Deck 9: Product Strategy

Question 1

The dominant choice attribute for a consumer in buying convenience item is:

A) brand name.
B) price.
C) access.
D) situation specific.

Answer 1

C

Question 2

Cannibalization refers to a situation when:

A) the market territory of two contiguous markets overlap.
B) the breadth and depth of a product line complicate the marketing of a service line.
C) the sale of one product takes away sales from another of the same company.
D) two competing companies confuse the other's position in the consumers' mind, thus cannibalizing their unique position.

Answer 2

C

Question 3

In the introduction stage of the product life cycle, the major concern for the organization is:

A) to correctly price the product or service.
B) to ensure that the product or service is a quality offering.
C) to ensure a sufficient supply in the channel of distribution.
D) to ensure that there is a value-added difference.

Answer 3

B

Question 4

In a skimming price strategy, the organization tends to:

A) set a high price relative to competing products or substitutable services.
B) skim off the high-end customers.
C) set a high price to allocate as much cost to this service line as possible.
D) All of these are correct.

Question 5

One of the key advantages of a skimming strategy for services is that:

A) it gives a service a way to develop a position to negotiate with consumers.
B) it is a useful mechanism for structuring all the costs of the services.
C) it allows for a high price because no one understands the costs.
D) it can be useful to control demand until the organization is sure that processes are in place to handle flow.

Question 6

The major disadvantage of a skimming strategy is that it:

A) encourages competitors to enter.
B) allows for rate-setting commissions to begin an investigation into price-setting practices.
C) ignores where the bulk of the market is.
D) All of these are correct.

Question 7

To implement a penetration strategy, an organization must have a good understanding of:

A) the price sensitivity of the market.
B) its cost structure.
C) its ability to deal with a reaction from competitors.
D) its debt-financing capacity.

Question 8

Generating primary demand is the major objective in which stage of the product life cycle?

A) Introduction
B) Growth
C) Mature
D) Decline

Question 9

A manufacturer of proton beam therapy publishes a magazine showing articles and stories of patients whose diseases have been treated with great results using this technology. This is an example of a strategy to create:

A) differentiation.
B) skimming.
C) secondary demand.
D) primary demand.

Question 10

When competitors enter the market, the organization should recognize that it has entered which stage of the product life cycle?

A) Introduction
B) Growth
C) Maturity
D) Decline

Question 11

Intuitive Surgical has entered the market with a robotics surgical device. Because it is in the growth stage of the life cycle, it has decided to:

A) lower prices.
B) generate primary demand.
C) target different market segments for usage of its device.
D) All of these are correct.

Question 12

The first proton beam therapy center has now closed, and in some markets two competing centers have decided to merge. These trends indicate that the market for such facilities has entered which stage of the product life cycle?

A) Introduction
B) Growth
C) Maturity
D) Decline

Question 13

Generating selective demand is the key promotional objective of which stage of the product life cycle?

A) Introduction
B) Growth
C) Maturity
D) Decline

Question 14

In the growth stage of the life cycle, the focus on the middleman becomes one of:

A) negotiating the price.
B) gaining a presence.
C) solidifying loyalty.
D) gaining an image of the service in the channel.

Question 15

In the early phase of the mature life cycle, growth in sales/revenues continues to occur due to:

A) marginal competitors exiting the marketplace.
B) the lessening battle for market share.
C) stronger players beginning to solidify their position.
D) customers beginning to recognize their preferences for the brand.

Question 16

In the mature stage of the product life cycle, a key objective becomes one of:

A) maintaining price margins.
B) maintaining the existing customer base.
C) recognizing when it is necessary to withdraw from the market first.
D) developing selective demand.

Question 17

Developing new product or service lines to reposition the organization to enjoy future revenue streams should occur during which stage of the product life cycle?

A) Introduction
B) Growth
C) Maturity
D) Decline

Question 18

Aggressive price discounting is most common during which stage of the product life cycle?

A) Introduction
B) Growth
C) Maturity
D) Decline

Question 19

In the decline stage of the product life cycle, many organizations struggle with dropping an unprofitable service or product because:

A) it is often an emotional decision for the organization.
B) there is always revenue that can be obtained.
C) some people always need every service.
D) every product has value.

Question 20

In the life cycle of a high-learning product, the key strategic challenge is to:

A) price it at the appropriate value level.
B) educate the market as to the benefits of the product.
C) get people to learn to adapt to change.
D) get the channel to adopt to new use alternatives.

Question 21

Competition enters rapidly in a _______ product life cycle.

A) high-learning
B) fashion
C) fad
D) low-learning

Question 22

Which product life cycle has only two stages: introduction and decline?

