Question 1

Gillette spent $200 million in advertising to introduce the Fusion razor to male shavers.Such expenditures are often made to stimulate primary demand,or desire for the product __________,rather than for a specific brand,when there are few competitors with the same product.

Accepted Answer

Primary demand refers to the demand for a particular class of product, such as razors in general, rather than for a specific brand or form (e.g. disposable vs. electric) of the product.

Question 2

Xerox pioneered the first portable fax machine.In 1980,the price was $12,700.Xerox used a(n)__________ pricing strategy to help recover its research and development costs.

Accepted Answer

The skimming pricing strategy involves setting a high price for a new and innovative product in order to recover the high research and development costs. This is commonly used for products with little competition and high demand, which was likely the case for Xerox's portable fax machine in 1980.

Question 3

3M is a master of the __________ pricing strategy.According to a 3M manager,"We hit fast,price high,and get the heck out when the me-too products pour in."

Accepted Answer

The strategy described by the 3M manager is skimming pricing strategy, where a company sets a high initial price for a product and then gradually lowers the price over time as competitors enter the market. This strategy is particularly effective when demand is inelastic and customers are willing to pay a premium for an innovative or unique product, as is often the case with 3M's products.

Question 4

During the introduction stage of the product life cycle,promotional expenditures are made to stimulate consumer desire for an entire product class rather than for a specific brand.The consumer demand that is stimulated is referred to as __________ demand.

Accepted Answer

The answer of During the introduction stage of the product...

Question 5

The Dell EC 280 is a small desktop computer that uses less electrical power and is targeted at the less affluent,but very large Chinese market that has never owned a personal computer.The PC was introduced at a price of $340 for a basic configuration.Dell most likely used which pricing strategy in this example?

Accepted Answer

Penetration pricing is a strategy where a company sets a low price for their products to enter a new market and gain a larger market share. In this case, Dell set a low price of $340 for the Dell EC 280 to target the less affluent, but large Chinese market that has never owned a personal computer, which indicates that Dell used a penetration pricing strategy.

Question 6

3D OLED (organic light-emitting diode)HDTVs,such as the 55"model from LG Electronics,are in which stage of the product life cycle?

Accepted Answer

3D OLED HDTVs are in the introduction stage of the product life cycle as they represent a new technology that is just being introduced to the market.

Question 7

A company may choose a skimming strategy during the introduction stage of its product to help recover costs of development and/or to __________.

Accepted Answer

A skimming strategy involves setting a high price for a new product during its introduction stage to capture the price insensitive early adopters who are willing to pay more. This can help the company recover the costs of development and maximize profits before competitors enter the market.

Question 8

An all electric-powered automobile such as the Tesla Motors Model S is in which stage of its product life cycle?

Accepted Answer

The Tesla Motors Model S is an all electric-powered automobile that is still in the early stages of its product life cycle. It is in the introduction stage, which is characterized by slow sales growth and high marketing costs.

Question 9

When the Egg Farmers of Canada implemented its "Get Cracking" advertising campaign,the organization was trying to stimulate __________ demand.

Accepted Answer

The "Get Cracking" advertising campaign by the Egg Farmers of Canada was trying to stimulate primary demand, which refers to the demand for a product category in general, rather than for a specific brand or product within that category. The goal of the campaign was to increase overall consumption of eggs, rather than promoting a specific brand or type of eggs.

Question 10

During the introduction stage of the product life cycle,the strategy that discourages competitive entry by charging a low price for a new product is referred to as __________ pricing.

Accepted Answer

Penetration pricing is a strategy used during the introduction stage of the product life cycle to discourage competitive entry by charging a low price for a new product. This strategy aims to attract a large customer base and gain market share quickly. The low price helps in stimulating demand, and as the customer base expands, economies of scale can be achieved, leading to lower costs and higher profits in the long run.

Question 11

The preference for a specific brand is called __________ demand.

Accepted Answer

Selective demand refers to the preference of a specific brand by consumers. Primary demand refers to the demand for a general product category or type, while derived demand is the demand for a product that comes from the demand for another product or service (e.g. demand for tires is derived from the demand for cars). Secondary demand refers to the demand for a product that is a result of its use as a component or ingredient in another product. Generic demand refers to the demand for a product category without consideration of any specific brand.

