Chap 011

Chapter 11 MANAGING PRODUCTS, SERVICES, AND BRANDS Test Item Table
Major Section of the Chapter Level 1: Definition (Knows Basic Terms & Facts) Gatorade: A Thirst for Competition (pp. 233-234) The Product Life Cycle (pp. 234-241) 3, 4, 12, 15, 16, 20, 24, 36, 52, 53, 55, 59, 64, 66, 69, 72, 73, 74, 75, 76, 202 83, 87, 94, 104, 106, 107, 108 110, 111, 112, 114, 117, 136, 137, 138, 139, 140, 145, 150, 151, 153, 155, 157, 158, 161, 162, 211 163, 164, 169, 170, 171 Level of Learning Level 2: Conceptual (Understands Concepts & Principles) 1, 2 Level 3: Application (Applies Principles)
Managing the Product Life Cycle (pp. 241-243) Branding and Brand Management (pp. 244-249) Creating Customer Value Through Packaging and Labeling (pp. 249-250) Managing the Marketing of Services (p. 250-252)
5, 6, 8, 14, 18, 22, 26, 27, 32, 33, 34, 37, 38, 39, 40, 43, 44, 45, 47, 54, 56, 57, 58, 60, 61, 62, 68, 70, 71, 201, 203, 204, 205, 206 93, 95, 103, 207, 209
7, 9, 10, 11, 13, 17, 19, 21, 23, 25, 28, 29, 30, 31, 35, 41, 42, 46, 48, 49, 50, 51, 63, 65, 67, 77, 78, 79, 80, 81, 82 84, 85, 86, 88, 89, 90, 91, 92, 96, 97, 98, 99, 100, 101, 102, 105, 109, 208 113, 115, 134, 135, 141, 142, 143, 144, 146, 152, 154, 156, 159 173, 174, 175
116, 118, 119, 120, 121, 122, 123, 124, 125, 126, 127, 128, 129, 130, 131, 132, 133, 147, 148, 149, 160, 210, 212, 213, 214, 215 165, 166, 167, 168, 172, 216
182, 187, 188, 196, 197
176, 177, 178, 179, 184, 185, 186, 191, 192, 194, 195, 198, 217, 218
180, 181, 183, 189, 190, 193
Video Case: BMW: Newness and the Product Life Cycle (pp. 254-255) Note: Bold numbers indicate short essay questions.
199, 200
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CHAPTER 11
MANAGING PRODUCTS, SERVICES, AND BRANDS MULTIPLE CHOICE QUESTIONS

