BA-110 Chapter 14 – Study Guide

1. The best product development strategy for most firms is to: A) develop a small number of products that achieve market success and stick with

them, because constantly changing old products (or introducing new ones) can confuse and frustrate customers.

B) maintain one product line while adding regularly to that product line over time to sustain customer interest.

C) constantly monitor consumer wants and needs and be willing to develop new products and adapt policies and services as those needs begin to change.

D) focus on the actual product or service and don't worry too much about factors such as image, price, and service.

2. LoRider Wheels sells high quality bicycles and accessories. The store is known for a pleasant environment, friendly salespeople and an excellent service department. All of these elements are part of the ___________ offered by LoRider. A) total product offer B) product line C) competitive environment D) marginal utility package

3. When consumers decide to purchase a particular product, they: A) will search for the retailer that offers the lowest price. B) consider the total collection of benefits that the product offers. C) base their decision on a brand name nearly all of the time. D) initially evaluate the product's package.

4. Which of the following is the best example of a product line? A) General Motors offers passenger cars, small trucks, and tractor trailers. B) Sony offers DVD players, compact disk players, and video game consoles C) Kellogg offers Special K, Raisin Bran, Corn Flakes, and a variety of other cold

ready-to-eat cereals. D) Hewlett Packard offers scanners, printers and personal computers.

5. Sweet Dream Confectioners uses the same ingredients as most other producers of chocolate candies. In fact, taste tests suggest that the candy itself, while quite good, isn't much better than other well-known brands of chocolate. However, the company wraps its candies in expensive looking foil and places them in very attractive boxes. It promotes its products in advertisements as "the ultimate in chocolate experience." Sweet Dream charges a much higher price than most competitors, but sales continue to grow. This success indicates that: A) consumers often behave in an irrational manner.

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B) there is more to the total product offer than the physical product. C) consumers seldom consider price when making a buying decision for goods such as

chocolate. D) chocolate is best classified as a convenience good.

6. In evaluating colleges, students and parents are likely to judge a school: A) strictly on the basis of major curriculums offered. B) based on the tuition. C) by the collection of benefits offered by the school. D) on the anticipated rate of return on their tuition investment.

7. The Procter & Gamble Company produces bar soap, disposable diapers, deodorants, laundry detergents, peanut butter, cookies, cake mix, shampoo, shortening, coffee, and many other products. These products are part of P&G's: A) product line. B) product network. C) product mix. D) marketing mix.

8. Borden, Inc., offers pasta, dairy items, and adhesives. These different types of products are referred to as Borden's: A) product line. B) product mix. C) product differentiation. D) product life cycle.

9. The Procter & Gamble Company is a major producer of bar soaps. In fact, Procter & Gamble produces Ivory, Camay, Lava, Safeguard, Zest, and Coast bar soaps that all claim a variety of benefits. These products are of Proctor & Gamble's _____ in bar soaps. A) product mix. B) product concentration. C) product store. D) product line.

11. Successful product differentiation: A) of consumer goods is determined exclusively by price. B) can be based on either real or perceived differences in products. C) is prohibited if it restricts price competition and market access. D) is less important due to the growth of the Internet.

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12. All of the following would allow a firm to utilize product differentiation except: A) pricing differences. B) increased production. C) elaborate packaging. D) intensive advertising.

13. Which of the following products would normally be classified as a shopping good or service? A) Laptop computers B) Newspapers C) Fur coats D) Chewing gum

14. All of the following statements regarding convenience goods and services are accurate except: A) shoppers will exert little effort to obtain the product. B) consumers purchase the product on a frequent basis. C) consumers buy only carefully after comparing quality and value. D) brand awareness and image are important in marketing these products.

15. Which of the following would be considered an unsought good or service by a typical college student? A) College textbook B) Pizza C) Car towing D) Internet service provider

16. Buccaneer Industries manufactures and markets expensive industrial cranes. This long lasting equipment would be classified as a(n) ________ : A) specialty B) capital C) accessory D) consumer

17. "I Can't Believe That It's Medicine" is an advertising slogan for a new antacid. The manufacturer claims that their antacid works faster and tastes better than any competing brand. These claims are part of the firm's strategy to achieve: A) deceptive marketing recognition. B) the creation of knockoff products. C) new product development. D) product differentiation.

