Marketing Management - 12Th Edition - Kotler/Keller

Chapter 12: Setting Product Strategy

GENERAL CONCEPT QUESTIONS

Multiple Choice

1. Marketing planning begins with the formulation of an offering to ______target customers’ needs or wants. a. exceed b. meet c. capture d. compete with e. comprehend Answer: b Page: 372 Level of difficulty: Easy

2. The customer will judge the offering by three basis elements: ______, services mix and quality, and price. a. performance b. salespeople c. price d. product features and quality e. none of the above Answer: d Page: 372 Level of difficulty: Easy

3. The components of the market offering include all of the following EXCEPT ______. a. product feature b. product quality c. reputation of firm d. services mix and quality e. value-based pricing Answer: c Page: 372 Level of difficulty: Easy

4. In planning its market offering, the marketer needs to address five product levels. These levels include all of the following EXCEPT ______. a. potential product b. augmented product c. core benefit d. basic product e. product usage/purpose Answer: e Page: 372 Level of difficulty: Medium

325 Part 5: Shaping the Market Offerings

5. The five product levels constitute a ______. At each level more customer value is added. a. customer augmented product b. customer consumption system c. customer value hierarchy d. customer perceived value e. customer hierarchy Answer: c Page: 372 :Level of difficulty: Medium

6. The way the user performs the tasks of getting and using products and related services is the user’s total ______. a. consumption system b. consumable system c. consistent use system d. augmented system e. none of the above Answer: a Page 372 Level of difficulty: Medium

7. Marketers have traditionally classified products on the basis of characteristics: ______, tangibility, and use. a. customer value hierarchy b. expected c. augmented d. durability e. none of the above Answer: d Page: 373 Level of difficulty: Hard

8. When companies search for new ways to satisfy customers and distinguish their offering from others, they look at the ______product, which encompasses all the possible augmentations and transformations of the product. a. consumption system b. expected c. potential d. augmented e. basic Answer: c Page: 373 Level of difficulty: Hard

9. The vast array of goods consumers buy can be classified on the basis of shopping habits. We can distinguish among convenience, ______, specialty, and unsought goods. a. “must haves” b. impulse c. shopping d. business e. functional

70 Chapter 12: Setting Product Strategy

Answer: c Page: 374 Level of difficulty: Easy 10. The consumer usually purchases ______frequently, immediately, and with a minimum of effort. a. specialty goods b. shopping goods c. “must haves” goods d. personal goods e. convenience goods Answer: e Page: 374 Level of difficulty: Medium

11. ______are similar in quality but different enough in price to justify shopping comparisons. a. Emergency goods b. Homogeneous shopping goods c. Heterogeneous shopping goods d. Specialty goods e. None of the above Answer: b Page: 374 Level of difficulty: Medium

12. Examples of products such as insurance, cemetery plots, and smoke detectors, are examples of ______that are products that the consumer does not know about or does not normally think of buying. a. specialty goods b. unsought goods c. heterogeneous shopping goods d. homogeneous shopping goods e. none of the above Answer: b Page: 374 Level of difficulty: Hard

13. Industrial-goods can be classified in terms of how they enter the production process and their relative costliness. We can distinguish three groups of industrial goods: ______, capital items, and suppliers and business services. a. service components b. sub-assemblies c. pieces and parts d. specialty goods e. materials and parts Answer: e Pages: 374-–375 Level of difficulty: Medium

14. Materials and parts are goods that enter the manufacturer’s product completely. They fall into two classes: ______, and natural products. a. component parts b. raw materials c. farm products d. component materials e. none of the above

Answer: b Page: 374 Level of difficulty: Easy 15. Capital items are long-lasting goods that facilitate developing or managing the finished product. They include two groups: installations and ______. a. natural products b. component materials c. operating supplies d. equipment e. none of the above Answer: d Page: 375 Level of difficulty: Medium

16. Supplies and business services are short-term goods and services that facilitate ______or managing the finished product. a. inspecting b. developing c. building d. creating e. none of the above Answer: b Page: 375 Level of difficulty: Easy

17. Many products can be differentiated in terms of its ______,—size, shape, or physical structure. a. form b. performance quality c. conformance quality d. reliability e. design Answer: a Page: 376 Level of difficulty: Easy

18. Most products can be offered with varying ______that supplement its basic function. a. reliability b. conformance qualities c. features d. forms e. none of the above Answer: c Page: 376 Level of difficulty: Easy

19. ______is the level at which the product’s primary characteristics operate. a. Design b. Conformance quality c. Reparability d. Performance quality e. None of the above Answer: d Page: 376 Level of difficulty: Easy

20. ______describes the product’s look and feel to the buyer; it has an advantage of creating distinctiveness that is/might be difficult to copy. a. Design b. Style c. Durability d. Conformance e. none of the above Answer: b Page: 377 Level of difficulty: Easy

21. In increasingly fast-paced markets, prices, and technology are not enough. ______is the factor that will often give a company its competitive edge and is defined as the totality of features that affect how a product looks and functions in terms of customer requirements. a. Services b. Performance c. Reliability d. Style e. Design Answer: e Page: 377 Level of difficulty: Hard

22. When the physical product cannot be easily differentiated, the key to competitive success may lie in adding valued services and improving their quality. The main service differentiators are ordering ease, delivery, installation, ______, customer consulting, maintenance, and repair. a. customer limiting b. customer orders c. niche marketing d. customer training e. customer marketing Answer: d Page: 378 Level of difficulty: Hard

