CH-12 Setting Product Strategy – Marketing Management : Exam Guide

Chapter 12 1. A ________ is anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas. A) function B) product C) benefit D) process E) structure Answer: B Rationale: A product is the most suitable choice because it encompasses all the offerings mentioned in the question, including physical goods, services, experiences, etc. It's a broad term that covers various entities provided to satisfy customer wants or needs. 2. A customer judges a product offering by three basic elements: product features and quality, services mix and quality, and ________. A) performance B) utility C) tangibility D) price E) availability Answer: D Rationale: Price is a fundamental element that customers consider when evaluating a product offering. It directly affects the perceived value of the product and influences purchasing decisions. 3. The five product levels constitute a ________. At each level more customer value is added. A) product line B) business model C) customer value-hierarchy D) value grid E) demand chain Answer: C Rationale: The concept of product levels represents a hierarchy of value provided to customers, starting from the core benefit or problem solution and progressing through various levels where additional value is added. Therefore, "customer value-hierarchy" best describes this concept. 4. When companies search for new ways to satisfy customers and distinguish their offering from others, they look at the ________ product, which encompasses all the possible augmentations and transformations of the product. A) consumption B) expected C) potential D) augmented E) basic Answer: C Rationale: The "potential" product refers to all the augmentations and transformations that a product might undergo in the future. It represents the highest level of product development, incorporating possible future innovations and enhancements. 5. The way the user performs the tasks of getting and using products and related services is the user's total ________. A) consumption system B) consumable system C) consistent use system D) augmented system E) potential system Answer: A Rationale: The user's total consumption system refers to the entire process and experience involved in acquiring, using, and disposing of products and services. It encompasses all activities related to consumption, making "consumption system" the appropriate choice. 6. Marketers must see themselves as benefit providers. For example, when a shopper purchases new shoes, he/she expects the shoes to cover his/her feet and allow him/her to walk unobstructed. This is an example of what level in the consumer-value hierarchy? A) pure tangible good B) basic product C) augmented product D) potential product E) generic product Answer: B Rationale: At the basic product level, customers seek the core benefits or functionalities of a product. In the case of shoes, the basic expectation is for them to cover the feet and enable comfortable walking, demonstrating the basic product level in the consumer-value hierarchy. 7. How a consumer shops for organic foods and how he or she uses and disposes of the product is part of the consumers' ________ that is important for marketers to consider. A) value proposition B) consumption system C) value system D) quality perception E) value chain Answer: B Rationale: The way consumers interact with products, including their shopping behavior, usage patterns, and disposal habits, constitutes their consumption system. Understanding this system is crucial for marketers to effectively target and serve their customers. 8. The sellers of ________ goods carry a wide assortment to satisfy individual tastes and must have well-trained salespeople to inform and advise customers. A) unsought B) specialty C) convenience D) heterogeneous shopping E) generic Answer: D Rationale: Heterogeneous shopping goods are those for which consumers have diverse preferences, leading to a wide assortment of offerings. These goods require well-trained salespeople to assist customers in making informed decisions due to the variety of choices available. 9. Marketers have traditionally classified products on the basis of three characteristics: ________, tangibility, and use. A) availability B) affordability C) aesthetics D) durability E) necessity Answer: D Rationale: Durability is one of the key characteristics used to classify products. It refers to the product's ability to withstand use over time, distinguishing durable goods from non-durable ones. 10. Which of the following are tangible goods that normally survive many uses? A) generic goods B) durable goods C) core benefits D) convenience goods E) unsought goods Answer: B Rationale: Durable goods are tangible products designed to last through multiple uses or for an extended period. They are distinct from non-durable goods, which are consumed or used up quickly after purchase. Therefore, "durable goods" best fits the description provided in the question. 11. Because ________ are purchased frequently, marketers should make them available in many locations, charge only a small markup, and advertise heavily to induce trial and build preference. A) nondurable goods B) durable goods C) services D) unsought goods E) specialty goods Answer: A Rationale: Nondurable goods, such as food, beverages, and toiletries, are purchased frequently and require wide availability, competitive pricing, and heavy advertising to encourage trial and build brand preference due to their frequent purchase nature. 12. What types of goods are purchased frequently, immediately, and with minimum effort by the consumers? A) specialty goods B) shopping goods C) unsought goods D) durable goods E) convenience goods Answer: E Rationale: Convenience goods are those that consumers purchase frequently, immediately, and with minimal effort. Examples include everyday items like snacks, beverages, and toiletries. 13. It was sunny when Jenny went to class, but by the time class was over it was raining heavily, so Jenny stopped by the student store to buy an umbrella before she walked back to her dorm. In this case, the umbrella is an example of a(n) ________. A) impulse good B) specialty good C) homogeneous shopping good D) emergency good E) heterogeneous shopping good Answer: D Rationale: An emergency good is something purchased in response to an unexpected or urgent situation, such as buying an umbrella due to sudden rain. 14. What goods are similar in quality but different enough in price to justify shopping comparisons? A) emergency goods B) homogeneous shopping goods C) heterogeneous shopping goods D) specialty goods E) convenience goods Answer: B Rationale: Homogeneous shopping goods are products that are similar in quality but different enough in price to justify shopping comparisons. Examples include appliances or electronics from different brands. 15. Products such as insurance, cemetery plots, and smoke detectors are examples of ________ that are products that the consumer does not know about or does not normally think of buying. A) specialty goods B) unsought goods C) heterogeneous shopping goods D) homogeneous shopping goods E) convenience goods Answer: B Rationale: Unsought goods are products that consumers either do not know about or do not normally consider buying until they need them. Examples include insurance and smoke detectors. 16. Industrial goods can be classified as ________, capital items, or suppliers and business services based on their relative cost and how they enter the production process. A) service components B) sub-assemblies C) accessories D) specialty goods E) materials and parts Answer: E Rationale: Industrial goods are classified into three categories: materials and parts, capital items, and supplies and business services. Materials and parts are raw materials and components used in the production process. 17. ________ are the major factors influencing the selection of suppliers for natural products. A) Price and delivery reliability B) Product features and customization C) Price and customization D) Delivery reliability and product features E) Customization and delivery reliability Answer: A Rationale: When selecting suppliers for natural products, factors such as price competitiveness and delivery reliability play significant roles in decision-making. 18. Capital items are long-lasting goods that facilitate developing or managing the finished product. They include two groups: installations and ________. A) natural products B) component materials C) operating supplies D) equipment E) processed materials Answer: D Rationale: Capital items consist of long-lasting goods that aid in the development or management of the finished product. They comprise installations (such as buildings and machinery) and equipment (such as tools and computers). 19. The two kinds of supplies with respect to industrial goods classification are maintenance and repair items, and ________. A) installations B) operating supplies C) processed materials D) component materials E) equipment Answer: B Rationale: Supplies in industrial goods classification include maintenance and repair items (needed to maintain machinery and equipment) and operating supplies (consumables necessary for dayto-day operations). 