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18. As restaurant chains that specialize in Mexican cuisine, Fernando's and Carmelita's offer similar items on their menus. However, Fernando's restaurants are positioned in the market as elegant establishments with high prices. Carmelita's restaurants, on the other hand, are located in middle class neighborhoods, with a casual atmosphere that welcomes families with young children. The prices at Carmelita's are in the moderate range. When evaluating the marketing strategies used by these restaurants, we can conclude that: A) both practice product mix effectiveness. B) they utilize product differentiation. C) Fernando's has chosen a shopping good strategy. D) their target markets differ, with one intended to appeal to the industrial market, and

the other designed to attract the consumer market.

19. Entice-mint Breath Mints is a new brand of breath fresheners. The company realizes that product location is very important since consumers desire to buy this type product with a minimum of effort. Entice-mint mints represent a: A) shopping good. B) specialty good. C) convenience good. D) industrial good.

20. Suits for Success is a men's clothing store in a large suburban shopping mall. The managers of the store know that their customers usually comparison shop, looking carefully at quality and price before deciding to buy. Armed with this information, Suits for Success carries quality clothing, offers competitive pricing, and friendly, helpful service. The target customers apparently view men's suits as a: A) specialty good. B) convenience good. C) shopping good. D) unsought good.

21. Karen is a collector of fine art, particularly paintings. She has been looking for an original Lady Molly painting for months and has said that she is willing to go to extraordinary efforts to acquire this painting for her collection. Clearly this painting represents a __________________ good for Karen. A) shopping B) specialty C) necessity D) luxury

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22. Which of the following products would most likely be classified as a specialty good or service? A) A microwave oven. B) A limited-edition print signed by the artist C) A sports coat, slacks, and tie D) A car insurance policy

23. June lives in the southern part of Alabama where winters are normally fairly mild. Last January, during an unusually cold spell, the water pipes in her house froze and burst. She had to look in the Yellow Pages to find a plumber who was able to come out and repair the pipes the same day. Prior to the frozen pipes, the plumber's services represented a: A) unsought service. B) industrial service . C) specialty service. D) convenience service.

24. Soprano Manufacturing acquired several pieces of expensive heavy machinery it intends to use in their operations. As an industrial goods, this heavy machinery represents: A) an installation. B) accessory equipment. C) an intermediate good. D) a shopping good.

25. The trend away from personal salespeople to self-service in many retail outlets has caused firms to: A) reduce their promotional budgets spent on advertising. B) rely more on personal sales efforts. C) place a greater promotional importance on packaging. D) decrease expenditures on interactive web pages.

26. Attracting attention, describing contents, explaining benefits and identifying the uses of a product are all functions of: A) target marketing. B) Universal Product Codes. C) packaging. D) market segmentation.

27. The evaluation of packaging as a marketing function indicates that: A) the package is less important as the Internet provides consumers with easily

obtained information. B) packaging carries more of the promotional burden of the product.

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C) consumers are influenced less by packaging. D) the primary purpose of packaging is to limit the product liability of businesses.

28. Which of the following statements about packaging is the most accurate? A) Changes in packaging can improve the product itself and open up large new

markets. B) Packaging is the least critical element of a firm's promotional strategy. C) Technology has not changed the role of packaging. D) Packaging has avoided federal regulations.

29. Which of the following statements is the most accurate assessment of the role packaging plays in product offerings? A) The importance of packaging has diminished as the use of the Internet has grown. B) While packaging plays an important role in marketing goods, it is not relevant to the

marketing of services. C) Effective packaging eliminates the potential of product liability suits. D) The importance of packaging is greater than ever.

30. The use of the Folgers's ________ allows customers to easily identify this product from other coffee products. A) patent B) trade symbol C) brand name D) brand equity

31. The Pillsbury Doughboy is an example of a: A) patent. B) trademark. C) private brand. D) generic label.

32. A street vender selling Rolex watches at ridiculously low prices approached Ted. Ted, however, was suspicious that the watches were illegal ________ brands. A) knockoff B) private C) generic D) look alike

33. Sears sells batteries under its own Diehard brand name even though another company actually produces these batteries. This is an example of a: A) knockoff brand

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B) generic brand C) dealer (private) brand D) brand association

34. Many supermarkets carry plain packages that only identify the name of the product that is inside. For example, a label may read simply "peaches" or "green beans." These goods represent: A) private labels. B) manufacturers' brands. C) generic goods. D) universal code branding.