A) High learning
B) Low learning
C) Fad
D) Fashion

Question 23

In health care, a major factor that affects life cycles is:

A) demographics.
B) technology.
C) reimbursement.
D) All of these are correct.

Question 24

Hospital-based sleep centers and many outpatient sleep centers were dramatically affected by externalities in the environment. The result was that many outpatient centers closed. What two factors affected the changes in these institutions' life cycles?

A) Reimbursement and demographics
B) Technology and physician resistance
C) Technology and reimbursement
D) Physician resistance and demographics

Question 25

A major criticism of the product life cycle concept has been that:

A) it is difficult to determine when to change strategy over the life cycle.
B) it is difficult to determine when one enters each stage.
C) the industry curve and product curve often intersect at different points.
D) there is no standard product life cycle curve.

Question 26

In recent years, the greatest change in hospital revenues has been the increase occurring in revenue from:

A) outpatient services.
B) ancillary services.
C) inpatient services.
D) emergency services.

Question 27

Which of the following is not a way to stretch the product life cycle?

A) Market modification
B) Product modification
C) Market repositioning
D) Product repositioning

Question 28

When it is touted to "brush after every meal," this is an example of:

A) creating new users.
B) market modification.
C) product modification.
D) market enhancement.

Question 29

Off-label use of a pharmaceutical product is an example of:

A) a high-learning product.
B) a shopping product.
C) a repositioning strategy.
D) market stretching.

Question 30

In terms of off-label use, Food and Drug Administration regulations:

A) allow for promotion of the off-label benefits.
B) prohibit promotion of the off-label benefits.
C) have not addressed the issue of off-label benefits.
D) allow companies to promote off-label benefits if they specifically state in the advertisements the drug was not tested for that specific condition.

Question 31

The Louisiana Heart Hospital focuses only on the care of heart-related diseases. This is an example of a:

A) niche strategy.
B) product-focused strategy.
C) selective-demand strategy.
D) key market strategy.

Question 32

Focusing on a very narrow segment of the market is a definition of a:

A) selective strategy.
B) single-segment strategy.
C) niche strategy.
D) targeted strategy.

Question 33

In order for a brand or service mark to have legal protection, it must have which of the following?

A) A clear registered trade or service mark that cannot be confused with those of others brands or services
B) At least three letters or symbols in its name
C) A visible logo that is used in signage and letterhead
D) A certificate showing that is registered in a state registry

Question 34

Brand equity is the:

A) worth of the brand in actual dollars in the marketplace.
B) total dollars a company spends in promoting its brand name.
C) equity a company has in its stock price.
D) association a consumer places with the organization's brand.

Question 35

Which of the following is not one of the many advantages that have been cited of having a strong brand?

A) It aids in establishing a competitive advantage.
B) It allows an organization to establish a successful digital presence.
C) It can create a barrier to entry.
D) All of these are correct.

Question 36

In following a house of brands strategy, it is of paramount importance to ensure that:

A) each brand has a distinct name.
B) the co-brands are of similar value.
C) there is consistency across the organization with regards to service and clinical quality.
D) the multibrand approach is understood throughout the organization.

Question 37

The principal/agent notion is a central concept in health care because:

A) consumers pay physicians as agents to buy medical services for them, such as laboratory and radiology tests.
B) principals such as companies hire agents to help them contract with health systems.
C) a patient trusts a doctor to make the decisions for them.
D) a doctor trusts that the patient will follow their advice.

Question 38

A multispecialty clinic has established a surgical center, a rehab group, and a durable medical equipment company. All of these entities are under the name of the multispecialty practice. This branding strategy would be considered:

A) co-branding.
B) a multibrand.
C) a multiproduct.
D) a reseller.

Question 39

A hospital has decided to acquire practices throughout its primary and secondary service area. As it acquires each practice, it allows each group to retain the name of the group. However, under the practice's name, it places the name of the health system. This is an example of:

A) multiproduct branding.
B) co-branding.
C) multibranding.
D) mixed branding.

Question 40

Using the same brand name across all the products or services in the organization's line is an example of which type of branding strategy?

A) Multibranding
B) Co-branding
C) Reseller
D) Multiproduct

Question 41

A major tertiary center has decided to generate significant revenue by staffing the laboratories of smaller hospitals in the region on a contractual basis. The tertiary center has hired a large number of pathologists. However, as they place the pathologists in these local hospitals, there will be no identification with the major tertiary center. The pathologists and their support staff will wear the lab coats of the local facility. This approach is an example of which branding strategy?

