MKT 300 Exam 3

_____ reflect(s) the mental and emotional links that consumers make between a brand and its key product attributes.

Brand associations ((Brand associations reflect the mental and emotional links that consumers make between a brand and its key product attributes, such as a logo and its color, slogan, or famous personality. These brand associations often result from a firm's advertising and promotional efforts.))

It is important to Joanne to get value for her money, but she does not want to spend time comparison shopping. Joanne will likely respond to _______ pricing, but not to _______ pricing.

EDLP; high/low ((Everyday low pricing (EDLP) focuses on providing reasonable prices all the time on all products, instead of using sale items and regular, higher prices. This allows consumers to shop in one place and know they are getting a reasonable price, instead of having to search around for bargains. By contrast, high/low pricing strategies adopt a regular, higher price and occasional low sales prices. This requires the consumer to shop around to find out which stores have which items on sale.))

_______ means allowing employees to make decisions about how service is provided to customers.

Empowerment ((Empowerment refers to permitting frontline employees to make decisions about service delivery in order to meet customers' specific needs. In general, empowerment of employees results in better service.))

Which of the following is not one of the five groups in the diffusion of innovation curve?

Non-adopters ((the five groups in the diffusion of innovation curve are innovators, early adopters, early majority, late majority, and laggards.))

_____ measures consumers' sensitivity to price changes.

Price elasticity of demand ((Price elasticity of demand measures how changes in price affect the quantity of the product demanded.))

Which of the following products actually lost market share due to its attempt at sustainable packaging?

Sun Chips

What is the difference between a coupon and a rebate?

The retailer handles coupons while manufacturers handle most rebates. ((Consumers redeem coupons at the retail store; most rebates are handled by the manufacturer and consumers must mail in a request.))

How did consumers respond when Chobani reduced the size of its Greek yogurt containers from 6 ounces to 5.3 ounces?

They used social media to complain about the change.

_____ occurs when members of the marketing channel collude to control the prices passed on to consumers.

Vertical price fixing ((Vertical price fixing occurs when parties at different levels of the same marketing channel (e.g., manufacturers and retailers) agree to control the prices passed on to consumers.))

A pricing tactic is

a short-term approach that is often in response to a competitive threat. ((Pricing tactics offer short-term methods to focus on select components of the five Cs. Generally, a pricing tactic represents either a short-term response to a competitive threat (e.g., lowering price temporarily to meet a competitor's price reduction) or a broadly accepted method of calculating a final price for the customer that is short term in nature.))

Margaret has been invited to a fancy dinner party and wants to bring a good bottle of wine as a gift for the host. Since she does not know much about wine, she will likely use the price of the wines as

an indicator of quality. ((Price is a particularly powerful indicator of quality when consumers are less knowledgeable about the product category, as in the saying "You get what you pay for.))

What aspect of the product is being described when a used car salesperson explains that each car comes with a one-year extended warranty and a two-year maintenance plan?

associated services ((Associated services are the nonphysical aspects of the product such as product warranties.))

The service dimension called __________ refers to the ability of the firm's employees to convey trust and confidence.

assurance ((Assurance refers to employees' knowledge and courtesy and their ability to convey trust and confidence))

Bill desperately needed tires for his car, and he found an ad with an incredibly low price. When he got there, he found out that those had supposedly been sold out, and he was pressured into buying tires that were more expensive than he wanted. Bill found out later that Marcelo had the same experience at the store a few weeks earlier. It's quite possible that both Bill and Marcelo had become the victim of a deceptive pricing tactic known as

bait and switch. ((Bait-and-switch tactics lure customers into the store with promises of low prices—often for products that are not even available in the store.))

A noncumulative B2B quantity discount is

based only on the amount purchased in a single order. ((B2B quantity discounts can be cumulative (in which the discount is based on the quantity purchased over a period of time) or noncumulative (in which the discount is based on a single order).))

In the case of Band-Aid adhesive bandages, the brand name has

become synonymous with the product itself. ((Brand names that become synonymous with the product must protect against the use of the brand name in a generic fashion, or they may lose their trademark on the name.))

