MAR3023 -- MODULES 6 & 7
Which of the following statements about a label is NOT true? a) A good product label will be easy to remove b) A good product label will have an 800 number c) A good product label will signal quality d) A good product label is designed to be read by the target segment e) None of the above
a) A good product label will be easy to remove
The connection between a lot of advertising and brand equity is ________ the connection between sustained innovation excellence and brand equity. a) A lot weaker than b) About the same as c) A lot stronger than
a) A lot weaker than
Which of the following statements is true, as discussed in the product development module? a) All products have an implied warranty b) A defensive warranty acts as a spur to improve product quality and design c) An outstanding warranty has an impact on consumer perceptions of quality, particularly for an established brand d) A good customer service manager points out when customers have obviously not read product instructions
a) All products have an implied warranty
If you face fierce competition, the short-term effect on sales of a price reduction will be: a) Greater than the long-term effect of a price reduction b) Less than the long-term effect of a price reduction c) The same as the long-term effect of a price reduction
a) Greater than the long-term effect of a price reduction
The filter or stage-gate product development process is made up of which of the following stages? a) Idea development, analysis and screening, concept development, prototype design, prototype manufacturing and testing b) Analysis and screening, idea development, concept development, prototype design, prototype manufacturing and testing c) Idea development, concept development, analysis and screening, prototype design, prototype manufacturing and testing d) Idea development, concept development, prototype design, analysis and screening, prototype manufacturing and testing
a) Idea development, analysis and screening, concept development, prototype design, prototype manufacturing and testing
Volume discounting: a) Is a form of price discrimination b) Is a form of predatory pricing c) Results in lower overall demand for the selling firm's brand d) Results in a sustainable competitive advantage over non-discounting sellers e) Is more likely to occur when there are no substitutes in the marketplace
a) Is a form of price discrimination
A tied pricing contract: a) Is illegal in the United States b) Results in lower profits for the selling firm, due to the necessarily lower margins c) Fixes the price of a product for a period of time (usually one year) d) Ties the firm's price increases to changes in the consumer price index (CPI) e) Results in lower prices for complementary products
a) Is illegal in the United States
What is the key to a successful product design process? a) Iterating or cycling from design improvement and improved prototype to customer testing and consultation b) Spending a lot of time in designing the first prototype c) Hiring professionals to design the product d) Allocating big budget for product design
a) Iterating or cycling from design improvement and improved prototype to customer testing and consultation
The current emphasis in new product development in North America encourages: a) Managers to think inside the box b) Managers to think outside the box c) Partnerships with companies in low cost markets
a) Managers to think inside the box
When demand increases faster than supply increases: a) Price increases b) Price decreases c) Price stays the same
a) Price increases
When supply decreases faster than demand decreases: a) Price increases b) Price decreases c) Price stays the same
a) Price increases
A negative aspect of price promotions in a mature market is: a) That they can reduce the degree of brand loyalty in the market b) That they cause buyers to switch to non-promoted brands c) The lack of competition that results d) That brand switching decreases e) None of the above
a) That they can reduce the degree of brand loyalty in the market
When a logo's reputation is earned over decades _______________. a) The logo should stay the same for decades b) The logo needs to be refreshed to create more interest and attention c) The logo needs to be changed to create new brand associations
a) The logo should stay the same for decades
The most efficient transfer price is: a) The market price of the goods and services that the subsidiary faces b) The price that minimizes overall taxes c) The price that minimizes taxes of the selling subsidiary d) The price that minimizes taxes of the buying subsidiary
a) The market price of the goods and services that the subsidiary faces
Electric utilities have developed ___________ to compete in the home heating market segment. a) Usage segment discounting b) Volume discounting c) Price shading d) All are correct answers
a) Usage segment discounting
Which of the following decreases consumer price sensitivity? a) When the purchase is a necessity b) When prices are increasing c) When product innovation decreases d) When there are close competitive substitutes
a) When the purchase is a necessity
