Preview Extract
Chapter 7 Products and Services
1) Why is sales growth slow during the maturity stage in a product's life cycle?
A) The product has just been introduced to the market.
B) The product is being adopted by the market.
C) The product has been adopted by most potential buyers.
D) The product's life has been extended.
Answer: C
Rationale:
During the maturity stage, the product has already been adopted by a large portion of
potential buyers. As a result, the market becomes saturated, and sales growth slows down
because there are fewer new customers to attract.
2) Which of the following types of customers will the introduction stage of a product attract?
A) innovators
B) early majority
C) late majority
D) laggards
Answer: A
Rationale:
The introduction stage of a product typically attracts innovators, who are the first individuals
to adopt new products or technologies. They are willing to take risks and try out novel
offerings before the majority of the market.
3) Which of the following types of customers wait for products to reach full majority before
purchasing them?
A) innovators
B) early adopters
C) early majority
D) late majority
Answer: C
Rationale:
The early majority are pragmatic consumers who prefer to wait until a product has been
adopted by a significant portion of the market before making a purchase. They are influenced
by the experiences and opinions of others and tend to adopt products once they become
mainstream and widely accepted.
4) Which of the following is characteristic of the early majority customer?
A) relish innovation to the point of overlooking initial defects in new products
B) value the product's benefits, but are unwilling to suffer the defects often inherent in early
models
C) are conservative and wait for the product to reach full maturity
D) are highly conservative and risk averse often form niche markets
Answer: B
Rationale:
The early majority customers value the benefits of a product but are cautious about potential
defects or shortcomings. They are not as eager as innovators to overlook initial issues and
prefer to wait until products are more refined and reliable before making a purchase.
5) At which of the following life cycle stages of a product would customers be willing to
overlook the imperfections in the secondary features of the product?
A) introduction
B) growth
C) maturity
D) decline
Answer: A
Rationale:
During the introduction stage of a product's life cycle, customers are often willing to overlook
imperfections in secondary features because they are primarily interested in the novelty and
primary benefits offered by the new product. As the product matures and competition
increases, customers become more discerning, placing greater emphasis on secondary
features and expecting higher levels of refinement.
6) At which of the following life cycle stages of a product is it copyrighted and patented?
A) introduction
B) growth
C) maturity
D) decline
Answer: A
Rationale:
Copyrighting and patenting typically occur during the introduction stage of a product's life
cycle when the product is being developed and introduced to the market to protect its
intellectual property from competitors.
7) During the growth stage of a product's lifecycle product features are grouped into
blockbuster features, technology features, premium features, and ________.
A) repositioning features
B) parity features
C) differentiation features
D) extension features
Answer: B
Rationale:
During the growth stage, product features are often grouped into blockbuster features (major
selling points), technology features (innovative aspects), premium features (additional
features offered at a higher price), and parity features (features considered standard or
essential for competitiveness).
8) Which of the following is a tactic best employed during the growth stage of a product's life
cycle?
A) introducing similar products into existing segments
B) reducing costs and offer the product only to niche segments
C) developing additional features as desired by customers
D) restricting packaging to one or two variants
Answer: C
Rationale:
During the growth stage, developing additional features as desired by customers helps to
capitalize on the product's increasing popularity and demand. This tactic can attract more
customers and strengthen the product's position in the market.
9) Which of the following categories of features allows a product/service to be a clear leader
in the market?
A) blockbuster
B) technology
C) premium
D) parity
Answer: A
Rationale:
Blockbuster features are major selling points that distinguish a product from competitors and
allow it to be a clear leader in the market. These features are often unique or highly desirable,
setting the product apart from others.
10) ________ features are features expected for products in that category
A) Blockbuster
B) Technology
C) Premium
D) Parity
Answer: D
Rationale:
Parity features are features expected for products in a particular category. They are
considered standard or essential for competitiveness and are necessary to meet customer
expectations.
11) Changing the messaging for a product, to focus on the new applications for the product, is
a tactic employed in the ________ stage of a product's life cycle.
A) introduction
B) growth
C) maturity
D) decline
Answer: D
Rationale:
In the decline stage of a product's life cycle, sales are decreasing, and the market is shrinking.
To prolong the product's life or extract remaining value, companies may attempt to find new
applications or niche markets for the product by changing the messaging to attract new
customer segments.
12) Which of the following objectives does creation of buyer personas to describe buyers
whose needs will not be met by a product or service achieve?
A) checking if a particular product is properly focused
B) understanding purchase motivation
C) allowing the product to penetrate all market segments
D) helping liquidate inventory or selling product to another company
Answer: A
Rationale:
Creation of buyer personas helps in checking if a particular product is properly focused by
identifying and understanding the needs of different customer segments. By understanding
the specific needs that won't be met by the product, companies can refine their marketing
strategies and product offerings to better target their intended audience.
