International marketing Chapter 10

12. Which of the following is not an example of a bridge offering? a. Escada c. DKNY b. Ann Klein II d. Emporio Armani

ANS: A A bridge brand is designed to reach consumers who cannot afford the more prestigious brand in the product line. In this way, the manufacturer is able to reach a different market segment. As the segment's buying power increases, it is hoped that the consumers, from the positive experience with the bridge offering, will then purchase the more expensive product. Laurel is the more expensive product. In this case, Laurel is the bridge offering for Escada. This is found in the "Managing the International Product and Service Mix" section (10-2).

25. In which stage of product development companies need to consider both the extent to which the product fits with the target consumers, as well as with the overall mission of the organization? a. Product screening c. Product design b. Concept development d. Test marketing

ANS: A During the product screening stage, companies need to consider both the extent to which the product fits with the target consumers, as well as with the overall mission of the organization. This is found in the "Designing and Developing the Product" section (10-3e).

19. Haagen Dazs' idea to introduce its Dulce de Leche ice cream in the United states came from which source? a. Consumers c. Channel members b. Competition d. Consultants

ANS: A Haagen Dazs developed a caramel flavored ice cream for Argentina called Dulce de Leche. The company brought this flavor to the U.S. based on its success with Argentinean consumers. This is found in the "Generating New Product Ideas" section (10-3a).

39. Which type of country is most likely to be a "lead" country in terms of product diffusion? a. An industrialized, high-income country. b. A middle-income country. c. A low-income country. d. An underdeveloped country.

ANS: A High-income, industrialized countries are most likely to be lead countries. Consumers in these markets are wealthy (compared to other markets) and can afford to adopt products early in the product life cycle. Industrialized countries are also more likely to have marketing vehicles that allow marketers to promote new products and services. This may be found in the "Product Diffusion" section (10-5).

4. In which stage of the product life cycle are products most likely to be developed in industrialized countries? a. Introduction c. Maturity b. Growth d. Decline

ANS: A Highly skilled researchers are most likely to be found in industrialized countries. Furthermore, consumers in industrialized countries are most able to afford the higher prices that new products often require to recover research and development costs. For these reasons, products in the introduction stage are likely to be developed in industrialized countries. This is found in "The International Product Life Cycle" section (10-1).

37. What form of innovation is the most prominent for of innovation today? a. Continuous innovation c. Dynamically continuous innovation b. Discontinuous innovation d. Congruent innovation

ANS: A Continuous innovations are the easiest form of innovation for companies to create. They are also the easiest form of innovation for consumers to accept. For these reasons, continuous innovations are the most common form of innovation taking place. This may be found in the "Degree of Product/Service Newness" section (10-4).

36. Which type of innovation has no disruption on consumption patterns? a. Continuous innovations c. Dynamically continuous innovations b. Discontinuous innovations d. Radical innovations

ANS: A Continuous innovations involve product alterations, such has new flavors, or a new product that is an improvement over the old offering. This form of innovation has no disruption on consumption patterns since the product is compatible with the needs of consumers and it is easy to communicate the products' benefits to consumers. This may be found in the "Degree of Product/Service Newness" section (10-4).

14. The total number of products in a product line is known as the a. product length. c. product depth. b. product width. d. product assortment.

ANS: A One important dimension of the product mix is the product line, a number of related brands in the same product category. Companies use different line strategies to achieve market share and profitability goals. This is found in the "Managing the International Product and Service Mix" section (10-2).

15. The extent to which the different product lines are related, use the same distribution channels, and have the same final consumers is known as a. product length. c. product depth. b. product consistency. d. product assortment.

ANS: B An important dimension of the product mix is product consistency; this term refers to the extent to which the different product lines are related, use the same distribution channels, and have the same final consumers. This is found in the "Managing the International Product and Service Mix" section (10-2).

6. Which stage of the product life cycle is characterized by a rapid increase in competition? a. Introduction c. Maturity b. Growth d. Decline

ANS: B In the growth stage, competition increases dramatically. To capture a strategic advantage, firms introduce variants in an attempt to differentiate themselves from competitors. This is found in "The Growth Stage" section (10-1b).