In 1990, ____ of new product development projects were next generation, break-through products and by 2004, ____were next generation, break-through products according to Professor Cooper. a) 12%, 20% b) 20%, 12% c) 41%, 61% d) 61%, 41%
b) 20%, 12%
An outstanding warranty has an impact on consumer perceptions of quality, particularly for ___________. a) An existing brand b) A new brand c) A brand extension d) Both existing and new brands
b) A new brand
Price Shading: a) Is illegal in North America b) Allows sellers to lower prices for buyers who are knowledgeable about competitive suppliers c) Results when sellers maintain their prices at the same level when competitors raise prices d) Results when sellers maintain their prices at the same level when competitors lower prices e) Is useless when trying to deal with seasonal fluctuations of supply and demand
b) Allows sellers to lower prices for buyers who are knowledgeable about competitive suppliers
Research suggests that compared to price promotions, consumers may have a more positive feeling about: a) An equivalent price reduction made in the base price b) Coupons and rebates c) None of the options are true
b) Coupons and rebates
Which of the following was not one of the first two activities in the Good Grip's product development process? a) Identify a consumer need b) Hire a designer c) Learn about the market
b) Hire a designer
Which of the following statements is true? a) The timing of promotion isn't an important tactical decision b) In the fashion world, promotions running late in the season are designed to reduce inventory carrying costs and the risk of fashion obsolescence c) Retailers don't manage the promotions by scheduling their manufacturer orders d) Providing an early promotion will not attract buyers who would buy later at the usual higher price
b) In the fashion world, promotions running late in the season are designed to reduce inventory carrying costs and the risk of fashion obsolescence
The great era of branding started? a) In the early 1800s b) In the late 1800s c) In the early 1900s d) In the 1950s
b) In the late 1800s
A price skimming strategy: a) Is more likely to attract a large number of buyers b) Is more likely to attract competitors c) Is illegal if the price is set lower than the firm's average cost d) Will work only when there are substitute products on the market
b) Is more likely to attract competitors
Which of the following statements is true, as discussed in the product development module? a) One third of the CEO's of very successful high-growth, high-profit companies manage the task of designing low cost into their products well b) It has been proven that concurrent engineering is very effective c) It is easy to implement concurrent engineering d) Many admit they are doing a good job of early testing of product design for manufacturability, of estimating costs, and of involving customers and suppliers during the design process
b) It has been proven that concurrent engineering is very effective
Each year, marketers spend far more on ____________. a) Advertising b) Packaging c) Distribution channel promotions d) Similar budget are allocated to all of the above
b) Packaging
When demand decreases faster than supply decreases: a) Price increases b) Price decreases c) Price stays the same
b) Price decreases
When supply increases faster than demand increases: a) Price increases b) Price decreases c) Price stays the same
b) Price decreases
In leveraging brand reputation, a strong brand __________________. a) Opens the door and invites you in b) Provides a foot in the door, that is all c) Blows down the door and blows out the windows
b) Provides a foot in the door, that is all
What impact(s) might occur when off-peak demand pricing is applied? a) Increasing the annual overall average selling price b) Reducing the annual overall contribution margin c) Price-sensitive shoppers wait for the sales to occur d) Both B and C
b) Reducing the annual overall contribution margin
Transfer pricing is a) The price you charge transfer companies for a product or service b) The price you charge another unit or subsidiary of your company for a product or service c) The price you charge an overseas subsidiary of your company for a product or service d) The price you pay transfer companies for a product or services
b) The price you charge another unit or subsidiary of your company for a product or service
The Price Change worksheet uses the "Wisdom of the Crowd" by: a) Employing economic analysis that has been tested and proven b) Using the forecasts of everyone involved c) Both A and B d) None of the above
b) Using the forecasts of everyone involved
The CEO of P&G talks about two consumer moments of truth. Which of the following is NOT one of them? a) When the consumer confronts the product on the store shelf b) When the consumer talks to other consumers c) When the consumer uses the product at home d) All of the above
b) When the consumer talks to other consumers
The typical performance metric for judging new product success is __________________. a) Return on investment b) Market share c) % of sales coming from new products launched in the last 3-5 years d) All of the above
