Marketing Principles - Exam 2

Which of the following are considered part of the five Cs of pricing?

-Channel members -Company objectives -Customers -Competition

Which of the following are advantages to firms of owning their own brands?

-Choice of market segments and positioning -Ability to create brand equity -Control over marketing strategy

What does a brand need in order to be somewhat protected from competition from other firms and price competition?

-An established track record in the market -A loyal customer base

Early adopters, although not as fast as innovators, are quick to purchase a new product or service. Which of the following characteristics are typically associated with early adopters?

-Are less risk seeking than innovators -Tend to be opinion leaders of particular product categories

Which of the following processes could be considered an acceptable method for generating ideas?

-Brainstorming within the firm -Communicating with a firm's R&D department -Conducting consumer research -Researching competitors' products and services

While pioneers capture an early and commanding market share, imitators often enter the market and gain which advantages?

-Capitalizing on the pioneer brand's weaknesses -Focusing marketing efforts on demand for their brand -Offering better products at lower prices

Break-even analysis examines the relationships between which of the following?

-Cost -Price

Which of the following help to increase a brand's equity?

-Customer loyalty -Brand awareness -Perceived value

Branding includes which of the following?

-Distinctive packaging -Slogans -Logos

Burger King launched the "Whopper Bar," serving beer as well as burgers in a test market in Miami. Which of the following would have been elements of a good plan for this test market?

-Running the TV ads planned for the full launch -Offering the complete menu planned for the full launch

What are the steps taken by firms that have products in the decline stage of the product life cycle?

-Target a niche segment -Completely exit market

Which of the following are components of the actual product?

1. Features/design 2. Brand Name

What are the four stages that a product passes through as it enters, gets established in, and ultimately leaves the marketplace?

Decline Growth Maturity Introduction

A mobile phone manufacturer decides to eliminate its flip phone product line to focus on the more popular touchscreen products. What is this an example of?

Decreasing breadth

How do consumers generally describe the role of price in their purchase decisions?

Extremely important

True or False: In order to achieve success, a brand must have a name that is a part of the English language.

False

Product development entails a variety of processes and considerations to determine which aspects of a product or service?

Form and features

the process by which ideas are transformed into new products and services that will help firms grow.

Innovation

______ are consumers who like to avoid changes and rely on traditional products until they are no longer available.

Laggards

Of the following, which best describes a monopoly?

One firms controls the market.

A ___________ is something that a customer values and that can be bought or sold

Product

Which of the following traits are associated with the innovators consumer group?

Risk takers Highly knowledgeable (about the product/service)

Which strategy is used by firms that believe increasing volume of sales will help the firm more than increasing profits?

Sales-oriented strategy

Which of the following is an example of a monetary sacrifice included in the overall price of a product or service?

Shipping

___________ products/services are those such as an Apple iPhone, a Harley-Davidson motorcycle, or a Starbucks latte for which the consumer shows a fairly strong preference and loyalty and will go out of the way to find that specific brand.

Specialty

On which of the following does brand loyalty have the most significant effect?

Substitution effect

Which of the following is a market testing method that offers a strong predictor of product success based on actual purchasing behavior?

Test marketing

Which of the following describes the core customer value of a product?

The basic benefits consumers are seeking

______ makes up one of the Cs of the five Cs of pricing.

The customer

What is the most likely result of a co-branding effort between two brands that have completely different customers?

The entire effort will fail for both brands.

the product life cycle is characterized by initial losses to the firm due to its high start-up costs and low levels of sales revenue as the product begins to take off.

The introduction stage

Which of the following is an example of an oligopoly?

The oil industry, with a limited number of providers

Crucial to the success of new products are early adopters, who are responsible for influencing what?

The other three categories of consumers

defines the stages products move through as they enter, get established in, and ultimately leave the marketplace.

The product life cycle

refer to how complicated a product is and how easy or hard it is to try.

Trialability and complexity

True or False: Most brands marketed in the United States are manufacturer brands.