23. Manufacturers, service providers, and retailers seek new designs to create differentiation and establish a more complete connection with consumers. ______recognize the emotional power of design and the importance to consumers of how things look and feel. a. Holistic marketers b. Savvy marketers c. Key marketers d. Integrated marketers e. None of the above Answer: a Page: 379 Level of difficulty: Hard

24. Delivery refers to how well the product or service is delivered to the customer. It includes, speed, ______, and care attending the delivery process. a. length of time for delivery b. type of delivery services c. attributes d. completeness e. accuracy Answer: e Page: 378 Level of difficulty: Easy

25. ______refers to the training the customer’s employees to use the vendor’s equipment properly and efficiently. a. Customer training b. Internal marketing c. Client marketing d. Customer relationships e. Technical training Answer: a Page: 379 Level of difficulty: Easy

26. ______refers to data, information systems, and advice services that the seller offers to their buyers. a. Sales force relationships b. Customer relationships c. Internal marketing d. Customer training e. Customer consulting Answer: e Page: 380 Level of difficulty: Easy

27. A product hierarchy stretches from basic needs to particular items that satisfy those needs. We can identify six levels of a product’s hierarchy to include all of the following EXCEPT ______. a. need family b. product family c. product class d. product line e. extended family Answer: e Pages: 380–381 Level of difficulty: Hard

28. A ______is defined as a distinct unit within a brand or product line distinguishable by size, price, appearance, or some other attribute. a. stock keeping unit (SKU) b. UPC (uniform product code) c. stock unit (SU) d. product type e. none of the above Answer: a Page: 381 Level of difficulty: Hard

29. A ______is the set of all products and items a particular seller offers for sale. a. product line b. product mix c. family of products d. product system e. product class Answer: b Page: 381 Level of difficulty: Easy

30. The ______of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. a. consistency b. depth c. width d. length e. composition Answer: a Page: 381 Level of difficulty: Hard

31. In offering a product line, companies normally develop a ______and modules that can be added to meet different customer requirements. a. convenience item b. “best selling” item c. staple item d. product e. basic platform Answer: e Page: 382 Level of difficulty: Medium

32. A company can classify its products into four types that yield different gross margins, depending upon sales volume and promotional costs. In the case of personal computers, the four classifications include all EXCEPT ______. a. core product b. shopping goods c. staples d. specialties e. convenience items Answer: b Page: 382 Level of difficulty: Medium

33. The main point in segmenting products into different classes is that companies should recognize that these items ______in the potential for being priced higher or advertised more as ways to increase sales, margins, or both. a. differ b. are more elastic c. are less elastic d. respond to advertising differently e. none of the above Answer: a Page: 383 Level of difficulty: Easy

34. A benefit of product mapping is that it identifies ______. a. market matrixes b. target markets c. market segments d. consumers e. none of the above Answer: c Page: 383 Level of difficulty: Hard

35. Product-line analysis provides information for two key decision areas—product-line length and ______. a. product-length new items b. product-mix pricing c. product pricing d. popular pricing e. none of the above Answer: b Page: 384 Level of difficulty: Hard

36. ______occurs when a company lengthens its product line beyond its current range. a. Market reach b. Product reach c. Product adaptations d. Line shrinking e. Line stretching Answer: e Page: 384 Level of difficulty: Easy

37. When a company positioned in the “middle” market may want to introduce a lower- priced product line this is an example of ______. a. product-line length b. up-market stretch c. down-market stretch d. maintenance e. none of the above Answer: c Page: 384 Level of difficulty: Easy

38. Companies that wish to enter the high end of the market can introduce products that cater to that market. This is an example of ______. a. down-market stretch b. up-market stretch c. maintenance d. product-line length e. none of the above Answer: b Page: 385 Level of difficulty: Easy

39. A product line can also be lengthened by adding more items within the present range. There are several motives for line filling: ______, trying to satisfy dealers who complain about lost sales because of missing items in the line, trying to utilize excess capacity, and others. a. responding to senior management wishes b. responding to consumer wishes c. reaching for incremental profits d. reaching for incremental capacity e. responding to sales force demands Answer: c Page: 386 Level of difficulty: Hard

40. If line filling is overdone it could result in ______and customer confusion. a. sales paralysis b. manufacturing inefficiencies c. self-cannibalization d. self-sacrifice e. none of the above Answer: c Page: 386 Level of difficulty: Easy

41. Price-setting logic must be modified when the product is part of a product mix. In that case, the firm searches for a set of prices that ______profits on the total mix. a. is ineffective on total b. has no effect on total c. maximizes d. minimizes e. capitalizes upon Answer: c Page: 387 Level of difficulty: Easy

42. A company with many products must ensure that each of its products possess a ______with the consumer. a. status b. niche c. noticeable difference d. just-noticeable difference e. none of the above Answer: d Page: 386 Level of difficulty: Easy

43. With regards to product-line pricing, companies normally develop product lines rather than single products and introduce price steps. The seller’s task is to establish ______quality differences between these price steps. a. imaginary b. actual c. perceived d. monetary e. none of the above Answer: c Pages: 387-388 Level of difficulty: Medium

44. Some service firms often engage in ______, consisting of a fixed fee plus a variable usage fee. a. pure bundling b. pure pricing c. mixed pricing d. captive pricing e. two-part pricing Answer: e Page: 389 Level of difficulty: Easy

