Question 1

The product analysis stage of the new-product development process considers the sales forecasts and cost estimates of a new-product idea.

Accepted Answer

A) True 
 B)False  True

Question 2

Changes in packaging can transform the product in the minds of consumers and open larger market opportunities.

Accepted Answer

A) True 
 B)False  True

Question 3

Consumers are best served by providing specialty goods in convenient locations.

Accepted Answer

A) True 
 B)False  False

Question 4

Mini-Case
Gourmet Pets is an innovative competitor in the billion-dollar pet food industry. In fact, two of its products, Kitty Sirloin and McDog T-bone, each claim over a 30% share in their market segments. The company has done detailed research and discovered that, for a growing number of pet owners, the family pet serves as a baby substitute. These owners tend to pamper their pets, and are very discriminating in what they purchase. With this in mind, the company has put a great deal of effort into developing a new dog food: Prime Cuts. The new product is packaged in a resealable, microwaveable container and can be purchased in a variety of flavors (including Western BBQ, Teriyaki, Australian Outback, and Hickory Smoked). Gourmet Pets promotes the product as far superior to "average" dog foods, even though the quality of meat and nutrient content of the food are virtually identical to many other brands. The company faces no competition in this market segment so it plans to charge a high price for the product.
-Gourmet Pets feels its target market is more concerned with perceived quality than actual product cost. They also feel that the newness of this concept offers an opportunity to make high profits since they are the first firm to enter this market, so they face no direct competition. Their decision to charge a high price is consistent with the ________ strategy.

Accepted Answer

A)  market pricing 
B)  price leadership 
C)  skimming price 
D)  penetration price 
A)  market pricing 
B)  price leadership 
C)  skimming price 
D)  penetration price

Question 5

Phil asks you to calculate the break-even point for his firm. You respond that you will need the following information:

Accepted Answer

A)  the values for all assets and liabilities. 
B)  total fixed costs, selling price per unit, and variable costs per unit. 
C)  forecasted sales volume, operating expenses, and asset values. 
D)  sales revenue and total liabilities. 
A)  the values for all assets and liabilities. 
B)  total fixed costs, selling price per unit, and variable costs per unit. 
C)  forecasted sales volume, operating expenses, and asset values. 
D)  sales revenue and total liabilities.

Question 6

Carlotta owns and manages the Carlite Car Wash. She charges $8 per car wash. Her fixed costs are $600 per month, while her variable costs per car wash amount to $2. Carlotta must wash 60 cars to break even.

Accepted Answer

A) True 
 B)False

Question 7

As a brand manager at a firm, 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?

Accepted Answer

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. 
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.

Question 8

While some products remain in the introductory stage of the product life cycle for years, other products may go through the entire cycle in a few months.

Accepted Answer

A) True 
 B)False

Question 9

Borden, Inc., makes pasta, dairy items, and adhesives. These different types of products are referred to as Borden's:

Accepted Answer

A)  product line. 
B)  product mix. 
C)  product differentiation. 
D)  product life cycle. 
A)  product line. 
B)  product mix. 
C)  product differentiation. 
D)  product life cycle.

Question 10

A firm's product line refers to all of the different geographic markets in which it sells the same good or service.

Accepted Answer

A) True 
 B)False

Question 11

The product life cycle model helps marketers realize that:

Accepted Answer

A)  consumers are always ready to try a new product if it is priced correctly. 
B)  different stages in the life cycle call for different marketing strategies. 
C)  sales and profit levels can be forecasted accurately. 
D)  careful product screening will increase profits over the life of a product. 
A)  consumers are always ready to try a new product if it is priced correctly. 
B)  different stages in the life cycle call for different marketing strategies. 
C)  sales and profit levels can be forecasted accurately. 
D)  careful product screening will increase profits over the life of a product.

Question 12

A single product line may contain several competing brands.

Accepted Answer

A) True 
 B)False

Question 13

Successful firms maintain consistency in their marketing mix strategies throughout the product life cycle.

Accepted Answer

A) True 
 B)False

Question 14

Unsought goods and services fail to provide the benefits consumers expect.

Accepted Answer

A) True 
 B)False

Question 15

Equipment maintenance and repair of equipment used by businesses is an industrial support good.

