Deck 14: Product and Pricing Strategies

Question 1

A product line comprises all products from a single manufacturer.

Answer 1

False
Explanation:Product line is a series of related products offered by a firm. It may not comprise all products of a firm.

Question 2

Creating variations of an existing product is referred to as line stretching.

Answer 2

False
Explanation:Line stretching refers to adding items with price points above or below the current product line. Creating variations of an existing product is referred to as line extension.

Question 3

License is an agreement to produce and market another company's product in exchange for a royalty or fee.

Answer 3

True
Explanation:License is an agreement to produce and market another company's product in exchange for a royalty or fee.

Question 4

Expense items are inexpensive products that organizations generally use within a year of purchase.

Question 5

Providing education in return of fees is an example of a service.

Question 6

Target customers are familiar with a brand and are likely to consider buying it.This brand has high brand preference.

Question 7

Price elasticity is a measure of the sensitivity of demand to changes in price.

Question 8

Variable costs are not dependent on the magnitude of production.

Question 9

Prototypes are diagrammatic representations of a business model.

Question 10

Commercialization refers to the large-scale production and distribution of products that have survived the testing process.

Question 11

Product life cycle refers to the four stages through which a product progresses.

Question 12

A software firm buys 250 personal computers for a new facility that it is opening.This is an example of an expense item.

Question 13

Capital items are less expensive than expense items.

Question 14

A logo is a graphical or textual representation of a brand.

Question 15

Food grains and wheat are examples of shopping products.

Question 16

Product mix is a complete list of all products that a company offers for sale.

Question 17

A firm uses the brand of an existing product on a new product in a different new category.This is an example of line filling.

Question 18

Shopping products are particular brands that the buyer especially wants and will seek out,regardless of location or price.

Question 19

Crowdsourcing is a technique that companies use to generate new product ideas.

Question 20

A product carrying the label of a wholesaler is an example of a private brand.

Question 21

Optimal pricing is a computer-based pricing method.

Question 22

Skim pricing refers to introducing a new product at a low price in hopes of building sales volume quickly.

Question 23

Charles is the purchase agent for a consulting firm.He places orders for office stationeries and consumables once in two weeks.The purchases are made in large quantities and are billed in the firm's name.The items that Charles buys are examples of ________.

A) specialty products
B) expense items
C) capital items
D) shopping products
E) convenience products

Question 24

Participative pricing allows customers to pay the amount they think a product is worth.

Question 25

Five college graduates decide to open a laundry service company.They import six commercial washing machines from Italy to set up a factory.In this case the commercial washing machines are best referred to as a(n)________.

A) capital item
B) shopping product
C) expense item
D) convenience product
E) specialty product

Question 26

Break-even point refers to the sales volume at a given price that will cover all of a company's costs.

Question 27

The introductory stage will be followed by a ________ stage for a successful product.

A) maturity
B) research
C) saturation
D) growth
E) infiltration

Question 28

________ are fairly important individual goods and services that people buy less frequently.

A) Convenience products
B) Expense items
C) Specialty products
D) Capital items
E) Shopping products

Question 29

A product is called a good if ________.

A) its price is below the market standards
B) it is predominantly tangible
C) it has been standardized
D) it is sold directly to the end consumers
E) its price is above the market standards

Question 30

Jennifer buys such items as bread,flour,and beverages every week from nearby shops.These items are examples of a(n)________.

A) shopping product
B) expense item
C) capital item
D) specialty product
E) convenience product

Question 31

John decides to buy a new car.He compares many products and considers such aspects as fuel efficiency,power,and size before finalizing a model.In this case,the new car is an example of a(n)________.

A) convenience product
B) expense item
C) specialty product
D) capital item
E) shopping product

Question 32

The maturity stage of product lifecycle is ________.

A) a stage where a product's price is at a high level
B) usually the shortest stage in a product's lifetime
C) characterized by steep decline in profits
D) typically followed by a growth stage
E) a stage where firms have to win sales away from others

Question 33

Which of the following is the best example of a good?

A) e-learning storyboard
B) digital music
C) air travel
D) life insurance
E) a pair of shoes

Question 34

Research and development is carried out usually during the ________ stage of product development.

A) maturity
B) introduction
C) growth
D) saturation
E) intensification

Question 35

Dynamic pricing refers to offering temporary price reductions to stimulate sales.

Question 36

________ are expensive organizational products with a long useful life.

A) Shopping products
B) Capital items
C) Expense items
D) Specialty products
E) Convenience products

Question 37

________ are everyday individual goods and services that people buy frequently without much conscious planning.

A) Convenience products
B) Shopping products
C) Expense items
D) Capital items
E) Specialty products

Question 38

________ are particular brands that the buyer especially wants and will seek out.

A) Specialty products
B) Expense items
C) Capital items
D) Convenience products
E) Shopping products

Question 39

Absco computers introduced a low cost,cloud-based storage service.The company adopted a unit-based pricing for the product and many small businesses found the product to be very effective in reducing their storage costs.The sale of the product has increased swiftly in the recent months and is at an all time high.The product is presently in the ________ stage of product lifecycle.

