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In evaluating a total product offer, value enhancers such as service, guarantees, reputation of the seller, etc. are as important to customers as the basic product.

A) True
B) False

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Product development is a key activity in any modern business, anywhere in the world.

A) True
B) False

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Total fixed costs are those costs that change when the volume of production changes.

A) True
B) False

Correct Answer

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Using a sports or movie celebrity as a spokesperson for your product is an attempt to build favorable:


A) brand reputation.
B) publicity.
C) brand association.
D) manufacturers' brands.

E) B) and D)
F) All of the above

Correct Answer

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A skimming pricing strategy:


A) allows low income households the ability to purchase a particular good or service.
B) drives competitors out of business in order to achieve a monopoly position in the market.
C) creates a "common man" image to reach a larger market.
D) establishes a high price in order to earn the highest possible profit while there is little competition.

E) A) and D)
F) C) and D)

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Restaurants, like other businesses, often find that the best way to succeed in the market is to:


A) listen to customers and adapt products to their needs.
B) create a product for which he could charge an exceptionally high price.
C) create a winning combination of advertising and personal selling for all of the stores in the chain.
D) open more stores in a single year than other foodservice operators.

E) A) and D)
F) None of the above

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One way a small firm can succeed against larger competitors is to:


A) determine their break-even point price.
B) add value to their product offering.
C) eliminate the fringe benefits offered to frequent customers.
D) use break-even segmentation.

E) B) and C)
F) None of the above

Correct Answer

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Which of the following statements about packaging is the most accurate?


A) Changes in packaging can improve the product itself and open up large new markets.
B) Packaging is the least critical element of a firm's promotional strategy.
C) Technology has had a very limited role in improving packaging.
D) Packaging has avoided federal regulations.

E) A) and B)
F) A) and C)

Correct Answer

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The purpose of break-even analysis is to determine the lowest price a firm can charge and still be able to cover its costs of production.

A) True
B) False

Correct Answer

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The target costing strategy establishes a selling price that consumers are willing to pay for a product, and then subtracts a desired profit margin to determine a target cost of production.

A) True
B) False

Correct Answer

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Manufacturers' brands carry the brand name of the producers that distribute the products nationally.

A) True
B) False

Correct Answer

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The combination of all the factors that consumers evaluate when deciding whether or not to buy a good or service is called a:


A) total product offer.
B) product mix.
C) product differentiation.
D) product package.

E) B) and C)
F) None of the above

Correct Answer

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The Internet has the intensity of price competition.


A) decreased
B) increased
C) had no impact on
D) stifled

E) A) and C)
F) A) and D)

Correct Answer

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Whether a consumer thinks a product provides the best value depends upon:


A) the actual product benefits.
B) the consumer's perceptions.
C) the global situation.
D) the laws covering the product's manufacture.

E) A) and B)
F) A) and C)

Correct Answer

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Which stage of the product life cycle is characterized by rapidly rising sales, very high profit levels, and a growing number of competitors?


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

E) B) and D)
F) A) and B)

Correct Answer

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At Isuzu's Appliance Store, all new products are offered with an extended service contract, as well as free delivery and installation. By offering these value enhancers, Isuzu's has added to their total product offer.

A) True
B) False

Correct Answer

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In order to achieve a social objective, firms use low prices to enable people with low incomes to buy their product.

A) True
B) False

Correct Answer

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While the time in each stage may vary, all products progress through each stage of the product life cycle.

A) True
B) False

Correct Answer

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Which of the following are products consumers buy after comparing quality, price, and style from a variety of sellers?


A) shopping goods
B) specialty goods
C) convenience goods
D) unsought goods

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

Correct Answer

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Successful firms always try to maintain consistency in the short-run and long-run pricing objectives.

A) True
B) False

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