Accepted Answer

A) True 
 B)False

Question 16

With a looming recession in front of him, department store owner Cooper Collins decided to make a gutsy move with his high-end Eastpointe stores. Rather than focus on the upscale, luxury market that the store attracted earlier in the decade, he focused on bringing in clothing with more mass appeal. The stores succeeded in turning around downward trending sales. In conjunction with your understanding of the product life cycle, which of the following statements summarizes the marketing strategy?

Accepted Answer

A)  Eastpointe recognized that it was not competing well with its traditional higher income market. It decided to change its product offering and price to appeal to a broader market and increase sales and profits. 
B)  Eastpointe stores recognized several markets that it could reach with its upscale clothing lines. 
C)  Eastpointe positioned itself against, rather than with, the competition. It decided to adhere to its price leadership position. 
D)  Eastpointe knew that in order to re-invent itself, it was going to have to practice the same marketing strategy followed by Walmart and other discount stores. It would make all marketing decisions based on cost. The price on an item need only exceed what it cost to make and ship it. Falling prices became the norm. 
A)  Eastpointe recognized that it was not competing well with its traditional higher income market. It decided to change its product offering and price to appeal to a broader market and increase sales and profits. 
B)  Eastpointe stores recognized several markets that it could reach with its upscale clothing lines. 
C)  Eastpointe positioned itself against, rather than with, the competition. It decided to adhere to its price leadership position. 
D)  Eastpointe knew that in order to re-invent itself, it was going to have to practice the same marketing strategy followed by Walmart and other discount stores. It would make all marketing decisions based on cost. The price on an item need only exceed what it cost to make and ship it. Falling prices became the norm.

Question 17

Sometimes a firm will lower prices below their costs in order to build a customer base.

Accepted Answer

A) True 
 B)False

Question 18

Most consumers view specialty goods as having a variety of acceptable substitutes.

Accepted Answer

A) True 
 B)False

Question 19

Price, appearance, and reputation can influence a consumer's perceptions of quality.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following refers to how quickly or easily a given brand name comes to mind when a product category is mentioned?

Accepted Answer

A)  brand equity 
B)  brand loyalty 
C)  brand awareness 
D)  brand insistence 
A)  brand equity 
B)  brand loyalty 
C)  brand awareness 
D)  brand insistence

Exam 14: Developing and Pricing Goods and Services

The product analysis stage of the new-product development process considers the sales forecasts and cost estimates of a new-product idea.

Changes in packaging can transform the product in the minds of consumers and open larger market opportunities.

Consumers are best served by providing specialty goods in convenient locations.

Phil asks you to calculate the break-even point for his firm. You respond that you will need the following information:

Carlotta owns and manages the Carlite Car Wash. She charges $8 per car wash. Her fixed costs are $600 per month, while her variable costs per car wash amount to $2. Carlotta must wash 60 cars to break even.

While some products remain in the introductory stage of the product life cycle for years, other products may go through the entire cycle in a few months.

Borden, Inc., makes pasta, dairy items, and adhesives. These different types of products are referred to as Borden's:

A firm's product line refers to all of the different geographic markets in which it sells the same good or service.

The product life cycle model helps marketers realize that:

A single product line may contain several competing brands.

Successful firms maintain consistency in their marketing mix strategies throughout the product life cycle.

Unsought goods and services fail to provide the benefits consumers expect.

Equipment maintenance and repair of equipment used by businesses is an industrial support good.

Sometimes a firm will lower prices below their costs in order to build a customer base.

Most consumers view specialty goods as having a variety of acceptable substitutes.

Price, appearance, and reputation can influence a consumer's perceptions of quality.

Which of the following refers to how quickly or easily a given brand name comes to mind when a product category is mentioned?

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding Economics and How It Affects Business

Doing Business in Global Markets

Demanding Ethical and Socially Responsible Behavior

How to Form a Business

Entrepreneurship and Starting a Small Business

Management and Leadership

Structuring Organizations for Todays Challenges

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Union and Employeemanagement Issues

Marketing: Helping Buyers Buy

Distributing Products

Using Effective Promotions

Understanding Accounting and Financial Information

Financial Management

Using Securities Markets for Financing and Investing Opportunities

Money, Financial Institutions, and the Federal Reserve

Managing the Marketing Mix: Product, Price, Place and Promotion

Extension: Working Within the Legal Environment

Extension: Using Technology to Manage Information

Extension: Managing Risk

Extension: Managing Personal Finances

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