Deck 12: Developing and Pricing Products

Question 1

Shopping goods are purchased more often than convenience goods.

Answer 1

False
Explanation:Shopping goods, by definition, are more expensive and purchased less often than convenience goods. Examples of shopping goods are mobile devices and appliances. Examples of convenience goods are milk, bread, and newspapers.

Question 2

Variable costs of a product are those costs that change with the quantity of a product produced and sold.

Answer 2

True
Explanation:Variable costs are key to completing a breakeven analysis and using cost-oriented pricing.

Question 3

A private brand is a brand name developed by a wholesaler or retailer for their product.

Answer 3

True
Explanation:A private brand is created when a wholesaler or retailer develops a brand name and has a manufacturer put it on a product. An example is Sears, which carries the brand of Kenmore appliances.

Question 4

If prices are set too high,the company will make a large profit on each item,but will sell fewer units.

Question 5

A product's features may be intangible.

Question 6

After a product has been in the maturity stage for a few decades,marketers must accept that the product will begin to decline.

Question 7

Sears' Craftsman Tools is an example of a private brand.

Question 8

Price skimming occurs when a company sets an initially low price to establish a new product in the market.

Question 9

The breakeven point is the price at which a company earns the maximum profits.

Question 10

Most ideas for new products eventually reach the market.

Question 11

Companies using price lining offer all items in certain categories at a limited number of prices.

Question 12

One advantage to marketers of selling online is that it is easier for sellers to hide prices and enjoy a large markup.

Question 13

Pet Care Pros has a strong reputation in caring for customers' dogs and cats.The owners want to develop a new service: pet sitting for reptiles.Their product development process should include development of a prototype.

Question 14

The product life cycle describes the commercial life of services as well as goods.

Question 15

While watching your favorite sitcom,you see an actor holding a particular brand of beer.This is an example of product placement.

Question 16

Speed to market increases the chance that a new product will survive.

Question 17

A doctor's office buys a multifunction printer.This purchase is an example of a capital item.

Question 18

The process of product development begins with concept testing.

Question 19

A value package consists of an in-store advertisement that makes the product attractive and identifies features and benefits.

Question 20

Packaging can serve as an in-store advertisement that makes the product attractive,displays the brand name,and identifies features and benefits.

Question 21

What is selling the rights to place a brand name on products such as t-shirts referred to as?

A) international branding
B) national branding
C) private branding
D) regional branding
E) licensed branding

Question 22

Noxzema,Prudential,and Minute Maid would be examples of which kind of brand name?

A) licensed
B) private
C) national
D) international
E) convenience

Question 23

Which defining word or phrase below BEST captures the meaning of capital items?

A) bulk loads
B) directly used in the production process
C) to the consumer within a year
D) permanent
E) governmental purchase

Question 24

During the product life cycle,when do sales begin to climb and the product begin to show profit?

A) ascending
B) mature
C) initial
D) growth
E) accelerated

Question 25

Assuming a company has been gathering ideas for new products,what is the next step in the development process?

A) test marketing
B) prototype development
C) business analysis
D) concept testing
E) screening

Question 26

Which of the following is a convenience service?

A) a limousine ride from the restaurant to senior prom
B) catering for a wedding reception
C) a haircut at one of Great Clips' 3,000 quick-service salons
D) a hotel room next door to the convention you're attending
E) the daily newspaper

Question 27

A firm makes bookcases,bicycles,soft drinks,armored cars,and novelty dishes.What do these items make up?

A) product line
B) product variety
C) product assortment
D) product mix
E) product inventory

Question 28

The Men's Store offers sweatshirts at three prices: $28,$42,and $60; this illustrates price lining.

Question 29

For a restaurant making pizzas,the cost of the cheese is a fixed cost.

Question 30

What results when companies extend their horizons and identify opportunities outside existing product lines?

A) disconnected product lines
B) multiple product lines
C) uniform product lines
D) universal product lines
E) tailored product lines

Question 31

PepsiCo's juice product line includes Tropicana juice,Tropicana Twister juice drinks,and Trop50 reduced-calorie juices.Which of the following new products would also belong in this product line,if PepsiCo were to introduce it?