A) maturity
B) growth
C) saturation
D) research
E) introduction

Question 40

Expense items are ________.

A) fairly important goods and services that people buy less frequently
B) everyday goods and services that individuals buy
C) inexpensive products that organizations generally use
D) expensive organizational products with a longer useful life
E) particular brands that the buyer especially wants and will seek out

Question 41

Mr.White is a detergent brand.The brand is owned by Unitech,a company that produces consumer products.Unitech uses the same brand for a new kitchen utensil that the company is launching.Identify the product-line expansion method used in this case.

A) brand extension
B) brand stretching
C) line filling
D) line extension
E) line stretching

Question 42

________ is an agreement to produce and market another company's product in exchange for a royalty or fee.

A) Trademark
B) License
C) Patent
D) Copyright
E) Co-branding

Question 43

Which of the following refers to a graphical representation of a brand?

A) brand equity
B) brand name
C) trademark
D) logo
E) prototype

Question 44

A survey revealed that a product has good brand awareness.This means that ________.

A) buyers will not accept substitutes of the brand
B) the brand does not have many substitutes
C) people are familiar with the brand
D) the brand represents a specialty product
E) majority considered the brand as a preferred one

Question 45

An organization decides to use crowdsourcing in its new-product development process.Crowdsourcing will be used during the ________ stage of product development.

A) business analysis
B) idea generation
C) idea screening
D) test marketing
E) commercialization

Question 46

People who monitor social media to spot shifts in consumer tastes are called ________.

A) social arbitrators
B) trend watchers
C) crowd pullers
D) social developers
E) social programmers

Question 47

Co-branding is ________.

A) a legal protection given to owners for exclusive rights to the use of brands
B) a partnership to closely link brand names for a single product
C) the process of selling a famous brand to a third party
D) a method of testing and evaluating a new product
E) an agreement to produce and market another company's product

Question 48

Which of the following is a key difference between product mix and product line?

A) Product line is the complete set of the products in an industry, whereas product mix is an incomplete set of products.
B) Product mix contains products that are similar, whereas product line may contain dissimilar products also.
C) A product mix is used by larger companies, whereas a product line is used by smaller companies.
D) Product line is a set of heterogeneous goods or services whereas product mix is a set of homogenous products.
E) Product mix includes all products from a single manufacturer, whereas product line contains a group of similar products.

Question 49

Brand preference means that people ________.

A) are not willing to accept substitutes for the product
B) will purchase the product if it is available
C) are willing to wait long for the product
D) are not willing to experiment with other brands
E) will buy the product only if it is availed in small numbers

Question 50

________ refers to a stage at which buyers will not accept a substitute for the product.

A) Brand insistence
B) Brand preference
C) Brand saturation
D) Brand awareness
E) Brand knowledge

Question 51

Goblo Chemicals is a Japanese drug manufacturer.The company has spent a considerable amount in R&D to invent a drug that fosters weight loss.The company has tested the product in-house and has now sold the product to a selected group of customers to gauge its demand.The company is in the ________ stage of product development now.

A) idea screening
B) business analysis
C) commercialization
D) idea generation
E) test marketing

Question 52

Indoxo Autoparts is a company that manufactures automobile accessories.The company is considering the manufacture of a special type of helmet that helps reduce hair loss.The company conducts an online survey to know what customers think of this idea.This process of validating ideas through customers is known as ________.

A) business analysis
B) beta testing
C) test marketing
D) concept testing
E) prototyping

Question 53

During the business analysis stage,a company ________.

A) sells the product on a limited basis to gauge its market appeal
B) invests significantly in research and development
C) reviews the sales, costs, and profit projections
D) screens the business ideas that it has generated
E) generates a wide variety of ideas to introduce a new product

Question 54

________ refer to brands that have been given legal protection so that their owners have exclusive rights to their use.

A) Brand equities
B) Prototypes
C) Licenses
D) Trademarks
E) Brand marks

Question 55

Proctor and Gamble offers products under more than fifty brand names.The company's products vary from cosmetics to cat foods.A complete list of all these products that the company offers will refer to the company's ________.

A) core product line
B) marketing mix
C) product mix
D) product line
E) co-branding list

Question 56

Prototypes are ________.

A) layouts used in the design of a product
B) analysts who screen product ideas
C) tools used to design a new product
D) preproduction samples of products
E) networks used in the commercialization of products

Question 57

Which of the following refers to creating variations of an existing product?

A) brand extension
B) line filling
C) brand filling
D) line extension
E) line stretching

Question 58

________ refers to using the brand of existing products on products in a different new category.

A) Brand filling
B) Line extension
C) Line filling
D) Brand stretching
E) Brand extension

Question 59

________ refers to developing items to fill gaps in the market that have been overlooked by competitors or have emerged as consumer tastes and needs shift.

