Deck 5: Product Differentiation

Question 1

In the bicycle industry,the feel of high-end bicycles when they are ridden is important.As a serious rider becomes accustomed to a particular bicycle,it is very difficult for that rider to switch to an alternative supplier.This is an example of product differentiation through which of the following?

A)linkages between functions
B)product customization
C)location
D)product complexity

Answer 1

B

Question 2

The most obvious way that firms can try to differentiate their products is by

A)making the product more complex.
B)introducing the product at the right time.
C)customizing the product for a particular segment.
D)altering the features of the products they sell.

Answer 2

D

Question 3

Which generic business level strategy is Coach pursuing?

A)cost leadership
B)related diversification
C)product differentiation
D)unrelated diversification

Answer 3

C

Question 4

A firm's ________ is really no more than a socially complex relationship between a firm and its customers and can serve as a basis for product differentiation.

A)location
B)reputation
C)consumer marketing
D)architectural competence

Question 5

Which of the following bases of product differentiation attempts to create the perception that a firm's products or services are unusually valuable by focusing on links within and between firms?

A)reputation
B)product complexity
C)consumer marketing
D)product mix

Question 6

If an individual is considering purchasing a Toyota Camry or a Ferrari and decides that it is worth paying the extra money for the prestige that is associated with the Ferrari,the additional money the customer is willing to pay for the prestige is known as a(n)

A)altruistic price.
B)hedonic price.
C)fair market value.
D)margin price.

Question 7

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

A)customer perceptions; objective properties
B)objective properties; price
C)customer perceptions; price
D)objective properties; customer perception

Question 8

Which of the following bases of product differentiation attempts to create the perception that a firm's products or services are unusually valuable by focusing directly on the attributes of the products or services a firm sells?

A)product complexity
B)product customization
C)consumer marketing
D)reputation

Question 9

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

A)Product differentiation
B)Related diversification
C)Cost leadership
D)Best-cost provider

Question 10

________ is the ability to use organizational structure to facilitate coordination among specific disciplines to conduct research.

A)Architectural competence
B)Cross-functional linking
C)Organizational coordination
D)Managerial leverage

Question 11

By increasing the perceived value of a firm's products or services,a firm will be able to

A)charge a lower price than it would otherwise be able to do.
B)charge a higher price than it would otherwise be able to do.
C)sell its products at lower prices than firms pursuing a cost-leadership strategy.
D)gain significantly more market share than firms pursuing a cost-leadership strategy.

Question 12

The price premium that customers are willing to pay for the superior quality and perceived prestige of Coach's products over the prices of similar products are known as

A)marginal prices.
B)hedonic prices.
C)heroic prices.
D)elastic prices.

Question 13

The ability of companies that produce complex software packages to tailor these packages to the specific needs of their customers is an example of product differentiation through

A)complexity.
B)consumer marketing.
C)product customization.
D)timing.

Question 14

Which of the following bases of product differentiation does Coach appear to be employing?

A)product features,product complexity,and consumer marketing
B)location,linkages between functions,and reputation
C)reputation,consumer marketing,and product features
D)distribution channels,service and support,and links with other firms

Question 15

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.

Question 16

Through which bases of competitive advantage do firms attempt to alter the perceptions of current and potential customers,whether or not specific attributes of a firm's products or services are altered?

A)reputation
B)location
C)product customization
D)consumer marketing

Question 17

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

Question 18

________ can be can be a source of product differentiation when a single set of customers purchases several of a firm's products.

A)Product placements
B)Reputation
C)Product mix
D)Architectural competence

Question 19

Product differentiation is ultimately an expression of the ________ of individuals and groups within firms and is limited only by the ________ that exist,or that can be created,in a particular industry.

A)creativity; resources
B)resources; opportunities
C)creativity; opportunities
D)opportunities; resources

Question 20

Coach's agreement with Lexus to produce automobiles with Coach leather interior is an example of

A)cooperative strategic alliance.
B)architectural competence.
C)skunk works.
D)product placement.

Question 21

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

Question 22

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.

Question 23

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.

Question 24

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.

Question 25

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.

Question 26

Identify the three broad categories of product differentiation and identify two bases of differentiation under each category.

Question 27

What is the relationship between product differentiation and managerial creativity?

Question 28

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

Question 29

Define product differentiation and discuss the role that customer perceptions play in product differentiation.

