Exam 2

Question 1

Two methods of idea generation

Answer 1

brain draining

stimulus response

Question 2

Stimulus feeds the brain

Answer 2

more stimulus = more ideas

Question 3

life currencies

Answer 3

money, information, time, space, fun

Question 4

gravitational marketing

Answer 4

the only way to disrupt marketplace equilibrium is to introduce new products and services that are significantly different than what already exists

Question 5

improvements

Answer 5

most innovation is not totally new to the world ideas - they are improvements on things that already exist

Question 6

Product life cycle

Answer 6

1. momentum
2. growth
3. cost cutting
4. decline
   looks like a bell curve

Question 7

failure rate

Answer 7

85%

high risk

Question 8

Innovation process

Answer 8

1. brainstorm ideas
2. write a brand positioning statement
3. turn the brand positioning into a written concept
4. test the concept on real, live consumers

Question 9

Developing your idea

Answer 9

1. create a great product name aligned with benefit
2. determine the target audience, benefit and reason why (brand positioning)
3. write one paragraph ad for product (concept)

Question 10

cycles of learning

Answer 10

plan
do
study
act

Question 11

Failure rates

Answer 11

No test = 85%
test 1 = 42.5%
test 2 = 21.25%
test 3 = 10.6%
test 4 = 5.3%

Question 12

Competitors pricing is irrelevant when determining how to price your own products / services. You should just do what’s best for your products / services to maximize your profitability.

Answer 12

False

Question 13

skimming price strategy

Answer 13

sacrificing high sales to gain a high profit

Question 14

value

Answer 14

increased competition force companies to provide value products and services to retain sales (value meals at mcdonalds)

Question 15

captive

Answer 15

products have complementary products where one requires using the other

Question 16

dynamic

Answer 16

flexible pricing mechanism made possible by advances in information technology

Question 17

price discrimination

Answer 17

a different price for the same product in different segments to the market

Question 18

freemium

Answer 18

offering a product or service free of charge while charging for advance features

Question 19

cost-plus

Answer 19

calculates the cost of producing the product and adds a percentage

Question 20

product bundle

Answer 20

combine several products in the same package rather than trying to sell all separately

Question 21

penetration

Answer 21

price charged for products and services is set artificially low to gain market share

Question 22

loss-leader

Answer 22

product sold at a low price - sometimes at cost or even below cost - to stimulate other profitable sales

Question 23

predatory

Answer 23

intended to drive out competitors from a market

Question 24

preimum

Answer 24

keeping the price of a product or service artificially high to encourage favorable perceptions based solely on price

Question 25

psychological

Answer 25

selling a product at 3.99 rather than 4.00

Question 26

market based

Answer 26

based upon analysis and research compiled from the competitive marketplace

Question 27

high-low

Answer 27

this is the pricing strategy of most department stores

Question 28

One page memo section headings

Answer 28

1. Subject (introduce)
2. Background
3. How it works (Key Learning)
4. Benefits
5. Next steps

Question 29

functional packaging benefits

Answer 29

store-ability
convenience
portability