13) At which of the following life cycle stages of a product should a company change its
messaging to promote new uses for the product or service?
A) introduction
B) growth
C) maturity
D) decline
Answer: D
Rationale:
In the decline stage of a product's life cycle, sales are decreasing, and the market is shrinking.
To prolong the product's life or extract remaining value, companies may attempt to find new
applications or niche markets for the product by changing the messaging to attract new
customer segments.
14) During which stage of value proposition creation are buyer personas created?
A) while understanding customer purchase motivation
B) while identifying targeted customer segment
C) while creating a name for a product or service
D) while creating a list of direct and indirect competitors
Answer: B
Rationale:
Buyer personas are typically created during the stage of identifying the targeted customer
segment. This involves understanding the characteristics, needs, preferences, and behaviors
of the potential customers who are most likely to benefit from the product or service.
15) Which of the following is an example of a heart benefit?
A) the ability of borosilicate glass to withstand high temperatures
B) the precise, accurate rhythm of a particular brand of pacemakers
C) the low power consumption of a brand of power tools
D) the design and color of a brand of designer bags for women
Answer: D
Rationale:
A heart benefit refers to an emotional or psychological advantage that appeals to customers'
desires, aspirations, or feelings. In this case, the design and color of a brand of designer bags
for women provide an example of a heart benefit, as it appeals to customers' aesthetic
preferences and sense of style, eliciting an emotional response.
16) For which of the following types of organizations would a differentiation approach based
on serviceability be most suitable?
A) a biscuit manufacturing company
B) a clothing manufacturing company
C) a washing machines manufacturer
D) a paper manufacturer
Answer: C
Rationale:
A washing machine manufacturer would find a differentiation approach based on
serviceability most suitable because in the appliance industry, after-sales service and the
ability to quickly and effectively address maintenance issues are crucial factors influencing
customer satisfaction and brand loyalty.
17) Customization as a method to effect differentiation is an approach taken when ________.
A) a product has a single, notable feature
B) a product has features that a competitor's products do not
C) customer needs are diverse
D) customer safety is paramount
Answer: C
Rationale:
Customization is typically employed when customer needs are diverse and varied. By
offering customizable options, companies can tailor their products or services to meet the
specific preferences and requirements of individual customers, thereby differentiating
themselves from competitors who offer standardized offerings.
18) For which of the following products would a differentiation approach based on customer
training be a necessity?
A) a model airplane kit
B) a bicycle
C) an x-ray machine
D) a pair of shoes
Answer: C
Rationale:
A differentiation approach based on customer training would be a necessity for products that
require specialized knowledge or skills to operate effectively and safely. An x-ray machine
falls into this category, as proper operation and interpretation of results typically require
training to ensure accurate diagnostics and patient safety.
19) Which of the following approaches to differentiation should a company offering cupcakes
adopt?
A) delivery
B) customer training
C) customer consulting
D) installation
Answer: A
Rationale:
For a company offering cupcakes, differentiation through delivery can be an effective
strategy. Providing fast, reliable delivery services, perhaps with options for customization or
special packaging, can set the company apart from competitors and enhance the overall
customer experience.
20) Which of the following products can be differentiated by quality installation?
A) biscuits
B) books
C) terracotta pots
D) home theatre systems
Answer: D
Rationale:
Quality installation can differentiate products that require assembly or setup, such as home
theatre systems. Offering professional installation services ensures that customers can enjoy
the product's full functionality without the hassle of installation challenges, thereby
enhancing customer satisfaction and loyalty.
21) A company producing high quality vinegar used elaborately shaped bottles as a method of
differentiation. Which of the following differentiation approaches is being used by the
company?
A) durability
B) serviceability
C) form
D) features
Answer: C
Rationale:
By using elaborately shaped bottles, the company is focusing on the form of the product to
differentiate it from competitors. The unique and visually appealing design of the bottles sets
the product apart and attracts customers' attention.
22) TimeO promotes its digital watches as being the ultimate tough watch, resistant to
mechanical shock and water. The promotions mention a 5 year replacement warranty for all
types of manufacturing defects. Which of the following product differentiation approaches is
TimeO using?
A) form
B) ease of use
C) durability
D) customization
Answer: C
Rationale:
TimeO is using the durability approach to differentiate its watches. By highlighting their
resistance to mechanical shock and water, as well as offering a 5-year replacement warranty
for manufacturing defects, the company emphasizes the reliability and long-lasting nature of
its product.
23) MyLappie manufactures its laptops according to customers specifications. Customers can
place an order and specify the shape, size, and configuration of the laptop along with the
designs of its keyboard. Which of the following product differentiation approaches does
MyLappie use?
A) quality
B) customization
C) durability
D) reliability
Answer: B
Rationale:
MyLappie is using the customization approach to differentiate its laptops. By allowing
customers to specify the shape, size, configuration, and design features of the laptop
according to their preferences, the company provides a personalized product tailored to
individual customer needs and desires.
