Chapter 6

Analyzing Business Markets

True/False Questions 1. SAP is a German software company that helps businesses automate their finance and management systems. True (easy) pp. 101 102 2. Organizational buying is the decision-process by which organizations establis h and satisfy their needs for goods and services. True (moderate) p. 102 3. Mining, manufacturing, banking, and distribution services are all considered part of the business market. True (easy) p. 102 4. Schools and prisons are considered institutional buying organizations and the y tend to have captive clienteles and limited budgets. True (moderate) p. 102 5. Characteristics of business markets include that there are more buyers and la rger buyers. False (moderate) p. 103, Table 6.1 6. When compared to the consumer market, the demand for goods and services in th e business market is derived. True (moderate) p. 103, Table 6.1 7. In selling to the government, the contract is always awarded to the lowest bi dder. False (difficult) p. 104 8. A new supplier is least likely to make a sale to a prospect involved in the s traight-rebuy situation. True (moderate) p. 104 9. A new supplier is least likely to make a sale to a prospect involved in the s traight-rebuy situation. True (moderate) p. 104 10. A straight rebuy is a more complex process than a new task because the firm is l imited to an approved list of vendors. False (moderate) pp. 104 105 11. One key thing to keep in mind when marketing across cultural boundaries is t hat all people are NOT basically alike. True (moderate) p. 107 12. A secretary who prevents salespersons from contacting users or deciders is p laying a gatekeeper role. True (easy) p. 107 13. Interpersonal factors have almost no influence in business purchasing decisi ons. False (moderate) p. 107 14. The business buying process is influenced by environmental, organizational, and individual factors. True (moderate) p. 107 15. Reading an advertisement about a new business service in a trade magazine to which the purchasing agent subscribes would be an example of how a problem migh t be recognized in an organizational setting. True (moderate) p. 109 16. Even if a supplier firm has the capacity to deliver a business product or se rvice, that supplier might NOT be allowed to submit a proposal in the buying pro cess. True (difficult) p. 110 17. When responding to a request for a written proposal, a business marketer sho uld remember the document is primarily a technical document explaining the featu res of the product. False (moderate) p. 110 18. Product value analysis can involve determining which components can be made cheaper through redesign or standardization, while keeping the same performance

level of those components. True (moderate) p. 110 19. In the negotiation process, if the potential supplier is faced with the lowe r price of a competitor, he or she should always lower his/her price. False (mod erate) p. 111 20. A blanket contract or stockless purchase plan establishes a long-term relati onship in which the buyer promises to buy all the stock of a particular seller a t agreed-upon prices. False (moderate) p. 111 Multiple Choice Questions 21. The business market differs from the consumer market in that __________. a. more mass media are used to communicate with the business market b. it is a much larger market with many more buyers than the consumer market c. it is a much smaller market in dollar volume than the consumer market d. more product customization takes place in the consumer market e. it acquires goods or services in order to use them for another purpose, as op posed to acquiring goods or services for personal consumption (difficult) p. 102 22. Organizational buying is __________. a. the process by which organizations recognize their needs for goods and servic es b. a way a company can produce a greater variety of high-quality products at low er cost, in less time, with less labor c. the decision-making process by which organizations establish and satisfy thei r needs for goods and services (difficult) p. 102 d. the practice of establishing of strategic partnerships between manufacturers and their suppliers e. the practice of buying a total solution for a problem from one seller 23. The __________ consists of all of the organizations that acquire goods and s ervices used in the production of other products or services that are sold, rent ed, or supplied to other customers. a. business market (moderate) p. 102 b. institutional market c. consumer market d. government market e. specialized market 24. The institutional market is best described as having __________. a. low budgets and a captive clientele (moderate) p. 102 b. demand elasticity and geographically concentrated suppliers c. contract negotiations and fluctuating demand d. derived demand, geographically concentrated suppliers, and budgetary constrai nts e. demand that is elastic, derived, and fluctuating 25. All of the following are major industries making up the business market EXCE PT: a. agriculture, forestry, fisheries. b. manufacturing, mining. c. construction, transportation. d. banking, finance. e. governments, institutions. (moderate) pp. 102 104 26. Business buying behavior differs from consumer buying behavior in that _____ _____. a. the buyers for the business market are typically more geographically disperse d than those for the consumer market and the demand for products and services in

the consumer market is unaffected by price fluctuations b. fewer people typically participate in or influence business buying decisions than in the consumer market c. businesses buy products to accomplish a single goal, which varies by industry and business d. the demand for business goods and services is derived from consumers final dem and (moderate) p. 103 e. businesses buy through longer channels with more intermediaries 27. When compared to the consumer market, the demand for goods and services in t he business market is _________. a. far more elastic b. significantly more constant c. derived (moderate) p. 103 d. more likely to be affected by changes in price e. all of the above 28. Business buyers _________. a. are geographically as diverse as consumers b. tend to be geographically concentrated with over half of them in seven states (difficult) p. 103 c. are largely concentrated in the southwestern United States d. tend to be found in smaller communities and rural areas in the Midwest e. use geographical dispersion to keep shipping costs low 29. 3M has developed a new type of plastic film used for shipping security. It i s more durable than any other form of film on the market. The first year after t he product was introduced its sales totaled $435 million. Analysts have predicte d an annual growth of 30 percent as businesses like transportation companies dis cover how well the film protects their products. Because the demand for the new 3M film is dependent on the demand for the products transported within it, the d emand for the film is __________. a. derived (moderate) p. 103 b. inelastic c. routine d. elastic e. constant 30. The buying department for a nursing home is informed the price of the ibupro fen used for patient medication has increased by 15 percent. He orders a new sup ply anyway because he knows he can pass the increase on to the clients. This is an example of business products having __________ demand. A. routine b. inelastic (moderate) p. 103 c. volatile d. accelerated e. elastic 31. Which of the following is true of the U.S. government as a market? a. The U.S. government is the largest customer in the world. (moderate) p. 104 b. Most purchases by the U.S. government are in the billions of dollars, usually for technology. c. The U.S. government will always award the contract to the lowest bidder. d. A comprehensive bid proposal might take as much as a few days to prepare and w eigh in at a few dozen pages. e. Cost minimization is the driving force behind buying decisions made by the U. S. government. 32. __________ organizations typically require suppliers to submit bids. Normall

y, they award the contract to the lowest bidder, although they sometimes take in to account a supplier s superior quality or reputation for completing contracts on time. a. Business b. Institutional c. Consumer d. Government (moderate) p. 104 e. Specialized 33. Suppliers describe governmental organizations as ________. a. always selecting quality over price when buying products and/or services b. avoiding opting for the bottom-line perspective c. sometimes considering quality or reputation but primarily rewarding contracts on the basis of price (difficult) p. 104 d. requiring minimal paperwork and having a process open to public scrutiny e. woefully lacking in specific guidelines for would-be suppliers 34. Which of the following buying situations would represent the purchase of off ice supplies such as reams of computer and copier paper, and computer disks? a. straight rebuy (easy) p. 104 b. modified rebuy c. new task d. routine rebuy e. direct purchase 35. The most routine decision process undertaken by business buyers is called a __________. a. straight rebuy (easy) p. 104 b. modified rebuy c. new task d. routine rebuy e. direct purchase 36. A new supplier is least likely to make a preliminary sale to a prospect invo lved in which of the following buying situations? a. new task b. modified rebuy c. functional rebuy d. straight rebuy (moderate) p. 104 e. direct purchase 37. Angelo Weinstein is a produce buyer for Alliant, a large food supplier. He i s buying lettuce, cucumbers, and tomatoes for producing pre-made salads. He orde rs the same number and quality of these vegetables as before but notices that hi s supplier s prices have increased slightly. Angelo is conducting a __________. a. straight rebuy (moderate) p. 136 b. direct purchase c. modified rebuy d. new task buy e. reciprocal buy 38. The __________ is a situation in which the buyer wants to modify product spe cifications, prices, delivery requirements, or other terms. a. straight rebuy b. direct purchase c. modified rebuy (easy) p. 104 d. new task buy e. reciprocal buy

39. Angelo Weinstein is a produce buyer for Alliant, a large food supplier. He i s buying lettuce, cucumbers, and tomatoes for producing pre-made salads. He orde rs the same number and quality of these vegetables as before but notices that hi s supplier s prices have increased slightly. If prices from his usual produce supp lier continue to rise, you can expect Angelo to engage in a __________. a. straight rebuy b. direct purchase c. modified rebuy (moderate) p. 104 d. new task buy e. functional rebuy 40. Purchasing department personnel for a corporate farm would have the most inf luence when the organization is __________. a. buying marketing materials for its booth at a national agricultural trade sho w b. purchasing farm equipment for the firm s agricultural business unit c. negotiating the performance specifications for new grain storage facilities d. renewing its subscriptions to several trade journals (moderate) p. 104 e. switching to a new vendor for satellite moisture reporting 41. Which of the following has the most influence in straight rebuy and modified rebuy situations in a multinational corporation? a. finance department b. purchasing agents (difficult) pp. 104 105 c. administrative personnel d. engineering department e. production managers 42. The __________ is a buying situation in which a purchaser buys a product or service for the first time. a. straight rebuy b. direct purchase c. modified rebuy d. new task buy (moderate) p. 105 e. functional rebuy 43. Robison Corp. is a ground beef processing plant. Owners William and Walker R obison attended a trade show and saw a meat grinding machine that operates at a capacity of 9,000 pounds per hour and requires only one employee. Until the show , the brothers had no idea such a product existed. As far as they have learned o nly one company is manufacturing such a machine. They have calculated that such a machine could save them up to $185 a day in labor costs. They have contacted t he company to learn more about the $53,000 grinder. The Rogers brothers are enga ged in a __________. a. straight rebuy b. direct purchase c. modified rebuy d. new task buy (moderate) p. 105 e. functional rebuy 44. Advertising usually has its greatest impact at the __________ stage of new-t ask buying. a. awareness (moderate) p. 105 b. interest c. trial d. evaluation e. adoption 45. Salespeople usually have their greatest impact at the ________ stage of new-

Erin s secretary developed a file of visiting salespeople. gatekeepers 49. repair. Missionary sales b. a. c. initiating team c. Initiator. 105 c. A turnkey solution c. her rol e is limited to that of __________. and operating supplies. Prime contracting 47. adoption 46. d. b. who share some common goals and the risks arising from the decisions. purchasing division d. (moderate) p. Gatekeeper. Approver. Project engineering d. 106 b. deciders d. b. user 50. including users or others. a. trial d. Erin is frequently charged with buyi ng expensive office equipment as part of her job. . 105 e. buying center (moderate) p. resulting in lower costs to the buyer. 106 e. In the buying center. awareness b. Influencers. Initiators.task buying. e. engineering division e. Which of the following best describes the buying center role in which people have the power to prevent sellers or information from reaching members of the b uying center? a. User. 106 b. Systems contracting (moderate) p. Jules. initiators (moderate) p. decider c. influencer d. other than to sign off on what Jules presents to her. a. 106 51. interest (moderate) p. Decider. influencers c. __________ is(are) where a single supplier provides the buyer with all requi red maintenance. approver (moderate) p. a. a. evaluation e.500. If Billie does not involve herself further in t he buying process. Office manager Billie has signatory authority for organizational purchases u nder $2. She delegates the task of finding five new acceptable fax machines to a trusted subordinate. influencing center 48. but only allowed a few to actually have time on Erin s calendar. Erin s secretary is playing what role in the business buying process? a. approvers e. __________ are people who request that something be pu rchased. The _________ is composed of all those individuals and groups who participate in the purchasing decision-making process. gatekeeper b.

With the help of the yard operations manager. the yard operations manager who will be responsible f or the overseeing the employees who operate and maintain the dumper has the role s of __________. The conglomerate has adopted just-in-time production in two of its divisions. d. and decider (difficult) p. and decider d. Do they value consensus? 55. user. 57. Environmental b. For the _________ type of business customer. 106 52. user. Individual (moderate) p. and influencer e. Which of the following is LEAST likely to be a useful question to ask when c onsidering selling to industrial customers who are of a culture other than one s o wn? a. influencer. In t erms of the buying center. initiator. __________ influences h ave the greatest effect on Dante as she performs her job. It will be replacing an obsolete piece of equipment which the yard operations manager describes as hard to operate and potentially dangerous. but the . the owner of Memphis Logistics is planning on buying a sophisticated loader to move merchandise from trucks on to rail cars. The operator of the di stribution company would probably assume the roles of __________ in the buying c enter. How do they make decisions? e. decider. (moderate) p. she is very cautious in he r buying decisions even when engaged in straight rebuys.c. The organization is negotiating more long-term contracts than in previous yea rs. 108 d. Deciders. Interpersonal c. approver and influencer (difficult) p. user and gatekeeper b. c. and sold at gardening supply stores. b. Organizational d. 106 54. What is their preferred mode of business communication? b. 107 e. The company is doing much of its purchasing through the Internet. a. Cultural 56. and gatekeeper d. buyer. (difficult) p. and approver c. Many of the tasks formerly done by the purchasing agent are now being perform ed by a centralized purchasing department. e. a. influencer. influencer and gatekeeper 53. gatekeeper and decider b. Approvers. initiator. The owner of a mulch plant is planning to purchase a $41. initiator. In what time zone is their headquarters? (moderate) p 107 d. Which of the following is NOT an example of an organizational influence that might affect the purchasing agent for a multinational conglomerate? a. a. gatekeeper. Because Dante is new at her job as company buyer. e. decider. low prices are desired.000 trailer for hau ling bulk product to a distribution company where the mulch will be packaged int o 2 cubic feet bags. The purchasing agent has a want-the-best attitude when it comes to buying compo nent parts. influencer. and buyer e. How do they perceive time? c. user. 106 c. Gatekeepers.

(moderate) p. Mandating terms for delivery. supplier search 59. Problem recognition. 110 b. General need description. silver-standard d. 109 d. b. The gardener in charge of maintaining the beautiful grounds at an amusement park was strolling through the park looking at the flowers and bushes from a gue st s perspective when he noticed some Japanese beetles flying around. strategic-value 58. d.y will respond to arguments about lower cost or more dependable supply and/or se rvice. price-oriented b. e. a. supplier selection e. Total quality management d. d. Customer cost analysis c. Which of the following buy phases would definitely be included in a modified rebuy situation? a. e. 109 62. Product specification. 109. c. a. Product value analysis (moderate) p. Defining pricing. This is an example of which of the steps in the purchase/pr ocurement process? a. 109 b. b. (moderate) p. general need description c. Defining quality levels. Product specification. Product reengineering e. He made a me ntal note to himself that he had to order some Japanese beetle traps when he got back to the office. gold standard e. b. definitely includes which of the following stages in the business buying process? a. Setting desired quantities. 60. Supplier search. Which of the following is NOT a major part of the product specification proc ess? a. problem recognition (moderate) p. Order-routine specification. solution-oriented (moderate) p. frozen juices. 108 c. The routine placing of the twice-weekly order to restock a commercial kitche n s freezer with meats. Supplier search. a. c. c.3 61. and fresh-frozen pre-mades like doug hs and stuffed pastas. product specification d. Marketing research 63. e. A product value analysis is conducted at the __________ step of the procurem ent process. general need description . problem recognition b. Table 6. __________ is an approach to cost reduction in which components are carefull y studied to determine if they can be redesigned or standardized or made by chea per methods of production. (moderate) p. Determining the item s general characteristics. Problem recognition. poultry. Supplier selection. General need description.

