CH-8 The Product Experience: Product Strategy and Building the Brand – Essentials of Marketing Management : Exam Guide

Chapter 08 The Product Experience: Product Strategy and Building the Brand True/False Questions 1. The three customer brand roles are conveying information, educating the customer about the product, and reassuring the customer during the purchase decision. Answer: True Rationale: Brands provide information about the product, educate the customers, and reassure them about their purchase decision. 2. A stock keeping unit (SKU) is a unique identification number used to track a product in the consumer's home. Answer: False Rationale: An SKU is a unique identification number used to track a product through a distribution system, inventory management, and pricing (and not in the consumer's home). 3. A good branding strategy can overcome a product that fails to deliver on the value proposition by infusing it with a brand image. Answer: False Rationale: Branding can have a strong effect on the product experience, but a good branding strategy will not overcome a poorly designed product or failure to deliver on the value proposition. 4. To create a brand identity there must be identifiable and meaningful differences among products. Answer: True Rationale: If all products are perceived to be equal then it is more difficult to create a brand identity, which is a summary of unique qualities attributed to the brand. 5. If the essential benefit of a product is not met, the other value-added product experiences the marketer creates have little or no meaning to the customer. Answer: True Rationale: The essential benefit is the fundamental need met by the product. No matter what other value-added product experiences are provided to the customer, the essential benefit must be part of the encounter. 6. Overall satisfaction or dissatisfaction with a product is determined by the customer's evaluation of a product experience against a set of defined expectations. Answer: True Rationale: Every aspect of the product experience is evaluated by the customer and then considered against a set of expectations. This determines the customer's overall satisfaction or dissatisfaction with the product. 7. Companies use perceived quality only to validate a price premium. Answer: False Rationale: Companies use perceived quality to justify price premiums as well as to differentiate their product from the competition. 8. A brand cannot be used to expand into new product categories. Answer: False Rationale: A company can use its brand to expand into new product categories, known as a category extension. 9. Business goods can be characterized on two dimensions: (1) whether or not they are used in the manufacturing process and (2) the time needed to decide whether to purchase them or not. Answer: False Rationale: Businesses buy an array of products that can be classified into three broad areas based on two dimensions: whether or not they are used in the manufacturing process and cost. 10. Since customers make brand connections, marketing managers generally want to extend brands to new products, irrespective of how well they fit with the existing perception of the brand as long as the extension is into a profitable category. Answer: False Rationale: While managers like to extend their brands to new products because of the brand connections that customers form, the fit between the core brand and the extension is vital. 11. A product line is defined as the combination of all the products offered by a company. Answer: False Rationale: A product line is group of products linked through usage, customer profile, price points, and distribution channels or needs satisfaction. A combination of all the products offered by a company is known as product mix. 12. If someone opened a bottle of Coke and there was no "fizz" then it would be an example of a lack of reliability. Answer: False Rationale: Conformance is the product's ability to deliver on features and performance characteristics promised in marketing communications. If someone opened a bottle of Coke and there was no "fizz" then it would be an example of a lack of conformance (and not reliability). 13. One of the disadvantages of using style as a discriminator is that consumer tastes change over time and what is considered stylish can quickly lose its appeal. Answer: True Rationale: The challenge in using style as a product discriminator is that it can be difficult to create consistently because consumer tastes change over time. 14. One of the drawbacks to a firm that benefits from brand loyal customers is that it suffers from increased long-term marketing costs giving the brand sponsor less flexibility in marketing budgets because loyal customers expect certain marketing events to occur. Answer: False Rationale: Brand loyalty actually leads to reduced long-term marketing costs and provides more flexibility to marketing budgets. 15. All product life cycles take the same length of time to move through the market. Answer: False Rationale: The speed at which products within a category move through the product life cycle is not consistent, and there is a great deal of variability across product categories. 16. An analysis of the product life cycle provides information only about the historical trends in the category and not about the future market conditions. Answer: False Rationale: The product life cycle is a useful tool because it: (1) provides a strategic framework for market analysis, (2) tracks historical trends, and (3) identifies future market conditions. 17. The key benefit of stand-alone brands is that they separate the company from the brand, which insulates the company if there is a problem with the brand. Answer: True Rationale: Stand-alone brands separate the company from the brand and this insulates the company if there is a problem with the brand. But stand-alone brands are expensive to create and maintain as there is little or no synergy between company brands. 18. The decisions made about the product have no impact on the pricing, promotion, or distribution elements of the marketing mix. Answer: False Rationale: Decisions about the product affect other elements of the marketing mix. 19. The major objectives of packaging are to protect the product, communicate information about the product, and encourage product use. Answer: True Rationale: Packaging protects the product, communicates information about it, and encourages use by customers. 20. One of the key aspects of labeling is the inclusion of information to meet federal, state, and local rules and regulations. Answer: True Rationale: Labels must meet federal, state, even local rules and regulations. Consumer advocacy groups and government agencies evaluate labels to identify misleading or mislabeled products. Multiple Choice Questions 21. The marketing manager for ABC Corp. is about to launch a new product. He is concerned with coming up with a name, symbol, and design which would identify the new product and differentiate it from the competition. He is trying to come up with a(n) _______________ for the product. A. Identity B. Characteristics C. Personality D. Brand E. Unique aspects Answer: D. Brand Rationale: A brand, as defined by the American Marketing Association, is "a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or groups of sellers and to differentiate them from those of competitors." Thus, the manager is trying to come up with a brand for the product. 22. When a product is wrong _______________. A. No amount of marketing communications will make it successful B. Consumers will still buy it if marketed correctly C. It is hard to charge a low enough price to earn acceptable profits D. All members of the company have to work extra hard E. Charging a higher price will mask the shortcomings Answer: A. No amount of marketing communications will make it successful Rationale: When a product is wrong, no amount of marketing communications, no degree of logistical expertise or pricing sophistication will make it successful. 23. _______________ is considered the heart of marketing. A. Advertisement B. Branding C. Product experience D. After sale service E. Sales Answer: C. Product experience Rationale: The primary function of marketing is to deliver value to the customer. The essential component in delivering value is the product experience, which is why it is considered the heart of marketing. 24. Because she knows that no other single product element conveys more information about the company than the brand, the marketing manager of XYZ Shoes is concerned with _______________ as an integral part of the product development process. Even though XYZ offers an established product, it is defined, in large measure, by its brand, and the marketing manager works very hard to protect this critical asset. A. Marketing imagery B. Branding strategy C. Customer perceptions D. Competitive actions E. Internal strengths Answer: B. Branding strategy Rationale: Brands convey a lot of information about the company. Established products are defined, in large measure, by their brand, and companies work very hard to protect this critical asset. So branding strategy becomes an integral part of the product development process. 25. When customers see the logo of McDougal's restaurant, they think of decent food served quickly in a clean, family friendly environment. This is an example of the _______________ role the brand plays for customers. A. Reassurance B. Education C. Information conveyance D. Invigoration E. Benchmarking Answer: C. Information conveyance Rationale: The brand conveys information about the product; without any additional data, customers construct expectations about quality, service, even features based on the brand. 26. Different target markets will view the same product _______________. A. In exactly the same way B. In completely different ways C. In ways that are so similar it does not matter to the marketer D. In only economic terms E. Rationally Answer: B. In completely different ways Rationale: It is important for the marketer to understand exactly what the customer includes in a product experience, but this is a difficult challenge because different target markets will view the same product in completely different ways. 27. When a competitor used its logo in a disparaging way in an advertisement, XYZ brand sued the competitor. It won the suit on the basis that the competitor violated its trademark. This is an example of the _______________ role the brand plays for the brand sponsor. A. Benchmarking B. Education C. Protection D. Invigoration E. Categorization Answer: C. Protection Rationale: Brands offer legal protection for the product through a trademark. By protecting the brand, the company is able to defend essential product elements such as its features, patentable ideas in manufacturing or product design, and packaging. 28. Companies translate the essential benefit into physical, tangible elements known as the _______________. A. Augmented product B. Core product C. Deviated product D. Differentiated product E. Contrasting product Answer: B. Core product Rationale: Companies translate the essential benefit into physical, tangible elements known as the core product and this is the starting point for the product experience. 