11-1 CHAPTER OPENING EXAMPLE: GATORADE Which of the following statements about Gatorade is true? a. b. c. d. e. Michael Jordan has been a Gatorade spokesperson. International opportunities were vigorously pursued. Distribution of Gatorade expanded first to include convenience stores and supermarkets. The original Gatorade was a liquid with a lemon-lime flavor. All of the above statements about Gatorade are true. CONCEPTUAL
Answer: e Page: 233 Rationale: Stokely-Van Camp Co. bought the Gatorade formula in 1967. When Quaker Oats purchased Stokely-Van Camp in 1983, executives quickly grew sales through a variety of means including those mentioned above. 11-2 CHAPTER OPENING EXAMPLE: GATORADE Which of the following statements about Gatorade is true? a. b. c. d. e. Gatorade began as a rehydration beverage for a football team. Gatorade has plans to expand to the Latin American market before the end of this decade. Gatorade was first only available through catalogs or mail order. The Federal Trade Commission protects the Gatorade brand name from becoming generic. All of the above statements about Gatorade are true. CONCEPTUAL
Answer: a Page: 233 Rationale: Alternative a is true. The University of Florida football team physician concocted the beverage in 1965 as a rehydration beverage for the schools football team. Gatorade is sold in 47 countries including Latin America. Gatorade was first distributed through convenience stores and supermarkets. Companies, not the Federal Trade Commission, are responsible for protecting their own brand names. 11-3 PRODUCT LIFE CYCLE DEFINITION
A concept that describes the stages a new product goes through in the marketplaceintroduction, growth, maturity, and decline is called: a. b. c. d. e. the retail life cycle. the product life cycle. the marketing mix. the product growth cycle. product commercialization. Page: 234; Figure 11-1
Answer: b
Rationale: Key term definitionproduct life cycle
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11-4 INTRODUCTION STAGE
DEFINITION
The stage of the product life cycle when a product is first introduced to its intended target market is called the __________ stage. a. b. c. d. e. growth commercialization launch introduction awareness-trial
Answer: d Page: 234 Rationale: The product life cycle describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline. The introduction stage of the product life cycle occurs when a product is first introduced to its intended target market. 11-5 INTRODUCTION STAGE CONCEPTUAL
Lack of profit in the introductory stage of the product life cycle is very often the result of: a. b. c. d. e. insufficient allocation of resources to the marketing mix. poor selection of distribution channels. high taxes. large investment costs in product development. ineffective execution of the marketing program.
Answer: d Page: 234 Other Location: web Rationale: The lack of profit is often a result of the large costs of product development. 11-6 INTRODUCTION STAGE CONCEPTUAL
The marketing objective for a product in the __________ stage of the product life cycle is to promote consumer awareness and gain trial. a. b. c. d. e. introduction growth maturity decline product repositioning
Answer: a Page: 234 Other Location: web Rationale: The marketing objective for a company at the introduction stage is to promote consumer awareness and gain trial--the first purchase of a product by a consumer.
APPLICATION
A few years ago Who Wants to Be a Millionaire premiered as the first nighttime game show in a couple of decades. The marketing for the show was intent on making television viewers aware of its existence and excited enough about the show that we would watch the first episode. Which of the following statements about televised game shows is true? a. b. c. d. e. Who Wants to Be a Millionaire was in the introduction stage of the product life cycle of televised nighttime game shows when it premiered. Because television has been around for many years, all programs fall naturally into the maturity stage. Televised programs are either in the introduction stage or the growth stage and are discontinued when they move into the maturity stage. All televised programming uses a three-stage product life cycle--growth, maturity, and decline. The product life cycle is totally inapplicable to any television genre.
Answer: a Page: 234 Rationale: The televised game show was a new product category on television and as such was in the introduction stage. Because producers are always trying to gain and keep audiences, program types move in and out of favor, which means new products are introduced and others go into decline. There are program types today that can be said to be in their maturity such as news programs like Meet the Press. The four-stage product life cycle is applicable to television genres. 11-8 INTRODUCTION STAGE CONCEPTUAL
A product in the introduction stage of the product life cycle should have which of the following marketing objectives? a. b. c. d. e. to gain awareness and stimulate trial to stress differentiation to maintain brand loyalty to gain as much distribution as possible to reveal a marketing niche
Answer: a Page: 234 Rationale: The marketing objective for a product at the introduction stage is to promote consumer awareness and gain trial--the first purchase of a product by consumer.
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APPLICATION
One of the newest types of television shows is the category called reality shows. According to the product life cycle, what was the objective of the marketers of these reality shows when they were in the introduction stage of the product life cycle? a. b. c. d. e. to gain awareness and stimulate trial to stress differentiation to maintain brand loyalty to gain as much distribution as possible to reveal a marketing niche
Answer: a Page: 234 Rationale: The marketing objective for a company at the introduction stage is to promote consumer awareness and gain trial--the initial watching of the TV show by viewers. 11-10 PRIMARY DEMAND APPLICATION
Gillette spent $35 million in advertising to introduce the Sensor razor to consumers. Such expenditures are often made to stimulate __________, or desire for the product class, rather than for a specific brand, when there are no competitors with the same product. a. b. c. d. e. additional marketing research innovative sampling primary demand initial data gathering repeat purchase
Answer: c Page: 234 Rationale: Text term definitionprimary demand 11-11 PRIMARY DEMAND APPLICATION
Scientists have discovered a new medical treatment but before they can market it, physicians and patients must be aware of its existence. In other words, its manufacturer must create __________ demand. a. b. c. d. e. selective primary derived generic secondary
Answer: b Page: 234 Rationale: Primary demand is the desire for the product class rather than for a specific brand since there are few competitors with the same product. In this case, the medical treatment is new so first the physicians and patients must be made aware of its existence.
11-12 PRIMARY DEMAND
DEFINITION
During the introduction stage of the product life cycle, promotional expenditures are made to stimulate consumer desire for an entire product class rather than for a specific brand. The consumer desire that is stimulated is referred to as __________ demand. a. b. c. d. e. selective primary derived generic secondary
Answer: b Page: 234 Rationale: Text term definitionprimary demand 11-13 PRIMARY DEMAND APPLICATION
The popular "Got Milk" advertising campaign was sponsored by the National Milk Board to encourage more people to drink milk. This ad campaign stimulated __________ demand. a. b. c. d. e. selective primary derived generic secondary
Answer: b Page: 234 Rationale: When expenditures are made to increase desire for a product class, such as milk, this is an example of stimulating primary demand. 11-14 PRIMARY DEMAND CONCEPTUAL
Promotional expenditures at the introduction stage of the product life cycle are spent on: a. b. c. d. e. contests and sweepstakes. creating selective demand. creating primary demand. personal endorsements. maintaining brand loyalty.
Answer: c Page: 234 Rationale: Companies often spend heavily on advertising and other promotion tools to build awareness among consumers in the introduction stage. These expenditures are often made to stimulate primary demand, or desire for the product class rather than for a specific brand since there are few competitors with the same product.
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11-15 SELECTIVE DEMAND
DEFINITION
During the growth stage of the product life cycle, promotional expenditures are made to stimulate consumer desire for a specific brand due to increased competition. The consumer desire that is stimulated is referred to as __________ demand. a. b. c. d. e. selective primary derived generic secondary
Answer: a Page: 235 Rationale: Text term definitionselective demand 11-16 SELECTIVE DEMAND DEFINITION
As competitors introduce their own products, and the product progresses along its life cycle, company attention is focused on creating __________ demand, or demand for a specific brand. a. b. c. d. e. selective primary derived generic secondary
Answer: a Page: 235 Rationale: Text term definitionselective demand 11-17 SELECTIVE DEMAND APPLICATION
For years when most consumers thought of cranberries, they thought of the Ocean Spray brand. Then Northland cranberry juice came on the market claiming that it was superior to the Ocean Spray brand. Northland was creating __________ demand for its cranberry products. a. b. c. d. e. selective primary derived generic secondary
Answer: a Page: 235 Rationale: Northland was interested in creating awareness for its brandnot its product category so it was creating selective demand.
CONCEPTUAL
During the introduction stage of the product life cycle, the place element of the marketing mix is highly involved with: a. b. c. d. e. reducing inventory costs. gaining distribution outlets. guaranteeing there is adequate demand if a skimming pricing strategy is used. building storage warehouses and distribution centers. using an intermodal logistics system.
Answer: b Page: 235; Figure 11-1 Rationale: Gaining distribution outlets for the product is important but often difficult because retailers may be hesitant to carry a new product. 11-19 PRODUCT LIFE CYCLE APPLICATION
The music industry has changed dramatically over the years. In the 1970s, consumers purchased 8-track tapes. In the 1980s, cassette tapes caused the decline of 8-track tapes. In fact, today consumers would experience difficulty in purchasing a new artist on 8-track tape. Now in the 2000s, compact discs have become very popular and are being purchased by music lovers of every age and background. As sales of compact discs continue to grow at an increasing rate, sales of cassette tapes are weakening, the profits are declining, and the product may face a fate similar to that of 8-track tapes. Based upon this information, you can correctly conclude cassette tapes are in the __________stage, and compact discs are in the __________ stage of the product life cycle: a. b. c. d. e. decline; growth decline; introduction maturity; growth decline; maturity maturity; introduction
Answer: a Page: 235 Rationale: The decline stage of the product life cycle occurs when sales begin to drop. As presented in this question, cassette tapes are showing weaker sales and lower profits. Compact discs, on the other hand, are showing rapid increases in sales. The rapid increase in sales is characteristic of a product in the growth stage of the product life cycle.
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11-20 SKIMMING PRICING
DEFINITION
During the introduction stage of the product life cycle, __________ may be used used. This pricing strategy charges a high price to recoup the costs of product development. a. b. c. d. e. penetration pricing cost-plus pricing ROI pricing. market-oriented pricing skimming pricing
Answer: e Page: 235; Figure 11-1 Rationale: Text term definitionskimming 11-21 SKIMMING PRICING APPLICATION
INGenius ATG introduced the microware oven-sized battery recycler in 1999. It was intended for the business market. Companies could buy the recycler and use it to restore alkaline batteries that are not normally recharged. The recycling does not let a battery live forever; but it does give it a charge of about 80 percent of the energy it originally had. Depending on the size of the battery, the recycler can hold up to 96 batteries. It takes 13 hours to recharge any battery. The recycler was introduced at $3,000. When you consider that the R & D to develop this product was quite high, you should suspect that INGenius ATG was using a __________ strategy. a. b. c. d. e. penetration pricing cost-plus pricing ROI pricing. market-oriented pricing skimming pricing
Answer: e Page: 235; Figure 11-1 Other Location: web Rationale: Skimming pricing strategy charges a high price to recoup the costs of product development. 11-22 SKIMMING PRICING CONCEPTUAL
A company follows a skimming strategy as part of introducing a new product to: a. b. c. d. e. help recover costs of development and to capitalize on the price insensitivity of early buyers. capitalize on the price sensitivity of early buyers and to postpone breakeven. discourage competitors and build unit volume. move the product into the maturity stage once primary demand has been created. do all of the above.
Answer: a Page: 235 Rationale: During introduction, a high initial price may be used as part of a skimming strategy to help the company recover the costs of development as well as take advantage of the price insensitivity of early buyers. However, high prices tend to attract competitors eager to enter the market because they see the opportunity for profit.
11-23 SKIMMING PRICING
APPLICATION
When Texas Instruments (TI) introduced its pocket calculator in the early 1970s, it was a tremendous product innovation, and TI set the mail order price at $495. What is the name of the pricing strategy Texas Instruments used? a. b. c. d. e. rip off chiseling opportunistic skimming caveat emptor
Answer: d Page: 235 Other Location: web Rationale: During introduction, a high initial price may be used as part of a skimming strategy to help the company recover the costs of development as well as take advantage of the price insensitivity of early buyers. However, high prices tend to attract competitors eager to enter the market because they see the opportunity for profit. 11-24 PENETRATION PRICING DEFINITION
During the introduction stage of the product life cycle, the strategy that discourages competitive entry by charging a low price is referred to as: a. b. c. d. e. penetration pricing. cost-plus pricing. ROI pricing. market-oriented pricing. skimming pricing.
Answer: a Page: 236 Rationale: Text term definitionpenetration pricing
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11-25 PENETRATION PRICING
APPLICATION
Consumers who are frequently on the Internet more than likely use either Netscape Explorer or Netscape as their Web browser. There is another option called Opera, which is faster and highly customizable, a feature that neither Internet Explorer nor Netscape have. For example, it can be set to suppress all pop-up ads and there are several mouse-controlled shortcuts available. Opera was initially offered on the market for $29 and this included tech support. It was hoped that this low price would build the volume of Opera users quickly. Opera used a __________ strategy. a. b. c. d. e. penetration pricing cost-plus pricing ROI pricing market-oriented pricing skimming pricing
Answer: a Page: 236 Rationale: Penetration pricing is pricing low to discourage competitive entry and help build unit volume, though the company must closely monitor costs. Opera charged a low price to build market share quickly for its new product. 11-26 PENETRATION PRICING CONCEPTUAL
To discourage competitive entry, a company can price its new product low, using penetration pricing. This pricing strategy also helps to: a. b. c. d. e. reduce costs. increase profits. build customer loyalty. improve product quality. build unit volume.
Answer: e Page: 236 Rationale: Penetration pricing is pricing low to discourage competitive entry and help build unit volume, though the company must closely monitor costs. 11-27 INTRODUCTION STAGE CONCEPTUAL
Which of the following statements about the introduction stage of the product life cycle is true? a. b. c. d. e. During the introduction stage, efforts are made to increase primary demand. During the introduction stage, firms may choose a skimming pricing strategy. During the introduction stage, firms may choose a penetration pricing strategy. Generally the promotional message is to inform and educate the consumer. All of the above statements about the introduction stage of the product life cycle are true.
Answer: e Page: 235; Figure 11-1 Rationale: As shown in Figure 11-1, during the introduction stage, the marketing objective is to gain awareness, to use either a skimming or penetration pricing strategy, to educate and inform with promotion and to increase primary demand for the product class.
APPLICATION
Opera.com introduced a new Web browser that can be easily customized to do what you want it to dosuch as suppress all pop-up ads and retrieve previously visited websites quickly. Opera is spending a lot of money to make potential consumers aware of the existence of a Web browser that can be customized. Sales have been slow to rise over the past year, and profit has yet to be achieved. In what stage of the product life cycle is this product category? a. b. c. d. e. growth stage decline stage commercialization stage maturity stage introduction stage
Answer: e Page: 235; Figure 11-1 Rationale: As shown in Figure 11-1, during the introduction stage, the marketing objective is to gain awareness, to use either a skimming or penetration pricing strategy, to educate and inform with promotion and to increase primary demand for the product class. In the case of web browsers, primary demand has been stimulated; Opera.com is trying to stimulate selective demand. 11-29 INTRODUCTION STAGE APPLICATION
Technology that allows consumers to access information on the Internet from a cell phone is in the introductory stage of its product life cycle. The industry is composed of several small firms with state-of-the-art products that are neither standardized nor compatible with one another. Moreover, these small firms have limited marketing expertise and little money to spend on marketing; their common strength is engineering. This industry has welcomed the entry of a giant in the mobile phone industry like Nokia because: a. b. c. d. e. the small companies could leapfrog beyond Nokia's products. Nokia's entry would help segment the market, establishing targets for the smaller firms. Nokia set standards and is generating primary demand. Nokia could solve the remaining technological problems. Nokia could acquire the small, struggling firms.
Answer: c Page: 235 Rationale: Nokia has the marketing power to carry the industry through the introductory stage by establishing industry-wide standards and stimulating primary demand.
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APPLICATION
Imagine that Eveready has developed solar rechargeable batteries that cost only slightly more to produce than regular batteries (less than the rechargeable batteries currently available) and can be recharged by sunlight up to 5 times, after which they are meant to be discarded. Unfortunately, the production process cannot be patented, and competitors could arrive within a few months. Eveready's marketing efforts should include all the following EXCEPT: a. b. c. d. e. skimming pricing. widespread distribution. high production capacity. advertising aimed at brand name awareness. introductory promotions to encourage trial.
Answer: a Page: 235; Figure 11-1 Rationale: Competition would be deterred if Eveready could create trial and brand loyalty for its product. The skimming price strategy would work against this, and its high per unit profits would likely attract competitors more quickly to the industry. Instead, Eveready would use penetration pricing along with widespread distribution, advertising aimed at brand name awareness, and introductory promotions to encourage trial and establish brand loyalty. 11-31 GROWTH STAGE APPLICATION
A few years ago Who Wants to Be a Millionaire premiered as the first nighttime game show in a couple of decades. Once the show became a hit and televised several nights a week, other networks quickly created their own version of what they hoped to be a successful game show format. Greed and Twenty-One are the names of but two of the new shows that were created to compete with Who Wants to Be a Millionaire. At this point in time the nighttime televised game show entered which stage of its product life cycle? a. b. c. d. e. growth stage decline stage commercialization stage maturity stage introduction stage
Answer: a Page: 236; Figure 11-1 Rationale: The growth stage of the product life cycle is characterized by rapid increases in sales as well as the appearance of competitors. As a result of more competitors and more aggressive pricing, profit usually peaks during the growth stage.
11-32 GROWTH STAGE
CONCEPTUAL
Which stage in the product life cycle is characterized by a rapid increase in sales and the appearance of competitors? a. b. c. d. e. introduction growth maturity decline profit
Answer: b Page: 236; Figure 11-1 Rationale: The growth stage of the product life cycle is characterized by rapid increases in sales as well as the appearance of competitors. As a result of more competitors and more aggressive pricing, profit usually peaks during the growth stage. 11-33 GROWTH STAGE At which stage in the product life cycle do industry profits usually peak? a. b. c. d. e. introduction growth maturity decline commercialization CONCEPTUAL
Answer: b Page: 236; Figure 11-1 Rationale: The growth stage of the product life cycle is characterized by rapid increases in sales as well as the appearance of competitors. As a result of more competitors and more aggressive pricing, profit usually peaks during the growth stage. 11-34 GROWTH STAGE CONCEPTUAL
Which of the following is a characteristic of the growth stage of the product life cycle? a. b. c. d. e. advertising emphasis switches to primary demand growing proportion of initial purchasers to repeat purchasers slow, steady sales competitors appear pricing is more aggressive
Answer: d Page: 236; Figure 11-1 Rationale: The growth stage of the product life cycle is characterized by rapid increases in sales as well as the appearance of competitors. As a result of more competitors and more aggressive pricing, profit usually peaks during the growth stage.
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11-35 GROWTH STAGE
APPLICATION
A technology company has just begun to make a profit on its DVD-R discs (DVD discs in a recordable format). Its promotional expenditures are aimed at trying to persuade potential customers of the merits of its DVD-R discs. Even more money is being spent to develop the firm's distribution system for its DVD-R discs. Since Apple's iMac now comes with a DVD recorder as a standard part, several other companies have started producing DVD-R discs for the market. What stage of the product life cycle is the DVD-R in? a. b. c. d. e. commercialization stage maturity stage growth stage decline stage introduction stage
Answer: c Page: 236; Figure 11-1 Rationale: In this stage the competitors first appear, profitability becomes a reality, promotion tries to create selective demand, and expanding distribution outlets for the growth in product sales becomes important. 11-36 MATURITY STAGE DEFINITION
Which stage in the product life cycle is characterized by a slowing of industry sales? a. b. c. d. e. introduction growth maturity decline comparability
Answer: c Page: 237; Figure 11-1 Rationale: The third stage, maturity, is characterized by a slowing of total industry sales revenue. Sales increase at a decreasing rate as fewer new buyers enter the market. Most consumers who would buy the product are either repeat purchasers of the product or have tried and abandoned it. Weaker competitors begin to leave the market. Profit declines because there is fierce price competition among many sellers.
11-37 MATURITY STAGE During the maturity stage of the product life cycle, profit declines because: a. b. c. d. e.
CONCEPTUAL
there are fewer and fewer competitors in the market. better products are only in the growth stage. production costs increase the more a firm has to manufacture the same product. there is fierce price competition among sellers. all of the above.
Answer: d Page: 238; Figure 11-1 Rationale: The third stage, maturity, is characterized by a slowing of total industry sales revenue. Sales increase at a decreasing rate as fewer new buyers enter the market. Most consumers who would buy the product are either repeat purchasers of the product or have tried and abandoned it. Weaker competitors begin to leave the market. Profit declines because there is fierce price competition among many sellers. 11-38 MATURITY STAGE CONCEPTUAL
The marketing objective of a firm whose product is in the maturity stage of the product life cycle is to: a. b. c. d. e. actively search out new first time users. maintain existing buyers since new ones are hard to find. actively reinforce competitors' marketing efforts. maintain existing distributors and actively seek out new ones. shift to a skimming price strategy.
Answer: b Page: 238; Figure 11-1 Rationale: Marketing attention in the maturity stage is often directed toward holding market share through further product differentiation and finding new buyers. 11-39 MATURITY STAGE CONCEPTUAL
Promotional expenses at the maturity stage of the product life cycle are often directed towards: a. b. c. d. e. creating demand for the product class. reminding the consumer to use the product. creating primary demand. gaining new distributors. eliminating distribution channels.
Answer: b Page: 238; Figure 11-1 Other Location: web Rationale: As shown in Figure 11-1, promotion is usually reminder oriented.
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11-40 MATURITY STAGE
CONCEPTUAL
Which of the following statements is a characteristic of the maturity stage of the product life cycle? a. b. c. d. e. Often this stage is entered because of environmental or technological factors. During this stage companies attempt to eliminate distribution channels. Industry sales revenue peaks, which is one stage after industry profit peaks. Industry profits peak because production and distribution costs are declining. Industry profit peaks, which is one stage after industry sales revenue peaks.
Answer: c Page: 238; Figure 11-1 Rationale: At the maturity stage industry sales revenue peaks while industry profit (which peaked in the growth stage) is declining because of more competitors and more price competition. 11-41 MATURITY STAGE APPLICATION
The videocassette recorder (VCR) was introduced to the market in the late 1970s. Ninety-one percent of American homes own at least one VCR. To maintain market share in the VCR market and to get customers to purchase additional VCRs, its manufacturers have continually provided for higher-quality recording capabilities and made the machines easier to watch and with different features that allowed for quicker location of recorded programs. Because the goal of VCR manufacturers is to maintain brand loyalty and market share, the product category is in the __________ stage of its product life cycle. a. b. c. d. e. introduction growth maturity decline harvesting