20. ________ are major purchases and are usually bought directly from the producer with the typical sale preceded by long negotiation periods. A) Raw materials B) Materials and parts C) Processed materials D) Capital goods E) Installations Answer: E Rationale: Installations are major purchases typically bought directly from the producer, often involving long negotiation periods due to their significant impact on operations or production processes. 21. Most products are established at one of four performance levels: low, average, high, or superior. For example, mountain bikes come in a variety of sizes and physical attributes. When a consumer purchases a mountain bike costing $1,000, she/he expects the bike to perform to specifications and to have a high ________ meeting the promised specifications. A) features B) conformance quality C) durability D) performance quality E) reliability Answer: D Rationale: Performance quality refers to the level at which the product's primary characteristics operate. In this case, the consumer expects the mountain bike to perform to the specifications expected of a $1,000 bike, indicating a high performance quality. 22. Many products can be differentiated in terms of their ________, which is its size, shape, or physical structure. A) form B) prototype C) architecture D) model E) blueprint Answer: A Rationale: Form refers to the physical attributes of a product, such as its size, shape, or physical structure. Differentiating products based on their form allows companies to create distinctiveness and appeal to different consumer preferences. 23. ________ is the ability of a company to prepare on a large-scale basis individually designed products, services, programs, and communications. A) Mass customization B) Reverse engineering C) Interoperability D) Backward compatibility E) Benchmarking Answer: A Rationale: Mass customization refers to the ability of a company to produce individually designed products, services, programs, or communications on a large scale. It combines the flexibility of customization with the efficiency of mass production. 24. ________ is the level at which the product's primary characteristics operate. A) Design B) Conformance quality C) Reparability D) Performance quality E) Durability Answer: D Rationale: Performance quality refers to the level at which a product's primary characteristics operate. It indicates how well the product performs its intended function. 25. Buyers expect products to have high ________, which is the degree to which all the produced units are identical and meet the promised specifications. A) durability B) compatibility C) conformance quality D) form E) performance quality Answer: C Rationale: Conformance quality refers to the degree to which all produced units are identical and meet the promised specifications. High conformance quality ensures consistency and reliability in the product. 26. Most products can be offered with varying ________ that can supplement its basic function. A) degrees of reliability B) conformance qualities C) features D) forms E) designs Answer: C Rationale: Features are additional characteristics or attributes of a product that supplement its basic function. Offering products with varying features allows companies to cater to different customer needs and preferences. 27. If the Ford GT is designed to accelerate to 50 miles per hour within 10 seconds, and every Ford GT coming off the assembly line does this, the model is said to have high ________. A) reliability B) conformance quality C) durability D) compatibility E) interoperability Answer: B Rationale: High conformance quality means that all products consistently meet the specified standards and perform as expected. In this case, if every Ford GT meets the acceleration requirement, it demonstrates high conformance quality. 28. ________ describes the product's look and feel to the buyer; it has an advantage of creating distinctiveness that is difficult to copy. A) Design B) Style C) Durability D) Conformance E) Reliability Answer: B Rationale: Style refers to the aesthetic aspects of a product, including its look and feel. It contributes to creating distinctiveness and differentiation, which can be difficult for competitors to copy. 29. Ideal ________ would exist if users could fix the product themselves with little cost in money or time. A) durability B) reliability C) style D) design E) reparability Answer: E Rationale: Reparability refers to the ease with which a product can be repaired, ideally allowing users to fix the product themselves with minimal cost in money or time. 30. ________ is a measure of the probability that a product will not malfunction or fail within a specified time period. A) Reparability B) Durability C) Reliability D) Specialty E) Compatibility Answer: C Rationale: Reliability is a measure of the probability that a product will not malfunction or fail within a specified time period. It indicates the product's consistency and trustworthiness in performance. 31. When the physical product cannot be easily differentiated, the key to competitive success may lie in adding valued services and improving their quality. The main service differentiators are ordering ease, delivery, installation, ________, customer consulting, maintenance, and repair. A) technology intensity B) responsivity C) ease of use D) customer training E) adaptability Answer: D Rationale: Customer training is an essential service differentiator, especially when the physical product lacks differentiation. Providing training to customers' employees on how to use the vendor's equipment properly and efficiently adds value to the offering. 32. Delivery refers to how well the product or service is brought to the customer. It includes speed, ________, and care throughout the delivery process. A) expedience B) intensity C) tangibility D) performance E) accuracy Answer: E Rationale: Delivery involves ensuring the accuracy of the delivery process, including delivering the product or service to the customer with precision and attention to detail. 33. ________ refers to educating the customer's employees to use the vendor's equipment properly and efficiently. A) Customer training B) Open innovation C) Crowdsourcing D) Co-development E) Collaborative research Answer: A Rationale: Customer training involves educating the customer's employees on how to use the vendor's equipment effectively, ensuring optimal performance and efficiency. 34. ________ refers to data, information systems, and advice services that the seller offers to their buyers. A) Sales force relationships B) Customer relationships C) Open source technology D) Customer training E) Customer consulting Answer: E Rationale: Customer consulting involves providing buyers with data, information systems, and advice services to assist them in making informed decisions and optimizing their use of the seller's offerings. 35. Differentiating on ________ is important for companies with complex products and becomes an especially good selling point when targeting technology novices. A) delivery B) ordering ease C) ease of installation D) customer consulting E) reparability Answer: C Rationale: Ease of installation is crucial for companies with complex products, especially when targeting technology novices. Making installation simple and straightforward can be a significant selling point for such companies. 36. ________ describes the service program for helping customers keep purchased products in good working order. A) Returns B) Ordering ease C) Installation D) Maintenance and repair E) Delivery Answer: D Rationale: Maintenance and repair involve service programs aimed at assisting customers in keeping purchased products in good working order by providing necessary repairs and maintenance. 37. Which of the following actions would result in the elimination of uncontrollable returns of products in the short run? A) improved handling B) better packaging C) improved transportation D) proper storage E) cannot be eliminated Answer: E Rationale: Uncontrollable returns of products cannot be eliminated in the short run because they may stem from various factors beyond immediate control, such as customer dissatisfaction or unforeseen product issues. 38. Smith & Adams Poultry has recently upgraded its transactional model such that its customers (restaurants and hotels) can communicate with its central supply system to indicate purchase volumes, dates, and receive confirmation, through their computer terminals. This is an example of a company differentiating itself versus competition in terms of ________. A) customer relationships B) customer training C) installation D) delivery ease E) ordering ease Answer: E Rationale: Upgrading the transactional model to allow customers to communicate purchase details through computer terminals enhances ordering ease, thereby differentiating the company in terms of convenience and efficiency. 