5. Which stage of the product life cycle is characterized by the introduction of new product variants? a. Introduction c. Maturity b. Growth d. Decline

ANS: B New products are associated with the introduction stage. But new product variants are associated with the growth stage. In the growth stage, competition increases dramatically. To capture a strategic advantage, firms introduce variants in an attempt to differentiate themselves from competitors. This is found in "The Growth Stage" section (10-1b).

8. In which stage of the product life cycle are standards likely to be established? a. Introduction c. Maturity b. Growth d. Decline

ANS: B Competing formats may exist in the introduction stage of the PLC. However, in the growth stage one format or standard emerges. It is the establishment of a standard that helps the industry to grow. This is found in "The Growth Stage" section (10-1b).

7. Toward the end of which stage of the product life cycle does the firm focus on developing economies of scale? a. Introduction c. Maturity b. Growth d. Decline

ANS: B Competitive pressure in the growth stage causes the firm to develop product variants. Toward the end of the growth stage, it also causes the firm to seek cost savings through developing economies of scale. It is important for the firm to have economies of scale as it enters the mature stage of the IPLC. This is found in "The Growth Stage" section (10-1b).

40. In which type of country does the diffusion rate tend to be faster? a. Lead countries c. Asian countries b. Lag countries d. Western countries

ANS: B Diffusion rates are typically faster in lag countries. Consumers in lag countries have had a chance to see the product develop in the lead country. Consumption risk is reduced and demand prior to introduction is stimulated in this way. Most Western countries are lead countries. There are also lead countries in Asia (e.g., Japan). So, "lag" countries is the best answer. This may be found in the "Product Diffusion" section (10-5).

33. Which type of innovation is known to create new industries? a. Continuous innovation c. Dynamically continuous innovation b. Discontinuous innovation d. Congruous innovation

ANS: B Discontinuous innovations (also known as radical innovations) are often responsible for the creation of new industries or new standards of management, manufacturing and servicing. The represent fundamental changes for consumers, entailing departures from established consumption. The Internet is an example of a discontinuous innovation as was the microwave when it was first introduced. This may be found in the "Degree of Product/Service Newness" section (10-4).

13. The complete assortment of the products that a company offers to its target international consumers is the a. product width. c. product depth. b. product mix. d. product assortment.

ANS: B Most multinational corporations tend to have both local and global brands that they nurture through their life cycle. The international product mix is the complete assortment of the products that a company offers to its target international consumers, and it has a number of important dimensions.This is found in the "Managing the International Product and Service Mix" section (10-2).

18. The first step in the new product development process is: a. competitive analysis. c. screening new product ideas. b. idea generation. d. business analysis.

ANS: B The first step in the new product development process is idea generation. Competitive analysis and consumer inquiry may be sources that marketers use to help generate ideas. After the ideas are generated, they are screened on the basis of company goals and objectives. Business analysis may be part of the screening process. This is found in the "Generating New Product Ideas" section (10-3a).

16. The total number of product lines that the company offers is the: a. product length. c. product depth. b. product width. d. product assortment.

ANS: B The product width is the total number of product lines the company offers. The text uses Unilever to illustrate this principle. Unilever has product lines that include culinary products, frozen foods, ice cream, tea, margarine, etc. giving Unilever and extensive product width. This is found in the "Width"

35. Which type of innovation does not significantly alter consumer behavior, but does represent a change in the consumption pattern? a. Continuous innovation c. Dynamically continuous innovation b. Radical innovation d. Congruent innovation

ANS: C Continuous innovation does not cause a change in consumption patterns. Discontinuous innovations significantly alter consumer behavior. However, dynamically continuous innovations represent a change in the consumption pattern while not significantly altering consumer behavior. This may be found in the "Degree of Product/Service Newness" section (10-4).

2. At which stage of the international product life cycle does manufacturing typically move to developing countries? a. Introduction c. Maturity b. Growth d. Decline

ANS: C Maturity of the product life cycle drives firms to seek cost reductions. For this reason, production often moves abroad in an attempt to take advantage of less expensive labor. This is found in "The International Product Life Cycle" section (10-1).

