Transcript
Nike started with innovative running shoes for serious runners. However, large companies eventually seek full market coverage. Nike now makes and sells a broad range of sports products for just about anyone and everyone, with the goal of “helping athletes at every level of ability reach their potential.” Nike has different products designed to meet the special needs of each segment it serves.
1. Which of the following is most strongly supported by the statements above?
a.
Nike believes that its product lines cannot reach their potential unless they become the leader in their markets.
b.
Nike’s competitors fail to recognize the need to meet the special needs of each segment of the market.
c.
Nike’s goals have changed since the company began operations.
d.
Nike is still known as an innovator in the competitive running world.
e.
Nike’s definition of “full market coverage” is broader than the definitions used by other large companies.
User Responses: C
Feedback: Nike started out in a small category: innovative running shoes for serious runners. Now they do almost everything related to athletics. So it is fair to say that their goals have changed, Choice 3.
Choice 1 has the wrong focus. Nike’s goal is to help individuals reach their potential. The passage does not discuss what it would take for product lines to reach their potential.
Choices 2 and 5 focus on other companies, but competitors are not discussed in the statements. Similarly, we aren’t told how anyone else defines “full market coverage.”
Choice 4 is possible, but Nike’s current status in the competitive running world isn’t mentioned.
2. Which of the following actions would be most consistent with Nike’s goals?
a.
using the same product designs for men’s running shoes and women’s running shoes
b.
producing formal attire in a variety of sizes and colors for both men and women
c.
focusing exclusively on shoes instead of the larger category of “sports products”
d.
drawing a line of contrast with the company’s history by ending production of products for serious runners
e.
creating a line of custom products for athletes with disabilities
User Responses: E
Feedback: Nike’s goal is to “[help] athletes at every level of ability reach their potential.” So Choice 5 fits by helping athletes with disabilities reach their potential.
Choice 1 goes against the notion of meeting “special needs.”
Choice 2 talks about formal attire, which isn’t related to athletics.
Choice 3 goes against Nike’s broad mission.
Choice 4 goes too far. Nike may not be limited to that market, but that market is still part of Nike’s larger mission.
3. When members of management created Nike’s goals, which of the following questions should have been LEAST relevant to their decision?
a.
What are the values of the organization?
b.
What are Nike’s unique strengths?
c.
What are the expressed goals of other companies that produce sports products?
d.
Are there any favorable conditions in the marketplace that Nike is positioned to exploit?
e.
Are there any market perceptions about Nike that Nike would like to correct?
User Responses: C
Feedback: All of the choices are important except Choice 3. The issue here is Nike and Nike’s mission, not how other organizations define themselves.
In the past, only India’s elite could afford to buy a car. But recent dramatic changes in India’s economy have produced a growing middle class and rapidly rising incomes. Now, to meet the new demand, established automakers are introducing smaller, more-affordable vehicles into India. But they will have to find a way to compete with India’s Tata Motors, which has unveiled the least expensive car ever in this market, the Tata Nano. The Nano sells for only 100,000 rupees (about US $2,200). It seats four passengers, gets 50 miles per gallon, and travels at a top speed of 60 miles per hour.
4. Based on the information above, Tata most likely believed that as a result of recent changes in India’s economy, a growing number of Indian consumers ________.
a.
became even more cost-conscious than ever before
b.
would be willing and able to spend 100,000 rupees on a car
c.
would choose a vehicle with high fuel efficiency primarily because of concern about the natural environment
d.
will eventually prefer models similar to those currently available in the U.S. and Europe
e.
will place a higher value on car safety than fuel economy
User Responses: B
Feedback: The changes to India’s economy produced a growing middle class and rising incomes. Tata responded to the new demand by producing a new car that sells for 100,000 rupees. Therefore, Tata must believe that a growing number of Indian consumers are willing and able to pay 100,000 rupees for a car, as Choice 2 indicates.
Choice 1 goes against the discussion, and Indians have more money now.