Question 30

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

Question 31

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

Question 32

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

Question 33

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

Question 34

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

Question 35

Bentley's introduction of a new 48-volt electric system in one of its high-end SUVs was an attempt at differentiation through product features.

Question 36

Differentiation can be based on explicit linkages between one firm's products and the products and services of other firms.

Question 37

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.

Question 38

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.

Question 39

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.

Question 40

In general,firms selling differentiated products face a demand curve that is

A)upward sloping.
B)horizontal.
C)vertical.
D)downward sloping.

Question 41

When a firm sells a highly differentiated product,it enjoys a quasi-monopoly in that segment of the market.

Question 42

Describe the role of product differentiation and how product differentiation helps firms take advantage of opportunities in fragmented industries,in emerging industries,in mature industries and in declining industries.

Question 43

Firms selling differentiated products face a horizontal demand curve.

Question 44

Which of the following bases of product differentiation is almost always easy to duplicate?

A)product features
B)product mix
C)product customization
D)consumer marketing

Question 45

Product differentiation helps reduce the threat of new entry by forcing potential entrants to an industry to absorb not only the standard costs of beginning business but also the additional costs associated with overcoming incumbent firms' product-differentiation advantages.

Question 46

According to Chamberlin,firms selling differentiated products and facing a downward sloping demand curve are in an industry described as

A)perfect competition.
B)monopolistic competition.
C)oligopolistic competition.
D)semi-structured competition.

Question 47

Product differentiation increases the threat of substitutes by making a firm's current products appear less attractive than substitutes.

Question 48

Which of the following statements regarding the impact of product differentiation on the threat of new entry is accurate?

A)Product differentiation helps reduce the threat of new entry by forcing potential new entrants to absorb costs associated with overcoming incumbent firms' product-differentiation advantages.
B)Product differentiation increases the threat of new entry by allowing potential new entrants to avoid costs associated with overcoming incumbent firms' product-differentiation advantages.
C)Product differentiation has no impact on the threat of new entry.
D)It is not possible to determine the impact of product differentiation on the threat of new entry.

Question 49

In fragmented industries firms can use product differentiation to help consolidate a market.

Question 50

Firms with highly differentiated products may have loyal customers,or customers who are unable to purchase similar products or services from other firms and are therefore more likely to accept increased prices due to a firm passing on increased costs by a powerful supplier.

Question 51

In emerging industries

A)firms that are first movers are unlikely to gain product-differentiation advantages based on buyer loyalty and high switching costs.
B)firms that are first movers can gain product-differentiation advantages based on perceived technological leadership.
C)product-differentiation efforts are focused on product refinement as a basis of product differentiation.
D)firms can sometimes be tempted to exaggerate the extent to which they have refined and improved their products and services.

Question 52

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

Question 53

The business level strategy Coach is pursuing is likely to

A)reduce the threat of rivalry to virtually zero.
B)increase the threat of substitutes due to premium pricing.
C)decrease the threat of new entrants due to the additional cost they would face to overcome Coach's reputation advantages.
D)decrease the threat of buyers since Coach can lower its prices due to its efficient manufacturing operations.

Question 54

In a declining industry

A)product-differentiation efforts are focused on product refinement as a basis of product differentiation.
B)firms that are first movers can gain product-differentiation advantages based on perceived technological leadership.
C)highly differentiated firms may be able to gain product-differentiation advantages by preempting strategically valuable assets.
D)highly differentiated firms may be able to discover a viable market niche that will enable them to survive despite the overall decline in the market.

Question 55

When considering the impact of product differentiation on the threat of rivalry,product differentiation

A)reduces the threat of rivalry to zero.
B)increases the threat of rivalry by forcing each firm in an industry to compete directly with one another instead of allowing them to carve out their own unique product niche.
C)has no impact on the threat of rivalry.
D)reduces the threat of rivalry because each firm in an industry attempts to carve out its own unique product niche.

Question 56

In emerging industries,product-differentiation efforts often focus on product refinement as a basis for product differentiation.

Question 57

What is the impact of product differentiation on each of the environmental threats identified in the five forces framework?

Question 58

With regard to the threat of suppliers,product differentiation

A)reduces the threat of suppliers because a firm with a highly differentiated product can pass increased costs on to customers.
B)increases the threat of suppliers because a firm with a highly differentiated product is unable to pass increased costs on to customers.
C)has no impact on the threat of suppliers.
D)can either increase or reduce the threat of suppliers.