45. In ______the seller offers goods both individually and in bundles and often charges less for the “bundle” than for the individual products. a. pirating pricing b. captive pricing c. two-part pricing d. pure bundling e. mixed bundling Answer: e Page: 389 Level of difficulty: Medium

46. Products are often combined with other products (from other companies or from other divisions) and this is called ______. a. “in-house” branding b. two-part branding c. co-branding d. co-marketing e. cooperative advertising Answer: c Page: 390 Level of difficulty: Easy

47. The main advantage of co-branding is that a product may be convincingly positioned by virtue of the ______involved. Co-branding can generate greater sales from the existing target market as well as open additional opportunities with new consumers and channels. a. branding synergy b. increased advertising dollars c. multiple brands d. bundled package e. none of the above Answer: c Page: 390 Level of difficulty: Hard

48. The potential disadvantages of co-branding are the risks and lack of control from becoming aligned with another brand in the consumers mind. Consumer ______about the level of involvement and commitment with co-brands are likely to be high, so unsatisfactory performance could have negative repercussions for the brands involved. a. expectations b. primary service features c. values d. perceptions e. pricing Answer: a Page: 390 Level of difficulty: Medium

49. ______is a special case of co-branding involving creating brand equity for materials, components, or parts that are necessarily contained within other branded products. a. Component branding b. Ingredient branding c. Advertising branding d. Sales branding e. None of the above Answer: b Page: 391 Level of difficulty: Hard

50. We define packaging as all the activities of designing and producing the container for a product. This includes up to three levels of material: primary package, secondary package, and ______. a. retailer package b. design package c. shipping package d. consumer package e. none of the above Answer: c Page: 393 Level of difficulty: Medium

51. Various factors have contributed to the growing use of packaging as a marketing tool and include all of the following EXCEPT ______. a. self-service b. consumer affluence c. consumer influence d. company and brand images e. innovational opportunities Answer: c Page: 393 Level of difficulty: Hard

52. To achieve the marketing objectives for the brand and satisfy the desires of consumers, the ______and functional components of packaging must be chosen correctly. a. characters b. logo c. aesthetics d. brand name e. colors Answer: c Page: 394 Level of difficulty: Medium

53. After packaging is designed, it must be tested. These tests include all of the following EXCEPT ______. a. stress testing b. consumer testing c. engineering tests d. dealers testing e. visual testing Answer: a Page: 394 Level of difficulty: Easy

54. A label performs several functions for a product. These include all of the following EXCEPT ______. a. grades b. promotes c. describes d. classifies e. identifies Answer: d Page: 394 Level of difficulty: Medium

55. The ______passed by Congress in 1967, sets mandatory labeling requirements on packaging. a. Federal Trade Commission Act b. Fair Trade Act c. Fair Packaging and Labeling Act d. Food and Drug Administration Act e. none of the above Answer: c Page: 395 Level of difficulty: Easy

56. ______are formal statements of expected product performance by the manufacturer. a. Insurance b. Warranties c. Guarantees d. Reputation e. Marketing statements Answer: b Page: 395 Level of difficulty: Medium

57. Many sellers offer either general or specific guarantees. Guarantees reduce the buyer’s ______risk. a. actual b. perceived c. real d. implied e. stated Answer: b Page: 396 Level of difficulty: Easy

58. Guarantees are most effective in two situations. The first is when the company or products are not well known and the second is when the product’s quality is ______to competition. a. not known b. different c. inferior d. equivalent e. superior Answer: e Page: 396 Level of difficulty: Medium

59. In today’s rapidly changing product markets, modernization of the product line is continuous. Companies plan improvements to encourage customer migration to ______. a. higher markup products b. higher margin items c. lower-price, lower-value d. high-priced, high-valued e. none of the above Answer: d Page: 386 Level of difficulty: Easy

60. Buyers expect products to have a high ______, which is the degree to which all the produced units are identical and meet the promised specifications. a. durability b. reliability c. conformance quality d. form e. performance quality Answer: c Page: 377 Level of difficulty: Easy

True/False

61. Product is the key element in the market offering. Answer: True Page: 371 Level of difficulty: Easy

62. Marketing planning ends with the formulation of an offering to meet the target customers’ needs and wants. Answer: False Page: 372 Level of difficulty: Easy

63. A product is anything that can be offered to a market to satisfy a want or need. Answer: True Page: 372 Level of difficulty: Medium

64. In planning its market offering, the marketer needs to address five product levels each of which reduces customer value. Answer: False Page: 372 Level of difficulty: Medium

65. The customer value hierarchy consists of the basic product, core benefit, expected product, augmented product, and the consumption system. Answer: False Page: 372 Level of difficulty: Medium

66. Marketers have traditionally classified products on the basis of characteristics such as durability, tangibility, and use. Answer: True Page: 373 Level of difficulty: Medium

67. The vast array of goods consumers buy can be classified on the basis of needs. Answer: False Page: 374 Level of difficulty: Medium

68. Industrial goods can be classified in terms of how they leave the production system. Answer: False Page: 374 Level of difficulty: Hard

69. Capital items are long-lasting goods that facilitate developing or managing the finished products. Answer: True Page: 375 Level of difficulty: Medium

70. Supplies can be classified as two kinds: maintenance and repair items and operating supplies. Answer: True Page: 375 Level of difficulty: Medium