Answer: c Page: 238 Other Location: web Rationale: Product differentiation is a commonly used strategy for products in the maturity stage to maintain market share and brand loyalty.
11-42 MATURITY STAGE
APPLICATION
Hershey's chocolate bars have been marketed in the United States for more than 100 years, and are still a tremendous success, with a loyal following of consumers. The company began advertising several years ago to hold its market share, and it has introduced several distinctive new products. What stage of the product life cycle are Hershey's chocolate bars competing in? a. b. c. d. e. development introduction growth maturity decline
Answer: d Page: 238; Figure 11-1 Rationale: The third stage, maturity, is characterized by a slowing of total industry sales revenue. Sales increase at a decreasing rate as fewer new buyers enter the market. Most consumers who would buy the product are either repeat purchasers of the product ( in this case) or have tried and abandoned it. Weaker competitors begin to leave the market. Profit declines because there is fierce price competition among many sellers. There is a full product line, shown by the addition of several distinctive new products. 11-43 DECLINE STAGE CONCEPTUAL
Sales and profits both exhibit a steady downward trend throughout which stage of the product life cycle? a. b. c. d. e. introduction growth maturity decay decline
Answer: e Page: 238 Rationale: In the decline stage, both sales and profits are steadily dropping. 11-44 DECLINE STAGE CONCEPTUAL
All products are assumed to have a complete product life cycle. Which of the following is NOT a reason why products ultimately decline? a. b. c. d. e. poor marketing emergence of superior competitive products all consumers' wants and needs inevitably change non-marketing failures of firms all the above are reasons for decline
Answer: c Page: 238 Rationale: There is no evidence that all consumer wants and needs inevitably change; instead many tastes, especially those motivated by basic drives, appear unchanged throughout history.
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11-45 DECLINE STAGE
CONCEPTUAL
All of the following occur during the decline stage of the product life cycle EXCEPT: a. b. c. d. e. sales decrease substantially. the firm chooses the wrong marketing strategy, which results in an inappropriate marketing program for the target market. the uncontrollable environment changes. promotional support for the product becomes minimal. the number of competitors is reduced.
Answer: b Page: 238; Figure 11-1 Rationale: Alternative b is the correct response because a firm may have had the appropriate marketing strategy that led to the development and execution of the appropriate marketing program for its product. However, this may have been insufficient to stimulate or maintain selective demand because environmental factors (changes in consumer preferences, new technologies, or other uncontrollable factor) may have caused a fundamental decline in sales for the product class. 11-46 DECLINE STAGE APPLICATION
In the 1960s, television westerns were extremely popular. The shows were adventure shows with settings and costumes that were very unlike what really existed. There was Bonanza, Wagon Train, The Virginian, Laramie, etc. When viewers gradually stopped watching this category of programs, production companies found the networks no longer wanted to televise such shows. The television western as a product category entered the __________ stage. a. b. c. d. e. decay decommercialization decline maturity harvested
Answer: c Page: 238 Rationale: The programs entered the decline stage with declining viewership (or sales). 11-47 DECLINE STAGE CONCEPTUAL
To handle products in the decline stage of the product life cycle, companies often use either: a. b. c. d. e. diversification or harvesting. harvesting or contracting. deletion or harvesting. diversification or harvesting. building or contracting.
Answer: c Page: 238 Rationale: To handle a declining product, a company often follows one of two strategies. Deletion is dropping the product from the line; harvesting is retaining the product but reducing support costs.
11-48 DECLINE STAGE
APPLICATION
Three years ago Pokmon was the hottest name in toys, but as other more high-tech toys appeared on the market, the popularity of Pokmon waned as did its sales. Some toy experts predict Pokmon will soon be only a memory for toy retailers. Pokmon is in the __________ stage of its product life cycle. a. b. c. d. e. decay decommercialization decline maturity harvested
Answer: c Page: 238 Rationale: The decline stage occurs when sales begin to drop. The market has abandoned Pokmon. 11-49 DECLINE STAGE APPLICATION
Your product has been suffering from steadily eroding sales and profits. You have tried a number of options to revitalize the product's sales and profits, but after seven changes in your strategy, you have yet to find success. Which of the following actions would be the LEAST appropriate next step? a. b. c. d. e. Delete the product from the line. Retain the product, but reduce its support costs. Stimulate primary demand. Contract the production of the product. Contract the marketing of the product.
Answer: c Page: 238; Figure 11-1 Rationale: When its product reaches the decline stage company, it can follow one of two main optionsdeletion or harvesting. These are described in Alternatives a and b. It's much too late to try to stimulate primary demand for the product class, which normally occurs during the introduction stage of the product life cycle, so alternative c is the least appropriate next step.
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11-50 DELETION
APPLICATION
During the 1990s, there was a backlash against artificial colors in food and other consumer products. As a result, a lot of companies issued products that were clear. One example was Crystal Pepsi. The product never really found a market and was __________, or dropped from the Pepsi product line soon after its introduction. a. b. c. d. e. diversified aggregated segmented deleted harvested
Answer: d Page: 238 Rationale: Dropping a product from a companys product line is called product deletion. 11-51 DELETION APPLICATION
In the 1960s, television westerns were extremely popular. The shows were adventure shows with settings and costumes that were very unlike what really existed. There was Bonanza, Wagon Train, The Virginian, Laramie, etc. When viewers gradually stopped watching this category of programs, production companies found the networks no longer wanted to televise such shows. The production companies used a __________ strategy and stopped production on all television westerns when the networks stopped showing them. a. b. c. d. e. diversifying aggregation segmentation deletion harvesting
Answer: d Page: 238 Rationale: Dropping a product from a companys product line is called product deletion. 11-52 DELETION DEFINITION
A strategy of dropping a product from the product line, usually in the decline stage of the product life cycle, is called: a. b. c. d. e. diversifying. aggregation. segmentation. deletion. harvesting.
Answer: d Page: 238; Figure 11-1 Rationale: Text term definitiondeletion
11-53 HARVESTING
DEFINITION
__________ occurs when a company retains a product but reduces marketing support costs. a. b. c. d. e. Skimming Harvesting Profiting Deletion Divesting
Answer: b Page: 238 Rationale: Text term definitionharvesting 11-54 HARVESTING CONCEPTUAL
When a product reaches the decline stage of the product life cycle, a firm has two choices. One choice involves product deletion, where a product is dropped from a firm's product line. Another less drastic choice is to retain the product in the product line, but to reduce marketing costs. When this option called __________ is selected, advertising expenditures for the product are reduced and salespeople do not devote their efforts to selling the product. a. b. c. d. e. decline maintenance customer need maintenance divestment maturity re-development harvesting
Answer: e Page: 238 Rationale: In essence, when a harvesting strategy is employed with products in the decline stage, the marketing firm reduces marketing efforts for the product and simply collects the revenues realized from ongoing customer needs and requests. The future of such products is limited to existing customer demand. 11-55 HARVESTING DEFINITION
A strategy of harvesting may be employed in the decline stage of a products life to: a. maintain primary demand for a product category. b. get as many new customers as possible. c. maintain the ability to meet customers' requests. d. eliminate production and distribution costs. e. reposition the product. Answer: c Page: 238 Rationale: Text term definitionharvesting
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11-56 MARKETING NEWSNET The growth of e-mail has: a. b. c. d. e.
CONCEPTUAL
led to a significant increase in the amount of faxing because communication is easier. led to a significant decrease in the amount of faxing. not affected faxing. led to a significant increase in the amount of faxing because people don't trust just e-mail and want a hard copy fax. discouraged all forms of written communication.
Answer: c Page: 238 Rationale: The growth of e-mail has not affected faxing because the two technologies do not directly compete for the same messaging applications. E-mail is used for text messages, while faxing is used for formatted business documents. 11-57 LENGTH OF PRODUCT LIFE CYCLE CONCEPTUAL
Generally, the average length of time it takes for a product category to move from the introduction stage of its product life cycle to the decline stage is: a. b. c. d. e. 18 months. 5-10 years. 20 years. 30 years. unpredictable.
Answer: e Page: 238 Rationale: There is no exact time that a product takes to move through its life cycle. 11-58 LENGTH OF PRODUCT LIFE CYCLE CONCEPTUAL
There is no exact time that a product takes to move through its life cycle. As a rule: a. b. c. d. e. fad products have the longest lifecycle. consumer products have shorter life cycles than business products. packaged goods have a shorter life cycle than fads. installations have a shorter life cycle than consumer products. intangibility shortens the product life cycle.
Answer: b Page: 239 Other Location: web Rationale: As a rule, consumer products have shorter life cycles than business products. The availability of mass communication vehiclessuch as television and the Internetinforms consumers faster and shortens life cycles. Also, technological change tends to shorten product life cycles as new product innovation replaces existing products.
11-59 TYPES OF PRODUCT LIFE CYCLES Which of the following is a NOT a type of product life cycle? a. b. c. d. e. revolutionary low learning fashion high learning fad
DEFINITION
Answer: a Page: 239 Rationale: The product life cycle curve shown in Figure 11-1 is the generalized life cycle, but not all products have the same shape to their curve. There are several different life-cycle curves, each type suggesting different marketing strategies: high-learning, low-learning, fashion, and fad. 11-60 HIGH LEARNING PRODUCT CONCEPTUAL
An extended introduction stage of the product life cycle occurs for which type of product? a. b. c. d. e. high learning low learning fashion fad revolutionary
Answer: a Page: 239 Other Location: web Rationale: A high learning product is one for which significant education of the customer is required, and there is an extended introductory period. An example is a convection oven, which requires learning a new way of cooking and altering familiar recipes. 11-61 HIGH LEARNING PRODUCT CONCEPTUAL
Interactive television with video on-demand capabilities will change how people watch television and how consumers access the Internet. What type of a product life cycle would be associated with this product? a. b. c. d. e. revolutionary high learning low learning fashion fad
Answer: b Page: 239 Rationale: A high learning product is one for which significant education of the customer is required, and there is an extended introductory period. Interactive television will require significant education of the consumer and therefore there will be an extended introductory period.
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11-62 LOW LEARNING PRODUCT
CONCEPTUAL
An alternative product life cycle that results from products that are easily imitated by competitors, consumers who readily understand their benefits, and for which the appropriate marketing strategy is to gain strong distributor outlets is characteristic of __________ products. a. b. c. d. e. high learning low learning fashion fad substitute
Answer: b Page: 239 Rationale: Low-learning product sales begin immediately because little learning is required by the consumer, and the benefits of purchase are readily understood. This product often can be easily imitated by competitors, so the marketing strategy is to broaden distribution quickly. In this way, as competitors rapidly enter, most retail outlets already have the first product. It is also important to have the manufacturing capacity to meet this demand. 11-63 DIMENSIONS OF PRODUCT LIFE CYCLE APPLICATION
Imagine Eveready has developed solar rechargeable batteries that cost only slightly more to produce than regular batteries (less than the rechargeable batteries currently available) and can be recharged by sunlight up to 5 times, after which they are meant to be discarded. Unfortunately, the production process cannot be patented, and competitors could arrive within a few months. Which of the following is the best description of the product life cycle of this product? a. b. c. d. e. rapid growth followed by rapid decline long, level beginning, and rapid ascent moderately slow introduction, followed by modest growth, gradually leveling off high introductory sales, with rapid decline high initial sales followed by slow decline
Answer: c Page: 238-239 Rationale: Consumers will need to be educated about the availability and benefits of the new type of battery. Therefore, a slow introductory period is likely. Growth will slow as competitors enter the market. Alternative a is a fad product. Alternative b shows no growth in the introduction stage so this is incorrect. Alternatives d and e don't reflect reasonable product life cycles ad both begin with high initial sales.
11-64 FASHION PRODUCT
DEFINITION
Products that are introduced, decline, and then seem to return are characteristic of the __________ type of product life cycle. a. b. c. d. e. high learning low learning fashion fad revolutionary
Answer: c Page: 239 Rationale: Text term definitionfashion product 11-65 FASHION PRODUCT APPLICATION
Which of the following products is the best example of a product that might experience an introduction, a decline, and a reintroduction as part of its normal product life cycle? a. b. c. d. e. cat food veterinarian services cake mixes fishnet hose paperclips
Answer: d Page: 239 Rationale: A fashion product, such as hemline lengths on skirts, or lapel widths on sport jackets, is introduced, declines, and then seems to return. Life cycles for fashion products most often appear in womens and mens clothing styles. The length of the cycles may be years or decades. 11-66 FAD PRODUCT DEFINITION
Which type of product has experiences rapid sales on introduction and then an equally rapid decline of the product life cycle? a. b. c. d. e. high learning products low learning products fashion products fad products abnormal products
Answer: d Page: 240 Rationale: A fad, such as wall walkers or toe socks, experiences rapid sales on introduction and then an equally rapid decline. These products are novelties and have a short life cycle.
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11-67 FAD PRODUCT
APPLICATION
Some singers sing a great song that shoots to the top of the chart. The singers go on tour and have sold-out concerts everywhere they appear. Just as quickly (particularly if they are unable to follow their first hit song with a second one), they are singing to half-filled concerts and then to smaller clubs, and eventually no one wants to hear them perform. Such one-hit singers are most likely categorized as __________ products. a. b. c. d. e. high learning low learning fashion fad revolutionary
Answer: d Page: 240 Rationale: A fad, such as the singer mentioned, experiences rapid sales on introduction and then an equally rapid decline. This singer is a novelty and has a short life cycle because only one song was popular. 11-68 DIFFUSION OF INNOVATION With diffusion of innovation, a. b. c. d. e. once a product enters the market, very similar products will enter within a very short period of time. one new product will produce ancillary product invention (e.g., video cassettes created a market for cassette holders). not all consumers accept a new product at the same time because adoption of a product spreads slowly throughout the population. product changes by one competitor lead to similar product changes by another competitor. unique efforts are made to create primary demand. CONCEPTUAL
Answer: c Page: 240 Rationale: Not all consumers rush to buy a product in the introductory stage, and the shapes of the life cycle curves indicate that most sales occur after the product has been on the market for some time. In essence, a product diffuses, or spreads, through the population, a concept called the diffusion of innovation.
11-69 DIFFUSION OF INNOVATION
DEFINITION
The life cycle of a product depends on sales to customers. The shapes of life-cycle curves indicate that most sales occur after the product has been on the market for some time. The concept that some people are attracted to a product early while others buy it only after they see their friends with the product is called the: a. b. c. d. e. dissociation of sensibility. timed profiling. categories of adopters. diffusion of innovation. derivation of markets.
Answer: d Page: 240 Rationale: Text term definitiondiffusion of innovation 11-70 DIFFUSION OF INNOVATION CONCEPTUAL
All of the following are categories of consumers based on when they purchase a new product, the information sources they use, and their risk-taking orientation EXCEPT: a. b. c. d. e. initiators. early adopters. early majority. late majority. laggards.
Answer: a Page: 240; Figure 11-4 Other Location: web Rationale: The first category of product adopters relative to the diffusion of innovation is innovators, not initiators. 11-71 DIFFUSION OF INNOVATION CONCEPTUAL
The largest numbers of product adopters with respect to the diffusion of innovation are found among: a. b. c. d. e. early adopters and laggards. early majority and late majority. late majority laggards. innovators and early majority. innovators and early adopters.
Answer: b Page: 240; Figure 11-4 Rationale: Early majority adopters and late majority adopters make up about 68% of the total population that will adopt a new product at some point during a product life cycle.
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11-72 INNOVATORS As product adopters, innovators typically: a. b. c. d. e.
DEFINITION
fear debt and use neighbors and friends as information sources. are skeptical and have below average social status. act with deliberation and use many informal social contacts. are leaders in social standing and have slightly above average education when compared to the other adopter classes. are venturesome, better educated than other product adopters, and use multiple information sources.
Answer: e Page: 241; Figure 11-4 Other Location: web Rationale: There are five categories of product adopters based on when they adopt, or choose to buy a new product. For any product to be successful it must be purchased by innovators and early adopters. The five categories are: (1)innovators are venturesome, better educated than other product adopters, and use multiple information sources; (2)early adopters are leaders in social settings, slightly above average education; (3) early majority are deliberate and have many informal social contacts; (4) late majority is skeptical and has below average social status; (5) laggards fear debt, neighbors and friends are information sources. 11-73 EARLY ADOPTERS As product adopters, early adopters typically: a. b. c. d. e. fear debt and use neighbors and friends as information sources. are skeptical and have below average social status. act with deliberation and use many informal social contacts. are leaders in social standing and have slightly above average education when compared to the other adopter classes. are venturesome, better educated than other product adopters, and use multiple information. DEFINITION
Answer: d Page: 241; Figure 11-4 Rationale: There are five categories of product adopters based on when they adopt, or choose to buy a new product. For any product to be successful it must be purchased by innovators and early adopters. The five categories are: (1)innovators are venturesome, better educated than other product adopters, and use multiple information sources; (2)early adopters are leaders in social settings, slightly above average education; (3) early majority are deliberate and have many informal social contacts; (4) late majority is skeptical and has below average social status; (5) laggards fear debt, neighbors and friends are information sources.
11-74 EARLY MAJORITY As product adopters, members of the early majority typically: a. b. c. d. e.
DEFINITION
fear debt and use neighbors and friends as information sources. are skeptical and have below average social status. act with deliberation and use many informal social contacts. are leaders in social standing and have slightly above average education when compared to the other adopter classes. are venturesome, better educated than other product adopters, and use multiple information.
Answer: c Page: 241; Figure 11-4 Rationale: There are five categories of product adopters based on when they adopt, or choose to buy a new product. For any product to be successful it must be purchased by innovators and early adopters. The five categories are: (1)innovators are venturesome, better educated than other product adopters, and use multiple information sources; (2)early adopters are leaders in social settings, slightly above average education; (3) early majority are deliberate and have many informal social contacts; (4) late majority is skeptical and has below average social status; (5) laggards fear debt, neighbors and friends are information sources. 11-75 LATE MAJORITY As product adopters, members of the late majority typically: a. b. c. d. e. fear debt and use neighbors and friends as information sources. are skeptical and have below average social status. act with deliberation and use many informal social contacts. are leaders in social standing and have slightly above average education when compared to the other adopter classes. are venturesome, better educated than other product adopters, and use multiple information. DEFINITION
Answer: b Page: 241; Figure 11-4 Rationale: There are five categories of product adopters based on when they adopt, or choose to buy a new product. For any product to be successful it must be purchased by innovators and early adopters. The five categories are: (1)innovators are venturesome, better educated than other product adopters, and use multiple information sources; (2)early adopters are leaders in social settings, slightly above average education; (3) early majority are deliberate and have many informal social contacts; (4) late majority is skeptical and has below average social status; (5) laggards fear debt, neighbors and friends are information sources.
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11-76 LAGGARDS As product adopters, laggards typically: a. b. c. d. e.
DEFINITION
fear debt and use neighbors and friends as information sources. are skeptical and have below average social status. act with deliberation and use many informal social contacts. are leaders in social standing and have slightly above average education when compared to the other adopter classes. are venturesome, better educated than other product adopters, and use multiple information.
Answer: a Page: 241; Figure 11-4 Rationale: There are five categories of product adopters based on when they adopt, or choose to buy a new product. For any product to be successful it must be purchased by innovators and early adopters. The five categories are: (1)innovators are venturesome, better educated than other product adopters, and use multiple information sources; (2)early adopters are leaders in social settings, slightly above average education; (3) early majority are deliberate and have many informal social contacts; (4) late majority is skeptical and has below average social status; (5) laggards fear debt, neighbors and friends are information sources. 11-77 PRODUCT ADOPTION APPLICATION
When the personal computer was first introduced, industry analysts predicted that very few would be sold. However, a short time after the product was made available, consumers who were young, highly educated, adventuresome, and who were well informed began buying personal computers. While those buyers were relatively few in number, the marketers of computers were encouraged because other, less adventuresome consumers would likely adopt personal computers later. According to the product adoption classification, those first buyers of personal computers were: a. b. c. d. e. early adopters. early majority. innovators. product leaders. diffusion leaders.
Answer: c Page: 241; Figure 11-4 Rationale: Innovators are characterized as being adventuresome, having a high level of education, and having access to multiple sources of information.
11-78 PRODUCT ADOPTION
APPLICATION
Imagine Post Cereal introduces a cereal bar just like the ones Kellogg's and Quaker already have on the market. Post has decided to promote the bars using ads without coupons and to price the bars at about the same price as the other brands. Post Cereal bars will also be distributed to the same stores as the Kellogg's and Quaker products. Which of the following barriers to new product adoption will most likely prevent the Post Cereal bars from being a successful product? a. b. c. d. e. value barrier psychological barrier economic barrier usage barrier social barrier
Answer: a Page: 240 Rationale: Several factors affect whether a consumer will adopt a new product or not. Common reasons for resisting a product in the introduction stage are usage barriers (the product is not compatible with existing habits), value barriers (the product provides no incentive to change), risk barriers (physical, economic, or social), and psychological barriers (cultural differences or image). 11-79 PRODUCT ADOPTION APPLICATION
A new exercise video contends that with one day of fasting and one one-hour period of intense cardiovascular exercise, the average individual can lose five pounds a week and be in peak health within six months of starting the program. __________ barriers will doom the new product to failure because the product's claims are not consistent with what consumers do and how they think. a. b. c. d. e. Psychological Physical Risk Value Usage
Answer: e Page: 240 Rationale: Several factors affect whether a consumer will adopt a new product or not. Common reasons for resisting a product in the introduction stage are usage barriers (the product is not compatible with existing habits), value barriers (the product provides no incentive to change), risk barriers (physical, economic, or social), and psychological barriers (cultural differences or image).
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APPLICATION
When McDonalds began doing business in India, it had to change the meat in some of its meals from beef, considered sacred by many in India, to lamb and other meats. __________ barriers would have doomed McDonalds in India had they not changed their recipes because many Indian consumers would have refused to eat sandwiches made from an animal they consider to be sacred. a. b. c. d. e. Psychological Physical Risk Value Usage