29. Because Sony has so many different product offerings in various electronics categories, the management has found that it is helpful to use brands to keep track of products in each category. Thus, they have different brand names for their televisions, DVD players, and portable music players. This is an example of the _______________ role the brand plays for the brand sponsor. A. Benchmarking B. Education C. Protection D. Invigoration E. Categorization Answer: E. Categorization Rationale: Brands offer an effective and efficient methodology for categorizing products. 30. Every aspect of the product experience is evaluated by the customer and then considered against a set of _______________. A. Peer evaluations B. Guidelines set by the industry C. Store features and benefits D. Expectations E. Societal norms Answer: D. Expectations Rationale: Every aspect of the product experience is evaluated by the customer and then considered against a set of expectations. This evaluation is a critical element contributing to overall satisfaction or dissatisfaction with the product. 31. When Apple introduced the i-Phone, in order to reach the corporate mobile user it had to develop features that would attract this market. However, it had to deal with the offerings of market leader Research in Motion. So when the engineers were designing the i-Phone, they used BlackBerry as a comparison point. This is an example of the _______________ role the brand plays for the brand's competitors. A. Invigoration B. Education C. Protection D. Benchmarking E. Categorization Answer: D. Benchmarking Rationale: Market-leading brands provide competitors with a benchmark against which to compete. Thus, while designing the i-Phone, engineers used BlackBerry as a benchmark. 32. Over the years Athena Footwear had developed a reputation as a high quality brand of shoes at a moderate premium price point. Recently it decided to introduce a low-price line of shoes, however, the new line suffered from poor performance and durability, and if the shoes in the new line got wet, the colors would bleed. Because of these problems, the sales of the new line were poor and the value of Athena Footwear's brand dropped significantly. This is an example of the _______________ limitation of branding. A. Lack of meaningful differences among products B. Failure to persuade the customer C. Failure to overcome poorly designed products D. Failure to protect the brand E. Lack of brand worthy communications Answer: C. Failure to overcome poorly designed products Rationale: A good branding strategy will not overcome a poorly designed product that fails to deliver on the value proposition. In this case, the good branding of Athena Footwear could not overcome the poorly designed footwear. 33. When companies look beyond delivering great core products to creating products that enhance, extend, and encourage the customer, it is called as _______________. A. Product extension B. Product deviation C. Product subordination D. Product clustering E. Product enhancement Answer: E. Product enhancement Rationale: The enhanced product extends the core product to include additional features, designs, and innovation that exceed customer expectations. 34. Lucky's Lettuce has spent much time and money over the past several years trying to become the premium brand for lettuce. However managers are finding it very difficult to build a strong brand because of the commodity nature of lettuce. This is an example of the _______________ limitation of branding. A. Need for meaningful differences among products B. Failure to persuade the customer C. Failure to overcome poorly designed products D. Failure to protect the brand E. Lack of brand worthy communications Answer: A. Need for meaningful differences among products Rationale: There must be identifiable and meaningful differences among products. If all products are perceived to be equal, it becomes difficult to create a brand identity. Hence, commodities like lettuce are difficult to brand. 35. Tangibility refers to _______________. A. The service delivered with the product B. The ability to create a combination of product and service C. The physical aspect of a product D. The value of the product in the market E. The emotions associated with the product Answer: C. The physical aspect of a product Rationale: Products, as opposed to services, have a physical aspect referred to as tangibility. 36. The owners of ABC Medical Equipment have been developing the brand equity of their MRI and CAT Scan equipment. Now, when someone mentions ABC's machines, radiologists and hospital purchasing agents usually say that they have heard of ABC's offerings and are interested in learning more about them. This response signals a familiarity and potential commitment to the brand. They have achieved the _______________ dimension of brand equity. A. Brand Assets B. Brand Association C. Brand Awareness D. Brand Loyalty E. Perceived Quality Answer: C. Brand Awareness Rationale: The most basic form of brand equity is simply being aware of the brand. Awareness is the foundation of all other brand relationships. Since potential customers have heard of ABC, brand awareness is achieved. 37. Gino always purchases clothing made by S&G Clothing. He tells others about how much he likes their clothes and the good qualities about them. When a shirt he purchased turned out to be defective, instead of switching clothing companies, he gave S&G a chance to fix the problems and still shops there. This is an example of the _______________ dimension of brand equity. A. Brand Assets B. Brand Association C. Brand Awareness D. Brand Loyalty E. Perceived Quality Answer: D. Brand Loyalty Rationale: Brand loyalty reflects a commitment to repeat purchases and increases customers' willingness to forgive a brand for negative experiences. Loyal customers are often ambassadors to new customers. Thus, the above case is an example of brand loyalty. 38. Over the years, Maytag products have earned a reputation for being reliable and durable. So when John decided to buy a new Maytag washing machine, he was willing to pay more for it. This is an example of the _______________ dimension of brand equity. A. Brand Assets B. Brand Association C. Brand Awareness D. Brand Loyalty E. Perceived Quality Answer: E. Perceived Quality Rationale: Companies use a positive perceived quality to differentiate the product and create higher price points. John was willing to pay more for the washing machine because of the perceived quality of Maytag. 39. James has been to Farm Fresh Ice Cream Shops several times. Based on his previous visits, he has developed certain emotional, psychological, and performance expectations for all subsequent visits to Farm Fresh. For instance, he believes he will feel happier when he leaves than when he arrives and that the ice cream will be rich and smooth. This is an example of the _______________ dimension of brand equity. A. Brand Assets B. Brand Association C. Brand Awareness D. Brand Loyalty E. Perceived Quality Answer: B. Brand Association Rationale: Customers develop a number of emotional, psychological, and performance associations with a brand and these associations become a primary purchase driver. This case is an example of the brand association dimension of brand equity. 40. KFC is very protective of its "Seven Herbs and Spices" recipe. This intellectual property gives them a significant competitive advantage over other chicken restaurants, and the company will use any legal resource available to protect its patented formula. This is an example of the _______________ dimension of brand equity. A. Brand Assets B. Brand Association C. Brand Awareness D. Brand Loyalty E. Perceived Quality Answer: A. Brand Assets Rationale: Brands possess assets such as trademarks and patents that represent a significant competitive advantage. Since KFC has patented its "Seven Herbs and Spices" recipe, it becomes a brand asset of KFC. 41. Products that are relatively low-cost, purchased frequently, and for which customers have little interest in seeking new information are called _______________. A. Shopping goods B. Convenience goods C. Specialty goods D. Unsought goods E. Consenting goods Answer: B. Convenience goods Rationale: Frequently purchased, relatively low-cost products for which customers have little interest in seeking new information or considering other options and products which rely heavily on prior brand experience and purchase behavior are called convenience goods. 42. Specialty goods hold a unique place in the hierarchy of product classifications in that they _______________. A. Focus on price B. Focus on total value C. Are sought out by customers who are willing to search to find this particular kind of product D. Have stores located in peculiar places E. Are not really desired by the consumer Answer: C. Are sought out by customers who are willing to search to find this particular kind of product Rationale: Specialty goods are a unique purchase made based on a defining characteristic for the consumer. Consumers are also more willing to seek out the product; however, expectations about product service, salesperson expertise, and customer service are higher. 43. There is a category of goods called unsought goods. These goods are characterized as being the kind of goods that consumers _______________. A. Want to be completely convenient to them B. Find located everywhere with intense distribution C. Find irrelevant to their lives D. Would rather not purchase at all E. Only buy if there is not an acceptable substitute Answer: D. Would rather not purchase at all Rationale: Unsought goods are products that consumers do not seek out and, indeed, often would rather not purchase at all. For example, insurance, particularly life insurance, is not a product people want to purchase. 44. When a company changes the size, shape, or color of a product, it is said that the company is using _______________ differentiation. A. Style B. Form C. Feature D. Engineering E. Conceptual Answer: B. Form Rationale: The most elemental method of differentiating a product is to change its form—its size, shape, color, and other physical elements. Many products considered very similar in functionality can be differentiated by variations in packaging or product delivery. 45. Companies often use features to differentiate themselves from competitors. However, a company must balance the features customers want with _______________. A. What the competition is doing B. The ability to manufacture the feature in a timely way C. What they will pay at a given quality level D. The configurations that make a positive brand look stylish E. Whatever the current industry standard is going to be in the future Answer: C. What they will pay at a given quality level Rationale: Delivering value is the primary driver in making product decisions, but a company must balance the features customers want with what they will pay at a given quality level. 46. When Maria purchases laundry detergent, she is able to easily recall and process information about Tide, but this does not happen for other brands because she knows and understands Tide. This is an example of the _______________ benefit of brand equity for customers. A. Perceived Quality B. Brand Image C. Brand Connections D. Perceived Bonuses E. Brand Loyalty Answer: C. Brand Connections Rationale: Customers are more likely to connect with a brand they know and understand. Since Maria understands Tide, she can quickly recall it and thus is an example of the brand connections benefit of brand equity. 