A) Multibrand
B) Multiproduct
C) Mixed
D) Reseller

Question 42

The diffusion of innovation refers to:

A) who adopts new products or services.
B) the time when a new innovation is adopted in the population.
C) how new diseases or epidemics spread.
D) how individuals are profiled.

Question 43

The major difference between innovators, early adopters, early majority, late majority, and laggards is:

A) their use of media.
B) their income distribution.
C) the time when they adopt a new product or service.
D) their price consciousness.

Question 44

Which of the following is not a factor affecting adoption?

A) Relative advantage
B) Consistency
C) Compatibility
D) Communicability

Question 45

Giving free samples to physicians as part of the diffusion of innovation is trying to affect which factor of adoption?

A) Divisibility
B) Complexity
C) Compatibility
D) Homophility

Question 46

Adoption increases when the group of people considering the new technology is more similar. This is referred to as the dimension of:

A) commonality.
B) congruency.
C) homophilous.
D) homogeneity.

Question 47

A surgeon hesitates to use Google glasses in the operating room. What criterion does this demonstrate with regard to the adoption of new products?

A) Complexity
B) Divisibility
C) Financial risk
D) None of these is correct.

Question 48

In the adoption of digital technology, two key barriers are:

A) privacy and cost.
B) cost and difficulty of understanding the product's benefit.
C) difficulty of understanding of the product's benefit and safety.
D) safety and privacy.

Question 49

The entire range of products or services offered by an organization is referred to as its product mix.

Question 50

A hospital has a comprehensive cancer center that has surgery, interventional radiology, counseling, gynecological surgery, breast reconstructive surgery, and many other related aspects pertaining to the treatment of adult cancer. This would be referred to as its product line.

Question 51

Specialty heart hospitals represent depth rather than breadth in terms of a product line perspective.

Question 52

Cross-subsidization of the business unit is when a company steals sales from itself.

Question 53

When a multispecialty group that has primary care satellites establishes a telemedicine division that provides primary care access, there is a risk of cannibalization.

Question 54

The stage a product goes through from introduction to its final withdrawal is referred to as the product life cycle.

Question 55

In the introduction stage, setting a high initial price is possible because buyers always want a new product and it encourages people to buy the item.

Question 56

A skimming strategy tends to encourage competitors to enter the market.

Question 57

The less sure an organization is of demand relative to capacity, the more likely it is to use a penetration pricing approach in the introduction stage of the product life cycle.

Question 58

Over the course of the product life cycle, prices for a product or service tend to stabilize as competition enters.

Question 59

The focus of primary demand is to generate demand for an entire product class.

Question 60

A key goal in the introduction stage of the life cycle is to generate selective demand for the new product.

Question 61

The key sign that a product has entered the growth stage of the life cycle is that a competitor has entered the market.

Question 62

Loyalty of the middleman in the channel of distribution must be obtained in the introduction stage of the life cycle before competitors enter the market.

Question 63

When no new competitors enter the market, this is a key sign that the product life cycle is now in the mature phase.

Question 64

The goal in the mature stage of the product life cycle is to retain customers through promotion.

Question 65

Many hospitals have begun to drop inpatient pediatric beds as a harvesting strategy, which indicates the decline stage of the life cycle of this service.

Question 66

Products that have a very protracted introductory period before reaching the growth phase are referred to as extended learning products.

Question 67

Google glasses for surgical use are most likely a case of a fad product.

Question 68

Fads have three stages: introduction, quick acceptance, and demise.

Question 69

When a new product enters the market and consumers immediately see the benefit, such as with walk-in urgent care centers, and competitors then quickly enter, it is an considered a low-learning product or service.

Question 70

The Duncan Yo-Yo Company has periodic times when sales are quite high; then it goes out of favor, only to return again among younger consumers as a product of interest. This product exhibits a fad product life cycle.

Question 71

A major externality that can affect the life cycle of any service in health care is reimbursement changes.

Question 72

Services can move to the decline stage as a function of technological changes.

Question 73

Rural hospital decline is most affected by changes in reimbursements.

Question 74

The major advantage of the product life cycle concept is that there is a standard life cycle by which all strategies can be formulated and developed.

Question 75

A hospital has decided to add more services to its health and wellness program. In this case it has undertaken a market modification program.

Question 76

When a company tries to create new uses for its product, it is undertaking a market modification program.

Question 77

Off-label uses of pharmacological products are an example of market modification programs.

Question 78

Off-label use of a pharmaceutical by a physician is illegal.

Question 79

In an undifferentiated positioning approach, a service is positioned to appeal to the broadest possible market.

Question 80

Shouldice Hospital in Canada did hernia repairs at its hospital and attracted patients from all of North America. This was an example of a mass market strategy.