Deck 11: Developing and Managing Goods and Services

Question 1

Functional modifications help an organization achieve and maintain a progressive image.

Answer 1

True

Question 2

Functional modifications make an existing product more durable.

Answer 2

False

Question 3

Functional modifications are usually executed by altering the materials or the production process.

Answer 3

False

Question 4

Concept testing gives reliable feedback, but at a relatively high cost.

Question 5

The product development stage determines the technical feasibility of producing the new product.

Question 6

Functional modifications usually require that the product be redesigned.

Question 7

New products are classified solely as innovations that have never been sold by any organization.

Question 8

An important question in the business analysis stage of new-product development is "Is demand strong enough to justify entering the market and will this demand endure?"

Question 9

Concept testing presents a small sample of potential buyers with a trial version of the new product to determine their initial reactions.

Question 10

Test marketing is a sample launching of the entire marketing mix.

Question 11

Estimates of sales are an important component of business analysis.

Question 12

Sales personnel are an external source for new product ideas.

Question 13

Business analysis provides a tentative sketch of a product's profitability.

Question 14

The major drawback in using aesthetic modifications is that their value is determined subjectively.

Question 15

Line extensions are less common than other new products because line extensions are more expensive and more risky.

Question 16

Automobile makers rely heavily on aesthetic modifications.

Question 17

Relatively few product ideas are put into the product development stage.

Question 18

The business analysis stage of new-product development explores how well the new product fits in with the firm's existing product mix.

Question 19

Quality modifications never seek to reduce product quality.

Question 20

Many of the so-called new products that are launched each year are in fact line extensions.

Question 21

Disruptive innovations involve completely new technologies.

Question 22

Product support services are important mainly for products that are mechanical in nature.

Question 23

Product design is the process of creating and designing products so that consumers perceive them as different from competing products.

Question 24

Consistency of product quality means giving consumers the quality they expect every time they purchase a product.

Question 25

Warranties and customer training are examples of customer services.

Question 26

New-product development does not include planning for advertising.

Question 27

Styling involves the specific design characteristics that allow a product to perform certain tasks.

Question 28

Test marketing is used by companies of all sizes, primarily because of the perceived risk of product failure on the open market and the associated consequences.

Question 29

The overall characteristics of a product that allow it to perform as expected in satisfying customer needs are called product quality.

Question 30

The majority of new-product projects initiated by major companies reach the commercialization stage.

Question 31

Test marketing is an extension of the product screening process.

Question 32

How a pair of jeans looks, regardless of the price, is an example of styling.

Question 33

Delivery, installation, financing, repair, warranties, and guarantees are all examples of product features.

Question 34

Head-to-head positioning can be appropriate even when the price is higher.

Question 35

The concept of product quality is the same from consumer to consumer and from consumer markets to organizational markets.

Question 36

Warby Parker was developed to challenge the dominant player in the market for eyewear. Founder Neil Blumenthal realized that a major firm, Luxottica, had an almost monopolistic hold on the eyewear and vision industry. They could therefore set high prices. He and his partners developed Warby Parker to develop less expensive glasses in-house at a fraction of the cost. Not only are Warby Parker's glasses much more affordable, but also the company donates money to a vision care nonprofit organization for every pair of glasses it sells. This allows people in developing countries access to eyewear who normally could not afford it. Warby Parker is an example of a company that has successfully engaged in disruptive innovation.

Question 37

Test marketing should be conducted when a product has been given a low probability of success.

Question 38

During the commercialization phase of new-product development, plans for full-scale manufacturing and marketing are refined and settled.

Question 39

Time spent in test marketing can benefit a firm's competitors.

Question 40

Designing a product that customers perceive as different from competing products is an example of product differentiation.

Question 41

Because of inseparability of the consumption and production of services, customers are often present when a service is produced.

Question 42

Marketers have little influence over shaping consumers' concepts or perceptions.

Question 43

The decision to drop a product should always be a unanimous decision of the management team.

Question 44

Positioning to avoid competition may be best when the product's performance characteristics do not differ significantly from competing brands.

Question 45

Systematic reviews of a company's product mix aid in determining when product deletion is necessary.

Question 46

Services are highly perishable and cannot be inventoried for future use.

Question 47

Because services are intangible by nature, marketers should downplay the tangibles associated with a particular service (such as facilities or employees).

Question 48

Run-outs are usually taken for technologically obsolete products as a form of product deletion.

Question 49

There is no way to combat the supply-demand problem associated with the perishability of services.

Question 50

Because of service perishability, it is difficult to price services in a manner that takes into account fluctuations in demand.

Question 51

An advantage of heterogeneity is that services can be customized.

Question 52

Repositioning requires changes in perception but not usually changes in product features.

Question 53

A run-out approach to product deletion lets the product decline without changing the marketing strategy.

Question 54

Goods can be defined in terms of their physical attributes, but services cannot because they are intangible.

Question 55

The phase-out approach to product deletion involves a process of continuous price increases to make as much profit as possible before the product is finally priced out of existence.

Question 56

The run-out approach to product deletion is used for technologically-obsolete products.

Question 57

Both production and consumption of services occur at the same time.

Question 58

The phase-out approach to product deletion exploits any strengths left in the product.

Question 59

Inseparability also means that customers expect a service to be provided in a certain way by a specific person.

Question 60

The education a student gets is an example of the intangibility of services.

Question 61

The goal of building client-based relationships is to satisfy customers so well that they become very loyal and would be unlikely to switch to competitors.

Question 62

Suppose Pizza Hut discounts its pizzas on Wednesday evening because demand is slow. This pricing strategy is known as low demand pricing.

Question 63

Demand-based pricing means lower prices during times of lower demand and higher prices during times of higher demand.

Question 64

The intangible nature of services often leads customers to use prices as a measuring tool for quality.

Question 65

A hair stylist who gives good haircuts in the morning but tends to give haircuts of lesser quality in the afternoon is suffering from the challenges associated with intangibility.

Question 66

High-contact services are very expensive to deliver because they are equipment-intensive.

Question 67

Intangible cues are used to provide customers with some assurance of service quality.

Question 68

When a customer takes part in the production of a service, other customers can affect the outcome of the service.

Question 69

Client-based relationships are interactions that result in satisfied customers who repeatedly use a service over time.

Question 70

Using promotional efforts that encourage the trial use of some services can be an effective way for customers to assess the quality of the offered service.

Question 71

Intangibility of services creates promotional challenges because it is difficult to display a service in a store and to demonstrate the quality of a service.

Question 72

Training of employees is less important for high-contact services than it is for low-contact services.

Question 73

Distribution of services is often more direct, even if the customer must go to the service provider's facilities.

Question 74

Because most services are people based, they are susceptible to heterogeneity, or variation in demand over time.

Question 75

The ability to customize services to match the specific needs of individual customers is an advantage to service marketers and may lead to standardized packages.

Question 76

Supplementary services are the basic services that a customer expects to receive.

Question 77

Demand-based pricing relies on information concerning peak demand times and off-peak demand times.

Question 78

Advertisements for services use tangible cues to help customers understand the intangible attributes associated with a particular service.

Question 79

Balancing the supply and demand of services can be done by keeping service prices the same regardless of the time of day, week, or year.

Question 80

Customers seldom rely on the price-quality associations.