71. To be branded, physical products must be differentiated. Answer: True Page: 376 Level of difficulty: Easy

72. Many products can be differentiated in form, features, performance quality, conformance quality, durability, reliability, reparability, and style. Answer: True Pages: 376–377 Level of difficulty: Hard

73. If the physical product cannot be easily differentiated, the key to competitive advantage lies in the pricing of the related “services” provided by the manufacturer. Answer: False Page: 378 Level of difficulty: Hard

74. Design is now more fully integrated into the marketing management process. Answer: True Page: 379 Level of difficulty: Hard

75. Customer training and customer consulting are two areas for service differentiation that manufacturers can use with their products. Answer: True Pages: 379–380 Level of difficulty: Medium

76. The product hierarchy stretches from basic needs to particular items that satisfy those needs. Answer: True Page: 380 Level of difficulty: Medium

77. A product system is a group of diverse but related items that function in a compatible manner and includes the product mix and product assortment. Answer: False Page: 381 Level of difficulty: Medium

78. The four product-mix dimensions (length, width, depth, consistency) permit the company to expand its business. Answer: True Page: 381 Level of difficulty: Medium

79. Product-line managers need to know the sales and profits of each item in their line in order to estimate growth, sales, and profits in the future. Answer: False Page: 382 Level of difficulty: Medium

80. The product-line manager must review how the line is positioned against competitors’ lines. Answer: True Page: 383 Level of difficulty: Easy

81. Factors that influence product-line length do not include company objectives or management aspirations. Answer: False Page: 384 Level of difficulty: Hard

82. Every company’s product line covers a certain part of the total possible range of products and consumer levels. Answer: True Page: 384 Level of difficulty: Hard

83. Companies in the “middle market” should not attempt to stretch their line in both directions. Answer: False Page: 385 Level of difficulty: Medium

84. Line filling if overdone may result in self-cannibalization and increased customer loyalty. Answer: False Page: 386 Level of difficulty: Medium

85. In the rapidly changing market of today’s world, product lines must be continuously updated or modernized. Answer: True Page: 386 Level of difficulty: Medium

86. Price-setting logic must be modified when the product is part of a product mix. Answer: True Page: 387 Level of difficulty: Easy

87. Companies normally develop product lines rather than a single product and introduce price steps such as a “low-,” “average-,” and “high-” priced computer system. Answer: True Pages: 387–388 Level of difficulty: Medium

88. Manufacturers of systems such as razors and ink jet printers use a system of pricing called “two-part pricing”—one price for the disposable products and another for the “hardware.” Answer: False Pages: 388–389 Level of difficulty: Hard

89. A pricing system in which there is a “fixed” fee and then a variable “usage” fee is called bundling. Answer: False Page: 389 Level of difficulty: Hard

90. Pure bundling occurs when a firm offers goods both individually and in bundles. Answer: False Page: 389 Level of difficulty: Medium

91. Co-branding is when two or more well-known existing brands are combined into a joint product and/or marketed together in some fashion. Answer: True Page: 390 Level of difficulty: Medium

92. Ingredient branding can take on a form called “self-branding” in which the company advertises its own branded ingredients. Answer: True Page: 391 Level of difficulty: Medium

93. Packaging is all the activities of designing and producing the container for a product. Answer: True Page: 393 Level of difficulty: Easy

94. Packaging has been called the fifth “P” by marketers because it can be an element of product strategy. Answer: True Page: 392 Level of difficulty: Hard

95. Various factors have contributed to the growth of packaging as a “fifth P” and include self-service, consumer affluence, consumer independence, company and brand image, and innovation opportunities. Answer: False Pages: 392–393 Level of difficulty: Medium

96. Labels can identify the product and must contain legal statements that under various Federal laws cannot be misleading, false, or deceptive. Answer: True Pages: 394–395 Level of difficulty: Medium

97. Warranties must be written to be legally enforceable. Answer: True Page: 395 Level of difficulty: Hard

98. Warranties are formal statements of expected product performance by the manufacturer. Answer: True Page: 395 Level of difficulty: Easy

99. Guarantee’s greatest contribution to a product’s success is that they decrease the buyer’s perceived risk in the purchase of the product. Answer: True Page: 396 Level of difficulty: Hard

100. Guarantees are most effective when the product is well known and/or similar in performance to other brands in the market. Answer: False Page: 396 Level of difficulty: Hard

101. In planning its market offering, the marketer must address the five product levels of the customer value hierarchy. Describe the “customer value hierarchy” and identify the five levels of product contained within.

Suggested Answer: Each layer adds more customer value, and the five levels are: (1) it begins with the core benefit—the service or benefit the customer is really buying; (2) the basic product—where the marketer has to turns it into the core benefit; (3) expected product—a set of attributes and conditions buyers normally expect when they purchase this product; (4) the augmented product—the marketer exceeds customer expectations; (5) and finally the potential product—which encompasses all the possible augmentations and transformations the product or offering might undergo in the future. These five elements constitute the buyers consumption system. Pages: 372–373 Level of difficulty: Easy

102. The vast array of products that consumers buy can be classified on the basis of shopping habits and are broken down into four main areas. List these four main areas of consumer shopping habits and explain what elements are included within.