Answer: a Page: 240 Rationale: Several factors affect whether a consumer will adopt a new product or not. Common reasons for resisting a product in the introduction stage are usage barriers (the product is not compatible with existing habits), value barriers (the product provides no incentive to change), risk barriers (physical, economic, or social), and psychological barriers (cultural differences or image). 11-81 PRODUCT ADOPTION APPLICATION
Even an experienced and well trained hiker would not think of crossing Death Valley, where temperatures easily top 120 degrees, without plenty of water as part of their supplies. __________ barriers would doom any hiking trip across that area without the assurance that plenty of water would be available for the hiker. a. b. c. d. e. Psychological Physical Risk Value Usage
Answer: c Page: 240 Rationale: Several factors affect whether a consumer will adopt a new product or not. Common reasons for resisting a product in the introduction stage are usage barriers (the product is not compatible with existing habits), value barriers (the product provides no incentive to change), risk barriers (physical, economic, or social), and psychological barriers (cultural differences or image).
APPLICATION
Why would the manufacturer of a new all-natural-ingredient shampoo and conditioner put free samples of the product in Sunday newspapers? a. b. c. d. e. to simulate laggard usage of the product to encourage product adoption to control innovation diffusion to avoid any possibility of litigation to circumvent the typical adoption cycle
Answer: b Page: 240 Rationale: Free samples are one of the most popular means to gain consumer trial, and it is logical that increased consumer trial will lead to increased adoption. 11-83 PRODUCT MODIFICATION DEFINITION
__________ is a strategy that involves altering a product's characteristic such as its quality, performance, or appearance to try to increase and extend the products sales. a. b. c. d. e. Market modification Product modification Product repositioning Market-product strategy Diversification
Answer: b Page: 241 Rationale: Text term definitionproduct modification 11-84 PRODUCT MODIFICATION APPLICATION
Twenty years ago, the Mississippi Gulf Coast was a nice place to vacation with a white sandy beach, golfing opportunities, resort hotels, and good seafood restaurants. With the addition of casinos, the Gulf Coast improved its odds of being a tourist destination for more travelers. This is an example of: a. b. c. d. e. a market-product strategy. diversification. market modification. product modification. harvesting.
Answer: d Page: 241 Rationale: Product modification is a strategy that involves altering a product's characteristic such as its quality, performance, or appearance, to try to increase and extend the product's sales.
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11-85 PRODUCT MODIFICATION
APPLICATION
Alka-Seltzer was made originally as a hangover remedy that cured the headache and settled the stomach. Today, you can purchase Original Alka-Seltzer, Extra Strength Alka-Seltzer, AlkaSeltzer Morning Relief (for morning headaches and fatigue), and Alka-Seltzer Heartburn Relief. To extend the product's sales to new markets, the makers of Alka-Seltzer have used: a. b. c. d. e. a market-product strategy. diversification. market modification. product modification. harvesting.
Answer: d Page: 241 Rationale: Product modification is a strategy that involves altering a product's characteristic such as its quality, performance, or appearance to try to increase and extend a product's sales. In this case Alka-Seltzer manufactured additional types of the product to address different consumer needs or required product performance. 11-86 PRODUCT MODIFICATION APPLICATION
DiGiorno rising crust pizza has been available in the freezer sections of supermarkets for quite awhile. The product's recent introduction of a DiGiorno cheese stuffed crust is an example of __________ and should attract new buyers. a. b. c. d. e. a market-product strategy. diversification. market modification. product modification. harvesting.
Answer: d Page: 241 Rationale: Product modification is a strategy that involves altering a product's characteristic such as its quality, performance, or appearance to try to increase and extend a product's sales. In this case, DiGiorno added a cheese stuffed crust to try to increase and extend their sales of pizza. 11-87 MARKET MODIFICATION DEFINITION
___________ is a strategy used when a company tries to find new customers, increase a products use among existing customers, or create new use situations. a. b. c. d. e. Market modification Product modification Product repositioning Market-product strategy Diversification
Answer: a Page: 241 Other Location: web Rationale: Text term definitionmarket modification
11-88 MARKET MODIFICATION
APPLICATION
When Coca-Cola promoted Coke as a morning beverage when you didn't want coffee, it was using: a. b. c. d. e. product modification. repositioning the product. market modification. market-product extension. diversification.
Answer: c Page: 241 Rationale: Market modification is a strategy used when a company tries to find new customers, increase a products use among existing customers, or create new use situations. Coca-Cola was using market modification strategy because it was trying to increase product usage. 11-89 MARKET MODIFICATION APPLICATION
Tums, which has long been used for reducing heartburn, is now being promoted as a source of calcium for the prevention of osteoporosis. Its manufacturer is using which of the following market modification strategies? a. b. c. d. e. finding new users creating new use situations increasing use by existing customers modifying the product characteristics doing none of the above
Answer: b Page: 241 Rationale: Market modification is a strategy used when a company tries to find new customers, increase a products use among existing customers, or create new use situations. In the case of Tums the manufacturer is trying to create a new use situation by suggesting it be used to prevent osteoporosis.
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APPLICATION
Finding new uses for an existing product has been a major strategy in extending the life of Arm & Hammer Baking Soda. The product (unchanged from its original formula) is now being promoted as a dentifrice; a deodorizer for cat litter, carpeting, and refrigerators; and a fire extinguisher. Arm & Hammer is: a. b. c. d. e. finding new users through a product modification strategy. creating new use situations through a market modification strategy. increasing use by existing customers through a product modification strategy. modifying the product characteristics. demarketing the product.
Answer: b Page: 241 Rationale: Market modification is a strategy used when a company tries to find new customers, increase a products use among existing customers, or create new use situations. Arm & Hammers original formula is being used in additional situations. 11-91 MARKET MODIFICATION APPLICATION
Major American car manufacturers are offering buying incentives to newly graduated college students who traditionally have little or no credit. Car manufacturers are using which of the following market modification strategies? a. b. c. d. e. finding new users creating new use situations increasing use by existing customers modifying the product reacting to competitors' position
Answer: a Page: 241 Other Location: web Rationale: Market modification is a strategy used when a company tries to find new customers, increase a products use among existing customers, or create new use situations. By offering buying incentives to college students (new customers), automobile manufacturers can tap a sizable market of new customers who might otherwise not buy a new car.
APPLICATION
The Upjohn Company first targeted men for its Rogaine topical solution, a drug to restore hair growth, but later marketed this product to women. The Upjohn Company is using which of the following market modification strategies? a. b. c. d. e. finding new users creating new use situations increasing use by existing customers modifying the product reacting to competitors' position
Answer: a Page: 241 Rationale: Market modification is a strategy used when a company tries to find new customers, increase a products use among existing customers, or create new use situations. By including women in their marketing efforts, Upjohn increased the number of potential customers. 11-93 ETHICS AND SOCIAL RESPONSIBILITY ALERT CONCEPTUAL
Consumer advocates believe the practice of downsizing by consumer products firms has resulted in: a. b. lower product prices for consumers because of lower labor, raw material and packaging costs due to the recession and lower inflation in the United States. a greener environment due to the reduction in the amount of packaging used for promotional purposes (e.g. eliminating of the glossy cardboard that promoted the musical artist and contained the CD and its plastic protective box), thereby reducing the amount of waste disposed in landfills. fewer products and less product variability offered due to the corporate restructuring taking place worldwide. keeping prices from rising beyond the psychological barriers consumers have developed for products. a subtle, yet deceptive practice of taking advantage of consumers' buying habits by offering less product content in the same or larger package while maintaining or increasing the price.
c. d. e.
Answer: e Page: 243 Rationale: Consumer advocates charge that downsizing the content of packages while maintaining prices is a subtle and unannounced way of taking advantage of consumer buying habits. They also say downsizing is a price increase in disguise and deceptive, but legal. Manufacturers argue that this practice is a way of keeping prices from rising beyond psychological barriers for their products.
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11-94 PRODUCT REPOSITIONING
DEFINITION
Changing the place a product occupies in a consumer's mind relative to competitive products is called: a. b. c. d. e. market modification. product modification. product repositioning. product development. differentiation.
Answer: c Page: 242 Rationale: Text term definitionproduct repositioning 11-95 PRODUCT REPOSITIONING CONCEPTUAL
All of the following are factors that trigger product repositioning as a marketing action EXCEPT: a. b. c. d. e. changing the value offered to consumers relative to competitive products by adding or deleting features. catching a rising trend due to changes in consumer preferences relative to competitive products. reaching a new market due to sluggish sales in the currently targeted market. reacting to a competitor's entrenched product position that is adversely affecting the firm's sales and market share. copying competitors' sales promotion strategies to increase the trial and repeat purchase behavior of consumers relative to the firm's product.
Answer: e Page: 242 Rationale: Often a company decides to reposition its product or product line in an attempt to increase sales. A firm can reposition a product by changing one or more of the four marketing mix elements. Four factors that trigger a repositioning action are: (1) reacting to a competitors position; (2) reaching a new market; (3) catching a rising consumer trend; and (4) changing the value offered by trading up or down.
APPLICATION
Sealy, the largest manufacturer of mattresses in the U.S., recently set out to redefine its place in the bedrooms of America. No longer was it going to be associated as a mattress company. Henceforth, the name Sealy was going to be known as the world's leading "sleep wellness provider." This is an example of: a. b. c. d. e. reverse marketing. demarketing. repositioning. resegmenting. reverse targeting.
Answer: c Page: 242 Rationale: Often a company decides to reposition its product or product line in an attempt to increase sales. A firm can reposition a product by changing one or more of the four marketing mix elements. Four factors that trigger a repositioning action are: (1) reacting to a competitors position; (2) reaching a new market; (3) catching a rising consumer trend; and (4) changing the value offered by trading up or down. Sealy is changing the place a product occupies in a consumer's mind relative to competitive products. 11-97 PRODUCT REPOSITIONING APPLICATION
New Coke was repositioned as a slightly sweeter, less filling soft drink because the Coca-Cola Company discovered that its 1984 market share in supermarkets was 2 percent behind Pepsi. This product repositioning strategy was: a. b. c. d. e. a reaction to a competitor's position. to reach a new market. to catch a rising trend. to change the value offered. to change its target audience.
Answer: a Page: 242 Rationale: Often a company decides to reposition its product or product line in an attempt to increase sales. A firm can reposition a product by changing one or more of the four marketing mix elements. Four factors that trigger a repositioning action are: (1) reacting to a competitors position; (2) reaching a new market; (3) catching a rising consumer trend; and (4) changing the value offered by trading up or down.
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APPLICATION
Harry & David is a catalog retailer. At its inception, the company sold fruit baskets and popularized the Fruit of the Month concept. Since then the company has abandoned this restrictive definition of itself, expanded its product mix, and used its promotion to explain that it is the source of the perfect gift for every occasion. Harry & David used a __________ strategy. a. b. c. d. e. reinvention restoration reconfiguration realignment repositioning
Answer: e Page: 242 Rationale: Often a company decides to reposition its product or product line in an attempt to increase sales. A firm can reposition a product by changing one or more of the four marketing mix elements. Four factors that trigger a repositioning action are: (1) reacting to a competitors position; (2) reaching a new market; (3) catching a rising consumer trend; and (4) changing the value offered by trading up or down. Harry & David changed the place a product occupies in a consumer's mind relative to competitive products by expanding its product mix and using promotion to explain that it is the source of the perfect gift for every occasion. 11-99 PRODUCT REPOSITIONING APPLICATION
Snickers candy bar was repositioned from a candy bar to a snack food through commercials that showed busy people satisfying their hunger with a Snickers bar. Mars, Inc. used this strategy with its Snickers bar to: a. b. c. d. e. react to a competitor's position. reach a new market. catch a rising trend. change the value offered. do none of the above.
Answer: b Page: 242 Rationale: Often a company decides to reposition its product or product line in an attempt to increase sales. A firm can reposition a product by changing one or more of the four marketing mix elements. Four factors that trigger a repositioning action are: (1) reacting to a competitors position; (2) reaching a new market; (3) catching a rising consumer trend; and (4) changing the value offered by trading up or down. Mars, Inc., makers of Snickers, saw that time pressures meant more consumers were looking for a quick snack. By positioning the peanut filled candy bar as an energy-filled snack, it was able to reach a much larger market.
APPLICATION
For many years, Kellogg's Frosted Flakes, a ready-to-eat breakfast cereal, was perceived as a cereal for children. Tony the Tiger, a cartoon character, extolled Frosted Flakes, and advertisements depicted children enjoying the product in competitive situations. Recently, in response to declining sales of the Frosted Flakes, the cereal-maker has adopted a new series of advertisements that show adults admitting they enjoy Frosted Flakes, too. Kellogg's is attempting to: a. b. c. d. e. develop alternative product selection factors. reposition its product. complete the product life cycle of Frosted Flakes. introduce new uncontrollable elements into the marketing mix. introduce a new product.
Answer: b Page: 242 Rationale: Often a company decides to reposition its product or product line in an attempt to increase sales. A firm can reposition a product by changing one or more of the four marketing mix elements. Four factors that trigger a repositioning action are: (1) reacting to a competitors position; (2) reaching a new market; (3) catching a rising consumer trend; and (4) changing the value offered by trading up or down. Kellogg's is attempting to change the place Frosted Flakes occupies in the minds of consumers in relation to alternative, competing breakfast food products by appealing to a new marketadults. 11-101 PRODUCT REPOSITIONING APPLICATION
Pretzels were first introduced as a salty snack. Later the product was repositioned as a low-fat snack to: a. b. c. d. e. respond to a competitor's head-on positioning strategy. reach a new market. catch a rising trend. change the value offered. change its target audience.
Answer: c Page: 243 Rationale: Often a company decides to reposition its product or product line in an attempt to increase sales. A firm can reposition a product by changing one or more of the four marketing mix elements. Four factors that trigger a repositioning action are: (1) reacting to a competitors position; (2) reaching a new market; (3) catching a rising consumer trend; and (4) changing the value offered by trading up or down. Pretzels capitalized on the "better-for-you trend in the food industry.
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APPLICATION
An aging baby boomer population has led to increased interest in developing and marketing products to satisfy the need of this potentially large market. As a result, moisturizing creams like Oil of Olay are now positioned as age-defying creams. This is an example of which of the four factors that may trigger a repositioning action? a. b. c. d. e. reacting to a competitor's position reaching a new market catching a rising trend changing the value offered product modification
Answer: c Page: 243 Rationale: Often a company decides to reposition its product or product line in an attempt to increase sales. A firm can reposition a product by changing one or more of the four marketing mix elements. Four factors that trigger a repositioning action are: (1) reacting to a competitors position; (2) reaching a new market; (3) catching a rising consumer trend; and (4) changing the value offered by trading up or down. The aging baby boomers are waging a valiant fight against aging, and marketers are helping them by creating products that will appeal to this market. 11-103 PRODUCT REPOSITIONING CONCEPTUAL
Which of the following product repositioning strategies requires a change in the physical product? a. b. c. d. e. increasing use creating new use situations finding new users reacting to a competitors position changing the value offered
Answer: e Page: 243 Rationale: Often a company decides to reposition its product or product line in an attempt to increase sales. A firm can reposition a product by changing one or more of the four marketing mix elements. Four factors that trigger a repositioning action are: (1) reacting to a competitors position; (2) reaching a new market; (3) catching a rising consumer trend; and (4) changing the value offered by trading up or down. Value is increased by adding features or higher quality materials. This is known as trading up. Value can also be decreased by reducing the number of features, quality, or content of the product, known as trading down.
11-104 TRADING UP Trading up involves adding value to a product (or line) through: a. b. c. d. e.
DEFINITION
adding product features but reducing the price. adding product features and using higher quality product materials. reducing product features and using lower quality product materials. decreasing the number of features and quality and lowering the price of a product. downsizing.
Answer: b Page: 243 Rationale: Text term definitiontrading up 11-105 TRADING UP APPLICATION
Kmart stores hoped to add perceived value to the store's merchandise by adding the Martha Stewart product line, which is perceived as being of a higher quality. This product line addition was an example of: a. b. c. d. e. top-down marketing. trading up. bottom-up marketing. trading down. game-playing.
Answer: b Page: 243 Other Location: web Rationale: Often a company decides to reposition its product or product line in an attempt to increase sales. A firm can reposition a product by changing one or more of the four marketing mix elements. Four factors that trigger a repositioning action are: (1) reacting to a competitors position; (2) reaching a new market; (3) catching a rising consumer trend; and (4) changing the value offered by trading up or down. Trading up involves adding value to a product (or line) through adding product features and using higher quality product materials. The Martha Stewart product line is perceived as using higher quality product materials. 11-106 TRADING DOWN The strategy of trading down involves: a. b. c. d. e. adding product features and using lower quality product materials. adding product features and using higher quality product materials. reducing product features and using lower quality product materials. reducing the number of features, quality, or price of a product. seeking a less price sensitive target market. DEFINITION
Answer: d Page: 243 Rationale: Text term definitiontrading down
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11-107 DOWNSIZING
DEFINITION
__________ refers to reducing the content of packages without changing package size and maintaining or increasing the package price. a. b. c. d. e. Top-down marketing Trading up Bottom-up marketing Game-playing Downsizing
Answer: e Page: 243 Rationale: Text term definitiondownsizing 11-108 DOWNSIZING Downsizing is reducing the: a. b. c. d. e. quality of materials used in a product line. product's price for a smaller package. content of a package without changing its size while maintaining or increasing the package price. number of product features offered to consumers. number of brands offered and the total number of products manufactured. DEFINITION
Answer: c Page: 243 Rationale: Text term definitiondownsizing 11-109 DOWNSIZING APPLICATION
Since the creation of the Hershey candy bar over 100 years ago, the price of chocolate has fluctuated, but the price of the candy bar has slowly risen. In fact, when the price of chocolate had dramatic price fluctuations over a three-year period, the price of a Hershey's candy bar remained the same. When the price of chocolate was very high, Hershey's was able to maintain its profits by making the bars smaller. Hershey's engaged in: a. b. c. d. e. top-down marketing. trading up. bottom-up marketing. game-playing. downsizing.
Answer: e Page: 243 Other Location: web Rationale: Downsizing is reducing the content of packages without changing package size while maintaining or increasing the package price.
11-110 BRANDING
DEFINITION
The decision an organization makes to use a name, phrase, design, symbol, or combination of these to identify its products and distinguish them from those of competitors is called: a. b. c. d. e. product identification. branding. trademarking. copyrighting. licensing.
Answer: b Page: 244 Rationale: Key term definitionbranding 11-111 BRAND NAME DEFINITION
A ___________ is any word, device (design, sound, shape, or color), or combination of these used to distinguish a seller's goods or services. a. b. c. d. e. copyright trade name brand mark brand name generic brand
Answer: d Page: 244 Rationale: Key term definitionbrand name 11-112 BRAND NAME A brand name is: a. b. c. d. e. any word, device (design, sound, shape or color), or combination of these used to distinguish a seller's goods or services. the part of a brand name that can be spoken. the part of a brand that is a symbol or design and cannot be spoken. the commercial, legal name under which a company does business. legal identification of a company's exclusive rights to use a brand name, brand mark, or trade name. DEFINITION
Answer: a Page: 244 Rationale: Key term definitionbrand name
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11-113 BRAND NAME
APPLICATION
The stylized blue and white waves in an oval shape that appear on every package of Ocean Spray brand products is an example of a: a. b. c. d. e. copyright. trade name. service market. brand name. generic brand.
Answer: d Page: 244 Rationale: A brand name is any word, device (design, sound, shape or color), or combination of these used to distinguish a seller's goods or services. 11-114 BRAND PERSONALITY __________ is a set of human characteristics associated with a brand name. a. b. c. d. e. Brand personality A brand mannerism A symbolic brand Brand personification Product personification DEFINITION
Answer: a Page: 244 Rationale: Key term definitionbrand personality 11-115 BRAND PERSONALITY APPLICATION
When consumers think of Harley-Davidson, the image of a masculine, non-conformist is the likely associated with that brand name. With the Vespa motorscooters, the image is more likely to be a brainy environmentalist that wears polyester and socks that don't match. Both Vespa and Harley-Davidson: a. b. c. d. e. have brand personalities. have created brand mannerisms. are symbolic brands. use brand personification. use product personification.
Answer: a Page: 244 Rationale: Brand personality is a set of human characteristics (masculine, non-conformist) associated with a brand name (Harley-Davidson).
11-116 VALUE OF BRANDING The primary benefit of branding for consumers is branding makes: a. b. c. d. e. products higher in quality. products lower in price. consumers more efficient shoppers. products higher in value. advertising unnecessary.
CONCEPTUAL
Answer: c Page: 244 Rationale: Consumers may benefit most from branding. Recognizing competing products by brand names allows them to be more efficient shoppers. Consumers can recognize and avoid products with which they are dissatisfied, while becoming loyal to other, more satisfying brands. Brand loyalty often eases consumers decision making by eliminating the need for an external search. 11-117 BRAND EQUITY Brand equity is: a. b. c. d. e. the resources invested to create a name, phrase, design, symbol, or combination of these to identify a firm's products and distinguish them from those of its competitors. adding customer value to the product brand through additional features or higher-quality materials, or reducing its price. increasing the content contained within the brand's package without changing its size or increasing its price. the net present value of the royalties the firm receives as a result of licensing its brand to other firms to manufacture and/or market. the added value a given brand name gives to a product beyond the functional benefits provided. DEFINITION
Answer: e Page: 245 Rationale: Key term definitionbrand equity
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11-118 CREATING BRAND EQUITY Which of the following is true about the process of creating brand equity? a. b. c. d. e.
CONCEPTUAL
Marketers have to develop positive brand awareness and an association of the brand in consumers minds with a product class or need to give the brand an identity. A marketer must establish a brands meaning in the minds of consumers. A marketer must get consumers to develop proper responses to a brands identity and meaning. A deep psychological bond characterizes consumerbrand connection and the personal identification consumers have with the brand. All of the above are true about the process of creating brand equity.