Choice 3 brings in concern for the environment, which is possible but not mentioned by the passage.
Choice 4 speculates about the future, but the passage doesn’t.
Choice 5, if anything, goes against the passage, because the Tata sounds like a fuel-efficient car but not necessarily a safe one.
5. Which of the following, if true, would form the strongest basis for a criticism of Tata’s positioning of the Nano?
a.
Cars that get 50 miles per gallon or more would be widely accepted in markets outside of India.
b.
New highway regulations in India will require new cars to have a maximum speed of at least 80 percent of the maximum speed of most cars on the road.
c.
The cost of the most valuable safety features has decreased.
d.
Even the least expensive car can be expensive to own if it often requires repair.
e.
Tata has a wide variety of interests, and so the success of the Nano brand is not critical to Tata’s success.
User Responses: B
Feedback: The Nano is inexpensive but small, and has a low top speed. If India instituted a minimum top speed for new cars, that could be bad for the Nano. So Choice 2, if true, would be a basis for criticism.
Choice 1 refers to non-Indian markets, but the Nano was designed for India.
Choice 3makes the Nano sound safer, or at least as safe, as more expensive cars.
Choice 4 brings up repair costs, but we know nothing about the Nano’s cost of repair.
Choice 5 explains that the Nano is just one project for Tata, but that doesn’t tell us if it is a good project or not.
6. A Chinese company recently acquired the Zoomer brand of vehicles. Compared to other vehicles, Zoomers are expensive and are not fuel efficient. Which of the following, if true, would most support the Chinese company’s decision to acquire Zoomer and promote it in the Chinese market?
a.
A growing economic class views expensive cars as an indication of wealth and prestige.
b.
In China, concern over fuel efficiency includes issues of economic cost as well as environmental protection.
c.
Most of the cars that appeal to Chinese lower-income consumers have not been successful outside of China.
d.
In the United States, the value of Zoomer’s brand has dropped as consumers have become more environmentally conscious.
e.
Zoomer’s previous owner made efforts to create Zoomer vehicles that were less expensive and more fuel-efficient.
User Responses: A
Feedback: Zoomers are expensive and use a lot of fuel. This sounds bad, but it might be desirable for customers who want to advertise their ability to own an expensive vehicle. So if Choice 1 were true, the company’s decision would make more sense.
Choice 2, if anything, weakens the argument by pointing to fuel efficiency.
Choices 3 and 4 refer to the market outside of China, but this argument concerns the Chinese market.
Choice 5 is irrelevant because the issue at hand is what to do with the brand as it is now.
7. An industry analyst examines the features of the Tata Nano and concludes that Tata will never be able to compete in the U.S. or European markets. This conclusion rests on which of the following assumptions?
a.
Neither U.S. nor European manufacturers are capable of producing an inexpensive car that gets 50 miles to the gallon.
b.
Tata’s competitive position in India will not be threatened by U.S. and European car manufacturers.
c.
Should Tata be unable to acquire a significant market share in the U.S. or Europe, it will be unable to make up for this by selling more cars in China.
d.
Tata would not adjust its designs if it attempted to sell cars in the U.S. or Europe.
e.
Price is not a significant factor in U.S. and European auto sales.
User Responses: D
Feedback: The Tata Nano may not sound like a strong model for U.S. or European markets, but so what? Tata might compete in those markets with different designs, as Choice 4 points out. With new designs, the current deficiencies of the Nano would be less relevant.
Choices 1 and 2 suggest that other companies couldn’t compete with the Nano, but that’s not the question at hand. The issue is whether Tata could compete elsewhere.
Choice 3 talks about the consequences of failure, but the issue here is whether Tata would fail at all.
Choice 5 would strengthen the argument if it were true, but it need not be true for the argument to work. Tata could fail in the U.S. and European markets even if price is an important factor. So Choice 5 need not be assumed.