A) farm-stand orange and pineapple juices in containers shaped like fruit
B) Tropicana breakfast cereal
C) Trop50 reduced-calorie candy
D) lemon-flavored Pepsi-Cola
E) cookbooks with recipes using Tropicana products

Question 32

The only goal of determining prices is to maximize profit for the firm.

Question 33

Which of the following activities describes the development stage of commercialization?

A) building a prototype
B) testing the product to see if it meets performance requirements
C) selling the product on a trial basis in limited areas
D) beginning full-scale production and marketing
E) testing consumer reaction to the product in limited areas

Question 34

What type of brands are Sears Craftsman tools and Kenmore appliances examples of?

A) national
B) licensed
C) private
D) global
E) social

Question 35

Products priced above the market play on the common assumption that a higher price means higher quality.

Question 36

When a wholesaler or retailer develops a brand name and has the manufacturer place that name on the product,what is that product name called?

A) national brand
B) private brand
C) luxury brand
D) licensed brand
E) manufacturer brand

Question 37

In which of the following ways is product development different for services than for physical goods?

A) Instead of gathering product ideas, the company goes immediately to the testing phase.
B) Instead of screening ideas, the company tests all of them, since no prototype is needed.
C) Instead of creating a prototype, the company develops a service process design.
D) The business analysis step is not needed, since there are no production costs with services.
E) The commercialization step is gradual for services, but rapid for physical goods.

Question 38

Using the odd-even psychological pricing strategy,a restaurant would price an entree at $10.00 rather than $9.95.

Question 39

During the product life cycle,when do sales begin to slow down while profit levels are high?

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

Question 40

Which of the following is a product benefit of a Southwest Airlines flight to Tucson,Arizona?

A) a pleasant experience because of the friendly crew members
B) the Southwest Airlines Web site, where passengers make reservations
C) the boarding pass for the flight
D) use of a Boeing 737
E) the price of the ticket

Question 41

Which of the following gives the correct formula for calculating markup percentage?

A) sales price/markup
B) sales price/fixed costs
C) fixed costs/variable costs
D) markup/sales price
E) sales price/variable costs

Question 42

Which of the following scenarios would allow a firm to price below prevailing market price and still succeed?

A) The public does not learn that the firm's product is indeed inferior.
B) The firm can offer a product of acceptable quality.
C) The firm can offer an entirely new product.
D) The firm has effective promotional tactics and marketing strategies.
E) The firm can effectively criticize its competitors' products.

Question 43

What kind of products is Brilliant Solutions selling?

A) expense items
B) capital items
C) production items
D) specialty goods
E) convenience goods

Question 44

Which of the following pricing strategies has stimulation of sales as a higher priority than maximization of profits?

A) price fixing
B) penetration pricing
C) price skimming
D) price pointing
E) price lining

Question 45

Which of the following terms refers to the monetary amount added to a product's cost to the seller in order to sell it at a target profit?

A) profit margin
B) breakeven cost
C) revenue
D) revenue margin
E) markup

Question 46

Which of the following options BEST describes an example of price lining?

A) having the price of each individual song on an online music store be determined by length of song
B) having the price of each individual song on an online music store be determined by popularity of the band
C) having the price of each individual song on an online music store be determined by user auction
D) having the price of each individual song on an online music store be determined by reverse auction
E) having the price of each individual song on an online music store be determined by which of several categories the song falls into

Question 47

Betty's Breads is trying to calculate its breakeven point.Monthly fixed costs are $5,255.The cost of making one loaf of bread,considering labor and materials,is $3.50.Betty's sells the bread at $6 per loaf.How many loaves does Betty's need to sell each month in order to break even?

A) 251
B) 626
C) 1502
D) 2102
E) 2200

Question 48

The sales price of a product is given as the product's cost to the seller plus which of the following quantities?

A) breakeven price
B) revenues
C) variable price
D) fixed point
E) markup

Question 49

Which of the following assumptions is the strategy of pricing above the market based on?

A) Higher price implies higher quality.
B) Higher price means higher customer support.
C) Higher prices means higher customer satisfaction.
D) Higher price creates higher demand.
E) Higher price means easier distribution.

Question 50

From the choices below,pick the BEST definition of the term fixed costs.

A) costs that are needed to acquire a fixed market share
B) costs that are needed to acquire fixed profits
C) costs that are unaffected by the number of goods sold by the firm
D) costs that remain the same from year to year
E) costs that remain the same across all products

Question 51

A highly successful bakery specializes in making cherry tarts.Which of the following costs at the bakery is NOT variable?