A) Brand extension
B) Line filling
C) Brand stretching
D) Line extension
E) Line stretching

Question 60

________ is a product development stage in which a product is sold on a limited basis to gauge its market appeal.

A) Business analysis
B) Test marketing
C) Crowdsourcing
D) Prototyping
E) Commercialization

Question 61

________ is a computer-based pricing method that creates a demand curve for every product to help managers select a price that meets specific marketing objectives.

A) Value-based pricing
B) Cost-based pricing
C) Freemium pricing
D) Optimal pricing
E) Participative pricing

Question 62

Which of the following is a pricing method that allows customers to pay the amount they think a product is worth?

A) cost-based pricing
B) participative pricing
C) penetration pricing
D) optimal pricing
E) value-based pricing

Question 63

A number of applications in the Android Market do not charge the customer for using the basic version of the application.However,the customers are charged if they want a version of the product with better features.This pricing strategy is referred to as ________ pricing.

A) value-based
B) freemium
C) optimal
D) auction
E) penetration

Question 64

Price elasticity is a measure of the sensitivity of ________ to changes in price.

A) variable cost
B) demand
C) income
D) yield
E) total cost

Question 65

Skim pricing is used during the ________ stage of a product.

A) introductory
B) maturity
C) decline
D) growth
E) saturation

Question 66

Penetration pricing doesn't work if ________.

A) the company can't sustain the low price levels profitably
B) there is some level of competition in the market
C) a company is entering a market that is totally new
D) the customers in a market are highly price sensitive
E) the product is characterized by high extent of price elasticity

Question 67

Which of the following pricing methods is characterized by charging a high price for a new product during the introductory stage and lowering the price later?

A) cost-based pricing
B) value-based pricing
C) optimal pricing
D) skim pricing
E) auction pricing

Question 68

Line stretching refers to ________.

A) using the brand of existing products on products in a different new category
B) adding items with price points above or below the current product line
C) creating variations of a current product
D) creating variations of an existing product
E) developing items to fill gaps in the market that have been overlooked by competitors

Question 69

A group of fifteen entrepreneurs starts a manufacturing firm.The total fixed costs that they have incurred in setting up the business amounts to $50000.The variable cost of selling a unit of product is $25.What is the break-even point if each unit is priced at $50?

A) 2000
B) 500
C) 333
D) 666
E) 1000

Question 70

Novice Telecom is a manufacturer of cell phones.The company is planning to launch a new model of smart phone and the pre-launch marketing has created much hype in the market.In order to cash in on the hype,the company charges a high price during the initial stages of the product's launch.Identify the pricing strategy this company is using.

A) optimal pricing
B) skim pricing
C) penetration pricing
D) auction pricing
E) freemium pricing

Question 71

Which of the following is an example of a fixed cost that businesses have to incur?

A) cost of raw materials
B) cost of supplies
C) shipping costs
D) sales commissions
E) cost of building plants

Question 72

Using a brand name on a variety of related products is known as ________.

A) brand filling
B) brand extension
C) line extension
D) family branding
E) brand stretching

Question 73

Break-even analysis is a method of ________.

A) calculating the minimum sales needed to cover all costs
B) classifying the variable costs incurred by a firm
C) classifying the fixed costs incurred by a firm
D) balancing the costs and risks of a business
E) estimating the fixed costs required to minimize the operational costs

Question 74

Which of the following is an example of a variable cost that businesses have to incur?

A) insurance premiums
B) real estate taxes
C) unit-based incentives
D) employee salaries
E) mortgage payments

Question 75

Cost-based pricing ________.

A) uses a software to generate the ideal price for each item
B) introduces a new product at a very low price
C) is based on customer perceptions of cost
D) doesn't consider factors such as customer demand
E) uses a high price for a new product during the introductory stages

Question 76

Which of the following statements is true of a brand extension strategy?

A) Brand extension cuts the costs and risks of introducing new products.
B) It is used by firms that have a weak brand name.
C) It is a strategy used by start-up firms.
D) It refers to developing items to fill gaps in the market.
E) Brand extension refers to creating variations of a product.

Question 77

________ is a method of setting prices based on customer perceptions of a product's worth.

A) Cost-based pricing
B) Optimal pricing
C) Skim pricing
D) Freemium pricing
E) Value-based pricing

Question 78

In ________,the seller doesn't set a firm price but allows buyers to competitively propose the prices that they are willing to pay.

A) cost-based pricing
B) value-based pricing
C) optimal pricing
D) auction pricing
E) freemium pricing

Question 79

MaCton is a Chinese manufacturer of personal computers.The company decides to extend its product line by adding two premium products that are priced much more than the existing products.Identify the product-line expansion method that the company is using.

A) Brand extension
B) Line filling
C) Line extension
D) Brand filling
E) Line stretching

Question 80

Rose Perfumes is a well known perfume brand in Europe.The firm markets a large collection of perfumes.In order to expand its business,the firm decides to enter the U.S.market.The firm keeps its prices very low to capture the market rapidly.Identify the pricing strategy that the firm is using.

A) cost-based pricing
B) value-based pricing
C) penetration pricing
D) freemium pricing
E) optimal pricing