Deck 9: Small Business Marketing: Product and Pricing Strategies

Question 1

The concept of total product includes how customers describe one's good or service.

Answer 1

True

Question 2

The total product is the most general description of a business,and the one which captures the smallest amount of what is special about a business.

Answer 2

False

Question 3

Setting prices higher than the competition without providing customers with the perception of receiving greater value will lead to lower overall volume.

Answer 3

True

Question 4

As a small business adds employees,the importance of its owner increases.

Question 5

A product can include goods,services,and ideas.

Question 6

If a rapid prototyping model can be developed,the molds for manufacturing can be made inexpensively by most modern manufacturers.

Question 7

Increasing market share usually means pricing toward the low end of the competition in order to take market share from the competition.

Question 8

It's always easier for a business to raise prices than it is to lower them as it will face much less customer dissatisfaction.

Question 9

Random discounts shouldn't be too frequent because consumers begin to realize if they stock up in this sales period,they can probably wait until the next sales period.

Question 10

Optimum price is the lowest price that will produce the desired level of sales in an intended market.

Question 11

Marketing and new product experts believe that most of the small business failures could have been avoided by following the new product development (NPD)process.

Question 12

For me-too products,the stages of new product development are always extensively long.

Question 13

Price skimming involves setting a price above that of the competition so as to indicate a higher quality or that a product is a status symbol.

Question 14

Services have separability of production and consumption.

Question 15

For services,referral bonuses are an inefficient tool because the recommendation of a friend or relative is of no importance in purchasing or in trying a new service.

Question 16

The advantage of separating company name from brand name is that if a product doesn't take off,one can drop the product line with minimal impact to the company image.

Question 17

Even if a competitor matches a sale or offers some other promotion to match one's offering,it's not as aggressive an action as a price war.

Question 18

It's almost always a good idea for a small firm to try to compete on price.

Question 19

The new product development process is likely to be easier for services than for innovative goods.

Question 20

Competitors of a company are not a source of business ideas.

Question 21

The group of people on which a marketer focuses promotion and sales efforts is called a _____.

A) focus group
B) target market
C) strategic group
D) sales pitch

Question 22

Which of the following is most likely to be an example of a good-dominated product?

A) Purchasing a sewing machine with a warranty
B) Leasing a sewing machine
C) Hiring the services of a tailor
D) Renting a sewing machine

Question 23

The first time Jena visited Blue Corals Inn,a restaurant in her neighborhood,she was delighted with the food and service quality.However,the next time she dined at the same place,the restaurant's food and service seemed to have lost its quality.This scenario best illustrates the _____ characteristic of services.

A) perishability
B) tangibility
C) heterogeneity
D) absorptivity

Question 24

The research and development team of Leonide Inc.has generated five different product ideas.All five ideas are being rated against each other on their characteristics such as product uniqueness,idea profitability,protectable intellectual property,and product team quality.Based on their ranking in this stage,only three ideas will make it to the immediate next step which will be the stage of _____.

A) idea generation
B) commercialization
C) feasibility study
D) market introduction

Question 25

While developing a new product,in the product development stage,the first versions of products are used in further consumer testing.These first versions of products are called _____.

A) pure goods
B) prototypes
C) me-too products
D) hybrids

Question 26

Which of the following is the first stage of the new product development process?

A) Test marketing
B) Commercialization
C) Feasibility study
D) Idea generation

Question 27

Which of the following statements best describes the process of idea screening in new product development?

A) It involves specifying the details of each idea's technological feasibility,its cost,how it can be marketed,and its market potential.
B) It is the process of selecting the most promising ideas to be further evaluated for feasibility.
C) It involves creating the first versions of products called prototypes which are used in further consumer testing.
D) It is the process of mass producing a new product so that consumers can avail it.

Question 28

Which of the following statements is true about pure services?

A) They are separable from consumption.
B) They are tangible.
C) They are heterogeneous.
D) They are nonperishable.

Question 29

A service typically exhibits the characteristic of _____ because if it is not used when offered,it cannot be saved for later use.

A) perishability
B) tangibility
C) absorptivity
D) homogeneity

Question 30

Which of the following statements is true about me-too products?

