning and improving its processes. Many processes have a
long history or tradition in organizations, but changes in customers, competitors, technology, and
other environmental factors make them obsolete.
Best practice transfer – a best practice system helps identify and transmit superior processes, knowledge,
and expertise across the firm. Disseminating best practices, knowledge, and expertise across the
firm can be a major challenge.
Benchmarking – benchmarking suppliers, customers, competitors, and firms in other industries can
improve the firm’s processes.
(moderate)

57. In a short essay, list and discuss five organizational arrangements for traditional marketing
organizations.

Answer
Functional organization – in the early stages of marketing organizations, activities such as marketing
research, advertising, customer service, and new product development are often placed in an
organization operating separately from the sales force. Purely functional organizations tend to work
best with homogeneous markets and product lines. However, as these organizations become more
complex, specialized responsibility for either products or markets becomes necessary.
Product/brand management and market segment organizations developed to solve this problem.
Product/Brand management organization – in this structure, sales and marketing activities are overlaid
with a product management system in which managers are responsible for individual products and
brands. These managers develop marketing plans for their products/brands and work within the
organization to ensure plan implementation. In successful systems, the cost of focusing on
individual products is more than offset by improved financial performance.
Category management – partly as a response to problems posed by internal competition, Proctor &
Gamble and many other companies subordinated the brand management system to category
management. The firm’s several brands in a product category are managed in a complementary
manner to avoid destructive competition among company brands and brand managers.
Market segment organization – managers are responsible for individual market segments; business-to-
business marketers particularly favor geography and industry/end-use organizations. This system
may overlay other marketing and sales functions or may be specialized by industry. The benefit of
this system is that the firm is more closely aligned with its target customers, and the potential for
inter-product conflict is obviated.

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Combined product/brand management/market segment organizations – the problem with the
product/brand, category, and market segment organizations is that each omits a crucial dimension.
In the product/brand and category management organizations, no one is specifically responsible for
market segments; in the market segment organization, no one is specifically responsible for
individual products. Some firms have incorporated both organizations.
(moderate)

58. In a short essay, list and discuss three of the newer approaches to marketing organization.

Answer
Inclusion organizations – this structure organizes a firm’s functional departments so as to make the
majority of organizational activities accountable to marketing. This approach may have
considerable applicability in service businesses where it is often difficult to identify where
marketing starts and operations ends. However, it is not appropriate for all organizations.
Organizing by business processes – one outgrowth of the re-engineering movement is the attempt by
some companies to organize around business processes. The firm retains a classic functional
structure, but much organizational output results from cross-functional process teams. A critical
problem with this approach concerns recognition and reward. If this authority remains in the line
organization, conflict and tension are inevitable.
Customer management organizations – although few businesses serve once-only clientele, only recently
have firms begun to recognize the value of treating customers in relational rather than transactional
terms. For consumer goods manufacturers, loyal customers represent substantial cash flow over
time. In addition, as the pace of new product introduction increases, cash flows generated by
customers can be more stable over time than those associated with the firm’s individual products
and brands.
(moderate)

59. In a short essay, discuss the concepts of “hard” systems and “soft” systems as they relate to
management systems and processes.

Answer
“Hard” systems – in many firms, “hard” systems are used mostly to improve operational efficiency and
reduce costs, rather than to increase strategic effectiveness and add value for customers. However,
when used creatively, the technological power of computer-based systems can contribute
enormously to making firms more externally focused, improving marketing effectiveness, and
securing competitive advantage.
“Soft” systems – soft systems can also help make firms more externally focused, improve marketing
effectiveness, and secure competitive advantage. The planning system is used as an example. Good
planning is driven externally rather than internally. The planning process commences with a full
environmental analysis, and significant effort is placed on understanding customers, competitors,
and the environment in general. Outputs of the planning system set direction for the firm and also
play a critical role in measurement and control.
(easy)

60. In a short essay, list and discuss how the four traditional tools of human resource management can
facilitate an external orientation and enhance the probability of superior strategy implementation.

Answer
Recruitment and selection – hiring personnel with the appropriate skills can have a major impact on
developing an external orientation. More generally, recruitment and selection criteria can aid the
firm’s shift from an internal to external perspective. Some companies even recruit from their
customer pool and, as a result, secure greater insight into customer needs.
Training and development – this presents marvelous opportunities for attitude change as well as data and
skill acquisition. These activities can help fill the gap between the knowledge, skills, and abilities
required to perform specific jobs and the quality of the current set of human resources.

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Work processes and career paths – one result of the functional specialization found in most organizations
is that managers responsible for critically important customer-based decisions may be
organizationally far removed from the market. This organizational distance can be reduced through
consistent and regular contact with customers.
Recognition and reward systems – just as measurement and control systems should evolve to focus on
customers, so too must systems for recognition and rewards. For the firm to be truly committed to
an external perspective, managerial incentive compensation should be based on customer-focused
measures and not be applied just for the marketing and sales functions.
(moderate)

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