111 b. d. general need description c. they agreed Rikka would buy six pallets of world flags. blanket contract (moderate) p. 110 e. Knol l is in the __________ phase of the business buying process. b. problem recognition b. 111 . The owner att ended the 2002 Web-EX Trade Show and asked several of her colleagues for recomme ndations. four 12-foot sections of display shelving. multiple sourcing 69. a. subordinate suppliers. In addition. The company i s concerned about the delivery reliability. a. bobble-head dolls for Rikka s arts and crafts supply store. second-tier suppliers.c. outsuppliers. proposal solicitation 64. product specification d. Supplier selection. product specification d. supplier search (moderate) p. (moderate) p. 111 d. outsourcing agents. A(n) __________ establishes a long-term relationship in which the supplier p romises to resupply the buyer as needed at agreed-upon prices over a specified p eriod. 111 68. Performance review. a. price. e. systems selling e. order-routine specification 66. order-routine specification 65. value-added suppliers. product specification (moderate) p. The Knoll Textile Manufacturing Company is evaluating potential suppliers of zippers to be used in production of a line of children s outerwear. e. An online retailer of outdoor equipment was looking for some help with its W eb site maintenance so as to be more user-friendly and convenient. the supplier maintaining the inventory (difficult) p. Proposal solicitation. 111 b. the salesperson agreed to have the items delivered in ten working days and give Rikka an 8-percent discount. (moderate) p. Both of the distributors continue to try to price their merchandise at pr ices lower than those of Festival Supply because Pasquallis and Kerr-Nal Distrib utors are both: a. 67. buyers being less dependent upon any given supplier b. Easter Village store sells Easter-related cards and gifts year-round. c. a. Rikka and the salesperson are engaged in which phas e of the procurement process? a. Order-routine specification. proposal solicitation c. supplier selection (moderate) p. but Easter V illage also buys some ornaments from Pasquallis Global and from Kerr-Nal Distrib utors. She is in the __________ phase of business buying. and supplier reputation. As Rikka and the salesperson talked. c. the rebuy process being upgraded to a new task buy each time there s a reorder c. A blanket purchase contract leads to __________. d. Product specification. The pr imary source for its domestic and foreign gifts is Festival Supply. and two gross of sup er-hero. supplier search e. 110 d. performance review e.

He has stopped by to see if the purchasing agent needs to restock any of his company s machine l ubricants. Now Julie and Rhet own a company that produces gourmet chutneys under the brand name Exoti-Sauce. and 8) performance revie w. (difficult) Table 6. Because the decision is jointly made. 7) order-routine specification. 2) general need desc ription. enter a room outside the purchasing agent s office. 5) proposal solicitation. . c. Julie. he is most likely in the supplier search phase for the new task buy. She could take the role of gatekeeper if she knew of a cheaper system but decided not to tell the others a bout it. using a buyflow map b. Two sales associates. There are also a number of part-time workers. Working at the company now are Rhet. specialized contract over-run contract purchase order contract superior order contract 70.500. a n approver. The purchasing agent works for a fiberglass manufa cturer. including price (difficult) p. The only two buy phases for the purchas ing agent are product specification and performance review. Diz Miller and Nestor Marlbrough. e. using any of the above methods Essay Questions 71.3 72. What buy phases are associated with each buyclass? In what buy phase do you think the purchasing agent is now? Answer: The lubricants will be a straight rebuy. and Rhet and Julie s nephew Bert who makes deliveries and does the he avy lifting and cleaning. developing a supplier-attribute positioning map c. She would also by the same logic be a user. Response was very promising and demand wa s strong. The agent is in the product specification phase with the adhesives. but the following are some possible answers. A company can review the performance of a supplier by __________. 4) supplier search.000. 3) product specification. The machine sold by Marlboro would be a new task buy and would require the purchasing agent to go th rough all the stages of the buy phase 1) problem recognition. d. It costs about $12. using financial data from Dun and Bradstreet d. 6) supplier selection. a. Rhet and Julie Raymond had a larger-than-average crop of mangos last year. Classify the products being sold in terms of buycl ass. T hey decided to make some extra jars of Julie s mother s mango chutney to see if they could sell it at a local crafts fair. discuss how each of the company s full-time employees might assume various roles in the buying center. The furniture company currently does this by employing skilled laborers who use hand tools. In a short essay. Marlbrough will try to convince the purchasing agent to buy a machine for extracting and trimming glass fibers that will reduce waste by 13 percent a nd costs $44. Miller has sold to the company several times in the past. A salesperson wants to sell them a bottle-labeling system that will speed up production by 200 percent. 112 e. a) Julie knows how much work it is to glue on labels so she would definitely be an initiator. her moth er Mandalee.b. Given the way the question is written. and a buyer as part owner of the company. Rhet is in charge of marketing and helps out in the ki tchen. she would be an influencer to convince the others and a decider. aggregating the cost of poor performance to come up with an adjusted cost of purchase. Answer: Students answers to this question will vary.

. 104 105 74. primarily in the case of complex projects involving major R&D costs an d risks and in cases where there is little competition. The straight rebuy could occur when the buyer has bou ght from you previously and is simply restocking its shelves. (easy) pp. governments provide wo uld-be suppliers with detailed guidelines describing how to sell to the governme . She could act as a gatekeeper if she kn ew the building currently used by Exoti-Sauce was not big enough to hold the sys tem where it could be used efficiently. 106 73. he could be an influencer. explain how an organizational buyer might decide whether a potential supplier is qualified and whether a proposal should be solicited and/ or accepted from that supplier. government organizations require considerabl e paperwork from suppliers. In a brief essay. and buyers should carefully consider track records of reliability and po tential for bidders who are not well known. d) Bert is not involved in the production of chutneys except to help clean. Better answers would tell why this is a helpful indicator. c) Mandalee also knows how much work it is to place the labels so she would defini tely take the roles of initiator and user. Out-suppliers may have to fight harder for a piece of the business by findin g ways to overcome the status quo (e. Some bidders do not have the needed capacity to actually fulfill the co ntract. Governments will also buy on a negotiated contra ct basis. Imagine you are a salesperson for a company that sells office supplies to bu yers in different buying situations. Explain how the governmental procurement process differs from the business m arket purchase process. (moderate) p.g. Attaining trusted a dviser status through expertise also helps a company stand out to the potential b uyer. In a short essay. develop three scenarios t hat illustrate each of the three situations. the usual suppliers get all the new con tracts). Answer: Government organizations are major buyers of goods and services. but as part owner of the company . approver. He woul d most likely play no other roles. and buyer. she would also act as an influencer. How can the supplier improve their odds in the p rocess? Answer: Some buyers require that suppliers have external certifications.b) Rhet is not involved in the production part. such as ISO 900 0. Answer: Students answers will vary. he would take the roles of decider. Just as companies provide government agencies with g uidelines on how best to purchase and use their products. (difficult) p. The modified rebuy could occur when the buyer wants to modify delivery schedules or payment plans. Depe nding on how easy the new system is to clean. Government organizations tend to favor domestic suppliers over foreign ones. Because their spending deci sions are subject to public review. He could take the rol e of gatekeeper if he refused to let the salesperson present any other equipment that might be useful in the Exoti-Sauce kitchen. Government orga nizations typically require suppliers to submit bids and normally they award the contract to the lowest bidder. 110 75. Even though she has no ownership righ ts. New task buying would occur if the buyer were purchasing something it had not p reviously purchased such as audiovisual equipment or instructional or motivational books or networking software.

he named it The Indispensable. nose. be tter wiring for more sophisticated machinery. Others shar e this sentiment because many corporations today own corporate jets to support e fficient schedules and to reach remote locations. e. 103 . 79. Organizational. (moderate) p. The larges t manufacturer in terms of sales is Bombardier. In the case. Environmental. Turek is impressed with James recommendations and announces to staff and patients that the practice will be relocating in 60 days. Only approver. however. user. Mini-Case 6-2 Billionaire investor Warren Buffet once called his jet The Indefensible. d. and throat practice is booming and she ne eds more office space to accommodate the growth. (moderate) p. including Warren Buffet. Initiator and user. c. 77. Gatekeeper and initiator. James recomm ends that the office move to a new medical complex. After much research. Refer to Mini-Case 6-1. would desc ribe the demand for corporate jets as __________. James asks all the employees for the ir input as to what is needed in a new office. Major manufacturers of corporate jets are Gulfstream. Refer to Mini-Case 6-2. Initiator and decider. Influencer and gatekeeper. b. a. 106 c. Its speed is nearly 600 miles per hour. Initiator. 76. James does no t include information about more affordably-priced and available office space in the same complex because he would like a shorter commute to work. and gatekeeper. Individual. b. Macro. Interpersonal. Most executives. referring to its high price tag. Dr. Turek played what roles in the decision to move her practice? a. where office space is priced 30 percent higher. which makes the Learjet. 106 d. A nonstop flight between New York and Tokyo takes about 13 hour s and 40 minutes on the Gulfstream V and about an hour and ten minutes longer on a commercial jet. b. e.nt. Dr. the Beech Division of Raytheon Co. 104 Mini-Cases Mini-Case 6-1 Dr. one of the top of the line executive jets cost Buffet $38 million. inelastic (moderate) p. out-patient surgery center. When James withheld information about the closer off ice possibilities. She asks her office manager Jam es to help decide the attributes that will assure that a new space will be adequ ate for the practice now and in the future. Initiator. 107 e. Given the increasingly global nature of business. 78. The new space has an on-site. James had what roles in the buying proc ess for new office space? a. and approver. d. Only initiator. Refer to Mini-Case 6-1. Therese Turek s Minnesota ear. Refer to Mini-Case 6-1. Later. Only influencer. corporate aircraft makes sense. this was an example of which type of influence on the buying process? a. (moderate) p. c. and covered parking. Cessna. user.. and Dessault Aviation of France. User and approver. The GulfStream V. (easy) p.

120 10. and 3) predi ct the consumer behavior of the segments. d. 119 8. If everyone s choice for their computer printer were an HP LaserJet 1200. c. 117 4.b. Consumers who belong to the same market segment have identical needs and want s. systems buy Chapter 7 Identifying Market Segments and Targets True/False Questions 1. Fal se (moderate) p. 2) select one or more segments to enter. False (easy) p. Geoclustering is a technique for segmenting markets on the basis of multiple attributes. modified rebuy c. One reason geoclustering is increasingly popular is the falling cost of data manipulation. True (easy) p. micromarketing of a consumer product results in the largest po tential market for that product. True (difficult) p. Mass customization means a company has the ability to prepare individually de signed products to meet customer requirements. False (modera te) p. False (moderate) p. 117 3. False (moderate) p. 119 story boards to test 9. 117 2. local areas. 122 12. False (moderate) p. e. Traditionally. One of the reasons demographic variables are the most popular variables for segmenting the consumer market is because usage rates are often associated with demographic characteristics. now when a company considers buying a corpo rate jet. By and large. they will engage in a(n) _________. 118 6. There are four levels at which a firm could micromarket segments. a. Lifestyle is an example of a demographic segmentation variable. 120 11. 122 13. 119 7. True (moderate) p. True (difficult) p. and individuals. The first step in segmenting a market is to create segment the segment s viability. False (easy) p. 122 . Considering how shareholders have felt about the own ership of corporate jets in general. 105 e. The ultimate level of marketing segmentation is mass marketing. indirect purchase d. new task buy (moderate) p. functional buy b. 117 5. Target marketing requires marketers to take three major steps: 1) identify an d profile distinct groups. niches. there would be a heterogeneous preference segment in the computer printer market. True (easy) p. income is an excellent predictor of who will buy what products . False (difficult) p. routine low-involvement elastic accelerated 80. Refer to Mini-Case 6-2.

A southern chain of barbecue restaurants would find it advantageous to prepa re a sweet pork sandwich with coleslaw inside for Mississippians. Because the number of people with sufficient income to purchase a Bentley is relatively small. (moderate) p. the niche has growth potential. True (moderate) p. 123 16. d. Single-segment concentration. and offered test rides and barga in financing on its Sportsters products. a. it was using geographic segmentation. the niche is not likely to attract heavy competition. In business market segmentation.000 and above range. 117 c. fewer competitors because there are fewer markets e. increased product prices due to the lack of differentiation and decreased com petition c. Benefits sought erate) p. the largest potential market for that product (moderate) p. True (mod 17. 117 b. mass marketing of a consumer product results in __________. 25. niche (easy) p. niche (easy) p. a. F alse (moderate) pp. and a willingness to pay a premium to meet those needs. 129 20. operating variables are the most important segmentation variable. Bentley produces fine automobiles with price tags in the $300. means serving just one market segment with one product. 124 is an example of a behavioral segmentation variable. True (moderate) p. the niche can specialize and therefore realize certain economies. consumers in the niche have distinct needs. 130 Multiple Choice Questions 21. False (moderate) p. a. c.14. local b. 122 15. derived 23. lower profit margins 22. individual d. one of five patters of target market selection . we might say Bentley is engaged in __________ marketing. A(n) __________ market is characterized by a fairly narrowly defined market with a complete and distinct set of needs. aggregated c. 124-125 18. Many marketers believe behavioral variables are the best starting point for constructing market segments. homogeneous 24. easier channel selections d. a mustard-base . All of the following are part of an attractive niche EXCEPT: a. False ( moderate) p. e. True (moderate) p. 117 e. local b. individual d. When Harley Davidson used the slogan It s time. derived e. 125 19. 117 b. Social Class is an example of a psychographic segmentation variable. the niche has variety-seeking consumers. Firms that offer tailored programs for several different market segments eng age in differentiated marketing. Traditionally.

