BA-110

Chapter 14 Study Guide

1. The best product development strategy for most firms is to: A) develop a small number of products that achieve market success and stick with them, because constantly changing old products (or introducing new ones) can confuse and frustrate customers. ) maintain one product line while adding regularly to that product line over time to sustain customer interest. !) constantly monitor consumer wants and needs and be willing to develop new products and adapt policies and services as those needs begin to change. ") focus on the actual product or service and don#t worry too much about factors such as image, price, and service. $. %o&ider 'heels sells high (uality bicycles and accessories. The store is known for a pleasant environment, friendly salespeople and an e)cellent service department. All of these elements are part of the *********** offered by %o&ider. A) total product offer ) product line !) competitive environment ") marginal utility package +. 'hen consumers decide to purchase a particular product, they: A) will search for the retailer that offers the lowest price. ) consider the total collection of benefits that the product offers. !) base their decision on a brand name nearly all of the time. ") initially evaluate the product#s package. ,. 'hich of the following is the best e)ample of a product lineA) .eneral /otors offers passenger cars, small trucks, and tractor trailers. ) 0ony offers "1" players, compact disk players, and video game consoles !) 2ellogg offers 0pecial 2, &aisin ran, !orn 3lakes, and a variety of other cold ready4to4eat cereals. ") 5ewlett 6ackard offers scanners, printers and personal computers. 7. 0weet "ream !onfectioners uses the same ingredients as most other producers of chocolate candies. 8n fact, taste tests suggest that the candy itself, while (uite good, isn#t much better than other well4known brands of chocolate. 5owever, the company wraps its candies in e)pensive looking foil and places them in very attractive bo)es. 8t promotes its products in advertisements as 9the ultimate in chocolate e)perience.9 0weet "ream charges a much higher price than most competitors, but sales continue to grow. This success indicates that: A) consumers often behave in an irrational manner.

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) there is more to the total product offer than the physical product. !) consumers seldom consider price when making a buying decision for goods such as chocolate. ") chocolate is best classified as a convenience good. :. 8n evaluating colleges, students and parents are likely to ;udge a school: A) strictly on the basis of ma;or curriculums offered. ) based on the tuition. !) by the collection of benefits offered by the school. ") on the anticipated rate of return on their tuition investment. <. The 6rocter = .amble !ompany produces bar soap, disposable diapers, deodorants, laundry detergents, peanut butter, cookies, cake mi), shampoo, shortening, coffee, and many other products. These products are part of 6=.#s: A) product line. ) product network. !) product mi). ") marketing mi). >. orden, 8nc., offers pasta, dairy items, and adhesives. These different types of products are referred to as orden#s: A) product line. ) product mi). !) product differentiation. ") product life cycle.

?. The 6rocter = .amble !ompany is a ma;or producer of bar soaps. 8n fact, 6rocter = .amble produces 8vory, !amay, %ava, 0afeguard, @est, and !oast bar soaps that all claim a variety of benefits. These products are of 6roctor = .amble#s ***** in bar soaps. A) product mi). ) product concentration. !) product store. ") product line. 11. 0uccessful product differentiation: A) of consumer goods is determined e)clusively by price. ) can be based on either real or perceived differences in products. !) is prohibited if it restricts price competition and market access. ") is less important due to the growth of the 8nternet.

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1$. All of the following would allow a firm to utiliAe product differentiation e)cept: A) pricing differences. ) increased production. !) elaborate packaging. ") intensive advertising. 1+. 'hich of the following products would normally be classified as a shopping good or serviceA) %aptop computers ) Bewspapers !) 3ur coats ") !hewing gum 1,. All of the following statements regarding convenience goods and services are accurate e)cept: A) shoppers will e)ert little effort to obtain the product. ) consumers purchase the product on a fre(uent basis. !) consumers buy only carefully after comparing (uality and value. ") brand awareness and image are important in marketing these products. 17. 'hich of the following would be considered an unsought good or service by a typical college studentA) !ollege te)tbook ) 6iAAa !) !ar towing ") 8nternet service provider 1:. uccaneer 8ndustries manufactures and markets e)pensive industrial cranes. This long lasting e(uipment would be classified as a(n) ******** : A) specialty ) capital !) accessory ") consumer

1<. 98 !an#t elieve That 8t#s /edicine9 is an advertising slogan for a new antacid. The manufacturer claims that their antacid works faster and tastes better than any competing brand. These claims are part of the firm#s strategy to achieve: A) deceptive marketing recognition. ) the creation of knockoff products. !) new product development. ") product differentiation.