Business demand is derived demand—it ultimately comes from the demand for consumer goods. Hewlett-Packard and Dell buy Intel microprocessor chips because consumers buy personal computers. If consumer demand for computers drops, so will the demand for microprocessors. Therefore, B-to-B marketers sometimes promote their products directly to final consumers to increase business demand. For example, Intel advertises heavily to personal computer buyers, selling them on the virtues of Intel microprocessors. The increased demand for Intel chips boosts demand for the PCs containing them, and both Intel and its business partners win.
8. Which of the following would most likely to lead to an increase in the demand for Intel microprocessor chips?
a.
an increase in the cost of computer components other than microprocessors
b.
a rebate program reducing the cost of computers containing Intel chips
c.
a increase in the cost of producing Intel chips
d.
an increase in the number of companies producing microprocessors
e.
a decrease in marketing efforts by computer manufacturers
User Responses: B
Feedback: Demand for chips comes from demand for the computers that contain the chips. A decrease in price paid for such computers would increase demand. Rebates decrease the price consumers pay, so Choice 2 would be most likely to increase the demand for the computers and therefore the chips.
Choices 1 and 3 would make computers more expensive, reducing demand.
Choice 4 would have no clear effect on the demand for computers, which is the key issue here.
Choice 5 would reduce demand for computers and the chips within them.
9. Which of the following, if true, would provide the strongest support for Intel’s strategy of promoting its products directly to final consumers?
a.
Buyers of personal computers are usually unaware of the number of intermediaries in a typical supply chain.
b.
Even a computer with a fast microprocessor will need a variety of plug-ins to run many software packages.
c.
Components such as printers that are usually sold separately from computers are often marketed directly to consumers.
d.
Customers who require support for their computers will almost always seek help from the computer’s manufacturer and not the manufacturer of any microprocessors within that computer.
e.
Manufacturers of personal computers typically include information about microprocessors when creating consumer-oriented product descriptions.
User Responses: E
Feedback: Is it a good idea to promote microprocessors to people who don’t buy microprocessors? What would customers do differently? If Choice 5 were true, then a customer who has a favorable opinion of Intel products could choose a computer that contained an Intel microprocessor. Consider what would be the case if Choice 5 weren’t true: if consumers had no easy way of knowing what is in the computers that they buy, then it would make little sense to market to them.
Choice 1 is off topic, because the subject is microprocessors and not everything in the supply chain. In any case, Choice 1 makes consumers sound more out of touch, and that goes against Intel’s strategy.
Choice 2 would show that a computer has lots of components, but doesn’t tell us how consumers behave when buying computers.
Choice 3 is irrelevant because printers are sold directly. Microprocessors are sold as part of a package.
Choice 4 The issue of support is one step removed from the discussion here. If anything, Choice 4 tends to show that customers look to the computer manufacturer instead of other organizations, which could only undermine the strategy.
10. Which of the following, if true, would most undermine Intel’s strategy of promoting its products directly to final consumers?
a.
Consumers who view Intel’s ads tend to believe that all computers contain the same microprocessors.
b.
The techniques that are most successful in selling to personal computer buyers are different from those that are most successful in selling to personal computer manufacturers.
c.
Even the most advanced microprocessors used in personal computers are not as advanced as some microprocessors used in the industrial market.
d.
Microprocessors are just one of many components that Hewlett-Packard and Dell purchase in making their personal computers.
e.
In the personal computer market, technology considered current just five years ago is considered obsolete today.
User Responses: A
Feedback: If lots of consumers believe that all computers contain the same microprocessors, Choice 1, then they would have no reason to seek out computers that contain Intel products. So if Choice 1 were true, marketing to these people would make less sense.
Choices 2 and 3 are irrelevant. The fact that the markets, Choice 2, are different does not indicate whether marketing to consumers is a good idea. Choice 3 takes this one step further from the argument by explaining that the products are different.
Choice 4 is background information that does not tell us whether it makes sense to market to consumers.
Choice 5, if anything, would strengthen the argument by suggesting that innovations in product development might be important to consumers.