21. In which stage of product development are prototypes developed? a. Product screening c. Product design b. Concept development d. Test marketing

ANS: C Product screening and concept development occur before a prototype is developed. Test marketing occurs after a prototype is developed. During the product design and development stage, a prototype is developed. This is found in the "Designing and Developing the Product" section (10-3e).

28. Which form of test marketing recruits a sample of consumers to participate in a research study in a central facility? a. Controlled test marketing c. Simulated test marketing b. Full test marketing d. All of the above

ANS: C Simulated test marketing, typically recruits a sample of consumers to participate in a research study in a central facility. After responding to questions about their product related attitude and purchase behavior, they view advertising of the new brand (and of competitive brands). This is found in the "Test Marketing" section (3-f).

22. In which stage of product development does the product typically acquire a name? a. Competitive analysis c. Product Design b. Concept Development d. Test Marketing

ANS: C During the product design and development stage the product usually acquires a name, a brand identity, and the marketing mix is developed. It is important to have a name before the test marketing phase. This is found in the "Designing and Developing the Product" section (10-3e).

34. Which type of innovation is best represented by the development of cellular telephones? a. Radical innovation c. Dynamically continuous innovation b. Continuous innovation d. Congruent innovation

ANS: C Dynamically continuous innovations do not significantly alter consumer behavior, but they represent a change in the consumption pattern. Cellular phones are an example of this form of innovation. In contrast, the first telephone would be an example of a radical innovation. This may be found in the "Degree of Product/Service Newness" section (10-4).

32. Which type of "new" product has the highest success rate? a. New to existing market b. New line c. New item in an existing product line d. New product to the world

ANS: C New items in an existing product line for the company have the highest (83%) success rate and the greatest impact on company sales and profit. The text does not explicitly state why this occurs, but part of the reason is that this innovation is often a continuous innovation. Continuous innovations have no disruption on consumption patterns. That is, it is easy for consumers to accept the product. These types of innovations experience rapid diffusion. This may be found in the "Degree of Product/Service Newness" section (10-4).

29. Which form of test marketing is likely to reveal the least amount of information to potential competitors? a. Controlled test marketing c. Simulated test marketing b. Full test marketing d. Quasi test marketing

ANS: C Quasi test marketing is not a term used in this text. Simulated test marketing, typically recruits a sample of consumers to participate in a research study in a central facility. After responding to questions about their product related attitude and purchase behavior, they view advertising of the new brand (and of competitive brands). The respondents' preferences and buying behavior as they relate to the tested brands are then observed. Because simulated test marketing is limited to the central facility and products are not deployed to actual stores, the competition is unlikely to gain access to information. This is found in the "Test Marketing" section (3-f).

27. Which form of test marketing is likely to reveal the most amount of information to potential competitors? a. Controlled test marketing c. Simulated test marketing b. Full test marketing d. Quasi test marketing

ANS: C Test marketing a product can provide a good indication of how the product will be received in the market, but this stage can also be expensive, time consuming, and open to competitive sabotage. This is found in the "Test Marketing" section (3-f).

9. Which stage of the international product life cycle is usually the longest stage? a. Introduction c. Maturity b. Growth d. Decline

ANS: C That maturity stage is usually the longest stage of the PLC. Laundry detergent is a good example of a product that has been in the mature stage for decades. This may be found in "The Maturity Stage" section (10-1c).

10. Which stage of the international product life cycle is characterized by a leveling of profits and a slowdown in sales growth? a. Introduction c. Maturity b. Growth d. Decline

ANS: C The maturity stage of the IPLC is characterized by a leveling of profits and a slowdown in sales growth as the product is adopted by most target consumers. Sales growth is obviously increasing in the introduction and growth stage of the IPLC. This may be found in "The Maturity Stage" section (10-1c).

10. Which stage of the international product life cycle is characterized by a leveling of profits and a slowdown in sales growth? a. Introduction c. Maturity b. Growth d. Decline

ANS: C The maturity stage of the IPLC is characterized by a leveling of profits and a slowdown in sales growth as the product is adopted by most target consumers. Sales growth is obviously increasing in the introduction and growth stage of the IPLC. This may be found in "The Maturity Stage" section (10-1c).