24) A cell phone manufacturer offers its mobiles with music players and high definition
cameras, not seen on competitors' phones of the same price range. Which of the
differentiation approach is the company adopting?
A) features
B) serviceability
C) durability
D) reliability
Answer: A
Rationale:
The company is adopting the features differentiation approach by offering additional features
like music players and high definition cameras that are not typically found on competitors'
phones in the same price range. This sets their product apart and provides added value to
customers.
25) Toons, a company making portable music players, introduced its new generation USB
Mp3 player allowing users to drag and drop music files directly onto the music player folder.
This bypasses the requirement for complicated software installation and usage seen on
competitors' models. What approach to differentiation is being used by Toons?
A) customization
B) serviceability
C) ease of use
D) form
Answer: C
Rationale:
Toons is employing the ease of use differentiation approach by making its USB Mp3 player
more user-friendly compared to competitors' models. By allowing users to drag and drop
music files directly onto the device without requiring complicated software installation,
Toons enhances the user experience and simplifies the product's usability.
26) PizzaOne is an organization that specializes in pizza delivery that allows people to place
food orders and make payments online. Which of the following product-related service
differentiation is being used by PizzaOne?
A) ordering ease
B) maintenance and repair
C) customer training
D) delivery
Answer: A
Rationale:
PizzaOne's focus on allowing customers to easily place food orders and make payments
online represents an ordering ease differentiation strategy. By providing a convenient and
user-friendly ordering process, PizzaOne enhances the customer experience and differentiates
itself from competitors.
27) BD Biosciences manufactures advanced Flow Assisted Cell Sorters (FACS), a complex
machine used to sort different types cells. BD Biosciences offers free, hands-on courses to all
customers as the number of people using the advanced features of FACS machines are few.
What sort of differentiation is this product-associated service?
A) ordering ease
B) delivery
C) customer training
D) maintenance and repair
Answer: C
Rationale:
BD Biosciences' offering of free, hands-on courses to customers for using the advanced
features of their Flow Assisted Cell Sorters (FACS) represents a customer training
differentiation strategy. By providing training opportunities, BD Biosciences enhances the
value of their product and helps customers maximize its capabilities.
28) WorkWell computers offers customers the option of customizing its computers. Their
showrooms have trained professionals to aid customers buy the right computer based on their
needs. What differentiation tactic is being used by WorkWell?
A) customer training
B) delivery
C) maintenance and repair
D) customer consulting
Answer: D
Rationale:
WorkWell computers' provision of trained professionals in their showrooms to aid customers
in selecting the right computer based on their needs represents a customer consulting
differentiation strategy. By offering personalized assistance and guidance, WorkWell
enhances the customer experience and helps customers make informed purchasing decisions.
29) BMUU is an automobile manufacturer offering Drive Buddy, a unique cellular-based
freeway assist service, to all their customers. This service is an example of product-related
service differentiation by ________.
A) maintenance and repair
B) customer consulting
C) installation
D) delivery
Answer: A
Rationale:
BMUU's offering of Drive Buddy, a cellular-based freeway assist service, represents a
product-related service differentiation strategy focused on maintenance and repair. Drive
Buddy provides assistance to customers while driving, helping to ensure the safety and
functionality of their vehicles.
30) ItaLive is a company that specializes in Italian kitchens. It offers customers the unique
experience of having experts visit their home, design and set up a customized kitchen best
suited to the customer's needs. Which of the following approaches to differentiation does
ItaLive employ?
A) ordering ease
B) maintenance and repair
C) installation
D) empathy
Answer: C
Rationale:
ItaLive employs an installation differentiation approach by offering customers the unique
experience of having experts design and set up a customized kitchen in their home. This
personalized installation service enhances the value proposition for customers and
differentiates ItaLive from competitors.
31) Which of the following categories of the extended 7Ps would cleanliness of the area,
neatness of dress, and quality of signage come under?
A) people
B) process
C) product
D) physical evidence
Answer: D
Rationale:
The cleanliness of the area, neatness of dress, and quality of signage are all elements of
physical evidence. Physical evidence refers to the tangible aspects of a service environment
that customers can perceive, such as the appearance of facilities, equipment, personnel, and
communication materials, which shape customers' perceptions of service quality.
32) Which of the following categories of the extended 7Ps includes the flow of activities to
execute the service?
A) people
B) process
C) product
D) physical evidence
Answer: B
Rationale:
The flow of activities to execute the service falls under the category of process in the
extended 7Ps marketing mix. Process refers to the procedures, mechanisms, and activities
involved in delivering the service to customers. It encompasses how the service is performed,
including the sequence of steps, efficiency, and effectiveness of operations.
33) Service ________ is the ability to perform the promised service dependably and
accurately.