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1>. As restaurant chains that specialiAe in /e)ican cuisine, 3ernando#s and !armelita#s offer similar items on their menus. 5owever, 3ernando#s restaurants are positioned in the market as elegant establishments with high prices. !armelita#s restaurants, on the other hand, are located in middle class neighborhoods, with a casual atmosphere that welcomes families with young children. The prices at !armelita#s are in the moderate range. 'hen evaluating the marketing strategies used by these restaurants, we can conclude that: A) both practice product mi) effectiveness. ) they utiliAe product differentiation. !) 3ernando#s has chosen a shopping good strategy. ") their target markets differ, with one intended to appeal to the industrial market, and the other designed to attract the consumer market. 1?. Cntice4mint reath /ints is a new brand of breath fresheners. The company realiAes that product location is very important since consumers desire to buy this type product with a minimum of effort. Cntice4mint mints represent a: A) shopping good. ) specialty good. !) convenience good. ") industrial good. $D. 0uits for 0uccess is a men#s clothing store in a large suburban shopping mall. The managers of the store know that their customers usually comparison shop, looking carefully at (uality and price before deciding to buy. Armed with this information, 0uits for 0uccess carries (uality clothing, offers competitive pricing, and friendly, helpful service. The target customers apparently view men#s suits as a: A) specialty good. ) convenience good. !) shopping good. ") unsought good. $1. 2aren is a collector of fine art, particularly paintings. 0he has been looking for an original %ady /olly painting for months and has said that she is willing to go to e)traordinary efforts to ac(uire this painting for her collection. !learly this painting represents a ****************** good for 2aren. A) shopping ) specialty !) necessity ") lu)ury

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$$. 'hich of the following products would most likely be classified as a specialty good or serviceA) A microwave oven. ) A limited4edition print signed by the artist !) A sports coat, slacks, and tie ") A car insurance policy $+. Eune lives in the southern part of Alabama where winters are normally fairly mild. %ast Eanuary, during an unusually cold spell, the water pipes in her house froAe and burst. 0he had to look in the Fellow 6ages to find a plumber who was able to come out and repair the pipes the same day. 6rior to the froAen pipes, the plumber#s services represented a: A) unsought service. ) industrial service . !) specialty service. ") convenience service. $,. 0oprano /anufacturing ac(uired several pieces of e)pensive heavy machinery it intends to use in their operations. As an industrial goods, this heavy machinery represents: A) an installation. ) accessory e(uipment. !) an intermediate good. ") a shopping good. $7. The trend away from personal salespeople to self4service in many retail outlets has caused firms to: A) reduce their promotional budgets spent on advertising. ) rely more on personal sales efforts. !) place a greater promotional importance on packaging. ") decrease e)penditures on interactive web pages. $:. Attracting attention, describing contents, e)plaining benefits and identifying the uses of a product are all functions of: A) target marketing. ) Gniversal 6roduct !odes. !) packaging. ") market segmentation. $<. The evaluation of packaging as a marketing function indicates that: A) the package is less important as the 8nternet provides consumers with easily obtained information. ) packaging carries more of the promotional burden of the product.

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!) consumers are influenced less by packaging. ") the primary purpose of packaging is to limit the product liability of businesses. $>. 'hich of the following statements about packaging is the most accurateA) !hanges in packaging can improve the product itself and open up large new markets. ) 6ackaging is the least critical element of a firm#s promotional strategy. !) Technology has not changed the role of packaging. ") 6ackaging has avoided federal regulations. $?. 'hich of the following statements is the most accurate assessment of the role packaging plays in product offeringsA) The importance of packaging has diminished as the use of the 8nternet has grown. ) 'hile packaging plays an important role in marketing goods, it is not relevant to the marketing of services. !) Cffective packaging eliminates the potential of product liability suits. ") The importance of packaging is greater than ever. +D. The use of the 3olgers#s ******** allows customers to easily identify this product from other coffee products. A) patent ) trade symbol !) brand name ") brand e(uity +1. The 6illsbury "oughboy is an e)ample of a: A) patent. ) trademark. !) private brand. ") generic label. +$. A street vender selling &ole) watches at ridiculously low prices approached Ted. Ted, however, was suspicious that the watches were illegal ******** brands. A) knockoff ) private !) generic ") look alike ++. 0ears sells batteries under its own "iehard brand name even though another company actually produces these batteries. This is an e)ample of a: A) knockoff brand