35. Certain brand names, such as Kleenex and Xerox, have become _________, because they are so commonly identified with a specific product category that consumers use these names to refer to any product in that category regardless of the manufacturer. A) family brands B) generic names C) universal products D) knockoff names

36. Some businesses use nostalgia ads to rekindle the memories and emotions of consumers to an earlier time and place. This technique of linking a brand name to a pleasant memory or favorable image is the goal of brand: A) association. B) tie-ins. C) insistence. D) preference.

37. One of the reasons why companies created the position of brand manager was to: A) have greater control over new product development and promotion. B) cut expenses associated with the marketing of products. C) limit the amount of market research expenses products required. D) identify and prosecute firms that violate trademark protection.

38. The job performed by brand managers: A) is mainly concerned with the promotion of the entire product mix of their firm. B) involves broad responsibilities for the marketing of a specific brand or product line. C) is likely to become less important in firms that utilize the Internet. D) focuses more on the pricing and promotion of established goods than on the

development of new products.

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39. Anheuser-Busch Companies, Inc., has been given the exclusive right to the name Budweiser and is legally protected from others using this name by the ____________________ they hold. A) licensing agreement. B) brand name. C) copyright. D) trademark.

40. Green Giant Green Beans, Chevy Corvette, Coca Cola, Dole Pineapple, and Peter Pan Peanut Butter are all examples of: A) private brands. B) wholesaler brands. C) manufacturers' brands. D) registered generic brands.

41. Federated Grocery Stores operates a large chain of stores across several Midwestern states. While Federated doesn't actually produce any canned foods, it markets a line of foods under its own brand name that were actually produced by another company. Federated canned foods represent a: A) manufacturers' brand. B) generic brand. C) knockoff brand. D) dealer brand.

42. An advertisement for the Xerox Corporation encourages customers to say "Copy it" rather than "Xerox it". This indicates that Xerox is fearful that its brand name might become a(n): A) equity name. B) generic name. C) private brand. D) public domain good.

43. Business sponsorship of events, such as the Winston-Salem stock car races or Virginia Slims ladies tennis tournament, is intended to increase: A) brand awareness. B) the quality of the event. C) the promotional budget. D) the availability of knockoff brands.

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

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B) publicity. C) brand association. D) manufacturers' brands.

45. SneezeNoMore markets a group of similar products for people suffering from the common cold. The products in this line are sold under the brand name SneezeNoMore. The products differ mainly in the strength of the dosage and in whether they also contain additional medications to help the consumer sleep. As an employee of SneezeNoMore, Jill is responsible for the marketing mix for the company's products. She is also involved in any major decisions concerning the development of new products that will be included in this product line. Jill serves as a(n): A) brand manager. B) market mix specialist. C) target market manager. D) product line specialist.

46. As a manager at Excitement Foods, Mark is responsible for the firm's Kool'nKreamy brand of ice cream. Recently, he approved a proposal to test market new ice cream flavors. He also is considering the possibility of lowering the price of the ice cream and initiating a new advertising campaign. Mark appears to be a(n): A) product development manger. B) target market manager. C) brand manager. D) commercialization manager.

47. The greatest source of ideas for new products is: A) consumer suggestions. B) suggestions from competitors. C) employee ideas. D) research and development.

48. In order to compete successfully internationally U.S. firms must: A) shorten the product life cycle. B) utilize a price skimming strategy. C) reduce the time involved in new product development. D) move production to low wage countries.

49. All of the following are relevant criteria for the product screening process except: A) profit potential for the product. B) marketability of the product. C) product fit with present products. D) the stage of the product life cycle.

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50. "If you create a better mouse trap, the world will beat a path to your door." This statement ignores the need for which step in the new-product development process? A) Commercialization B) Screening C) Idea generation D) Development

51. As a brand manager, Ellen has proposed an aggressive advertising campaign that exaggerates the benefits of their newest product. While Ellen is convinced that this strategy will encourage consumers to try the product, her assistant strongly opposes the idea. Which of the following presents the best explanation for the assistant's opposition to Ellen's proposal? A) If a firm produces a quality product, the best advertising is word-of-mouth to

generate excitement for a new product. B) The best way to promote new consumer products is with personal selling. C) Exaggerating the benefits of a product may backfire and injure the product's

potential for success. D) Effective advertising for new consumer products should be subtle and low key.

