Module 11 - Product Decisions

Question 1

1 Which branding strategy imposes the greatest risk to brand equity?
A.Cobranding.
B.Global branding.
C.Individual branding.
D.Family branding.
E.Multiple brands

Answer 1

D

Question 2

2 Under which set of circumstances is family branding advisable?
A.When the brand is well known and a new product has quality problems.
B.When advertising economies of scale exist and the brand has low perceived quality.
C.When advertising economies of scale exist and the products under the brand have variable quality.
D.When advertising economies of scale exist and the brand has high perceived quality.
E.When the brand is a well-known price leader and the new product is positioned toward a high-quality, high-prestige portion of the market

Answer 2

D

See section Branding Strategies.

Question 3

3 Kellogg’s Raisin Bran and Kellogg’s Rice Crispies are examples of:
A.individual branding.
B.distributor branding.
C.private labelling.
D.family branding.
E.no-name branding.

Answer 3

D

Question 4

4 When the Coca-Cola Company sells its own brand of orange juice (Minute Maid) to A&P grocery stores so that they can sell this orange juice under the A&P label, what type of strategy is A&P pursuing?
A.Private labelling.
B.Multiple brands.
C.Family branding.
D.Individual branding.
E.None of the above.

Answer 4

A

See section Retailer and Distributor Brands.

Question 5

5 In a consumer retail environment like a grocery store, a product’s package can have strong ties to which other element of the marketing mix?
A.Price.
B.Place.
C.Promotion.
D.All of the above.
E.Only A and B above.

Answer 5

D

Question 6

6 If Ford Motor Co. adds a Thunderbird convertible to its line to please its dealers who want a full line of cars to sell to their customers, what type of strategy is Ford pursuing?
A.Line filling.
B.Downward stretching.
C.Line extension.
D.Line pruning.
E.Line shortening

Answer 6

A

Question 7

7 When Arm & Hammer used its reputation for its baking soda to come out with ‘Arm & Hammer Carpet Deodoriser’, what type of strategy was it pursuing?
A.Line extension.
B.Brand extension.
C.Line pruning.
D.Line stretching.
E.Line filling.

Answer 7

B

See section Brand Extensions.

Question 8

8 In-house development is best for ____ innovative new products, while out-sourcing works best for ____ innovative new products.
A.highly; slightly.
B.slightly; highly.
C.autonomous; systematic.
D.systemic; autonomous.
E.None of the above.

Answer 8

D

See section Organising for New Product Development.

Question 9

9 When a company introduces a new product in two cities to determine the trial rate and the repeat purchase rate, what type of procedure is this company using?
A.Laboratory test marketing.
B.Focus group testing.
C.Minimarket testing.
D.Field-test marketing.
E.In-house test marketing.

Answer 9

D

See section Precommercialisation Business Analysis Decisions.

Question 10

10 What options does a company have if it wishes to test market a new product before launching it nationally?
A.Channel restricted launch.
B.Regional roll-out.
C.Modified test market launch.
D.All of the above.
E.None of the above

Answer 10

D

See section Commercialisation Decisions.

Question 11

1 The major subgroupings of consumer goods include:
A. convenience goods, shopping goods, exclusive goods and services.
B. convenience goods, shopping goods, speciality goods and unsought goods.
C. staple goods, impulse goods and emergency goods.
D. staple goods, shopping goods and services.
E. convenience goods, shopping goods, emergency goods and unsought goods.

Answer 11

B

Question 12

2 Of the four major subgroupings of consumer goods, the one most likely to be tied to a strategy of maximum distribution is:
A. shopping goods.
B. speciality goods.
C. unsought goods.
D. convenience goods.
E. All classes of goods require intensive distribution

Answer 12

D

Question 13

3 Flashlight batteries and candy are most likely to be examples of:
A. shopping goods.
B. unsought goods.
C. staple goods.
D. speciality goods.
E. convenience goods

Answer 13

E

Question 14

4 Which of the following could be described as a speciality good?
A. Musical instruments.
B. Encyclopaedias.
C. Toothpaste.
D. Cars.
E. Washing machines

Answer 14

A

Question 15

5 Differentiation on service quality can occur on any of the following dimensions EXCEPT:
A. Reliability.
B. Assurance
C. Responsiveness
D. Tangibles
E. Serviceability.