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) generic brand !) dealer (private) brand ") brand association +,. /any supermarkets carry plain packages that only identify the name of the product that is inside. 3or e)ample, a label may read simply 9peaches9 or 9green beans.9 These goods represent: A) private labels. ) manufacturers# brands. !) generic goods. ") universal code branding. +7. !ertain brand names, such as 2leene) and Hero), have become *********, because they are so commonly identified with a specific product category that consumers use these names to refer to any product in that category regardless of the manufacturer. A) family brands ) generic names !) universal products ") knockoff names +:. 0ome businesses use nostalgia ads to rekindle the memories and emotions of consumers to an earlier time and place. This techni(ue of linking a brand name to a pleasant memory or favorable image is the goal of brand: A) association. ) tie4ins. !) insistence. ") preference. +<. Ine of the reasons why companies created the position of brand manager was to: A) have greater control over new product development and promotion. ) cut e)penses associated with the marketing of products. !) limit the amount of market research e)penses products re(uired. ") identify and prosecute firms that violate trademark protection. +>. The ;ob performed by brand managers: A) is mainly concerned with the promotion of the entire product mi) of their firm. ) involves broad responsibilities for the marketing of a specific brand or product line. !) is likely to become less important in firms that utiliAe the 8nternet. ") focuses more on the pricing and promotion of established goods than on the development of new products.

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+?. Anheuser4 usch !ompanies, 8nc., has been given the e)clusive right to the name udweiser and is legally protected from others using this name by the ******************** they hold. A) licensing agreement. ) brand name. !) copyright. ") trademark. ,D. .reen .iant .reen eans, !hevy !orvette, !oca !ola, "ole 6ineapple, and 6eter 6an 6eanut utter are all e)amples of: A) private brands. ) wholesaler brands. !) manufacturers# brands. ") registered generic brands. ,1. 3ederated .rocery 0tores operates a large chain of stores across several /idwestern states. 'hile 3ederated doesn#t actually produce any canned foods, it markets a line of foods under its own brand name that were actually produced by another company. 3ederated canned foods represent a: A) manufacturers# brand. ) generic brand. !) knockoff brand. ") dealer brand. ,$. An advertisement for the Hero) !orporation encourages customers to say 9!opy it9 rather than 9Hero) it9. This indicates that Hero) is fearful that its brand name might become a(n): A) e(uity name. ) generic name. !) private brand. ") public domain good. ,+. usiness sponsorship of events, such as the 'inston40alem stock car races or 1irginia 0lims ladies tennis tournament, is intended to increase: A) brand awareness. ) the (uality of the event. !) the promotional budget. ") the availability of knockoff brands.

,,. Gsing a sports or movie celebrity as a spokesperson for your product is an attempt to build favorable: A) brand reputation.

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) publicity. !) brand association. ") manufacturers# brands. ,7. 0neeAeBo/ore markets a group of similar products for people suffering from the common cold. The products in this line are sold under the brand name 0neeAeBo/ore. The products differ mainly in the strength of the dosage and in whether they also contain additional medications to help the consumer sleep. As an employee of 0neeAeBo/ore, Eill is responsible for the marketing mi) for the company#s products. 0he is also involved in any ma;or decisions concerning the development of new products that will be included in this product line. Eill serves as a(n): A) brand manager. ) market mi) specialist. !) target market manager. ") product line specialist. ,:. As a manager at C)citement 3oods, /ark is responsible for the firm#s 2ool#n2reamy brand of ice cream. &ecently, he approved a proposal to test market new ice cream flavors. 5e also is considering the possibility of lowering the price of the ice cream and initiating a new advertising campaign. /ark appears to be a(n): A) product development manger. ) target market manager. !) brand manager. ") commercialiAation manager. ,<. The greatest source of ideas for new products is: A) consumer suggestions. ) suggestions from competitors. !) employee ideas. ") research and development. ,>. 8n order to compete successfully internationally G.0. firms must: A) shorten the product life cycle. ) utiliAe a price skimming strategy. !) reduce the time involved in new product development. ") move production to low wage countries. ,?. All of the following are relevant criteria for the product screening process e)cept: A) profit potential for the product. ) marketability of the product. !) product fit with present products. ") the stage of the product life cycle.