Answer: e Page: 245-246; Figure 11-5 Rationale: Brand equity arises from a sequential building process consisting of four steps: (1) develop positive brand awareness and an association of the brand in consumers minds with a product class or need to give the brand an identity; (2) establish a brands meaning in the minds of consumers which arises from what a brand stands for; (3) get consumers to develop proper responses to a brands identity and meaning; and (4) developing a deep psychological bond that characterizes consumerbrand connection and the personal identification consumers have with the brand. 11-119 CREATING BRAND EQUITY Which of the following is true about the process of creating brand equity? a. b. c. d. e. Marketers have to develop positive brand awareness and an association of the brand in consumers minds with a product class or need to give the brand an identity. A marketer must establish a brands colors in the minds of consumers. A marketer must get consumers to develop proper responses to a brands distribution strategy. A deep physical bond characterizes consumerbrand connection. All of the above are true about the process of creating brand equity. CONCEPTUAL
Answer: a Page: 245-246; Figure 11-5 Rationale: Brand equity arises from a sequential building process consisting of four steps: (1) develop positive brand awareness and an association of the brand in consumers minds with a product class or need to give the brand an identity; (2) establish a brands meaning in the minds of consumers which arises from what a brand stands for; (3) get consumers to develop proper responses to a brands identity and meaning; and (4) developing a deep psychological bond that characterizes consumerbrand connection and the personal identification consumers have with the brand.
CONCEPTUAL
Marketers have to develop positive brand awareness and an association of the brand in consumers minds with a product color. A marketer must establish a brands meaning in the minds of consumers. A marketer must get consumers to develop proper responses to a brands distribution strategy. A deep physical bond characterizes consumerbrand. All of the above are true about the process of creating brand equity.
Answer: b Page: 245-246; Figure 11-5 Rationale: Brand equity arises from a sequential building process consisting of four steps: (1) develop positive brand awareness and an association of the brand in consumers minds with a product class or need to give the brand an identity; (2) establish a brands meaning in the minds of consumers which arises from what a brand stands for; (3) get consumers to develop proper responses to a brands identity and meaning; and (4) developing a deep psychological bond that characterizes consumerbrand connection and the personal identification consumers have with the brand. 11-121 CREATING BRAND EQUITY Which of the following is true about the process of creating brand equity? a. b. c. d. e. Marketers have to develop positive brand awareness and an association of the brand in consumers minds with a product color. A marketer must establish a brands meaning in the minds of competitors. A marketer must get consumers to develop proper responses to a brands identity and meaning. A deep physical bond characterizes consumerbrand connection. All of the above are true about the process of creating brand equity. CONCEPTUAL
Answer: c Page: 245-246; Figure 11-5 Rationale: Brand equity arises from a sequential building process consisting of four steps: (1) develop positive brand awareness and an association of the brand in consumers minds with a product class or need to give the brand an identity; (2) establish a brands meaning in the minds of consumers which arises from what a brand stands for; (3) get consumers to develop proper responses to a brands identity and meaning; and (4) developing a deep psychological bond that characterizes consumerbrand connection and the personal identification consumers have with the brand.
703
CONCEPTUAL
Marketers have to develop positive brand awareness and an association of the brand in consumers minds with a product color. A marketer must establish a brands meaning in the minds of competitors. A marketer must get consumers to develop proper responses to a brands distribution strategy. A deep psychological bond characterizes consumerbrand connection and the personal identification consumers have with the brand. All of the above are true about the process of creating brand equity.
Answer: d Page: 245-246; Figure 11-5 Rationale: Brand equity arises from a sequential building process consisting of four steps: (1) develop positive brand awareness and an association of the brand in consumers minds with a product class or need to give the brand an identity; (2) establish a brands meaning in the minds of consumers which arises from what a brand stands for; (3) get consumers to develop proper responses to a brands identity and meaning; and (4) developing a deep psychological bond that characterizes consumerbrand connection and the personal identification consumers have with the brand. 11-123 VALUING BRAND EQUITY Which of the following is true about the value of brand equity? a. b. c. d. e. Brand equity is an intangible asset. Brand equity has an economic value to the manufacturer. Brand equity can increase in value when effectively managed. Brand equity can lose value when ineffectively managed. All of the above are true about the value of brand equity. CONCEPTUAL
Answer: e Page: 245-246; Figure 11-5 Rationale: Brand equity also provides a financial advantage for the brand owner. Successful, established brand names have an economic value. They are intangible assets. The recognition that brands are assets is apparent in the decision to buy and sell brands such as Hawaiian Punch. Brands can increase in value when effectively managed. They can lose value when they are not managed properly.
11-124 VALUING BRAND EQUITY Which of the following is true about the value of brand equity? a. b. c. d. e. Brand equity is an intangible asset. Brand equity does not have an economic value to the manufacturer. Brand equity will not increase in value when effectively managed. Brand equity will not decrease in value when ineffectively managed. All of the above are true about the value of brand equity.
CONCEPTUAL
Answer: a Page: 245-246; Figure 11-5 Rationale: Brand equity also provides a financial advantage for the brand owner. Successful, established brand names have an economic value. They are intangible assets. The recognition that brands are assets is apparent in the decision to buy and sell brands such as Hawaiian Punch. Brands can increase in value when effectively managed. They can lose value when they are not managed properly. 11-125 VALUING BRAND EQUITY Which of the following is true about the value of brand equity? a. b. c. d. e. Brand equity is a tangible asset. Brand equity has an economic value to the manufacturer. Brand equity will not increase in value when effectively managed. Brand equity will not lose value when ineffectively managed. All of the above are true about the value of brand equity. CONCEPTUAL
Answer: b Page: 245-246; Figure 11-5 Rationale: Brand equity also provides a financial advantage for the brand owner. Successful, established brand names have an economic value. They are intangible assets. The recognition that brands are assets is apparent in the decision to buy and sell brands such as Hawaiian Punch. Brands can increase in value when effectively managed. They can lose value when they are not managed properly. 11-126 VALUING BRAND EQUITY Which of the following is true about the value of brand equity? a. b. c. d. e. Brand equity is a tangible asset. Brand equity has no economic value to the manufacturer. Brand equity can increase in value when effectively managed. Brand equity cannot lose value when ineffectively managed. All of the above are true about the value of brand equity. CONCEPTUAL
Answer: c Page: 245-246; Figure 11-5 Rationale: Brand equity also provides a financial advantage for the brand owner. Successful, established brand names have an economic value. They are intangible assets. The recognition that brands are assets is apparent in the decision to buy and sell brands such as Hawaiian Punch. Brands can increase in value when effectively managed. They can lose value when they are not managed properly.
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11-127 VALUING BRAND EQUITY Which of the following is true about the value of brand equity? a. b. c. d. e. Brand equity is a tangible asset. Brand equity has no economic value to the manufacturer. Brand equity cannot increase in value when effectively managed. Brand equity can lose value when ineffectively managed. All of the above are true about the value of brand equity.
CONCEPTUAL
Answer: d Page: 245-246; Figure 11-5 Rationale: Brand equity also provides a financial advantage for the brand owner. Successful, established brand names have an economic value. They are intangible assets. The recognition that brands are assets is apparent in the decision to buy and sell brands such as Hawaiian Punch. Brands can increase in value when effectively managed. They can lose value when they are not managed properly. 11-128 PICKING A GOOD BRAND NAME All of the following are criteria for selecting a good brand name EXCEPT: a. b. c. d. e. suggests product features. suggests product benefits. fits the company or product image. is memorable, distinctive, and positive. is simple. CONCEPTUAL
Answer: a Page: 246 Rationale: It is often a difficult and expensive process to pick a good brand name. The five criteria mentioned most often when selecting a good brand name are: (1) the name should suggest the product benefits; (2) the name should be memorable, distinctive, and positive; (3) the name should fit the company or product image; (4) the name should have no legal or regulatory restrictions; and (5) the name should be simple and emotional. In the international arena, having a non-meaningful brand name has been considered a benefit.
11-129 PICKING A GOOD BRAND NAME Which of the following are criteria for selecting a good brand name? a. b. c. d. e. should have no legal or regulatory restrictions suggests product benefits fits the company or product image is memorable, distinctive, and positive All of the above are criteria for selecting a good brand name.
CONCEPTUAL
Answer: e Page: 246 Rationale: It is often a difficult and expensive process to pick a good brand name. The five criteria mentioned most often when selecting a good brand name are: (1) the name should suggest the product benefits; (2) the name should be memorable, distinctive, and positive; (3) the name should fit the company or product image; (4) the name should have no legal or regulatory restrictions; and (5) the name should be simple and emotional. In the international arena, having a non-meaningful brand name has been considered a benefit. 11-130 PICKING A GOOD BRAND NAME Which of the following are criteria for selecting a good brand name? a. b. c. d. e. should have no legal or regulatory restrictions suggests product features fits the consumers image blends with the culture All of the above are criteria for selecting a good brand name. CONCEPTUAL
Answer: a Page: 246 Rationale: It is often a difficult and expensive process to pick a good brand name. The five criteria mentioned most often when selecting a good brand name are: (1) the name should suggest the product benefits; (2) the name should be memorable, distinctive, and positive; (3) the name should fit the company or product image; (4) the name should have no legal or regulatory restrictions; and (5) the name should be simple and emotional. In the international arena, having a non-meaningful brand name has been considered a benefit.
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11-131 PICKING A GOOD BRAND NAME Which of the following are criteria for selecting a good brand name? a. b. c. d. e. should be complex so it stands out suggests product benefits fits the consumers image blends with the culture All of the above are criteria for selecting a good brand name.
CONCEPTUAL
Answer: b Page: 246 Rationale: It is often a difficult and expensive process to pick a good brand name. The five criteria mentioned most often when selecting a good brand name are: (1) the name should suggest the product benefits; (2) the name should be memorable, distinctive, and positive; (3) the name should fit the company or product image; (4) the name should have no legal or regulatory restrictions; and (5) the name should be simple and emotional. In the international arena, having a non-meaningful brand name has been considered a benefit. 11-132 PICKING A GOOD BRAND NAME Which of the following are criteria for selecting a good brand name? a. b. c. d. e. should be complex so it stands out suggests product features fits the company or product image blends with the culture All of the above are criteria for selecting a good brand name. CONCEPTUAL
Answer: c Page: 246 Rationale: It is often a difficult and expensive process to pick a good brand name. The five criteria mentioned most often when selecting a good brand name are: (1) the name should suggest the product benefits; (2) the name should be memorable, distinctive, and positive; (3) the name should fit the company or product image; (4) the name should have no legal or regulatory restrictions; and (5) the name should be simple and emotional. In the international arena, having a non-meaningful brand name has been considered a benefit.
11-133 PICKING A GOOD BRAND NAME Which of the following are criteria for selecting a good brand name? a. b. c. d. e. should be complex so it stands out suggests product features fits the consumers image is memorable, distinctive, and positive All of the above are criteria for selecting a good brand name.
CONCEPTUAL
Answer: d Page: 246 Rationale: It is often a difficult and expensive process to pick a good brand name. The five criteria mentioned most often when selecting a good brand name are: (1) the name should suggest the product benefits; (2) the name should be memorable, distinctive, and positive; (3) the name should fit the company or product image; (4) the name should have no legal or regulatory restrictions; and (5) the name should be simple and emotional. In the international arena, having a non-meaningful brand name has been considered a benefit. 11-134 BRAND NAME APPLICATION
Imagine the President of Black Stoves, Inc. is thinking about developing a new brand name for the company's line of wood stoves with catalytic converters. The stove because of its design also conserves wood because it burns slowly. The brand name he is considering is The Fast One. Why is this brand name choice NOT the best one? a. b. c. d. e. The name should be distinctive and memorable. The name should fit the company image. The name should have no legal restrictions. The name should be simple. The name should suggest the product benefits.
Answer: e Page: 246 Other Location: web Rationale: It is often a difficult and expensive process to pick a good brand name. The five criteria mentioned most often when selecting a good brand name are: (1) the name should suggest the product benefits; (2) the name should be memorable, distinctive, and positive; (3) the name should fit the company or product image; (4) the name should have no legal or regulatory restrictions; and (5) the name should be simple and emotional. In the international arena, having a non-meaningful brand name has been considered a benefit. This brand name does not suggest the product's benefits. It meets the other criteria and guidelines reasonably well.
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11-135 BRAND NAME
APPLICATION
Use the five criteria for selecting a good brand name to determine which of the following is the best choice. a. b. c. d. e. Spam canned meat Ken's salad dressing Formula 409 cleaner Match Light charcoal Bayer aspirin
Answer: d Page: 246 Rationale: It is often a difficult and expensive process to pick a good brand name. The five criteria mentioned most often when selecting a good brand name are: (1) the name should suggest the product benefits; (2) the name should be memorable, distinctive, and positive; (3) the name should fit the company or product image; (4) the name should have no legal or regulatory restrictions; and (5) the name should be simple and emotional. In the international arena, having a non-meaningful brand name has been considered a benefit. Only Match Light is simple and distinctive. The name suggests the product benefit, and it has no legal restrictions. The name is memorable and positive. 11-136 MANUFACTURER BRANDING DEFINITION
With __________, the producer dictates the brand name using either a multiproduct or multibrand approach. a. b. c. d. e. retailer branding intermediary licensing manufacturer branding co-branding
Answer: d Page: 247 Rationale: Text term definitionmanufacturer branding
11-137 MANUFACTURER BRANDING Manufacturer branding is: a. b. c. d. e.
DEFINITION
a statement indicating the liability of the manufacturer for product deficiencies. a branding strategy in which the producer dictates the brand name, using either a multiproduct or multibrand approach. a branding strategy in which a company uses one name for all of its products. It is often referred to as a blanket or family branding strategy. a branding strategy in which manufacturers produce products but sell them under the brand name of a wholesaler or retailer, also called private labeling or reseller branding. a contractual agreement whereby a company allows someone else to use its brand name and usually requires the product be made to its specifications.
Answer: b Page: 247 Rationale: Text term definitionmanufacturer branding 11-138 MANUFACTURER BRANDING DEFINITION
With manufacturer branding the producer dictates the brand name using either a: a. b. c. d. e. regional or national approach. domestic or international strategy. multiproduct or multibrand approach. competitor-focused or consumer-oriented approach. tactical or strategic objective.
Answer: c Page: 247 Rationale: Text term definitionmanufacturer branding 11-139 MULTIPRODUCT BRANDING Multiproduct branding is: a. b. c. d. e. a statement indicating the liability of the manufacturer for product deficiencies. a strategy where products are given no identifying names other than a description of their contents. a branding strategy in which a company uses one name for all of its products. a branding strategy in which manufacturers produce products but sell them under the brand name of a wholesaler or retailer, also called private labeling or reseller branding. a contractual agreement whereby a company allows someone else to use its brand name and usually requires that the product be made to its specifications. DEFINITION
Answer: c Page: 247 Rationale: Key term definitionmultiproduct branding
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11-140 MULTIPRODUCT BRANDING
DEFINITION
A branding strategy in which a company uses one name for all of its products (often referred to as a blanket or family branding strategy) is called: a. b. c. d. e. co-branding. generic branding. reseller branding. mixed branding. multiproduct branding.
Answer: e Page: 247 Rationale: Key term definitionmultiproduct branding 11-141 MULTIPRODUCT BRANDING APPLICATION
All products sold by the Tabasco Company are sold using the Tabasco brand. This is an example of: a. b. c. d. e. multiproduct licensing. multibranding. co-branding. generic branding. multiproduct branding.
Answer: e Page: 247 Rationale: With multiproduct branding, a company uses one name for all of its products, as Tabasco does. 11-142 BLANKET BRANDING APPLICATION
Every product manufactured by the SlimFast Company carries the Slim-Fast brand name. The SlimFast Company uses: a. b. c. d. e. multibranding. single branding. co-branding. blanket branding. agent licensing.
Answer: d Page: 247 Rationale: With multiproduct branding (also known as blanket branding), a company uses one name for all of its products.
11-143 BLANKET BRANDING
APPLICATION
Every product manufactured by the Gap carries the Gap brand name. The Gap uses: a. b. c. d. e. multibranding. single branding. co-branding. blanket branding. agent licensing.
Answer: d Page: 247 Rationale: With multiproduct branding (also known as blanket branding), a company uses one name for all of its products. 11-144 FAMILY BRANDING APPLICATION
Every product manufactured by Ben & Jerrys carries the Ben & Jerrys brand name. Ben & Jerrys uses: a. b. c. d. e. multibranding. single branding. co-branding. family branding. agent licensing.
Answer: d Page: 247 Rationale: With multiproduct branding (also known as family branding), a company uses one name for all of its products. 11-145 LINE EXTENSIONS When a company uses line extension it is: a. b. c. d. e. manufacturing a product under a new brand name that consumers will view as an entirely new product line. using a current brand name to enter a new market segment in its product class. speeding up the movement of a product category through its PLC. contracting with another firm to manufacture modified versions of the original products. applying the current brand name to enter a completely different product class. DEFINITION
Answer: b Page: 247 Rationale: Text term definitionline extensions
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11-146 LINE EXTENSIONS
APPLICATION
Bayer aspirin is sold in the original strength, in a safety-coated version, in an extra-strength version, and in a version designed especially for women. The manufacturer of Bayer aspirin is using: a. b. c. d. e. channel extension subbranding line extension co-branding multibranding
Answer: c Page: 247 Rationale: Bayer aspirin is using line extensions, the practice of using a current brand name to enter a new market segment in its product class. 11-147 LINE EXTENSIONS Which of the following statements about line extensions is true? a. b. c. d. e. A line extension strategy typically leads to increased advertising costs. There are no risks associated with a line extension strategy. When the Clorox Company joins with Kroger supermarkets to advertise Clorox products, it is an example of a line extension. A line extension is used with multiproduct branding. A line extension is used with multibranding. CONCEPTUAL
Answer: d Page: 247 Rationale: Line extensions, the practice of using a current brand name to enter a new market segment in its product class, is a multiproduct branding strategy that can reduce advertising costs because the same name is used on all products, thus raising the level of brand awareness. A risk with line extensions is that sales of an extension may come at the expense of other items in the company's product line. Alternative c describes cooperative advertising. Alternative e is the strategy of giving each product its own brand name.
11-148 LINE EXTENSIONS Which of the following statements about line extensions is true? a. b. c. d. e.
CONCEPTUAL
A line extension strategy typically leads to decreased advertising costs. There are no risks associated with a line extension strategy. When the Clorox Company joins with Kroger supermarkets to advertise Clorox products, it is an example of a line extension. A line extension is used with reseller branding. A line extension is used with multibranding.
Answer: a Page: 247 Rationale: Line extensions, the practice of using a current brand name to enter a new market segment in its product class, is a multiproduct branding strategy that can reduce advertising costs because the same name is used on all products, thus raising the level of brand awareness. A risk with line extensions is that sales of an extension may come at the expense of other items in the company's product line. Alternative c describes cooperative advertising. Alternative d is the strategy manufacturing products but selling them under the retailer or wholesaler brand name. Alternative e is the strategy of giving each product its own brand name. 11-149 LINE EXTENSIONS Which of the following statements about line extensions is true? a. b. c. d. e. A line extension strategy typically leads to increased advertising costs. There are risks associated with a line extension strategy. When the Clorox Company joins with Kroger supermarkets to advertise Clorox products, it is an example of a line extension. A line extension is used with reseller branding. A line extension is used with multibranding. CONCEPTUAL
Answer: b Page: 247 Rationale: Line extensions, the practice of using a current brand name to enter a new market segment in its product class, is a multiproduct branding strategy that can reduce advertising costs because the same name is used on all products, thus raising the level of brand awareness. A risk with line extensions is that sales of an extension may come at the expense of other items in the company's product line. Alternative c describes cooperative advertising. Alternative d is the strategy manufacturing products but selling them under the retailer or wholesaler brand name. Alternative e is the strategy of giving each product its own brand name.
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11-150 SUBBRANDING Combining a family brand with a new brand is called: a. b. c. d. e. subbranding. multiproduct branding. mixed branding. generic branding. family branding.
DEFINITION
Answer: a Page: 247 Other Location: web Rationale: Text term definitionsubbranding 11-151 BRAND EXTENSION Brand extensions require: a. b. c. d. e. manufacturing a product under a new name that consumers will view as an entirely new product line. manufacturing a new product with the same brand name for a new market segment in the same product class so consumers will view it as a logical addition to the original product line. manufacturing accessory products such as Barbie clothes for Barbie Dolls. licensing another firm to manufacture modified versions of the original products. applying the current brand name to enter a completely different product class. DEFINITION
Answer: e Page: 247 Rationale: Text term definitionbrand extension 11-152 BRAND EXTENSION APPLICATION
Gerber had tremendous brand equity with its baby food. The use of a __________ strategy to use the Gerber name on a bibs, plastic baby bottles, and pacifiers seemed logical. a. b. c. d. e. brand extension family branding co-branding blanket branding mixed branding
Answer: a Page: 247 Rationale: A brand extension strategy applies the current brand name to enter a completely different product class. Gerber applied the brand name that had been used successfully for food to baby accessories.
11-153 MULTIBRANDING Multibranding is: a. b. c. d. e.
DEFINITION
a branding strategy that involves giving each product a distinct name. a branding strategy that uses different brand names for the same product across multiple countries. a branding strategy in which a company uses one name for multiple products. a branding strategy in which manufacturers produce products but sell them under the brand name of a wholesaler or retailer. a contractual agreement whereby a company allows someone else to use its brand name and usually requires that the product be made to its specifications.
Answer: a Page: 248 Rationale: Key term definitionmultibranding 11-154 MULTIBRANDING APPLICATION
Mars, Inc. sells Snickers, Milky Way, Twix, Skittles, Dove, Starburst, M&Ms, and Three Musketeer candy. This variety of names is typical of a __________ strategy a. b. c. d. e. co-branding multibranding multiproduct mixed brand private branding