Suggested Answer: The four main areas are: (1) convenience goods that are bought frequently, immediately, and with a minimum of effort; (2) shopping goods are goods that the consumer in the process of selection and purchase characteristically compares on such bases as suitability, quality, price, and style; (3) specialty goods, which have unique characteristics, or brand identification for which a sufficient number of buyers are willing to make a special purchasing effort; and (4) unsought goods, which are those goods that the consumer does not know about or does not normally think of buying. Page: 374 Level of difficulty: Medium

103. Industrial-goods can be classified in terms of how they enter the production process and their relative costliness. Explain the three groups of industrial goods.

Suggested Answer: The three groups of industrial goods include: (1) material and parts, which are goods that enter the manufacturer’s product completely. Raw materials (farm and natural products) and manufacturers materials and parts (component materials and component parts) compose this first group. (2) Capital items are long-lasting goods that facilitate developing or managing the finished product, such as machinery (installations and equipment). And (3) supplies and business services, which are short-term goods and services that facilitate developing or managing the finished product (maintenance and repair and operating supplies) are included here. Business supplies include advisory services and other “services” necessary for the ongoing operation of the business. Pages: 374–376 Level of difficulty: Hard

104. When differentiated, products can then be branded. List the possible ways that physical products can be differentiated.

Suggested Answer: Products can be differentiated according to: form, features, performance quality, conformance quality, durability, reliability, reparability, and style. Pages: 376–377 Level of difficulty: Easy

105. Explain the concepts of product line width, length, depth, and consistency.

Suggested Answer: The width of a product mix refers to how many different product lines the company carries. The depth of a product mix refers to the total number of items in the mix. The length of a product mix refers to how many variants are offered of each product in the line and is determined by dividing the total number of items by the number of lines. The consistency of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. Page: 381 Level of difficulty: Hard

106. A company’s product mix, the set of all products and items a particular seller offer for sale, is important to the company because it will allows the company product flexibility. Explain how product-mix dimensions aid company profits.

Suggested Answer: The product-mix dimensions permit the company to expand its businesses in four ways. It can add new product lines, thus widening its product mix. It can lengthen each product line; it can add more product variants to each product and deepen its product mix; or it can pursue more product-line consistency. Page: 381 Level of difficulty: Hard

107. Product-line length is important for a company in its pursuit of profit opportunities and is composed of line stretching. Explain the concept of line stretching and the three uses for it.

Suggested Answer: Line stretching occurs when a company lengthens its product line beyond its current range. It includes down-market stretching (introduce a lower-priced line), up-market stretch (introduce an upscale line), or two-way stretch (introduce both an upscale line and a down-scale line). Pages: 384–385 Level of difficulty: Hard

108. Product-mix pricing includes a number of pricing strategies for the brand manager. List each of these strategies and briefly define each.

Suggested Answer: There are six situations involving product mix-pricing: (1) product-line pricing—low, medium, and high priced product within the same line i.e.: different priced ties; (2) optional-feature pricing —charging for “extra” features such as leather seats in a car; (3) captive-product pricing—when the “user” has no choice but to use the high priced “disposable” products that make the entire product work (for example, ink cartridges for printers); (4) two-part pricing—consisting of a fixed fee and a variable usage fee (cell usage); (5) by- product pricing—the price of the by-products of goods being used for other purposes (oil refining for example); and (6) product-bundling pricing—pure bundling when the firm only offers its products as a bundle or mixed bundling when the firm offers its products as a “bundle” and/or individually. Pages: 387–389 Level of difficulty: Hard

109. Various factors have contributed to the increased importance of packaging as a marketing tool. List and briefly describe these events.

Suggested Answer: Self-service—an increasing number of products are being sold without any personal interaction, on a self-service basis. Consumer affluence —the rising consumer affluence means consumers are willing to pay a little more for convenience, appearance, dependability, and prestige of better packages. Company and brand image—packages contribute to instant recognition of the company or brand. Innovation opportunity—innovative packaging can bring large benefits to consumers and profits to producers. Page: 393 Level of difficulty: Hard

110. Sellers must label their products. Labels service many purposes beyond just “naming” the product. List the additional services provided by a product’s label.

Suggested Answer: A label identifies the product; a label might also grade the product; a label might describe the product; and then the label might promote the product. A label may contain information required by law. Pages: 394–395 Level of difficulty: Medium

APPLICATION QUESTIONS

Multiple Choice

111. Marketers must see themselves as benefit providers. For example, when a shopper purchases new shoes, he/she expects the shoes to cover his/her feet and allow them to walk unobstructed. This is an example of what level in the consumer value hierarchy? a. Pure tangible good b. Basic product c. Augmented product d. Potential product e. Consumption system Answer: b Page: 372 Level of difficulty: Easy

112. How a consumer shops for organic foods and how they use and dispose of the product is part of the consumers ______that is important for marketers to consider. a. basic product system. b. customer value system c. potential system d. consumption system e. none of the above Answer: d Page: 372 Level of difficulty: Medium

113. The seller of ______goods carry a wide assortment to satisfy individual tastes and must have well-trained salespeople to inform and advise customers. Examples include automobile dealers, furniture stores, and insurance services. a. unsought shopping goods b. specialty shopping goods c. homogeneous shopping goods d. heterogeneous shopping goods e. none of the above Answer: d Page: 374 Level of difficulty: Medium

114. ______are major purchases and are usually bought directly from the producer with the typical sale preceded by long negotiation periods. a. Raw materials b. Materials and parts c. Business services d. Capital goods e. Installations Answer: e Page: 375 Level of difficulty: Medium