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7D. 98f you create a better mouse trap, the world will beat a path to your door.9 This statement ignores the need for which step in the new4product development processA) !ommercialiAation ) 0creening !) 8dea generation ") "evelopment 71. As a brand manager, Cllen has proposed an aggressive advertising campaign that e)aggerates the benefits of their newest product. 'hile Cllen is convinced that this strategy will encourage consumers to try the product, her assistant strongly opposes the idea. 'hich of the following presents the best e)planation for the assistant#s opposition to Cllen#s proposalA) 8f a firm produces a (uality product, the best advertising is word4of4mouth to generate e)citement for a new product. ) The best way to promote new consumer products is with personal selling. !) C)aggerating the benefits of a product may backfire and in;ure the product#s potential for success. ") Cffective advertising for new consumer products should be subtle and low key. Cllen#s proposal is more appropriate for the $ market. 7$. 2athy works as a manager at 3antastic 3abricators. The innovative staff at the company is regularly encouraged to suggest ideas for new products. 0ince !athy works in product screening, she: A) gives the final approval for the commercialiAation of new products. ) reduces the number of new products being worked on at any one time. !) market tests the product ideas that originate with the staff. ") develops the concept testing to establish the personnel re(uired for each new pro;ect. 7,. 'hen reviewing the product life cycle model, it is important to remember that: A) although all products go through each stage of the life cycle, the time frame can vary considerably from one product to another. ) it is a theoretical model that may not be followed by all products. !) the maturity stage accounts for the fastest growth in sales. ") companies earn their largest profits in the introduction stage. 77. Ince a good or service nears the end of its product life cycle, the firm recogniAes that: A) it is impossible to revert to an earlier stage of the model. ) it can return to an earlier stage through creative marketing. !) they will en;oy relatively high profits. ") marketing dollars spent now will provide little benefit.

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7:. 'hich stage of the product life cycle is characteriAed by rapidly rising sales, very high profit levels, and a growing number of competitorsA) .rowth ) /aturity !) 0aturation ") "ecline 7<. 'hich of the following is e)pected during the maturity stage of a product life cycleA) A rapid increase in profits. ) A rapid increase in the number of competitors. !) A peak in sales. ") &educed emphasis on promoting the product#s brand name . 7>. 'hich of the following is consistent with the introduction stage of the product life cycleA) "ecreasing sales volume. ) %arge number of competitors. !) %ow profit levels or a potential loss. ") /inimum use of advertising. 7?. "uring the ******** stage of the product life cycle sales reach a peak, profits are declining, and the number of competitors starts to decrease. A) growth ) maturity !) saturation ") decline :D. All of the following are consistent with the maturity stage of the product life cycle e)cept: A) a peak in the sales curve. ) increasing profit levels. !) a stable number of competitors. ") declining profits. :1. All of the following are characteristics of the decline stage of the product life cycle e)cept: A) falling sales. ) a decreasing number of competitors. !) many new firms entering the market. ") decreasing profits.

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:$. 'hich of the following products currently would most likely be considered in the growth stage of the product life cycleA) 1!&s ) 'elch#s grape ;elly !) "igital cameras ") !amel cigarettes :+. 0ales of cellular phones are still increasing, but the rate of growth has slowed. 0ales are e)pected to peak later this year. ased on this information, cellular phones are in what stage of the product life cycleA) 8ntroduction ) .rowth !) /aturity ") "ecline :,. 0ales levels of Armstrong mountain bikes are rising rapidly, profits are very high, and a growing number of competitors are taking aim at Armstrong#s market lead. ased on this information, Armstrong mountain bikes are in which stage of the product life cycleA) 8ntroduction ) .rowth !) /aturity ") "ecline :7. "ewy, !heatem, and 5owe#s promotional efforts are intended to increase the public#s awareness of their new product#s benefits and uses. This effort is consistent with the ******** of the product life cycle model. A) introduction ) growth !) maturity ") decline ::. 6hil asks you to calculate the break4even point for his firm. Fou respond that you will need the following information: A) the values for all assets and liabilities. ) total fi)ed costs, selling price, and variable costs per unit. !) forecasted sales volume, operating e)penses, and asset values. ") sales revenue and total liabilities :<. As firms develop their marketing mi), it is important to remember that: A) prices must be linked directly to cost of production.

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) instincts and past history are the best guides in determining price. !) regardless of the strategy used, prices ultimately reflect the forces of supply and demand. ") firms are often restricted in creating pricing strategies by relevant government rules and guidelines. :>. The cost of raw materials used to produce a good or service represent the firm#s ******** costs. A) fi)ed ) variable !) mi)ed ") uncontrollable :?. 6har4out 6harmacy will advertise a price of an over4the4counter drug at or below their cost. The intended goal of this loss leader strategy is to: A) achieve a target profit. ) reduce the break4even (uantity. !) build traffic and increase the customer base. ") create an upscale image. <D. The strategy of first determining what the market is willing to pay, then subtracting a desired profit margin to determine a desired cost of production is called: A) cost4based pricing. ) target costing. !) penetration pricing. ") skimming pricing. <1. The formula for break4even analysis includes all of the following components e)cept: A) total sales revenue. ) total fi)ed costs. !) forecasted cash re(uirements. ") variable cost per unit of output. <$. The rent a firm pays each month for office space is an e)ample of a(n): A) fi)ed cost. ) variable cost. !) mi)ed cost. ") uncontrollable cost. <+. 'hich of the following is a potential problem with a high4low pricing strategyA) 8t confuses and frustrates customers.