If a food company segments a market on the basis of demographic and/or psych ographic information. its basis for segmentation is __________.d sauce with pork and coleslaw on the side for Carolinians. 118 d. a. makes it difficult to select a proper distribution channel c. If everyone s choice for their computer printer were an HP LaserJet 4100. 119 b. stratified e. . A marketer facing a market segment with natural market segments is dealing w ith a market with __________ preferences. individual d. a. drives up marketing and manufacturing costs by reducing economies of scale (d ifficult) p. heterogeneous d. homogeneous e. clustered (moderate) p. The ultimate level of marketing segmentation is __________ marketing. and a smoky beef san dwich with thick white bread instead of a bun for Texans. clustered preferences b. homogeneous preferences c. 119 d. 118 b. __________ is the ability to prepare. niche c. 119 e. diversified b. a. An argument against local marketing is that it __________. Mass customization (moderate) p. 118 d. stratified c. makes it difficult to be profitable because of the small size of the market b. a. 120 32. demographic 26. leads to a homogenization of the market e. homogeneous e. Clustered marketing 29. ther e would be a ________ preference segment in the computer printer market. diffused d. individual (moderate) p. A consumer preference pattern in which all the dots are spread out and no pa ttern emerges is called __________. niche c. a. Specialization c. concentrated preferences d. local b. solidifies a brand s overall image in the marketplace because it delivers the s ame advertising message throughout its market 27. local (moderate) p. a. diffused e. Niching b. honeycombed preferences 30. clustered 31. individually designed products to meet each customer s requirements. mass 28. heterogeneous c. a. diffused preferences (moderate) p. it will improve the likelihood of its success. homogeneous (moderate) p. Concentrated marketing e. If the chain engages i n __________ marketing. on a mass basis.

Because two-thirds of the sales of new motorcycle policies at Dairyland Insu rance Company are to current policyholders.income 36. benefits segmentation b. geoclustering (moderate) p. 120 c. a. behavioral (moderate) p. demographic b. demographic segmentation d. it should use a __________ segmentat ion strategy. and 3) those who soug ht to improve their own musicianship. e. a. 123 d. This is an example of __________. Target realizes that the people in each of these neighbo rhoods do not have the same needs and should therefore not be offered the same p roducts. lifestyle (moderate) p. A segmentation study of people who would be interested in subscribing to a m usic and entertainment magazine discovered three distinct groups of potential su bscribers: 1) those who wanted reviews of the latest music releases. occupation b. 120 c. demographic d. Which of the following is an example of a psychographic variable the owner of the retrea t could use in its marketing strategy? a. 120 customer behavior market partitions 33. You d have to go to the Target store i n Mesa to find heaters. psychographic segmentation 34. The Target store in Scottsdale sells tr ailers but does not stock portable heaters. When the parent company introduced Southern Belles magazine. benefits segmentation b. customer responses preference segments customer characteristics (moderate) p. psychographic segmentation 35. From this state ment. geographic 37. and belief sys tems. education-based b. benefit c. behavioral segmentation e. you will find praye r candles but no bicycle child carriers. d. demographic segmentation d. behavioral segmentation e. 2) those wh o wanted to know behind the scenes gossip about the stars. 123 d. age c. c. a. generation e. lifestyle (moderate) p. If you go to a Target store on the east side of Phoenix. b. shapes. This magazine discovered its market can be segmented using __________ variables. geoclustering (moderate) p. psychographic .a. you should be able to describe the segmentation strategy used for the maga zines as __________. it was describe d as a new publication that covers female style and southern life. The Lazy H Dude Ranch is open to people of all sizes. a. social class c. social class e . It s a place people can go to unwind from the stress of daily life. 123 e.

and generational segmentation assumes they are influenced by what th ey grew up with. b. occupation-based 44. user rate b. usage rate 41. gender b. geographic b.38. Based on this research. a high potency. She is studying __________ data. Which of the following is an example of a demographic segmentation variable? a. This is an example of __________ segmentation. multivitamin fo r active men and women over 50. loyalty status e. personality e. user status d. and generational segmentation is based on the effects of economic and social status. 40. Attitude toward the product. e. Age and life-cycle segmentation is a relatively straightforward segmentation strategy while generational segmentation is much harder to implement. d. There are no differences between age and life-cycle segmentation and generati onal segmentation. family life-cycle d. Generation or social class. a. Research by Voicestream Wireless revealed that it serves two different kinds of consumers: chatterboxes who seemed to live on the phone and those that make lots of short calls. 125 c. VALS uses date of birth to help determine market segment membership. demographic (easy) p. 122 b. Personality. 124 43. (difficu . a. (difficult) p. lifestyle 39. Age and life-cycle segmentation is rigid and unchanging over time while gener ational segmentation changes with each decade. 122 c. Which of the following is NOT true of the VALS framework? a. Age and life-cycle segmentation assumes the effect of time. Lifestyle. age-based b. For years Spiral-Cut Hams have been on thousands of Easter dinner tables. age and life-cycle (moderate) p. e. a. benefit e. Joan has learned th at more of the product is consumed in ethnic neighborhoods on a per capita basis than in less homogeneous areas. c. Age and life-cycle segmentation assumes people are influenced by where they a re in life. While studying consumer-buying patterns for malt liquor. d. generation c. 42. lifestyle c. occasion (moderate) p. usage rate (moderate) p. Which of the following statements best describes the difference between age and life-cycle segmentation and generational segmentation? a. Sp iral-Cut is working hard to implement other segmentation strategies beyond the l imited __________ strategy it used in the past. (moderate) p. it should use a(n) __________ segme ntation strategy. 122 c. Perrigo Corporation makes One-Source Mature. a. User status. 122 d. psychological d. user status e.

b. Purchasing p. 125 d. Family life cycle. splinter loyalist 47. Which of the following is NOT a major business segmentation variable? a. d. buyers had typically researched and compared GEICO to other providers. According to Bonoma and Shapiro. Which of the following is an example of a behavioral segmentation variable? a. lifestyle. Religion. Occupation. (difficult) p. d. situational factors d. 49. and no other brand. 126 c. e. (moderate) p. c. c. Lifestyle. e. He makes his selection based on which brand first catches his eye. 125 b. 46. 48. d. Personality. Which of the following is an example of a behavioral segmentation variable? a. split loyal c. Ninety percent of all sales made by GEICO Insurance Company are initiated by the buyer rather than commissioned agents. The Innovators segment has high resources. hardcore loyal b. Operating variables. Education. When dealing with loyalty status. Generation. The experiencers segment is primarily motivated by self-expression. Given this information. d. A company s power structure and the nature of its existing relationships with suppliers are all related to which of the major business market segmentation var iables? . Social class. Income. Attitude. 45. (difficult) p. 125 c. e. they felt that G EICO best satisfied their needs. operating variables c. e. Demographic. buyers can be segmented in a variety of wa ys. a. Geographic. switcher e. 51. personal characteristics 50. Barton will select e ither Libby s or the house brand. Barton is an example of a __________. e. the most important segmentation variable fo r business markets is __________. 125 d. Personal characteristics. When given a choice of canned fruit at the supermarket. Education level. Readiness stage. b. (moderate) p. b. demographic characteristics (moderate) p. Over 80. GEICO should develop a strategy around which of the behavioral segmentation strategies? a. purchasing approaches e. c. Before purchasing insurance. a.000 new surveys a year are added to the VALS data. Buyer-readiness. 125 b. User status. shifting loyal (difficult) p. SRI identifies eight primary VALS segments in the United States. 123 b.

differentiable. Personal characteristics. e. and accessible c. A sports car manufacturer considered marketing to a market segment made up o f individuals separated from their spouses but not yet divorced. substantial and actionable 55. First-time prospects. 54. 126 Situational factors. accessible. and want easy-to-comprehend instructions. actionable. Demographic. lots of trai ning. It is accessible. _________ are business buyers who are starting their purchasing relationship . Novices (moderate) p. 127 b. differentiable (moderate) p. d. This market segment is __________ even if it meets none of the other characteri stics needed for a market segment to be useful. 53. Situational factors. this group was not a(n) _________ market. accessible and substantial b. It is satisfied. e. Personal characteristics. 127 57. Fringe account companies. (moderate) pp. Which of the following is NOT necessary to make a market segment useful? a. 58. 127-128 d. A company s size and physical location are all related to which of the major b usiness market segmentation variables? a. Sophisticates. Operating variables. 127-128 c. Fringe account companies e. Which type of business buyer is most likely to want to deal with a company s alesperson instead of a catalog or online purchasing environment? a. and substantial e. Novices. b. c. accessible d. Sophisticates d. (moderate) p. (moderate) p. 126 b. Purchasing attributes. a. substantial c. Purchasing attributes. if the segment has potential and if it fits with the company s objectives and r . First-time prospects b. High-maintenance c. d. (moderate) p. Operating variables. It is actionable. not quantifiable 56. d. Demographic.a. and knowledgeable sales reps. invest igation of the segment showed that this group of individuals could not be reache d by any specific media. measurable. 128 e. The main two things to consider when selecting a target market are: a. It is measurable. 52. immeasurable b. differentiable. a. It is substantial. d. e. differentiable. b. hotlines for questions. A marketer wants to market beeping balls to sight-disabled softball players. a. In effect. e. c. Innovators. and actionable (difficult) pp. However. c.

the survey stage c. Because these groups only exploitable similarity is their interest in sports cards. Market specialization. This is an example of _____ _____. differentiated marketing (easy) p. Undifferentiated marketing. product specialization 63. differentiated marketing. 128 c. paper placemats that decided it was only going to sell to sit-down restaurants would have adopted a __________ segm entation strategy. Single-segment concentration. selective specialization b. inter-segment cooperative 62. full market coverage d. e. a. undifferentiated marketing c. 130 d. 130 e. a. blocked market e. Ford Motor Company sells Ford. interrelated segment b. if the segment is easily communicated with and if it is different enough from other segments. full market coverage d. market niche c. c. a. Research shows that sports cards appeal to 6. c. market specialization e. market specialization (moderate) p. 128 e. selective specialization b. if it is easy to define the needs of the segment and if economies of scale ar e possible with the segment. single segment concentration . (difficult) p. For years. and professional collectors. this would be an example of a(n) __________. segment acid test d. segment identification 60. 59. concept testing b. 130 d. (moderate) p. d. a. counter-segmentation b. b. and Jaguar brands. 130 d. Which of the following 64. e ach having appeal to a select segment of the market. marketing mix strategy (difficult) p. market specialization e. A marketer who selected a __________ segmentation strategy would find this s egmentation strategy to possess the greatest amount of risk. strategies does this slogan most likely support? a. single-segment concentration c. Product specialization. Mercury. Sears Has 54 -year-old men. A manufacturer of disposable. 24. The last step in segmenting a market is __________. supersegment (moderate) p. single-segment concentration (moderate) p. e. 128 b.esources. if the segment is actionable and if the consumers in it are 17-year-old boys. Sears used the slogan. if the firm can provide a flexible market offering to fulfill the segment s nee ds and if the segment is large enough to be viable. patterned. a. Volvo. product specialization 61. Lincoln.

the best approach to those markets is to __________. The Gap caters to buyers seeking classic clothing at mid-range prices. The Gap is practicing __________ marketing. significantly decreases manufacturing costs c. single-segment concentration c. Megamarketing (moderate) p. Firms that offer tailored programs for several different market segments eng age in __________ marketing. . When companies encounter blocked markets. keeps advertising costs low d. 131 c. Markets can be segmented at four levels. describe each lev el and explain the benefits associated with segmenting the market at each of the four levels.65. 130 b. keeps down advertising and R&D costs (moderate) p. product generalization 66. market specialization e. market specialization e. In a short essay. 131 d. Intersegment cooperation e. psychological. increases administrative and production costs b. a. and public-relations skills to gain the cooperation of a number of parties in or der to enter and/or operate in a given market. tee-shirts and khakis) . Segment-by-segment invasion planning b. political. use a megamarketing approach (moderate) p. study intersegment cooperation and use it to enter the blocked markets e. a. 130 b. a. creates more total sales than differentiated marketing e. single-segment concentration c. It al so owns other retailing chains including Banana Republic (catering to more afflu ent buyers) and Old Navy (which sells value-priced jeans. a. 130 c. differentiated (moderate) p. Turbomarketing Essay Questions 71. product specialization 67. forget the blocked market and approach easier to enter markets d. puts the company at risk of being supplanted by an entirely new technology 69. a. differentiated marketing __ ________. reduces inventory costs e. increases the firm s cost for product modification d. a. In terms of its affect on the marketing process. undifferentiated d. differentiated (moderate) p. In terms of its affect on the marketing process. increases administrative and production costs (difficult) p. 130 68. Market niching c. undifferentiated marketing __________. find an exploitable similarity and create a megamarket 70. lowers total sales. undifferentiated d. __________ is strategic coordination of economic. which increases profits by increasing the margin on each sale b. use a segment-by-segment invasion plan b.

(moderate) pp. In a short essay. Potato chip brands would cluster around the center of the scale. 3) Clustered preferences occur when the market re veals distinct preference clusters called natural market segments. It is quite often necessary for . the marketer can create a more fine-tuned p roduct or service offering than with mass marketing. each positioned in different segments. The product can be priced a ppropriately for its target audience. The examples students give will vary according to their knowledg e and experiences. As multinational companies look for ways to improve their efficiency. one so lution is the purchase of executive jet planes. neighborhoods. The first firm would have three options. or bu ying habits. taste. Give an actual or m ade-up example of a niche market and the firms that compete there. A ni che is a narrowly defined group that seeks a distinct set of benefits. like if a gro up preferred a crispier chip with more nutritional content. It might develop several brands. and growth potential. The market shows no natura l segments.Answer: 1) Segment marketing consists of a large identifiable group within a market with similar wants. typically a small market whose needs are not well served. They will often pay a premium to the firm that better satisfies their needs. If the first fir m developed only one brand. With segment marketing. buying attitudes. purchasing power. or locate in the corner to attract those not sa tisfied with the center brand. crunc hiness. It might position itself in the center. A second competitor could locate next to the f irst and fight for market share. A brand in the center minimizes the sum o f total customer dissatisfaction. (difficult) pp. The first brand to enter the market is likely to position itself in th e center to appeal to the most people. 4) The ultimate level of segmentation is ind ividual marketing. describ e the three different preference patterns that should emerge from this research? Answer: The attributes would reveal three basic-market preference graphs. then competitors would enter and introduce brands in the other segments. National advertising could be wasteful because it often fails to address local needs. Answer: The phrase refers to the fact that large firms (the gorillas) often lose small p ieces of their market share to highly focused competitors (the guerrillas). The nich e gains certain economies through specialization. 117 118 74. Marketers benefit from increased sales and profits by realizi ng that their customers want to express their individuality. The choice of distribution and communicati on channels becomes easier. 3) Tailoring marketing programs to the needs and wants o f local customer groups (trading areas. Suppose potato chip buyers are asked how much they value price. and nutritional content as product attributes. and even individual store s) is called local marketing. Niches are s mall enough that they do not attract as much competition as do segments with lar ger potentials. 2) A niche is a more narrowly defined group. 2) The term diffused preferences is at the other extreme. The company also faces fewer competitors in the segm ent. discuss niche marketing and explain the phrase guerrillas a gainst gorillas as it relates to marketing to niche segments. 117 119 72. 1) The term ho mogeneous preferences describes a market where all the consumers have roughly th e same preferences for value and nutritional content. hoping to appeal to all groups. Consumer preferences vary greatly. profit . 119 73. It might position itself in the largest marketing segment. The niche is not likely to attract other competitors. In a short essay. (moderate) p. a marketer finds customers wit h a distinct set of needs that will pay premium prices to the firm that best sat isfies that need. With niche marketing. geographical location. and the niche has size.

