PRODUCT/SERVICE
MANAGEMENT
3.01
• 1. Which of the following is a way that a
buisness can extend the life cycle of an
establishes product?
A. By promoting the product to current users
B. By finding new uses for the product
C. By restricting distribution
D. By attracting customers who are innovators
Answer
•
B,
By finding new uses for the product. Establishes
products are in the maturity stage, and one way
marketers can extend their life cycles is by finding
new ways that the products can be used by current
consumers. Continuing to promote the same
product to current users will not extend its life cycle.
Consumers who are innovators are attracted to
products in the introductory stage, not the maturity
stage. Restricting distribution would shorten rather
than lengthen the products life cycle.
3.01
• 2. When a company uses its product
wrapping to promote the preservation of
an endangered animal species, its
engaging in an ethical practice called..
A. political lobbying
B. environmental labeling
C. cause packaging
D. provocative branding
3.01
• 3. A business is behaving unethically if its
product’s label contains..
A. nutritional values
B. recyclable material
C. mandatory requirements
D. misleading information
3.01
• 4. Which of the following technological
tools helps a business's employees
simultaneously access the same
information about the business's
products?
A. Memory Card
B. Micro-Portal
C. Intranet
D. Generator
Answer
• C,
Intranet. Intranet refers to a business's network of computers
that are linked so that the employees can retrieve the same
business info. For example, a software program that tracks
inventory may be available for the sales department, the
shipping department, and the purchasing department to
review. A business that uses an Intranet system to manage
product maximizes its communications and response time.
Generators and memory cards do not allow a business's
employees to simultaneously access the product info. MicroPortal is a fictitious term.
3.01
•
5. Five years aftera new product has been
introduced, sales begin to level off because
customers are purchasing the competitors brand.
What strategy would be most appropiate to use in
this situation?
A. Take the product off the market
B. Do nothing, fluctuations in sales are common
C. Modify the product to renew customer intrest
D. Triple the advertising budget for the product
Answer
•
C,
Modify the product to renew customer interest. Modifying the
product allows a company an opportunity to increase sales
without the risk of introducing an entirely new product. Also,
such modifications could include and technological advances
that have been made since the product’s introduction. The
product should remain on the market, its sales have leveled
off- not stopped. If the company does nothing, sales may
continue to decline. Tripling the advertising budget does not
guarantee increased sales, especially if there is something
unsatisfactory about the existing product.
3.01
•
6. Which of the following is an unethical situation in
product/service management?
A. Vincent Electronics discontinues production of a
slow-moving solar calculator.
B. Travis Manufacturing uses recycled materials for
its product packaging
C. Donna’s dress boutique obtains deep discounts
from a new clothing designer
D. The Simpson company embellishes the
information the it places on its product labels
Answer
• D,
The Simpson Company embellishes the info that it
places on its product labels. When a company
embellishes info on product labels, it is
exaggerating the attributes or performance of the
product. This is unethical behavior because the
company is misleading customers.
3.01
• 7. What is one way businesses use
computer technology to obtain info to
improve their product/service mix?
A. Mailing questionnaires to customers
B. Tracking visitors to their web-sites
C. Compiling detailed databases
D. Preparing interactive software programs
Answer
• B,
Tracking visitors to their websites. As a result of
computer technology, many businesses have
developed websites that are accessible to
customers. This technology also allows businesses
to track their visitors to their website and obtain info
such as their name, address, type of purchase etc..
3.01
• 8.
Which activity is addressed in the
product/service management function?
A. Setting discounts to clear products from inventory.
B. Determining where products will be offered for sale.
C. Focusing promotional activities on a new-product release.
D. Eliminating products that are slow sellers.
Answer
• D.
Eliminating Products that are slow sellers.
The product/service management function
follows a product throughout its life cycle,
determining when to eliminate slowselling items.
3.01
9. What is an example of an ethical issue that a
product/service manager might face?
A. Use of color on the label.
B. Use of environmentally friendly packaging.
C. Use of packaging as a means of promotion.
D. Use of nutrition information on a food label.
Answer
B.
Use of environmentally friendly
packaging. One of the ethical issues that
product/service managers face is that of
being environmentally friendly. Many
businesses changed their packaging due
to pressure by customers.
3.01
10.
Why should a business continue to monitor an
established product?
A. To determine the acceptance of a product by
a limited market.
B. To make sure that a marketing plan is firmly
in place.
C. to make changes in order to extend a
products life cycle.