115. Most products are established at one of four performance levels: low, average, high or superior. For example, mountain bikes come in a variety of sizes and physical attributes. When a consumer purchases a mountain bike costing $1,000 she/he expects the bike to perform to specifications and to have a high ______meeting the promised specifications. a. features b. durability c. conformance quality d. performance quality e. reliability Answer: d Pages: 376-377 Level of difficulty: Medium

116. When Baxter Medical supplied their hospitals with computer terminals directly linked to Baxter’s ordering system, this was an example of a company differentiating itself versus competition in terms of ______. a. customer relationships b. customer training c. installation d. delivery ease e. ordering ease Answer: e Page: 378 Level of difficulty: Hard

117. Campbell Soups’ all feature the name “Campbell Soup” on their packaging first then the particular variety such as Cream of Mushroom. This is an example of a firm using what level of product hierarchy to market its products? a. Item b. Product type c. Need family d. Product family e. Product line Answer: e Page: 381 Level of difficulty: Hard

118. A consumer products firm manufacturers and sells over 200 different sizes and varieties of jams and jellies. We can say that this manufacturer’s product mix has a ______of products in this category. a. width b. depth c. length d. product assortment e. continuity Answer: b Page: 381 Level of difficulty: Medium

119. A marketing manager has decided that the firm’s newest product should also carry with it a service component—the home installation. When pricing out the product, the marketing manager realizes that the service component should carry a higher margin than the basis hardware product. In terms of sales and profits, the marketing manager is capitalizing on the ______of the home installation to increase the overall margin of his products. a. services b. convenience c. staple d. specialty e. core Answer: d Page: 382 Level of difficulty: Hard

120. A manufacturer of hiking boots looks at data that indicates that their sub-segment of the market called “serious hiker” is declining and is predicted to decline into the future. The firm decides to enter the “low-price” segment with its new items. This is an example of a firm ______to reach a new market. a. down-market stretch b. up-market stretch c. two-way stretch d. marketing research e. capitalizing upon Answer: a Page: 384 Level of difficulty: Medium

121. Marriott Corporation now contains hotels and motels at the “budget” end of the consumer spectrum to the “premium” end with their JD Marriott flagship locations. This is an example of a firm that successfully performed a ______to reach more consumers and ventures that are more profitable. a. marketing diversification b. two-way stretch c. up-market stretch d. down-market stretch e. cross stretch Answer: b Page: 385 Level of difficulty: Medium

122. When shopping for tires for your automobile, you notice that the manufacturer you have selected has tires for your car priced low-, average-, and high-based upon performance and features. This is an example of what type of product-mix pricing? a. Captive-price pricing b. Product-line pricing c. By-product pricing d. Two-part pricing e. Optional-feature pricing Answer: b Pages: 387–388 Level of difficulty: Medium

123. Purchasers of theatre tickets receive a 20 percent discount if they purchase and pay for the full season at one time. This is an example of what type of product- mix pricing? a. Mixed bundling b. Pure bundling c. Cross-promotion d. Captive-pricing e. None of the above Answer: a Page: 389 Level of difficulty: Medium

124. McDonald’s restaurants inside Super Wal-Marts and Starbucks inside SuperTargets are examples of ______whose main advantages are that the products can or may be convincingly positioned by virtue of the associated brands. a. cooperative marketing b. co-branding c. retail co-branding d. ingredient branding e. none of the above Answer: c Page: 390 Level of difficulty: Medium

125. Betty Crocker cake mixes using Hershey syrup in its cake mixes and “Lunchables” lunch combinations with Taco Bell tacos are examples of what special type of branding? a. Mixed branding b. Ingredient co-branding c. Co-branding d. “Self-branding” e. None of the above Answer: b Page: 391 Level of difficulty: Medium

126. Sales of luxury goods such as perfumes, colognes, and after shaves depend heavily upon their initial response by the consumer. A well-designed package can create convenience and promotional value. It has been called the “silent salesman.” Which of the three levels of packaging is this “silent salesman”? a. Retailer b. Consumer c. Shipping d. Secondary e. Primary Answer: e Page: 393 Level of difficulty: Medium

127. Packaging can increase sales and profits for a firm—if done correctly. Dutch Boy Paints introduced their Twist & Pour paint container that is significantly different from other paint cans. From the perspective of a marketer, and consumer, packaging must achieve a number of objectives. These objectives include all of the following EXCEPT ______. a. convey descriptive and persuasive information b. assist at-home storage c. be superior in performance d. facilitate transportation e. identify the brand Answer: c Pages: 393–394 Level of difficulty: Hard

128. In selling your product to an end-user, you say, “this product is guaranteed for life.” However, this guarantee is not in writing because your firm does not wish to go on record making such a claim. A few months later, this same consumer, returns to your shop, says that the product has failed, and wishes a replacement. You claim that because the statement “this product is guaranteed for life” is not in writing that you do not owe the consumer a new product. Senior management interferes and states, “Warranties whether expressed or implied are ______.” a. not legally enforceable b. part of the advertising concept c. part of the marketing mix d. legally enforceable e. none of the above Answer: d Page: 395 Level of difficulty: Medium