A) For me-too products,steps in new product development process should never be skipped.
B) The vast majority of new ideas for small businesses will be me-too products.
C) Idea generation is the longest stage in the development of me-too products.
D) Testing a me-too product's differential advantage over competition is a wasted effort.

Question 31

Purchasing a car with a warranty is most likely to be an example of a _____.

A) pure good
B) good-dominated product
C) pure service
D) hybrid good

Question 32

Which of the following should be avoided while coming up with a company or brand name considering the possibility of future expansion?

A) Selecting a company or brand name that describes the firm or the product
B) Using one name for the company and a separate brand name for the products
C) Using names that are relatively easy to spell and pronounce
D) Selecting a company or brand name that's too narrow

Question 33

ZestOne Technologies has launched a series of tablet computers that are similar to a competitor's product that already exists in the market.Such products are typically termed as _____.

A) me-too products
B) prototypes
C) augmented products
D) complementary goods

Question 34

The core product typically includes:

A) the basic description of what a company or a product does.
B) features of a product that differentiates it from competition.
C) what a product means to the customers.
D) value and cost benefits customers incur from a product.

Question 35

The entire bundle of products,services,and meanings of one's offering;including extras like service,warranty,or delivery,as well as what the product means to the customer refers to _____.

A) augmented product
B) total product
C) hybrid product
D) pure good

Question 36

Which of the following stages of new product development typically involves specifying the details of each idea's technological feasibility,its cost,how it can be marketed,and its market potential?

A) Idea generation
B) Market introduction
C) Idea evaluation
D) Test marketing

Question 37

Pure goods are more _____ than pure services.

A) perishable
B) inconsistent
C) inseparable
D) homogenous

Question 38

An item's capability of being touched,seen,tasted,or felt is called _____.

A) tangibility
B) legitimacy
C) mutuality
D) perishability

Question 39

A(n)_____ typically means the core product plus features that tend to differentiate the product from competition.

A) pure good
B) hybrid product
C) augmented product
D) me-too product

Question 40

Which of the following statements is true about products?

A) People such as political candidates and celebrities cannot be considered as products.
B) Most of the products sold today are combinations of both goods and services.
C) Products in terms of goods are generally less homogeneous than services.
D) Products in terms of goods are more inseparable from their providers than services.

Question 41

The strategy of pricing toward the low end of the competition in order to take market share from the competition becomes most popular as a product reaches the _____ phase of the product life cycle.

A) growth
B) maturity
C) decline
D) introduction

Question 42

Which of the following terms refers to the amount of profit an entrepreneur incurs,usually stated as a percentage of the total price?

A) Capital
B) Margin
C) Debt
D) Harvest

Question 43

Which of the following terms refers to an estimation of what a price should be based on information gathered by a customer from sources such as advice,advertisements,or comparison shopping?

A) Mark-up price
B) Budget-based price
C) Augmented price
D) External reference price

Question 44

A(n)_____ is best defined as a product for which there are few substitutes and for which a change in price makes very little difference in quantity purchased.

A) pure good
B) augmented product
C) prototype
D) inelastic product

Question 45

_____ is best described as the process of making a new product available to consumers.

A) Commercialization
B) Factoring
C) Pilot testing
D) Liquidation

Question 46

Raven has been researching for product ideas by interacting with children,young mothers,and by carefully studying the competitors' toys.This has helped her generate several ideas.Which of the following is most likely to be the next step for Raven?

A) Test marketing
B) Product development
C) Idea screening
D) Commercialization

Question 47

In new product development process,the product development stage typically involves:

A) testing the feasibility of product ideas.
B) creating a marketing plan for the final product.
C) introducing product prototypes to test markets.
D) commercializing the new product.

Question 48

Which of the following statements is true about elastic products?

A) An elastic product does not have many substitutes or alternatives.
B) A change in price of elastic products makes very little difference in quantity purchased.
C) During economic bad times businesses that sell inelastic products close down more often than those that sell elastic products.
D) Customers will respond to price increases for elastic products much more negatively than for inelastic products.

Question 49

The manufacturing costs incurred by Fred's Prints,a firm selling custom-designed T-shirts,are $10 per T-shirt,and the selling and distribution costs incurred are 6$ per T-shirt.To this total cost of $16,Fred adds a profit of $4 on each T-shirt and sells the T-shirt at $20.The markup here would be _____.