Which of the following is not one of the four criteria used for determining how "good" a brand is, or how much equity it has?

brand conceptualization ((Brand awareness, brand loyalty, brand associations, and perceived value are the four primary criteria used to evaluate brand equity.))

When a restaurant chain, Big Burgers, launches its own brand of frozen meals, this is an example of a

brand extension. (( a brand extension refers to the use of the same brand name in a different product line.))

Efforts to change a brand's focus to target new markets or change the image of a brand are called

brand repositioning. ((Efforts to change the brand's focus or image are referred to as brand repositioning or rebranding.))

Brand dilution occurs when

brands are overextended and customer perceptions about the core brand are adversely affected. ((brand dilution (the weakening of brand equity) can occur when brands are extended too much or in inappropriate ways.))

Pioneer or breakthrough products

can change consumer preferences. ((Pioneer products establish a completely new market or radically change both the rules of competition and consumer preferences in a market.))

A service is any intangible offering that involves a deed, performance, or effort that

cannot be physically possessed. ((Services are intangible—they cannot be physically touched or possessed, as a pure product can.))

Firms can close a __________ gap by being more realistic about the services they can provide and managing customer expectations.

communication ((A communication gap exists if the firm does not keep its service promises. By making realistic promises that set customer expectations appropriately, this gap can be closed.))

Laptop computers, personal digital assistants, and cellular phones were all readily accepted and diffused in U.S. markets where business and personal lifestyles tend to be faster-paced, compared to many other areas in the world. These products offered __________ with consumers' needs and priorities.

compatibility ((The fast pace of business in the United States makes mobile computing devices compatible with U.S. consumers' lifestyles.))

In many high-end resort markets, Westin hotels compete directly with Crown Plaza hotels. When it comes to pricing, Westin tends to charge its guests similar rates to what the Crown Plaza hotels charge. Westin is using a _______ pricing strategy.

competitive parity ((A competitive parity strategy is a type of competitor-oriented strategy in which the firm sets prices similar to those of the competition.))

When firms set prices similar to those of competitors, they are following a strategy of

competitive parity. ((A competitive parity strategy is a type of competitor-oriented strategy in which the firm sets prices similar to those of the competition.))

Firms using a(n) _______ pricing method set their prices relative to what other firms are charging.

competitor-based ((Competitor-based pricing methods set prices relative to other firms.))

One of the categories of products for which brand extension is especially logical is

complementary goods. ((Complementary products are those which are used together—for example, chips and dip, or toothbrushes and toothpaste. ))

Brands are assets that can be legally protected through

copyrights and trademarks. ((Brands can be legally protected through copyrights and trademarks.))

Milton owns a lawncare business. From experience, Milton has found that John Deere equipment lasts almost twice as long as competitors' machines. For John Deere, Milton's perception about its products makes _______ pricing a logical choice

cost of ownership ((Cost of ownership pricing considers not just the price initially paid, but the cost of owning the product across its lifetime. Milton is likely to pay more for a John Deere lawn mower because of his beliefs about its useful life.))

For many years, General Electric had a corporate strategy of being among the top three firms in any market in which it operated; if it could not achieve a top-three position, it would exit the market. This strategy often resulted in the company __________ when certain product lines failed to meet this expectation.

decreasing product mix breadth ((If GE could not achieve first, second, or third place in a market, it would eliminate a product line, which decreases the product mix breadth.))

A __________ gap is the difference between the firm's service standards and the service it provides to customers.

delivery ((Due to the human element, there is almost always variability in service delivery, in which service sometimes fails to meet the firm's standards. This is the delivery gap.))

The customers at Marielle's coffee shop want to grab a quick cup of coffee before boarding the commuter train into the city. The sign in the window promises "Quick, In-and-Out Service," and usually Marielle's keeps that promise. But one morning, customers were frustrated when the staff behind the counter showed more interest in gossiping about their social lives than in waiting on customers. Marielle's shop is suffering from a ________ gap

delivery ((Marielle's has standards in place to offer fast service, and this is what its customers expect, so we are not dealing with a knowledge or standards gap. And on most days, this promise is kept, so we are not dealing with a communication gap. But on this particular day, service does not match the standards. This is a delivery gap.))