Question 59

Given that the leather handbag market that Coach largely competes in can be considered a mature market,Coach should focus its product-differentiation efforts on

A)exploiting a first-mover advantage as a basis of product differentiation.
B)introducing radically new technologies as a basis of product differentiation.
C)seeking a viable market niche that will enable it to survive.
D)refining products as a basis of product differentiation.

Question 60

Product differentiation effectively reduces rivalry to zero.

Question 61

Research on architectural competence in pharmaceutical firms suggests that

A)not only do some firms possess this competence,but that other firms do not; firms without this competence have,on average,been able develop it with minimal investment.
B)very few firms possess this competence,but firms without this competence,on average,are able to develop it.
C)not only do some firms possess this competence,but also that other firms do not and firms without this competence have,on average,been unable to develop it.
D)virtually every firm possesses this competence to some extent.

Question 62

Which of the following bases of Coach's competitive advantage is likely to be the most difficult to duplicate?

A)product features
B)consumer marketing
C)location
D)reputation

Question 63

Product features,product customization,and product complexity have few obvious close substitutes and may be sources of sustained competitive advantages.

Question 64

Identify the two primary forms that the substitutes for bases of product differentiation can take.

Question 65

Which of the following bases of product differentiation is usually costly to duplicate?

A)product features
B)links with other firms
C)reputation
D)product mix

Question 66

Which of the following bases of product differentiation is generally viewed as the most difficult to duplicate?

A)product features
B)reputation
C)linkages with other firms
D)location

Question 67

Which of the following bases of product differentiation is by far the most popular way for firms to try to differentiate their products but is identified as almost always being easy to duplicate?

A)product mix
B)product features
C)customization
D)distribution channels

Question 68

The U-form structure used to implement a product-differentiation strategy

A)rarely uses temporary cross-divisional and cross-functional teams to manage the development and implementation of new,innovative,and highly differentiated products.
B)has simple reporting relationships.
C)often uses temporary cross-divisional and cross-functional teams to manage the development and implementation of new,innovative,and highly differentiated products.
D)has a small corporate staff.

Question 69

The concept of product differentiation generally assumes that the number of firms that have been able to differentiate their products in a particular way is,at some point in time,less than the number of firms needed to generate perfect competition dynamics.

Question 70

Identify which bases of product differentiation are likely to be almost always easy to duplicate,which can sometimes be costly to duplicate and which are usually costly to duplicate and discuss under what conditions a base of differentiation is likely to be costly to imitate and can be a source of sustained competitive advantage.

Question 71

Ultimately the ________ of a product differentiation strategy depends on the ability of individual firms to be creative in finding new ways to differentiate their products.

A)sustained competitive advantage
B)rarity
C)imitation
D)innovation

Question 72

While product features,by themselves,are usually not a source of sustained competitive advantage,they can be a source of a temporary competitive advantage.

Question 73

Product features as a basis for product differentiation are generally not easy to duplicate.

Question 74

Product features,by themselves,are

A)usually not a source of temporary competitive advantage,but they can be a source of a sustainable competitive advantage.
B)usually not a source of either a temporary competitive advantage,or a source of a sustainable competitive advantage.
C)usually can be a source of both a temporary competitive advantage and a source of a sustainable competitive advantage.
D)usually not a source of sustained competitive advantage,but they can be a source of a temporary competitive advantage.

Question 75

Firms that pursue a product-differentiation strategy can choose whether or not they want to reveal this strategic choice to their competition by adjusting their prices.

Question 76

Timing,location,distribution channels,and service and support are all very similar bases of product differentiation and can act as substitutes for each other.

Question 77

Knowing how a firm is differentiating its products means that competitors will be able to duplicate a firm's product-differentiation strategy at a lower cost.

Question 78

Under which of the following conditions is the product mix advantage as a basis of product differentiation the least difficult to duplicate?

A)when the base of a product mix advantage is a common customer
B)when the mix of products is highly integrated with each other
C)if each of the products in a product mix has unique features
D)if a firm brings a series of products to market

Question 79

A ________ structure exists when individuals in a firm have two or more bosses simultaneously.

A)U-form
B)multidivisional
C)cross-divisional
D)matrix

Question 80

Which of the following bases of Coach's competitive advantage is likely to be the easiest to duplicate?

A)product features
B)consumer marketing
C)location
D)reputation