A) $20
B) $4
C) $16
D) $10

Question 50

Which of the following is most likely to be an example for an elastic product?

A) Staple foods
B) Gasoline
C) T-shirts
D) Basic utilities

Question 51

_____ is best described as the process of selling prototype of a product in either a real or simulated market environment.

A) Test marketing
B) Moonlighting
C) Bootstrapping
D) Commercialization

Question 52

If a business is trying to grow,the right price for its products is one that is:

A) necessary to capture a desired market share given an anticipated level of sales volume.
B) low enough to fill the business's production capacity and keep its key employees working.
C) high enough to maximize the probability of a sale without leaving money on the table.
D) optimum enough to ensure that only a few customers can afford the product.

Question 53

_____ is typically a source for consumers' internal reference price.

A) Researching on the Internet
B) Taking advice from friends and family
C) Looking at competitive ads
D) Recollecting previous shopping experiences

Question 54

Which of the following pricing practices is the most inappropriate?

A) Pricing a product,advertised for high quality and prestige,lower than the competition
B) Lowering prices during happy hour,hence discriminating against those who work during that time period
C) Lowering prices to capture maximum market share as the patent for a product approaches its termination
D) Pricing a product low when a business is operating below capacity

Question 55

_____ is a price-setting method where an amount is added to the cost of a product to set the retail price and provide a profit.

A) Markup pricing
B) Marginal pricing
C) Internal reference pricing
D) Differential pricing

Question 56

Zoruski Inc. ,a manufacturer of leather furniture,is facing problems with pricing its products in the Asian market.Due to the presence of several middlemen in its distribution channel,the prices of furniture rise up to three times from what they are sold at in the home market.This problem faced by Zoruski Inc.is typically referred to as _____.

A) price bundling
B) price escalation
C) price discrimination
D) loss leaders

Question 57

Given the fact that there are several substitutes available for Tinkle Toys' products,these Tinkle Toys' products are most likely to fall under the category of _____.

A) inelastic products
B) pure services
C) hybrid goods
D) elastic products

Question 58

_____ refers to the highest price of a product that will produce the desired level of sales in the intended market.

A) Marginal price
B) External reference price
C) Optimum price
D) Reserve price

Question 59

Which of the following is the biggest problem with simulated test markets?

A) They cannot be computer-generated.
B) They make it easy for competitors to "steal" one's ideas.
C) They do not always reflect actual buying behavior.
D) They can be used only in the commercialization stage and not in the product development stage.

Question 60

Raven created the sample versions of her toy products and tested them in kindergartens and play parks.These sample versions of the toys are referred to as _____.

A) hybrids
B) pure goods
C) me-too products
D) prototypes

Question 61

_____ is described as setting the price for an item relatively low and then charging much higher prices for the expendables it uses.

A) Bait pricing
B) External reference pricing
C) Captive pricing
D) Odd-even pricing

Question 62

Shoe Pica Inc. ,a retailer of shoes,advertises that it is selling a particular type of jogging shoes at a very low price of $50.These shoes are kept at the end of the store and before reaching those shoes,customers have to walk by all the other shoes that have many more features and better quality.Several times,this causes the consumers to buy other better brands even though they are costlier that the one advertised.This is a typical example for _____.

A) captive pricing
B) partitioned pricing
C) price lining
D) bait pricing

Question 63

Happy hours in amusement parks,movies,and restaurants are examples of _____.

A) prestige pricing
B) off-peak pricing
C) loyalty programs
D) random discounting

Question 64

Which of the following is the best example for price discrimination?

A) Half price for children below five years in adventure parks
B) Prices variance between high-end cars and mid-end cars
C) 10 percent rebate for a pack of three bar soaps
D) Buy nine sandwiches and the tenth one is free

Question 65

Harry ordered a television online for $800,he was asked to pay $100 toward shipping charges,$50 as installation charges,and another $100 for extended warranty.This example best illustrates _____.

A) bait pricing
B) internal reference pricing
C) partitioned pricing
D) multipack pricing

Question 66

Which of the following will be an example of odd-even pricing?