True

True or false: Since test marketing costs are high, a company may choose to launch a new product without extensive test marketing and instead rely on instinct.

True

When consumers experience brand loyalty, which feeling do they associate with the brand?

Trust

_____________ products/services are those that people don't think about buying or don't know about.

Unsought

Adding new products is MOST likely to prompt consumers to purchase in which of the following industries?

Video games

The diffusion of innovation curve refers to the rate in which consumers ______ a given product or service.

adopt

Firms need to continue to innovate because customer needs ______.

are constantly changing

The mental link customers make between a brand and its key product attributes is known as brand ______.

association

To capture new or evolving markets, a firm may increase ________ to compete in new product areas.

breadth

A useful technique that enables managers to examine the relationships among cost, price, revenue, and profit over different levels of production and sales is called ______.

break-even analysis

What are products that household buyers use for their own use called?

consumer products

The five Cs of pricing include ______.

cost considerations

A firm can delete entire product lines to address changing market conditions; this is also known as ______.

decreasing breadth

According to the cross-price elasticity of demand, when the price of DVD players drops, the demand for DVDs is likely to ______.

increase

When the ___ majority of consumers enters the market, the market has already reached its full market potential.

late

The majority of the brands marketed in the United States are ______ brands.

manufacturer

When only a few firms dominate a market, it is known as ______ competition.

oligopolistic

Competition, channel members, costs, customers, and company objectives are the five critical components of _____.

pricing

If a firm has positive results from market testing, the next step will be

product launch

If a firm has positive results from market testing, the next step will be the

product launch

Manufacturers tend to manage their own brands because it allows them to ______.

retain control over their marketing strategies

Jack and his wife were in need of a new a mattress. They compared mattresses at a few local stores, learning about different brands, before making a purchase. In Jack's case, a mattress is most likely a(n) ______ product.

shopping

By the time the late majority enters the market, sales tend to ______.

stabilize or decline slightly

Firms tend to spend _____ to market to loyal customers compared to marketing to new customers.

substantially less

When Subway introduced a new Southwestern Club sandwich in South Florida before launching it nationwide, it was engaging in ______.

test marketing

An example of a nonmonetary sacrifice made in acquiring a product or service is ______.

time

The _____ is fixed costs plus the sum of the variable costs.

total cost

Pricing is difficult to manage because it is the least ______ of the four Ps

understood

Total cost equals ______.

variable costs plus fixed costs

True or false: In general, customers are more sensitive to price increases than to price decreases.

True

The diffusion of innovation curve refers to the rate in which consumers ______ a given product or service. Multiple choice question.

adopt

New products and services that consumers accept quickly will have a high ______ rate early in their product life cycles, which will accelerate the diffusion process across the various stages.

adoption

The Apple iPod was readily accepted by consumers in part because it was an easy way to listen to music anywhere, with substantial improvements over portable CD players. This is an example of a relative ___ within the diffusion process.

advantage

Consumer packaged goods companies sell products across many different product lines. These companies have significant ______ in their product mixes.

breadth

the category of consumers who begin to use a product or service immediately following innovators.

early adopters

When a 10% decrease in price produces more than a 10% increase in quantity sold, the product or service is responsive to price changes and is considered to be ______.

elastic

A firm's product line depth is the number of ______ within a product line, as opposed to the number of product lines a firm has.

items

Those consumers who enter the market for the first time during the decline stage are known as ______.

laggards

Whenever a product has a ______ level of complexity, it will consequently be ______ to try.

low; easy

Debbie is considering having Botox treatments and knows it is a very serious process. On the advice of three of her friends who have each visited Dr. Parsons several times in the past two years for Botox treatments, Debbie makes an appointment with Parsons. She considers the selection to be a(n) ______ good/service.

specialty

A percentage increase in the quantity demanded for Product A results in a percentage decrease in quantity demanded for Product B. Products for which demand is negatively related are known as ______ products.

substitute

Brands are typically legally protected through ______.

trademarks and copyrights

What are the key characteristics of the growth stage of the product life cycle?

