Subject: Business    / Marketing

Question 1

From Chapter 8 and Virtual Lecture 4 we learn that large, established firms find it difficult to invest in “disruptive” (discontinuous) innovation. They are far more comfortable investing in simple “sustained” (continuous) innovation to make minor improvements in existing products. For disruptive innovation to have its best chance of succeeding, an established company must:

Invest heavily in new ideas because the more they get out in the market, the more likely one of them will be profitable.

Focus on sustained innovation because the ROI is known and posses less risk to future profits.

Focus on disruptive innovation solutions that address unmet customer needs and which allow the company to create new, superior business models.

Closely monitor new product ideas coming to market to quickly identify winners that they can improve on through their innovation process.

Question 2

According to Chapter 9 and Virtual Lecture 4, the key driver of brand equity is:

how consumers perceive the brand and how the brand relates to consumer’s self-concept compared to competitors.

the advertising message of the brand.

the value of the brand in the eyes of shareholders.

The value of the brand on the balance sheet.

Question 3

Fidelity Corp. earned a 10 percent profit margin last year, and it wants to continue that margin next year. Unfortunately, Fidelity’s costs have increased dramatically. In order to acheive its profit margin goal, it must increase its prices dramatically. Managers are worried that they will lose customers at the new pricing level. Which of the following strategies would help Fidelity to keep its customers, even with its new prices?

Target costing

Yield management

Price leadership.

Value pricing.

Question 4

Sharp Electronics earned a 6 percent profit margin on its sales last year, but wants its brand new product that it has introduced to earn a 10% profit margin next year. Which of the following pricing objectives has Sharp used?




Target costing

Question 5

Jane Yellowhair makes small woolen handbags out of Pendleton blankets, and has fixed costs of $30,000. She expects to sell 6,000 bags for $17.50 each. This price will give her a 20 percent markup. Calculate the variable costs per handbag.





Question 6

A manufacturer that gives its high volume retailers a discount off of their MSRP is providing retailers with:

a wholesaler margin price

a trade discount or promotional allowance

a cash discount or retailer margin price

an advertising allowance or seasonal discount

Question 7

Courtyard by Marriott is a corporate name combined with an individual product name. It is also called a sub-brand. Why did Marriott choose to sub-brand its extended stay hotel brand?

Because the Marriott name is already registered as a trademark for a certain kind of hotel.

Because Courtyard offers different product features, but Marriott still wanted customers of Courtyard to associate Courtyard with the positive Marriott brand name.

Because Courtyard is a better name to describe the kind of service customers can expect.

Because Marriott wanted to have line extensions and be viewed as a major hotel conglomerate.

Question 8

Kodak is cutting the price of its digital camera 10%, from $250 to $225, because the product is at the latter end of its life cycle. At the original $250 price, digital cameras earned a 20% profit margin with 80% total costs. What does this price cut do to the product’s profit margin?

Cuts it by 20% from $50 to $40.

Cuts it in half from $50 to $25.

Cuts it by 10% from $50 to $45.

Increases profit by selling more volume.

Question 9

A childcare provider that expertly delivers the benefits that children need most — great educational programs in a safe/secure environment — should not be concerned about being in conflict with its consumers’ preferences for convenience and nurturing.



Question 10

In marketing, the term “Point of Difference” (POD) means:

a firm that uses points of parity (POP) to compete effectively against their competitors

a firm that creates a distinct and better value proposition than its competitors and that is used to attract targeted customers.

a firm’s capabilities and resources that are different than those of its competitors.

the use of a contingency or alternative marketing plan when the firm’s original marketing plan is not performing up to expectations.

Question 11

Why do new products fail?

Because most products today have longer product life, there is less need for new products.

Marketers tend to underestimate the market size and underestimate demand which results in lost customers.

Because new product development doesn’t effectively consider the “job-to-be-done” of the target audience.

Social and governmental regulations have significantly increased new product development costs making it harder for new products to succeed.

Question 12

If you add a new product to your Allstar product portfolio, you must watch your budget carefully, in fact you must reduce your budget for marketing Allround to allocate some of your existing budget for the new product.



Question 13

When GE uses a five-step process called DMAIC (define, measure, analyze, improve, and control) to improve quality it is engaged in which of the following processes?

Total quality management (TQM)

ISO 9000

Six Sigma

Cannibalization strategy

Question 14

The Clorox Company marketed a new product called Clorox Oxygen Action multipurpose stain reliever. This is an example of a brand extension.



Question 15

Price is the only element of the marketing mix (4Ps) that produces revenue. The other three elements produce costs.



Question 16

Amazon has a goal to increase the loyalty of their customers. As a marketing manager for Amazon, you determine that exceptional customer service that exceeds customer expectations will build greater customer loyalty. Which of the following action steps would help Amazon achieve its goal?

inform your employees that customer service will be exceptional.

develop an exceptional customer service positioning strategy as part of Amazon’s corporate strategy.

ensure that the “product” part of the 4P value chain includes a customer service approach that exceeds customer expecations and is monitored daily and well-managed.

Both answers 2 and 3 are correct in the context of this question.

Question 17

Brand positioning is all about developing a strong point of difference (POD) and brand personality compared to competitors.



Question 18

Blue Cross Blue Shield is the leading brand in the health insurance market. It built its reputation by differentiating in two ways: 1) offering the largest/best networks of providers and 2) by giving superior service to its customers. If BCBS listed just one point-of-diffrence (POD) and one point-of-parity (POP), which of the following would best describe its POD and its POP, compared to its competitors?

POD: superior customer service

POP: best network of providers

POD: best network of providers

POP: superior customer service

POD: deep product line serving all customers

POP: superior customer service

POD: superior customer service

POP: deep product line serving all customers

Question 19

A company exploring a unique brand personality for its new product that is different than the brand personality of competitive products should:

create TV ads that differentiate the new product.

invite a cross-section of executives to work in a task force to develop a brand personality plan for the product.

hire a naming firm to develop a unique name and personality for the new product.

create a perceptual brand map that visually describes where competitive products are located in consumers’ minds in hope of finding an opportunity to differentiate.

Question 20

The poor quality of American products in comparison to Japanese products in the 1980s led to the ISO quality revolution in American industry.



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