A) Buy a T-shirt for $19.89.
B) Buy four sandwiches and take the fifth one for free.
C) For purchases above $20 get a gift worth $5.
D) Market price is $25 and our price is $22.

Question 67

Blue Moss Inc.ensures that its detergent brand "Pure Plus" is always placed next to competitors' detergents in supermarkets.This is a strategy the company uses to imply that the same quality product is available at a better bargain.Which of the following pricing strategies is being used by Blue Moss Inc.?

A) Price signaling
B) Price skimming
C) Reference pricing
D) Customary pricing

Question 68

By adopting the pricing technique of loss leaders,a firm most likely aims to:

A) attract traffic toward its products.
B) imply superior quality to a competitor.
C) signal that its products are a status symbol.
D) reward repeat customers.

Question 69

Turquoise Innovations Inc.has introduced a unique software that has no competition in the market.The company has incurred huge research and development costs in order to commercialize this software.Several business firms have been waiting for the release of this product as it saves their cost of outsourcing finance functions.Hence,the best pricing strategy this product will be _____.

A) penetration pricing
B) going rate pricing
C) limit pricing
D) price skimming

Question 70

The primary goal of penetration pricing is to:

A) steal competitors' market share.
B) imply that a product is a status symbol.
C) reward repeat and loyal customers.
D) attract the low-,mid-,and high-end customers.

Question 71

_____ refers to setting a price above that of the competition so as to indicate a higher quality or that a product is a status symbol.

A) Penetration pricing
B) Premium pricing
C) Limit pricing
D) Bait pricing

Question 72

Flying Ross Inc. ,a maker of world-renowned wristwatches,makes watches for three different customer segments.Timepieces under the Gold series are priced extremely high to cater to the high-end market,watches under the Pioneer series cater to the mid-end market,and those under the Marvella series are priced low in order to capture the low-end market.This strategy of setting three price points is typically referred to as _____.

A) partitioned pricing
B) captive pricing
C) price gouging
D) price lining

Question 73

If the toy products are initially sold at an extremely low price that just covers the costs in order to get competitors' market share,then this pricing strategy would be known as _____.

A) penetration pricing
B) price signaling
C) price skimming
D) partitioned pricing

Question 74

Ivory Isles Resort sets a low base price of $250 for its rooms.This appears to be a great bargain for vacationers looking for resorts in the 5-star segment.However,the customers have to pay additional charges for using services such as the casino,spa,hot pool,gym,and the lounge.According to this information,which of the following pricing strategies is used by Ivory Isles?

A) Captive pricing
B) Odd-even pricing
C) Going-rate pricing
D) Multipack pricing

Question 75

Saffron Spas Inc.has two membership schemes meant to attract different customer segments.The executive membership program priced at $1000 allows for unlimited usage of the services available in the spa chain up to a year.The premium membership program priced at $700 allows for limited usage of the spa services up to a year.According to this information,which of the following pricing strategies is adopted by Saffron Spas Inc.?

A) Captive pricing
B) Partitioned Pricing
C) Price lining
D) Going rate

Question 76

Which of the following is the best example for random discounting?

A) Christmas sale
B) Back-to-school sale
C) Happy hours in movies
D) Sale on select merchandise

Question 77

Penetration pricing refers to:

A) charging the absolute highest possible price due to inelastic demand.
B) charging different prices to different groups to attract a different demographic.
C) setting a low price in order to get market share.
D) setting a high price to imply that a product is a status symbol.

Question 78

Which of the following statements is true of price skimming?

A) It should be followed when there are many substitutes for a product.
B) It should be typically applied at the decline stage of the product life cycle.
C) It is not a long-term strategy for businesses to follow.
D) It helps establish a barrier to the entry of competitors.

Question 79

Smart Home,a retailer for consumer electronics,sells a reputed brand's desktops at near cost price.These desktops are located at the end of the store so that the customers notice the other products in the store before they pick the desktop.As a result the sales of printers,USB devices,web cameras,and other electronic products in the store have increased.This is an example for _____ pricing technique.

A) going rate
B) loss leaders
C) bundling
D) skimming

Question 80

Charging lower prices at certain times to encourage customers to come during slack periods is known as _____.

A) off-peak pricing
B) price gouging
C) price lining
D) odd-even pricing