When travelers are bumped from overbooked flights, they are frequently offered vouchers good for future travel. The dollar value of the voucher is the airline's estimate of

distributive fairness. ((Distributive fairness is the evaluation of fairness of the outcome (i.e., a fair compensation for whatever loss or inconvenience occurred as a result of the service problem).))

Along the service-product continuum, which of the following would be considered the most service dominant?

doctor's office ((All the businesses on the list except the doctor's office involve some tangible component—groceries, clothing, books, and food. In the doctor's office, the only tangible elements delivered are things such as samples of drugs, X-rays, and prescription slips (and even those are often submitted electronically).))

The __________ diffusion of innovation group is crucial because few new products can be profitable until this large group buys them.

early majority ((The early majority is the first large group to adopt the product. Without this group, profits are unlikely to materialize.))

Empowerment of employees helps address the delivery gap because

employees directly involved with the customer can respond effectively at the moment the problem occurs. ((Empowerment refers to permitting frontline employees to make decisions about service delivery to meet customers' specific needs. In general, empowerment of employees results in better service because the employee is directly involved in the situation and can respond quickly and effectively.))

Successful first movers create a market or a product category. They often benefit from being readily recognizable to consumers and

establishing an early market share lead. ((the first firm offering a new-to-the-world product often becomes the market leader due to its position as the first, and, for a time, only firm in the market.))

Production of the DeLorean car, made famous in the film Back to the Future, never got above 25,000 units during its lifetime. Automobile industry analysts estimate that production of this car needed to reach around 300,000 units to achieve the __________, which refers to a decrease in unit cost as product volume increases.

experience curve effect ((The experience curve refers to a drop in unit cost as the quantity sold increases.))

When consumers associate a brand with a certain level of quality and familiar attributes, allowing consumers to make quick decisions, the brand

facilitates purchasing. ((A brand can facilitate purchasing because the customer can quickly recognize it and decide whether or not to purchase it based on brand associations.))

Firms can measure the success of a new product by all of the following factors except

fewer competitors in the market. ((Firms can measure the success of a new product by three interrelated factors: (1) its satisfaction of technical requirements, such as performance; (2) customer acceptance; and (3) its satisfaction of the firm's financial requirements, such as sales and profits.))

Empowerment is when __________ are authorized to make decisions to help their customers and, as a result, service quality generally improves.

frontline employees ((Empowerment refers to permitting frontline employees to make decisions about service delivery to meet customers' specific needs. In general, empowerment of employees results in better service.))

A(n) _______ market legally circumvents authorized channels of distribution to sell goods at prices lower than those intended by the manufacturer.

gray ((A gray market employs irregular but not necessarily illegal methods; generally, it legally circumvents authorized channels of distribution to sell goods at prices lower than those intended by the manufacturer.))

When Toyota introduced hybrid cars, there were waiting lists to buy them. Then Honda and a few other manufacturers entered the market, shifting the product life cycle for hybrid cars into the __________ stage of the product life cycle.

growth ((As a few additional competitors moved into the hybrid car market, opening up production capacity for additional buyers, the hybrid market moved into the growth stage.))

During the __________ stage of the product life cycle, sales rise, profits rise rapidly, and there are a small but increasing number of competitors.

growth ((the growth stage, the second stage of the product life cycle, is marked by rising sales and profits and an increasing number of competitors.))

The old restaurant saying "You are only as good as the last meal served" reflects the fact that services are

heterogeneous. ((This saying refers to the heterogeneity, or variability, of services—the fact that they tend to vary by time, location, or service provider.))

If all three grocery stores in town decide to charge the same price for a gallon of milk, what type of pricing tactic is being used?

horizontal price fixing ((Horizontal price fixing occurs when competitors that produce and sell competing products or services collude or work together to control prices.))

Although firms such as restaurants have difficulty controlling service quality from day to day, they do have control over

how they communicate the services they promise. ((Restaurants cannot control the prices they pay for ingredients or their customers' attitudes, but they can control their communication with customers, which will influence expectations and perceptions.))

In a competitive market, perceived value is determined by consumers mostly

in relationship to the value of competitors' offerings. ((The perceived value of a good or service is the relationship between its benefits and its costs. In a competitive market, these benefits and costs will be easiest to evaluate in comparison to competitive offerings.))