47. When a company can show that their product's projected lifetime is high under certain operating conditions, they may be able to achieve a _______________. A. Brand image that is linked to conformance B. Brand image that is one of strength and is performance oriented C. Brand image that is based upon form and get a higher price D. Brand image focused on durability and get a price premium E. Brand image based on performance and get a price premium Answer: D. Brand image focused on durability and get a price premium Rationale: Data shows that people find durability, the projected lifetime of the product under specific operating conditions, to be an important discriminating product characteristic and are willing to pay a premium for products that can demonstrate greater durability. 48. Reliability of a product refers to the products ability to _______________. A. Work a high percentage of the time without failure or stoppage B. Work perfectly all the time C. Work in the most hostile environments D. Work where they are intended to work most of the time but not all the time E. Do exactly what the marketing communications claim Answer: A. Work a high percentage of the time without failure or stoppage Rationale: Reliability is the percentage of time the product works without failure or stoppage, and businesses and consumers consistently report this as an important discriminator in their purchase decision. 49. Because he always purchased Harley-Davidson Motorcycles, Cliff does not consider any other brands and makes quick decisions when he is making a purchase in this product category. This is an example of the _______________ benefit of brand equity for customers. A. Perceived Quality B. Brand Image C. Brand Connections D. Perceived Bonuses E. Brand Loyalty Answer: E. Brand Loyalty Rationale: Brand loyalty expedites the consumer purchase decision process and prevents consumers from exploring other brand options. Since Cliff does not consider any other brands and makes quick decisions in favor of Harley-Davidson, this is an example of brand loyalty. 50. More than any other discriminator, style offers a company the advantage of _______________. A. Being a low cost differentiator B. Being easy to do consistently over time C. Being able to reduce quality with greater style D. Being difficult for competition to copy E. Being the same over time Answer: D. Being difficult for competition to copy Rationale: Style refers to the look and feel of the product and it offers the advantage of being difficult to copy. 51. Intel makes a product most people never see; however, it spent a great deal of money building its brand and now people ask for "Intel Inside." This is an example of linking the _______________ benefit of brand equity to marketing strategy. A. Perceived Quality B. Brand Image C. Brand Connections D. Perceived Bonuses E. Brand Loyalty Answer: E. Brand Loyalty Rationale: Brand loyalty expedites the consumer purchase decision process and prevents consumers from exploring other brand options. Since people ask for Intel products without giving any consideration to competitor's products, this is an example of brand loyalty. 52. The marketing manager for DRNK Spirits decided that all the products that his company produced would carry the same brand name of Nightlife. As a result, there is Nightlife Ale, Nightlife Lager, Nightlife Vodka, Nightlife Tequila, and Nightlife Whiskey. This is an example of _______________. A. Family branding B. Store Branding C. Stand-alone branding D. Co-branding E. National Branding Answer: A. Family branding Rationale: Family branding includes products that share a brand name and are associated with one another. There is synergy among members of a brand family, but a negative event with one product often leads to negative publicity for the entire brand family. 53. Unilever, a worldwide leader in consumer products, follows a brand strategy in its personal care division with nine brands (AXE, Dove, Lifebuoy, Lux, Ponds, Rexona, Sunsilk, Signal, and Vaseline) that operate independently of each other. This is an example of _______________. A. Family branding B. Store Branding C. Stand-alone branding D. Co-branding E. National Branding Answer: C. Stand-alone branding Rationale: Stand-alone brands are created to separate the company from the brand in order to insulate the company if there is a problem with one of its brands. 54. American Express recently introduced the One card that incorporates the American Express brand as well as its own brand, One. This is an example of _______________. A. Merging B. Store Branding C. Combining a family brand with stand-alone branding D. Co-branding E. Licensing Answer: C. Combining a family brand with stand-alone branding Rationale: One variation on the family vs. stand-alone branding choice is to combine family brands with a distinct individual product brand. Since the One card incorporates the American Express brand as well as its own brand One, it combines a family brand with a stand alone brand. 55. International Delight coffee creamers frequently adds new flavor offerings to its product offerings. This would be an example of a _______________ extension. A. Natural B. Line C. Random D. Category E. Basic Answer: B. Line Rationale: Companies can use branding to extend a line where each new product added extends the line. Since the company is adding only new flavor offerings to its product (and not entering into a new category of products), this is an example of line extension. 56. Dell used its brand to expand into new areas including printers and consumer electronics such as LCD and plasma televisions. Dell engaged in a _______________ extension. A. Natural B. Line C. Random D. Category E. Basic Answer: D. Category Rationale: A company can use its brand to expand into product categories, known as a category extension. Since Dell used its brand to expand into new product categories, it engaged in a category extension. 57. Super-Mart decides to create its own brand of personal care products. It enters into an agreement with a large manufacturer of this type of product, to supply them with the products that will carry its newly formed brand's name. This is an example of _______________. A. Family branding B. Store Branding C. Stand-alone branding D. Co-branding E. National Branding Answer: B. Store Branding Rationale: Large retailers create a store brand to market their own products. Often contracting with large manufacturers, retailers are able to compete directly with national brands through lower prices. 58. Really Big Soaps, the market leader in body wash, sells its products around the country under the same brand. This is an example of _______________. A. Family branding B. Store Branding C. Stand-alone branding D. Co-branding E. National Branding Answer: E. National Branding Rationale: Large consumer product companies create national brands that are sold around the country under the same brand. 59. The producers of a successful animated television program for children entered into agreements with restaurants and toy manufacturers, giving them the right to use the brand in exchange for a set fee or percentage of sales. This is an example of _______________. A. Family branding B. Store Branding C. Stand-alone branding D. Co-branding E. Licensing Answer: E. Licensing Rationale: Companies can choose to extend their brand by offering other manufacturers the right to use the brand in exchange for a set fee or percentage of sales. This is known as licensing. 60. Costco and American Express joined together to offer a Costco-American Express card that allows users to get rebates on their purchases at Costco while expanding the reach of American Express to Costco members. This is an example of _______________. A. Family branding B. Store Branding C. Stand-alone branding D. Co-branding E. Licensing Answer: D. Co-branding Rationale: Co-branding joins two or more well-known brands in a common product or takes two brands and markets them in partnership. Co-branding provides the opportunity to leverage the strengths of each brand to increase sales beyond what they could do independently. 61. NRG Beverages and DRNK Spirits are considering co-branding an energy drink that also contains alcohol. The critical decisions in this type of relationship revolve around _______________ for each firm. A. Control factors B. Resource commitments C. Brand strength D. Brand identity E. Brand protection Answer: B. Resource commitments Rationale: Critical decisions in the co-branding process revolve around resource commitments, which company is spending what, and what other resources are asked of each company. 62. Companies must balance the number of items in a product line. Too many items and customers find it difficult to see the differences between the products. Too few products and the company runs the risk of _______________. A. Having inefficiencies in production B. Having trouble with discounters because they may have the same product as a full price store C. Having a problem with communication to the market about the products D. Missing important market opportunities that are not being met by the current product offerings E. Having supplier issues due to low order quantities Answer: D. Missing important market opportunities that are not being met by the current product offerings Rationale: Companies must balance the number of items in a product line; too many items in a product line and customers find it difficult to differentiate between individual products, but too few products and the company runs the risk of missing important market opportunities. 63. Combining all the products offered by a company is called the _______________. A. Product combination package B. Product mix C. Product profile D. Product standardization E. Product function Answer: B. Product mix Rationale: Combining all the products offered by a company is called the product mix. 64. Pricing strategy is related to product line strategy. Often multiple price points are targeted at specific markets with unique features following a _______________ product line strategy. A. Good to worst B. Low quality to high quality C. Good, better, best D. Compensatory E. Fragmented Answer: C. Good, better, best Rationale: A "good, better, best" product line strategy develops multiple product lines that include products with distinct features at particular price points to attract multiple target markets. 65. Dell prices new computer models to minimize the disruption of demand for its existing products. This implies a strategy of _______________. A. Lowering the prices of existing models to maintain separation of price between new and existing models B. Lowering prices of all models to accommodate for increases in technology C. Raising all prices together in order to confuse the public to thinking all the technology is at the same level D. Raising and lowering prices of all models in order to create a mixed effect E. Pricing based solely on costs Answer: A. Lowering the prices of existing models to maintain separation of price between new and existing models Rationale: Technology companies, for many years, have faced the challenge of pricing new products that are less expensive but with more features than previous models; often they lower prices on existing products to maintain a price separation between new and existing products. 66. Generally speaking, a new product will get _______________ level of budget with respect to communication than established products. A. A lower B. The same C. A mid D. A higher E. A percentage Answer: D. A higher Rationale: New products almost always have additional communication budgets to support the product's introduction. 