A) reliability
B) empathy
C) responsiveness
D) tangibility
Answer: A
Rationale:
Service reliability refers to the ability to perform the promised service dependably and
accurately. It involves delivering services consistently and meeting customer expectations
regarding service quality and performance.
34) ________ is defined as the willingness to help customers and provide prompt service.
A) Empathy
B) Responsiveness
C) Tangibility
D) Reliability
Answer: B
Rationale:
Responsiveness is defined as the willingness to help customers and provide prompt service. It
involves promptly attending to customer inquiries, requests, and needs, demonstrating
attentiveness and willingness to assist customers in a timely manner.
35) Orient Insurance gives customers the assurance of settling claims within seven days.
Which of the following approaches is Orient Insurance using to achieve differentiation?
A) empathy
B) tangibles
C) responsiveness
D) customization
Answer: C
Rationale:
Orient Insurance is using the responsiveness approach to achieve differentiation by assuring
customers of settling claims within seven days. This emphasizes the company's commitment
to promptly addressing customer needs and providing efficient service, which can
differentiate it from competitors who may have longer claims processing times.
36) A job consultancy, in a promotion, claims its services to have been certified by the
International Organization for Standardization. Which of the following approaches to
differentiation is the organization utilizing?
A) tangibles
B) empathy
C) assurance
D) responsiveness
Answer: C
Rationale:
The organization is utilizing the assurance approach to differentiation by highlighting its
certification from the International Organization for Standardization (ISO). This certification
assures customers of the consultancy's commitment to maintaining high standards of quality
and service excellence, thereby differentiating it from competitors who may not have such
certifications.
37) ________ is defined as the degree of caring and individual attention provided to
customers.
A) Empathy
B) Assurance
C) Responsiveness
D) Reliability
Answer: A
Rationale:
Empathy is defined as the degree of caring and individual attention provided to customers. It
involves understanding and addressing customers' needs, concerns, and emotions with
compassion and sensitivity.
38) Smoothline is an airline known for the extra care and warmth shown to its passengers,
especially children and ill passengers. What approach to differentiation do Smoothline take?
A) customer consulting
B) tangibles
C) reliability
D) empathy
Answer: D
Rationale:
Smoothline takes the empathy approach to differentiation by demonstrating extra care and
warmth towards its passengers, especially those who may require additional attention such as
children and ill passengers. This focus on providing personalized and compassionate service
enhances the overall customer experience.
39) AirCon is a cellular network service provider that is known for the warmth and attention
with which its customer care executives deal with complainants. Which approach to achieve
differentiation has AirCon used here?
A) customer consulting
B) tangibles
C) reliability
D) empathy
Answer: D
Rationale:
AirCon has used the empathy approach to achieve differentiation by demonstrating warmth
and attention in the interactions of its customer care executives with complainants. This
empathetic approach helps to build trust and rapport with customers, enhancing their overall
experience with the service provider.
40) A group of hospitals uses bright, homely colors for its decor and furnishings, in order to
lessen the traumatic associations with traditional white and gray colors of hospital equipment.
This approach to differentiation is this an example of ________.
A) customer consulting
B) tangibles
C) reliability
D) responsiveness
Answer: B
Rationale:
This is an example of the tangibles approach to differentiation. By using bright, homely
colors for decor and furnishings, the hospitals are focusing on the tangible aspects of their
environment to create a more comforting and less intimidating atmosphere for patients,
thereby enhancing their overall experience.
41) Swansong is a group of luxury hotels that uses ultra luxurious Rolls Royce cars for the
convenience of their guests. Which approach to differentiation is Swansong using?
A) customer consulting
B) tangibles
C) reliability
D) assurance
Answer: B
Rationale:
Swansong is using the tangibles approach to differentiation by providing ultra-luxurious
Rolls Royce cars for the convenience of their guests. This tangible offering enhances the
overall experience of the guests and sets Swansong apart from other hotels by providing a
luxurious and exclusive transportation option.
42) The typical lifecycle for a product or service includes stages of introduction, growth,
maturity, and decline.
Answer: True
Rationale:
This statement is true. The product lifecycle concept outlines the stages a product or service
typically goes through, starting from introduction (where it is launched into the market),
followed by growth (when sales increase), maturity (where sales plateau), and finally decline
(when sales decrease).
43) The early majority are the very first customers to try a product.
Answer: False
Rationale:
This statement is false. The early majority are not the first to try a product; rather, they make
up a significant portion of the market that adopts a product after it has been tried and
accepted by the innovators and early adopters. They tend to be more cautious and wait until a
product has proven its value and reliability before purchasing.
44) Innovators are highly averse to risk and are extremely conservative.
Answer: False
Rationale:
This statement is false. Innovators are actually characterized by their willingness to take risks
and try new ideas, products, or services. They are typically the first individuals to adopt new
technologies or innovations, often seeking out novelty and excitement rather than sticking
with conservative approaches.