Answer 15

E

Question 16

6 Only a small percentage of new products would be classified as:
A. new to the world.
B. new to the firm.
C. product-line extensions.
D. product improvements.
E. brand extensions.

Answer 16

A

Question 17

7 The biggest cause of failures among new products comes from:
A. insufficient demand for this type of product.
B. introducing me-too products that sell for the same or a higher price but do not outperform products already on the market.
C. changes in consumers’ preferences while the product is under development.
D. interorganisational conflicts between various departments in the company.
E. poor product design.

Answer 17

B

Question 18

8 A company that wants to find out about the process by which a consumer adopts a new product would probably use:
A. laboratory test markets.
B. consumer tests.
C. product tests in the field.
D. a panel of experts.
E. an extensive test marketing programme

Answer 18

A

Question 19

9 Which type of quality dimension refers to the EPA miles per gallon rating of a new Honda Accord car?
A. Durability.
B. Aesthetics.
C. Performance.
D. Reliability.
E. Conformance

Answer 19

C

Question 20

10 A brand name:
A. is the part of a firm’s recognised and registered symbol that can be vocalised.
B. is the part of a firm’s recognised and registered symbol that cannot be vocalised.
C. is an unregistered symbol representing a product class.
D. is an unregistered symbol representing a product type.
E. includes the registered symbol representing the product.

Answer 20

A

Question 21

What is a product? Describe its various components.

Answer 21

A product can be defined as anything that satisfies a want or need through use, consumption, or acquisition. Thus, products include goods (TVs, radios, cars), services (medical, educational), places (New York, Moscow), people (David Camer- on and other politicians everywhere), activities (entering a contest or visiting a weight-loss clinic), and ideas (have you hugged your kids today?).

Question 22

Describe the four subgroups of consumer goods.

Answer 22

Question 23

What are the eight dimensions of quality? How do these affect a firm’s quality strategy?

Answer 23

One important dimension on which goods or services are physically differentiated is on the basis of quality – seeking to be better, in some sense, in the customers’ eyes than competing products.

Question 24

How does branding benefit consumers? Sellers?

Answer 24

Branding helps to differentiate one product from another
Comprises of:

Brand name
Brand mark
Perceived quality
Brand association

Branding helps by enhancing:

Effectiveness of marketing promotions programs
Brand loyalty
Opportunities for brand extensions
Prices and margins from competitive advantage
Channel relationships

Question 25

Discuss briefly the various branding-strategy options.

Answer 25

• Individual branding – each product has a distinctive name, if one product is bad does not tarnish the overall name
• Family branding - same brand covers a number of products

– reduced costs and transfer of customer satisfaction from one to the other

• if one product is bad may tarnish the overall brand
• Co-branding – haagen daz baileys ice cream
• Global brands – very expensive

Question 26

Define each of the following:

A. Line filling.
B. Line stretching.
C. Line extensions.

Answer 26

Line Filling: This strategy lengthens the product line by adding items within the present range. Its objective is to satisfy more customers, to increase sales and profits, to placate dealers who want a full-line supplier, and to ward off competitors.

Line Strecthing: This strategy involves lengthening the product line beyond its current range of variables, such as size and price. Aircraft manufacturers, such as Boeing and Airbus, have typically expanded the size of their jets. Such product line stretching – literally, in this case – may be up or down or both.

**Line Extentions: **This strategy consists of introducing new products that differ significantly from those in the existing line by more than just size and price.

Question 27

Discuss briefly the five criteria consumers use to evaluate service quality.

Answer 27

Question 28

How can the variation in new-product failure-rate estimates be explained?

Answer 28

• Most new products fail
• Biggest cause is introduction of me-too product
• Drivers of new product development:
  
  • Change in market
  • Changes in technology
  • Govt regulations
  • Change in raw materials
  • Introduction of new products by competitors

Question 29

Why are more and more firms using teams to introduce new products?

