Midterm 3

Question 1

What are the different stages in the product life cycle?

Answer 1

introduction
growth
maturity
decline

Question 2

What is diffusion of innovation?

Answer 2

innovators
early adopters
early majority
late majority
laggards

Question 3

What are the ways to manage the product life cycle?

Answer 3

(modifying product vs. modifying
market)

Question 4

Product modification:

Answer 4

altering one or more of a product’s characteristics to increase
the product’s value to customers and increase sales.
1. Adding vitamins to Pantene shampoo to create a “new, improved shampoo”
2. product bundling —the sale of two or more separate products in one package.

Question 5

market modification: f

Answer 5

find new customers, increase a product’s use among existing
customers, or create new use situations.

Question 6

Finding New Customers

Answer 6

a) LEGO Group has introduced a product line for young girls called LEGO Friends.

Harley-Davidson encourages women to take up biking, thus doubling the
number of potential customers for its motorcycles.

Question 7

Increasing a Product’s Use

Answer 7

a) Because soup consumption rises in the winter and declines during the summer,
Cambell advertises more heavily in warm months to encourage consumers to think of soup as more than a cold-weather food.

b) Florida Orange Growers Association advocates drinking orange juice throughout
the day rather than for breakfast only.

Question 8

Creating a New Use Situation

Answer 8

a) Gillette markets its Gillette Body line of razors, blades, and shaving gels for
“manscaping”—the art of shaving body hair in areas below the neckline.

Question 9

Reposition the product:

Answer 9

changes the place a product occupies in a consumer’s mind
relative to competitive products.

Question 10

Ways to reposition product

Answer 10

-Change value offered
-react to competitor position
-reach a new market
-catch a rising trend

Question 11

Changing the Value Offered

Answer 11

Trading Up
Trading Down

Question 12

Reacting to a Competitor’s Position

Answer 12

New Balance repositioned its athletic shoes to focus on fit, durability, and
comfort rather than competing head-on against Nike on performance and
Adidas on fashion. The company offers an expansive range of shoes and networks with podiatrists, not sports celebrities.

Question 13

Reaching a New Market

Answer 13

When Unilever introduced iced tea in Britain, sales were disappointing. The
company made its tea carbonated and repositioned it as a cold soft drink.

Johnson & Johnson effectively repositioned its St. Joseph aspirin from a product for infants to an adult low-strength aspirin to reduce the risk of heart problems
or strokes.

Question 14

Catching a Rising Trend

Answer 14

Growing consumer interest in foods that offer health and dietary benefits is an example.

Quaker Oats makes the FDA-approved claim that oatmeal, as part of a low-saturated-fat, low-cholesterol diet, may reduce the risk of heart disease.

Calcium-enriched products, such as Kraft American cheese and Ben’s Original Calcium Plus rice, emphasize healthy bone structure for children

Question 15

brand personality

Answer 15

A set of human characteristics associated with a brand name.
a) consumers assign personality traits to products—traditional,

Question 16

brand name

Answer 16

Any word, device (design, sound, shape, or color), or combination of these used to
distinguish a seller’s products or services.

Question 17

brand equity

Answer 17

The added value a brand name gives to a product beyond the functional benefits
provided.

Question 18

Identify the four alternative branding strategies

Answer 18

1. multiproduct branding
2. multibranding
3. private branding
4. mixed branding

Question 19

profit equation

Answer 19

Total Revenue - Total Cost
(PriceXQ sold) - (fixed costs+variable cost)

Question 20

final price equation

Answer 20

List price - allowances + extra fees

Question 21

break-even
point

Question 22

break even quantity

Answer 22

fixed cost/ (unit price-unit variable costs)

Question 23

What is a demand curve?

Answer 23

a graph that relates the quantity sold and price, showing the maximum number of units that will be sold at a given price

Question 24

What are the factors affecting demand?

Answer 24

-consumer tastes
-price and availability of similar products
-consumer income

Question 25

What are the three different types of vertical marketing systems?

Answer 25

corporate vertical marketing system
contractual vertical marketing system
administered vertical marketing systems

Question 26

corporate vertical marketing system

Answer 26

combination of successive stages of production and distribution under a single ownership

Question 27

corporate vertical marketing system
Forward integration

Answer 27

A producer is unhappy with the distributor and distributes their product. The producer is taking on the role of distribution.