A) cost of cherries
B) cost of flour
C) cost of wax paper liners
D) cost of the oven
E) cost of heating the oven

Question 52

Companies that price their product low enough to attract a large number of buyers are MOST likely pursuing which of the following objectives?

A) stable market pricing
B) high profits
C) stable market activity
D) low market volatility
E) high market share

Question 53

Which of the following strategies is involved with penetration pricing?

A) setting an initial low price to establish a new product in the market
B) setting an initial low price to cover new product costs and still generate a profit
C) setting a limited number of prices for certain categories or products
D) setting an initial high price to establish a new product in the market
E) setting an initial high price to cover new product costs and still generate a profit

Question 54

Which of the following pricing strategies BEST describes price lining?

A) setting an initial low price to establish a new product in the market
B) setting an initial high price to cover new product costs and generate a profit
C) setting individually negotiated prices for certain categories of products
D) setting a limited number of prices for certain categories of products
E) setting individually negotiated prices for all categories of products

Question 55

Odd-even pricing falls under the category of which of the following?

A) price fixing
B) psychological pricing
C) market pricing
D) price lining
E) price skimming

Question 56

Brilliant Solutions' 15 products for cellphone towers and three products for airport runways are examples of which of the following?

A) product features
B) product benefits
C) product lines
D) value packages
E) production items

Question 57

Which of the following pricing strategies is used by many e-tailers in order to provide flexibility between buyers and sellers in setting a price?

A) penetration pricing
B) psychological pricing
C) breakeven pricing
D) fixed pricing
E) dynamic pricing

Question 58

Which of the following costs refers specifically to those that change with the quantity of a product sold or produced?

A) annual costs
B) variable costs
C) fixed costs
D) marginal costs
E) market-adjusted costs

Question 59

Which of the following costs refers specifically to those that are unaffected by the quantity of a product sold or produced?

A) annual costs
B) variable costs
C) fixed costs
D) marginal costs
E) market-adjusted costs

Question 60

Which of the following strategies is involved with price skimming?

A) setting an initial low price to establish a new product in the market
B) setting an initial low price to cover new product costs and still generate a profit
C) setting a limited number of prices for certain categories or products
D) setting an initial high price to establish a new product in the market
E) setting an initial high price to cover new product costs and still generate a profit

Question 61

Which of the following,if true,would MOST strengthen the senior manager's argument?

A) Research suggests that consumers are looking for more variety in this product category.
B) The majority of India's consumer market is located at the bottom of the pyramid.
C) Few competitors in the market offer basic cell phones because of increasing customer sophistication.
D) The company will face charges of dumping if it sells the phones at a price lower than what it offers in the home country.
E) Different companies already cater to the requirements of different market segments in India.

Question 62

A chef visits the produce market each morning to select fruits and vegetables for use in her restaurant's soups and salads.Explain whether the chef is buying production items or expense items.

Question 63

What steps in the development process should Ginny and RJ complete before they commercialize ComicalYou?

A) business analysis and test marketing
B) product ideas and screening
C) screening and prototype development
D) product ideas and prototype development
E) concept testing and prototype development

Question 64

As ComicalYou reaches the introduction stage of the product life cycle,what marketing strategy is MOST appropriate?

A) Lower price slightly to increase sales.
B) Focus on making customers aware of the product and its benefits.
C) Cut prices in response to increased competition.
D) Increase advertising in response to greater competition.
E) Develop product adaptations to extend the product's life.

Question 65

Piper & Son sells pickled peppers to stores for $3 per jar,and the stores sell each jar to consumers for $7.50.What is the markup percentage?

A) 40%
B) 60%
C) 67%
D) 150%
E) 250%

Question 66

Extensive analysis reveals that if Personal Devices offered Indian customers products at a number of different price points,the company would initially earn more profits but damage the brand in the long term.Which of the following,if true,would support the argument that Personal Devices should offer products at multiple price points?

A) One of the core values of Personal Devices is to offer only the most advanced technology.
B) Major stockholders of Personal Devices are primarily motivated by short-term profits.
C) Competitors have adapted their products considerably for the Indian market.
D) Indian customers are increasingly becoming selective about the brands they purchase.
E) The huge Indian middle class is rapidly reaching a level where they can afford premium products.