Answer 29

• In house or sub contract or joint venture
• In house – faster, competitive advantage, ioint venture
• Bureaucratic is better for line extensions and product improvement
• Cross functional required for innovation

Question 30

What are the major steps of the new-product development process?

Answer 30

Question 31

What are the more important sources of new product ideas?

Answer 31

Define objectives – what markets do we wish to grow, what capabilities should product have

Is their a strategic fit?

Lead user researcher – ideas developed by users who are ahead of market trends

These decisions, which were addressed from a strategic perspective in Module 2, provide guidance for idea generation. Typically, a substantial number of new product ideas must be generated to get one successful product. Ideas for new products can come from customers; from the company’s own staff, R&D people, the salesforce, product managers, marketing researchers; from members of its distribution channels; even from competitors.

Question 32

What are the various ways new product ideas can be tested?

Answer 32

preliminary assessments of the idea’s technical and market feasibility. First, can the product be developed and delivered? For a high-technology product, will the technology pan out? Second, how large is the market, and what is the estimated market potential for the proposed product? Will customers like it? This screening is typically based largely or entirely on secondary data and on the market and technical know-how resident in the company. The tools presented in Module 8 for estimating market potential are useful at this stage. A ‘classic’ qualitative scoring model used by some companies at Gate 2 is shown in Exhibit 11.13.

Question 33

Describe a laboratory test market and how it operates

Answer 33

In lab marketing, measure process by which customer adopts a new product - awareness, trial and repeat buying

• Respondents from target market are shown ads
• Given option to purchase product in a simulated store
• Research do follow up interviews to see measure satisfaction and repurchase intentions

Question 34

What factors might influence a firm’s decision about whether to conduct a field test market?

Answer 34

In a field test market, the marketing plan for the product is typically implement- ed in a small geographical area to ensure that it will deliver the expected results. This test seeks to obtain an estimate of the sales that will be achieved once the product is rolled out into the broader market, given the planned marketing strategy and marketing budget.

In the past, the big food-, household-, and personal care-products companies typically used a sample composed of a few small cities as the test market – and did so for between 12 and 18 months. The cost of such research was often several million dollars. Increasingly such companies want faster and less-expensive ways of testing their products, and not only for cost reasons. More importantly, long test markets give competitors the opportunity to evaluate the results, even to the point of introducing their own new product.

Question 35

Describe briefly the various commercialisation strategies.

Answer 35

Number of commercialization strategies

• Forgo market testing and rollout region by region or nationally in one go.
• Use test marketing in different markets – geographic and then rollout in others

Question 36

A product is defined in the text as:
A. a good involved in exchange for buyer use, consumption or acquisition.
B. any tangible object that satisfies a want or a need.
C. any object or collection of objects that satisfies a human want or need.
D. any tangible object or collection of objects that satisfies a human want or need and which is offered within an exchange relationship.
E. anything that satisfies a want or a need in terms of use, consumption or acquisition.

Answer 36

E

Question 37

Tangible or intangible attributes given to the product by its designers is a:
A. benefit.
B. feature.
C. distinction.
D. quality dimension.
E. product characteristic.

Answer 37

B

Question 38

Dishwashers and refrigerators are most likely examples of:
A. convenience goods
B. shopping goods.
C. unsought goods.
D. speciality goods.
E. staple goods.

Answer 38

B

Question 39

The type of consumer product subgroup most likely to be associated with limited distribution is:
A. speciality goods.
B. shopping goods.
C. convenience goods.
D. staple goods.
E. unsought goods

Answer 39

A

Question 40

The qualitative product design and marketing research technique, where customers are observed in their own environment, is called:
A. home interviews.
B. mall intercept studies.
C. empathic design.
D. hidden camera studies.
E. all of the above.

Answer 40

C

Question 41

Coca-Cola, who also owns Minute Maid and Powerade, uses what type of branding strategy for these products?
A. Family branding.
B. Multiple branding.
C. No-name branding.
D. Individual branding.
E. Cobranding.