-Competitors increase -Sales rise

Products whose demands are positively related to one another are known as ______ products.

complementary

___ products are items whose demands are positively related, so that they rise and fall together. An example would be Blu-ray players and Blu-ray discs.

complementary

How do brands improve consumers' shopping experience?

-They make it easier to decide which products to buy. -They help shoppers distinguish between similar products. -They indicate a certain level of quality.

Branding provides a way for a firm to ______ its product offerings from those of its competitors.

differentiate

Some markets demand a higher frequency of new product releases than others. In which of the following markets do sales come from new products?

-Clothing -Video games -Movies -Books

Which of the following are risks of co-branding?

-Conflicts of interest between the co-brands -Customers for the two brands being too different

Without innovation, what options would be available to firms?

-Continue to market current products to current customers -Take current products to new markets

Which of the following factors influence how rapidly a product will move through the product life cycle?

-How different the product is from other offerings in the market -How valuable the product is to the consumer

Which of the following are among the five categories of consumers determined by how soon they adopt a product?

-Innovators -Laggards -Early majority

Product development or product design entails a process of balancing which types of considerations?

-Manufacturing -Marketing -Engineering

What are some advantages experienced by pioneer firms over later entrants?

-More likely to command a greater market share over a longer period -More readily recognizable to consumers -Establish an early market share lead

True pioneer products are products that have never been seen before and literally create new markets. Which of the following products would be considered a pioneer product at the time it was introduced?

-Pampers disposable diapers in the early 1960s -Amana's microwave oven in 1967

The types of strategies that could be implemented in a profit orientation strategy include which of the following?

-Target return pricing -Maximizing profits strategy

When Frito-Lay decided to introduce a salsa product line, it used the existing Tostitos brand (under which it sells taco chips). What advantages did this strategy provide Frito-Lay?

-The Tostitos brand already had brand associations that helped to sell salsa. -Frito-Lay could introduce the product to the market more quickly. -Frito-Lay could spend less on developing consumer brand awareness.

What objectives do firms have in adding new products, services, and processes to their offerings?

-To keep customers from getting bored with existing products -To satisfy the changing needs of consumers

What might a concept include along with a brief written description of the product?

-Visual images -Customer needs it satisfies

What does a postlaunch review help determine?

-Whether the launch was a success or failure -Whether changes to the marketing mix are needed -Whether additional resources are needed

What can marketers learn from the diffusion of innovation theory?

-Which markets are likely to be most receptive to new products or services -The rate at which consumers are likely to adopt a new product or service

If McDonald's reduces the price of a Big Mac by 25% and sales increase by more than 50%, the firm could describe demand as which of the following?

-price sensitive -elastic

A strong brand protects firms from which of the following?

1. An existing competitor lowering prices 2. New products offering similar features or benefits

The product development process can be diagrammed as a sequential process. Place the stages in order, with the first stage at top.

1. Idea generation 2. Concept testing 3. Product development 4. Market Testing 5. Product Launch 6. Evaluation of results

Place each of the following categories of consumers in the order in which they adopt a product, according to the diffusion of innovation curve, beginning with the innovators at the top.

1. Innovators 2. Early adopters 3. Early majority 4. Late majority 5. Laggards

Put the stages in the product life cycle in order from first to last, with the first stage at top.

1. Introduction 2. Growth 3. Maturity 4. Decline

Branding enables a firm to do which of the following?

1. Make consumers aware of available products 2. Differentiate its product offerings

Which traits are true of ALL products?

1. Offered through a marketing exchange 2. Something that a customer values

Which of the following are components of the augmented product?

1. Warranties 2. Product Support

While early adopters are crucial to the success of a new product, they still only make up a relatively small percentage of the total consumers in a given product market. This percentage is approximately how big?

13.5%

Laggards make up roughly ______ of the market.

16%

What percentage of new products is estimated to succeed?

3 percent

While late to the party, the late majority category of consumers is still significant, making up roughly ______ of the total consumer market.