45) Early adopters are more concerned with key functionality than complete feature sets.
Answer: True
Rationale:
This statement is true. Early adopters are typically more interested in the core functionality of
a product rather than its exhaustive feature set. They are willing to accept some limitations or
incompleteness in features if the core functionality meets their needs and offers them a
competitive advantage. Early adopters often value innovation and are willing to work with
products that may still be evolving.
46) Customers in a mature market look for products of high quality.
Answer: True
Rationale:
This statement is true. In mature markets, where competition is often intense and product
offerings are abundant, customers tend to prioritize quality as a distinguishing factor. Quality
becomes a key differentiator in retaining customers and gaining a competitive edge.
47) The number of variations available in packaging are the least during the mature stage of a
product's lifecycle.
Answer: False
Rationale:
This statement is false. During the mature stage of a product's lifecycle, companies often
introduce various packaging variations to differentiate their products from competitors and
cater to different consumer preferences. Offering diverse packaging options can help
rejuvenate interest in the product and maintain its appeal in the market.
48) Innovators and early adopters should be targeted during the introductory stage.
Answer: True
Rationale:
This statement is true. During the introductory stage of a product's lifecycle, innovators and
early adopters are typically the primary target audience. These are the consumers who are
most likely to embrace new technologies or innovations and are willing to take the risk of
trying a new product before it becomes widely accepted.
49) Late majority customers are tolerant of products or services being offered as only one or
two variants.
Answer: False
Rationale:
This statement is false. Late majority customers, who are more risk-averse and conservative
in their buying behavior, often prefer a wider range of options and variations to choose from.
Offering only one or two variants may limit the appeal of the product to this segment of the
market.
50) Brands and patents must be filed to protect intellectual property during the introduction
stage.
Answer: True
Rationale:
This statement is true. It is crucial to protect intellectual property, including brands and
patents, especially during the introduction stage when a product or service is being launched
into the market. Filing for patents and establishing a strong brand presence early on can help
prevent competitors from copying or infringing upon the innovation, providing a competitive
advantage and safeguarding long-term success.
51) During the growth stage an organization must concentrate on product repositioning
tactics.
Answer: False
Rationale:
This statement is false. During the growth stage of a product's lifecycle, the focus is primarily
on scaling up production, expanding market share, and meeting increased demand. Product
repositioning tactics are more commonly employed during the maturity stage when
competition intensifies, and companies seek to differentiate their offerings to maintain or
regain market share.
52) The early majority tend to be pragmatists, people who value the benefits that the product
or service offers but do not want to be "guinea pigs" like the early adopters.
Answer: True
Rationale:
This statement is true. The early majority are pragmatists who are more cautious and
deliberate in their adoption of new products or services. They value the benefits offered by
the innovation but prefer to see evidence of its reliability and usefulness before committing,
unlike the risk-taking early adopters.
53) During the maturity stage, alternate uses of a product must be a main component in an
organization's messaging.
Answer: False
Rationale:
This statement is false. While exploring alternate uses of a product can be a strategy to extend
its lifecycle, during the maturity stage, the focus of an organization's messaging typically
revolves around emphasizing the product's core features, benefits, and competitive
advantages to maintain market share and differentiate from competitors.
54) Value propositions clarify the unique value a product or service provides to its customers.
Answer: True
Rationale:
This statement is true. A value proposition is a statement that articulates the unique benefits
and value that a product or service offers to its customers. It highlights why a customer
should choose a particular product or service over alternatives, addressing their needs, wants,
and pain points.
55) Value propositions are methods to categorize customers into market segments for
effective marketing.
Answer: False
Rationale:
This statement is false. While value propositions are indeed crucial for effective marketing,
they are not methods for categorizing customers into market segments. Instead, value
propositions are used to communicate the unique value of a product or service to existing
market segments, helping to attract and retain customers within those segments. Market
segmentation involves dividing a broader market into smaller, homogeneous groups based on
shared characteristics or needs.
56) A value proposition compares the merits associated with targeting different consumer
segments.
Answer: False
Rationale:
This statement is false. A value proposition is a statement that articulates the unique benefits
and value that a product or service offers to its customers. It is not about comparing the
merits of targeting different consumer segments; rather, it focuses on communicating the
value of the product or service to a specific target audience.
57) Buyer descriptions are created to describe the type of buyer intended for a product.
Answer: True
Rationale:
This statement is true. Buyer descriptions, also known as buyer personas, are fictional
representations of the ideal customers for a product or service. They are created based on
market research and demographic data to describe the characteristics, behaviors, and needs of
the target audience intended for the product.
58) Head benefits are emotional reasons for buying a product or service.
Answer: False
Rationale:
This statement is false. Head benefits refer to the tangible, functional advantages or features
of a product or service that appeal to customers' rational decision-making. Emotional reasons
for buying a product or service are typically referred to as heart benefits.