Answer 41

D

Question 42

The more service-sensitive the market:
A. the greater the amount of customer complaints a company will receive.
B. the lesser the opportunity for profits.
C. the greater the chance for losing customers.
D. the greater the need to charge more for a product.
E. the greater the opportunity for profits.

Answer 42

E

Question 43

The benefit of expanding a product line is:
A. to satisfy demand.
B. to control shelf space.
C. to avoid cannibalisation.
D. all of the above.
E. only A and B above

Answer 43

E

Question 44

____ constitute the lifeblood of long-term firm success.
A. Cash cows
B. Product-line extensions
C. New products
D. Product systems
E. Continuous product improvement

Answer 44

C

Question 45

More ____ structures are called for when a highly innovative product is involved and more ____ structures may be better when less-innovative products are involved.
A. participative; bureaucratic.
B. bureaucratic; participative.
C. regimented; simple.
D. vertical; horizontal.
E. multi-layered; simple.

Answer 45

A

Question 46

The stage-gate system is designed to:
A. ‘kill’ ideas that lack market potential.
B. get new products to market quickly.
C. increase market success by making sure products have the ‘right’ attributes. D. all of the above.
E. only A and C.

Answer 46

D

Question 47

At a minimum, what area of expertise should staff the stage-gate system?
A. Marketing.
B. R&D.
C. Production.
D. Someone with the clout to commit resources.
E. All of the above.

Answer 47

E

Question 48

The multidimensional nature of product quality and the nature of the competitive market imply that firms should seek:
A. high performance on a limited number of quality dimensions.
B. to spread or average performance among all dimensions of quality.
C. high performance on all dimensions of product quality.
D. to obtain high performance on at least one dimension of quality significant in common among all market segments.
E. to obtain high performance on at least one dimension of quality significant to each segment of the market.

Answer 48

A

Question 49

Branding:
A. is the part of a firm’s recognised and registered symbol that can be vocalised.
B. is the part of a firm’s recognised and registered symbol that cannot be vocalised.
C. is an unregistered symbol representing a product class.
D. is an unregistered symbol representing a product type.
E. identifies and differentiates products of one seller from another.

Answer 49

E

Question 50

McDonald’s ‘golden arches’ in the front of the restaurant building are an example of:
A. a brand name.
B. a brand mark.
C. a private label brand.
D. store branding.
E. individual branding.

Answer 50

B

Question 51

A brand name that legally belongs exclusively to a given company is known as:
A. brand name.
B. a brand mark.
C. a trade mark.
D. a family brand.
E. an individual brand.

Answer 51

C

Question 52

A component of brand equity is:
A. brand name awareness.
B. brand loyalty.
C. perceived quality.
D. both A and B above.
E. A, B and C above.

Answer 52

E

Question 53

A brand may not be necessary when:
A. quality is hard to measure.
B. the market is very large.
C. the brand engenders a favourable stereotype.
D. the product possesses a significant ‘point of difference.’
E. the product is to be sold at below market prices.

Answer 53

E

Question 54

Manufacturer brands are also known as ____, while distributor brands are known as ____.
A. national brands; private labels.
B. individual brands; family brands.
C. multiple brands; private brands.
D. private labels; national brands.
E. primary brands; intermediary brands.

Answer 54

A

Question 55

Companies or individuals that develop innovations that are ahead of market trends and have needs that go beyond those of the typical user are:
A. lead users.
B. top developers.
C. trend setters.
D. innovative developers.
E. forward thinkers.

Answer 55

A

Question 56

In the stage-gate system, at which gate is an idea screened?
A. Gate 1.
B. Gate 2.
C. Gate 3.
D. All of the above.
E. Only A and B above.

Answer 56

E

Question 57

If any of five products under consideration varies widely in quality, the least effective branding strategy is likely to be:
A. cobranding.
B. national branding.
C. private labelling.
D. no-name branding.
E. family branding.