67. It is not uncommon to see _______________ profits in the introductory stage of the product life cycle for an industry. A. High B. No or negative C. Average D. Low E. Marginal cost Answer: B. No or negative Rationale: In the introduction phase, sales are usually low and there are high marketing and product costs, so no or negative profits are not uncommon. 68. The speed at which products within a category move through the PLC _______________. A. Is not consistent B. Is consistent C. Only varies by a small amount D. Looks like a normal distribution E. Is very short Answer: A. Is not consistent Rationale: The speed at which products within a category move through the PLC is not consistent, and there is a great deal of variability across product categories. 69. Market skimming is a pricing strategy used in the _______________ phase of the product life cycle. A. Growth B. Introduction C. Decline D. Maturity E. Maturity and decline Answer: B. Introduction Rationale: Market skimming is a pricing strategy in which the initial price is set high to target less price-sensitive consumers so as to recoup R&D costs before competitors enter market. Thus, it is a pricing strategy used in the introduction phase of the product life cycle. 70. Early adopters and innovators are the primary purchasers in the _______________ stage of the product life cycle. A. Growth stage B. Introductory stage C. Maturations stage D. Decline E. Innovation Answer: B. Introductory stage Rationale: In the introductory phase, the target markets are innovators and early adopters. 71. The marketing manager of Store Brand Pain Reliever is designing the packaging for their new gel coated capsules. Her main concerns are to design a package that prevents tampering on the shelf and keeps children from accessing the product without adult assistance. She is focusing on the _______________ objective of packaging. A. Protection B. Aesthetic C. Communication D. Harmony E. Usage Promotion Answer: A. Protection Rationale: The package must protect the product and protect the customers from unauthorized access to the product. Since the manager wants to design a package that protects the product and keeps children from accessing the product, she is concerned with the protection aspect of packaging. 72. Colgate Palmolive reported fake Colgate toothpaste being shipped in phony packages in the United States. It was not clear where the fake toothpaste originated, but Colgate and other packaged goods companies took a number of steps to reduce counterfeit packaging. Document Security Systems works with manufacturers to make their packaging more secure. This is part of the _______________ objective of packaging. A. Harmony B. Aesthetic C. Communication D. Protection E. Usage Promotion Answer: D. Protection Rationale: The package must protect the product and protect the customers from unauthorized access to the product. Since the companies want to protect their customers from fake goods, they are concerned with protection aspect of the packaging. 73. The manufacturer of Tiny Bubbles, a laundry detergent, is redesigning the product's package. He wants the shape to be distinctive in the hope that it will distinguish his brand from the competition because he knows that a unique package can be a deciding factor at the point of sale. He is focusing on the _______________ objective of packaging. A. Usage Promotion B. Aesthetic C. Communication D. Harmony E. Protection Answer: C. Communication Rationale: The three objectives of packaging are to protect, communicate, and promote usage. At the point of sale, the package is the last marketing communication the customer will see before the purchase, which can distinguish the product. Since the manufacturer wants to distinguish his product with the help of packaging, he is focusing on the communication objective of packaging. 74. Coke's distinctive contour bottle design is so unique that the package can be identified in the dark. Additionally, packaging offers the company the opportunity to present the trademark, logo, and other relevant information in an appealing and persuasive manner. This relates to the _______________ objective of packaging. A. Usage Promotion B. Aesthetic C. Protection D. Harmony E. Communication Answer: E. Communication Rationale: The three objectives of packaging are to protect, communicate and promote usage. Packaging can communicate critical brand messages quickly through color or design cues and it offers a distinctive competitive advantage. Thus, Coke's distinctive bottle design is related to the communication objective of packaging. 75. The marketing manager of Super Fresh Frozen Vegetables is working on the package for a new line of self-steaming microwaveable vegetables. He wants the package to show a physically fit individual happily eating the product and how to work the steamer packaging. He is focusing on the _______________ objective of packaging. A. Usage Promotion B. Aesthetic C. Communication D. Harmony E. Protection Answer: A. Usage Promotion Rationale: To encourage product use, packages frequently demonstrate a product and show the product being used by a happy customer which connects the product to the target customer. Thus, in this case, the manager is focusing on the usage promotion objective of packaging. 76. The owner of Tiny Tots Baby Food is redesigning the package for her product. She is trying to select a color that is both comforting and natural as well as a shape that is distinctive so that her brand is easy to identify and distinguishable from its main competitors. She is focusing on the _______________ element of effective packaging. A. Usage Promotion B. Aesthetic C. Legal requirements D. Harmony E. Protection Answer: B. Aesthetic Rationale: Color plays a significant role in package design. A package has very little time to connect with the customer at the point of purchase, so designs that are appropriate, interesting, and persuasive to the target market are critical. Since the owner is concerned with the color and shape of the package, her focus is on the aesthetic element of packaging. 77. Products introduced in the growth stage tend to have _______________. A. Fewer features and better design B. Promotion focused on product awareness C. More features and better design D. Limited design and more features E. Innovators and early adopters as their target customers Answer: C. More features and better design Rationale: Products introduced in the growth phase usually have more features and better design due to learning from the first generation. 78. The Food and Drug Administration requires all processed-food companies to provide detailed nutritional information clearly identifying calories, fats, carbohydrates, and other information. This is an example of the _______________ requirement of labeling. A. Legislative B. Marketing C. Legal D. Industry E. Consumer Answer: C. Legal Rationale: Labels must meet federal, state, even local rules and regulations. 79. The marketing manager of QRS Children's Furniture is designing a new label for her line of highchairs. The two key aspects of the label that she is working on are the assembly instructions and the simple usage instructions. These are examples of the _______________ requirement of labeling. A. Legislative B. Marketing C. Legal D. Industry E. Consumer Answer: E. Consumer Rationale: Consumers want to use products out of the box, and package labeling is the most convenient place for initial use instructions. This case is an example of the consumer requirements of labeling. 80. Robitussin redesigned its packaging to provide specific product use information to help parents make a purchase decision and to inform them about proper product usage. The package lists three key pieces of information: the symptoms it treats, whether it is drowsy or non-drowsy, and the recommended age for usage. This is an example of meeting the _______________ requirements of labeling. A. Legislative B. Marketing C. Legal D. Industry E. Consumer Answer: E. Consumer Rationale: Consumers want to use products out of the box, and package labeling is the most convenient place for initial use instructions. The product package tends to include product precautions, simple assembly information, and appropriate age for product use. This case is an example of meeting the consumer requirements of labeling. 81. On a box of Procter & Gamble's Bounce fabric softener sheets, the brand name "Bounce" is approximately 50 percent of the space on the front panel and the rest of the space is a bright color (orange) with clean fresh images of a sun rising and a green field. This is an example of the _______________ requirements of labeling. A. Legislative B. Marketing C. Legal D. Industry E. Consumer Answer: B. Marketing Rationale: Since package labeling represents the last marketing opportunity before the purchase decision, as much label space as possible is allocated to marketing communications. Thus, this case is an example of meeting the marketing requirements of labeling. 82. The first phase of the maturity stage of the PLC is characterized as having _______________. A. Growth but at a rate lower than the growth stage B. No growth C. Loss of sales D. An increase in sales but at a decreasing rate E. Negative net growth Answer: D. An increase in sales but at a decreasing rate Rationale: In the first phase of the maturity stage, sales continue to increase but at a decreasing rate. 83. The owner of NOP detergents is working with an art designer on the label for a new line of naturally scented detergents. They are trying to come up with the best way to place the brand and logo along with the other required information on the label. They are working on the _______________ requirements of labeling. A. Legislative B. Marketing C. Legal D. Industry E. Consumer Answer: B. Marketing Rationale: Since package labeling represents the last marketing opportunity before the purchase decision, as much label space as possible is allocated to marketing communications which includes the brand and logo. Thus, the owner is working on the marketing requirements of labeling. 84. In the maturity stage of the PLC, consumer goods companies find that they spend _______________. A. A small percentage of their budget on mature products preferring to spend on new products B. A large percentage of their budget on marketing communications because of the need to support the brand and reinforce key product differentiators C. A proportionate percentage of their budget on marketing communications in order to maintain their market share and not let new competitors enter the market with ease D. A lower percentage of their budget on marketing communications in order to milk the product for profitability E. The same as in the growth stage Answer: B. A large percentage of their budget on marketing communications because of the need to support the brand and reinforce key product differentiators Rationale: In the maturity phase, it is necessary to further differentiate ones product from the competition or face pressure to lower prices, so greater expenditure on marketing communications is needed to reinforce this differentiation. 