34%

when a company shows potential customers a product or service before they actually bring it to market.

A premarket test

Match each of the following items with the type of price elasticity. Price Insensitive

Apple increases the price of the new iPhone by 25% and sales decrease less than 1%

Which of the following best describes how managers have historically treated pricing?

As an afterthought

Which of the following is NOT one of the categories of consumer products that buyers use for their personal use?

Associated products

Which of the following is a way by which risk can be diversified?

By creating a broader portfolio of products through innovation

Firms risk a significant amount of money when repositioning their products. Which of the following are expenses associated with repositioning?

Changing brand image through promotion Changing packaging

The five Cs of pricing are company objectives, customers, cost, channel members, and

Competition

What makes the search for shopping goods different from the search for specialty goods?

Consumers are willing to consider alternative brands and features with shopping goods.

What is a product or service for which consumers usually expend no effort toward decision making?

Convenience product/service

Which product has the most observability?

Cordless screwdriver

Which of the following can a firm accomplish with knowledge gained from the diffusion of innovation theory?

Developing effective marketing strategies to increase product acceptance across all consumer groups

The risks associated with brand licensing include which of the following?

Diluting brand equity

After signing a number of licensing agreements to allow their characters to appear on clothing, toys, and video games, the makers of a popular television show saw viewership decline and consumer perceptions of the show start to fall. What is the most likely reason for this phenomenon?

Dilution of brand equity through overexposure

Joanna is interested in new electronics products, but she prefers to wait a few weeks to buy them until technology bloggers post their initial opinions. Joanna probably belongs to which of the adopter groups?

Early adopters

Which diffusion of innovation adopter group waits until the "bugs" are worked out of a particular product, in order to avoid risk, but still purchases within the first half of all adopters?

Early majority

True or False: New products must be targeted toward end consumers.

False

True or False: The sole purpose of a product package is to protect the product from damage while in the supply chain.

False

What is a key characteristic of the maturity stage?

Firms defending market share

Which of the following is the best example of a convenience product/service?

Gasoline

Identify one of the disadvantages of being the first mover.

Having to establish the market all alone

generation refers to the first stage in the process by which firms develop a new product.

Idea

According to the diffusion of innovation curve, when would marketers expect to see the highest frequency of purchases for a given product or service?

In the middle of the curve

A popular hair salon determines that there is a high demand for other beauty treatments in the area and decides to offer manicures, pedicures, and massages. What is this an example of?

Increasing breadth

Which consumers enjoy taking risks and like to be the first to purchase a new product or service?

Innovators

Firms can highlight a product's relative advantage, which refers to which perception among consumers about the product?

It is better than its substitutes.

What will happen to a firm if it continues to produce the same products in a saturated market?

It will eventually decline.

Some analysts have attributed the success and quick diffusion of the Apple iPod in part to the white earbuds. At the time, earbuds were not seen as often, and most headphones were black, not white. As knowledge of the iPod spread, the white earbuds could be seen even if the iPod itself was out of sight. This is an example of which of the factors that affect speed of diffusion?

Observability

Match each of the following items with the type of price elasticity. Price Sensitive

Pepsi drops the price of a six-pack by 50% and sales increase 78%

or breakthrough products are brand new products that establish a completely new market or radically change both the rules of competition and consumer preferences in a market.

Pioneer

Why might it be an advantage for a company to launch a product without test marketing it?

They could get the product to market before the competition.

True or False: During test marketing, a firm will introduce all the elements of the marketing mix to determine demand for the entire market.

True

True or False: If market testing returns with positive results, the firm is then ready to introduce the product to the entire market, which is called a product launch.

True

True or False: Managers can use the product life cycle model to help predict what pricing, product, promotional, and placement strategies they should employ at each of the four stages.

True

True or False: Trademarks and copyrights are legal ways to protect brands from being used by others.

True

True or false: Channel members can have different perspectives when it comes to strategies.

True

True or false: Customers are one of the five Cs of pricing.

True

Using the diffusion of innovation theory, what can a firm can predict?