Answer 57

E

Question 58

The production by Whirlpool of appliances for Sears under the Kenmore name is an example of:
A. manufacturer branding.
B. national branding.
C. individual branding.
D. sale of OEM components to competitors.
E. private labelling.

Answer 58

E

Question 59

Packaging serves which of the following functions?
A. Facilitating and protecting.
B. Product usage and promotion.
C. Retail impact and safety.
D. All of the above.
E. Only A and B above

Answer 59

D

Question 60

The Ford Explorer Eddie Bauer edition illustrates which branding strategy?
A. Cobranding.
B. Global branding.
C. Individual branding.
D. Family branding.
E. Multiple brands.

Answer 60

A

Question 61

Toyota’s introduction of the Lexus at the top end of the car market is an example of:
A. line filling.
B. line extension.
C. brand extensions.
D. product systems.
E. none of the above.

Answer 61

B

Question 62

Which best illustrates a product system strategy?
A. Burger King’s Whopper.
B. Toyota’s Lexus and Toyota car lines.
C. British Airways vacation packages.
D. Cost Cutter’s hair salons.
E. Microsoft’s Windows.

Answer 62

C

Question 63

In a field test market, where is the marketing plan for the product implemented?
A. A random sample of the target market.
B. Focus group.
C. Small geographical area.
D. Laboratory.
E. Across the country

Answer 63

C

Question 64

Adding tangibility to service channels is best illustrated by:
A. Dodge’s ram logo for its line of pickup trucks.
B. American Express’ doubling of manufacturers’ warranties.
C. Sprint’s use of Candice Bergen as their spokesperson.
D. BurgerKing’s consistent branch design and decor.
E. McDonald’s golden arches logo.

Answer 64

D

Question 65

What does a laboratory test market measure?
A. Awareness of the product.
B. Likelihood of product trial.
C. Chance for repeat buying.
D. All of the above.
E. Only A and B above.

Answer 65

D

Question 66

What are the major want–satisfying benefits that customers are likely to receive from the following products?

a. Cars.
b. Motor cycles.
c. Raincoats.
d. Contribution to a local charity.
e. Reading a book about the life of Gandhi.

Answer 66

Question 67

Some men consider a business suit a shopping good, while others view such a product as a speciality good. How are the shopping and purchasing behaviours of the two groups likely to differ? Why?

Answer 67

Question 68

A large over-the-counter drug company developed a new mint-flavoured toothpaste that would retard the development of plaque. The firm’s marketing department was uncertain of how to best position the new product – as a convenience or a speciality item. If they decided to market it as a convenience good, what are the product-line, price-distribution and promotion implications as against marketing it as a speciality good?

Answer 68

The differences between marketing the new toothpaste as a convenience good and marketing it as a speciality good are:

(a) The line, in terms of the size of the container, would be longer – in part to gain greater shelf space.
(b) The package would be designed more as a promotional item, whereas, as a speciality good, the emphasis would be on developing a ‘medical’ image.
(c) The price would be competitive with other brands whereas, as a speciality good, the price would be considerably above that of ‘popular’ brands.
(d) Emphasis would be placed on mass outlet stores to gain widespread distribution, as against a speciality good’s limited distribution, for which the selected stores would provide in-store displays, personal selling and local advertising.
(e) Mass advertising coupled with coupons and perhaps free samples, as against local cooperative advertising and perhaps some advertising in a limited number of magazines. Efforts would be made to influence dentists to recommend the brand. Free samples would be given to dentists to pass on to their patients. (These promotions to dentists would be undertaken whether it was to be mar- keted as a convenience or a speciality good.)

Question 69

Suppose you are the marketing manager for Ralph Lauren’s line of designer women’s fashions. You believe that your products are speciality goods in the eyes of most potential customers. What does this fact imply for each of the following areas of your strategic marketing programme?

a. Price policy.
b. Distribution.
c. Promotion

Answer 69

Question 70

The Pontiac division of General Motors has adopted a market targeting strategy aimed at the segment of the car market consisting of younger consumers who are interested in sporty and expressive cars. How has this strategy affected the division’s decisions concerning the breadth of its product line and the design and features of individual products in its line?