39. Realizing that although household products is a huge category, taking up an entire supermarket aisle or more, it is an incredibly boring one, the founders of Method Products designed a sleek, uncluttered dish soap container that also carried functional advantages, such as ease of dispensing soap and cleaning. Method is competing in the crowded market for household products on the basis of superior ________. A) design B) durability C) conformance D) reliability E) performance quality Answer: A Rationale: Method Products is competing on the basis of superior design, as evidenced by their sleek, uncluttered dish soap container. Design plays a significant role in distinguishing products in crowded markets. 40. In increasingly fast-paced markets, price and technology are not enough. ________ is the factor that will often give a company its competitive edge and is defined as the totality of features that affect how a product looks, feels, and functions in terms of customer requirements. A) Conformance B) Design C) Performance D) Reliability E) Style Answer: B Rationale: Design encompasses the totality of features that affect how a product looks, feels, and functions, making it a critical factor in giving a company its competitive edge, especially in fast-paced markets where price and technology alone may not suffice. 41. A group of products within a product class that are closely related because they perform a similar function, are sold to the same customer groups, are marketed through the same outlets or channels, or fall within given price ranges is known as a ________. A) product type B) product class C) need family D) product variant E) product line Answer: E Rationale: A product line consists of a group of related products within a product class that share similar characteristics and are targeted towards similar customer groups or sold through similar channels. 42. A(n) ________ is defined as a distinct unit within a brand or product line distinguishable by size, price, appearance, or some other attribute. A) stockkeeping unit B) inventory turn C) individual brand D) product type E) brand line Answer: A Rationale: A stockkeeping unit (SKU) refers to a distinct unit within a brand or product line that is uniquely identified for inventory management purposes. SKUs are distinguishable by various attributes such as size, price, or appearance. 43. A ________ is the set of all products and items a particular seller offers for sale. A) product line B) product mix C) product extension D) product system E) product class Answer: B Rationale: The product mix refers to the complete set of all products and items offered by a particular seller for sale, encompassing various product lines and categories. 44. Happy Home Products produces detergents, toothpaste, bar soap, disposable diapers, and paper products. This company has a product ________ of five lines. A) type B) length C) class D) mix E) width Answer: E Rationale: Product width refers to the number of different product lines a company offers. In this case, Happy Home Products has five different product lines, indicating a product mix width of five. 45. Using the ________ level of the product hierarchy to market its soups, Campbell Soups feature the company name first, then the soup variety on their packaging. A) product class B) product-type C) need-family D) product-family E) product-line Answer: E Rationale: The product-line level of the product hierarchy represents a group of related products produced by a single manufacturer. Campbell Soups use this level to market their soups by featuring the company name followed by the specific soup variety, indicating the product line. 46. A consumer products firm manufactures and sells over 200 different sizes and varieties of jams and jellies. We can say that this manufacturer's product mix has high ________. A) consistency B) depth C) intensity D) range E) width Answer: B Rationale: Product depth refers to the number of variants offered for each product in a product line. In this case, the manufacturer offers over 200 different sizes and varieties of jams and jellies, indicating a high product depth. 47. The ________ of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. A) consistency B) depth C) width D) length E) composition Answer: A Rationale: Product mix consistency refers to the degree of similarity or relatedness among the various product lines in terms of end use, production requirements, distribution channels, or other factors. 48. The ________ of the product mix refers to the total number of items in the mix. A) width B) length C) depth D) breadth E) range Answer: B Rationale: Product mix length refers to the total number of items offered in the product mix, encompassing all the products and variants across different product lines. 49. In offering a product line, companies normally develop a ________ and modules that can be added to meet different customer requirements. A) convenience item B) flagship product C) staple item D) potential product E) basic platform Answer: E Rationale: Companies typically develop a basic platform or core product within a product line, along with modular features or options that can be added to meet different customer requirements, preferences, or usage scenarios. 50. The ________ of a product mix refers to how many variants are offered of each product in the line. A) width B) length C) depth D) consistency E) height Answer: C Rationale: Product mix depth refers to the number of variants offered for each product within a product line. It represents the breadth of options available within each product category or line. 51. Which of the following is a benefit of product mapping? A) studying market matrices B) integrating target markets C) identifying market segments D) educating consumers E) integrating target matrices Answer: C Rationale: Product mapping helps in identifying market segments by visually representing the positioning of products or brands relative to each other in the market space, facilitating the identification of opportunities for targeting specific segments. 52. Product-line analysis provides information for two key decision areas product-line length and ________. A) product-class composition B) product-mix pricing C) product pricing D) popular pricing E) product need family Answer: B Rationale: Product-line analysis provides information for decisions related to product-line length and product-mix pricing, helping companies optimize their product offerings and pricing strategies. 53. What occurs when any company lengthens its product line beyond its current range? A) market overreach B) brand dilution C) product adaptations D) cannibalization E) line stretching Answer: E Rationale: Line stretching occurs when a company extends its product line beyond its current range, introducing products at different price points or targeting new market segments. 54. A company positioned in the "middle" market introduces a lower-priced product line. What type of line-stretching is this? A) home stretch B) up-market stretch C) down-market stretch D) maintenance stretch E) two-way stretch Answer: C Rationale: Introducing a lower-priced product line by a company positioned in the "middle" market is an example of down-market stretch, where the company extends its product line to cater to lower-priced segments. 55. Moving ________ carries risks. The new brand can cannibalize core brand sales and lower the core brand's quality image. A) up-market B) two ways C) one way D) down-market E) out-market Answer: D Rationale: Moving down-market carries risks such as cannibalization of core brand sales and potentially lowering the quality image of the core brand due to association with lower-priced offerings. 56. Companies may wish to implement a(n) ________ to achieve more growth, to realize higher margins, or simply to position themselves as full-line manufacturers. A) up-market stretch B) rebranding plan C) outsourcing strategy D) disintermediation policy E) vertical integration strategy Answer: A Rationale: Implementing an up-market stretch involves introducing higher-priced products or entering premium market segments to achieve more growth, realize higher margins, or position the company as a full-line manufacturer catering to diverse customer segments. 57. A manufacturer of hiking boots looks at data that indicate that their subsegment of the market called "serious hiker" is declining and is predicted to decline into the future. The firm decides to enter the "low-price" segment with its new items. This is an example of a firm's ________ to reach a new market. A) down-market stretch B) up-market stretch C) two-way stretch D) marketing research E) disintermediation Answer: A Rationale: Entering the "low-price" segment to reach a new market, especially when the current market segment is declining, represents a down-market stretch strategy aimed at capturing new customer segments with lower-priced offerings. 