c) % of sales coming from new products launched in the last 3-5 years
If the contribution margin percentage is currently 40 percent and a price reduction of 20 percent is proposed, by what percentage will sales have to increase for the price reduction to be worthwhile? a) 20% b) 50% c) 100% d) 200%
c) 100%
P&G's recent success in product development is because it has set a goal of having ____ of its new products come from outside the company. a) 30 percent b) 40 percent c) 50 percent d) 80 percent
c) 50 percent
Which material in packaging may enhance the quality image of the brand in beverages and foods industries, as discussed in the product development module? a) Cans b) Plastic c) A glass bottle d) Cardboard
c) A glass bottle
A penetration pricing strategy can be attractive when: a) Creating the necessary long-term aftermarket relationship with a customer that generates profitability b) It creates an industry platform or standard to which all other rivals must use or conform c) Both A and B d) None of the above
c) Both A and B
Research has shown that the design management skills listed in the section _______________. a) Are positively related to firm growth and profitability b) Moderate the effect of investment in design on performance c) Both A and B d) None of the above
c) Both A and B
What can you learn from the Price Change worksheet? a) What price sensitivity it will take to make a price reduction pay off b) What price sensitivity it will take to make a price promotion pay off c) Both A and B
c) Both A and B
Why do we have warranties if the common law is that a product must be of merchandise quality? a) To protect the seller b) To bolster the promise of customer satisfaction c) Both A and B d) We don't have to have warranties for every product
c) Both A and B
Which of the following price points should markets focus on? a) Supply curve kink points b) Demand curve kink points c) Both supply curve and demand curve kink points
c) Both supply curve and demand curve kink points
Dell computer sets the price of its added-value notepad features based on: a) The cost of the additional feature b) Buyers' perceived value of the feature c) Both the cost and the perceived value
c) Both the cost and the perceived value
If all dairy farmers adopt Supercowchow and overall supply increases by 10 percent, which of the following will happen to the long-term income of the farmers who adopted it first? Their long-term income compared to their short-term income will: a) Stay the same b) Increase c) Decrease
c) Decrease
Royal Phillips Electronics developed a global branding effort called "Sense and Simplicity" in 2004. Which of the following activities is incorrect? a) Set up a Simplicity Advisory Board of company outsiders to evaluate products and report to the CEO b) This principle applies to all good design: Simplify! c) Everything should be made as simple as possible, and then simpler d) It is an extension of the Chinese principle of feng shui: buildings and interiors with no clutter and complexity are healthy
c) Everything should be made as simple as possible, and then simpler
According to the module, which of the following products/services uses a premium pricing strategy? a) Extended appliance warranties of Walmart b) P&G's Crest Spinbrush c) Extended appliance warranties of Best Buy d) None of the above
c) Extended appliance warranties
The Chief Executive of GE, Jeff Immelt thinks ______________. a) North America has a great future in developing new products b) His company will do more product development in Germany c) GE will move its break-through product development efforts to India and China
c) GE will move its break-through product development efforts to India and China
Given the results of the Nescafe Instant coffee experiment, how did Nescafe reposition its brand? a) Great tasting and convenient b) Great tasting for the busy homemaker c) Great tasting and it frees up time to do more important chores d) Great tasting to the last drop
c) Great tasting and it frees up time to do more important chores
Which of the following is likely to most increase shareholder value and obtain financing? a) A very clever brand advertising campaign b) Having the Chief Executive Officer appear in the brand advertising campaign c) Having the company name as the brand name d) All of the above
c) Having the company name as the brand name
Optimal price is very likely to be at one of the demand curve kinks because it produces the: a) Target return on investment b) Lowest variable costs c) Highest gross contribution
c) Highest gross contribution
Harley Davidson is a great example of what sort of brand loyalty? a) Emotional loyalty b) Differentiation loyalty c) Identity loyalty d) Service contract loyalty
c) Identity loyalty
Where are the greatest branding opportunities today? a) In big ticket items involving a lot of risk b) To insecure teenagers c) In developing economies
c) In developing economies
Lower introductory prices can lead to higher per unit margins by: a) Increasing demand for competing products b) Decreasing demand for competing products c) Increasing sales volume and achieving economies of scale and sales efficiencies d) Maintaining brand loyalty with price discounts