Answer 70

The key is that this segment does not emphasise the product feature requirements of the major segments of the car market (which presumably seek features like economy, durability and so on). Rather, this ‘peripheral’ segment emphasises sportiness, expressiveness and perhaps ‘performance’. Thus, rather than seek product-line breadth (i.e. a variety of cars emphasising different features), the company should seek product-line depth (i.e. a variation on the themes of sporti- ness, expressiveness and performance).

Question 71

Large discount organisations in the United States such as Walmart are increasing their emphasis on store brands. What is meant by a store brand, sometimes referred to as a private label? Why are such companies making this decision? How should the manufacturers of national brands respond?

Answer 71

A store brand (or private label) is one developed by either a wholesaler or a retailer who is responsible for their naming, pricing, promotion and quality control. Such brands have increased in importance in recent years mainly because national brands have regularly increased their prices along with the massive use of coupons, thereby training consumers to shop for price. They also undertook a large number of line extensions and, in general, focused less and less on brand quality. Such powerful discounters as Walmart and Target have moved aggressively with their own brands to take advantage of the price vulnerability of many national brands. The latter have responded by reducing the price gap between their brands and private brands and by promoting value pricing which features fewer coupons (and price promotions in general) and stressing the higher quality (including the greater number of features) of their products.

Question 72

Should Walmart adopt a family branding strategy as it expands the number and type of its private labels? What would it possibly gain in so doing? What are the dangers in adopting such a strategy?

Answer 72

Whether Walmart – or any large discounter – should adopt a family branding strategy is a moot question. Much depends on the extent to which the company engages in private branding. If the items are related, then the company’s use of a family brand is more apt to be successful. If the family brand covers products that vary in quality, consumers can become confused about what quality to expect in the other products using the same name. Also, extending a brand name to an inadequate product is likely to hurt the quality reputation of the entire line.

Question 73

When Honda introduced a line of luxury cars to the US market, it decided to use a new brand name, Acura, along with a new and independent dealer network and marketing programme, rather than treating the new cars as part of the Honda line. What were the advantages and disadvantages of this branding strategy?

Answer 73

The advantages of this strategy are that it: (1) separates the upmarket Honda product from the low-priced Honda products; (2) increases the number of Honda dealerships to which consumers are exposed; (3) allows Honda to establish separate structures for dealer pricing and other activities; and (4) permits trading up within the Honda family of cars.

The disadvantages of this strategy are that it: (1) encourages horizontal conflict within the dealer channels (regular Honda versus Acura Honda dealer disputes); (2) separates the Acura from the favourable general Honda image (e.g. dependability, reliability); (3) compels separate advertising and other promotional programmes.

Question 74

Even though the firm decided not to use the Honda brand when it introduced the new models described in Question 11.53, the introduction can still be seen as an attempt to stretch the company’s product line. What do you think motivated this strategic move? What risks were involved?

Answer 74

There were probably two motives: experience and margin. Many firms (including particularly internationally oriented Japanese firms like Honda) attempt to gain as much production volume as possible. Volume is sought as an explicit goal because it increases the experience base, which drives down unit production costs in a predictable fashion. Also, Honda may have substantially saturated its low-price model market, and thus sought additional markets to increase its car volume. And the high-price model market carries a higher profit margin.

Question 75

Doctors, lawyers, and other professionals have become increasingly active in recent years in marketing their services. Which unique characteristics or concerns make such professional services different from tangible products? What are the implications of those differences for the design of effective marketing programmes for professional services?

Answer 75

Question 76

The World Wide Web can offer considerable opportunities for manufacturers of farm equipment such as tractors, combines, and harvesters to better serve their customers. Discuss the various ways in which the WWW can help such manufacturers better meet customer needs

Answer 76

The World Wide Web can be helpful in a variety of ways including announcing and detailing all new products, price changes, recalls, special promotions, new uses of existing products, maintenance suggestions, repairs and a place to display its catalogue containing detailed specifications on all products and services.