129. A new product is advertised on the “infomercials” as being “the best cleaner money can buy” and “if not completely satisfied, return the product for a full refund, including shipping.” The strategy to use a strong guarantee in this instance is “sound” because ______. a. it is an example of a misleading or false advertising and is illegal b. the product is so superior to competition that there will be no claims for refunds c. it is just “advertising fluff” and the manufacturer has no intentions of refunding money d. for a product that is not too well known it is “good advertising” because the claims will be a small percentage of sales e. for a product that is not too well known it reduces the buyer’s risk in purchasing Answer: e Page: 396 Level of difficulty: Medium

130. The branding of products that have similar characteristics, form, features, and benefits is a tough job for marketers. Some marketers have had success with products like Perdue chickens and Bayer aspirins. Others struggle to keep their brand names out the “common usage” such as Xerox and Kleenex for copiers and tissues. In deciding on a differentiation for your product, you can choose to differentiate it in such areas as all of the following EXCEPT ______. a. form b. features c. reliability d. style e. color Answer: e Pages: 376–377 Level of difficulty: Medium

Short Answer

131. A manufacturer is contemplating introducing a product that is inferior to its competition in its performance, design, and functionality. However, the manufacturer believes that “good brand marketing” can overcome these shortfalls. Why is this thinking incorrect?

Suggested Answer: At the heart of a great brand is a great product, the product is a key element in the market offering. Customers will judge the product (offering) on three basic elements: product features and quality; services mix and quality, and price. Not having a competitive product cannot be overcome by marketing. Pages: 372–373 Level of difficulty: Hard

132. Studying how consumers shop, how they use a particular product or service, and how they dispose of the product when consumed is important for marketers. This information forms the basis of product strategy. First, define this term and second, identify the two upcoming product strategies that are affected by this knowledge.

Suggested Answer: This is called the users total consumption system, defined as the way the user performs the tasks of getting and using products and related services. This is important because it will contain information useful in the product-augmentation strategy and the potential product strategy. Pages: 372–373 Level of difficulty: Hard

133. Convenience goods, products purchased without much thought can be classified as impulse goods and emergency goods and this constitutes one of the four classifications of goods based on shopping habits. The purchase of a Mercedes automobile, life insurance, homogeneous shopping goods, and heterogeneous shopping goods are examples of the other classifications. Identify these “goods” classifications or segments.

Suggested Answer: The vast array of goods purchased by consumers can be classified as convenience goods, shopping goods (homogeneous and heterogeneous), specialty goods, and unsought goods. Page: 374 Level of difficulty: Easy

134. Industrial-goods classifications based in terms of how the products enter the production process and their relative costs include such segments as materials and parts, and capital items. Window cleaning services, consumable office supplies, personal computers, desk, paint, nails, and buckets are included in the classifications of industrial-goods. List these other “classifications” including sub- classifications for industrial-goods.

Suggested Answer: Industrial-goods classifications include material and parts, farm products, natural products, manufactured materials and parts, and component parts. Capital goods include installations and equipment. Supplies and business services include maintenance and repair items, operating supplies, and business advisory services. Pages: 374–377 Level of difficulty: Hard

135. In your position as a marketing manager for a small industrial company, you have been asked by the President to help differentiate the company’s product from its competitors. In reviewing your marketing management notes, you note that the text stated that physical products could be differentiated in eight ways. These eight areas comprise the “meat” of the memo you are writing to the President of your form. What are the eight ways that physical products can be differentiated?

Suggested Answer: The eight ways that physical products can be differentiated are form, features, performance quality, conformance quality, durability, reliability, reparability, and style. Pages: 376–377 Level of difficulty: Medium

136. As the marketing manager for a product often referred to as a “commodity,” you know that incremental sales and profits lies not in physical differentiation but in “service” differentiation. As you compose a memo to your boss regarding the concept of “service” differentiation, you note the six areas where service differentiation can make a difference. List these six areas for service differentiation.

Suggested Answer: The main service differentiators are: ordering ease, delivery, installation, customer training, customer consulting, and maintenance and repair. Pages: 378–380 Level of difficulty: Easy

137. You have been asked to create a product system for your company’s personal digital assistant. Before starting, you must define the term “product system” to the engineers to enable them to start design and production of the aligned items. Define the concept of “product system.”

Suggested Answer: A product system is a group of diverse but related items that function in a compatible manner. Page: 381 Level of difficulty: Easy

138. You have been asked to prepare a product-line analysis for your company’s stable of products. Why is it important for product-line mangers to do a product-line analysis?

Suggested Answer: Product-line managers need to know the sales and profits of each item in their line in order to determine which items to build, maintain, harvest, or divest. They also need to understand each product line’s market profile. Page: 382 Level of difficulty: Medium

139. The four product-mix dimensions are width of a product mix, the depth of a product mix, the length, and consistency allows the firm to plan its product strategies. How can these four dimensions affect product and corporate strategy?

Suggested Answer: These four product-mix dimensions permit the company to expand its business in four different ways. First, it can add new product lines, thus widening its product mix. Second, it can lengthen each product line. It can add more product variants to each product and deepen its product mix. Finally, a company can pursue more product-line consistency. Page: 381 Level of difficulty: Medium

140. As the newest member of the marketing department, your immediate boss asks you to comment on the company’s proposal to add two new shoes to the company’s middle-of-the-road pricing and product-line strategies. The first pair will retail for $ 40.00 and has as its target market the “bargain” shopper. The second pair will retail for $ 200.00 and is targeted at the “sophisticated shopper.” In relations to product-line strategy, what is the company trying to accomplish with these two new items?