Answer: b Page: 248 Rationale: A multibranding strategy involves giving each product a distinct name. Mars uses a branding strategy that gives each of its products a distinct name. 11-155 MULTIBRANDING DEFINITION
A manufacturer's branding strategy in which a distinct name is given to each of its products is called: a. b. c. d. e. multibranding. generic branding. cobranding. mixed branding. multiproduct branding.
Answer: a Page: 248 Rationale: Key term definitionmultibranding
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11-156 MULTIBRANDING
APPLICATION
Seiko makes watches. It markets its higher quality watches under the Sieko or Lasalle name, and its lower-priced watches are sold under the Pulsar brand. Seiko uses a __________ strategy. a. b. c. d. e. multibranding generic branding multiproduct branding trademarked branding private branding
Answer: a Page: 248 Rationale: A multibranding strategy involves giving each product a distinct name. Sieko is making a new line of goods with a different set of product characteristics, and targeted to different markets so they are using the multibranding strategy avoid confusion between the image developed for the high quality line of products and that developed for the lower quality lines. 11-157 PRIVATE BRANDING DEFINITION
A company uses __________ when it manufactures products but sells them under the brand name of a wholesaler or retailer. a. b. c. d. e. manufacturer branding private branding generic branding proprietary rights riparian rights
Answer: b Page: 248 Rationale: Text term definitionprivate branding 11-158 PRIVATE BRANDING Private branding is: a. b. c. d. e. a branding strategy that involves giving each product a distinct name. a strategy where products are given no identifying names other than a description of its contents. a branding strategy in which a company uses one name for all of its products. a branding strategy in which manufacturers produce products that are sold under the brand name of a wholesaler or retailer. a contractual agreement whereby a company allows someone else to use its brand name and usually requires that the product be made to its specifications. DEFINITION
Answer: d Page: 248 Rationale: Text term definitionprivate branding
11-159 PRIVATE BRANDING
APPLICATION
Thirty-six percent of sales at supermarkets in the United Kingdom carry the stores' own brand names. Eighteen percent of all supermarket sales in France and Germany carry the stores' own brand names; and in the US, 14 percent do. These supermarkets are using a __________ strategy to sell consumer food. a. b. c. d. e. private branding generic branding multibranding co-branding multiproduct branding
Answer: a Page: 248 Rationale: Private branding involbes manufacturing a product but selling them under the brand name of a wholesaler or retailer. In this case each grocery chain is selling products manufactured by others under their own brand name. 11-160 MARKETING NEWSNET Which of the following statements about Pez is true? a. b. c. d. e. Pez comes from the German word for peppermint, pfefferminz. Pez was successfully sold in Europe as an adult breath mint. Pez was originally packaged in a headless dispenser. Pez first appeared in the United States in 1953. All of the above statements about Pez are true. CONCEPTUAL
Answer: e Page: 249 Rationale: The Marketing NewsNet describes how Pez creates customer value through packaging. The package was changed from a hygienic headless container to one with a licensed character head on it to increase sales to the preteen and teenage target markets. 11-161 MIXED BRANDING Mixed branding is a branding strategy: a. b. c. d. e. that involves giving each product a distinct name. that uses different brand names for the same product across multiple countries. in which a company uses one name for all of its products. in which a company markets products under their own name and that of a reseller. in which a company follows both manufacturer and generic branding approaches for products in its mix. DEFINITION
Answer: d Page: 249 Rationale: Text term definitionmixed branding
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11-162 MIXED BRANDING
DEFINITION
A branding strategy in which a company markets products under its own name and that of a reseller is called: a. b. c. d. e. multibranding. generic branding. private branding. mixed branding. multiproduct branding.
Answer: d Page: 249 Rationale: Text term definitionmixed branding 11-163 PACKAGING Packaging is: a. b. c. d. e. any box, bottle, jar, can, carton or bag that can be used for transporting durable or nondurable goods. any container in which a product is offered for sale and on which information is communicated. that part of a product that is not consumed. any container used for storage of consumer or industrial goods. accurately described by none of the above. DEFINITION
Answer: b Page: 249 Rationale: Key term definitionpackaging 11-164 LABEL A label: a. b. c. d. e. is an integral part of the package. typically identifies the product or brand. is typically an expensive part of the marketing strategy for a product. provides important benefits for manufacturers, retailers, and consumers. is accurately described by all of the above. DEFINITION
Answer: e Page: 249 Rationale: Text term definitionlabel
11-165 PACKAGING Which of the following can be conveyed through packaging? a. b. c. d. e. communication benefits storage benefits perceptual benefits protection benefits all of the above
CONCEPTUAL
Answer: e Page: 250 Rationale: Packaging and labeling cost companies about $100 billion annually and account for about 15 cents of every dollar spent by consumers for products. Despite the cost, packaging and labeling are essential because both provide important benefits for the manufacturer, retailer, and ultimate consumer. They include: (1) communication benefits, (2) functional benefits including storage, and (3) perceptual benefits. 11-166 PACKAGING Which of the following statements about packaging is true? a. b. c. d. e. Packaging can have brand equity benefits for the company. Consumer protection is an important function of packaging. Packaging can give the idea of status, economy, and product quality. Packaging can be used to extend shelf life. All of the above statements about packaging are true. CONCEPTUAL
Answer: e Page: 250 Other Location: web Rationale: Packaging and labeling cost companies about $100 billion annually and account for about 15 cents of every dollar spent by consumers for products. Despite the cost, packaging and labeling are essential because both provide important benefits for the manufacturer, retailer, and ultimate consumer. They include: (1) communication benefits, (2) functional benefits including storage, and (3) perceptual benefits. Specific benefits include brand equity benefits for the company, consumer protection, image benefits for the company and customer, and extending the shelf life of the product.
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11-167 PACKAGING
CONCEPTUAL
Which of the following statements does NOT describe a benefit associated with packaging? a. b. c. d. e. Packaging provides consumers with valuable and necessary information about directions regarding product usage and its composition. Packaging extends a product's shelf life. Packaging is an inexpensive product strategy to implement. Packaging potentially increases product sales. Packaging connotes product benefits or enhances psychographic attributes of the product.
Answer: c Page: 250 Rationale: Packaging and labeling cost companies about $100 billion annually and account for about 15 cents of every dollar spent by consumers for products. Despite the cost, packaging and labeling are essential because both provide important benefits for the manufacturer, retailer, and ultimate consumer. They include: (1) communication benefits, (2) functional benefits including storage, and (3) perceptual benefits. 11-168 PACKAGING Packages create customer value by providing: a. b. c. d. e. legal disclaimers. psychographic attributes about the product. communication, functional, and perceptual benefits. environmental impact statements. all of the above. CONCEPTUAL
Answer: c Page: 250 Rationale: Major benefits of packaging are the information communicated to consumers, its functional benefits such as protection or storage, and the perception created in the consumers' minds. 11-169 COMMUNICATION BENEFITS OF PACKAGING DEFINITION
Directions on how to use a product and the composition of a product that appear on packaging are what kind of benefits? a. b. c. d. e. communication benefits storage benefits perceptual benefits protection benefits all of the above
Answer: a Page: 250 Rationale: A major benefit of packaging is the label information on it that is communicated to consumers.
11-170 FUNCTIONAL BENEFITS OF PACKAGING
DEFINITION
Packaging that provides convenience, protection, or storage offers what kind of benefits? a. b. c. d. e. communication benefits functional benefits perceptual benefits physiological benefits all of the above types of benefits
Answer: b Page: 250 Other Location: web Rationale: Packaging often plays an important functional role such as convenience, protection, or storage. 11-171 PERCEPTUAL BENEFITS OF PACKAGING DEFINITION
The ideas of status, economy, and product quality that packaging creates in the consumer's mind relates to what kind of benefits? a. b. c. d. e. communication benefits functional benefits perceptual benefits physical benefits all of the above types of benefit
Answer: c Page: 250 Rationale: Packaging plays an important perceptual role in helping to position the product in the consumers mind in terms of status, economy, and product quality. 11-172 PERCEPTUAL BENEFITS OF PACKAGING A package can connote: a. b. c. d. e. status, economy, and product quality. economy, barter price, and distribution strategy. all of the elements of the marketing mix. product quality, company size, and industry growth rate. consumerism, environmentalism, and industry ethical standards. CONCEPTUAL
Answer: a Page: 250 Rationale: A component of packaging and labeling is the perception created in the consumers mind. Characteristics such as shape and color can connote status, economy, and product quality.
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11-173 PACKAGING
APPLICATION
How does General Mills Gold Medal flour brand provide functional benefits through its packaging? a. b. c. d. e. By including company contact information on the bag By including the Betty Crocker seal of approval on the bag By using a fancier, gold-embellished label than the one currently used By using a resealable plastic bag instead of a paper bag All of the above would provide functional benefits through packaging.
Answer: d Page: 250 Rationale: Alternative a provides a communication benefit. Alternative b provides a perceptual benefit as the Betty Crocker seal connotes quality to many consumers. Alternative c might be a perceptual benefit, however the price for the additional seal would be unacceptable for this type of product and would not be seen by most consumers as a benefit. Alternative d is a functional benefit, as it allows storage of the flour in the original packaging, whereas the paper bag package does not. 11-174 PACKAGING APPLICATION
How does General Mills Gold Medal flour brand provide perceptual benefits through its packaging? a. b. c. d. e. By including company contact information on the bag By including the Betty Crocker seal of approval on the bag By using a fancier, gold-embellished label than the one currently used By using a resealable plastic bag instead of a paper bag All of the above would provide functional benefits through packaging.
Answer: b Page: 250 Rationale: Alternative a provides a communication benefit. Alternative b provides a perceptual benefit as the Betty Crocker seal connotes quality to many consumers. Alternative c might be a perceptual benefit, however the price for the additional seal would be unacceptable for this type of product and would not be seen by most consumers as a benefit. Alternative d is a functional benefit, as it allows storage of the flour in the original packaging, whereas the paper bag package does not.
11-175 PACKAGING
APPLICATION
How does General Mills Gold Medal flour brand provide communication benefits through its packaging? a. b. c. d. e. By including company contact information on the bag By including the Betty Crocker seal of approval on the bag By using a fancier, gold-embellished label than the one currently used By using a resealable plastic bag instead of a paper bag All of the above would provide functional benefits through packaging.
Answer: a Page: 250 Rationale: Alternative a provides a communication benefit. Alternative b provides a perceptual benefit as the Betty Crocker seal connotes quality to many consumers. Alternative c might be a perceptual benefit, however the price for the additional seal would be unacceptable for this type of product and would not be seen by most consumers as a benefit. Alternative d is a functional benefit, as it allows storage of the flour in the original packaging, whereas the paper bag package does not. 11-176 MANAGING THE MARKETING OF SERVICES CONCEPTUAL
The concepts of the product part of the marketing mix usually apply well to service with three exceptions. They are: a. b. c. d. e. exclusivity, branding, and capacity management exclusivity, pricing, and branding branding, capacity management, and promotion capacity management, pricing, and promotion pricing, promotion, and place
Answer: a Page: 251 Rationale: Only alternative a lists product elements of the marketing mix. Alternative b includes pricing, not a product element. Alternative c includes promotion, not a product element. Alternative d includes both pricing and promotion. Alternative c includes all the other elements of the marketing mix except product elements.
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11-177 MARKETING MIX FOR SERVICES
CONCEPTUAL
When designing the product element of the marketing mix for services marketing managers should give special attention to: a. b. c. d. e. exclusivity, advertising, and capacity management. exclusivity, branding, and capacity management. advertising, packaging, and exclusivity. capacity management, packaging and advertising. brand name, packaging, and exclusivity.
Answer: b Page: 251 Rationale: There are three aspects of the product/service element of the mix that warrant special attention; exclusivity, branding, and capacity management. 11-178 PATENTS CONCEPTUAL
A patent gives a manufacturer of goods exclusive rights for 17 years. A major difference between goods and services is that: a. b. c. d. e. services can be patented for the life of the creator. services can be patented for 21 years. services can be patented only for 10 years. services cannot be patented. there is no need to patent services.
Answer: d Page: 251 Rationale: Because services are intangibles, and normally based on an idea rather than a process, they cannot be patented under current law. Such aspects of a service business as its name, corporate colors, and slogans, however, can be copyrighted. 11-179 BRANDING SERVICES CONCEPTUAL
The use of brand names is especially important for services because of which unique characteristic of services? a. b. c. d. e. inventory costs inseparability inconsistency invisibility intangibility
Answer: e Page: 251 Rationale: Because services are intangible and, therefore, more difficult to describe, the brand name or identifying logo of the service organization is particularly important in consumer decisions.
11-180 BRANDING
APPLICATION
Cracker Barrel is a leader in the market of family restaurants located alongside major highways. Its marketing mix includes a down-home atmosphere, a shop through which customers pass on the way to and from the restaurant, a menu of American home cooking, and a friendly staff. Which aspect of the product component of the marketing mix will be particularly helpful to travelers looking for a place to eat lunch? a. b. c. d. e. capacity management pricing strategy brand name and identifying logo exclusivity all of the above
Answer: c Page: 251 Other Location: web Rationale: Because services are intangible, and there are many competing places to eat at major stops along the highway, brand name or identifying logo of the service organization is particularly important in consumer decisions. 11-181 BRANDING APPLICATION
Andrea Arena is the owner of 2 Places at 1 Time, a concierge company. She and her staff of 60 perform everyday services such as walking the dog, picking up cleaning, waiting for the repairman, and going to the post office for people who are too busy to perform these simple acts themselves. This is a strong service brand name because it suggests: a. b. c. d. e. the company has international experience. the benefits provided by the service. the company is employee-owned. the company is a nonprofit organization. the service concept is patented.
Answer: b Page: 251 Rationale: Because services are intangible, and therefore, more difficult to describe, the brand name is particularly important. A strong brand name will suggest or describe the benefit of the service. 11-182 CAPACITY MANAGEMENT DEFINITION
Integrating the service component of the marketing mix with efforts to influence consumer demand is called: a. b. c. d. e. off-peak pricing. idle production capacity. gap analysis. capacity management. inventory management.
Answer: d Page: 251 Rationale: Key term definitioncapacity management
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11-183 CAPACITY MANAGEMENT
APPLICATION
An airport limousine service will meet people at their homes and deliver them to or bring them home from their local airport. Because demand is much higher before 9 a.m. and after 5 p.m. during weekdays, it must be concerned with: a. b. c. d. e. exclusivity. image management. branding. inconsistency. capacity management.
Answer: e Page: 251 Rationale: Most services have a limited capacity due to the inseparability of the service from the service provider and the perishable nature of the service. So the service component of the mix must be integrated with efforts to influence consumer demand. Service organizations must manage the availability of the offer to smooth demand over time so that the demand matches capacity and ensures a maximum ROI. 11-184 CAPACITY MANAGEMENT CONCEPTUAL
A patient must be in a hospital to "buy" an appendectomy, and a guest must be in a hotel to "buy" an accommodation. To make the product/service component of the marketing mix available to the consumer, the service component of the mix must be integrated with efforts to influence consumer demand. What is this called? a. b. c. d. e. allocation of resources timing capacity management customized service facilities analysis
Answer: c Page: 251 Rationale: The service component of the marketing mix must be integrated with efforts to influence consumer demand. This is referred to as capacity management. 11-185 MARKETING MIX FOR SERVICES Pricing plays two essential roles in the managing of services. They are: a. b. c. d. e. profit and capacity management. profit and indicator of customer value. influencing consumer perceptions and profit management. influencing consumer perceptions and capacity management. capacity management and cost recovery. CONCEPTUAL
Answer: d Page: 251 Rationale: Price can (1) affect consumer perceptions of services (such as eye surgery), and (2) be used in capacity management at services with variations in demand (such as airlines and hotels).
11-186 MARKETING MIX FOR SERVICES Which unique characteristic of service has the most influence on pricing? a. b. c. d. e. inventory costs inseparability inconsistency invisibility intangibility
CONCEPTUAL
Answer: e Page: 251 Rationale: The intangible nature of services makes price an important cue to indicate service quality to the consumer. 11-187 OFF-PEAK PRICING DEFINITION
Many service businesses use off-peak pricing, which consists of charging different prices during different times of the day or days of the week to reflect: a. b. c. d. e. variations in costs of delivering service. variations in demand for the service. deviations from standard profit policies. holidays and other special promotional events. government regulations that may apply.
Answer: b Page: 251 Rationale: Key term definitionoff-peak pricing 11-188 OFF-PEAK PRICING DEFINITION
Setting prices during different times of the day or days of the week to reflect variations in demand for the service is called: a. b. c. d. e. off-peak pricing. idle production capacity pricing. customer contact audit pricing. differential value pricing. capacity inventory pricing.
Answer: a Page: 251 Other Location: web Rationale: Key term definitionoff-peak pricing
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11-189 OFF-PEAK PRICING
APPLICATION
The headline in a newspaper advertisement for American Airlines proclaimed, "Florida: $199 Round Trip!" A closer examination of the advertisement revealed the special low price airfare applied only to specific travel dates. That is, the $199 price applied to tickets to Florida during the months of July and August. If a consumer wished to travel to Florida during the peak travel times of October through May, the price of the ticket was $499. The airline was engaging in __________ by offering lower prices for tickets during less desirable travel times. a. b. c. d. e. price gouging price differentiation off-peak pricing bait-and-switch pricing package pricing
Answer: c Page: 251 Rationale: The capacity management role of price for services is illustrated by off-peak pricing. Off-peak pricing means service providers charge different prices during different times of the day, on weekends, or at different times of the year. The differences in price reflect differences in demand for the service. 11-190 OFF-PEAK PRICING APPLICATION
Commuters in New York often have often installed devices on their cars that can be read automatically as they approach a tollbooth. This saves time, improves traffic flow, and means drivers don't need to keep suitable change in the car. It also offers New York authorities the opportunity to manage traffic flow by charging different toll amounts for different times of day. Commuters in New York are experiencing: a. b. c. d. e. price gouging. competitive pricing. off-peak pricing. internal marketing. external marketing.
Answer: c Page: 251 Rationale: Off-peak pricing consists of charging different prices during different times of day or days of the week to reflect variations in demand and for service. New York wants to try to reduce traffic during the rush hour.
CONCEPTUAL
Place or distribution is extremely important to the managing services because of which unique characteristic of services? a. b. c. d. e. inventory costs inconsistency inseparability intangibility invisibility
Answer: c Page: 252 Rationale: Place or distribution is a major factor in developing service marketing strategy because of the inseparability of services from the producer. 11-192 MARKETING MIX FOR SERVICES Historically in services marketing, little attention has been paid to: a. b. c. d. e. product. price. place (distribution). positioning. promotion. CONCEPTUAL
Answer: c Page: 252 Rationale: Historically, in services marketing, little attention has been paid to distribution. But as competition grows, the value of convenient distribution is being recognized. 11-193 MARKETING MIX FOR SERVICES APPLICATION
Which of the 4 P's is a variable that health care providers could employ to reach their market segments? a. b. c. d. e. promotion distribution pricing product all of the above
Answer: e Page: 251-252 Rationale: Image advertising (promotion), mobile units (distribution), toll-free information lines, specialized treatment centers (product), luxury packages (pricing), and no-frills services are all examples of marketing mix changes for a health care provider.
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CONCEPTUAL
Which of the following should be communicated to consumers when promoting services? a. b. c. d. e. courteous service availability location quality all of the above
Answer: e Page: 252 Rationale: The value of promotion, specifically advertising, for many services is to show the benefits of purchasing the service. Availability, location, quality and courteous service are benefits to consumers. 11-195 MARKETING MIX FOR SERVICES CONCEPTUAL
Which component of the promotional mix is particularly important for nonprofit services? a. b. c. d. e. advertising sales promotion personal selling publicity packaging
Answer: d Page: 252 Rationale: Nonprofit organizations often rely on publicity and public service announcements as the foundation of their media plans because publicity and public service announcements are free. 11-196 PUBLIC SERVICE ANNOUNCEMENT DEFINITION
A publicity tool frequently used by nonprofit services, which uses free space or time donated by the media is called a(n): a. b. c. d. e. promotion. advertisement. public service announcement. free standing insert. publicity stunt.
Answer: c Page: 252 Rationale: Because public service announcements are free, nonprofit groups have tended to rely on them as the foundation for their media plans.
11-197 PUBLIC SERVICE ANNOUNCEMENT
DEFINITION
Many nonprofit organizations have used what are called PSAs in their media planning. What does the abbreviation PSA stand for? a. b. c. d. e. public service announcement publicity savings allocation publicly served audience pluralistic society allotment promotional service allocation
Answer: a Page: 252 Rationale: Many services use public service announcements (PSAs), and because PSAs are free, nonprofit organizations have tended to rely on them as a foundation of their media plan. 11-198 PUBLIC SERVICE ANNOUNCEMENT CONCEPTUAL
Nonprofit services cannot control who sees a public service announcement or when the message is given because: a. b. c. d. e. PSAs tie up too large a percentage of the service's advertising budget. PSAs are traditionally boring and not well designed. timing and location of the PSA are under the control of the medium, not the organization. PSAs have a very limited reach or scope. PSAs are a form of two-way communication.
Answer: c Page: 252 Rationale: The timing and location of a PSA are under the control of the medium, not the organization. 11-199 VIDEO CASE: BMW BMW's strategy is to keep its products in the: a. b. c. d. e. introduction and growth stages. growth and maturity stages. introduction stage. growth stage. growth and maturity stages. CONCEPTUAL
Answer: a Page: 254 Rationale: BMW's strategy is to keep its products in the introduction and growth stages by periodically introducing new models in each of its product lines.
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11-200 VIDEO CASE: BMW Which of the following statements about BMW is true? a. b. c. d. e.
CONCEPTUAL
BMW cars typically have a product life cycle of seven years. BMW has a trademark naming system for its cars. Pierce Bronson drove a BMW in the James Bond film, Goldeneye. BMW's website is an integrated part of the overall marketing strategy for BMW. All of the above statements about BMW are true.
Answer: e Page: 255 Rationale: In the BMW video case the following are discussed: BMW cars typically have a product life cycle of seven years. BMW names its cars with the series number and size of engine, a trademark naming system for its cars. Pierce Bronson drove a BMW in the James Bond film, Goldeneye, thus giving the brand high-visibility promotion. BMWs website is an integrated part of the overall marketing strategy for BMW. On the website you can design your own car, transfer that information to your local dealership and even negotiate prices via the web.
CHAPTER 11 MANAGING PRODUCTS, SERVICES, AND BRANDS SHORT ESSAY QUESTIONS

