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Exam 14: Developing and Pricing Goods and Services

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Question 91

Multiple Choice

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From the buyer's perspective, which of the following is a benefit of a product with a well known brand name?

A) quality assurance
B) helps in promotional efforts
C) adds to repeat purchases
D) differentiates products so that prices can be set higher

E) C) and D)
F) B) and C)

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Question 92

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Brand loyalty refers to the degree to which customers are satisfied with a brand and are committed to further purchases.

A) True
B) False

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Question 93

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New-product failures are most often caused by excessively high prices.

A product line is a group of products that are physically similar or are intended for a similar market.

One function of effective packaging is to provide information regarding warranties, benefits, and uses of the good inside the package.

The break-even point is that level of sales where total revenues equals total costs.

The key to success for U.S. firms operating internationally is to increase their efforts to maintain high quality while decreasing expenditures on new-product development.

The product life cycle consists of stages.

Stella strongly prefers a specific brand of gourmet coffee. Because there is only one store in her area that sells this brand, she makes an extra effort to purchase this item. Stella's purchasing behavior indicates for her this product is a specialty good.

Successful marketing of convenience and specialty goods require different marketing mixes.

At the concept testing stage, factors such as packaging, branding, ingredients, etc. should be tested to ensure that a product is acceptable to potential consumers.

Employees, not the firm's research and development department, are the number one source of ideas for new industrial products.

New products often fail because they don't deliver to consumers their promised benefits.

The four stages in the product life cycle are introduction, market, exchange, and disposal.

Helen is considering adding a rack of greeting cards to her product offerings at Litton Books Unlimited. Her fixed costs associated with adding the greeting cards would be $300. Variable costs per card are $1 each. The greeting cards will sell for $2 each. Helen's break-even point would occur at cards sold.

Nailerman's Hardware is a large chain of hardware stores that sells a line of tools under the Nailerman brand even though they were actually produced by another firm. Since the products are actually produced by another firm, using the Nailerman brand is an example of a knockoff brand.

Profits peak during the maturity stage of the product life cycle.

Carlotta owns and manages the Carlite Car Wash. She charges $8 per car wash. Her fixed costs are $600 per month, while her variable costs per car wash amount to $2. Carlotta must wash 60 cars to break even.

Supermarkets and discount stores often advertise products at prices at or below their cost to attract people to the store. These products represent:

Brand managers have direct responsibility for all the elements of the marketing mix for a particular brand or product line.