58. Marriott Corporation now contains hotels and motels from the "budget" end of the consumer spectrum to the "premium" end with their JD Marriott flagship locations. This is an example of a firm that successfully performed a ________ to reach more consumers and ventures that are more profitable. A) upstream integration B) two-way stretch C) up-market stretch D) down-market stretch E) downstream integration Answer: B Rationale: Marriott Corporation's expansion from budget hotels to premium locations represents a twoway stretch, where the company extends its product offerings both upward (premium segment) and downward (budget segment) to reach more consumers and ventures that are more profitable. 59. A product line can also be lengthened by adding more items within the present range. There are several motives for line filling. Which of the following is one of them? A) responding to senior management wishes B) responding to consumer wishes C) reaching for incremental profits D) reaching for incremental capacity E) responding to sales-force demands Answer: C Rationale: One of the motives for line filling is reaching for incremental profits by introducing additional product variants or options within the existing product range to cater to diverse consumer preferences and capture additional market share. 60. If line filling is overdone, it could result in ________ and customer confusion. A) sales paralysis B) manufacturing inefficiencies C) self-cannibalization D) disintermediation E) ineffective management Answer: C Rationale: Overdoing line filling can lead to self-cannibalization, where new products cannibalize sales from existing products within the same product line, resulting in reduced overall profitability and customer confusion. 61. Price-setting logic must be modified when the product is part of a product mix. In that case, the firm searches for a set of prices that ________ profits on the total mix. A) are ineffective on total B) have no effect on total C) maximizes D) minimizes E) capitalize upon Answer: C Rationale: In a product mix, the firm aims to set prices that maximize profits on the total mix, taking into account the interrelationships between different products and their respective demand elasticities. 62. Companies normally develop ________ rather than single products and require sellers to establish perceived quality differences between price steps within it. A) product mix B) captive products C) product lines D) optional products E) average products Answer: C Rationale: Companies typically develop product lines rather than single products. Product lines consist of a group of related products that share similar characteristics or target similar customer segments, allowing sellers to establish perceived quality differences between price steps within the line. 63. When shopping for tires for your automobile, you notice that the manufacturer you have selected has tires for your car priced low, average, and high, based upon performance and features. This is an example of what type of product-mix pricing? A) two-part pricing B) product-line pricing C) captive product pricing D) market pricing skimming E) price discrimination Answer: B Rationale: Product-line pricing involves setting prices for a range of products within a product line based on different features, performance levels, or quality attributes. In this example, the manufacturer prices its tires at different levels within the product line based on performance and features. 64. Some service firms often engage in ________, consisting of a fixed fee plus a variable usage fee. A) pure bundling B) pure pricing C) mixed pricing D) captive pricing E) two-part pricing Answer: E Rationale: Two-part pricing involves charging customers a fixed fee along with a variable usage fee. This pricing strategy is common among service firms where customers pay a fixed fee for access to a service and an additional fee based on their usage or consumption. 65. In ________, the seller offers goods both individually and in bundles and often charges less for the "bundle" than for the individual products. A) pirating pricing B) captive pricing C) two-part pricing D) pure bundling E) mixed bundling Answer: E Rationale: Mixed bundling involves offering goods both individually and in bundles, with the bundle typically priced lower than the sum of individual product prices. This strategy encourages customers to purchase more items by offering a discount for bundled purchases. 66. Purchasers of theatre tickets receive a 20% discount if they purchase and pay for the full season at one time. This is an example of what type of product-mix pricing? A) mixed bundling B) pure bundling C) cross-promotion D) captive pricing E) two-part pricing Answer: A Rationale: This is an example of mixed bundling, where customers receive a discount for purchasing a bundle of products or services together. In this case, customers receive a discount for purchasing tickets for the full season rather than individual shows. 67. McDonald's restaurants inside Wal-Marts and Starbucks inside Super Targets are examples of ________, whose main advantages are that the products can or may be convincingly positioned by virtue of the associated brands. A) cooperative marketing B) cross-promotion C) retail co-branding D) ingredient branding E) feature promotion Answer: C Rationale: Retail co-branding involves establishing partnerships between retailers and well-known brands, such as McDonald's and Starbucks, to enhance the overall shopping experience and leverage the strengths of both brands within the retail environment. 68. Betty Crocker cake mixes using Hershey syrup in its cake mixes and "Lunchables" lunch combinations with Taco Bell tacos are examples of what special type of branding? A) family branding B) ingredient co-branding C) co-branding D) generic-branding E) individual branding Answer: B Rationale: This is an example of ingredient co-branding, where two brands collaborate by featuring one brand's product as an ingredient in the other brand's product. In this case, Betty Crocker cake mixes include Hershey syrup as an ingredient. 69. The main advantage of co-branding is that a product may be convincingly positioned by virtue of the ________ involved. A) branding synergy B) increased advertising dollars C) multiple brands D) bundled package E) pure bundling Answer: C Rationale: The main advantage of co-branding is the ability to leverage multiple brands involved in the collaboration to position the product convincingly in the market, benefiting from the combined brand equity and customer perceptions. 70. The potential disadvantages of ________ are the risks and lack of control from becoming aligned with another brand in the consumers mind. Consumer expectations about the level of involvement and commitment are likely to be high, so unsatisfactory performance could be very negative for the brands involved. A) co-branding B) cannibalization C) vertical integration D) disintermediation E) brand stretching Answer: A Rationale: The potential disadvantages of co-branding include risks and lack of control associated with aligning with another brand, as well as the potential for unsatisfactory performance to negatively impact the brands involved. 71. ________ is a special case of co-branding involving creating brand equity for materials, components, or parts that are necessarily contained within other branded products. A) Cross-branding B) Ingredient branding C) Equity branding D) Family branding E) Generic branding Answer: B Rationale: Ingredient branding involves creating brand equity for materials, components, or parts that are necessarily contained within other branded products. This strategy aims to enhance the perceived value of the host product by associating it with a well-known ingredient brand. 72. We define packaging as all the activities of designing and producing the container for a product. This includes up to three levels of material: primary package, secondary package, and ________. A) retailer package B) design package C) shipping package D) consumer package E) supplier package Answer: C Rationale: Packaging includes designing and producing containers for products, and it consists of three levels: primary package (immediate container in direct contact with the product), secondary package (outer wrapping or box), and shipping package (box or container used for shipping). 73. Sales of luxury goods such as perfumes, colognes, and aftershaves depend heavily upon their initial response by the consumer. A well-designed package can create convenience and promotional value. It has been called the "silent salesman." Which of the three levels of packaging is this "silent salesman"? A) retailer B) consumer C) shipping D) secondary E) primary Answer: E Rationale: The "silent salesman" refers to the primary package, which is in direct contact with the product and often serves as the first point of contact with the consumer. A well-designed primary package can enhance the product's appeal and contribute to its marketing success. 