Question 1

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

Skimming pricing strategy does not help build unit volume; instead, it focuses on maximizing profits from early adopters who are less price-sensitive.

Question 2

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

Northland is creating selective demand because it is promoting the superiority of its brand over the established Ocean Spray brand.

Question 3

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

Skimming strategy involves setting a high price initially to capitalize on the price insensitivity of early buyers. This helps a company to recover the high costs of product development and establish the product's position in the market.

Question 4

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

Accepted Answer

Primary demand refers to the overall demand for a product category or class, rather than demand for a specific brand. In this case, Gillette was trying to stimulate demand for razors in general, rather than just for the Fusion razor.

Question 5

The desire for a product class rather than for a specific brand is called __________ demand.

Accepted Answer

The answer of The desire for a product class rather...

Question 6

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

Accepted Answer

Promotional expenditures at the introduction stage should focus on cultivating primary demand, which means generating an interest in the product category rather than promoting a particular brand. Advertising is the best way to achieve this goal. Contests and sweepstakes, product samples, personal endorsements, and coupons are better suited for later stages of the product life cycle.

Question 7

The preference for a specific brand is called __________ demand.

Accepted Answer

Selective demand refers to the demand for a specific brand or product, rather than a general demand for the entire product category or industry. This means consumers have a preference for a particular brand and are willing to pay more for it than other brands in the same category.

Question 8

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 was trying to stimulate primary demand. Primary demand refers to the demand for a whole product category, such as eggs, rather than demand for a specific brand within that category.

Question 9

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

During the introduction stage of the product life cycle, a skimming pricing strategy may be used. This strategy charges a high initial price to recoup the costs of product development and take advantage of early adopters who are willing to pay a premium for the new product. This strategy is often used for innovative and technologically advanced products.

Question 10

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 11

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 generate trial of the new product. Hence, the place element of the marketing mix is highly involved in gaining as many retail distribution outlets as possible, even though many may be reluctant to carry the new product. It is important to establish a broad distribution network to reach potential customers and increase visibility.

Question 12

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 13

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 statement "We hit fast, price high, and get the heck out when the me-too products pour in" refers to a skimming pricing strategy, where a company sets a high price for a new product and then gradually lowers the price over time as competitors enter the market.

Question 14

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

Accepted Answer

Skimming pricing involves setting a high price for a new product in order to generate maximum revenue from early adopters, while penetration pricing involves setting a low price to quickly gain market share. These are the two most common pricing strategies for products in the introduction stage, as companies are often focused on building awareness and demand for the product while also recouping their development costs.

Question 15

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

As the product progresses along its life cycle, the company usually shifts its focus to creating selective demand or the preference for a specific brand over other rival brands. Primary demand refers to the demand for an entire product category, derived demand is demand for a product that occurs due to demand for another related product, generic demand refers to demand for a product category without a specific brand preference, and secondary demand refers to the demand for products used to create or support the use of the main product.

Question 16

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. This strategy involves setting a low price for a new product in order to encourage customer adoption and discourage competition from entering the market. The idea is that by offering a lower price, the product can gain traction in the market, create brand awareness, and generate word-of-mouth recommendations, ultimately leading to increased sales and market share.

Question 17

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 demand for an entire product category rather than demand for a specific brand. By advertising that giving flowers is a good gift for any occasion, they are promoting the idea of buying flowers in general, rather than pushing a particular brand or type of flower.

Question 18

The initial purchase of a product by a consumer is referred to as a(n)__________.

Accepted Answer

The initial purchase of a product by a consumer is commonly referred to as a "trial," as it allows the consumer to evaluate the product before making a repeat purchase decision.

Question 19

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

The term "class" refers to a category of products that fulfill the same need or want. In this case, the introduction of the Fusion razor was meant to stimulate primary demand for a new type of men's razor, rather than just for Gillette's specific brand. Therefore, "class" is the best choice to fill in the blank.

Question 20

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

Xerox used a skimming pricing strategy to initially set a high price and recover its research and development costs from early adopters of the product. Skimming pricing is often used for innovative and exclusive products with high demand, enabling a company to recoup investment costs quickly before reducing prices to appeal to a broader market.

Quiz 11: Managing Successful Products, Services, and Brands