Question 28

corporatevertical marketing system
Backward integration:

Answer 28

The distributor needs more control over the quality of products, so they become the producer.

Question 29

contractual vertical marketing system

Answer 29

independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could achieve alone.

Question 30

3 types of contractual vertical marketing system

Answer 30

Wholesaler-sponsored voluntary chain
Retailer-sponsored cooperatives
Manufacturer-sponsored retail franchise systems

Question 31

Wholesaler-sponsored voluntary chain

Answer 31

involve a wholesaler that develops a contractual relationship with small, independent retailers to standardize and coordinate buying practices, merchandising programs, and inventory management efforts.

Question 32

Retailer-sponsored cooperatives

Answer 32

exist when small, independent retailers form an organization that operates a wholesale facility cooperatively. Member retailers then concentrate their buying power through the wholesaler and plan collaborative promotional and pricing activities. Examples of retailer-sponsored cooperatives include Associated Grocers and Ace Hardware.

Question 33

Manufacturer-sponsored retail franchise systems

Answer 33

is a contractual arrangement between a parent company (a franchisor) and an individual or firm (a franchisee) that allows the franchisee to operate a certain type of business under an established name and according to specific rules

Question 34

administered vertical marketing systems

Answer 34

achieve coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership. Procter & Gamble, given its broad product assortment ranging from disposable diapers to detergents, is able to obtain cooperation from supermarkets in displaying, promoting, and pricing its products

Question 35

What are the factors affecting choice of channels in a distribution system?

Answer 35

1. target market?
2. buying requirements of the target market?

3.Which channel and intermediaries will be the most profitable?

Question 36

What is a supply chain management system?

Answer 36

is the integration and organization of information and logistics activities across firms in a supply chain for the purpose of creating and delivering products and services that provide value to consumers.

Question 37

How is a supply chain management system different from a marketing
channel?

Answer 37

supply chain differs from a marketing channel in terms of the firms involved. A supply chain includes suppliers that provide raw material inputs to a manufacturer as well as the wholesalers and retailers that deliver finished products to consumers. The management process is also different.

Question 38

What are the different components of a supply chain management system?

Answer 38

-Suppliers
-producers
-consumers
-logistics management
-supply chain management (suppliers network and marketing channel)

Question 39

What is Integrated Marketing Communications?

Answer 39

Designing marketing communications programs that coordinate all promotional activities—advertising, personal selling, sales promotion, public relations, and direct marketing—to provide a consistent message across all audiences.

Question 40

What are the key elements in a communication process?

Answer 40

1. Source
2. Message
3. Channel of communication
4. Receiver
5. Encoding
6. Decoding

Question 41

What are the five elements of the promotional mix?

Answer 41

Advertising
Personal Selling
Public Relations
Sales promotion
direct marketing

Question 42

Pull strategy

Answer 42

by directing its promotional mix at ultimate consumers to encourage them to ask the retailer for a product. Seeing demand from ultimate consumers, retailers order the product from wholesalers and thus the item is pulled through the intermediaries. Pharmaceutical companies, for example, now spend more than
$9.6 billion annually on direct-to-consumer prescription drug advertising to complement traditional personal selling and free samples directed only at
doctors.

Question 43

Push strategy

Answer 43

directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product. In this approach, personal selling and sales
promotions play major roles. Salespeople call on wholesalers to encourage orders and provide sales assistance.

Question 44

Understand the different types of appeals that can be created in an advertisement.

Answer 44

fear
sex
humor

Question 45

What are customer-oriented sales promotions?

Answer 45

1. Coupons
2. Deals (2 for 1)
3. Premiums- free toys w/ happy meals to promote movies
4. Contests- guess the flavor of this chip
5. Sweepstakes
6. Samples
7. Loyalty programs
8. Point of purchase displays - Red Bull display in a store
9. Rebate
10. Product placement- Reeses pieces in ET

Question 46

What are and trade-oriented Sales promotions?

Answer 46

1. Allowances and discounts
2. Corporate advertising
3. Training of distributor salesforce