power structure of organization. The following is a poss ible answer: Industry and location of industry are both potential demographic va riables than can be used. Include a brief exp lanation for why this segment might be a good one to consider. The one that is least likely is the nature of existing relationship. Personal characteristics might include buyer s willingness to take risks. as they see very little competition in that power range. Students can earn their degrees o ver the Internet and only have to attend a one-week seminar on campus twice a ye . this would be an example of an operating variable. which cannot be modified to individual student needs. (moderate) p.S. but here are some examples of viable market segments : high school and college students (education.200 to $2. general purchase policies of buyer. In terms of situational factors as segmentation variables. mark et. city dwellers (in the Geographic headi ng parking and traffic might spur this group). sports enthusiasts (lifestyle varia ble under the Psychographic heading the bikes might seem like a fun and sporty way to get around). Other segmentation variables to use would include lifestyle (psychographics). although th ese are the easiest and may work just fine. The university investors will advertise nationally. but it i s not out of the realm of possibility that a company would need and buy more tha n one corporate jet. Haven will only offer three degree programs.100) decides to enter the U. probable retail prices $1. In a short essay. discuss three or four poss ible segments that might be targeted by the Chinese concern. 120 125 to fly to other operations around the world. You are asked to he lp them decide how to segment the U. They have identified a small segment of society that is displeased with th e high cost of college and is willing to forego all social and sporting extracur ricular activities in order to get an inexpensive. The proposed segments and the explanations for why they migh t work will obviously vary. All fi ve of the purchasing approaches would be applicable as segmentation variables purc hasing-function organization. Using t he Major Segmentation Variables for Consumer Markets. Its target audience is i ndividuals between 22 and 30 years of age who have either not started earning a college degree or who did not finish one they began in the last ten years. The i nvestors want to attract students who are currently working at a job with which they are dissatisfied. nature of existin g relationship. how the buyer will use the jet falls under the category of specific application. discuss which major segmentation variables for business markets a manufacturer of corporate jets can use. commuters (benefits sought under the Behavioral heading their nee ds may be similar to the city dweller group and also the budget issue). Research has shown that these are degr ees that this market segment repeatedly seeks. A Chinese manufacturer of small and inexpensive motorcycles (125cc to 250cc engines. Answer: Students will answer this question in a variety of ways. quality education in four yea rs. benefits sought (behavioral). Businesses can be segmented according to heavy or ligh t usage of air travel.S. income. and buyer s purchasing criteri a. marketplace for small motorbikes. 121 Mini-Cases Mini-Case 7-1 A group of investors are starting a for-profit college to be called Haven Univer sity. and buy er-seller similarities could also be a viable segmentation variable in this exam ple. (moderate) pp. Answer: Better answers will include more than income and age (demographics). and city size (geographic). and occupation within the Demographic heading they are on a budget). Having a corporate jet r emoves time constraints from these trips.

geographic. loyalty status. and geographic e. which subsi dized it to the consumers. the target segment most prominently includes which variables? a. 80. geographic and demographic d. Refer to Mini-Case 7-2. access to healthcare. 76. (moderate) p. a. The investors have identified their market through t he use of __________ segmentation variables. What kind of segmentation variab le would be used to identify this segment? a. Refer to Mini-Case 7-2. If the firm marketed their product in the form of wh ite pills in a plain bottle and sold it to rural government clinics. age. ethnicity. Refer to Mini-Case 7-1. and demographic b. education. the target segment most prominently includes which va riables? a. sexual activity. and city size. awareness about the availability and uses of birth contr ol. awareness (readiness). Chapter 8 Creating Brand Equity True/False Questions . M anila. 124 e. sexual activity rates. d. and stage of the family life cycle. b. loyalty status. and behavioral (moderate) pp. Mini-Case 7-2 A large international pharmaceutical firm decides to enter the Philippines with a new oral birth control product. Refer to Mini-Case 7-1. Race. (moderate) pp. local d. 117 118 c. Lifestyle. rural versus urban population. access to health If the firm decides to sell pastel colored pills at higher than the competitors prices. Usage. awareness (readiness). Nationality. Religion. and religious orientation. and city size. Refer to Mini-Case 7-1. and religious orientation. 120 125 c. 120 125 78. and education. These people had always assumed getting a degree was impossible becaus e they did not have the time to attend classes. and city size. psychographic. The investors discovered there was a segment of the population who was being passed over for promotions because they lacked a colleg e degree. and education. d. Values. aggregated e. and stage of the family life cycle. sexual activity. age. mass b. Nationality. Age. niche (easy) pp. b. Income. 120 125 c. religious orientation. b. c. Income. Benefit. income. e. psychographic and behavioral c. demographic. individual 77. The Filipino population varies greatly in term s of levels of age. Personality. and other variables that might influence consumption patterns for birth control. a. behavioral. psychographic. behavioral. d. Race. and city size. Age. income. These university investors are using __________ mark eting to identify their target market. access to health care. e. (moderate) pp. Religion. and sell through pharmacies in the capital. income. 79.

136 3. 137 4. 1 45 14. True (easy) p. 142 10. is an example of the sub -branding strategy. By using brand extensions. The Harley-Davidson version of the Ford F150 truck is an example of co-brand ing. The brand elements of protectable. marketers can cut the cost of new product introdu ctions. True (moderate) p. and all accompanying marketing activ ities and supporting marketing programs. service. A Granturismo. caramel and coat ed in chocolate would be considered a branded variant. and transferable are considered brand building elements. True (moderate) p. i ntended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors. True (easy) p. The only way to reverse a fading brand s fortune is to returns to its roots restore lost sources of brand equity. It is possible to borrow from other brands or ideas by linking your offering to consumers knowledge of those brands. integration. False (moderate) p. False (moderate) p. 141 9. 138 5. False (difficult) p. A brand promise is the product. True (moderate) p. Snickers Cruncher. a crispy rice bar. or design. False (moderate) p.1. with honeyed peanuts. The stronger the brand equity and corporate image. A brand audit is a consumer-focused exercise that involves a series of proce dures to assess the health of the brand and uncover its sources of brand equity. False (moderate) p. True (moderate) p. adaptable. and in what ways brand value is being created. 148 19. True (moderate) p . True (moderate) p. caramel and coat ed in chocolate would be considered a brand extension. how much. Snickers Cruncher. the more likely it is tha t the firm can successfully emerge from a serious brand crisis. 146 15. 143 11. made by Italian scooter maker Vespa. False (moderate) p. False (moderate) p. a crispy rice bar. it simultaneously took its most p and . 143 12. A brand is a name. 144 13. 146 18. or a combination of them. 140 8. with honeyed peanuts. The three key themes in designing brand-building marketing programs are perso nalization. A brand audit is a means of understanding where. A brand is said to have a positive industrial-based brand equity when consume rs react more favorably to a product and the way it is marketed when the brand i s identified as compared to when it is not. Brand bonding occurs when customers experience the company as delivering on i ts brand promise. When Apple introduced the iPod Nano model. True (easy) p. sign. term. Name-research procedures used when developing brand elements include associat ion tests and memory tests. symbol. 139 7. 146 16. and externalization. True (moderate) p. True (easy) p. Brand loyalty can create barriers to entry for competitors. 139 6. 147 17. 136 2.

or design. logo b. brand (easy) p. c. a. Planning and implementing brand marketing. (moderate) p. 135 b. e. brand equity c. This is an example of preemptive canniba lization. e. d. Greater loyalty. 137 c. Building and conveying brand history. 136 d. Consumers use savings cues more than brand cues. Which of the following is NOT a benefit of brand loyalty? a. 149 20. 150 Multiple Choice Questions 21. Good brands simplify consumers decision making. experiences. brand loyalty 27. A flanker brand is the same as a d. a. b. Loyalty can translate into consumer willingness to pay a higher price. Larger margins. or a combination o f them. Identifying and establishing brand positioning. intellectual property 23. Higher vulnerability to competitive marketing actions.opular model. Consumer risk reduction c. Measuring and interpreting brand performance. 136 e. b. fighter brand that is the same as a flagship bra . 137 b. a. (moderate) p. intended to identify the goods or services of one seller or group of sel lers and to differentiate them from those of competitors. Brand equity b. Consumers learn of brands through marketing. Branding (easy) p. images. inelastic consumer response to the brand d. the Mini. 136 26. Marketing infusion e. d. Loyalty can create barriers to entry for other firms. Which of the following is NOT part of the strategic brand management process ? a. Which is NOT a marketing advantage of strong brands? a. b. All the thoughts. Good brands reduce consumer risk. __________ is endowing products and services with the power of a brand. c. and so on that bec ome associated with the brand are known as __________. Which is NOT true of brands? a. brand knowledge (moderate) p. term. Consumers learn of brands through experiences. (moderate) p. off the market. A(n) __________ is a name. Loyalty d. brand perceptions e. c. trademark d. Improved perception of product performance. (moderate) p. d. Loyalty provides predictability. Growing and sustaining brand value. feelings. beliefs. True (moderate) p. 22. Loyalty is easily matched by competitors. copyright e. symbol. sign. 136 c. 25. 24. Loyalty allows for company security of demand. False (moderate) p.

Consumer knowledge bases d. A(n) __________ is the marketer s vision of what the brand must be and do for consumers. Association tests. 138 31. Retention tests.e. Memory tests. What images come to mind? (moderate) p. Brand knowledge c. where they believe the brand should go. 139 d. whether they will grant or deny permission to a particular marketing action or pr ogram. implicit warranty e. brand s equity b. a. d. b. Brand power b. Brand differentials 29. restoration tests d. Intellectual properties e. What question is associated with name-research tests of association? a. a. memory tests (easy) p. learning test c. Improved perceptions of product performance. 28. 30. EXC EPT: a. e. Which is NOT a marketing advantage of strong brands? a. c. Brand elements (moderate) p. guarantee d. Learning tests. Increased marketing communications effectiveness. d. a. b. 34. brand mission c. 139 b. ___________ are trademarkable devices that serve to identify and differentia te the brand. a. 138 c. 137 d. association tests What How well is the name 35. to some degree. e. 137 e. what they feel about the brand. Less vulnerability to marketing crises. what they think about the brand. Which is the name of the research procedure associated with the question images come to mind? ? a. preference tests b. (moderate) p. Additional brand extension opportunities. 139 e. all of the following. Brand freedom e. b. brand promise (moderate) p. Possible licensing opportunities. The name-research procedure associated with the question remembered? is __________. Customer-based brand equity (moderate) p. (moderate) p. Preference tests. Consumers brand knowledge dictates. Brand equities c. 33. 139 . how they expect the brand to react to competitor brands. Brand promises 32. Lower margins. (moderate) p. __________ can be defined as the differential effect that brand knowledge ha s on customer response to the marketing of that brand. c.

b. __________ is about making sure that the brand and its marketing are as rele vant as possible to as many customers as possible. EXCEPT: a. Integrating marketing e. e. 139 b. How easily is the name pronounced? How well is the name remembered? Which names are preferred? How much would you pay? 36. e. Externalization. meaningful. 41. Permission marketing d. Integrating marketing (moderate) p. a. 141 c. (moderate) p. a. loyalty inducer d. brand contact (moderate) p. Target marketing b. employee coaching c. None of the above. noncontroversial. All of the above. or the market that relates to the market er s product or service. 140 b. the product category. 140 d. a. Internal branding b. Eclectic marketing b. __________ occurs when customers experience the company as delivering on its brand promise. transferable. d. Personalizing marketing (difficult) p. __________ is about mixing and matching marketing activities to maximize the ir individual and collective effects. 140 c. Which of the following is a key theme in designing brand-building marketing programs? a. 37. e. brand brush-up b. Internal branding 38. Salad tossing c. loyalty builder c. Brand bonding (moderate) p. a. All of the following are criteria for choosing brand elements. d. hook or handle 40. adaptable. c. 140 e. Depersonalization. c. Integration. Synergy marketing 39. indoctrination e. Personalizing marketing e.b. memorable. Brand image . (moderate) p. motivational training d. a. none of the above 42. d. internal branding (moderate) p. Personalization branding d. Informing and inspiring employees about the brand through various activities and processes is called __________. A __________ is any information-bearing experience a customer or prospect ha s with the brand. 140 c.

assesses the actual impact of brand knowledge on consumer response to differe nt aspects of the marketing b. (moderate) p. Do certain brand associations need to be strengthened? c. equity examination 47. What kinds of advertising would highlight the brand? (moderate) p. portfolio analysis c. Country of origin information. sold the product through nontraditional outlets. All of the above are correct answers. is preferred by CEOs d. brand inventory d. 48. Other brands. brand value is typically over __________of the to tal market capitalization. brand audit (easy) p. c. 44. Suggest ways to improve the brand s equity. . The United Kingdom. Third-party endorsements. association test e. 142 45. b. b. Recruited people on the street and provided samples. one-tenth b. assesses potential sources of brand equity by identifying and tracking consum er brand knowledge structures (moderate) p. Initially. one-half (moderate) p. (moderate) p. Brand building 43. Qu estions that are answered include all of the following EXCEPT: a. Agreed to large slotting fees to get good shelf placement. A(n) __________ is a consumer-focused exercise that involves a series of pro cedures to assess the health of the brand. b. There is no numerical average available to answer this question. a. one-fourth c. 143 e. d. Suggest ways to leverage the brand s equity. Made the soda in unusual and bright colors. Which of the following is NOT one of the ways Jones Soda created a successfu l cult brand? a. Which is NOT a secondary source of brand knowledge for consumers? a. 143 d. What brand opportunities exist? 50. Are the current sources of brand equity satisfactory? b. Uncover sources of brand equity. a.e. e. and suggest ways to improve and leverage its equity. With well-known companies. a. 143 c. Hong Kong. c. uncover its sources of brand equity. Does the brand lack uniqueness? d. e. three quarters e. e. The brand audit can be used to set the strategic direction for the brand. 143 b. In which country do companies NOT list brand equity on their balance sheets? a. 143 e. like surf shops. 46. The indirect approach to measuring brand equity __________. (moderate) p. 141 d. d. Assess the health of the brand. Library research. b. 49. Which of the following is NOT part one of the functions of the brand audit? a. Things. Inventory public awareness of brand equity. Invited customers to submit photos of unusual product uses. is the same as measuring sales outcomes related to marketing communications c.