Tess is the marketing manager for a fast-food restaurant chain. She uses a target return pricing strategy because her firm's primary objective is to

increase profits. (( target return strategy focuses on achieving a particular return on investment, which is a way of increasing profits.))

Effective service recovery efforts can lead to all of the following except

increased dependence on technology to prevent future service failures. ((effective service recovery can positively influence purchase intensions, positive word of mouth, and customer satisfaction; however, satisfaction may still be lower than it was before the service failure.))

Whenever Donald considers upgrading his personal computer system, he consults with Jeremy, a knowledgeable friend who always has the newest technology. For Donald, Jeremy is a(n) __________ in the diffusion of innovation curve.

innovator ((Jeremy, who always has the latest computer technology, is likely to be among the first group to adopt a new type of computer. This makes him part of the innovator group.))

Barnes & Noble bookstores have computers available for associates to use to search for books requested by customers and to place special orders. These computers are an example of

instrumental support. ((Instrumental support refers to systems and equipment needed by service employees to do their jobs well.))

A strategy of setting prices based on how customers develop their perceptions of value can often be the most effective pricing strategy, especially if the strategy

is supported by consistent advertising and distribution strategies. ((The question describes a customer orientation in pricing, which can be effective since it is based on value, as long as other aspects of the marketing mix support the strategy.))

Brand extension is a popular marketing strategy because

it allows the firm to spend less on creating brand awareness and associations. ((Since consumers are already familiar with the brand name, existing awareness and associations will transfer to the new product.))

By the time BMW got into the mini-SUV market, sales had leveled off and were even starting to decline. BMW had to target its marketing efforts toward the __________ diffusion of innovation group.

late majority ((Sales level off around the time when the late majority adopts the product.))

Ron sells commercial-grade tools to building contractors. Whenever he visits his customers, he looks to see if they are using his tools for other tasks or have modified the tools for some other purpose. These customers are __________, who can provide ideas for new and improved products.

lead users ((Ron is looking for lead users, who modify existing products according to their own ideas to suit their needs.))

Which of the following is not a common business-to-business pricing tactic?

loss leader pricing ((Business pricing tactics include seasonal discounts, cash discounts, advertising allowances, slotting allowances, quantity discounts, and uniform delivered vs. zone pricing. Loss leader pricing is an unethical practice in which a retailer sells a product at a price below its costs.))

Frequent buyer/user award programs are used to

maintain contact with loyal customers. ((frequent buyer programs and similar loyalty programs are often part of a CRM (customer relationship management) program.))

By the time BMW and Mercedes-Benz entered the mini-SUV market, there were many competitors, sales had peaked, and profits were declining. These firms entered the market during the __________ stage of the product life cycle.

maturity ((BMW and Mercedes delayed entry into the mini-SUV market, with the result that they did not enter until this market was already mature.))

A _______ strategy involves accurately measuring all the factors needed to predict sales and profits at various price levels, so that the price level that produces the highest return can be chosen

maximizing profits ((A maximizing profits strategy attempts to make the greatest possible profit, and therefore will set prices accordingly. A great deal of information is needed to make this determination.))

If a firm in a purely competitive market can differentiate its product or service, it becomes part of a(n) _______ market.

monopolistic competition ((The difference between pure competition and monopolistic competition is that in pure competition, products are not differentiated, but in monopolistic competition, they are.))

One of the key characteristics of brainstorming sessions is

no idea is immediately accepted or rejected. ((A brainstorming session is a meeting whose objective is to generate as many ideas as possible. For this reason, no idea is immediately accepted or rejected.))

A major airline sells an aggressively low priced ticket compared to a new low-fare airline which is trying to enter the market. The airline may be accused of engaging in the unethical practice of

predatory pricing. ((When a firm sets a very low price for one or more of its products with the intent to drive its competition out of business, it is considered predatory pricing.))

Sharon knew that her established customers liked her product much better than her competitor's. She was planning to expand into new markets, and she was considering pricing. She was leaning toward charging a higher price than competitors to help demonstrate that hers was a high-quality product. Sharon was considering

premium pricing. ((Premium pricing means the firm deliberately prices a product above the prices set for competing products to capture those customers who always shop for the best or for whom price does not matter.))