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) 8t places too much emphasis on nonprice competition. !) 8t teaches customers to wait for sales, and therefore reduces profits. ") 8t is difficult to implement. <,. American uilding 6roducts is the largest cement company in the /idwest. 'hen the firm raised its prices by > percent, all of its competitors soon announced they too were raising their prices by > percent. 8t appears this industry is influenced by a ******** strategy: A) price skimming. ) price leadership. !) market pricing. ") price discrimination. <7. The 8nternet allows customers to compare prices of many goods and service. This technology will likely: A) cause businesses to increase their focus on nonprice aspects of their promotional message. ) bring about more emphasis on demand4oriented pricing. !) diminish in importance as (uickly as other fads. ") focus government attention on the collusive pricing practices of firms in specific industries. <:. 1irtual Clectronics utiliAes a strategy to charge a very high introductory price for their automobile video theater. After identifying that their rival firms did not carry this new product, they chose this strategy to achieve ma)imum profits. 1irtual Clectronics has chosen a ******** strategy: A) high4low pricing ) a penetration !) bundling ") a skimming <<. arker rothers 6ens utiliAes a strategy of low prices to attract customers and discourage competition. This represents a ******* strategy. A) high4low ) bundling !) a skimming strategy. ") a penetration strategy.

<>. 'hat does a break4even point of 1DD units meanA) The firm must sell 1DD units to ma)imiAe its profits. ) 3i)ed costs plus variable costs e(uals 1DD units. !) y producing 1DD units, the firm can ensure that variable costs completely cancel

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our fi)ed costs. ") 8f the firm sells 1DD units, its total revenues will e(ual total costs. <?. Eian has entered into a contract with the federal government to design a computer simulation model for training helicopter pilots. The contract calls for the final price to be set at a fi)ed percentage profit over and above her cost of production. This seems to represent a: A) cost4based pricing strategy. ) supply and demand formula. !) demand4based pricing. ") price leadership. >D. 5elen is considering adding a rack of greeting cards to her product offerings at %itton ooks Gnlimited. 5er fi)ed costs associated with adding the greeting cards would be J+DD. 1ariable costs per card are J1 each. The greeting cards will sell for J$ each. 5elen#s break4even point would occur at ******** cards sold. A) 1$7 ) 17D !) +DD ") :DD >1. 3elicia wants to know how many units she must sell to cover all of her costs. 0he indicates to you that her selling price is J$D per units, her fi)ed costs are J:,DDD, and the variable costs per unit are J17 per unit. 'hat is her break4even pointA) +DD units ) ,DD units !) 1,$DD units ") 1,1DD units >+. /any products are promoted by emphasiAing their benefits, rather than setting the price lower than that of competitive goods. This emphasis on the product#s benefits illustrates a ******* strategy. A) penetration ) nonprice competition. !) industry leader ") bundled package >,. 'hich of the following statements about nonprice competition is most accurateA) 'hile still important, nonprice competition is becoming less critical as a result of the 8nternet. ) /arketers often rely on nonprice differences in their competitive strategy because price changes are easily matched.

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!) Bonprice competition is much more important to large firms than it is to small firms. ") As microeconomic theory suggests, firms have found that nonprice competition plays a secondary role that supplements the more important competition based on price. >7. Angie owns a small company that markets high (uality office supplies to businesses. Angie faces stiff competition from some much larger firms. 'hich of the following competitive strategies would probably work best for AngieA) 2eep costs as low as possible by offering a no frills approach with little of no e)tra services. ) "evelop a skimming pricing strategy. !) GtiliAe a high4low approach to pricing. ") 3ocus on offering better service with customers and work on building good customer relationships. >:. Iperating in the southwestern states, %ancer Airlines hopes to avoid entering the price war that currently is taking place between several airlines on the east coast. The best strategy to avoid severe price competition is to: A) provide fre(uent travelers the added value of special fringe benefits. ) cut costs and services in order to maintain their profit margin. !) reduce flights and layoff employees. ") determine the breakeven price and charge slightly more than that.

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