D. To evaluate how a product might fit the firms
product mix.
3.01
11.
Why is the quality level of a product an important
product/service management decision?
A. It identifies a products brand.
B. It reflects the image of the business.
C. It protects consumers.
D. It refers to the way the product works.
Answer
B.
It reflects the image of the business. The quality
level of a product is an important part of
product/service management because it reflects
the image of the business. Product managers
must choose not only the image they wish to
portray but the level of quality that is
appropriate to the products themselves.
3.01
12.
What is a technologically advanced method that allows a
businesses to produce products that are specialized for a
very few customers?
A. Intermittent conversion
B. Automatic production
C. Computerized robotics
D. Mass customization
Answer
D.
Mass customization. Computerization and
the technology of mass production have
created the method of mass
customization which allows businesses to
produce customized products for one
customer or only a vary few customers.
3.01
13. Why might profits sometimes decline for the
company that first introduced the product during the
growth stage of a products life cycle?
A. Because sales decline in the growth stage.
B. Because marketing strategies are adjusted.
C. Because competitors have entered the market.
D. Because production is more efficient.
Answer
C.
Because competitors have entered the
market. By the time a product reaches the
growth stage, there are usually many
competitors in the market. This forces
producers to lower prices in order to
compete for market share.
3.01
14.
Why does a company need to know what stage of the product life
cycle its products are in?
A. To prevent imitators from entering the
market.
B. To find new uses for the product.
C. To predict the length of the life cycle.
D. To adapt its marketing strategies.
Answer
D.
To adapt its marketing strategies.
Businesses change their marketing
strategies as their products go through
the stages of the life cycle. This means
that companies need to know where
products are in their life cycles in order to
use marketing strategies appropriate for
each stage.
62. Why would a business use a
broad product mix?
• A- To assure that the product lines are related
• B- To promote one-stop shopping
• C- To decrease legal liabilities
• D- To relate the products to the target market
B- To promote one-stop shopping
• A business with a broad product mix offers many
product lines. This provides them many
opportunities to make sales, allows them to
appeal to consumers with a variety of needs,
promotes one-stop shopping, and often reduces
the costs of the goods they buy for resale.
Assuring that product lines related refers to
consistency. The use of a broad product mix
does not decrease legal liabilities. In fact, its use
may increase legal liabilities since the business
is responible for a larger variety of product lines.
63. Which of the following is a reason that a
business would make a changes to its product?
• A- To keep up with changing consumer
preference
• B- To spread risk over a wider area
• C- To predict the success of the changed
product
• D- To make room for other products
A- To keep up with changing
consumer preferences
• Customers’ attitudes toward products change
over time, and their preference for a product
may change. Altering the product in some way
can renew customers interest. Making room for
other products is a reason for using the
contraction strategy. By adding products to the
product mix, businesses are able to spread risk
over a wide area. A limitation to the alteration
strategy is that businesses cannot predict the
success of altered products.
12. Company XYZ sells condensed soups
and promotes them by saying, “Great
taste, great price.” Company XYZ is
positioning its product according to what
strategy?
A. Relationship to other products
B. Features and benefits
C. Unique characteristics
D. Price and quality
D
Price and quality. The promotional slogan is positioning the
product as having great taste at a great price. The taste
is a quality. The promotion does not address specific
features and benefits of the product such as “30% more
chicken then the competition” or “Helps lower
cholesterol.” The company is not claiming that its soups
have a characteristic that is different than that of
competitors. The soups are not positioning according to
other products because the slogan does not include
information about other products that the company
produces.
13. A company advertises that its products
are durable, lightweight, and come in a
variety of colors. What strategy is the
company using to position its product?
A. Price and quality
B. Features and benefits
C. Unique characteristics
D. Relationship to other products
B
Features and benefits. The company is
positioning its products according to their
specific features and benefits. Color is one
of a product’s attributes or features. Being
durable and lightweight are benefits. The
company is not advertising quality or price,
or unique characteristics not available
from the competition. The company does
not mention its other products.
14. A company that makes ink pens claims
that no other pen on the market uses on
the market uses a type of ink that changes
color when exposed to light. The company
is positioning its product according to what
strategy?
A. Price and quality
B. Features and benefits
C. Unique characteristics
D. Relation to other products in a line
C
Unique charateristics. The company is
positioning its product according to unique
characteristics because it is claiming that
its product does something that no other
product can do. The ink changing color in
light is a feature, but it is a unique
characteristic that is not available on other
pens. The company is not positioning
according to the quality or the price of the
pens or their relationship to other
products.