Ellen's proposal is more appropriate for the B2B market.

52. Kathy works as a manager at Fantastic Fabricators. The innovative staff at the company is regularly encouraged to suggest ideas for new products. Since Cathy works in product screening, she: A) gives the final approval for the commercialization of new products. B) reduces the number of new products being worked on at any one time. C) market tests the product ideas that originate with the staff. D) develops the concept testing to establish the personnel required for each new

project.

54. When reviewing the product life cycle model, it is important to remember that: A) although all products go through each stage of the life cycle, the time frame can

vary considerably from one product to another. B) it is a theoretical model that may not be followed by all products. C) the maturity stage accounts for the fastest growth in sales. D) companies earn their largest profits in the introduction stage.

55. Once a good or service nears the end of its product life cycle, the firm recognizes that: A) it is impossible to revert to an earlier stage of the model. B) it can return to an earlier stage through creative marketing. C) they will enjoy relatively high profits. D) marketing dollars spent now will provide little benefit.

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56. Which stage of the product life cycle is characterized by rapidly rising sales, very high profit levels, and a growing number of competitors? A) Growth B) Maturity C) Saturation D) Decline

57. Which of the following is expected during the maturity stage of a product life cycle? A) A rapid increase in profits. B) A rapid increase in the number of competitors. C) A peak in sales. D) Reduced emphasis on promoting the product's brand name .

58. Which of the following is consistent with the introduction stage of the product life cycle? A) Decreasing sales volume. B) Large number of competitors. C) Low profit levels or a potential loss. D) Minimum use of advertising.

59. During the ________ stage of the product life cycle sales reach a peak, profits are declining, and the number of competitors starts to decrease. A) growth B) maturity C) saturation D) decline

60. All of the following are consistent with the maturity stage of the product life cycle except: A) a peak in the sales curve. B) increasing profit levels. C) a stable number of competitors. D) declining profits.

61. All of the following are characteristics of the decline stage of the product life cycle except: A) falling sales. B) a decreasing number of competitors. C) many new firms entering the market. D) decreasing profits.

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62. Which of the following products currently would most likely be considered in the growth stage of the product life cycle? A) VCRs B) Welch's grape jelly C) Digital cameras D) Camel cigarettes

63. Sales of cellular phones are still increasing, but the rate of growth has slowed. Sales are expected to peak later this year. Based on this information, cellular phones are in what stage of the product life cycle? A) Introduction B) Growth C) Maturity D) Decline

64. Sales levels of Armstrong mountain bikes are rising rapidly, profits are very high, and a growing number of competitors are taking aim at Armstrong's market lead. Based on this information, Armstrong mountain bikes are in which stage of the product life cycle? A) Introduction B) Growth C) Maturity D) Decline

65. Dewy, Cheatem, and Howe's promotional efforts are intended to increase the public's awareness of their new product's benefits and uses. This effort is consistent with the ________ of the product life cycle model. A) introduction B) growth C) maturity D) decline

66. Phil asks you to calculate the break-even point for his firm. You respond that you will need the following information: A) the values for all assets and liabilities. B) total fixed costs, selling price, and variable costs per unit. C) forecasted sales volume, operating expenses, and asset values. D) sales revenue and total liabilities

67. As firms develop their marketing mix, it is important to remember that: A) prices must be linked directly to cost of production.

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B) instincts and past history are the best guides in determining price. C) regardless of the strategy used, prices ultimately reflect the forces of supply and

demand. D) firms are often restricted in creating pricing strategies by relevant government rules

and guidelines.

68. The cost of raw materials used to produce a good or service represent the firm's ________ costs. A) fixed B) variable C) mixed D) uncontrollable

69. Phar-out Pharmacy will advertise a price of an over-the-counter drug at or below their cost. The intended goal of this loss leader strategy is to: A) achieve a target profit. B) reduce the break-even quantity. C) build traffic and increase the customer base. D) create an upscale image.

70. The strategy of first determining what the market is willing to pay, then subtracting a desired profit margin to determine a desired cost of production is called: A) cost-based pricing. B) target costing. C) penetration pricing. D) skimming pricing.