85. The _______________ is an example of an industry that brings out items in the spring, watches its growth in the summer and fall, and finally declines by the winter. It has a PLC that takes one selling season that is one year long and it is over. A. Golf industry B. Steel industry C. Frozen pizza industry D. Women's fashion industry E. Cell phone industry Answer: D. Women's fashion industry Rationale: In some cases, like the women's fashion industry, a product moves through an entire cycle in a period of months and is replaced with the next product design; the cycle takes one selling season, in this case, one year. 86. The marketing manager for ABC Appliances is working on the warranty for their new line of dishwashers. She is considering a 2-year total warranty based on costs, but the competition offers a 4-year total warranty and a 5-year mechanical warranty. She is worried that the shorter warranty she is planning will make customers think that ABC's dishwashers are inferior in quality. She should think about the _______________ of the warranty. A. Competitive advantage B. Costs and benefits C. Message D. Product differentiation E. Persuasiveness Answer: C. Message Rationale: Warranties convey a powerful message to the customer about perceived product quality and manufacturer commitment to customer satisfaction. In this case, the marketing manager should work on the message of the warranty. 87. The essential marketing objective in the introductory stage of the PLC is to build _______________. A. Trial of the product B. Public relations for the product C. Trial followed by loyalty D. Awareness leading to trial purchase E. Satisfaction Answer: D. Awareness leading to trial purchase Rationale: In the introductory phase, the main goal of marketing is awareness of the product, hopefully, leading to trial purchase. 88. Many Harley-Davidson owners have tattooed the company logo on their bodies. The HOG (Harley Owners Group) boasts a large membership willing to spend a lot of money on all things Harley. Indeed, Harley-Davidson has come to symbolize more than a motorcycle; it is a lifestyle. This is an example of _______________ customers. A. Brand Aware B. Brand Confused C. Brand Loyal D. Brand Committed E. Brand Identified Answer: C. Brand Loyal Rationale: Loyal customers become advocates for the brand and promote it through many means of communication (i.e., blogs, online communities, word of mouth). Since Harley-Davidson owners are promoting the brand through tattoos and a group, they are brand loyal customers. 89. Recently, Mercedes-Benz quietly reduced its warranty coverage by eliminating some free scheduled maintenance, because the expense for the firm was too high. At the same time, Hyundai and others have expanded their warranties to build consumer confidence in their cars. They realize that extending the period of warranty coverage demonstrates they are making better cars in a very tangible way. These are examples of firms considering the _______________ of the product warranty. A. Competitive advantage B. Costs and benefits C. Message D. Product differentiation E. Persuasiveness Answer: B. Costs and benefits Rationale: At one level, a company must be competitive and offer warranties consistent with the industry, however, companies constantly evaluate their warranties to consider whether the benefits of the warranty exceed the costs. 90. The warranty for tires is by the tire manufacturer while warranties for the power train are generally different from the rest of the automobile. These are examples of _______________ warranties. A. Specific B. Additional C. Extended D. General E. Basic Answer: A. Specific Rationale: Specific warranties offer explicit product performance promises related to components of the product. Short Answer Questions 91. How does the American Marketing Association define a brand and why is a strong brand important? Answer: A brand, as defined by the American Marketing Association, is "a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or groups of sellers and to differentiate them from those of competitors." Customers and non-customers assign a deep meaning to the brand. The importance of branding is not limited to consumer products. Business-to-business customers also consider brands when making a purchase decisions. Brands are important for customers and companies, which is why marketing managers are vitally interested in learning as much as possible about their customers' brand perceptions then developing effective branding strategies. 92. Ralph and Marie are buying Lisette, their 16 year-old daughter, her first car. Consider the product experience from the parent's point of view and Lisette's point of view. Why is this perspective important to marketers? Answer: It is important for the marketer to understand exactly what the customer includes in that experience. This is a particularly difficult challenge because different target markets will view the same product in completely different ways. Parents buying their daughter a car would probably consider safety, price, and operating costs; however, to the teenager, the same purchase makes an important statement about herself and her style. 93. Define product. What is the difference between product and product item? Answer: Product can be defined as anything that delivers value to satisfy a need or want and includes physical merchandise, services, events, people, places, organizations, information, even ideas. It is important to differentiate between a product and a product item. A product is a brand such as Post-it Notes or Tide detergent. Within each product a company may develop a number of product items, each of which represents a unique size, feature, or price. 94. Identify and explain the boundaries of branding. Answer: 1) While branding can have a strong effect on the product experience, it is not all-powerful. A good branding strategy will not overcome a poorly designed product that fails to deliver on the value proposition. Too frequently companies put a good brand on a bad product, which often leads to erosion of the brand's value. 2) A brand must also be protected. Counterfeit products or illegal activities conducted under the name of another company's brand can do significant damage to the brand. This is why companies aggressively protect their brands around the world. 3) Finally, there must be real, identifiable and meaningful differences among products. If all products are perceived to be equal then it is more difficult to create a brand identity, which is a summary of unique qualities attributed to the brand. Commodities are difficult to brand because customers often fail to perceive a difference among products. 95. Define brand equity according to David Aaker and list the corresponding dimensions. Answer: Brand equity can be defined as "a set of assets (and liabilities) linked to a brand's name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm or that firm's customers." Dimensions: Brand awareness, Brand loyalty, Perceived quality, Brand Associations, and Brand Assets. 96. What are the implications of the dimensions of brand equity for marketing managers? Answer: First, moving customers from brand awareness to loyalty requires a thorough understanding of the target market and a successful marketing strategy. This is accomplished by developing a strong value offering and then communicating that to the target market. This is an essential element of the marketing manager's job. Second, customers develop perceptions about a product and associate it with attitudes and even emotion that are encompassed in a product's brand equity. By learning how customers view competitors as well as their own brand, managers seek to affect people's perceptions and attitudes about their product. Finally, managers protect their brands because they represent a vital asset for the company. They are vigilant about how it is portrayed in the marketplace, particularly by competitors. Both the customers and the company have a stake in the brand's success. People do not want to purchase a brand if there is a question about quality, performance, or some other dimension of the product experience. They seek to maximize the benefits of the purchase and minimize the disadvantages. At the same time, companies understand every brand has liabilities that must be overcome to enhance the customer's perceived equity in the product. As a result, marketing managers constantly battle to increase brand equity or the customer's perception that the product's positive elements are greater than the negative elements. Brands do have real value and represent a significant company asset. 97. What is an essential benefit? List five products and their essential benefits. Answer: The essential benefit is the fundamental need met by the product. No matter what other value-added product experiences are provided to the customer, the essential benefit must be part of the encounter. An essential benefit is the fundamental need or core advantage that a product provides to the consumer. 1. Smartphone: Communication. 2. Washing Machine: Clean clothes. 3. Car: Transportation. 4. Refrigerator: Food preservation. 5. Laptop: Computing and internet access. 98. How do the essential benefit and the core product relate? Why is this important? Answer: Companies translate the essential benefit into physical, tangible elements known as the core product. Some companies do it better than others, making this critical challenge an important differentiator separating successful companies from their competitors. 99. What is an enhanced product? Give an example. Answer: The enhanced product extends the core product to include additional features, designs, and innovation that exceed customer expectations. In this way, companies build on the core product, creating opportunities to strengthen the brand. Companies build on the core product, creating opportunities to strengthen the brand. Consider Southwest Airlines once again, which has done a good job of delivering people on time and meeting customer expectations regarding low-cost air travel. Southwest added features such as frequent flyer opportunities and reserved seating to further augment the customer's air travel experience. Exhibit 8.1 shows how the essential benefit, core product, and enhanced product are created for Southwest Airlines. 100. Explain the advantages and disadvantages of both stand-alone and family branding. Give examples of companies that use each method. Answer: Stand-alone brands - separate the company from the brand, which insulates the company if there is a problem with the brand. But stand-alone brands are expensive to create and maintain, as there is little or no synergy between company brands. Family branding - Their advantages and disadvantages are just the opposite. There is synergy among members of a brand family, but a negative event with one product often leads to negative publicity for the entire brand family. Examples Lever Brothers follows a standalone brand strategy in its personal care division with nine brands that operate independent of each other. Heinz uses a family branding strategy with all products introduced under the Heinz brand. 101. Nate owns and operates a funeral home in California. Which consumer goods category does the funeral home fall under? Which part of the promotion mix is most important in Nate's industry? Answer: The final categories of goods, unsought goods, are products that consumers do not seek out and, indeed, often would rather not purchase at all. Insurance, particularly life insurance is not a product people want to purchase. In general, customers do not want to purchase products or services related to sickness, death, or emergencies because, in part, the circumstances surrounding the purchase are not pleasant. As a result, companies have well-trained salespeople skilled in helping customers through the purchase process. These salespeople often must be supported by extensive marketing communications. 