15. Why do companies use brands for their
products?
A. To differentiate their products
B. To charge higher prices
C. To encourage materialism
D. To demonstrate creativity
A
To differentiate their products. Companies
want their products to be perceived as
different from those of other companies.
They can do this through the use of
brands. Charging higher prices and
encouraging materialism are seen by
consumers as negative aspects of brands.
Creating an appealing brand often
requires creativity, but demonstrating
creativity is not a purpose of using brands.
16. In what stage of brand loyalty do people
become aware of the brand?
A. Recognition
B. Satisfaction
C. Insistence
D. Preference
A
Recognition. Brand recognition is the stage
of brand loyalty in which consumers
become aware of a brand’s existence.
Brand preference is when customers
prefer to purchase a brand based on their
positive experiences with that brand.
Brand insistence occurs when a customer
will only purchase that brand because of
his/her satisfaction with it.
34. A business that says it tries harder
because its product is not number one, is
using product positioning to_______.
A. Motivate
B. Organize
C. Upgrade
D. Compete
D.
35. Brand or trade names are used
primarily to identify a _______.
A. Market
B. Standard
C. Product
D. Trend
C.
36. A drawback of brands as compared to
unbranded products is that they
usually______.
A. Differentiate products.
B. Must be sold at higher prices.
C. Create brand loyalty.
D. Require trademark registration.
B.
Any business that transports goods across state lines must
comply with standards set by:
A.
B.
C.
D.
Individual Businesses
Government Agencies
Trade Associations
Professional Organizations
B: Government Agencies
While some businesses may have their
own standards, all businesses must
follow government standards by law.
Why do many professional organizations develop standards for
their members to follow?
A.
B.
C.
D.
To promote group activities
To create influence
To establish control
To promote product safety
D: To promote product safety
Many professional organizations develop standards
for their members to follow in order to promote
safety. These specifications guarantee that the
materials used to make goods, or the goods
themselves, meet certain standards for safety. The
safety standards also benefit customers who are
ensured of purchasing safe goods. Professional
organizations do not develop standards in order to
promote their activities, to create influence, or to
establish control.
When products are graded by nongovernmental agencies, the
grading is:
A.
B.
C.
D.
Voluntary
Mandatory
Periodic
Occasional
A: Voluntary
While grading by governmental
agencies is mandatory, grading by
nongovernmental agencies is
voluntary.
Which is an example of an implied warranty?
A. A customer buys a toaster and
assumes it will toast bread.
B. A jacket’s hang tag states that the
fabric is pure wool.
C. A television’s label promises a full
refund if the set doesn’t work.
D. A salesperson tells a customer, “This
is the best quality you can buy.”
A: A customer buys a toaster and assumes it
will toast bread.
An implied warranty is an unwritten
warranty understood by the consumer and
the seller that the product will perform as
expected. The television carries a guarantee
– a promise made by the seller to refund the
consumer’s purchase price if the product
does not perform as expected. The other
alternatives are examples of express
warranties that are either written or
expressed verbally.
Teri purchased a new car and expects for the entertainment
system to work smoothly. Which warranty is Teri expecting to be
fulfilled?
A.
B.
C.
D.
Express
Full
Limited
Implied
D: Implied
State provided
A customer buys a CD player and receives a printed warranty card
stating the action the company will take if the CD player does not
work properly. This is an example of a(n) _______ warranty.
A.
B.
C.
D.
Express
Full
Limited
Implied
A: Express
An express warranty is a promise expressed
in a specific statement concerning the
quality of the product. It may be in written or
oral form. An implied warranty is an
unwritten warranty that is understood by the
consumer and the seller that the product will
perform as expected. Not enough
information is given to determine the extent
of the promise; therefore, we do not know
whether the promise covered all repairs
(full) or only specific (limited).
How does the use of grades and standards affect the buying and
selling process?
A. It enables customers to buy without
having to inspect each product.
B. It provides product information on
unsafe products.
C. It enables businesses to set high
prices.
D. It enables salespeople to suggest
products without having to determine
customer needs.
A: It enables customers to buy without having
to inspect each product.
The use of grades and standards speeds up the
buying and selling process because customers
don’t have to inspect each product. It also furnishes
information that salespeople can use to justify
price, to sell benefits, and to meet customer needs.