Which consumers will buy a new product immediately and which will buy it later

One consumer research exercise asks consumers to say the first things that occur to them when they hear a brand name. For example, for the brand "Coca-Cola," someone might respond, "Red and white cans, sweet, carbonated." These are examples of brand ______.

associations

Products are complex, with multiple components. The term "_______________ product" (also known as associated services) refers to the nonphysical aspects of the product, such as financing and support.

augmented

If a brand has a high degree of brand _________, it means that most consumers are familiar with the brand and what it stands for even if they do not use the brand.

awareness

Marketers can assess the level of brand ______ by measuring the extent to which consumers in a market are familiar with a brand, know what it stands for, and have an opinion about it.

awareness

Suppose that Toyota introduced a small, inexpensive car under its Lexus brand. This action might harm consumers' current luxury-oriented brand associations for the Lexus brand. This is an example of ______, a risk companies face when adding a new product to an existing brand.

brand dilution

When a brand extension adversely affects consumer perceptions about the core brand, it is known as ______.

brand dilution

The set of assets and liabilities linked to a brand that add to or subtract from the value provided by a product or service is

brand equity

A firm's product mix _____ represents the number of product lines offered by the firm.

breadth

Marketers invest in developing a strong brand identity to help establish ______

buyer loyalty

What is the term used when a company's products are so closely related that sales of one brand take away sales from the other brand?

cannibalization

If a company's products are too closely related, sales of one brand may , or take away sales from the other brand, with no net sales, profit, or market share increase.

cannibalize

When developing a pricing strategy, channel members should ______.

clearly communicate their pricing goals to one another

Because they include information such as ingredients, nutrition, and the product benefits to a consumer, labels can be considered ______ tools.

communication

A newly formed coffee company should not have much trouble finding coffee drinkers in America to purchase a new type of coffee maker. However, a company selling gear for the game of cricket might have a difficult time being successful in the United States. They would probably be more successful in India or Australia. The degree to which one's product is consistent with the needs and habits of target consumers is known as ______.

compatibility

For many Americans, the daily ritual of having a coffee is almost automatic and assumed. The same can be said for the Chinese but with tea. For a firm that is marketing a product, this example serves as a reminder to consider the ______ of your product and its intended target market.

compatibility

a written description of a product and its technology and is presented to potential buyers or users to obtain their reactions.

concept

The five Cs of pricing are: company objectives, customers, channel partners, competition, and

costs

The percentage change in the quantity of one product demanded compared with the percentage change in price in another product is called

cross-price elasticity

When a product is in the ___ stage of the product life cycle, its firm will often choose between targeting a niche segment or exiting the market.

decline

The number of products within a product line is a firm's product line ______.

depth

The theory that helps marketers understand the product or service adoption rates of consumers is called ______.

diffusion of innovation

One advantage of product innovation is that a firm can expand into different product categories. The point of the risk ______ strategy is that if some products in one category are competing poorly, others in another category could be doing very well.

diversification

Along the diffusion of innovation curve, _______ make up the second group of consumers to adopt an innovation; they tend to be leaders in a social setting.

early adopters

Brands are assets that a firm can build and harness over time to increase its ______.

equity

The value of a brand can be calculated and compared to other brands in the form of brand ______.

equity

The percentage of new products that actually succeed is ______.

extremely low

Kellogg's sells a variety of products under its Kellogg's name brand then identifies groups of products with a secondary name such as Raisin Bran or Froot Loops, each in several sizes and versions. Froot Loops is known as a(n) ______ brand.

family

When a firm sells all its products under one ______, such as Pepperidge Farm, the individual brands benefit from the overall brand awareness associated with it.

family brand

Because a brand name is already well established, a firm can spend ______ resources to develop consumer brand awareness when introducing a brand extension.

fewer

Apple created an entirely new brand that started with the iPod and evolved into different product categories (e.g., iPhone, iPad) before anyone else could catch on. Thus, Apple was the ______, which made the firm easily recognizable to consumers, helping it to gain an early market share lead.