11-201 PRODUCT LIFE CYCLE CONCEPTUAL
Identify and describe the stages of the generalized product life cycle. For each stage, specify the marketing objective a firm should attempt to achieve. Answer: 1) Introduction Stage: occurs when new products are first commercialized to their intended target markets. The marketing objective at this stage is to create consumer awareness and stimulate trial (primary demand). 2) Growth Stage: is characterized by rapid increases in product sales as both trials and repeat purchases increase. Because the number of competitors increases, the marketing objective is to differentiate the firm's brand from its competitors through the addition of features or improved product quality (selective demand). 3) Maturity Stage: is characterized by the leveling off of product sales within the total industry or product class. The marketing objective is to maintain brand loyalty and hold market share through further product differentiation, increased promotion and distribution efficiency, and price reductions though rebates and discounts. 4) Decline Stage: occurs when both sales and profits decline due to environmental changes (new technologies appear, consumer preferences change, etc.). The marketing objective is to reduce product support. Page: 234-238;Figure 11-1 11-202 PRIMARY AND SELECTIVE DEMAND Explain the difference between primary demand and selective demand. Answer: Primary demand is a desire for the product class (such as food processors or potatoes) rather than for a specific brand. Demand for a specific brand is referred to as selective demand. Page: 234-235 DEFINITION
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11-203 DECLINE STAGE
CONCEPTUAL
Describe the decline stage of the product life cycle. Explain the two strategies a company might employ if its product were in the decline stage of the product life cycle. Answer: The decline stage occurs when sales and profits are steadily dropping. Frequently, a product enters this stage not because of any wrong strategy on the part of the company but because of environmental changes. To handle a declining product, a company follows one of two strategies. Deletion is dropping the product from the companys product line and is the most drastic action. Harvesting is when a company keeps the product but reduces marketing costs. Page: 238 11-204 LENGTH OF THE PRODUCT LIFE CYCLE How long is a product life cycle? What determines its length? Answer: There is no exact time that a product takes to move through its life cycle. As a rule, consumer products have shorter life cycles than business products. The availability of mass communication devices such as television and the Internet, informs consumers faster and shortens life cycles. Also, technological change tends to shorten product life cycles as new product innovation replaces existing products. Page: 238-239 11-205 FIVE PRODUCT LIFE CYCLE TYPES CONCEPTUAL CONCEPTUAL
What are the five product life cycle types described in the text? For each type, describe (and as an option, draw) its characteristics. Answer: The five product life cycles are: 1) Generalized is the type that is generally discussed in the textit starts at introduction, climbs through growth, plateaus during maturity, and starts to decline during the decline stage. 2) With High-learning PLC significant product education is required by consumers, resulting in an extended introduction stage. 3) With Low-learning PLC significant sales occur during the introduction stage because consumers require little information regarding the product's use or benefits. 4) The Fashion life cycle can repeat as consumer preferences change and then revert back, thus creating several life cycles over many years. Occurs with mens and womens fashion clothing. 5) The Fad life cycle experiences a rapid increase followed by a rapid decrease in sales during a relatively short period of time. Thus, the life cycle primarily consists of an introduction and a decline stage, with highly compressed growth and maturity stages. Page: 239-240
11-206 DIFFUSION OF INNOVATION
CONCEPTUAL
Define diffusion of innovation. Identify and describe the categories and profiles of each product adopter. Answer: The diffusion of innovation is the extent to which a new product or technology spreads or "diffuses" through a population in terms of initial purchases. The five categories of product adopters are: 1) Innovators: These adopters tend to be venturesome, possess higher education, and use multiple information sources before making product purchases. 2) Early Adopters: These adopters are leaders in social settings, and have above average education. 3) Early Majority: These consumers are deliberate when making product purchases and use many informal social contracts as information sources. 4) Late Majority: These consumers are skeptical about new products and possess a lower than average social status. 5) Laggards: These consumers have a fear of debt and rely on neighbors and friends for information regarding new products. Page: 241; Figure 11-4 11-207 MANAGING THE PRODUCT LIFE CYCLE Compare the three ways to manage a product through its product life cycle. Answer: The three ways to manage a product through its life cycle include modifying the product, modifying the market, and repositioning the product. Product modification strategies involve altering a product characteristic, such as quality, performance, or appearance to try to increase and extend its sales and life cycle. With market modification strategies, a company tries to increase a product's use among existing customers, to create new use situations, or to find new customers. Product repositioning is changing the place a product occupies in a consumer's mind relative to competitive products. A firm can reposition a product by changing one or more of the four marketing mix elements. Page: 241-242 CONCEPTUAL
737
11-208 ETHICS AND SOCIAL RESPONSIBILITY ALERT
APPLICATION
For more than 30 years, Starkist put 6.5 ounces of tuna into its regular-sized can. Today, Starkist puts 6.1255 ounces of tuna into its can but charges the same price. Colgate-Palmolive's Ajax king-size laundry detergent package has remained the same size, but the contents have been cut from 61 ounces to 55 ounces and the package price increased from $2.59 to $2.79. There are two sides to the ethical argument about this practice: that of consumer advocates, and that of manufacturers. What is the practice called, and what are the basic positions of the two sides? Answer: The practice is called "downsizing." Consumer advocates charge that downsizing packages while maintaining or increasing prices is a subtle and unannounced way of taking advantage of consumers' buying habits. Manufacturers argue that this practice is a way of keeping prices from rising beyond psychological barriers for their products. Students may or may not believe it is ethical for manufacturers to reduce the contents of their packages without informing consumers. Page: 243 11-209 TRADING UP/TRADING DOWN CONCEPTUAL
Explain the difference between trading up and trading down in repositioning a product. Answer: Trading up involves adding value to the product (or line) through additional features or high quality materials. For example, BMW traded up with a new model, 750 sci, which costs $67,000. Trading down involves reducing the number of features, quality, or price. For example, Mercedes traded down its line with the introduction of the Mercedes 190 Sedan. Page: 243 11-210 BRAND NAME AND BRAND PERSONALITY CONCEPTUAL
What is the difference between a brand name and a brand personality? Give an example of each. Answer: A brand name is any word, device (design, sound, shape, or color), or combination of these, used to distinguish a seller's goods or services. Some brand names can be spoken, such as Big Mac hamburger. Other brand names cannot be spoken, such as the logo (the rainbow-colored apple) that Apple Computer puts on its machines and in its ads. A brand personality is a set of human characteristics associated with a brand name. Research shows that consumers often assign personality traits to productstraditional, romantic, rugged, sophisticated, rebelliousand choose brands that are consistent with their own or desired self-image. Marketers provide a brand with a personality through advertising that depicts a certain user or usage situation and conveys certain emotions or feelings to be associated with the brand. Coca-Cola personality traits are American, real, and cool. Dr. Peppers are nonconforming, unique, and fun. Page: 244-245
11-211 BRAND EQUITY
DEFINITION
List the four sequential steps used to develop brand equity. Which step is the most difficult? Answer: 1) The first is to develop a positive brand awareness and an association of the brand in consumers' minds with a product class or need to give the brand an identity. 2) Next, a marketer must establish a brand's meaning in the minds of consumers. 3) The third step is to get consumers to develop proper responses to a brand's identify and meaning. 4) The final and most difficult step results in an intense, active loyalty relationship between consumer and the brand. Page: 245-246 11-212 CRITERIA FOR GOOD BRAND NAME CONCEPTUAL
What five criteria are mentioned most often in selecting a good brand name? Give an example of a brand name that illustrates each of the criteria. Answer: Five criteria are mentioned most often in selecting a good brand name: 1) The name should suggest the product benefits (e.g. Accutron, Easy-Off). 2) The name should be memorable, distinctive, and positive (e.g., Mustang). 3) The name should fit the company or product image (e.g. Sharp, Snackwell). 4) The name should have no legal restrictions (e.g. Heartwise-using heart is discouraged by FDA). 5) The name should be simple (e.g., Bold, Sure). Internationally, the name should not have any prior impressions or undesirable images among a diverse world population of different languages and cultures. Page: 246-247
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11-213 BRANDING STRATEGIES
CONCEPTUAL
Identify and describe the three branding strategies used by product marketers. Answer: Product managers use the following branding strategies: 1) Manufacturer branding: the producer dictates the brand name used. This strategy may use one of two approaches: a) multibranding: occurs when a firm gives each product a distinct name b) multiproduct (family or blanket) branding: occurs when a firm uses one brand name for all of its products. 2) Private branding: the producer manufactures the product but sells them under the brand name of a wholesaler or retailer. 3) Mixed branding: the producer markets products under its own name and also under that of a reseller because the target segment which is attracted to the reseller is different than the target segment of the producer. Page: 247-249 11-214 MANUFACTURER BRANDING CONCEPTUAL
What is manufacturer branding strategy? What are the two approaches associated with manufacturer branding strategy. What advantages are offered by each of these two approaches? Answer: Manufacturer branding is a naming strategy in which the producer dictates the brand name. The manufacturer may use either a multiproduct or multibrand approach. Multiproduct branding is when a company uses one name for all its products. This approach is often referred to as a "blanket" or "family" branding strategy. Consumers who have a good experience with one product will transfer this favorable attitude to other products in the product class with the same name. This strategy can also result in lower advertising and promotion costs because the same name is used on all products, thus raising the level of brand awareness. The multibrand approach, or multibranding, involves giving each product a distinct name. Sometimes the same product is sold under different names, especially internationally. Advertising and promotion costs for multibranded products tend to be higher, because the manufacturer must generate awareness among consumers and retailers for each new brand name without the benefit of any previous impressions. However, each brand is unique to each market segment and there is no risk that a product failure will affect other products in the line. Page: 247-248
11-215 MULTIPRODUCT BRANDING What is multiproduct branding? What are its advantages? Disadvantages?
CONCEPTUAL
Answer: Multiproduct branding is when a company uses one brand name for all its products. This approach is often referred to as a blanket or family branding strategy. There are several advantages. Consumers who have had a good experience with one product in the line may also carry a favorable attitude toward other products in the line. This approach can result in lower advertising and promotion costs because the same brand name is used on all products within the line, raising the level of brand awareness. A new product is viewed as an extension of an existing line rather than a totally new item. A blanket branding approach can also facilitate getting the product accepted by retail stores. The disadvantages of multiproduct branding are that: a) poor performance of one item may have a negative impact on similarly named items in the line b) too many uses for one brand name can dilute the image of a product line. Page: 248 11-216 BENEFITS OF PACKAGING CONCEPTUAL
Explain the following statement: Packaging provides communication, functional and perceptual benefits for manufacturers, retailers, and consumers. Answer: Packages provide important benefits for the manufacturer, retailer, and ultimate consumer. These benefits include: 1) Communication benefits. A major benefit of packaging is the information on it is conveyed to the consumer, such as directions on how to use the product and what the product is made of, which is needed to satisfy legal requirements of product disclosure. 2) Functional benefits. Packaging often plays an important functional role, such as convenience, protection, or storage. Another functional value of packaging is in extending storage and shelf life (the time a product can be stored before it spoils). 3) Perceptual benefits. Packaging can create a perception in the consumer's mind. For example, in the past the color of packages was selected subjectively. Today, there is greater recognition that color affects a consumer's perceptions. A package can also connote status, economy, or product quality. Page: 250
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11-217 MANAGING THE MARKETING OF SERVICES
CONCEPTUAL
What are the three aspects of the product/service element of the marketing mix that warrant special attention by service marketers? Answer: 1) Exclusivity: services are not patentable like goods, which gives manufacturers of goods a 17-year exclusive right to a product's production and marketing. 2) Branding: since services are intangible, the brand name or identifying logo is extremely important in helping potential customers decide to purchase the service because of the difficulty in differentiating a service from its competitors. 3) Capacity management: services possess the attribute of inseparability, which means that the customer must be present to simultaneously buy and use the service at the service delivery site. So the service component of the mix must be integrated with efforts to influence consumer demand. Page: 251 11-218 PRICING SERVICES What role does pricing play in the managing of services? Answer: There are two roles pricing plays in managing services: Consumer perception: Because of the intangible nature of services, consumers have few clues by which to judge their quality. In such cases, consumers use price as an indicator of quality. Therefore, the price of a service can change the perceptions of the value of what is offered. Capacity management: Since it can affect the level of demand for a service, organizations use price to help keep demand within capacity. For example, a movie theater might offer matinee prices or a restaurant might offer luncheon specials to increase demand for the service at that time of day. Prices often are changed as a function of demand according to the time of day or the day of the week. Page: 251 CONCEPTUAL