c) Increasing sales volume and achieving economies of scale and sales efficiencies
In a market where price shading is relatively common, sellers who do not shade their prices: a) Are typically seen as much more ethical than their competitors b) End up haggling with customers over prices c) May be perceived as uncooperative and unreasonable d) Are better able to deal with seasonal fluctuations in supply and demand e) Often acquire greater brand loyalty as a result of their unwillingness to participate in this illegal activity
c) May be perceived as uncooperative and unreasonable
Bruce McLaren, a New Zealander, founded the McLaren racing team that won eight Formula One World championships during the 1980s, and McLaren is still a major player in the design of race cars and winning championships. Which of the following would not have been a good brand extension? a) McLaren after-market high performance auto parts and accessories b) McLaren high-performance driving courses c) McLaren scenic tours of New Zealand d) A super sports car e) None of the above
c) McLaren scenic tours of New Zealand
In which of the following continents do prices change most often? a) Asia b) Europe c) North America
c) North America
When the market has distinguishable segments that vary in their degree of price sensitivity, the best pricing strategy to use when initially introducing a new product is likely: a) Penetration pricing b) Price point pricing c) Price skimming d) Substitute pricing e) Predatory pricing
c) Price skimming
What is gross contribution? a) Price minus variable cost per unit b) Price minus total fixed cost c) Quantity sold times contribution
c) Quantity sold times contribution
Which of the following statements is true about prototyping? a) You develop the clay model and then use it as input into computer-aided design b) Quality prototyping is about getting the prototype right the first time c) The working model that the organization has figured out how to manufacture is called the prototype d) Organizations don't spend enough time in developing detailed specifications of the first prototype
c) The working model that the organization has figured out how to manufacture is called the prototype
Concurrent engineering is _____________. a) The development of the production process and marketing plan after the development of the product b) The development of the production process and marketing plan before the development of the product c) When several product development teams work in parallel rather than in sequence d) When several product development teams work in sequence rather than in parallel
c) When several product development teams work in parallel rather than in sequence
Who are/were most likely to be the most brand-loyal to packaged goods and appliances? a) Your generation b) Your parents' generation c) Your grandparents' generation
c) Your grandparents' generation
A major part of product development involves: a) Improving the process b) Getting rid of the "not invented here" business mentality c) Changing the "corporate lawyers are king" business culture d) All of the above
d) All of the above
What are the possible underlying implications when companies rely on price promotions to sell their mature product? a) Companies don't have innovative strategies b) The product- development process is broken c) The product-development process needs to be fixed d) All of the above
d) All of the above
Which of the following does the Price Setting worksheet analysis do? a) Tells you how much you have to sell to meet the profit targets b) Tells you what market share you have to achieve to meet the profit targets c) Specifies your allocation of fixed costs and variable costs d) All of the above
d) All of the above
Which of the following products can price skimming strategy be applied with? a) Luxury goods b) Highly demanded new drugs c) A Rolex watch d) All of the above
d) All of the above
A.G. Lafley, the P&G CEO, used simple slogans. a) He felt that such simplification enables everybody to understand what the goal is and how to get there b) His plan is simple: focus on the billion-dollar brands c) He wanted to try to grow new brands rather than sell more Tide d) Both A and B e) A, B, and C
d) Both A and B
Payment terms: a) Price discriminate against slow-paying customers b) Many markets use the standard term "2-10, net 30" c) Most sellers impose and charge interest penalties on delinquent customer debt d) Both A and B
d) Both A and B
What kind of pricing strategies have Toyota and Honda done over the last 50 years in the United States? a) Penetration pricing strategy b) Keep raising quality with each improved model c) Keep reducing prices with each improved model d) Both A and B
d) Both A and B
Which of the following scenarios described in the price module best represents the advantage of differentiation over price promotion? a) Procter & Gamble's patented innovation "Pert Plus" b) Grind-your-own gourmet coffee beans by entrepreneurial firms c) Maxwell House coffee d) Both A and B