59) Serviceability is an approach to differentiation which works well with all kinds of
products.
Answer: False
Rationale:
This statement is false. Serviceability, which refers to the ease with which a product can be
serviced or repaired, may not work well with all kinds of products. While it is essential for
products that require regular maintenance or repairs, it may not be a significant factor for
products that are disposable or have a short lifespan.
60) Customer consulting as an approach to differentiation works well with complex products
where additional information is essential to proper selection.
Answer: True
Rationale:
This statement is true. Customer consulting involves providing personalized assistance and
guidance to customers to help them make informed decisions about complex products or
services. It is particularly effective for products that require a high level of customization or
where customers may need expert advice to understand their options properly.
61) Responsiveness works well with process-driven services.
Answer: True
Rationale:
This statement is true. Responsiveness, which refers to the ability of a business to promptly
and effectively address customer needs and inquiries, aligns well with process-driven
services. In such services, where procedures and workflows are predefined, being responsive
to customer inquiries or issues can enhance customer satisfaction and overall service quality.
Customers expect timely responses and efficient handling of their requests, especially in
service-oriented businesses where processes play a critical role in delivering value. Therefore,
being responsive is essential for maintaining competitiveness and building positive
relationships with customers in process-driven service industries.
62) Explain the classification of customers based on different adoption characteristics seen
during different stages of a product's lifecycle.
Answer: The type of customer we target varies depending on the life cycle stage because
different individuals show different adoption characteristics. The introduction stage attracts
innovators (the very first to try the product or service, often pioneering types who relish
innovation) and early adopters (among the earliest to try the new product or service). The
growth stage transitions from the early adopters to the early majority (people who value the
product or service's benefits, but are unwilling to suffer the defects often inherent in early
models). The maturity stage corresponds to late majority customers (conservative individuals
who wait for products to reach full maturity before purchasing). The decline stage is
characterized by a transition from late majority customers to laggards, who are highly
conservative and risk-averse, and are often niche markets who perceive that no substitute
exists.
63) Explain the variation of quality requirements of a market during different stages of a
product's lifecycle.
Answer: Required quality by the market will vary during the life cycle. Early adopters will
accept minor faults, whereas high quality is expected in mature markets. High quality is a
must in a world where dissatisfied customers can express their anger online with a click of a
mouse.
64) What is packaging? How does it vary during a product/service's lifecycle?
Answer: Packaging is the way the product or service is presented to the customer. For
products, this can mean the number of sizes, colors, and flavors available. For services, this
can mean the range of service options available, such as different types of hotel rooms to
accommodate different types of travelers.
The focus on the packaging of products and services will change during the life cycle. In the
introduction stage, companies will often provide a limited number of variants (partially
because many companies do not know which specific variants customers prefer when the
offering is first launched), whereas later stages warrant more choices.
65) Describe the type of customers that must be targeted during the growth stage of a
product's lifecycle.
Answer: At the growth stage, we transition from targeting early adopters to targeting the early
majority. The early majority tend to be pragmatists, people who value the benefits that the
product or service offers but do not want to be "guinea pigs" like the early adopters. Often,
the market will become segmented into different customer groups at this stage.
66) Explain the development of features during the growth stage of a products development.
Answer: The emphasis at this stage is to develop additional features desired by customers,
thus "filling out" the product or service to be competitive with other companies. It is helpful
to group features into four categories: blockbuster features (the product/service must be a
clear leader in one important aspect), technology features (advanced capabilities to target
sophisticated markets), premium features (luxury materials to target status-seeking markets),
and parity features (features expected for products in that category, such as the inclusion of a
remote control when purchasing a new HDTV set).
67) Write a note on value propositions.
Answer: Value propositions clarify the unique value a product or service provides to its
customers. They clearly state the tangible benefits customers will enjoy as a result of using
the product or service. As such, value propositions can tell us the underlying motivations a
customer has toward the product or service. Understanding customer motivations will help us
design the product or service, price it, deliver it through distribution channels, and promote it.
68) How is a targeted customer segmented identified?
Answer: We identify the targeted segment by using the standard customer characteristics
reviewed earlier (demographics, psychographics, etc.). Next, we create several buyer
descriptions, also called buyer personas, to describe the type of buyer intended for this
product. To be certain that the product or service is properly focused, we can create a persona
about a buyer whose needs will not be satisfied.
69) Explain "benefits" in a product/service value proposition format.
Answer: The benefits that customers will get from the product or service are stated in value
proposition format. To help describe benefits in a customer-oriented way, it is worthwhile to
separate benefits into two categories: head and heart. Head benefits are rational reasons for
buying a product or service, such as saving time or money. Heart benefits are emotional
reasons for buying a product or service, such as feelings of self-esteem when using it.
70) How can ease-of-use be used as a factor for differentiation of products?