74. Which of the following factors is one of the contributors to the growing use of packaging as a marketing tool? A) consumption aid B) consumer affluence C) consumer influence D) conformance qualities E) brand identification Answer: B Rationale: Consumer affluence, or the increased purchasing power of consumers, is one of the contributors to the growing use of packaging as a marketing tool. As consumers become more affluent, they expect higher-quality packaging and are willing to pay attention to packaging as part of the overall product experience. 75. ________ are formal statements of expected product performance by the manufacturer. A) Insurance B) Warranties C) Bonds D) Invoices E) Balance sheets Answer: B Rationale: Warranties are formal statements made by the manufacturer regarding the expected performance of the product. They assure consumers that the product will meet certain standards and offer remedies if the product fails to meet those standards within a specified period. 76. Many sellers offer either general or specific guarantees. Guarantees reduce the buyer's ________ risk. A) actual B) perceived C) real D) implied E) stated Answer: B Rationale: Guarantees, whether general or specific, reduce the buyer's perceived risk by providing assurance that if the product does not meet expectations, the buyer will receive some form of compensation or remedy. 77. Guarantees are most effective in two situations. The first is when the company or products are not well known and the second is when the product's quality is ________ to competition. A) not known B) different C) inferior D) equivalent E) superior Answer: E Rationale: Guarantees are most effective when the company or product is not well known because they help reduce the perceived risk associated with purchasing from an unfamiliar brand. Additionally, guarantees are effective when the product's quality is superior to that of competitors, as they reinforce the confidence in the product's performance. 78. A new product is advertised on the "infomercials" as being "the best cleaner money can buy" and "if not completely satisfied, return the product for a full refund, including shipping." The strategy of using a strong guarantee in this instance is sound because ________. A) it is an example of a misleading or false advertising and is illegal B) the product is so superior to competition that there will be no claims for refunds C) it is just "advertising fluff" and the manufacturer has no intentions of refunding money D) for a product that is not too well known, it is "good advertising" because the claims will be a small percentage of sales E) for a product that is not too well known it reduces the buyer's risk in purchasing Answer: E Rationale: In this instance, using a strong guarantee is sound because it reduces the perceived risk for buyers, especially for a new product that may not be well known. Offering a full refund, including shipping, reassures potential buyers and encourages them to try the product with minimal risk. 79. Marketing planning begins with formulating an offering to meet target customers' needs or wants. Answer: True Rationale: Marketing planning indeed starts with understanding the needs and wants of the target customers. Formulating an offering that fulfills these needs and wants is crucial for the success of any marketing strategy. 80. A product is anything that can be offered to a market to satisfy a want or need. Answer: True Rationale: This statement is true. A product can be tangible or intangible and serves to satisfy a customer's want or need. It encompasses goods, services, experiences, events, persons, places, properties, organizations, information, and ideas. 81. In planning its market offering, the marketer needs to address five product levels, each of which reduces customer value. Answer: False Rationale: This statement is false. The marketer aims to add value at each level of the product hierarchy, not reduce it. The five product levels include core benefit, generic product, expected product, augmented product, and potential product, each adding value to the customer offering. 82. The customer-value hierarchy consists of the basic product, core benefit, expected product, augmented product, and the consumption system. Answer: False Rationale: This statement is false. The correct customer-value hierarchy typically consists of the core benefit, actual product, augmented product, and potential product. The consumption system is not typically included in the product hierarchy. 83. Marketers have traditionally classified products on the basis of characteristics such as durability, tangibility, and use. Answer: True Rationale: This statement is true. Traditional product classifications often consider attributes like durability, tangibility, and intended use, which help marketers understand consumer behavior and preferences. 84. Durable products normally require less personal selling and service and less seller guarantees than nondurable goods. Answer: False Rationale: This statement is false. Durable products often require more personal selling, service, and seller guarantees compared to nondurable goods because they typically involve higher levels of investment and longer-term relationships with customers. 85. Because they are intangible, durable goods normally require more quality control, supplier credibility, and adaptability than either services or nondurable goods. Answer: False Rationale: This statement is false. Durable goods, being tangible, may require quality control, but they typically don't require as much supplier credibility and adaptability as services, which are highly dependent on intangible factors like customer experience and expertise. 86. Carlos always buys bread and milk when he goes grocery shopping. In this case, bread and milk are examples of impulse goods. Answer: False Rationale: This statement is false. Bread and milk are examples of staple goods or convenience goods. Impulse goods are typically items purchased without much forethought or planning. 87. A Maserati sports car is considered a convenience good because interested buyers will travel far to buy one. Answer: False Rationale: This statement is false. A Maserati sports car is not considered a convenience good. Convenience goods are typically inexpensive items purchased frequently with minimal effort. Maserati sports cars are high-end luxury goods, not convenience goods. 88. The homogeneity of natural materials limits the amount of demand-creation activity that producers undertake. Answer: True Rationale: This statement is true. Natural materials often have limited differentiation, making it challenging for producers to create demand solely through marketing activities. Producers may focus more on quality, sustainability, or other value-added aspects rather than extensive demand creation. 89. Capital items are long-lasting goods that facilitate developing or managing the finished products. Answer: True Rationale: This statement is true. Capital items are durable goods used by organizations to produce other goods or services. They include machinery, equipment, buildings, and other assets that facilitate production or management processes. 90. Supplies can be classified as two kinds: heterogeneous supplies and homogeneous supplies. Answer: False Rationale: Supplies are typically classified as either industrial supplies or maintenance, repair, and operating (MRO) supplies, based on their usage in business operations, rather than being categorized as heterogeneous or homogeneous. 91. To be branded, physical products need not be differentiated. Answer: False Rationale: Branding often involves differentiation to create a unique identity and value proposition for a product. Without differentiation, it's challenging to establish a distinct brand image in the market. 92. To avoid "feature fatigue," companies must be careful to prioritize those features that are included and find unobtrusive ways to provide information about how consumers can use and benefit from the feature. Answer: True Rationale: Feature fatigue can occur when products have too many features, overwhelming consumers and reducing their willingness to engage with the product. Prioritizing features and providing clear, unobtrusive information on their benefits can help mitigate this issue. 93. Firms should design the highest performance level possible for their products. Answer: False Rationale: Designing the highest performance level possible for products may not always be the best strategy. It could lead to over-engineering and unnecessary costs. Instead, firms should design products with performance levels that match customer needs and preferences at an optimal cost. 94. As a selling point, durability commands a particularly high pricing premium, especially for products that are subject to rapid technological obsolescence, as are personal computers and video cameras. Answer: False Rationale: While durability can be a selling point for some products, it may not necessarily command a high pricing premium, especially for products like personal computers and video cameras, where rapid technological obsolescence is a significant factor influencing consumer purchasing decisions. 