Question 67

What would be the MOST important role of packaging for the lighting products sold by Brilliant Solutions?

A) serving as an in-store advertisement for the products
B) making the product attractive to shoppers
C) identifying product features and benefits
D) reducing the risk of damage or breakage
E) increasing the difficulty of stealing small products

Question 68

All of Brilliant Solutions' products are packaged in boxes prominently displaying the Brilliant Solutions brand.Why would this brand be valuable to the company?

A) It signals the high quality of the product and helps customers remember it.
B) It helps customers classify the products correctly.
C) It is a product feature that contributes to the value package.
D) It allows Brilliant Solutions to present the products as capital items.
E) It enables Brilliant Solutions to extend its product lines.

Question 69

How does a product mix differ from a product line?

Question 70

How might selling the peppers online affect Piper & Son's pricing strategy?

A) Selling online will have no effect on Piper & Son's pricing strategy.
B) Selling online will raise ethical concerns, forcing a price cut.
C) Selling online will force the company to switch to market share objectives.
D) Selling online will reduce the number of units sold, driving up prices.
E) The ease of comparison shopping online will drive down prices.

Question 71

How can setting the price for pickled peppers too high yield profits that are lower than the maximum?

A) The high price will cause the convenience goods to become shopping goods.
B) The high price will hurt the company's reputation, so the product will decline.
C) The high price will generate a large profit per jar, but too few jars will be sold.
D) Customers will insist on paying a lower price, resulting in less income.
E) The high price will cause expenses to rise, reducing profits.

Question 72

Extensive analysis reveals that if Personal Devices offered Indian customers products at multiple price points,the company would initially earn more profits but damage the brand in the long term.Which of the following,if true,would weaken the argument that Personal Devices should offer products at multiple price points?

A) The Indian market is sufficiently large to support offerings at multiple price points.
B) Taiwanese manufacturers have focused on the low to medium end when selling to their domestic markets.
C) Brand image is the sum total of customer perceptions about a company.
D) Research shows that the average domestic consumer tends to associate price with quality.
E) Niche companies that try to be everything to everyone usually lose their edge in their core business.

Question 73

A chef purchases a new oven for her restaurant's kitchen.Explain whether the chef is buying a capital item or a production item.

Question 74

Which of the following,if true,would weaken the senior manager's argument?

A) Producing a stripped-down model would alter high-end domestic customers' view of the Personal Devices brand.
B) A premium auto manufacturer who came out with economy cars suffered in the market.
C) India recently blocked low-priced Chinese phones that did not have the International Mobile Equipment Identification number.
D) Research suggests that the premium market segment is saturated.
E) Even high-end customers typically do not use the advanced functionality in Personal Devices' cell phones.

Question 75

What are three functions of packaging?

Question 76

Ginny and RJ are correct: ComicalYou becomes a hit with young people,even with a $5 per month subscription fee.Within two years,it becomes the number one online destination for people in their teens and twenties,and usage soars.An online social network introduces a comics creation tool to compete with ComicalYou for 10 cents per message.What marketing strategy is most appropriate for this stage of the product life cycle?

A) Reintroduce the product in new markets to avoid the decline stage.
B) Reduce or end promotional support because people already know about ComicalYou.
C) Focus on making customers aware of the product and its benefits.
D) Lower prices slightly and continue promotional expenditures to keep demand growing.
E) Develop product adaptations to extend the product's life.

Question 77

Give an example of a product feature and a product benefit of a smartphone.

Question 78

If the Piper & Son's fixed cost for making pickled peppers is $200,000,and its variable cost per jar is $1,how many jars would the company have to sell at $3 per jar to break even?

A) 50,000
B) 66,667
C) 100,000
D) 133,333
E) 300,000

Question 79

Define the three categories of consumer products.

Question 80

What will make the product testing and test marketing stage challenging for an online product such as ComicalYou?

A) Putting a software service on a Web site is very expensive.
B) Consumers are reluctant to try out new forms of social media.
C) Research and development is expensive, and many new products fail.
D) If word about the service spreads quickly, it will be difficult to confine the testing to a limited market.
E) If users in the test market are dissatisfied, it will be difficult to change the product after it is online.