Answer: Products can be differentiated by being easy to use. This type of approach works for
two categories of products. The first is safety-oriented products which are seldom used, but
must be easy to use when the time comes, such as fire extinguishers. The second category is
complex products that are often used, but need to hide their complexity to avoid confusion
during operation, like home theatre systems or MP3 players.
71) Explain the use of empathy as a way to differentiate services.
Answer: A way to differentiate services is by showing empathy to customers, that is, to "put
yourself in their shoes." Empathy is defined as the degree of caring and individual attention
provided to customers. This type of differentiation approach works well for services that deal
with customers in a caring fashion, such as health-care procedures, as well as services that
give customers a high degree of individual attention, such as financial organizations
specializing in high net worth individuals.
72) Explain the product/service tactics employed during the growth stage of a product.
Answer: In the growth stage, competitors are attracted to the growing market, so the focus
should be on building brand preference, differentiating the product or service from others in a
quickly crowding field, and gaining market share.
• Customers to Target: At the growth stage, we transition from targeting early adopters to
targeting the early majority. The early majority tend to be pragmatists, people who value the
benefits that the product or service offers but do not want to be "guinea pigs" like the early
adopters. Often, the market will become segmented into different customer groups at this
stage.
• Features: The emphasis at this stage is to develop additional features desired by customers,
thus "filling out" the product or service to be competitive with other companies. It is helpful
to group features into four categories: blockbuster features (the product/service must be a
clear leader in one important aspect), technology features (advanced capabilities to target
sophisticated markets), premium features (luxury materials to target status-seeking markets),
and parity features (features expected for products in that category, such as the inclusion of a
remote control when purchasing a new HDTV set).
• Quality: All features, including secondary ones, are refined. Support services might be
added.
• Packaging: Products are offered in different sizes and shapes. Different service packages are
offered for different needs.
• Brand: At this stage, efforts should be made to increase brand preference. Market
communications should demonstrate how the product or service has features, advantages, and
benefits over competing brands.
73) Define value proposition. Describe its various elements.
Answer: Value propositions clarify the unique value a product or service provides to its
customers. They clearly state the tangible benefits customers will enjoy as a result of using
the product or service. Value propositions can tell us the underlying motivations a customer
has toward the product or service. Understanding customer motivations will help us design
the product or service, price it, deliver it through distribution channels, and promote it.
To complete the value proposition for our product or service, we need to determine the value
proposition elements—targeted buyer, customer's purchase motivation and use cases, name of
product or service, category of product or service, competitors, and differentiation.
Targeted Customer Segment: After identifying the targeted segment using the standard
customer characteristics like demographics and psychographics, we create several buyer
descriptions, also called buyer personas, to describe the type of buyer intended for this
product. To be certain that the product or service is properly focused, we can create a persona
about a buyer whose needs will not be satisfied.
Customer Purchase Motivation and Use Cases: The next step is to state why customers
purchase this type of product or service (their purchase motivation). To understand the
purchase motivation, as well as required product or service characteristics, it is helpful to
consider the usage scenarios the customer intends for the product or service.
Name of Product or Service: We should select a name that is short, memorable, and has
positive associations within its category.
Category of Product or Service: Next, we state the category of the product or service in terms
that the targeted segment would use.
Benefits: We then state the benefits that customers will get from the product or service. To
help describe benefits in a customer-oriented way, it is worthwhile to separate benefits into
two categories: head and heart. Head benefits are rational reasons for buying a product or
service, such as saving time or money. Heart benefits are emotional reasons for buying a
product or service, such as feelings of self-esteem when using it.
Competitors: Next, we list the competitors, both direct and indirect, for the product or
service. Direct competitors offer products and services nearly identical to ours, whereas
indirect competitors offer products and services in different categories, but still address the
problem that the customer is trying to solve.
Differentiation: The next step is to state the characteristics that make this product or service
distinct from similar versions in the market.
74) What are the different product differentiation approaches?
Answer: Form: Products can be differentiated through their physical size or shape. This type
of differentiation approach works well when consumers see the physical product during the
purchase selection process, as in a supermarket or liquor store.
Features: Products can be differentiated if they have many useful features that similar
products do not. This type of approach works well for products that are used to increase
productivity, such as power tools and computer software.
Ease of Use: Products can be differentiated by being easy to use. This type of approach works
for two categories of products. The first is safety-oriented products which are seldom used,
but must be easy to use when the time comes, such as fire extinguishers. The second category
is complex products that are often used, but need to hide their complexity to avoid confusion
during operation, like home theatre systems or MP3 players.
Quality: Products can be differentiated on the quality of their craftsmanship. This type of
approach works well for almost every category, and especially well for luxury and premiumpriced goods.
Durability: Products can be differentiated on the basis of their long operating life. This
approach is suited for products for which customers expect to keep a long time, like kitchen
appliances, or wear out and are costly to replace, like automotive tires.
Reliability: The ability for a product to avoid malfunctions is another basis for differentiation.