d) Both A and B
Which of the following scenarios best describe a high negative price elasticity? a) When price increases, demand decreases a lot b) When price increases, demand decreases little c) When price decreases, demand increases a lot d) Both A and C
d) Both A and C
In following through on claims, ________________________. a) When a customer complains, it will always lead to negative word-of-mouth b) If a complaint is handled promptly and graciously it can create a more loyal customer c) It is essential to process a warranty claim quickly and efficiently d) Both B and C e) A, B, and C
d) Both B and C
The filtering, stage-gate approach in turbulent times is considered by two leading marketing scholars to be: a) Best practice b) A way of ensuring that 70% of your product development projects are successful c) A way of ensuring that 50% of your product development projects are successful d) Cumbersome and inappropriate
d) Cumbersome and inappropriate
A movie theatre that prices afternoon showings lower than more popular evening showings: a) Is in danger of a class action lawsuit for price discrimination b) Must prove that afternoon showings cost less on average than evening showings c) Cannot sustain such a strategy over the long term d) Does so because of lower demand and because it cannot store its excess seating capacity e) Is foolishly losing revenue that could have been generated by pricing evening showings at the lower price
d) Does so because of lower demand and because it cannot store its excess seating capacity
There are different types of brand loyalty that have different strengths. Which of the following is the correct order of strength presented in the section? Strongest first, weakest last. a) Identity, differentiation, emotional, service contract, convenience b) Differentiation, emotional, identity, service contract, convenience c) Emotional, differentiation, identity, convenience, service contract d) Emotional, identity, differentiation, service contract, convenience
d) Emotional, identity, differentiation, service contract, convenience
What is the consequence of increased general global demand that is only somewhat answered by increased supply? d) General price increases e) General price decreases f) Prices stay the same
d) General price increases
Price promotions: a) Lead to a transfer of positive feelings to the product or brand b) Are typically superior to free sample promotions c) Work best with mature brands d) Have strong reinforcing effects and train shoppers to become deal-seeking shoppers e) None of the above
d) Have strong reinforcing effects and train shoppers to become deal-seeking shoppers
The long-term solution to the high price of gasoline is _____________. a) To find new sources of supply b) Decrease the fuel consumption of cars c) Reduce the price through government subsidy d) Increase the price further through government taxation
d) Increase the price further through government taxation
A study found that concurrent engineering ______________. a) Reduces time to market by 50-80 percent b) Development time is 20-50 percent less c) Dollar sales are 60-90 percent higher d) Overall quality is 200-600 percent higher
d) Overall quality is 200-600 percent higher
Which of the following statements about packaging is true? a) A one-page guide to product use is a sure sign of poor marketing b) The consumer cannot benefit from clever packaging designed for the usage situation c) Innovative packages can add real convenience to product use d) Recyclable packages will appeal to environmentally concerned market segments e) Both C and D
d) Recyclable packages will appeal to environmentally concerned market segments
What is the reason for the change in brand loyalty between generations? a) Exposure to more advertising b) Greater innocence c) Much busier d) Reduced product improvement
d) Reduced product improvement
Which of the following increases consumer price sensitivity? a) When the purchase accounts for an insignificant percentage of income b) When prices are dropping c) When product innovation increases d) When prices can be searched on the Internet
d) When prices can be searched on the Internet
When administered according to a careful feeding schedule, a premium nutritional additive called Supercowchow increases milk production earnings in a dairy herd to $1,050,000 from the $1,000,000 using the standard Cowchow that costs $50 a sack for the farmer to buy. The farmer uses 1,000 sacks of Cowchow a year. Supercowchow costs $10 per sack extra to manufacture and the farmer would use 1,000 sacks of it. Thus the added-value of Supercowchow over regular Cowchow is $50,000/1,000 sacks, which is $50 per sack. Which of the following would be the farmers' highest acceptable price for the new Supercowchow per sack? a. $60 b. $70 c. $80 d. $90 e. $100
d. $90
A positive warranty or guarantee can ______________. a) Raise quality expectations b) Raise employee efforts and morale c) Act as a quality control process d) Be a competitive differentiation feature e) All of the above
e) All of the above