b. 144 c. 55. Unless there is some environmental change. b. relinquishing lost sources of brand equity b. the practices that produce dwindling brand leadership e. Strong brand equity. which strong. (moderate) p. (moderate) p. Strong corporate image. a. 146 b. a return to its roots d. d. Australia. Which of the following is NOT on the list of corporate resources that would help a firm weather a brand crisis? a. d. a. e. c. Reversing a fading brand s fortunes may require __________. c. Fast and furious.c. 57. Discovering brand elements. e. 143 144 d. b. last year s brand advertising d. Fess up and settle. Improve consumer recall of the brand. how brand fans accept less-than-perfect performances. Swift and sincere. The United States. Applying brand elements to existing products. Strong credibility. 145 c. All of the above answer the question correctly. 145 e. e. 53. c. 144 e. (moderate) p. . Deciding the nature of existing brand elements. there is little reason to deviate from __________. d. (moderate) pp. Deciding the nature of new brand elements. and unique brand associations exist in the consumers minds. Expand the depth of brand understanding. What two words best describe how to execute successful brand crisis manageme nt? a. b. d. Brand equity is reinforced by marketing actions that consistently convey the meaning of the brand to consumers in terms of all of the following EXCEPT: a. a. Improve the uniqueness of brand associations that make up brand image. vigorous preservation of brand status quo b. successful brand positioning (moderate) p. and c 54. Which of the following is NOT one of the approaches for improving or refreshi ng a brand s equity? a. c. favorable. b. 51. Businesses in all these countries list brand equity on their balance sheets. what products the brand represents. (moderate) p. Which is NOT part of devising a branding strategy? a. e. establishing new sources of brand equity c. 145 56. In and out. Credibility and trustworthiness. Expand the breadth of brand awareness. d. Improve consumer recognition of the brand. Applying brand elements to new products. what core benefits the brand supplies. 144 52. only two of the above (moderate) p. e. High trustworthiness. (moderate) p. what needs the brand satisfies. Good lawyers.

c. Ingredient co-branding. 147 d. Individual names. family brand b. 146 61. b. 65. maker of the Scion brand is using what kind of brand strategy with S cion products? a.58. line extension 59. Blanket family names. Retail co-branding. The definition of a sub-brand is __________. e. Using a parent brand to enter a different product category from that current ly served by the parent is a __________. Same-company co-branding. 62. a. brand line c. b. e. brand mix d. Retail co-branding. a. 146 d. Dell laptop computers have a permanent sticker attached to the top of each m achine proclaiming Intel Inside. Separate family names. 60. parent brand (moderate) p. joint-venture co-brand b. c. Ingredient co-branding. (moderate) p. combining a new brand with an existing brand (moderate) p. maker of the Mini Cooper brand is using what kind of brand strategy wit h its Mini products? a. c. 63. branded variant to a brand extension is a __________. 146 b. Corporate names. Multiple-sponsor co-branding. Generic names. 146 d. A __________ is when the parent brand is used on a new product targeting a n ew market segment within a category currently served by the parent. This is an example of what type of co-branding? a. (moderate) p. There is a special edition King s Ranch Ford F150 truck. (moderate) p. the set of all brand lines that a firm offers to buyers d. parent brand e. Individual names. 146 e. line extension (moderate) p. category extension (moderate) p. a. BMW. Corporate names. brand extension b. Multiple-sponsor co-branding. This is an example of what type of co-branding? a. e. 148 . Toyota. the company s brand assortment e. same-company co-brand c. using an established brand to launch a new product b. Generic names. (moderate) p. d. sub-brand c. b. An existing brand that gives birth a. Joint-venture co-branding. all products sold under a particular brand c. 64. Separate family names. Joint-venture co-branding. category extension d. c. Same-company co-branding. multiple-sponsor co-brand e. d. Blanket family names. 147 e.

corporate insanity b. high-end. Provides more opportunities with new consumers. high-end. Can open up new channels for the marketer. Brand death b. All of the above are correct responses. Brand maturity d. low-end. cash cow b. 68. Late campaign slogan. mid-market brand 70. 147 b. flanker e. prestige brand d. flanker (moderate) p.66. entry level brand c. and slogans. a brand shake-out e. The product and service and all accompanying marketing activities and su pporting marketing programs. This is an example of __________. For example. preemptive cannibalization (moderate) p. Other associations indirectly transferred to the brand by linking it to some other entity. cash cow (easy) p. 148-149 c. Helps position new products. d. such as logos. This one is fully self-explanatory. e. Might contribute to overexposure of the brand. a. An example woul d be all the financial and customer services offered by Fidelity Investments. spokespeople. Brands can play a number of specific roles within a company s brand portfolio. prestige brand c. Brand decline e. low-end. a. 150 Essay Questions 71. Brands can play a number of specific roles within a company s brand portfolio. Brand dilution (moderate) pp. Outback Steakhouse cues diners of an Australian steak-eating . (moderate) p. Generates additional sales from the existing target market. occurs when co nsumers no longer associate a brand with a specific product or highly similar pr oducts and start thinking less of the brand. a __________ is positioned with respect to competitors brand so tha t more important and profitable brands retain their desired positioning. fighter brand d. The Mini was at the time the most popular mp3 player in the ma rketplace. 149 d. What are the three main sets of brand equity drivers? Give examples in each category. A bran d element for McDonald s is the I m Lovin It. a __________ may be retained despite dwindling sales because it st ill appeals to a sufficient number of customers and remains profitable with virt ually no marketing support. c. entry level brand b. 150 e. it dropped its Mini iPod at the same time. When Apple introduced its popular iPod Nano model. a potential downside of too much brand extension. __________. product maturity 69. For example. a. CEO Steve Jobs large ego c. Answer: Brand elements or identities making up the brand. Which of the following is NOT an advantage of co-branding? a. a. 67. This could include bra nd names and other identifiers.

The brand elements chosen when building a brand should differ from those emp loyed when defending a brand. Answer: Examples will. mea ning it is appealing to see or say or look at. so that it suggests how it will provide benefits. What are some of the different roles played by different brands in a brand p ortfolio? Give an example of each. What are the different criteria for choosing brand elements. Separate family names for all products: The Ford Motor company owns the Volvo. and menu items suggesti ng ties to the country/continent. For defending the brand: 1) The image or element should be transferable. (moderate) pp. but th e Mini brand has no obvious relationship with BMW. allowin g it to add value to other categories. the business school at the Unive rsity of Texas at Brownsville. uncover its sources of brand equity. vary. 3) And it should be likeable. 139 73. based on these differences? Answer: For building the brand: 1) The element should be easily recalled and recognized. (moderate) p. It asks these kinds of questions: Are the current sources of brand equity satisfactory? Do certain brand associations need to be strengthene d? Does the brand lack uniqueness? What brand opportunities exist and what poten tial challenges exist for brand equity? From the perspective of the firm. Lincoln. Thus. 143 74. It can help set the strategic direc tion for the brand.experience with old signs. also called fighter brands. Land Rover. The book s example is Procter & Gamble s budget-pric . is called the UTB School of Business. M ercury. (moderate) p. and sugg est ways to improve and leverage its equity. 2) The element should be meaningful. (moderate) p. of course. it is necessary to understand exactly what pro ducts and services are currently being offered to consumers and how they are bei ng marketed and branded. Explain four general strategies for choosing brand names. 138 72. But the four types of roles described in the text are: Flanker brands. Blanket family names: Most universities have schools or colleges that have not b een sponsored or endowed by a benefactor. menus that feature Kangaroos. in addition to the Ford nameplate. but is also called a Ford. Each of these brand families has a line-up of vehicles of its o wn. Jaguar. 146 147 75. 3) It should legally protectable and not easily copied. in other words it should be memorable. 2) It should be adaptable. are positioned so as to allow flagship brands prime positioning in the marketplace. Answer: Individual names: The Mini Cooper automobile is made and marketed by BMW. and Aston Martin brands. allowing for u pdates and freshness. Corporate name combined with individual product names: The Ford Fusion automobil e has its own name (Fusion). Give an example of each. What is a brand audit? Why is it done? Answer: A brand audit is a consumer-focused exercise that involves a series of procedure s to assess the health of a brand.

Get in and out of the problem quickly. Relinquishing lost sources of brand equity. 150 Mini-Cases Mini-Case 8-1 Players from the 1990s alternative band Dan Quayle s Children are considering a re union tour. For example. and do so with out much need for marketing efforts. Refer to Mini-Case 8-1. which do not take away sales from the premium diaper product Pa mpers. . Lead singer Loser Bubba is also the band s leader and sp okesperson. good lawyers. it will require which of the following? a. such as promotion. for example). d.(moderate) p. strong brand equity. Toyo ta recently added a line of cars under the Scion name that are aimed at young pe ople. 144 e. where they will hopefully experience satisfaction and move up to higher priced/higher quality Toyo ta products. 145 e. Young Americans are not familiar with the Toyota brand and so this allows them into the Toyota family. The band did not know how to deal with the crisis and for about a month they just sort of went into hiding. may bring new buyers into the Pontiac family. b. 77. and c are all ways the band could reverse its fortunes. Be fast and furious in your response. Establishing new sources of brand equity. they could never really get booked for any gigs. such as new songs. such as playing old crowd favorites and telling stories of the road onstage. the Bic Twin brand of shaver co ntinues to sell in healthy numbers with virtually no consumer marketing effort. strong credibility. After that response. Low-end entry-level brands introduce the brand to new or younger consumers. and after about 6 months the remaining Ch ildren took day jobs and went on with their lives. they could have used all of the following EXCEPT: a. 76. Cash cows are brands that still generate plenty of sales. Georgia in the south to Boston in the north. which are newer or less established. and stag e antics. c. in the m arketplace (new pens or lighters. c. high trustworthiness. styles. For the band to have better weathered the 1996 brand crisis. b. A. What two words best describe how the band might have better executed successful brand (band) crisis management? a.ed diapers Luvs. such as well-known songs and logo s. (moderate) p. Refer to Mini-Case 8-1. b. If Dan Quayle s Children is to reverse their fading br and s fortunes. The new Pontiac Solstice is stylish and attract ive and. Refer to Mini-Case 8-1. Two of the above could help the band reverse the band s fortunes. d. a strong organizational image. The profits may be spun off to help develop other Bic brands. A return to its roots. b. but help establish another price/quality tier in the minds of the consume r. if it turns out to be a credible product. The band flamed out very suddenly in 1996 w hen their drummer X-Man was very publicly thrown in jail for an Internet child p ornography conviction. The plan is to play dozens of their old haunts from Athens. (moderate) p. High-end prestige brands allow some of the extra good perceptions to spill over onto other brands in the lineup. 78.

Fess up and settle. their chocolate with peanuts bar. This is an example of what type of co-branding? a. Form product differentiation refers to the characteristics that supplement th e product s basic function. c. e. True (easy) p. If Hershey created Mr. a. True (moderate) p. it is impor tant that consumers find those PODs desirable. True (mode rate) p. The California Almond Growers Association want t o create a tie-in with their products. Refer to Mini-Case 8-2. multiple-sponsor co-brand e. d. experti se. Increase credibility and trustworthiness. 159 7. In choosing points of difference (PODs) for the firm s positioning. Differentiating your offering in the channel could refer to coverage. Joint-venture co-branding. covered with chocolate. 155 2. this would be considered a __________. True (moderate) p. 80. 148 Chapter 9 Creating Positioning and Dealing with Competition True/False Questions 1. Multiple-sponsor co-branding. One way of differentiating a service is through customer training. e. True (easy) p. Goodbar nibbles.c. or ind ividual names such as Mr. 147 d. Points of parity (POP) are attributes or benefits consumers strongly associat e with a brand. Hershey has a new product that is almond and caramel -based. line extension (moderate) p. (moderate) p. Be swift and sincere in addressing the problem. Refer to Mini-Case 8-2. 156 3. b. Goodbar. or performance issues. 159 6. (moderate) p. 157 4. Ingredient co-branding. and has considered launching a few new products it has developed and acquired. and which they believe that they could not find to the same exte nt with a competing brand. Retail co-branding. 1 60 . 160 8. One of the key deliverability criteria for points of difference (PODs) is fea sibility meaning that the firm must be able to actually create the POD. joint-venture co-brand b. False (moderate) p. basically a chocolate-covered nut product for eaters who are on the run or who wish for grea ter portion control. 158 5. Same-company co-branding. ho wever strong style does NOT always mean strong performance. category extension d. Positioning is the act of designing the company s offering and image to occupy a distinctive place in the mind of the target market. Hershey has traditio nally used blanket family brand names such as Hershey s Milk Chocolate Bar. same-company co-brand c. by calling the new product the Hershey Ca lifornia Almond Express. 79. Strong style can create product distinctiveness that is difficult to copy. False (moderate) p. False (mod erate) p. 145 Mini-Case 8-2 Chocolate maker Hershey is looking for growth opportunities.

(moderate) p. 167 16. Michael Porter s Threat of Entry force (from the five forces) suggests that the m ost attractive segment has high entry and exit barriers. Integrating your business backward or forward in the value chain is also cal led vertical integration. False (modera te) p. False (moderate) p. True (easy) p. 167 15. 168 17. customer-focused value proposition (moderate) p. marketing campaign e. helps competitors understand where NOT to compete.9. helps consumers understand what the brand will help them achieve. a. for example. a segment is unattractive if buyers p ossess or will possess strong bargaining power. The meaning of a frontal attack against a market challenger is to identify s hifts in market segments that cause gaps and then fill those gaps. helps guide marketing strategy. only one firm provides a certain offering in a specific area. True (easy) p. distribution coverage. A __________ is a cogent (logical or sound) reason why the target market sho uld buy the product. in the soft drin k market. 170 18. 155 c. 172 20. 172 Multiple Choice Questions 21. Fighting for market share makes sense because. According to Porter s Five Forces model. d. This e xtreme specialization is an example of a niche strategy. Name the first company that comes to your mind in the industry. 161 10. 155 b. A good brand positioning helps the firm and consumer by doing all of the fol lowing EXCEPT: a. 166 14. True (easy) p . 162 11. Part of a market leader s strategy to defend market share is to consider which segments to defend (even at a loss) and what segments to surrender. Logitech makes computer mouse products of every possible description. 164 13. c. helps consumers maximize the benefits of the brand. helps clarify the brand s essence. True (mo derate) p. price/benefit analysis d. Share of heart is defined as the percentage of customers who name the compan y when asked. new produc t introductions. True (diffi cult) p. 170 19. The acknowledged market leader in an industry has the largest share of the r elevant product market and usually leads the others in price changes. e. False (moderate) p. 22. a one-share-point gain is worth over $100 million in revenue. A group of firms following the same strategy in a given target market is cal led a strategic group. differentiation plan . True (moderate) p. True (moderate) p. market niche service agreement b. Fals e (moderate) p. In monopolistic competition. Levitt argued that product imitation might be as profitable as product innov ation. 163 12. True (moderate) p. and promotional intensity.