95. If the physical product cannot be easily differentiated, the key to competitive advantage lies in the pricing of the related "services" provided by the manufacturer. Answer: False Rationale: While services can complement physical products and contribute to competitive advantage, differentiation can occur through various means beyond pricing, such as branding, customer experience, innovation, and value-added services. 96. Customer training and customer consulting are two areas for service differentiation that manufacturers can use with their products. Answer: True Rationale: Providing customer training and consulting services can differentiate a manufacturer's offering by enhancing customer knowledge, usage, and satisfaction with the product, thereby adding value and building stronger relationships with customers. 97. The cost of processing a return can be significantly greater than that of an outbound shipment. Answer: True Rationale: Processing returns often involves additional costs related to inspection, restocking, refurbishment, or disposal of returned items, making it more expensive than outbound shipments, which typically involve packaging and transportation costs only. 98. Design can shift consumer perceptions to make brand experiences more rewarding. Answer: True Rationale: Design plays a crucial role in shaping consumer perceptions and experiences with a brand. Well-designed products and brand experiences can create positive associations, enhance satisfaction, and differentiate a brand in the marketplace. 99. The product hierarchy stretches from basic needs to particular items that satisfy those needs. Answer: True Rationale: The product hierarchy encompasses various levels, ranging from core benefits or basic needs to specific products or services that fulfill those needs. Understanding this hierarchy helps marketers develop products that effectively address consumer needs and preferences. 100. A product system is a group of diverse and unrelated items that does not function in a compatible manner and includes the product mix and product assortment. Answer: False Rationale: A product system typically refers to a set of complementary products or services that work together to fulfill a common need or solve a specific problem for the customer. It's characterized by compatibility and coherence rather than diversity and lack of compatibility. 101. The four product-mix dimensions (length, width, depth, consistency) permit the company to expand its business. Answer: True Rationale: The product mix dimensions—length (number of product lines), width (number of product lines within a product category), depth (number of variants within a product line), and consistency (how closely related the product lines are)—provide companies with flexibility to expand their business by offering diverse products to meet various consumer needs. 102. The product-line length can be obtained by averaging the number of variants within the brand groups. Answer: False Rationale: The product-line length refers to the total number of products within a product line, not an average of variants within brand groups. It represents the breadth of the product line, indicating how many different products are offered under a particular brand. 103. Every company's product line covers a certain part of the total possible range of products and consumer levels. Answer: True Rationale: Each company's product line is strategically positioned to target specific market segments, covering a certain range of products and consumer preferences within that segment. This helps the company focus its resources and efforts effectively. 104. Companies in the "middle market" should never attempt to stretch their line in both directions. Answer: False Rationale: Companies in the middle market can strategically stretch their product lines both upwards (adding premium products) and downwards (introducing more affordable options) to capture a broader customer base and compete more effectively across different market segments. 105. Line filling, if overdone, may result in self-cannibalization and increased customer loyalty. Answer: False Rationale: Line filling, if overdone, can lead to cannibalization within a product line as too many similar products compete for the same market share, potentially diluting sales and profitability. It may also confuse customers rather than increasing loyalty. 106. In the rapidly changing market of today's world, product lines must be continuously updated or modernized. Answer: True Rationale: In today's dynamic market, consumer preferences and technologies evolve rapidly. To remain competitive, companies often need to update or modernize their product lines to meet changing customer needs, stay relevant, and capitalize on emerging trends. 107. Price-setting logic must be modified when the product is part of a product mix. Answer: True Rationale: Price-setting logic can vary depending on the product's role within a product mix. Factors such as product positioning, competitive dynamics, and consumer perceptions of value across the product mix influence pricing strategies. Therefore, price-setting logic may need adjustments to align with the overall product mix strategy. 108. Companies normally develop product lines rather than a single product and introduce price steps such as a "low-," "average-," and "high-" priced computer system. Answer: True Rationale: Companies often develop product lines consisting of multiple products to cater to different market segments and consumer preferences. Within these product lines, they may introduce price steps to offer options at different price points, such as low-priced, average-priced, and high-priced variants, to appeal to a broader range of customers. 109. Manufacturers of systems such as razors and inkjet printers use a system of pricing called "two-part pricing" one price for the disposable products and another for the "hardware." Answer: False Rationale: Manufacturers of systems like razors and inkjet printers typically use a pricing strategy known as "razor-and-blades" or "tied products," where the initial product (the razor or printer) is sold at a relatively low price, while the complementary products (blades or ink cartridges) are sold at higher margins to generate ongoing revenue. 110. A pricing system in which there is a "fixed" fee and then a variable "usage" fee is called bundling. Answer: False Rationale: The described pricing system is not bundling. It's known as two-part pricing or a two-part tariff, where customers pay a fixed fee for access to a product or service and then pay additional charges based on their usage or consumption. Bundling involves selling multiple products or services together as a package at a combined price. 111. Pure bundling occurs when a firm offers goods both individually and in bundles. Answer: False Rationale: Pure bundling refers to the practice of selling goods or services only as part of a bundle, without offering them individually. It contrasts with mixed bundling, where products are available for purchase both individually and as part of a bundle. 112. Co-branding is when two or more well-known existing brands are combined into a joint product and/or marketed together in some fashion. Answer: True Rationale: Co-branding involves collaboration between two or more established brands to create a new product or service that leverages the reputation, image, and customer base of each brand. It can be a strategic marketing approach to enhance brand equity and appeal to a broader audience. 113. Ingredient branding can take on a form called "self-branding" in which the company advertises its own branded ingredients. Answer: True Rationale: Ingredient branding involves highlighting specific components or ingredients within a product and promoting them with their own brand identity. This can add value to the overall product and differentiate it from competitors. Self-branding refers to a company promoting its own branded ingredients within its products. 114. Packaging is all the activities of designing and producing the container for a product. Answer: True Rationale: Packaging encompasses the design, production, and presentation of the container or wrapping for a product. It includes considerations such as protection, convenience, branding, and communication with consumers. 115. Labels can identify the product and must contain legal statements that under various Federal laws cannot be misleading, false, or deceptive. Answer: True Rationale: Labels provide essential information about the product, including its identity, ingredients, usage instructions, and safety warnings. They must comply with various regulations and laws to ensure that they are accurate, truthful, and not deceptive to consumers. 