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Chapter 11 MANAGING PRODUCTS, SERVICES, AND BRANDS Test Item Table

182, 187, 188, 196, 197

180, 181, 183, 189, 190, 193

MANAGING PRODUCTS, SERVICES, AND BRANDS MULTIPLE CHOICE QUESTIONS

Rationale: Key term definitionproduct life cycle

11-4 INTRODUCTION STAGE

11-7 INTRODUCTION STAGE

11-9 INTRODUCTION STAGE

11-12 PRIMARY DEMAND

11-15 SELECTIVE DEMAND

11-18 INTRODUCTION STAGE

11-20 SKIMMING PRICING

11-23 SKIMMING PRICING

Answer: a Page: 236 Rationale: Text term definitionpenetration pricing

11-25 PENETRATION PRICING

11-28 INTRODUCTION STAGE

11-30 INTRODUCTION STAGE

11-32 GROWTH STAGE

11-35 GROWTH STAGE

11-40 MATURITY STAGE

11-42 MATURITY STAGE

11-45 DECLINE STAGE

11-48 DECLINE STAGE

Answer: d Page: 238; Figure 11-1 Rationale: Text term definitiondeletion

11-56 MARKETING NEWSNET The growth of e-mail has: a. b. c. d. e.

11-62 LOW LEARNING PRODUCT

11-64 FASHION PRODUCT

11-67 FAD PRODUCT

11-69 DIFFUSION OF INNOVATION

11-72 INNOVATORS As product adopters, innovators typically: a. b. c. d. e.

11-76 LAGGARDS As product adopters, laggards typically: a. b. c. d. e.

11-78 PRODUCT ADOPTION

11-80 PRODUCT ADOPTION

11-82 PRODUCT ADOPTION

11-85 PRODUCT MODIFICATION

11-88 MARKET MODIFICATION

11-90 MARKET MODIFICATION

11-92 MARKET MODIFICATION

11-94 PRODUCT REPOSITIONING

11-96 PRODUCT REPOSITIONING

11-98 PRODUCT REPOSITIONING

11-100 PRODUCT REPOSITIONING

11-102 PRODUCT REPOSITIONING

Answer: d Page: 243 Rationale: Text term definitiontrading down

Answer: a Page: 244 Rationale: Key term definitionbrand name

11-113 BRAND NAME

Answer: e Page: 245 Rationale: Key term definitionbrand equity

11-135 BRAND NAME

Answer: d Page: 247 Rationale: Text term definitionmanufacturer branding

11-137 MANUFACTURER BRANDING Manufacturer branding is: a. b. c. d. e.

Answer: c Page: 247 Rationale: Key term definitionmultiproduct branding

11-140 MULTIPRODUCT BRANDING

11-143 BLANKET BRANDING

Answer: b Page: 247 Rationale: Text term definitionline extensions

11-146 LINE EXTENSIONS

11-153 MULTIBRANDING Multibranding is: a. b. c. d. e.

Answer: a Page: 248 Rationale: Key term definitionmultibranding

Answer: d Page: 248 Rationale: Text term definitionprivate branding

11-159 PRIVATE BRANDING

Answer: d Page: 249 Rationale: Text term definitionmixed branding

11-162 MIXED BRANDING

Answer: e Page: 249 Rationale: Text term definitionlabel

11-170 FUNCTIONAL BENEFITS OF PACKAGING