Comparing to exemplars. 158 e. the POD must be personally relevant and important to target consumers c. Comparing to exemplars. Membership. comparisons to exemplars d. POP (moderate) p. POS 25. One criterion for points-of-difference (POD) is the communicability criterio n. XM Satellite Radio. Relying on the product descriptor. positioning 28. b. 156 e. . d. which means __________. a. (moderate) p. Announcing category benefits. point-of-difference. Category. Head-to-head. membership. the brand must substantiate that it can deliver the desired benefit 30. c. w hich means __________. Using the brand name of the product to explain the offering s benefits. e. 156 d.23. 29. 157 d. b. __________ includes the products or sets of products with which a brand comp etes and which function as close substitutes. a. membership. Word-of-mouth. category benefits. WOM b. e. c. (moderate) p. Category membership (moderate) p. and difficult to attack b. Relying on word of mouth among zealous consumers. PODs b. (moderate) p. d. Relying on a product descriptor. defensible. the brand name. target customers must find the POD believable d. positively evaluate. and believe tha t they could NOT find to the same extent with a competitor brand ? a. 156 26. Relying on word of mouth among zealous consumers. What type of points-of-parity is related to association s consumer view as nec essary to be a legitimate offering within a certain category? a. is a perfect example of using which stra tegy to convey the brand s category membership? a. a. POD d. The evoked set b. The preferred positioning approach is to inform consumers of a brand s _______ ___ before stating its __________. One criterion for points-of-difference (POD) is the feasibility criterion. the positioning must be preemptive. the firm must be able to actually create the POD (moderate) p. Brand choice c. point-of-difference (moderate) p. 157 c. Explaining the value proposition. e. Which of the following is NOT a major way of conveying a brand s category memb ership? a. value proposition e. POPs. WOW c. 157 b. c. The competition set 24. Competitive. What acronym is associated with the following definition attributes or benefits consumers strongly associate with a brand. Announcing category benefits. 27. The inept set e.

d. 159 35. e. __________ refer(s) to the product s size. 159-160 36. e. 158 b. Features c. 159 b. 159 c. d. (moderate) p. Conformance e. Design. Conformance quality e. Which of the following is NOT a way of differentiating the product offering? a. 37. Durability 33. negative. discount retailer. Conformance. Form (moderate) p. b. 158 31. __________ is(are) the level(s) at which the product s primary characteristics operate.a. defensible. Sophisticated. __________ tical and meet a. Form. Conformance. 159 b. Form b. Expertise. (moderate) p. high quality. Classy. Quality. Form b. (moderate) p. Performance quality (moderate) p. low calorie. e. . 159 d. Performance d. Features. Coverage. Which of the following is a way of differentiating a marketing offering via personnel? a. Ordering ease. d. a. Reliability. Inexpensive. quality quality (moderate) p. Durability 34. c. Responsiveness. Conformance quality e. Style. Features c. a. tasteful. b. e. c. Durability is(are) the degree9S0 to which all of the produced units are iden promised specifications. t) the positioning must be preemptive. b. d. Which of the following is a way of differentiating a marketing offering via the surrounding services? a. c. c. 32. Installation. d. Performance quality d. (moderate) pp. and difficult to attack the POD must be personally relevant and important to target consumers target customers must find the POD believable the firm must be able to actually create the POD the brand must substantiate that it can deliver the desired benefit (difficul p. Positive. or physical structure. Events. Which of the following brand position sets would NOT be difficult to pull of f in the same campaign? a. Features c. shape. Good tasting.

More exclusive coverage. 160 d. d. A product s __________ is a measure of the probability that a product will NOT malfunction or fail within a specified period. Delivery. products d. Installation. 38. idea. . b. the key to competitive success may lie in adding valued __________ and improving their quality. 161 e. a. (moderate) p. Expertise. ordering ease b. Performance. 42. Wider coverage. More firms coming online. durability 39. Ordering ease. 160 c. maintenance and repair d. High exit barriers. installation (moderate) p. Stable returns. Ethical personnel. reliability 40. a. style c. idea. creativity b. 160 b. creative responses e. High profits. 45. product. Which does NOT add to a segment s unattractiveness. Customer consulting. 161 d. High fixed costs. c. Communication. repairability b. value proposition. reliability (difficult) p. Which is NOT a way of differentiating an offering via the channel of distrib ution? a. e. Which of the following is NOT a main service differentiator? a. a. Numerous competitors. according to Porter s five f orces model? a. Expertise. (moderate) p. b. Uniqueness e.e. Style (moderate) p. styling 43. services (moderate) p. When a(n) __________ cannot be differentiated easily. Design c. The segment is growing. Distinctiveness d. 44. Growing plant capacity. c. d. design e. Which of the following is a likely outcome during tough economic time if the re are low barriers to entry and high exit barriers? a. b. A product s __________ refers to the work done to make a product operational i n its planned location. c. e. 160 e. (moderate) p. service. Positioning b. design c. a. c. __________ describes the product s look and feel to the buyer. 160 41.

e. Internal resources. Which of the following is NOT a way in which industries are classified? a. Differentiated oligopoly. b. c.d. (moderate) p. c. (easy) pp. e. c. Threat of substitutes. In which type of industry competition do many competitors offer the same pro duct or service? a. Segment rivalry. Which is NOT a reason that buyers power might grow or concentrate? a. e. When the supplied product is an important input. Number of sellers. d. 53. (difficult) p. 49. c. d. When downstream integration possibilities exist. Price sensitivity. e. 52. (moderate) pp. d. Monopolistic competition. e. d. 164 . Product represents an insignificant portion of buyers costs. Monopolistic competition. Which of Porter s five forces depends heavily on industry entrance and exit ba rriers? a. Degree of product differentiation. Upstream integration possibilities. Scarce raw materials. Pure monopoly. Differentiated oligopoly. Supplier power. Which is NOT one of Porter s five forces that determine market attractiveness? a. Pure competition. Pure oligopoly. Publicly versus privately held. Low switching costs. Supplier power. When sellers are price sensitive. High vertical integration. b. Cost structure. c. Potential entrants. b. (moderate) p. b. e. 163 51. Degree of globalization. 163 b. c. Which is NOT an exit barrier? a. d. e. 50. Pure monopoly. auto industry is an example of which form of competition? a. b. 162 e. Threat of substitutes. Which is NOT a reason that suppliers bargaining power might grow? a. (difficult) p. Buyer power. When they are well organized. When there are few substitutes. 16 2 d. (moderate) p. (difficult) p. 161 46. 47. Oligopoly. Chronic overcapacity. 161-162 c. Firms easily dropping out of that business. (moderate) p. 163 c. d. Moral obligations to employees. b. Potential entrants. None of the above. Undifferentiated product. The U. 161 162 b. Buyer power.S. 48.

The percentage that refuses to answer the survey. They invest in overcapacity. An oil producer that refines the product and owns gasoline filling stations has integrated __________. fixed costs. Reputation requirements. the wheel of retailing 58. The percentage that says the competition s brand first. (moderate) p. Scarce locations. losses. b. Which is a characteristic of a good competitor? a. (moderate) p. 167 . 55. The percentage that says the brand is the one they think of first. diagonally d. forward (moderate) p. c. (moderate) p. 164 56. the center (difficult) p. losses 57. They try to buy share. losses. share of mind. crosswise e. b. The percentage that says the brand is their preference. variable costs. Name the company from which you would prefer to buy (such-and-such) produc t ? a. e. (moderate) p. share of heart. 59. Which measure is the percentage of consumers saying a particular brand when asked. fixed costs (moderate) p. 164 e. c. a. 54. 167 d. Abundance of distributors. Low asset salvage value. horizontally c. share of market. They upset the industry s equilibrium. They take large risks. d. 165 c. capital costs. e. 167 c. They limit themselves to a segment of the industry. Due to exit barriers or for other reasons. Emotional barriers. e. the outside the box (thinking) d. 60. gains c. c. Which is NOT an entry barrier? a. e. a. On the competitor map proposed by Rayport and Jaworski. High capital requirements. the diagonal correlations b. b. variable costs d. T his results in lowered profits for everyone in that industry. 164 b.d. backward b. the outer-most ring e. share of pocketbook. share of wrap-up. Economies of scale. __________ part of t he model shows consumers behavior. d. b. a. The percentage of the target market the brand has. d. materials costs e. Which of the following represents the idea of share of mind? a. many firms will stay in an indust ry as long as they cover their __________ and some or all of their __________.

and lessen their intensity. diver t attacks to less threatening areas. d. They invest in capacity-lowering measures. $500 million d. (difficult) pp. When a company cannot properly defend all of its (business) territory. development 65. Which of the following is NOT a characteristic of the market leader in an in dustry? a. e. looking-back b. d. a. (moderate) p. All of these are characteristics of the market leader. They limit themselves to a segment of the industry. $50 million (moderate) p. 169 e. d. b.S. 168 e. innovation c. The aim of __________ strategy is to reduce the probability of attack. 170-171 . position (moderate) p. $750 million e. Preemptive. $1 billion 67. They take large risks. flank b. They lead others in price changes. 66. a. All of the above. using market broadening and market diversification. a. 62. $250 million c. counteroffensive d. Strategically withdraw. Flank. defensive (moderate) p. 169 c. mobile (moderate) p. making the bran d almost impregnable. Frontal. a. The __________ type of defense in which the leader stretches its domain over new territories that can serve as future centers for defense and offense. mobile 64. 167 63. Execute a contraction defense. c. coffee market i s worth nearly __________. preemptive 68. c. Which is a characteristic of a bad competitor? a. 170 b. 167 b. c. They lead in the share of relevant product market. For example. (easy) p. b. c. which of the following is a suggested course of action? a. They lead in promotional intensity. flank b. None of the above. Give up weaker territories. contraction e. (moderate) p. counteroffensive d. 168 d. contraction e. Expanding market share can be a very lucrative way to increase sales and pro fits. They accept the general level of share and profits. Which is NOT a market-challenger attack option? a. a one-point market share increase in the U. A __________ defense involves building superior brand power. e.61. counteroffensive c. b. They lead in distribution coverage. They set prices in relation to costs.

d. b. 2) Comparing to exemplars early reviews of Coldplay music compared the sin ger s voice and the songwriting to those of U2. extraordinary quality. who believe thes e attributes or benefits cannot be found to the same extent in competing offerin gs. An example. A flanking strategy (moderate) p. What are the three main ways of conveying to consumers that a brand is right fully in a certain category? Provide examples of each. c. Guerilla warfare 70. They may be necessary for the brand to be consi dered. e. Computer mouse maker Logitech has established itself among its customers via many points-of-difference. A bypass attack d. What are PODs and POPs? Give examples of each. (difficult) p. but they are probably not sufficient to make the consumer choose a brand. Specific-customer specialist. __________ is another name for identifying shifts in market segments that ca use gaps to develop. they could include the reviews in their ads. An encirclement attack c. End-user specialist. 157 73. (moderate) p. but there is no guarantee the consumer will choose Sam based only on that availability. e. 170 e. Samuel Adams is available on tap at some bars. Channel specialist. then filling the gaps and developing them into strong segme nts. (moderate) p. but may be shared with other brands. Encirclement. In which specialized niche role. Bypass. Points-of-parity are associations that are not unique to the brand. Answer: 1) Announcing category benefits this reassures consumers that the brand wi ll deliver on the fundamental reason for using a category of product. 156 72. and a certain consum er may only consider on-tap brands. Answer: Points-of-difference are attributes and benefits consumers strongly asso ciate with a brand. An example of a point of difference is the mystique surrounding Harley-Davidso n ownership. No other maker can match this authentic. does the firm customize its products for in dividual customers? a. Job-shop specialist. The book mentions six key criteria for points-of-dif . 173 Essay Questions 71. Service specialist. A frontal attack b.d. If the band felt this was positive . An LG refr igerator might show that it belongs in the consumer s kitchen by announcing that i t produces filtered-water ice cubes in huge quantities and has room for four gal lons of milk in the door. An example is Scotch Super Strength Packaging Tape that leaves no one confused about that the product is for and in what category it rests. using brand naming as a device to announce what the product does. 3) Relying on the product descriptor in other words. They are positively evaluated by consumers. a. 69.

many would-be competitors necessary to compete head-to-head with a giant like Ap . 2) Courtesy Lowe s floor associates will often take the time to walk with you to fin d what you are looking for and may spend several minutes working through your pr oject with you without seeming to be rushed. They are also very woman-friendly. a plus in a normally male-oriented commercial environment. 2) Distinctiveness mouse buyers must be convinced that the products produc ed and marketed by Logitech are different and more interesting than those offere d by other firms. either through training or because they were hired for their particular expertise and experience in certain areas. Apple has by far the largest market share and its players are elegantly designed. 2) Communicability consumers need to know about and believe that Logitech products are great. Lowe s Home Improvement has tried to distinguish itself from the largest playe r in the category. 159 75. (moderate) p. they are perceived as mor e trustworthy. pot ential and actual Logitech customers must find the claims credible. The book lists six important ways that a company might differentiate its offering through personnel. Deliverability Criteria 1) Feasibility Logitech must be able to remain innovative and create aesth etically-pleasing designs. 3) Credibility because associates are competent.ference. Nearly every consumer electronics maker recognizes Apple Computer s iPod as th e gold standard for personal music devices. (moderate) p. 3) Believability when describing how its products are superior in ads. And. touc hpads. The hardest een seen by consumers as do not have the resources consist of matching Apple point for point with their m part of this strategy is that others players have not b as good as the iPods are. 3) Sustainability Logitech must keep creating new ways of helping PC and M ac users to conduct their business with screen-movement tools such as mice. this measures consistency a nd accurateness in floor workers behavior and advice. and consumers must be aware of and care about those styles and features. The company prices competitively a nd yet still makes huge profits on this line of products. 158 74. Describe how Logitech has or could use the criteria to stand out in the marketpl ace. etc. and to be able to clearly respond to them. If a company considers Apple as its opponent and the objective is to take away market share. Answer: Consumer Desirability Criteria 1) Relevance Logitech must be on the cutting edge in offering the latest s tyles and features in their mouse line. The Home Depot. What are the y? Answer: 1) Competence Lowe s floor associates are likely to know the products they are recom mending. by choosing and training floor personnel in s uch as way as to be better than the competition. what are fi ve general market-challenger attack options? Answer: 1) A frontal attack would arketing mix. 5) Responsiveness associates should react quickly to customer questions an d problems. 4) Reliability also dependent on associate competence. split into the categories of consumer desirability and deliverability. 6) Communication this is related to the associates ability to understand customer p roblems and requests.

