Question 1

Once developed, a firm's reputation can last a long time, even if the basis for that reputation no longer exists.

Accepted Answer

A firm's reputation can be built over time through various factors such as quality of products, customer service, and corporate social responsibility. Even if the basis for that reputation changes or no longer exists, people's perception of the company may still be influenced by past experiences or hearsay. Therefore, a firm's reputation can last for a long time.

Question 2

To the extent that differences in product complexity lead customers to conclude that the products of some firms are more valuable than the product of other firms, then product complexity can be a basis of product differentiation.

Accepted Answer

If customers believe that more complex products are more valuable, then firms that offer more complex products can differentiate themselves from their competitors and potentially charge higher prices. Therefore, product complexity can be a basis of product differentiation.

Question 3

Edward Chamberlin described firms selling differentiated products and facing a downward-sloping demand curve as being in an industry characterized by monopolistic competition.

Accepted Answer

Monopolistic competition is a type of market structure in which firms sell differentiated products and face a downward-sloping demand curve. Edward Chamberlin is credited with developing this concept in his book "The Theory of Monopolistic Competition" in 1933.

Question 4

The ability to use organization structure to facilitate coordination among scientific disciplines to conduct research is known as architectural competence.

Accepted Answer

The answer of The ability to use organization structure to...

Question 5

When firms place their products in movies, this is known as co-branding.

Accepted Answer

The answer of When firms place their products in movies,...

Question 6

Firms selling differentiated products face a horizontal demand curve.

Accepted Answer

Firms selling differentiated products face a downward sloping demand curve, as the price of their product affects the quantity demanded. A horizontal demand curve would mean that consumers are willing to purchase the same quantity of the product at any price, which is not realistic.

Question 7

Wal-Mart exemplifies a firm pursuing a product-differentiation strategy while Victoria's Secret exemplifies a firm pursuing a cost-leadership strategy.

Accepted Answer

The statement is false. Wal-Mart is known for pursuing a cost-leadership strategy, while Victoria's Secret is known for pursuing a product-differentiation strategy.

Question 8

Timing-based product differentiation relies solely on being a first mover.

Accepted Answer

Timing-based product differentiation refers to the practice of launching a new product or service earlier than competitors. However, it is not solely reliant on being a first mover. Companies can also differentiate themselves by offering innovative features, unique benefits, superior quality, or better price value.

Question 9

Products can be differentiated by the extent to which they are customized for particular customer applications.

Accepted Answer

Products can indeed be differentiated based on the level of customization they offer for specific customer needs or applications. This is particularly relevant in industries like aerospace, defense, and medical devices, where customers have unique requirements and specifications. Customization can range from simple alterations in color or packaging to complex modifications in design, materials, or functionality. The level of customization also affects the cost, lead time, and quality of the product, as well as the customer's satisfaction and loyalty. Therefore, companies need to balance the benefits and risks of customization and standardization, based on their strategy, capabilities, and market demand.

Question 10

Attempts to create differences in the relative perceived value of a firm's products or services are rarely made by altering the objective properties of those products or services.

Accepted Answer

The answer of Attempts to create differences in the relative...

Question 11

A hedonic price is that part of a products' or services' actual price that is not attributable to a particular attribute of that product or service.

Accepted Answer

A hedonic price is actually the part of a product or services' actual price that is attributed to a specific attribute or set of attributes of that product or service.

Question 12

It is reasonable to expect that in the near future a marketing specialist will develop a definitive list of bases of product differentiation.

Accepted Answer

It is unlikely that a marketing specialist will develop a definitive list of bases of product differentiation due to the constantly changing market, consumer preferences, and new product innovations.

Question 13

Through advertising and other consumer marketing efforts, firms attempt to alter the perceptions of current and potential customers, but only when specific attributes of a firm's products or services are altered.

Accepted Answer

The answer of Through advertising and other consumer marketing efforts,...

Question 14

Chryslers' introduction of the "cab forward" design was an attempt at differentiation through product features.

Accepted Answer

The "cab forward" design was a unique feature introduced by Chrysler to differentiate their products from competitors.

Question 15

The physical location of a firm cannot be a source of product differentiation.

Accepted Answer

The physical location of a firm can be a source of product differentiation, such as a boutique shop located in a trendy neighborhood or a restaurant with a scenic view.

Question 16

In the information technology business, interconnectivity is a relatively unimportant basis of potential product differentiation.

Accepted Answer

In the information technology business, interconnectivity is a crucial basis of potential product differentiation. With the increasing need for interconnected devices and systems, products with better interconnectivity capabilities can have a significant competitive advantage over their counterparts.

Question 17

If products or services are perceived as being different in a way that is valued by customers, even if there is no physical differentiation, then product differentiation exists.

Accepted Answer

Product differentiation can exist through intangible factors such as brand image, customer service, and perceived quality, even if the physical products or services are similar to those offered by competitors.

Question 18

While firms often alter the objective properties of their products or services in order to implement a product-differentiation strategy, the existence of product differentiation is always a matter of customer perception.

Accepted Answer

Product differentiation is based on customer perceived differences, rather than objective differences in the product or service itself. Even if the objective properties of two products are the same, customers may perceive them differently due to branding, packaging, advertising, or other factors that influence their perception. Therefore, product differentiation is always a matter of customer perception.

Question 19

Product differentiation is a business strategy whereby firms attempt to gain a competitive advantage by increasing the perceived value of their products and services relative to the perceived value of other firms' products or services.

Accepted Answer

This is the correct definition of product differentiation.

Question 20

Product differentiation is ultimately an expression of the creativity of individuals and groups within firms and is limited only by the opportunities that exist, or that can be created, in a particular industry and by the willingness and ability of firms to creatively explore ways to take advantage of those opportunities.

Accepted Answer

The statement accurately describes how product differentiation is an expression of creativity within firms and is only limited by industry opportunities and the willingness of firms to explore them.

Quiz 5: Product Differentiation