23. In which stage of product development does the product acquire a brand identity? a. Product screening c. Product design b. Concept development d. Test marketing

ANS: C The product acquires a name—a brand identity—and the marketing mix is developed in the product design and development stage. This is found in the "Designing and Developing the Product" section (10-3e).

17. Lipton tea comes in at least three variants: Lipton Yellow Label, Lipton Ice Tea, and Lipton Brisk. This is an example of: a. product length c. product depth b. product width d. product variety

ANS: C The product depth refers to the number of different offerings for a particular brand. Thus the example in the question is an example of product depth. This is found in the "Depth" section (10-2c).

3. During which stage of the international product life cycle do international sales become crucial for the firm? a. Introduction c. Maturity b. Growth d. Decline

ANS: D One of the main reasons that firms develop international markets is to extend the product life cycle. A product in the decline stage in an industrialized country may be in a growth stage in a developing country. Thus, international sales are vital for a firm with products in the decline stage of the IPLC. This is found in "The International Product Life Cycle" section (10-1).

24. Which of the following takes place in the product design and development stage? a. Product acquires a name b. Product acquires a brand identity c. The marketing mix is developed d. All of the above occur during the product design and development stage

ANS: D The product acquires a name—a brand identity—and the marketing mix is developed in the product design and development stage. This is found in the "Designing and Developing the Product" section (10-3e).

38. Which of the following is likely to slow the rate of product diffusion? a. A relative advantage c. Trialability b. Compatibility with consumer needs d. Complexity

ANS: D The text describes various attributes that are likely to accelerate the rate of adoption of a product or service. These include a relative advantage (e.g., a cure for cancer), compatibility with the needs of consumers, and ease of observability or trialability. On the other hand, complex products or services are difficult for the consumer to understand and may slow the diffusion rate. This may be found in the "Product Diffusion" section (10-5).

30. Which of the following is not a test marketing system mentioned in the text? a. LITMUS c. BASES b. ASSESSOR d. CYPHER

ANS: D CYPHER is not a term found in the text. However, the text does specifically mention LITMUS, ASSESSOR, BASES, and ESP has simulated test marketing research systems. LITMUS, ASSESSOR, and ESP are used for packaged goods tests. BASES is used primarily for food and health and beauty products. This is found in the "Test Marketing" section (3-f).

31. Regarding goodness of launch, which is the correct order of impact? a. High service quality, quality sales force, on-time shipment, and quality of promotion. b. Quality of promotion, adequate product availability, on-time shipment, and high service quality. c. Product availability, promotional effort, on-time shipment, and quality sales force. d. High service quality, on-time shipment, adequate product availability, and quality of promotion.

ANS: D Goodness of launch is characterized by the following, in order of impact: high service quality on-time shipment and adequate product availability, quality sales force and enough sales effort and support, quality of promotion and sufficient promotional effort. This is found in the "Launching the Product Internationally" section (10-3g).

20. Which of the following is not considered to be unfavorable in the new product screening process? a. Targeting new customers c. Meeting new service requirements b. Using new channels d. All of the above are unfavorable

ANS: D Targeting new customers leads to unfamiliar customer needs which lowers the success rate of a new product launch. New channels also take a firm away from its expertise and lowers the success rate. New service requirements require new training of employees and also is considered to be an unfavorable attribute in the screening process. Thus, all of the above are unfavorable. This is found in the "Screening New Product Ideas" section (10-3b).

26. In which stage of product development does the company have a good indication of how the product will be received? a. Product screening c. Product design b. Concept development d. Test marketing

ANS: D Test marketing a product can provide a good indication of how the product will be received when it is in the market, but this stage can also be expensive, time consuming, and open to competitive sabotage. This is found in the "Test Marketing" section (3-f).

1. Which of the following is not a level of country development in international product life cycle theory? a. Developing or middle-income b. Less-developed or low-income c. Advanced, developed, or high-income d. Each of the above is part of the IPLC theory.

ANS: D The initial IPLC theory addressed three levels of country development: advanced (industrialized), developing, and less-developed. This is found in "The International Product Life Cycle" section (10-1).