102. Soleil and her husband Andrew have purchased their first home. Describe three possible purchases from each of the four categories of consumer goods that they may need to make. Answer: Convenience goods: Toilet paper, cleaning supplies, paper towels Shopping goods: Furniture, draperies, bathroom rugs Specialty goods: Samsung high def TV, Bose surround sound system, Tiffany Lamps Unsought goods: Homeowner's insurance, flood insurance, mortgage insurance 103. Define licensing and explain its benefits and key considerations. Give an example of a good use of licensing. Answer: Licensing — offering other manufacturers the right to use the brand in exchange for a set fee or percentage of sales. There is very little risk to the brand sponsor, and licensing can generate incremental revenue. In addition, it can extend the brand and build more brand associations among new users creating additional benefits. The brand sponsor does need to monitor the licensees to assure product quality and proper use of the brand. Finally, license partners should fit the company's overall marketing strategy for the brand. Example: Movies are among the best followers of the license strategy by licensing their brand (the movie) to a wide range of companies (restaurants, toy manufacturers, and others). Indiana Jones and the Kingdom of the Crystal Skull grossed more than $500 million in worldwide box office sales, but its licensee sales too exceeded that amount. The creators of the movie, added several hundred million dollars in revenue based on the licensing agreements. 104. Jill, who lives in Florida, needs to purchase a winter coat, an infrequent shopping task. List the eight product discriminators she will use in determining her ultimate purchase. Answer: •Form • Features • Performance quality • Conformance quality • Durability • Reliability • Repairability • Style 105. Compare product lines and product mixes. Give examples of each. Answer: A product line is group of products linked through usage, customer profile, price points, and distribution channels or needs satisfaction. Within a product line, strategies are developed for a single product, but also for all the products in the line. For example, 3M develops a strategy for each Post-it product, such as Post-it cards, that identifies possible product uses, different target markets, and marketing messages. At the same time, the company combines individual products for specific markets to create consumer-based solution catalogs. Students can find Post-it products targeted for them and teachers can find a separate listing of products. Combining all the products offered by a company is called the product mix. Small, start-up companies frequently have a relatively limited product mix but, as companies grow, their list of products grows as well. Developing strategies for the entire product mix is done at the highest levels of the organization. Large companies, like 3M or GE, have widely disparate product lines that encompass hundreds of products and thousands of product items. For example, 3M's product mix consists of more than 55,000 products that range from Post-it Notes to communication technology systems and a host of industrial applications. 106. Haagen-Dazs introduces new ice cream, sorbet and frozen yogurt flavors every year. Explain how they should allocate their marketing communication budget relative to new products and existing products. Answer: It should support new products more heavily than existing products and then cut back when they are established. Haagen-Dazs should allocate a larger portion of their marketing communication budget to promoting new products to generate awareness and interest. For existing products, they should allocate a smaller portion to maintain brand loyalty and remind customers of their favorites, ensuring a balanced approach to both acquisition and retention. 107. Identify the stages of the product life cycle and explain the objective of each phase. Answer: Introductory: Build market awareness for the product leading to trial purchase. Growth: Differentiate product from those of new competitors, promoting rapid expansion. Maturity: Transition product from high growth to sales stability. Decline: Determine the future of the product. 108. Create the Product Life Cycle chart. Answer: See Exhibit 8.6 The Product Life Cycle chart consists of four stages: Introduction, Growth, Maturity, and Decline. Each stage represents different levels of sales, profits, and marketing strategies. 109. Identify and explain the two dimensions used to classify business goods into three broad areas. What are these areas and give examples of each? Answer: (1) Whether or not they are used in the manufacturing process and (2) cost. Goods incorporated into the company's finished product as a result of the manufacturing process are either materials or parts. Materials are natural (lumber, minerals such as copper) or farm products (corn, soybeans) that become part of the final product. Parts consist of equipment either fully assembled or in smaller pieces that will be assembled into larger components and, again, used in the production process. In addition to the products that are used directly in the production process, companies purchase a number of products and services to support business operations. These can generally be placed on a continuum from low-cost/frequent purchases to very high-cost/infrequent purchases. MRO (maintenance, repair, operating) supplies are the everyday items that a company needs to keep running. While per unit cost is low, their total cost over a year can be high. 110. Explain the difference between a general and a specific warranty. Give an example of each. Answer: General warranties make broad promises about product performance and customer satisfaction. These warranties are generally open to customers returning the product for a broad range of reasons beyond specific product performance problems. Many companies have adopted lenient policies that allow a product return without even asking the customer for a reason. Others require a reason, although there is often a great deal of latitude in what is an acceptable justification. Specific warranties offer explicit product performance promises related to components of the product. Examples: The warranty that you can return a bottle of Equate Pain Reliever if you are completely satisfied with it for any reason is a general warranty. Automobile warranties are specific warranties covering various components of the product with different warranties. The warranty for tires is by the tire manufacturer while warranties for the power train are generally different from the rest of the automobile. Essay Questions 111. List and explain the roles that brands play for customers, the company and competitors give examples of a brand performing each role. Answer: Customer brand roles: Whether the customer is a consumer or another business, brands have three primary roles. First, the brand conveys information about the product. Without any additional data, customers construct expectations about quality, service, even features based on the brand. Brands also educate the customer about the product. People assign meaning to their product experiences by brand and, over time, make judgments about which brands are best at meeting their needs and which are not. As a result, product evaluations and purchase decisions become less formidable as the customer relies on the cumulative brand experience to simplify the purchase process. A third brand role is to help reassure the customer in the purchase decision. Company Brand Roles: Brands also perform important roles for the brand's sponsor (manufacturer, distributor, or retailer). They offer legal protection for the product through a trademark. By protecting the brand, the company is able to defend essential product elements such as its features, patentable ideas in manufacturing or product design, and packaging. A second critical role is that brands offer an effective and efficient methodology for categorizing products. Competitor Brand Roles: Market-leading brands provide competitors with a benchmark against which to compete. In industries with strong market leading brands, competitors design and build products targeted specifically at the market leader. In these situations, the competitor leverages its product strength against the market-leading brand's perceived weakness. Examples can be found in the text or students can come up with their own. 112. Define brand equity. List and explain the 5 dimensions of brand equity as described by David Aaker. Give examples of each dimension. Brand equity can be defined as "a set of assets (and liabilities) linked to a brand's name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm or that firm's customers." Answer: Five Dimensions: Brand awareness: The most basic form of brand equity is simply being aware of the brand. Awareness is the foundation of all other brand relationships. It signals a familiarity and potential commitment to the brand. Brand loyalty: This is the strongest form of brand equity and reflects a commitment to repeat purchases. Loyal customers are reassured by the brand and are often ambassadors to new customers. Loyal customers enable a company to reduce marketing costs, leverage trade relationships, and speak to competitive threats with greater success. Perceived quality: Brands convey a perception of quality that is either positive or negative. Companies use a positive perceived quality to differentiate the product and create higher price points. Rolex watches have been able to sustain a price premium long into their life cycle because of the perceived quality in design and performance of the product. Brand association: Customers develop a number of emotional, psychological, and performance associations with a brand. In many cases, these associations become a primary purchase driver, particularly with brand loyal users. Brand assets: Brands possess other assets such as trademarks and patents that represent a significant competitive advantage. 113. List and explain the benefits of brand equity for customers and brand sponsors. How can each of these be linked to marketing strategy? Answer: 1) Perceived Quality: Customers - All things being equal the branded product gives customers a reason to buy. This is an advantage over unbranded products because customers infer a level of quality from the branded product that facilitates their purchase decision. Brand sponsor - The perceived quality of a brand provides three distinct benefits to the company. First, the perception of a brand's quality enables companies to extend the product range. Second, the perception of quality can lead to a price premium opportunity. Finally, the perception of quality is an excellent differentiator in the market. Linking Benefit to Strategy - Successful marketing strategy builds quality into the entire customer experience. As companies extend their product lines, they must ensure the customer's brand experience remains positive. Quality can create a price premium, but managers understand that to validate that price premium they must constantly validate the value proposition for the customer and answer the customer question, "what makes this product special?" 