116. Warranties are formal statements of expected product performance by the manufacturer. Answer: True Rationale: Warranties are promises made by the manufacturer or seller regarding the quality, reliability, and performance of a product. They outline the terms and conditions under which the manufacturer will repair or replace the product if it fails to meet specified standards within a certain period. 117. A guarantee's greatest contribution to a product's success is that it decreases the buyer's perceived risk in the purchase of the product. Answer: True Rationale: Guarantees provide assurance to consumers by reducing the perceived risk associated with purchasing a product. They offer a form of protection or compensation if the product does not meet expectations, thereby increasing consumer confidence and willingness to buy. 118. Guarantees are most effective when the product is well known and/or similar in performance to other brands in the market. Answer: False Rationale: Guarantees can be effective across various product categories and situations, regardless of the product's level of familiarity or performance compared to competitors. Guarantees can enhance consumer trust and confidence in the product, regardless of its market position or competitive landscape. 119. In planning its market offering, the marketer must address the five product levels of the customer-value hierarchy. Describe the "customer-value hierarchy" and identify the five levels of product contained within. Answer: Each layer adds more customer value, and the five levels are: (1) the core benefit— the service or benefit the customer is really buying; (2) the basic product—the actual product that provides the core benefit; (3) expected product—a set of attributes and conditions buyers normally expect when they purchase the product; (4) the augmented product—the marketer exceeds customer expectations; and (5) the potential product—which encompasses all the possible augmentations and transformations the product or offering might undergo in the future. These five elements constitute the buyers' consumption system. 120. The vast array of products that consumers buy can be classified on the basis of shopping habits and are broken down into four main areas. List these four main classifications of consumer goods and explain what elements are included within. Answer: The four main areas are: (1) Convenience goods are bought frequently, immediately, and with a minimum of effort; (2) shopping goods are goods that the consumer characteristically compares on such bases as suitability, quality, price, and style; (3) specialty goods have unique characteristics or brand identification for which a sufficient number of buyers are willing to make a special purchasing effort; and (4) unsought goods are those goods that the consumer does not know about or does not normally think of buying. 121. You know that marketers have traditionally classified products based on characteristics of durability, tangibility, and use. You also know that each product type has an appropriate marketing-mix strategy attached. In analyzing your company's products, you decide to list each of these products and the appropriate marketing-mix strategy to understand where your products "fit." List these products and their appropriate marketing-mix strategies. Answer: (1) Nondurable goods—the appropriate strategy is to make them available in many locations, charge only a small markup, and advertise heavily to induce trial and build preference. (2) Durable goods—tangible goods that normally survive many uses. Durable products normally require more personal selling and service, command a higher margin, and require more seller guarantees. (3) Services—intangible, inseparable, variable, and perishable products. They require more quality control, supplier credibility, and adaptability. 122. Industrial goods can be classified in terms of how they enter the production process and their relative costliness. Identify the three groups of industrial goods. Answer: The three groups of industrial goods include: (1) Materials and parts are goods that enter the manufacturer's product completely. Raw materials (farm and natural products) and manufactured materials and parts (component materials and component parts) compose this group; (2) Capital items are long-lasting goods that facilitate developing or managing the finished product, such as machinery (installations and equipment); and (3) Supplies and business services are short-term goods and services that facilitate developing or managing the finished product; maintenance and repair and operating supplies are included here. Business supplies include advisory services and other "services" necessary for the ongoing operation of the business. 123. Describe the six main service differentiators. Answer: The main service differentiators are ordering ease, delivery, installation, customer training, customer consulting, and maintenance and repair. Ordering ease refers to how easy it is for the customer to place an order with the company. Delivery refers to how well the product or service is brought to the customer. It includes speed, accuracy, and care throughout the process. Installation refers to the work done to make a product operational in its planned location. Ease of installation is a true selling point for buyers of complex products like heavy equipment and for technology novices. Customer training helps the customer's employees use the vendor's equipment properly and efficiently. Customer consulting includes data, information systems, and advice services the seller offers to buyers. Maintenance and repair programs help customers keep purchased products in good working order. 124. Distinguish between controllable returns and uncontrollable returns. Answer: Controllable returns result from problems or errors by the seller or customer and can mostly be eliminated with improved handling or storage, better packaging, and improved transportation and forward logistics by the seller or its supply chain partners. Uncontrollable returns result from the need for customers to actually see, try, or experience products in person to determine suitability and can't be eliminated by the company in the short run through any of these means. 125. What is the significance of design for a company's products and services? What are the advantages of a good design? Answer: Design offers a potent way to differentiate and position a company's products and services. Design is the totality of features that affect how a product looks, feels, and functions to a consumer. Design offers functional and aesthetic benefits and appeals to both our rational and emotional sides. The designer must figure out how much to invest in form, feature development, performance, conformance, durability, reliability, reparability, and style. To the company, a well-designed product is easy to manufacture and distribute. To the customer, a well-designed product is pleasant to look at and easy to open, install, use, repair, and dispose of. The designer must take all these factors into account. Design can shift consumer perceptions to make brand experiences more rewarding. Design should penetrate all aspects of the marketing program so that all design aspects work together. 126. Explain the concepts of product-mix width, length, depth, and consistency. Answer: The width of a product mix refers to how many different product lines the company carries. The length of a product mix refers to the total number of items in the mix. The depth of a product mix refers to how many variants are offered of each product in the line and is determined by dividing the total number of items by the number of lines. The consistency of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. 127. Product-mix pricing can involve a number of pricing strategies for the brand manager. List each of these strategies and briefly define each. Answer: There are six situations involving product-mix pricing: (1) product-line pricing— low-, medium-, and high-priced products within the same line, such as different priced ties; (2) optional-feature pricing—charging for "extra" features, such as leather seats in a car; (3) captive-product pricing—when the "user" has no choice but to use the high-priced "disposable" products that make the entire product work (for example, ink cartridges for printers); (4) two-part pricing—consisting of a fixed fee and a variable usage fee (cell phone usage); (5) by-product pricing—the price of the by-products of goods being used for other purposes (oil refining for example); and (6) product-bundling pricing—pure bundling when the firm offers its products only as a bundle, or mixed bundling when the firm offers its products as a "bundle" and/or individually. 128. Various factors have contributed to the increased importance of packaging as a marketing tool. List and briefly describe these events. Answer: Self-service—an increasing number of products are being sold without any personal interaction, on a self-service basis. Consumer affluence—rising consumer affluence means consumers are willing to pay a little more for convenience, appearance, dependability, and prestige of better packages. Company and brand image—packages contribute to instant recognition of the company or brand. Innovation opportunity—innovative packaging can bring large benefits to consumers and profits to producers. 