Suggested Answer: This is an example of the company trying a “two-way stretch”—introducing products at both ends of the consumer market simultaneously. Pages: 385–386 Level of difficulty: Medium

141. During a meeting, you were asked by the vice-president of marketing, to comment on the company’s pricing strategy for its products. Recalling your marketing management course in college, your comments define the six situations involving product-mix pricing. List these six product-mix offerings.

Suggested Answer: Product-mix pricing includes product-line pricing, optional- feature pricing, captive-product pricing, two-part pricing, by-product pricing, and product-bundling pricing. Page: 387–389 Level of difficulty: Medium

142. As the marketing manager for your firm, you have been approached by your key component manufacturer suggesting that your two firms “co-brand” or “ingredient brand” in the introduction of a new item. What are some of the requirements for succeeding in ingredient branding?

Suggested Answer: First, the consumer must perceive that the ingredient matters to the performance and success of the product. Secondly, consumers must be convinced that not all ingredient brands are the same and that the ingredient is superior. Third, a distinctive symbol or logo must clearly signal to consumers that the host product contains the ingredient. Fourth, a coordinated “pull” and “push” program must help consumers understand the importance and advantages of the branded ingredient. Page: 392 Level of difficulty: Hard

143. In discussions with the packaging design team, you note that they do not have a firm design objective for the final package. In an internal memo to your boss, you outline the objectives (both company and consumer orientated) that you wish to see implemented by the design team. List these objectives.

Suggested Answer: The objectives of packaging should include the identification of the brand; convey descriptive and persuasive information; facilitate product transportation and protection; assist at-home storage; and aid product consumption. Page: 393 Level of difficulty: Hard

144. Again, in discussions with the packaging design team, it seems that they are unclear as to what should be included on the final product (consumer package) packaging. You list these objectives in a memo. List these objectives here.

Suggested Answer: Labels must first identify the product or brand; the label might also grade the product. The label should describe the product and promote the product and finally the label must contain all required government information. Page: 394 Level of difficulty: Medium

145. Your service firm is contemplating adding a “guarantee” component. Members of senior management are unclear as to the marketing advantages of a guarantee. How would you convince members of senior management that a guarantee can provide a marketing advantage?

Suggested Answer: Guarantees reduce the buyer’s perceived risk. They suggest that the service/product is of high quality and that the company and its service performance are dependable. All this enables the company to charge a higher price than a competitor who is not offering an equivalent offer. Page: 396 Level of difficulty: Easy

146. As you contemplate the introduction of your company’s newest services—you think that the offering of a service guarantee would be a “marketing coup” and completely surprise your competition. You remember that your marketing management text stated that guarantees are most effective in two situations. What are these two situations?

Suggested Answer: Guarantees are most effective when either the company or the product is not well known so a “money-back” guarantee in that case would reduce buyer’s perceived risk and provide them with confidence in purchasing the product. The second area is when the product/service is superior to competition in quality and performance. Page: 396 Level of difficulty: Medium

147. You know that marketers have traditionally classified products based on characteristics: durability, tangibility, and use. You also know that each product type has an appropriate marketing-mix strategy attached. In analyzing your company’s products, you decide to list each of these products and the appropriate marketing-mix strategy to understand where your products “fit.” List these products and their appropriate marketing-mix strategies.

Suggested Answer: (1) Nondurable goods—the appropriate strategy is to make them available in many locations, charge only a small markup, and advertise heavily to induce trial and build preference. (2) Durable goods—tangible goods that normally survive many uses. Durable products normally require more personal selling and service and command a higher margin, and require more seller guarantees. (3) Services—intangible, inseparable, variable, and perishable products. They require more quality control, supplier credibility, and adaptability. Pages: 373–374 Level of difficulty: Hard

148. As a small firm, you know that your firm cannot compete with the “big boys” in terms of price and promotion. Instead, you have decided to “out design” them. What is necessary for this strategy of “out designing them” to succeed?

Suggested Answer: Design offers a potent way to differentiate and position a company’s products and services. Design is the factor that will often give a

company its competitive edge. Design is the totality of features that affect how a product looks and functions in terms of customer requirements. The designer has to figure out how much to invest in form, feature development, performance, conformance, durability, reliability, reparability, and style. To the company, a well-designed product is one that is easy to manufacture and distribute. To the consumer, a well-designed product is one that is pleasant to look at and easy to open, install, use, repair, and dispose of. Pages: 377–378 Level of difficulty: Medium

149. Your firm is contemplating a bundling strategy for its line of products. You note that there are three guidelines for correctly implementing a bundling strategy from your marketing management class. n a memo to your boss, you outline these strategies. List them here.

Suggested Answer: Do not promote individual products in a package as frequently and cheaply as the bundle. Second, limit promotions to a single item in the mix if you want to promote individual products. Third, if you decide to offer large rebates on individual products, it must be the absolute exception and done with discretion. Pages: 389–390 Level of difficulty: Hard

150. Your research shows that over 53 percent of all purchases are made on impulse. As you sit down with your packaging design team, you tell them that the package must communicate many of the sales tasks. List the sales tasks that packaging must now incorporate due to the increase in self-service sales.

Suggested Answer: These tasks are: attract attention, describe the product’s features, create consumer confidence, and make a favorable overall impression. Page: 393 Level of difficulty: Medium