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Exam 14: Developing and Pricing Goods and Services

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Question 131

True/False

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Marketers use pricing,advertising,and packaging to differentiate their products from competitors' products even when actual differences are quite small.

A) True
B) False

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Question 132

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In the fall semester,Alex noticed that the plastic cola bottles in the vending machines at his university had changed shape.Upon further investigation,he realized that each bottle contained 2 ounces less beverage than previous bottles,even though he paid the same price as last semester.The pricing objective of the beverage company is to:

A) Increase profits by reducing the amount provided in each bottle.
B) Build traffic at the vending machines by changing the shape of the bottle.
C) Undercut the competition by changing the shape of the bottle.
D) Increase market share by reducing the amount provided in each bottle.

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

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Question 133

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Barker Brothers Pens utilizes a strategy of low priced pens to attract customers and discourage competition.This represents a _______ strategy.

Most manufacturers hope that their brand names will become a generic name.

Derek's company was bidding on the construction of a new penguin display at a world-famous zoo.When putting together his bid,Derek began by determining what the zoo would be willing to pay for the structure,and then subtracting a reasonable profit for the company.The result would be the cost of production.For example: If price to zoo = $6 million,and company profit margin = $2 million,the cost to produce cannot exceed $4 million.[$6 million - $2 million = $4 million.] The demand-based pricing strategy in this example is called __________.

Successful firms maintain consistency in their marketing mix strategies throughout the product life cycle.

Mystic Beverages,a producer of soft drinks,wants to differentiate its products from those of other soft drink providers.To implement this strategy successfully will require Mystic to create tangible differences in the physical product it offers.

Community Catering Services,Inc.advertises that they are the "friendliest caterers in town." Their prices are no lower than the rates charged by competing caterers,but they put a lot of emphasis on getting to know the needs of their customers.They tailor their efforts to meet these needs,providing a unique dining experience that exactly matches the customer's expectations.Community Catering is likely to find that this approach is more effective in achieving its goals than the use of aggressive price-cutting.

Mini-Case Gourmet Pets is an innovative competitor in the billion-dollar pet food industry.In fact,two of its products,Kitty Sirloin and McDog T-bone,each claim over a 30% share in their market segments.The company has done detailed research and discovered that,for a growing number of pet owners,the family pet serves as a "baby substitute." These owners tend to pamper their pets,and are very discriminating in what they purchase.With this in mind,the company has put a great deal of effort into developing a new dog food: Prime Cuts.The new product is packaged in a resealable,microwaveable container and can be purchased in a variety of flavors (including Western BBQ,Teriyaki,Australian Outback,and Hickory Smoked. ) Gourmet Pets promotes the product as far superior to "average" dog foods,even though the quality of meat and nutrient content of the food is virtually identical to many other brands.The company faces no competition in this market segment so it plans to charge a high price for the product. -Gourmet Pets hopes to use its special packaging and extensive advertising to create a perception in the minds of consumers that Prime Cuts is a superior product,even though the actual quality of meat used in the product is virtually no different from competing brands.The company is attempting to develop:

The critical component of a total product offer is always a low price.

Pattie Bunz operates the Zestee Burgers restaurant.The cost of pickles,onions,buns,catsup,and meat patties would all be considered variable costs for her type of business.

Webster Industries is one of the first producers of a unique consumer product.The company has chosen a low price strategy,hoping this will enable them to quickly attract many customers while discouraging potential competitors from entering the market.Webster's approach to pricing is a classic example of the skimming strategy.

Cost-based pricing adds a desired profit margin to the cost of producing a product.

Sears sells batteries under its own Diehard brand name even though another company actually produces these batteries.This is an example of a:

The Internet allows customers to compare prices of many goods and services.This technology will likely:

__________ presents an idea for a new product to potential customers to test their reactions.

The best product development strategy for most firms is to:

The concepts of product lines and product mixes apply to marketers of products and services.

Price,store surroundings,service,and brand name are all elements that consumers evaluate in a total product offer.

A firm's product line refers to all of the different geographic markets in which it sells the same good or service.