129. A manufacturer is contemplating introducing a product that is inferior to its competition in its performance, design, and functionality. However, the manufacturer believes that "good brand marketing" can overcome these shortfalls. Why is this thinking incorrect? Answer: At the heart of a great brand is a great product, the product is a key element in the market offering. Customers will judge the product (offering) on three basic elements: product features and quality; services mix and quality, and price. Not having a competitive product cannot be overcome by marketing. 130. Studying how consumers shop, how they use a particular product or service, and how they dispose of the product when consumed is important for marketers. This information forms the basis of product strategy. Define the consumption system and identify the two upcoming product strategies that are affected by this knowledge. Answer: This is called the user's total consumption system, defined as the way the user performs the tasks of getting and using products and related services. This is important because it will contain information useful in the product-augmentation strategy and the potential product strategy. 131. Industrial-goods classifications based on terms of how the products enter the production process and their relative costs include such segments as materials and parts and capital items. Window cleaning services, consumable office supplies, personal computers, desks, paint, nails, and buckets are included in the classifications of industrial goods. List the other "classifications" including subclassifications for industrial goods. Answer: Industrial-goods classifications include material and parts, farm products, natural products, manufactured materials and parts, and component parts. Capital goods include installations and equipment. Supplies and business services include maintenance and repair items, operating supplies, and business advisory services. 132. To be branded, products must be differentiated. List the possible ways that physical products can be differentiated. Answer: Products can be differentiated according to form, features, customization, performance quality, conformance quality, durability, reliability, reparability, and style. 133. In your position as a marketing manager for a small industrial company, you have been asked by the president to help differentiate the company's product from its competitors. In reviewing your marketing management notes, you note that the text stated that physical products could be differentiated in nine ways. These nine areas comprise the "meat" of the memo you are writing to the president of your firm. What are the nine ways that physical products can be differentiated? Answer: The nine ways that physical products can be differentiated are form, features, customization, performance quality, conformance quality, durability, reliability, reparability, and style. 134. When a physical product cannot easily be differentiated, the key to competitive success may lie in adding valued services and improving quality. Identify the six main service differentiators. Answer: The six main service differentiators are (1) ordering ease, (2) delivery, (3) installation, (4) customer training, (5) customer consulting, and (6) maintenance and repair. 135. You have been asked to create a product system for your company's personal digital assistant. Before starting, you must define the term "product system" to the engineers to enable them to start design and production of the aligned items. Define the concept of a "product system." Answer: A product system is a group of diverse but related items that function in a compatible manner. 136. You have been asked to prepare a product-line analysis for your company's stable of products. Why is it important for product-line mangers to do a product-line analysis? Answer: Product-line managers need to know the sales and profits of each item in their line in order to determine which items to build, maintain, harvest, or divest. They also need to understand each product line's market profile. 137. Explain the concept of line stretching and the three uses for it. Answer: Line stretching occurs when a company lengthens its product line beyond its current range. It includes down-market stretch (introduce a lower-priced line), up-market stretch (introduce an upscale line), or two-way stretch introduce both an upscale line and a downscale line. 138. As the newest member of the marketing department, your immediate boss asks you to comment on the company's proposal to add two new shoes to the company's middle-of-theroad pricing and product-line strategies. The first pair will retail for $ 40.00 and has as its target market the "bargain" shopper. The second pair will retail for $ 200.00 and is targeted at the "sophisticated shopper." In relation to product-line strategy, what is the company trying to accomplish with these two new items? Answer: This is an example of the company trying a "two-way stretch"—introducing products at both ends of the consumer market simultaneously. 139. During a meeting, you were asked by the vice-president of marketing, to comment on the company's pricing strategy for its products. Recalling your marketing management course in college, your comments define the six situations involving product-mix pricing. List these six product-mix pricing strategies. Answer: Product-mix pricing includes product-line pricing, optional-feature pricing, captiveproduct pricing, two-part pricing, by-product pricing, and product-bundling pricing. 140. Outline three guidelines for correctly implementing a bundling strategy. Answer: Do not promote individual products in a package as frequently and cheaply as the bundle. Second, limit promotions to a single item in the mix if you still want to promote individual products. Third, if you decide to offer large rebates on individual products, it must be the absolute exception and done with discretion. 141. As the marketing manager for your firm, you have been approached by your key component manufacturer suggesting that your two firms "ingredient brand" a new item. What are some of the requirements for succeeding in ingredient branding? Answer: First, the consumer must perceive that the ingredient matters to the performance and success of the product. Secondly, consumers must be convinced that not all ingredient brands are the same and that the ingredient is superior. Third, a distinctive symbol or logo must clearly signal to consumers that the host product contains the ingredient. Fourth, a coordinated "pull" and "push" program must help consumers understand the importance and advantages of the branded ingredient. 142. Your research shows that over 53% of all purchases are made on impulse. As you sit down with your packaging design team, you tell them that the package must communicate many of the sales tasks. List the sales tasks that packaging must now incorporate due to the increase in self-service sales. Answer: These tasks are: attract attention, describe the product's features, create consumer confidence, and make a favorable overall impression. 143. In discussions with the packaging design team, you note that they do not have a firm design objective for the final package. In an internal memo to your boss, outline the objectives (both company and consumer orientated) that you wish to see implemented by the design team. Answer: The objectives of packaging are to identify the brand; convey descriptive and persuasive information; facilitate product transportation and protection; assist at-home storage; and aid product consumption. 144. Sellers must label their products. Labels serve many purposes beyond just "naming" the product. List the additional services provided by a product's label. Answer: A label identifies the product; a label might also grade the product; a label might describe the product; and the label might promote the product. A label may contain information required by law. 145. What is the importance of guarantees? Answer: Guarantees reduce the buyer's perceived risk. They suggest that the service/product is of high quality and that the company and its service performance are dependable. 146. What are the situations in which guarantees are most effective? Answer: Guarantees are most effective when either the company or the product is not well known, so a "money-back" guarantee in that case would reduce the buyer's perceived risk and provide them with confidence in purchasing the product. The second area is when the product/service is superior to competition in quality and performance. Test Bank for Marketing Management Philip T Kotler, Kevin Lane Keller 9780132102926, 9780273753360, 9781292092621, 9780133856460, 9789332587403, 9780136009986