According to your text, research has consistently shown that consumers usually rank which of the four Ps as one of the most important factors in their purchase decisions?

price ((Although it is the most challenging of the four Ps to manage, research has consistently shown that consumers usually rank price as one of the most important factors in their purchase decisions.))

Cosmetic manufacturers that sell shampoo and conditioner together as one package at a lower price rather than selling each item separately are using

price bundling. ((The practice of selling more than one product for a single, lower price is called price bundling.))

If a 1 percent decrease in price results in less than a 1 percent increase in the quantity demanded, demand is

price inelastic. ((Demand is said to be price inelastic if a percentage increase in price results in a smaller percentage increase in demand.))

When marketers establish a price floor and a price ceiling for an entire line of similar products and then set price points in between for differences in quality among the products, they are using a _______ pricing approach.

price lining ((When marketers establish a price floor and a price ceiling for an entire line of similar products and then set a few other price points in between to represent distinct differences in quality, the practice is called price lining.))

Because services like cruises and car rentals are perishable, many marketers use

pricing strategies to match supply with demand. ((Perishability refers to the fact that services cannot be produced in advance and stored until they are needed. This can make matching of demand and supply difficult. Cruise lines will offer last-minute discounts for cruises with available capacity.))

A __________ package is the one a consumer uses. A __________ package is used by retailers to display and sell the product.

primary; secondary ((the primary package is the package the consumer uses (for example, a toothpaste tube), while the secondary package is used by retailers to display the product (for example, the box the toothpaste tube comes in).))

If a new product concept gets positive evaluations from potential customers during concept testing, the next step for a firm is

product development. ((After concept testing, the next step in the product development process is the actual product development.))

The __________ step in the product development process is critical, requiring tremendous resources and extensive coordination of all aspects of the marketing mix.

product launch ((In the product launch step, execution and coordination of the marketing mix is essential.))

A __________ is a group of associated items that consumers tend to use together or think of as part of a group of similar products.

product line ((a product line is a subset of the product mix, a collection of associated items that consumers either use together or consider to be related to each other))

Which of the following is not part of the "actual product" level of the product offer?

product warranty ((The "actual product" is made up of the brand name, quality level, packaging, and features and design. The product warranty is one of the associated services included in the augmented product.))

Julia wants her firm's gourmet snacks to be the leading brand in the U.S. market. When adopting a pricing strategy designed to gain market share, she should remember that

rarely is the lowest-price offering the dominant brand in a market. ((Julia is seeking market share, not profits, but she should bear in mind that market leaders are rarely the lowest-priced products in the market))

Everyday low pricing (EDLP) provides value to consumers by

reducing their search costs. ((Everyday low pricing focuses on providing reasonable prices all the time on products, instead of using sale items and regular, higher prices. This allows consumers to shop in one place and know they are getting a reasonable price, instead of having to search for bargains.))

Some products may stay comfortably in the maturity phase of the product life cycle until a new product emerges to replace them. An example of such a mature product is

refrigerators. ((Refrigerators have been in the maturity phase for decades and are likely to stay that way for quite some time. E-books and smartphones have not yet reached maturity. The VCR is in the decline stage, having been mostly replaced by DVDs, DVD writers, and DVRs.))

When a global firm turns to its subsidiaries in less developed markets for new product ideas, such as when Coca-Cola developed Minute Maid Pulpy out of its Shanghai research center and then moved the product into other markets around the world, the firm is engaged in

reverse innovation. ((reverse innovation is when companies initially develop products for niche or underdeveloped markets, and then expand them into their original or home markets.))

Many years ago Honda's Accord and Ford's Taurus were the two top-selling cars in the United States. As the year was coming to an end, Ford cut the price of the Taurus, hoping to outsell the Accord and allow Ford to claim that "Taurus is the best-selling car in America." Ford was using a _______ pricing strategy.

sales orientation ((Ford wanted to sell more of the Taurus, even if it meant lower profits. This is a sales orientation.))

The local furniture store will purchase outdoor furniture only during the winter months because the manufacturer offers a better price to the furniture store. This type of pricing tactic is known as a

seasonal discount. ((A seasonal discount is an additional reduction offered as an incentive to retailers to order merchandise in advance of the normal buying season.))

