Deck 13: B: Creating and Pricing Products That Satisfy Customers

Question 1

Candy bars, milk, and newspapers are all examples of convenience products.

Answer 1

True

Question 2

There are two dimensions to a firm's product mix: volume and breadth.

Answer 2

False

Question 3

BMW's acquisition of the British automaker Rover provides BMW with instant entry into the growing sport-utility vehicle market with the legendary Range Rover line. BMW's purchase is an attempt to widen its product mix.

Answer 3

True

Question 4

In the decline life-cycle stage of a product, less profitable versions of the product are sold at reduced rates to cut losses.

Question 5

The depth of a product mix is a measure of the average number of individual products within each line.

Question 6

A trademark is legally protected from use by anyone except its owner.

Question 7

Appliances, stereos, and furniture are all considered specialty products.

Question 8

A product mix is a combination of all the information a producer uses to sell its product to the public.

Question 9

During the decline stage of the product life-cycle, the sales volume decreases sharply because of an increase in the number of competing firms.

Question 10

New products are often immediate successes.

Question 11

A variation of an existing product, such as freeze-dried coffee, is an example of product imitation.

Question 12

The width of a product mix is a measure of the number of individual products within each line.

Question 13

A company's product mix usually must be changed to stay competitive.

Question 14

A brand mark is the part of a brand that consists of a symbol or distinctive design.

Question 15

Texaco, Exxon, and Ford are examples of a store brand.

Question 16

Entirely new products are innovations.

Question 17

Innovations are much less common than imitations and adaptations.

Question 18

Screening ideas for feasibility is the first stage of the new product development process.

Question 19

A product may be a good or a service but not an idea.

Question 20

Once it becomes effective, a product mix for a given product remains effective for a long time.

Question 21

A product cannot perform its function if it is priced incorrectly.

Question 22

A name, term, symbol, design, or any combination of these that identifies a product and distinguishes it from a competitor's product is called packaging.

Question 23

Management must set pricing objectives based on the primary objective of making a profit.

Question 24

Because markup pricing is difficult to use, few retailers and wholesalers use it.

Question 25

Brand equity refers to making all of a company's brands approximately equal with respect to brand loyalty.

Question 26

The price floor is the lowest price at which a producer can sell its product without incurring a loss.

Question 27

Price is the amount of money a seller is willing to accept in exchange for a product, at a given time and under given circumstances.

Question 28

Price allocates goods and services among those who are willing and able to pay for them.

Question 29

Brands help reduce a consumer's perceived risk of purchase.

Question 30

Even if a grocery item is a generic product, a consumer can tell who produced it by examining the package carefully.

Question 31

Packages have marketing value but no functional value.

Question 32

The three levels of brand loyalty are preference, recognition, and insistence.

Question 33

Price competition occurs when a seller makes its product stand out from the competition by distinctive product quality and customer service.

Question 34

A major reason why retailers use markup pricing is because it is easy to apply.

Question 35

The same price will be charged no matter what pricing objective is used.

Question 36

Some pricing objectives include surviving, maximizing profit, obtaining market- share goals, and maintaining status quo.

Question 37

Generic brands are becoming more popular with today's price-conscious shoppers.

Question 38

Craftsman and Kenmore are examples of a store brand.

Question 39

The branding strategy in which a firm uses the same brand for all or most of its products is called individual branding.

Question 40

The supply curve demonstrates that the quantity supplied by producers decreases as the price increases.

Question 41

Costs that depend on the number of units produced are called variable costs.

Question 42

The strategy of developing a large market share for a new product by setting a very low price is called penetration pricing.

Question 43

Random discounting is often predictable so consumers wait to make purchases until they can benefit from the price reductions.

Question 44

Odd-number pricing is limited to low-priced items.

Question 45

Fixed costs are costs that depend on the number of units produced.

Question 46

Pricing strategies act as guides for achieving pricing objectives.

Question 47

An early bird special offered by a restaurant during off-peak hours is an example of a secondary-market pricing strategy.

Question 48

In some cases, prices are assigned to goods on the basis of nothing more than customs and traditions.

Question 49

The breakeven quantity is the number of units that must be sold to equal the projected total revenue for the period.

Question 50

Manufacturers, wholesalers, and retailers do not use negotiated pricing strategies.

Question 51

Multiple-unit pricing is packaging together two or more complementary products and selling them for a single price.

Question 52

Costs incurred regardless of how many units of a product are produced or sold are called fixed costs.

Question 53

Psychological pricing strategies encourage purchases to be based on economically rational responses rather than on emotional responses.

Question 54

The strategy of charging the highest possible price for a product during the introduction stage of its life-cycle is called price skimming.

Question 55

One of the major dangers of competition-based pricing is that it often results in price wars.

Question 56

Differential pricing means different buyers pay different prices for the same quality and quantity of a product.

Question 57

Markup pricing is easy to apply, although it is difficult to determine an effective markup percentage.

Question 58

Competition-based pricing is important if competing products are similar and the organization is serving markets in which price is the crucial variable of the marketing strategy.

Question 59

The sum of the fixed costs and the variable costs attributed to the units produced is the selling price.

Question 60

A price of $5.95 for a product would fall into the category of odd-number pricing.

Question 61

The legality of uniform geographic pricing has been challenged and so its use has been abandoned.

Question 62

A trade discount is the price producers set to draw the public's attention to new products.

Question 63

Three types of product-line pricing are price leaders, special-event pricing, and comparison discounting.

Question 64

A company wanting to maximize profits from its new product would use product-line pricing.

Question 65

Pricing whereby the buyer absorbs all or part of the freight costs is freight absorption pricing.

Question 66

A men's clothing store sells ties only at $20 and $35. This type of pricing strategy is known as price lining.

Question 67

Setting prices for organizational buyers is very similar to setting prices for consumers.

Question 68

Seasonal discounts provide price incentives to customers during peak selling seasons.