A product's packaging ______________. a) Is its dressing b) Is often its most distinctive marketing effort c) Is a critical selling tool d) May have to be designed to fit unique display locations e) All of the above
e) All of the above
Product development is about strong __________________ a) Design creativity b) Leadership c) Focus d) Simplicity e) All of the above
e) All of the above
Many price discounts are wasted because: a) About two in three are not supported by special point-of-purchase displays b) About 30 percent are not passed on to consumers c) They are not noticed by buyers d) They are automatically given to all consumers e) B, C and D
e) B, C and D
A method to reduce price shading's potential to lower profits is to: a) Fire employees who participate in this activity b) Prosecute employees who participate in this activity c) Educate employees regarding legal pricing practices d) Set list prices relatively low and allow unrestricted salesperson price negotiations e) Base commissions on profits and not sales volume
e) Base commissions on profits and not sales volume
Consistently pricing your product below your average cost: a) Can be profitable if you can sell complementary products at a relatively high margin b) Is price discrimination if certain consumer groups do not purchase the products c) Can be considered predatory pricing if it results in taking sales away from competitors d) Can be profitable if there are multiple substitutes in the market e) Both A & C
e) Both A & C
Kinks in the demand curve for a particular product are more likely to occur when: a) The firm has successfully distanced the product from potential substitute products b) There exist perceptual price points wherein small changes in actual price are associated with rather large changes in perceived price and hence demand c) There exist close substitute products d) Both A and B occur e) Both B and C occur
e) Both B and C occur
Singer sewing machine wrecked its brand equity by __________________. a) Ceasing to provide customer support and education b) Selling off all of its company owned stores c) Stopped investing in developing and innovating high quality sewing machines d) All of these options e) None of the above
e) None of the above
Which of the following has Virgin used to extend its brand name? a) The extension category is used in the same usage situation b) The extension category is distributed through the same channels c) The extension category is not dominated by existing, powerful brands d) All of these options e) None of the above
e) None of the above
Which of the following is NOT one of the outside sources of innovation ideas? a) New ideas from employees b) Copying innovations in foreign markets c) New ideas from consumers d) Existing specialized industrial product e) None of the above
e) None of the above
Price discrimination: a) Is illegal in the United States b) Results when sellers maintain their prices even though competitors raise their prices c) Results when sellers maintain their prices even though competitors lower their prices d) Is a form of predatory pricing e) Results when a seller differentially adapts prices to various buyers
e) Results when a seller differentially adapts prices to various buyers
Prices are economic stop lights. They direct buying and selling. When prices become sticky: e) The market is less efficient in allocating resources f) Demand is increasing faster than supply so invest in supply g) Supply is increasing faster than demand so divest in supply h) The market is in efficient equilibrium
e) The market is less efficient in allocating resources
Which of the following is the odd brand out? a) NoDoz b) Handy Wipes c) Slim Fast d) Mop and Glow e) Tide
e) Tide
The Good Grips case study highlighted best practice in __________________. a) Understanding customer product use and benefits sought b) Design c) Funding the project d) Maximizing distribution reach e) Minimizing opportunities for imitators f) All of the above
f) All of the above
A brand is __________________________________. a) Created by memorable, meaningful and likable advertising b) A set of associations linked to a name c) A reputation d) A and B e) A and C f) B and C g) A, B and C
f) B and C
Which of the following would the manufacturer find to be the lowest acceptable per sack price for the new Supercowchow? f. $60 g. $70 h. $80 i. $90 j. $100
g. $70
Which of the following do you think is the fairest price for the Supercowchow? k. $60 l. $70 m. $80 n. $90 o. $100
m. $80
An enterprising manufacturer of filing-cabinet hanging folders makes them in several bright, modern colours rather than the standard, dull, cardboard green. Which of the following reasons contributed to the great success of this very successful and very profitable quality-added product feature and product positioning differentiation? 1. The different colours are more aesthetically attractive a) Yes b) No 2. The colours can be used to organize files a) Yes b) No 3. The folders are made of recycled paper a) Yes b) No 4. The extra cost is only a cent or so per file a) Yes b) No 5. Customers have to keep a larger inventory of files a) Yes b) No
1. a) Yes 2. a) Yes 3. b) No 4. a) Yes 5. a) Yes