As with ease of use, the approach benefits two types of goods: critical items that are not
regularly used but cause physical hardship when they fail, like automotive airbags, and items
that are costly to repair, like appliances. Consumer Reports magazine believes that reliability
is so important in products that it conducts exhaustive tests and surveys to predict the
likelihood of future problems. Top-rated appliances, such as Maytag washing machines, score
well in reliability.
Serviceability: Products can be differentiated on how easy they are to repair. This
differentiation approach works well for products where regular maintenance is required, such
as automobiles and household appliances.
Customization: In this approach, a product is tailored to the unique needs of the individual.
This approach works well when customer needs in a category are diverse, such as with
computers and automobiles.
75) Explain differentiation approaches for services.
Answer: Reliability: One way to differentiate services is by providing exceptional levels of
reliability. Indeed, reliability is the number one determinant of service quality. Service
reliability is defined as the ability to perform the promised service dependably and accurately.
This type of differentiation approach works well for critical services, where customers will
experience distress if the service is not executed correctly.
Responsiveness: A second way to differentiate services is by high responsiveness to customer
needs. Responsiveness is defined as the willingness to help customers and provide prompt
service. This type of differentiation approach works well for process-driven services, such as
dining services at restaurants and order fulfillment, where customers must endure long waits
if the service provider is not responsive to their needs.
Assurance: A third way to differentiate services is by providing customers with assurance that
the organization can provide quality service. Assurance is defined as the knowledge and
courtesy of employees, and their ability to convey trust and confidence. Assurance is
important for all services, but is especially applicable for medical procedures (patients want
to be sure their doctor is knowledgeable and conveys trust and confidence) and luxury
services, such as high-end hotels.
Empathy: A fourth way to differentiate services is by showing empathy to customers, that is,
to "put yourself in their shoes." Empathy is defined as the degree of caring and individual
attention provided to customers. This type of differentiation approach works well for services
that deal with customers in a caring fashion, such as health-care procedures, as well as
services that give customers a high degree of individual attention, such as financial
organizations specializing in high net worth individuals.
Tangibles: A fifth way to differentiate services is by using tangible elements to denote quality
of service. Tangibles are defined as the appearance of physical facilities, equipment, and
personnel. Service marketers sometimes refer to this approach as "making the intangible
tangible." This type of differentiation works for services with some type of physical presence,
such as law offices (with luxurious surroundings), hospitals (with attentive doctors), and
banks (with impressive safes).
76) Explain the product/service life cycle model
Answer: A typical life cycle for a product or service is divided into four stages: introduction,
growth, maturity, and decline. During the introduction stage, sales are slow as the product or
service is introduced to the market. At the growth stage, sales expand rapidly as the market
adopts the product or service. At the maturity stage, sales growth slows down because the
product or service has been adopted by most potential buyers. During the decline stage, sales
drift downward, unless the product or service's life is extended through new features, new
uses, repositioning, or brand extensions, shown as a life extension in the figure.
Product/service tactics will vary based on the life cycle stage of the market for the product or
service. Five product and service characteristics need to be addressed.
Customers to Target: The type of customer we target varies depending on the life cycle stage,
because different individuals show different adoption characteristics. The introduction stage
attracts innovators (the very first to try the product or service, often pioneering types who
relish innovation) and early adopters (among the earliest to try the new product or service).
The growth stage transitions from the early adopters to the early majority (people who value
the product or service's benefits, but are unwilling to suffer the defects often inherent in early
models). The maturity stage corresponds to late majority customers (conservative individuals
who wait for products to reach full maturity before purchasing). The decline stage is
characterized by a transition from late majority customers to laggards, who are highly
conservative and risk-averse, and are often niche markets who perceive that no substitute
exists.
Features: Different life cycle stages demand differing levels of attention to features. Early
adopters are more concerned with key functionality than complete feature sets, whereas
mature markets demand fully featured products and services.
Quality: Required quality by the market will vary during the life cycle. Early adopters will
accept minor faults, whereas high quality is expected in mature markets. High quality is a
must in a world where dissatisfied customers can express their anger online with a click of a
mouse.
Packaging: In the larger sense, packaging consists of more than just a cardboard box. It is the
way the product or service is presented to the customer. For products, this can mean the
number of sizes, colors, and flavors available. For services, this can mean the range of service
options available, such as different types of hotel rooms to accommodate different types of
travelers. The focus on the packaging of products and services will change during the life
cycle. In the introduction stage, companies will often provide a limited number of variants
(partially because many companies do not know which specific variants customers prefer
when the offering is first launched), whereas later stages warrant more choices.
Brand: Brands help make products and services distinct and relevant to the buyer. In essence,
the brand is a trustworthy, relevant, distinctive promise to customers. Our branding efforts
will vary during the life cycle.
Test Bank for Marketing Planning
Stephan Sorger
9780132544702