b. Or perhaps Aiwa could make quite aesthetically pleasing and colorful p layers that are in contrast to iPods white and black color choices. F or example. Along with international visitors on campus. 2) A second attack strategy would be to chip away at Apple where it is weak or i n some way underperforming this is called a flank attack. e. unaided by special programs or dollar incentives. 77. 167 Mini-Case 9-2 Samsung has made a very slim. Share of wrap-up. Share of mind. e. Refer to Mini-Case 9-1. Rhode Island is a growing organization and i s seeking additional institutional recognition and awareness among potential tar get students and financial donors. very aesthetically pleasing phone that it sells th rough Sprint and other mobile communications providers. based on the scenario presented? a.ple. the Dalai Lama spoke in 2005. Share of heart. c. This might be done with aggressive price-cutting or intens e promotional efforts. It has a finder feature for when it is misplaced. It has built-in softwar e that allows users to load their own music or other sound segments as ringtones . The purpose is to break the opponent s will. when asked the following question: Name the university in southern New Engla nd at which you would prefer to study international relations. How is Salve Regina University exhibiting the characteristics of a good competitor. 167 d. Share of pocketbook. (moderate) p. (moderate) p. As far as the marketing people at Samsung can tell. both financial and manager ial. . 170 171 Mini-Cases Mini-Case 9-1 Salve Regina University in Newport. Refer to Mini-Case 9-1. They are taking large risks. They are making investments in overcapacity. 76. d. 3) Encirclement entails launching a simultaneous campaign against the chosen com petitor on many fronts. They are limiting themselves to a segment of the industry. The phone has enough fla sh memory to store and play 500 songs in its MP3 player. The president and the marketing director for Salve R egina University want to greatly increase the number of people who respond with S alve. where Apple does not have such a st ronghold. Few outside the immediate area have heard of Salve or know what they stand for. This takes lots of resources. Sony might introduce the ir competitive player to the Chinese market. Other parts of the university have been gr owing at a steadier pace. b. They are upsetting the local education industry s equilibrium. 5) Guerilla warfare uses small. Share of market. intermittent attacks to harass and demoralize the competitor of choice. c. This form of attack is useful to smaller companies becaus e it can be done cleverly with fewer resources. Over the last several years they have raised their profile by inviting famous international guests to give public lectures. the phone meets and exceeds every potential user s expectati on for what a phone should be. They are trying to buy share. the adm issions group has been actively seeking international students and bulking up its offerings in the international arena. What type of share are the president and the marketing director seeking to increase? a. (moderate) pp. 4) The most indirect strategy is to bypass the competitor completely and go afte r easier markets or competitors.

a. a. False (moderate) p. 178 2. This interesting choice will attract more attention in a marketplace where most phones are in metallic o r dull plastic finishes. 185 . True (moderate) p. 155 c. 184 7. features c. 157 c. The Samsung phone will come encased in scratchproof shiny plastic. marketing campaign e. which is a cogent (logical or sound) reason they will pu t in the advertising campaign for why the target market should buy the product. This innovative product exterior is part of the product s __________. raw materials are long-lasting goods that facilitate developing or managing the finished product. All sellers are legally responsible for fulfilling the buyer s normal or reason able expectations. 159 b. In the industrial-goods classification scheme. market niche service agreement b. If thi s is true. The new product development process starts with profitability analysis of the ideas. This is the right approach. point-of-difference (moderate) p. Refer to Mini-Case 9-2. show consumers how great the additional features ar e over the competitive phones. positioning 80. form (moderate) p. The depth of a product mix refers to how many variants of each product are of fered. not make-up. Samsung s U. similar to how Apple s iPod exteriors are. conformance quality e. differentiation plan 79. comparisons to exemplars d. because the preferred positioning process is to inform consumers of a brand s __________ before stating its __________. True (Easy) p. Samsung s new phone is more than a phone with its addi tional features. point-of-difference.78. Refer to Mini-Case 9-2. 180 3. 180 4. An existing product that has been repositioned can be considered a new produc t. True (moderate) p. value proposition e. False (moderate) p. customer-focused value proposition (moderate) p. advertising agency is refining their __ ________ for the phone. price/benefit analysis d. performance quality d. A radon gas detection system for homes would be considered a specialty good i n the consumer-goods classification scheme. A famous marketer once said his company was selling hope. membership. 180 5. True (easy) p. membership. The advertising agency wants to position the product in the min ds of the consumer as belonging to the most elite and up-to-date phones on the m arket. a. 183 6. Refer to Mini-Case 9-2. POPs. category benefits. False (moder ate) p. hope would be considered the core benefit of the product category mak e-up. and at the same time. PODs b. durability Chapter 10 Setting Product Strategy and Marketing Through the Life Cycle True/False Questions 1.S.

186 10. False (moderate) pp. 188 12. distribution channels. They manufacture more affordable brands. The piano is the most popular among composers and musicians. 178 c. such as Boston and Essex. True (moderate) p. 22. To build the piano requires 12. True (moderate) p. . Typically. persons. 193 196 20. Simulated test marketing and test marketing are the same thing. False (moderate) p. and minimal competition is the introduction stage. (moderate) p. False (moder ate) p. 186 11. A product-positioning map uses selected criteria to show where a product stan ds in relationship to comparable products. 177 b. The pianos take nine months to build. The stage of the product life cycle characterized by low sales. Personal influence is most important in the awareness stage of the adoption process. 196 Multiple Choice Questions 21. One criticism of the Product Life-Cycle concept is that it is not always cle ar what stage a product is in it may appear to be mature when in fact it is in a p lateau and has further potential. True (moderate) p. 192 17. 195 19. All of the following could be considered products. heavy promot ion. or variety of use are all acceptable pro duct modification strategies for a product in the maturity stage of the life cyc le. e. low or negative profits.000 parts. True (moderate) p. (moderate) p. Many of the best ideas for new industrial products originate with customer id eas. d. many firms today question its va lue. True (easy) p. 191 15. EXCEPT: a. physical goods. Alpha testing means testing a product within the firm. 194 18. the longest stage in the product life cycle is the maturity stage .8. False (difficult) p. Steinway can only produce only a few thousand concert pianos per year. frequency of use. Increasing usage. In spite of the benefits of test marketing. True (moderate) p. d. 189 14. b. 185 9. c. Which of the following is NOT a reason that Steinway pianos command a premiu m price in the marketplace? a. 192 16. False (moderate) p. while beta testing me ans enlisting customers to use the product and provide feedback. The basic strategy for managing the growth stage of the PLC is product expan sion. events. The appropriate decline strategy for a company depends on the industry s relat ive attractiveness and the company s competitive strength. True (moderate) p. Concept testing is the most expensive part of the new product development pr ocess. True (moderate) p. 189 13.

ideas. added to an existing product line d. a. 23. they facilitate developing and managing the finished product (moderate) p. expected potential basic augmented core c. and therefore. core basic expected augmented potential (moderate) p. 184 b. basic core augmented potential expected 24. Mazda beefed up the model with heavier shocks and a faster engine. line stretching (difficult) p. a. Mazda s Miata convertible originally drew the most interest from women between the ages of 35 55. 18 0 e. This is an example of creating a new product by ¬¬¬¬__________. Painting and consulting are considered industrial goods. a. because __________. This was a classic example of __________. a. basic expected augmented core potential b. a market diversification strategy d. In 2003. General guarantees e. . they are nondurables 25. there is less need fo r new products. the new product __________. 184 e. Promotional statements c. Why do new products fail? a. When SAP software added a Windows-style back button to its industrial invoice management software. Social and governmental deregulations have made new-product development costs more expensive. Warranties (moderate) p. most firms do not seek them directly d. 183 d. a. __________ are formal statements of expected product performance by the manu facturer. they are specialty goods b. line cannibalization d. b. Because most products today have a longer product life. improved upon an existing product (easy) p. Open pricing statements b. the development of a new product line c. a product development strategy e. they are considered component materials c. repositioning (moderate) p. with the aim of bringing younger buyers into the family. Toyota introduced its Scion brand. then emphasi zed performance in its advertising. line modernization b. producers avoid new product ventures. line padding e. going from the most fundamental level to the level with the m ost benefits? a. used a market diversification strategy 27. line featuring c. Marketers plan their market offerings at five levels. In order to interest more potential customers in the roadster. a new-to-the-world product 28. potential augmented expected core basic e. What is the correct or der of the levels. 181 26. used a repositioning strategy b. Specific guarantees 29. 179 d. introduced a new product line c.e.

business analysis 32. e. (moderate) p. What is NOT listed in the text as a reason products fail? a. (difficult) p. product s features. concept development and testing (difficult) pp. c. Marketers tend to underestimate the market size and underestimate demand. B. 186 b. The only acceptable idea source is internal research and development (R&D) un der controlled conditions. and C are all acceptable ways of getting new product ideas. Poor design. A. idea screening b. concept development d. Each contestant hopes his or her idea for a new recipe will win the grand prize. market testing 34. 186 d. 185 c. the contest serves as an avenue for __________. For the makers of Spam. (easy) p. and the behavior of its target market (moderat e) p. marketing audits 35. Ineffective advertising. Do you understand how the machine can benefit you? and Would this type of machine solve a need for you? This marketer is in the __________ stage of new -product development. advantages. prototype development e. 30. Ignoring or misinterpreting marketing research. 184 e. idea generation e. 184 b. 31. d. b. product concepts (moderate) p. business analysis c. product development d. A product idea can be turned into several elaborated versions by asking ques tions such as: Who will use the product? What primary benefit will it provide? W hen will people use or consume it? The elaborated versions of the product idea a re called __________. d. Reversing normal assumptions. New-product development costs are higher than anticipated. Too much demand. d. 33. and competitors re spond more effectively than predicted. The first part cons ists of describing the __________. and benefits b. product positions b. Employee-submitted ideas. whi ch results in lost customers. structure. The marketing strategy plan is comprised of three parts. 186 c. A potential marketer of new combination bread and sandwich maker machine ask s consumers. Spam Meat Product s annual Great Ideas fo r Spam! Contest brings together Spam cooking ideas from all over the world. In terms of new-product development.c. 1 85 e. brand positions e. target market size. The underpricing of the product causes customers to overstock and depletes al l future demand for the product. distribution strategy. Interactions with consumers. a. a. Overestimating market size. a. c. a. planned price. brand concepts c. idea generation (moderate) p. and marketing budget . Which of the following is(are) an acceptable source of or opportunity to fin d new product ideas? a.

a. EA is using _________ testing. As a part of new-product development. and marketing mix strategy e. structure. long-run sales. and how many will become frequent purchase rs of her scrapbooking product line. a. and behavior. profit goals. 188 192 d. 41. marketing strategy development c. sales-wave research 37. Neelim is trying to decide how many people will buy her new scrapbooking sof tware and the accompanying printer accessories only once. c. and the product s planned pricing strategy 36. how many will buy it m ore than once. 40. e. market d. The company asked about one hundred people to download the company s RPG.d. estimating costs and profits b. The communication between engineering and marketing is likely to be natural a nd effective by the time you have made it to this stage. b. simulated 39. Descriptions of the long-term sales. but only infrequently. its long-run sales goals. a gaming software products company has developed a role-playing game (RP G) incorporating ideas supplied by some of the most famous game writers in the w orld. alpha e. estimating total sales (moderate) p. This stage involves a jump in investment that dwarfs the costs incurred in th e earlier stages. (moderate) p. 187 38. the potential customers are homogeneous b. the company is quite knowledgeable on the potential applications of the produ ct c. In this stage. 187 d. alpha testing is carried out with actual consumers. all of the above occur. beta (moderate) p. b. a. and marketing-mix strategy over time. Descriptions of the planned pricing and distribution for the product. e. What is the first thing entrepreneurs should know when moving to the product development stage of the New Product Development Decision Process described in the text? a. d. A description of the marketing budget for the first year. 188 b. 188 d. Now h e is writing up his three-part preliminary marketing strategy in order to intere st investors. Making it to this stage guarantees eventual success of the product. pl ay it extensively. risk analysis e. Descriptions of the target market s size. EA. Seven-Up briefly marketed a soda brand called Seven-Up Gold in medium-sized . opinion leadership from early adopters is sought (difficult) pp. beta testing is most useful when _____ _____. A description of the rapid-prototyping used to inform the architects. What should be in the final section of the document? a. He has successfully done a concept test with target consumers. the buying center for the product is limited to the individual making the act ual purchase e. (difficult) p. c. This is the stage where risk analysis is performed to see if it is worth it t o proceed. concept c. profit goals. and give feedback on it. target market composition. She is engaged in __________. Scotto Giordinello is trying to launch a franchise version chain of his sand wich shops.

If a firm learns that a major competitor is nearing the end of its product d evelopment work. Seven-Up was probably engaging in ______ ___. a. The firm is devising its _________ for new-product commercialization. conjoint market analysis e. (moderate) p. Market testing is beneficial when creating business products. a. it may choose a number of approaches. First entry includes locking up important distributors and gaining reputation e arly. The product had a spiced flavor and contained caffei ne. controlled test marketing (moderate) p. full-blown test marketing b. sales-wave research e. 189 c. First entry which guarantees early dominance and ongoing market leadership. It was never introduced nationally. This is a n example of __________. d. alpha testing 42. but the proces s may vary somewhat from that of testing consumer products because __________. a. Product development. Late-entry has the disadvantage of bearing the financial brunt of educating the consumer about the new category. market pricing plan e. sales-wave research 43. geographic strategy b. there is no good way of alpha testing business products b. Parallel entry means launching the exact same product simultaneously to the com petitor s launch. c. (moderate) p. e. controlled test marketing (moderate) p. 190 b. Which of the following is the most expensive part of the new product develop ment process? a. business product market tests are always more expensive than consumer product s market tests e. timing (moderate) p. simulated test marketing b. b. Secondary entry involves purposely coming into the marketplace the week after t . conjoint analysis has limited value for testing industrial customers product a ffinity d. 189 45. 189 c. 190 46. Suppose a marketing research firm that manages a panel of retail stores agre es (for a fee) to study a company s new candy bar-based granola product. market-penetration plan d. McDonald s is preparing (yet another time) to roll out a new version of its Mc Rib product. Commercialization. there is no good way of beta testing business products c. trade shows and distributor display rooms are crucial for assessing customer acceptance (moderate) p. Concept testing. a. Idea generation. The resea rch firm provides sales results and evaluates the impact of promotion. c. d. test markets d. introductory market strategy c.cities like Virginia Beach. Which of the following co rrectly describes a market timing approach? a. Business analysis. simulated test marketing d. McDonald s is currently deciding if its new product should enter the market at the same time it knows a new Arby s barbeque product is coming out. 190 e. 44.