2) Brand Connections: Customers - Two primary customer advantages result from brand associations. Customers process, store, and retrieve product information by brand, which is an advantage for strong brands. People are more likely to connect information with a brand they know rather than sort through information on unfamiliar brands. A second benefit is that strong brands generate a more positive attitude toward the product. Customers generally have more upbeat thoughts about a powerful brand than a weak brand or generic product. Brand Sponsor - When customers identify with a brand and then transfer that loyalty to the product it creates an additional barrier to entry for new brands, particularly for smaller firms that lack brand recognition. Linking Benefit to Strategy - Because of customer brand connections, marketing managers generally want to extend the brand to new products. However, extending a brand needs to fit the target market's perception of the brand. It is also important for strong brands to reinforce their market presence because it helps maintain a barrier to entry. 3) Brand Loyalty: Customers - Brand loyal customers do not spend as much time searching for new information and, as a result, generally spend less time in the purchase decision process. Brand Sponsor - Loyalty to the brand offers four distinct benefits that represent real market advantages to the brand sponsor. A well-executed branding strategy helps reduce long-term marketing costs giving the brand sponsor more flexibility in the marketing budgets. Branded products give sponsors additional channel leverage. Brand loyal customers are vocal and tell others about their experiences, which attracts new customers. Finally, brand loyal customers are forgiving, which enables companies to respond to a negative experience. Linking Benefit to Strategy - Because of customer loyalty, marketing managers with a strong brand have greater flexibility in their marketing budget Marketing managers know that loyal customers are great advocates for a brand. As a result, blogs and other online communities have become excellent tools for marketers to reinforce the brands message. 114. List and define the 4 basic strategic decisions in defining a brand. Describe the options along with their advantages and drawbacks available for each decision. Answer: Four basic strategic decisions in defining a brand are (1) stand-alone or family branding, (2) national or store branding, (3) licensing, and (4) co-branding. 1) Stand-alone or family branding - Does the brand stand alone or exist as part of a brand family? Each choice has advantages and disadvantages. Stand-alone brands separate the company from the brand, which insulates the company if there is a problem with the brand. But stand-alone brands are expensive to create and maintain as there is little or no synergy between company brands. Family branding advantages and disadvantages are just the opposite. There is synergy among members of a brand family, but a negative event with one product often leads to negative publicity for the entire brand family. 2) National or store branding - Another decision is whether the product should adopt a national or store brand strategy. Large consumer products companies create national brands that are sold around the country under the same brand. National brands enable manufacturers to leverage marketing resources by creating efficiencies in marketing communications and distribution. In addition, national brands generally have a higher perceived quality and, as a result, enjoy a price premium. However, developing a national brand is costly and lower priced store brands are strong competitors in many product categories. An alternative to creating a national brand is a store brand. Many large retailers create a store brand to market their own products. Often contracting with the large manufacturers retailers are able to compete directly with national brands by offering lower prices. 3) Licensing - Companies can also choose to extend their brand by licensing — offering other manufacturers the right to use the brand in exchange for a set fee or percentage of sales. There is very little risk to the brand sponsor, and licensing can generate incremental revenue. In addition, it can extend the brand and build more brand associations among new users creating additional benefits. The brand sponsor does need to monitor the licensees to assure product quality and proper use of the brand. Finally, license partners should fit the company's overall marketing strategy for the brand. 4) Co-branding - Frequently a company discovers advantages to linking its products with other products inside the company or externally with products from other companies, called co-branding. Co-branding joins two or more well-known brands in a common product or takes two brands and markets them in partnership. One advantage of co-branding is the opportunity to leverage the strengths of each brand to increase sales beyond what they could do independently. In addition, it may open each product up to new markets as well as lower costs by sharing marketing communications expenses. There are also several potential disadvantages. First, companies that co-brand externally give up some measure of control over their brand; by joining brands each company sacrifices some control to market the co-branded product. If one of the brands encounters a problem, for example a quality issue, it can have a negative effect on the co-branded product. Another potential disadvantage is overexposure; a successful product does not want too many co-branded relationships because it can dilute the brand's image. 115. What are the eight elements that create product discrimination? Give an example of each. Answer: Form: The most elemental method of differentiating a product is to change its form — size, shape, color, and other physical elements. Many products considered very similar in functionality can be differentiated by variations in packaging or product delivery. Features: When asked what makes a product different, many people will respond by talking about features. A feature is any product attribute or performance characteristic and is often added or subtracted from a product to differentiate it from competitors. However, while delivering consumer value is the primary driver in making product decisions, a company must balance the features customers want with what they will pay at a given quality level. Performance Quality: Companies should build products to the performance quality level that their target audience is willing to pay for. Often this means a company will build products at multiple performance levels to meet demand at various price points. Keep in mind that the key is to deliver value to the customer. The market's perception of the company's performance quality is critical in defining its market space. Companies generally try to match product performance quality with the market's perception of the brand. Conformance Quality: An important issue for consumers is conformance, which is the product's ability to deliver on features and performance characteristics promised in marketing communications. The challenge for marketers and manufacturing is that every product must deliver on those promises. Durability: Consumer research and purchase patterns affirm that people find durability, the projected lifetime of the product under specific operating conditions, an important discriminating product characteristic and are willing to pay a premium for products that can demonstrate greater durability. Reliability: A similar discriminator references the dependability of a product. Reliability is the percentage of time the product works without failure or stoppage. Businesses and consumers consistently report this is an important discriminator in their purchase decision; however, a product can be too reliable. Repairability: Increasingly, consumers and businesses evaluate the repairability, ease of fixing a problem with the product, as part of the product evaluation process. As a result, companies have built better diagnostics into their products to help isolate, identify, and repair products without the need for the costly repairs of a professional service. Style: One of the most difficult discriminators to accurately assess and build into a product is the look and feel of the product, or style. It is easy for someone to say a particular product has style, but designing it into a product can be a challenge. More than any other discriminator, style offers the advantage of being difficult to copy. The real challenge is that style can be difficult to create consistently. Consumer tastes change over time, and what is considered stylish can quickly lose it appeal. 116. List and explain the package objectives as they relate to branding and list and explain what makes for effective packaging. Answer: Package Objectives: Protect Above all, the package must protect the product. The challenge is defining how much protection is necessary and cost-effective. In some cases the package is a significant component of the product's overall cost so there is concern about any increases in package cost. Protecting customers from unauthorized access to the product is also part of package design. Package safety seals provide a layer of security and verification to the customer that the product has not been altered in any way before purchase. Finally, a growing concern is product theft, particularly in the retail store. As a result, the package design should include anti-theft methodology, such as bar coding or magnetic stripes that discourage shoplifting. Communicate Packages communicate a great deal of information about the product. Some of that information is designed as marketing communications (promotional). At the point of sale, the package is the last marketing communication the customer will see before the purchase. Consequently, packaging plays a critical role in the company's overall marketing communications strategy, particularly for consumer products. Additionally, packaging offers the brand sponsor the opportunity to present the trademark, logo, and other relevant information in an appealing and persuasive manner. As the customer stands in front of a shelf full of products in a store, the marketer wants the brand to be clearly visible to the buyer. This means packaging must be designed to easily communicate critical brand messages quickly through color or design cues. Unique package design can create a distinctive competitive advantage. Promote Usage Package design also encourages product use. It does this in several ways. First, packages frequently show the product being used by a happy customer, which supports the overall marketing message. This connects the product to the target customer. Second, in many cases, packages visually demonstrate a product. Third, marketers and package designers make extensive use of blister packs (products encased in clear plastic) and other package designs to visibly present and protect the product. Effective Packaging: Effective packaging accomplishes the objectives noted above in a persuasive, interesting, and visually appealing manner consistent with the target market's expectations. Materials, shape, colors, graphics, indeed all the design elements are used to create an aesthetically appealing package for the customer. Aesthetics Color plays a significant role in package design, indeed, in the entire branding strategy. The colors reflect the brand and are carried through in the package design. A visually appealing package, however, is not enough. It must be directed at the target audience to be successful. In most retail environments, a package has very little time to connect with the customer at the point of purchase. As a result, designs that are appropriate, interesting, and persuasive to the target market are critical. Harmonizes with All Marketing Mix Elements: A successful product package coordinates with all other marketing mix elements and is an extension of the product's marketing strategy. At the point of purchase, the package reinforces marketing communications by connecting advertising images (logo, pictures on the package) to the customer. As a result, package designers frequently work closely with advertising and other marketing communications specialists to orchestrate an integrated message and look throughout the marketing communications process. 