chapter 13

Question 1

deployment strategies

Answer 1

can influence the receptivity of customers and can reduce uncertainty about the product.

Question 2

launch timing

Answer 2

can be a significant part of the deployment strategy. a firm can strategically use launch timing to take advantage of business cycle or seasonal effects, to position its product with respect to previous generations of related technologies, and to ensure that production capacity and complementary goods or services are in place.

Question 3

cannibalisation

Answer 3

occurs when a firm’s sales of one product diminish its sales of another of its products.

Question 4

backward compatible

Answer 4

occurs when products of a technological generation can work with products of a previous generation. eg., if a computer can run on the same software as a previous generation of the computer.

Question 5

pricing

Answer 5

simultaneously influences the product’s positioning in the marketplace, its rate of adoption, and the firm’s cash flow.

Question 6

survival

Answer 6

a pricing model that sets the price to cover all variable costs and some of the fixed costs.

Question 7

maximise current profits

Answer 7

a pricing model that sets the price to maximise cash flow or rate of return on investment.

Question 8

maximum market skimming objective

Answer 8

the price is set high to signal the new product is a significant innovation. this also helps to cover the R&D costs. however, high initial prices may attract competitors to the market and can slow adoption of the product.

Question 9

maximum market share

Answer 9

the price is set low to rapidly attract customers, driving the volume up and production costs down.

Question 10

penetration pricing

Answer 10

occurs when the price of a good is set very low (or free) to maximise the good’s market.

Question 11

freemium

Answer 11

the base of a product or service is free, but additional features are charging a premium.

Question 12

manufacturers’ representatives

Answer 12

independent agents that promote and sell the product lines of one or a few manufacturers. they are often used when direct selling is appropriate, but the manufacturer does not have a sufficiently large direct sales force to reach all appropriate market segments.

Question 13

wholesalers

Answer 13

companies that buy manufacturer’s products in bulk, and then resell them (often in smaller or more diverse bundles) to other supply channel members such as retailers.

Question 14

retailers

Answer 14

companies that sell goods to the public. together with wholesalers, they break bulk.

Question 15

intermediaries

Answer 15

eg. manufactuers’ representatives, wholesalers, and retailers. they also provide services such as transporting, inventory, selling service, and handling transactions with customers.

Question 16

original equipment manufacturer/value-added seller

Answer 16

a company that buys products (or components of products) from other manufactuers and assembles them or customises them into a product that is then sold under the OEM’s name.

Question 17

disintermediation

Answer 17

occurs when the number of intermediaries in a supply chain channel is reduced. eg. when manufacturers bypass wholesalers and/or retailers and sell directly to end users. advances in information technology have enabled disintermediation or reconfiguration in the types of intermediaries used.

Question 18

alliances with distributors

Answer 18

strategic alliances or exclusivity contracts can encourage distributors to carry and promote a firm’s goods. by providing a srake in the success of the new technology, a distributor may be persuaded.

Question 19

bundling

Answer 19

enables the new technology to piggyback on the success of another product that already has a large installed base. switching costs may prevent customers from changing to a different product, even it is initially preferred.

Question 20

contracts and sponsorship

Answer 20

contractual arrangements with distributors, complementary goods providers, and large end users can ensure that the technology is used in exchange for price discounts, special service contracts, advertising assistance, or other inducements.

Question 21

guarantees and consignment

Answer 21

when there is market uncertainty, offering guarantees or agreeing to sell the product consignment, can encourage distributors to carry the product.

Question 22

marketing strategy

Answer 22

considers both the nature of the target market and the nature of the innovation.

Question 23

advertising

Answer 23

used to build public awareness of a technological innovation. in crafting a message, firms often attempt to strike a balance between achieving an entertaining and memorable message versus providing a significant quantity of informative content.

Question 24

promotion

Answer 24

temporary selling techniques such as offering samples for free trial or offering incentives for repeat purchase.

Question 25

publicity and public relations

Answer 25

many firms use publicity to effectively generate word of mouth.

Question 26

viral marketing

Answer 26

sending information directly to targeted individuals in an effort to stimulate word-of-mouth advertising. individuals are typically chosen on the basis of their position or role in particular social networks.