When testing new products, most firms consider the question of whether testing products on animals

should be done when the new product does not contribute to the health and well-being of human users. ((Some firms do not believe in conducting any animal testing at all, and a few consider animal testing appropriate in any situation. Many firms, though, find a middle ground, considering the benefit to humans of the research.))

The most common form of a quantity discount for consumers is a

size discount ((Size discounts refer to pricing that rewards the consumer for buying larger packages of a product by offering a lower unit price. For example, a gallon of milk is usually cheaper by the ounce than a quart of milk.))

When Burroughs Wellcome introduced the first anti-AIDS drugs, it initially set the price at $10,000 for a year's supply. Burroughs Wellcome was probably pursuing a(n) __________ pricing strategy.

skimming ((Skimming focuses on selling at a high price to the innovators and early adopters on the diffusion of innovation curve.))

Training service providers to know exactly what a "good job" entails is setting service

standards. ((Service providers cannot meet the firm's standards if provided with only general instructions (as in "do a good job"). Specific standards must be provided.))

Which of the following would not be part of the launch of a new product?

starting to make preliminary decisions about the target market ((The target market should already have been identified before the product launch stage; at this point the firm might confirm the target market choice.))

Gerald's Tire Service provides each employee with a clean, sharp-looking uniform. It also instruct employees to put all tools back where they belong and keep the work area clean and uncluttered. Gerald's Tire Service emphasizes __________ in the five service quality dimensions.

tangibles ((Gerald's is focusing on tangibles, which are the factors that can be seen, touched, or owned—in this case, uniforms and the cleanliness of the work area.))

Unlike product, promotion, or place, price is the only part of the marketing mix

that generates revenue. (( Product, promotion, and place generate costs; price generates revenue.))

B2B quantity discounts are legal if

the discounts are available to all customers. ((B2B quantity discounts are regulated by the Robinson-Patman Act. Ordinarily, all business buyers purchasing a given quantity should be charged the same price.))

Sales of national brands of orange juice tend to increase when the economy is doing well, while sales of generic orange juice increase when the economy is not doing well. This is an example of how _______ impacts demand for products.

the income effect ((This is an example of the income effect, where demand tends to shift from lower-priced to higher-priced products as consumers' income increases, and vice versa. In this case, generic orange juice costs less than do the national brands.))

The more substitutes that exist in a market,

the more sensitive consumers will be to changes in the price of a particular product. ((Substitutes, by offering reasonable alternatives, typically make consumers more sensitive to price changes.))

Salina is working to create greater brand awareness for her company's new line of personal digital assistants. To increase brand awareness, the least important information that should be included in promotions is

the product history ((The brand name, logo, packaging, and slogan are all important in creating brand awareness.))

One problem in relying on price elasticity and demand curves when setting prices is

the way a product or service is marketed can have a profound impact on price elasticity. ((Demand curves and price elasticity are the result of many factors, not the least of which is the nature of the marketing mix.))

When corporate headquarters announced new service quality standards for pizza franchise owners, Roland knew he would have trouble gaining employees' support because

they were not involved in setting the goals. ((By involving employees in goal-setting, managers can make it much more likely that employees will buy in to the standards and deliver service according to the standards established. In this case, standards were established by headquarters with no employee involvement.))

At the end of a brainstorming session, participants are often asked to

vote on the best ideas. ((Brainstorming sessions often end with a vote to identify the best ideas among those that were proposed.))

Customers have a defined __________ when it comes to waiting in line at a retail checkout counter. The amount of time consumers are willing to wait varies with the type of store.

zone of tolerance ((The difference between what customers desire and their minimum acceptable level of service is the zone of tolerance. Customers might be willing to wait longer for service at a busy grocery store than at a convenience store.))

When Jaime arrived at her hotel room and saw that the bed sheets had not been changed from the last hotel guest and there were cockroaches in the bathroom, she chose to go elsewhere. An undone, bug-infested room was not in Jaime's __________, which is the difference between what she really wants and what she will accept before looking for another hotel.

zone of tolerance ((The zone of tolerance is the difference between what a customer really wants and what the person will accept before going elsewhere.))