Mkt 350 exam 3

Blue Ocean strategies can be developed by:

-Reconstructing market boundaries -Reaching beyond existing demand -Breaking the value-cost tradeoff All of the Above

A go-to-market mistake happens when a good idea is prematurely eliminated during the screening process.

False

Price wars occur when a company sells a product for one price in a particular geographic region and a different price in another geographic region.

False

_______ costs are incurred over time, regardless of volume, whereas ________ costs fluctuate with volume.

Fixed; variable

________ refers to products sold at prices below cost to attract shoppers to a store.

Loss leader

HP sells an inexpensive printer for an entry-level user, but the printer cartridges that need continual replacement are fairly expensive. This demonstrates the concept of ___________.

captive pricing

Internal sources of generating product ideas include ________.

company salespeople

Hector is opening an appliance store. He has estimated a monthly profit goal based on his anticipated expenses and earning goals and uses it to set product prices. Hector is implementing a ________ pricing strategy.

target return on investment (ROI)

Horses and Harnesses wanted to increase its price for hand-made saddles, but it knew its customers were very price sensitive, so it only raised prices by $2. None of the customers reacted to the new price. This minimal price change is known as ________.

the just noticeable difference

Product followers who purchase older generation models with lower prices and fewer features are called ________

the late majority

An individual moves through five stages before adopting a product. The five stages include all of the following EXCEPT ________.

validation

With ________ pricing, customers are allowed—even encouraged—to haggle about prices.

variable

Dyani runs Cute Cakes, a gourmet cupcake bakery. To set prices for her cupcakes, Dyani looks at the cost of making each cupcake and then adds an additional amount on top of that to arrive at her price. Dyani is using ________.

cost-plus pricing

Products that are new-to-the-world create a fundamental change in the marketplace and are known as ________.

disruptive innovations

Among the five groups of adopters, which group is considered critical to long-term success?

early majority

In the context of product testing, beta testing is designed to ________.

encourage customers to evaluate and provide feedback on a prototype

The fundamental philosophy behind ________ is to reduce investment in promotion and transfer part of the savings to lower price.

everyday low pricing

The Internet created a rise in ________ as more and more people decided to meet online to sell products to the highest bidder.

auction pricing

The probability of a product's success is determined in the ________ stage of the product development process.

business case analysis

Blue Oceans:

Create and capture new demand.

________ are direct, immediate reductions in price provided to purchasers.

Discounts

________ is used by firms that rely on periodic heavy promotional pricing, primarily communicated through advertising and sales promotion, to build traffic and sales volume.

High/low pricing

The four-actions framework for achieving value innovation include all the following actions EXCEPT:

Imitate

________ are product enthusiasts who enjoy being the first to try and master a new product.

Innovators

________ require that a certain percentage markup be applied to all products.

Minimum markup laws

_______ could result in overall higher prices for consumers since various competitors are all pricing the same to maximize their profits.

Price-fixing

In the reading/video on the automobile industry, GM created a blue ocean by doing which of the following:

Rethinking the functional-emotional orientation of the industry and offering different models and colors of cars

Price is a key element in determining value.

True

Trial purchase is the focus of a product launch marketing plan.

True

_____ occurs when a company's actions favorably affect both its cost structure and its value proposition to buyers

Value innovation

While screening and evaluating ideas, a go-to-market mistake happens when ________.

a company fails to stop a bad product idea from moving into product development

The rate at which new products become accepted is known as the ________ process.

adoption

Golf ball manufacturers use "Iron Mike," a machine that swings a golf club at a constant velocity, to test the distance for new golf ball designs. When using Iron Mike, the manufacturers are engaged in

alpha testing.

Once a product has been developed and is on the market, the company can extend the product by ________.

creating additions to existing product lines

External sources of generating product ideas include ________.

customers

Jameson purchased an alarm system for his car during a promotion. He considered the price after the promotion to be very attractive. However, he later learned that the firm set an artificially high reference price for the alarm system just before the promotion to make the advertised sale price more attractive. Jameson just experienced ________.

deceptive pricing

In the context of criteria used to prioritize product ideas, time to market refers to the time taken to ________.

develop and get the product to market

The first step in the new-product development process is to ________.

generate new-product ideas

An individual moves through stages before adopting a product. During the awareness stage, consumers ________.

know of the product, but have insufficient information to move forward through the adoption process

Estimating total demand is a function of three separate purchase situations, which are ________ purchases.

new, repeat, and replacement

Firms should be careful with a ________ strategy, as price is a cue for developing customer perceptions of product quality. The value proposition may be reduced if a low price belies the product's actual quality attributes.

penetration pricing

When a firm's objective is to gain as much market share as possible, a likely pricing strategy is ________, sometimes also referred to as pricing for maximum marketing share.

penetration pricing

A strategy to intentionally sell below cost to push a competitor out of a market, then raise prices to new highs, is called ________.

predatory pricing

One rationale for establishing a price skimming objective is that ________ lends status to a product or brand by virtue of a price relatively higher than the competition.

prestige pricing

Jean Claude has just completed a new line of designer handbags. He wants the price to communicate to the customer that the handbags are high quality and exclusive, so he sets the price high. He knows that after this season, the price may need to decrease as the market evolves. Jean Claude is using a ________ strategy.

price skimming

Yoko is trying to explain to one of her ticket counter associates the differences in price associated with concert tickets. She explains that the lowest-priced tickets are for the least desirable seats and the highest-priced tickets are for the most desirable seats, with the rest of the ticket prices falling somewhere in between. Yoko is describing ________ pricing.

product line

Dag runs a hardware store. He learned that customers process the price of $9.99 as significantly lower than the price of $10.00 because of the reduced digit count in the price point. Accordingly, he follows this rule to set up the prices for all products. Dag uses a ________ strategy.

psychological pricing

Among the five groups of adopters, laggards are people who ________.

put off purchasing until there is no other option

Bella is a discount furniture store. Most of the items in the store are overstock and hence tend to be more inexpensive than other furniture. Recently Bella started to display the manufacturers' suggested retail price next to the price it charges to show the savings. Bella is using a ________ strategy.

reference pricing

Priceline.com is a firm that serves as a clearinghouse for extra capacity from airlines, hotels, and cruise lines. It is an example of a firm that uses a(n) ________ strategy.

reverse auction