first mover

Price is the one element in the marketing mix that ______.

generates revenues

Usually, during the ___ stage of the product life cycle, the typical consumers are early adopters, and there are increases in the number of competitors.

growth

Since brands are easily recognized by consumers and signify a certain quality level to buyers, brands ______.

help consumers to make quick decisions

After product development, firms conduct premarket tests, which help determine ______.

how many customers will try and then continue to use it

Although there are numerous stages in the product development process, every firm starts to develop new products through ______ and then finishes with an evaluation of ______.

idea generation; results

A company that develops a new merchandise tracking technology that automatically notifies suppliers when a new shipment is needed is using its new product to ______.

improve business relationships

Toyota sells cars under several brands: Lexus, for luxury cars, Scion, for targeting young consumers, and Toyota for its mid-market cars. Toyota is using a(n) ______ brand naming strategy to target different market segments.

individual

Some firms use ____ for each of their products, as opposed to the same name or brand for all their product lines and products.

individual brands

If a company needs to raise the prices of some its products, it should choose to raise the prices of ______ products because relatively fewer customers will stop buying the product as a result.

inelastic

When a 10% decrease in price results in less than a 10% increase in quantity sold, demand for the product or service is described as ______.

inelastic

Brand loyalty tends to be an advantage to the firm because it will ______ competition.

insulate the firm from

During the decline stage of the product life cycle, ______ who have not yet tried the product or service will be entering the market for the first time.

laggards

A good or service may pass through many stages as it establishes itself in the marketplace. Marketing managers refer to this as the product

life cycle

A product mix typically consists of product ______, or groups of associated items.

lines

Which of the following is a risk associated with repositioning a product?

loss of funds invested in the repositioning effort

the product life cycle is characterized by the adoption of the product by the late majority and good profitability.

maturity stage

Product lines are a part of a product ______.

mix

The complete set of all products and product lines offered by a firm is called its product assortment, or product ______________

mix

The product ______ is the complete set of all products and services offered by a firm.

mix

Price is one of the ______ in a consumer's purchase decision.

most important factors

In order to accurately evaluate the new product launch, marketers must undertake a critical ______ review to determine whether the product and its launch were a success or failure.

postlaunch

By focusing on target profit pricing, maximizing profits, or target return pricing, a firm is implementing a ______ orientation.

profit

Sometimes firms selling a pioneering product will set a very low price in order to attract many customers before competitors enter the market. This is an example of a ______ orientation.

sales

New product and service innovation is important because the longer a product or service exists in a given marketplace, the more likely that the market will become ______.

saturated

__________ products/services are typically consumer durables, such as a dryer or a refrigerator. Buyers spend a fair amount of effort and time to make the comparisons before purchasing and usually do not know which one or which brand they will buy in advance of the process.

shopping

When the change in demand for one product negatively affects the demand for another product, the items are known as ______ products.

substitute

The physical item to which marketers assign such attributes as the brand name, features/design, quality level, and packaging is ______.

the actual product

Which of the following refers to the basic problem-solving benefits that consumers seek in a product?

the core customer value

Antitrust laws are designed to protect consumers from ______.

the high prices charged by monopolies for their products

Sales of digital cameras have leveled off, and some producers have started to notice a decline in their profits. Consumers who purchase their first digital camera at this point are called ______.

the late majority

Loyalty toward a particular brand makes other brands seem less substitutable, which decreases ______.

the price elasticity of demand

E-book readers existed for many years before Amazon introduced the Kindle, but few consumers were aware of the devices, and sales stayed at very low levels. In the days before the Kindle, e-book reading devices were ______ products for most consumers.

unsought

When a product is first launched during the introduction stage, sales are usually ______ and there are ______ competitors.

very low; essentially no

The problem with using the product life cycle concept is that no one can predict the shape that the product's life cycle will take; therefore, it is impossible to know ______.

which stage the product is in

Other elements in the marketing mix may or may not be perfect, but if the price is wrong, revenue ______.

will not accrue