117. List and describe each of the types of labeling requirements and explain why each is important. Answer: The package label is an important and valuable location. Often there is not enough space to accommodate all the information relevant parties would like to include on the label. Consider, for example, that government agencies require certain information on almost every label while company attorneys want disclaimers to limit product liability. Also, marketing managers want promotional messages and brand information, while product managers would like product use instructions. Legal Requirements Labels must meet federal, state, even local rules and regulations. The Food and Drug Administration (FDA) requires all processed-food companies to provide detailed nutritional information clearly identifying calories, fats, carbohydrates, and other information. Other products must have warnings of a certain size that are easily read and understood by the customer. Hazardous materials such as cleaning products, pesticides, and many other items require 14 different pieces of information be included on the label. Consumer advocacy groups and government agencies evaluate labels to identify misleading or mislabeled products and there is a long history of legal prosecution for inappropriate, unethical, even illegal product labeling. Consumer Requirements Consumers want to use products out of the box and package labeling is the most convenient place for initial use instructions. Additionally, product precautions, simple assembly information, and appropriate age for product use may also be included on the package. Essentially, any information the consumer needs to make a product choice, particularly at the point of purchase, needs to be on the package. Marketing Requirements Since package labeling represents the last marketing opportunity before the purchase decision, as much label space as possible is allocated to marketing communications. Brand, logo, product image, and other relevant marketing messages take up the dominant space on the label. 118. Define the two types of warranties, describe the role that warranties play in the branding of a firm's offering and explain the considerations firms must have when designing their warranties. Answer: The two kinds of warranties are general and specific. General warranties make broad promises about product performance and customer satisfaction. These warranties are generally open to customers returning the product for a broad range of reasons beyond specific product performance problems. Many companies have adopted lenient policies that allow a product return without even asking the customer for a reason. Others require a reason, although there is often a great deal of latitude in what is an acceptable justification. Specific warranties, on the other hand, offer explicit product performance promises related to components of the product. Role of Warranties in Branding: The manufacturer's promise of performance helps define the brand for the customer. A company willing to stand behind its product provides a lot of reassurance to the customer. In addition, there is an implied quality perception about a product based on its warranty. Considerations: Honoring a warranty incurs significant costs. At one level, the company must be competitive and offer warranties consistent with the industry. However, companies constantly evaluate their warranties to consider whether the benefits of the warranty exceed the costs. This is particularly true when companies offer warranties above the industry average. Warranties convey a powerful message to the customer about perceived product quality and manufacturer commitment to customer satisfaction. Particularly with expensive products or purchase decisions in which the customer has anxiety, the warranty can play a significant role in the final product choice. As a result, companies focus a lot of time not only creating the warranty but also considering how best to communicate it to the customer. In some cases the warranty becomes part of the advertising campaign. With most products, however, companies take a lower profile and build warranty statements into the overall marketing communications strategy and product information. 119. What are the market conditions in each phase of the product life cycle? Intro: Conventional wisdom holds that pioneers enjoy an advantage because they have the opportunity to establish themselves in the market before competitors. They can define the market space with their product characteristics, features, and brand. Followers will release products similar to the pioneer. Answer: Growth: This stage is characterized by new competitors entering the market to capitalize on market growth. Some companies, often large, established competitors, develop long-term market strategies aimed at a broad range of market segments. Small and medium entrepreneurs identify market niches and develop specialized products targeted at specific customer needs. Customers are entering the market in big numbers as the product becomes more mainstream. Early majority adopters seek out the midmarket products while innovators and early adopters purchase next-generation models or new products with additional features. Maturity: Early in maturity many competitors remain in the market. Some late entrants will come in while the market is still growing despite the fact that growth rates have declined. Audi entered the SUV market in 2006 despite slowing product category sales. Many late entrants into a mature market want to recoup their development costs, even though the market is declining, because the investment is too high to withdraw. Additionally, companies are willing to risk a product launch because they know that if the product is well received there is still an opportunity for success albeit as a niche product. As the product moves deeper in the maturity stage, competitors begin to withdraw as growth rates decline. The first companies to exit the market are usually marginal players who were successful only as long as new customers were coming into the market. Once the market growth begins to slow, their problems (poor product design or quality, ineffective marketing campaigns, lack of cost control) overwhelm them. Those companies that remain fall into two broad categories. A few large players dominate the market followed by a number of smaller companies with specific products meeting specialized market needs. Market leaders carve out particular market spaces (high quality or low price) and drive profitability by capturing dominant market share coupled with reduced costs. As market growth slows, companies aggressively seek potential new target markets. There are two sources of new customers at this stage in the product life cycle. First, product nonusers are individuals who have not yet tried the product. A company capable of converting nonusers to the product can create a competitive advantage as the market slows. A second strategy is to convert users of competitive products. One challenge is that maintaining market share can be expensive as market followers aggressively attack to gain market share. Decline: At this point in the product's life cycle, profit margins have been dramatically reduced, particularly compared to growth and early maturity. Customers have moved on, and competitors are fighting for a piece of a smaller market, which may or may not continue to shrink. As a result, some competitors choose or are forced to leave the market, and those that remain focus on maintaining profit margins. Further compounding the challenge for many marketing managers is the timing of the market decline. Managers seek to understand if the sales decline is a short-term problem, resulting from outside forces (home sales drop as a result of interest rate increase), or a fundamental shift in the market with long-term implications (computers replacing the typewriter). 120. Define the term brand and explain what makes up a brand. Why is it an important part of a successful offering and what are the boundaries of branding? Answer: Definition: A brand, as defined by the American Marketing Association, is "a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or groups of sellers and to differentiate them from those of competitors." What makes up the brand and why it is important: While the logo is a recognizable symbol of a product, customers and noncustomers assign a much deeper meaning to the brand. No other single product element conveys more information about the company. Brands take on different roles for customers, manufacturers, even competitors. Brand strategy is an integral part of the product development process because companies know that successful new products result from a well-conceived branding strategy. At the same time, established products are defined, in large measure, by their brand, and companies work very hard to protect this critical asset. Every brand has positives and negatives. The greater the perceived difference between the positives and negatives, the more a customer will develop equity in the brand. When customers take "ownership" of a brand, they make an "investment" that often extends beyond a financial obligation and includes emotional and psychological attachment. Then the company can realize a number of benefits; however, if the company does a poor job of managing the brand, such as lowering the product quality, those same customers may become negative. As a marketing manager, it is necessary to learn about the brand equity of products to better understand the relationship of it to target markets and create more effective marketing strategies. Limitations of Branding: While branding can have a strong effect on the product experience, it is not all-powerful. A good branding strategy will not overcome a poorly designed product that fails to deliver on the value proposition. 8 Too frequently companies put a good brand on a bad product, which often leads to erosion of the brand's value. A brand must also be protected. Counterfeit products or illegal activities conducted under the name of another company's brand can do significant damage to the brand. This is why companies aggressively protect their brands around the world. Finally, there must be real, identifiable and meaningful differences among products. If all products are perceived to be equal then it is more difficult to create a brand identity, which is a summary of unique qualities attributed to the brand. Commodities are difficult to brand because customers often fail to perceive a difference among products. Test Bank for Essentials of Marketing Management Greg W. Marshall, Mark W. Johnston 9780078028786, 9780071082020, 9780077400187