71. The formula for break-even analysis includes all of the following components except: A) total sales revenue. B) total fixed costs. C) forecasted cash requirements. D) variable cost per unit of output.

72. The rent a firm pays each month for office space is an example of a(n): A) fixed cost. B) variable cost. C) mixed cost. D) uncontrollable cost.

73. Which of the following is a potential problem with a high-low pricing strategy? A) It confuses and frustrates customers.

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B) It places too much emphasis on nonprice competition. C) It teaches customers to wait for sales, and therefore reduces profits. D) It is difficult to implement.

74. American Building Products is the largest cement company in the Midwest. When the firm raised its prices by 8 percent, all of its competitors soon announced they too were raising their prices by 8 percent. It appears this industry is influenced by a ________ strategy: A) price skimming. B) price leadership. C) market pricing. D) price discrimination.

75. The Internet allows customers to compare prices of many goods and service. This technology will likely: A) cause businesses to increase their focus on nonprice aspects of their promotional

message. B) bring about more emphasis on demand-oriented pricing. C) diminish in importance as quickly as other fads. D) focus government attention on the collusive pricing practices of firms in specific

industries.

76. Virtual Electronics utilizes a strategy to charge a very high introductory price for their automobile video theater. After identifying that their rival firms did not carry this new product, they chose this strategy to achieve maximum profits. Virtual Electronics has chosen a ________ strategy: A) high-low pricing B) a penetration C) bundling D) a skimming

77. Barker Brothers Pens utilizes a strategy of low prices to attract customers and discourage competition. This represents a _______ strategy. A) high-low B) bundling C) a skimming strategy. D) a penetration strategy.

78. What does a break-even point of 100 units mean? A) The firm must sell 100 units to maximize its profits. B) Fixed costs plus variable costs equals 100 units. C) By producing 100 units, the firm can ensure that variable costs completely cancel

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our fixed costs. D) If the firm sells 100 units, its total revenues will equal total costs.

79. Jian has entered into a contract with the federal government to design a computer simulation model for training helicopter pilots. The contract calls for the final price to be set at a fixed percentage profit over and above her cost of production. This seems to represent a: A) cost-based pricing strategy. B) supply and demand formula. C) demand-based pricing. D) price leadership.

80. Helen is considering adding a rack of greeting cards to her product offerings at Litton Books Unlimited. Her fixed costs associated with adding the greeting cards would be $300. Variable costs per card are $1 each. The greeting cards will sell for $2 each. Helen's break-even point would occur at ________ cards sold. A) 125 B) 150 C) 300 D) 600

81. Felicia wants to know how many units she must sell to cover all of her costs. She indicates to you that her selling price is $20 per units, her fixed costs are $6,000, and the variable costs per unit are $15 per unit. What is her break-even point? A) 300 units B) 400 units C) 1,200 units D) 1,100 units

83. Many products are promoted by emphasizing their benefits, rather than setting the price lower than that of competitive goods. This emphasis on the product's benefits illustrates a _______ strategy. A) penetration B) nonprice competition. C) industry leader D) bundled package

84. Which of the following statements about nonprice competition is most accurate? A) While still important, nonprice competition is becoming less critical as a result of

the Internet. B) Marketers often rely on nonprice differences in their competitive strategy because

price changes are easily matched.

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C) Nonprice competition is much more important to large firms than it is to small firms.

D) As microeconomic theory suggests, firms have found that nonprice competition plays a secondary role that supplements the more important competition based on price.

85. Angie owns a small company that markets high quality office supplies to businesses. Angie faces stiff competition from some much larger firms. Which of the following competitive strategies would probably work best for Angie? A) Keep costs as low as possible by offering a no frills approach with little of no extra

services. B) Develop a skimming pricing strategy. C) Utilize a high-low approach to pricing. D) Focus on offering better service with customers and work on building good

customer relationships.

86. Operating in the southwestern states, Lancer Airlines hopes to avoid entering the price war that currently is taking place between several airlines on the east coast. The best strategy to avoid severe price competition is to: A) provide frequent travelers the added value of special fringe benefits. B) cut costs and services in order to maintain their profit margin. C) reduce flights and layoff employees. D) determine the breakeven price and charge slightly more than that.

BA110/SUM04 CH 14 Study Guide

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