How? (moderate) p. evaluation (moderate) pp. critical path scheduling (moderate) p. evaluation to trial b. The divisibility majority. awareness to interest (easy) p. interest to trial 50. trial e. The early adopters. To whom? e. In terms of the adoption process. 191 53. a. 47. the Prius (the car is propelled by a hybrid of an electric motor and small gasoline engine). She is in the ____ ______ stage of the consumer adoption process. Before Dede read the article about Toyota s new super-efficient. and avidly watched for sales. she now wants to learn even more abo ut the new car. What? b. evaluation (moderate) p. 190 d. a marketer could use _________ to show the simultaneous and sequential activities that mus t take place to launch the new product. 191 d. Guadalupe has also checked her bank account to see if she can afford the personal music and video player. Which of the following groups is the largest group of adopters? a. interest to evaluation e. The market is constantly changing. she had previously heard that the product existed. Guadalupe is thinking about buying an iPod Nano music player. awareness b. 190-192 e. trial 51. talked to several salespe ople. 190 e. During commercialization. b. The opinion leaders. so she has read Consumer Reports. Having read the article. Pre-made Rice Krispy treats were a huge success because they were perceived as much easier than making the recipe yourself which required consumers to melt ma . interest c. but didn t k now much about it. a Gantt chart b. a position map d. a. a. adoption 52. During the implementation of the introductory marketing strategy. a. adoption d. c. Who? 48. Personal influence is most important in the __________ stage of the adoption process. a. Where? c. (easy) p. 191 c. The innovative majority. low-polluting car. d. e. The action plan answers the commercialization question of __________. The early majority.he primary entrant and seeking the niche customers only. awareness to evaluation d. Dede has moved from __________ . a company must develop an action plan for the roll out. a PERT table c. a rollout plan 49. awareness b. interest c.

e. Products pass through distinct stages with different challenges to the market er. As the product passes through different stages. 192 d. marketing adjustments are req uired. a. divisibility c. e. complexity (moderate) p. Which of the following is NOT an underlying assumption of the product life c ycle? a. products spend a predetermined amount of time in each stage of the life cycle . 192 c. Products have a limited life. Services do not pass through life-cycle stages like products do. a. repositioning . b. Profits are negative in the introduction stage. low profit. __________. heavy promotion. d. Sales peak in the maturity stage. Profits decline in the decline stage. relative advantage b. communicability d. a product s profits are fixed throughout its life cycle e. 192 e. c. communicability d. all products begin at the introductory stage and move through all the life cy cles stages at a steady rate 57. introduction (moderate) p. (moderate) p 192 59. (moderate) p . Profits reach their highest point during the maturity stage. Which of the following is NOT generally true of the product life cycle? a. a. divisibility c. The stage of the life cycle characterized by low sales. Birth control pills didn t diffuse as quickly in predominately Roman Catholic countries as they did in the United States. this time span is determined by the product category c. use large mixing bowls. a. complexity e. relative advantage b. divisibility 55. compatibility (moderate) p. 58. This is an example of problems with the new product s __________. 192 b. c. communicability d. Profits rise and fall at different stages. Products require different marketing and other business strategies in each st age. When a new product innovation is relatively difficult to understand or use. compatibility 56. Pre-packaged Rice Krispy treats had a high level of __________ when compared to the former way of obtaining this tasty dessert. b. According to the concept of the product life cycle. the characteristic of __________ slows the adoption rate of the new product.rshmallows. growth c. most products require the same level of marketing throughout their life cycle d. comparability 54. 191 b. relative advantage (moderate) p. a. 193 b. and minimal competition is the _________ stage. complexity e. products have a limited life (difficult) p. and stir for just the right amount of time.

divesting b. 194 e. Asset leverage. maintaining d. 193 e. New products that were too crude. reducing overcapacity e. 62. Which of the following is NOT one of the factors Tellis and Golder say under pin long-term market leadership? a. d. 66. Most products are in the __________ stage of the product life cycle. (moderate) p. 61. decline 63. Reducing market participation. When psychological persuasion is NOT as effective as financial persuasion. a. m arketers tend to use which form of sales stimulation technique? a. Advertising. Volkswagen continued to sell its sedan (Beetle) in Brazil and Mexico for nea rly 20 years after it withdrew the product from the United States. Too many new products in the pipeline. Product quality improvement. e. Reducing sales force size. c. 194 e. c. Vision of a mass market. (moderate) p. Sales promotion. e.d. . Which is NOT a possible characteristic of harvesting a product in a declinin g industry? a. maturity (moderate) p. b. 195 b. Word of mouth (WOM). maturity (moderate) p. (moderate) p. Managerial incompetence or unhealthy complacency. which of the following was NOT a common weakness of the failing pioneers ? a. growth c. and did no a dvertising. 193 b. c. Niche market dominance. rejuvenation d. Product style improvement. b. In the Schnaars study of 28 industries in which imitators surpassed the inno vators. pre-maturity d. In product life cycle terms. d. harvesting (moderate) p. Products appeared before strong demand. Reducing advertising expenditures. 195 c. (moderate) p. The stage in the product life cycle in which the marketing objective is to m aximize profit while defending market share is the __________ stage. engaging in product improvements 65. a. a. introduction b. 194 d. decline 64. c. VW was __________ with the Beetle. Products that were improperly positioned. Reducing product quality. maturity e. Persistence. The company r educed R&D costs for the car to virtually nothing during that time. d. Relentless innovation. introduction b. growth c. decline 60.

etc. Which of the fo llowing represents a correct match of PLC stage to price strategy? a. Pricing changes are necessary across the product life cycle. PLC is not applicable to any services Essay Questions 71. the iPod needs to work. PLC is an ineffective product management tool c. Core Benefit The fundamental service or benefit that the iPod buyer is really buyi ng. Apple could easily add value by sending u sers a free download every once in awhile. Pricing to penetrate the market in the growth stage. Reducing investment in R&D. if Apple is too good a t it. Ease is a big plus for iPod. Although many swear by the product life cycle (PLC). For example. stable maturity d. these may become expectations. 195 d. the white or black plastic. which would add unexpected but real v . Which of t he following represents a correct match of PLC stage to distribution strategy? a. introduction b. Phasing out unprofitable outlets in the growth stage. some criticize the conc ept because __________. 67. once users get the hang of the machine. Matching competitors pricing in the decline stage. or the opportunit y to store lots of music in one place. Price reductions. (moderate) p. Being selective about distribution in the growth stage. (moderate) p. e. Building more intensive distribution in the maturity stage. marketers can seldom tell what stage of the PLC a product is in (difficult) p . and competitor dropout characterize th e __________ stage of the life cycle. the hard drive inside. etc. 69. store reserve power for hours of listening. d. each adding customer va lue. the headphones. Expected Product Buyers normally expect a certain set of attributes and conditions when they purchase an iPod. decline (easy) pp. deliver a certain amo unt of audio quality. Building selective distribution in the decline stage. Augmented Product These are the pluses iPod tries to deliver. decaying maturity e. 196 d. Phasing out unprofitable outlets in the introduction stage. promotion cutbacks. This is the physi cal product. a. growth c. 70. 194 195 68. Charging cost-plus pricing in the decline stage. a. or brushed metal colors. 195 c. the product life-cycle pattern is an inevitable pattern relatively unaffected by marketing strategies e. the control whe el. they come to take for granted how easy it is to create playlists. The core benefit for some users might be considered as fashion. Distribution changes are necessary across the product life cycle. This could be an ability to listen to music while on the go. Basic Product The way the core benefit it turned into a product. b. c. b. Pricing to best competitors in the introduction stage.2.e. find songs you want to hear. Cutting prices in the introduction stage. etc. Consider Apple s iPod what might be included in each of the product s levels? Answer: The five levels are depicted in the concentric circles model in Figure 10. PLC doesn t help managers compare product performance to other similar products b. e. Marketers plan their market offering at five levels. add and delete music.

heard the band at one of the events during hell week and says he can t stand the band si nce hearing them not enough punk influence for him and he hates the drummer. (difficult) p. In a short essay.2 72. allow text or email transmission. many potential possibi lities. Figure 10. (moderate) pp. The consumer considers whether to try the innovation. A friend that has dropped by ment ions that she has listened to nothing else since buying the R6K s CD. (difficult) p. The vendor can observe how much interest buyers show in the new smoker. The vendor wil l ask the customers to express their purchase intention and other reactions afte r the test. discuss how Maurer would conduct a business-goods marketin g test. 1) Aw areness. define the five strategies that a marketer . 5) Adoption. The s moker could also be tested in distributors and dealers display rooms where they ma y stand next to the Maurer s other products and possibly competitors products. Maur er would come closest to using full test marketing if it gives a limited supply of the product to the sales force to sell in a limited number of areas that rece ive promotional support. 190 192 74. because Josh s girlfriend flirted with the musician. It also has an added advantage i n that it is easy to clean because the hermetic system reduces tar and ash resid ue. A second common test method Maurer could use would be to introduce t he new smoker at trade shows. a practice that might expose unanticipated problems of safety and servicing and alert Maurer to the needs for customer training and servicing requirements. Potential Product All the possible augmentations and transformations possible. Then consider the following scenario: Burke comes back to his dorm room from a night out drinking and entertainment and is excited about a new local band he heard the Route 66 Killers. His roommate Bridgett tells Burke the band will pl ay again at another local nightspot on Friday. and she love s their T-shirt! A fraternity pledge. In a short essay. There are many. The fraternity pledge reached the trial stage and stopped. Maurer has developed a hermetic system for smoking meat that uses 50 percent less energy than industrial-sized smokers currently on the market even though i t will smoke the same amount of meat uniformly. Now indicate which stage o f the adoption process each of the above participants is in. Bri dgett is in the evaluation stage. iPo d could add a phone or PDA function. Answer: Maurer would use alpha testing within the company and beta testing with outside customers. 3) Evaluation. the consumer decides to make full and regular use of the innovation. Burke is in the interest stage. The vendor can also observe how much value the equipmen t adds to the customer s operation as a clue to subsequent pricing. The decline stage of the product life cycle (PLC) has its own special challe nges for marketers. its vendor s technical people will observe how tes t customers use the product. Trade shows draw a large number of potential buyer s. During beta testing. Tony. explain the five stages that adopters of new products and services move through. 188 73. He thinks their retro surf-influen ced style sounds interesting. The friend is in the adoption stage. from the apartment next door. In a short essay. or be ava ilable in truly tiny sizes in the future. The consumer becomes aware of the innovation but lacks information abou t it. In the case of the Route 66 Killers. The consumer tries the innovation to improve his or her estimate of its v alue. Moloto va. The consumer is stimulated to seek information about the inno vation. 179.alue to users without much cost to the company. Answer: The consumer adoption process focuses on the mental processes through which an i ndividual passes from first hearing about an innovation to final adoption. 2) Interest. 4) Trial.

Respon se to the creamers was so good. while simultaneously str engthening the firm s investment in lucrative niches. discuss th e reasons the son seems to be so in favor of the PLC concept and the father seem s to be so opposed to it. Jenny and her hu sband would have most likely used __________. Critics also charge that marketers can seldom tell what stage the product is in. 5) Divest the business quickly by disposing of its a ssets as advantageously as possible. 194-195 75. The son is convinced that such guitars are in the maturity stage of the product life cycle (PLC) and wants to implement strategie s that will stimulate sales. break-even analysis (easy) p. extensive concept testing 77. A father-and-son team owns a company that hand-makes customized high-quality guitars for famous musicians. Ov er the years. Jenny Wood was trying to figure out a way to make some extra cash. 188 b. 4) Harvest the firm s investme nt to recover cash quickly. In a short essay. Her continued success brought her to the attention of some national retailer s who were interested in carrying her product. risk analysis d. Critics of the PLC concept contend that life-cycle patterns are too variable in their shape and duration. and they had two small children. 76. She was already selling Jenny s Country Kitchen gourmet cocoa mixes at local fairs and craft shows when sh e came up with the idea for flavored creamers for coffee. by dropping unprofitable customer groups. as more and better-funded competitors entered the market and their profits shrunk. The appropriate decline strategy depends on the industry s relative attractiveness and the company s competitive strength in th at industry. the PLC concept helps the company measure product perform ance against similar products launched in the past. the PLC concept helps managers characterize the main marketing challe nges in each stage of a product s life and develop major alternative marketing str ategies. National exposure on the QVC shop ping channel gave the business a big boost in customer awareness. Answer: The PLC concept is best used to interpret product and market dynamics. they have debated the PLC concept. Since her appearance on QVC. 192 196 Mini-Cases Mini-Case 10-1 In 1991. Refer to Mini-Case 10-1. 2) Maintain the firm s investment level until the unce rtainties about the industry are resolved. The father is critical of the whole PLC concept. a. They charge that the PLC pattern is the result of marke ting strategies rather than an inevitable course that sales must follow. the simplest method of evaluating the merit of her new product idea. As a plan ning tool. (moderate) pp. What factors determine the strategy that should be implemented? Answer: 1) Increase the firm s investment so as to either dominate the market or strengthe n its competitive position. (moderate) pp. Her husband was a student. She developed nine dif ferent flavors of creamers. a fixed sequence of stages and a fixed length for each stage.can use for dealing with a product in the decline stage. Refer to Mini-Case 10-1. including raspberry mocha and cherry vanilla. conjoint analysis c. she decided to rent a small manufacturing facili ty. Because this is a small operation. As a control. P LCs lack what living organisms have namely. an attribute listing worksheet e. 3) Decrease the firm s investment level selectively. Jenny has started a ma .

adoption e. and customer level of satisfaction with the flavored creamers. does not in any way expose the product to the scrutiny of competitors c. Scooter plans to ask about 30 motorcycle owners abo ut their preferences regarding commercial motorcycle maintenance. their cost . Refer to Mini-Case 10-2. including show ing them his ad materials and asking about acceptable pricing levels. Scooter figures this will save on retail space and provide added value to those with broken down motorcycles. evaluation Mini-Case 10-2 Scooter Williams has devoted his life to all things motorized and on two wheels. 79. diffusion d. awareness (easy) p. door-to-door delivery of the bike b. Jenny probab ly selected sales-wave research because it __________. 191 b. For years he has been making plans to go independent by offering the service on a mobile basis that is. Scooter is engaged in __________. The new company will be called Scoo ter s. wo uld be in the __________ stage of the new product adoption process. but who did not know where or how to purchase them. a. indicates the brand s power to gain distribution and favorable shelf position s hould she decide to market to retailers 78. She has used sales-wave research to estimate trial. He is currently working for a Honda dealership. Some of the owners contacted say they have heard of Scooter s idea through friends over the years. a. can be implemented quickly and can be conducted with a fair amount of securit y (difficult) p. interest (moderate) p. but would like to start his own motorcycle repair company. sales-wave research d. or their contents and was stimulated to seek information about the product. trial e. They are in the ¬¬__________ stage of the adoption process. controlled test marketing b. 178 179 c. the advice the mechanic gives on extended warranties e. 189 d. adoption 81. evaluation d. the rider can keep riding (difficult) pp. business. simulated test marketing (difficult) p. Refer to Mini-Case 10-2. covert test marketing e. a. the changing of the nuts and bolts and parts by the mechanic d. In general. Refer to Mini-Case 10-1. 189 80. a. 191 b. is cost-free d. full-blown test marketing c. A consumer who was aware of Jenny s Country Kitchen f lavored creamers. first rep eat. Refer to Mini-Case 10-2. he will go to the motorcycle i n need of repair rather than make the biker deliver the ailing machine in the ba ck of a truck. the core customer benefit of motorcycle repair work is __________. measures the effectiveness of different sales promotions on customer trial ra tes b. trial c. the satisfaction Scooter will feel when he has a happy customer . interest c.

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