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
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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
Answer: c
Page: 374
Level of difficulty: Easy
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Chapter 12: Setting Product Strategy
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
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Part 5: Shaping the Market Offerings
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
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Chapter 12: Setting Product Strategy
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
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Part 5: Shaping the Market Offerings
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
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Chapter 12: Setting Product Strategy
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
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Part 5: Shaping the Market Offerings
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 lowerpriced 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
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Chapter 12: Setting Product Strategy
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
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Part 5: Shaping the Market Offerings
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
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Chapter 12: Setting Product Strategy
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
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Part 5: Shaping the Market Offerings
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
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Chapter 12: Setting Product Strategy
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
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Part 5: Shaping the Market Offerings
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
338
Chapter 12: Setting Product Strategy
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
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Part 5: Shaping the Market Offerings
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
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Chapter 12: Setting Product Strategy
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
Essay
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
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Part 5: Shaping the Market Offerings
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
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Chapter 12: Setting Product Strategy
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) byproduct 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
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Part 5: Shaping the Market Offerings
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
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Chapter 12: Setting Product Strategy
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
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
117.
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
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Part 5: Shaping the Market Offerings
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
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
121.
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
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Chapter 12: Setting Product Strategy
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 productmix 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
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Part 5: Shaping the Market Offerings
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
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
128.
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
129.
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Chapter 12: Setting Product Strategy
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.
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Part 5: Shaping the Market Offerings
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 subclassifications 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
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Chapter 12: Setting Product Strategy
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
351
Part 5: Shaping the Market Offerings
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, optionalfeature 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
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Chapter 12: Setting Product Strategy
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
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Part 5: Shaping the Market Offerings
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
354