Question 12

All of the following are true about a skimming pricing strategy when used during the introduction stage of the product life cycle EXCEPT:

Accepted Answer

The answer of All of the following are true about...

Question 13

When the Floral Council,a trade association of flower shop retailers,advertises that giving flowers is a thoughtful and appreciated gift for any occasion,it is trying to stimulate __________ demand.

Accepted Answer

The Floral Council is trying to create primary demand, which is the demand for a whole product category rather than a specific brand or product. They are encouraging people to consider flowers as a gift option for any occasion, which would increase the overall demand for flowers as a category rather than just for one specific type of flower or flower shop.

Question 14

As more competitors launch their own products and the product progresses along its life cycle,company attention is focused on creating __________ demand,or the preference for a specific brand.

Accepted Answer

At this stage in the product life cycle, the goal is to create selective demand, or the preference for a specific brand. Primary demand refers to the demand for the general product category (e.g. smartphones), while derived demand refers to demand for a product that is used to produce another product (e.g. steel used to make cars). Generic demand refers to demand for a product without a specific brand (e.g. store-brand cereal). Secondary demand refers to demand for a product that is used in conjunction with another product (e.g. ink cartridges for printers).

Question 15

Promotional expenditures at the introduction stage of the product life cycle are best spent on __________.

Accepted Answer

At the introduction stage of the product life cycle, the goal is to cultivate primary demand by creating awareness about the new product among potential customers. Advertising is the best way to achieve this goal as it allows for mass communication to a large audience. Contests and sweepstakes, product samples, personal endorsements, and coupons may be more suitable for later stages of the product life cycle when the goal is to stimulate selective demand, generate word-of-mouth demand, or maintain brand loyalty.

Question 16

The two most common pricing alternatives for products in the introduction stage of the product life cycle are __________ and __________.

Accepted Answer

Skimming pricing and penetration pricing are the two most common pricing alternatives for products in the introduction stage of the product life cycle. Skimming pricing involves setting a high price initially to skim maximum revenues from segments willing to pay a premium for the new product. Penetration pricing involves setting a low price initially to gain maximum market share and to discourage competitors from entering the market.

Question 17

For years when most consumers thought of cranberries,they thought of the Ocean Spray brand.Then Northland cranberry juice came on the market,claiming that it was superior to the Ocean Spray brand.Northland was creating __________ demand for its cranberry products.

Accepted Answer

Selective demand refers to the demand for a specific brand or product. In this case, Northland is creating demand specifically for its cranberry products, as opposed to overall demand for cranberry juice in general (generic demand) or demand for cranberry juice as a whole category (primary demand). Derive demand refers to demand that is created as a result of demand for another product, such as demand for chips increasing due to demand for dip. Secondary demand refers to demand for a product that is used to make another product, such as demand for wheat used in making bread.

Question 18

When the National Cattlemen's Beef Association developed the "Beef,It's What's for Dinner" advertising campaign,it was trying to stimulate __________ demand.

Accepted Answer

The answer of When the National Cattlemen's Beef Association developed...

Question 19

During the introduction stage of the product life cycle,a(n)__________ pricing strategy may be used.This pricing strategy charges a high initial price to recoup the costs of product development.

Accepted Answer

Skimming pricing strategy is commonly used during the introduction stage of the product life cycle. This strategy charges a high initial price to recover the costs of development and to generate profits quickly. As the demand for the product increases, the price may be gradually lowered to attract more price-sensitive customers.

Question 20

During the introduction stage of the product life cycle,the place (distribution)element of the marketing mix is highly involved with __________.

Accepted Answer

During the introduction stage, the main objective is to create awareness and trial of the new product. For this reason, gaining as many retail distribution outlets as possible is highly involved with the distribution element of the marketing mix. Although many outlets may be reluctant to carry the new product during this stage, it is important to establish the product's presence in the market.

Quiz 10: Managing Successful Products, Services, and Brands

Gillette spent $200 million in advertising to introduce the Fusion razor to male shavers.Such expenditures are often made to stimulate primary demand,or desire for the product __________,rather than for a specific brand,when there are few competitors with the same product.

Xerox pioneered the first portable fax machine.In 1980,the price was $12,700.Xerox used a(n) __________ pricing strategy to help recover its research and development costs.