The use of grades and standards enables
salespeople to recommend products that best meet
customer needs. Although grades and standards
provide product information, they do not address
unsafe products. Unsafe products should not be
offered since they are a business liability. Product
prices will vary based on the product’s grade.
Therefore, the prices will not necessarily be high.
What is a purpose of warranties and guarantees?
A. To increase customer anxiety about
purchases
B. To decrease feedback from customers
C. To protect the producer and the seller
D. To avoid a customer-oriented focus
for the business
C: To protect the producer and the seller.
A purpose of warranties and guarantees is to
protect the producer and the seller. Producers and
sellers are protected by well-written warranties and
guarantees because the responsibilities to the
consumer are clearly defined. The customer is
informed at the time of the purchase of the way in
which any problems will be handled. This helps to
prevent purchasers from making unreasonable
claims against producers or sellers. Reduced
anxiety about purchases is a customer benefit
received from warranties and guarantees. Benefits
to the business from warranties and guarantees
include attaining a customer-oriented focus for the
business and obtaining feedback from customers.
• A business’s brand promise is what the
business intends to _______.
•
•
•
•
A.)
B.)
C.)
D.)
Name its product
Sell to the target market
Provide the customer
Use as a trademark
• One way a company can reinforce its
image is by ____.
•
•
•
•
A.)
B.)
C.)
D.)
Developing a financial plan.
Training its employees
Conducting a competitive analysis
Identifying economic resources
• One way of reinforcing the company’s
image though employee performance is by
making sure employees have ______.
•
•
•
•
A.)
B.)
C.)
D.)
Thorough knowledge of the products
Comfortable work stations
Generous pay and benefit plans
Full access to customer databases
• When a business publicly pledges to
provide all of its customers with quick,
courteous service, what is it doing?
•
•
•
•
A.)
B.)
C.)
D.)
Making a brand promise
Developing a campaign platform
Stating industry policies
Establishing product position
Explanation
• Making a brand promise.
• A brand promise is a business’s agreement,
spoken or unspoken, with customers that it will
consistently meet their expectations and deliver
on its brand characteristics and values. In the
example, the brand promise is to provide all
customers with quick, courteous service.
Developing a campaign platform, stating
industry policies, and establishing product
position are not activities in which a business is
making a pledge or promise to customers.
• John communicates through all
advertisements that his employees go
through extensive training. What is John
doing?
•
•
•
•
A.)
B.)
C.)
D.)
Making a brand promise
Developing a campaign platform
Stating industry policies
Establishing product position
• What will probably happen to a business if
it continuously fails to deliver on its brand
promise?
•
•
•
•
A.)
B.)
C.)
D.)
Lose credibility
Improve sales volume
Increase market share
Decrease liability
Explanation
• Lose credibility.
• A brand promise is a business’s agreement, spoken or
unspoken, with customers that it will consistently meet
their expectations and deliver on its brand characteristics
and values. An example of a brand company
consistently fails to deliver backorders within 24 hours,
customers are likely to become upset, which may cause
the company to lose credibility. A business that loses
credibility with its customers tends to lose sales and
market share because its customers will likely find new
sources to fulfill their needs. Liability refers to a debt,
that the company owes and does not always affect a
company’s ability to fulfill its brand promise.
• What is an example of an employee reinforcing a firm’s
image through his/her job performance?
• A.) A customer waits on the telephone for several
minutes while Matt confirms shipping information
• B.) Susan advises her customer that the sofa is only
available by special order
• C.) Jack politely asks if his customer would like a
beverage while she/he waits for car service
• D.) Angela, a human resources manager, prepares the
firm’s employee newsletter every month.
Explanation
• Jack politely asks if his customer would like a beverage
while she/he waits for car service.
• The manner in which employees perform their tasks is
an important factor that affects how customers view a
business. When an employee is polite and asks a
customer if she/he would like a beverage while waiting
for a service, the employee is reinforcing a positive view
or image of the business. On the other hand, placing a
customer on hold, especially if it happens often, might
anger the customer and reinforce a negative image of
the business. There is not enough information to
determine if preparing a newsletter or telling a customer
that an item is only available by special order is
reinforcing or creating a certain image.
• Which of the following is a policy that the WNJ Company
might implement to reinforce its image as an efficient
and responsive business?
• A.) Requiring employees to respond to customer
inquires within 24 hours
• B.) Requesting that employees sign their timecards at
the end of a pay period
• C.) Ensuring that employees wear clean uniforms during
their shifts
• D.) Allowing employees to establish their own service
standards.