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128. d
129. b
130. e
131. d
132. c
133. b
134. d
135. c
136. d
137. d
138. c
139. d
140. d
141. c
142. c
143. c
144. e
145. c
146. c
147. d
148. a
149. d
150. b
151. b
152. c
153. e
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154. c
155. b
156. a
157. a
158. c
159. d
160. e
161. e
162. c
163. e
164. a
165. d
166. b
167. a
168. c
169. e
170. c
171. e
172. c
173. d
174. e
175. c
176. a
177. b
178. e
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230. a
231. b
232. c
233. a
234. e
235. d
236. c
237. b
238. e
239. a
240. d
241. d
242. c
243. b
244. a
245. e
246. b
247. a
248. e
249. c
250. c
251. e
252. c
253. a
254. b
255. b
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with the problem of intangibility, marketers employ tangible cues, such as well-groomed, professional-appearing contact
personnel and clean, attractive physical facilities, to help assure customers about the quality of the service. Service
companies must be careful not to promise too much regarding their services so that customer expectations do not rise to
unattainable levels.
280. When introducing a new product into a product line, one or more existing brands may have to be repositioned to
minimize cannibalization of established brands and thus ensure a favorable position for the new brand. Repositioning can
be accomplished by physically changing the product, its price, or its distribution. Rather than making any of these
changes, marketers sometimes reposition a product by changing its image through promotional efforts. Finally, a marketer
may reposition a product by aiming it at a different target market.
281. The seven phases of the new-product development process are: idea generation, screening, concept testing, business
analysis, product development, test marketing, and commercialization. Businesses and other organizations seek product
ideas that will help them to achieve their objectives. This activity is idea generation. In the process of screening, the ideas
with the greatest potential are selected for further review and analyzed to determine whether or not they match the
organization’s objectives and resources. In concept testing, a small sample of potential buyers is presented with a product
idea through a written or oral description (and perhaps a few drawings) to determine their attitude sand initial buying
intentions regarding the product. During the business analysis stage, the product idea is evaluated to determine its
potential contribution to the firm’s sales, costs, and profits. Product development is the phase in which the organization
determines if it is technically feasible to produce the product and if it can be produced at costs low enough to make the
final price reasonable. A limited introduction of the product in geographic areas chosen to represent the intended market is
called test marketing. During the commercialization phase, plans for full-scale manufacturing and marketing must be
refined and settled and budgets for the project prepared.
282. A product manager is responsible for a product, a product line, or several distinct products that make up an
interrelated group within a multiproduct organization. On the other hand, a brand manager is responsible for a single
brand. Both product and brand managers operate cross-functionally to coordinate the activities, information, and strategies
involved in marketing an assigned product. Product managers and brand managers plan marketing activities to achieve
objectives by coordinating a mix of distribution, promotion (especially sales promotion and advertising), and price.
283. The characteristics of services create a number of challenges for service marketers in the development of marketing
mixes. A service offered by an organization generally is a package, or bundle, of services consisting of a core service and
one or more supplementary services. Heterogeneity results in variability in service quality and makes it difficult to
standardize services. However, heterogeneity provides one advantage to service marketers: it allows them to customize
their services to match the specific needs of individual customers. Customization plays a key role in providing
competitive advantage for the service provider. Being able to personalize the service to fit the exact needs of the customer
accommodates individual needs, wants, or desires. The characteristic of intangibility makes it difficult for customers to
evaluate a service prior to purchase. Intangibility requires service marketers, such as hairstylists, to make promises to
customers. The customer is forced to place some degree of trust in the service provider to perform the service in a manner
that meets or exceeds those promises. Service marketers must guard against making promises that raise customer
expectations beyond what they can provide. The inseparability of production and consumption and the level of customer
contact also influence the development and management of services. The fact that customers are present during the
production of a service means that other customers can affect the outcome of the service. Service marketers can reduce
problems by encouraging customers to share the responsibility of maintaining an environment that allows all participants
to receive the intended benefits of the service environment.
284. Services have six basic characteristics: intangibility, inseparability of production and consumption, perishability,
heterogeneity, client-based relationships, and customer contact.
Intangibility means a service is not physical and therefore cannot be touched. Pure goods, if they exist at all, are rare
because practically all marketers of goods also provide customer services. Even a tangible product like sugar must be
delivered to the store, priced, and placed on a shelf before a customer can purchase it. Intangible, service-dominant
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products such as education or health care are clearly service products. Most products fall somewhere in the middle of this
continuum. Products such as a restaurant meal or a hotel stay have both tangible and intangible dimensions. Knowing
where the product lies on the continuum is important in creating marketing strategies for service-dominant products.
Inseparability refers to the fact that the production of a service cannot be separated from its consumption by customers.
Inseparability implies a shared responsibility between the customer and service provider. Training programs for
employees in the service sector should stress the importance of the customer in the service experience so that employees
understand that the shared responsibility exists.
Services are characterized by perishability because the unused service capacity of one time period cannot be stored for
future use. Goods marketers can handle the supply–demand problem through production scheduling and inventory
techniques. Service marketers do not have the same advantage and face several hurdles in trying to balance supply and
demand. They can, however, plan for demand that fluctuates according to day of the week, time of day, or season.
Heterogeneity refers to variation in quality. Services delivered by people are susceptible to heterogeneity. Quality of
manufactured goods is easier to control with standardized procedures, and mistakes are easier to isolate and correct. The
quality of the service a single employee provides can vary from customer to customer, day to day, or even hour to hour.
Although many service problems are onetime events that cannot be predicted or controlled ahead of time, employee
training and the establishment of standard procedures can help increase consistency and reliability.
Client-based relationships refer to interactions with customers that result in satisfied customers who use a service
repeatedly over time. The success of many services depends on creating and maintaining client-based relationships. Word-
of-mouth (or going viral, which is the online equivalent) is a key factor in creating and maintaining client-based
relationships. To ensure that it actually occurs, the service provider must take steps to build trust, demonstrate customer
commitment, and satisfy customers so well that they become very loyal to the provider and unlikely to switch to
competitors.
Customer contact refers to the level of interaction between a service provider and a customer that is necessary to deliver a
service. Not all services require a high degree of customer contact, but many do. Employees of high-contact service
providers represent a very important ingredient in creating satisfied customers. A fundamental precept of customer contact
is that satisfied employees lead to satisfied customers. Employee satisfaction is one of the most important factors in
providing high service quality to customers.
285. The three approaches that marketers use to differentiate their products from their competitors’ products are: product
quality, product design and features, and product support services. Product quality refers to the overall characteristics of a
product that allow it to perform as expected in satisfying customer needs. The concept of quality varies between consumer
and business markets. For business markets, technical suitability, ease of repair, and company reputation are important
characteristics. Unlike consumers, most businesses place far less emphasis on price than on product quality .Product
design refers to how a product is conceived, planned, and produced. The style of a product is one design feature that can
allow certain products to sell very rapidly. Good design, however, means more than just appearance; it also involves a
product’s functionality and usefulness. Product features are specific design characteristics that allow a product to perform
certain tasks. By adding or subtracting features, a company can differentiate its products from those of the competition.
Product features also can be used to differentiate products within the same company. Many companies differentiate their
product offerings by providing support services. Usually referred to as customer services, these services include any
human or mechanical efforts or activities a company provides that add value to a product.
286. Product deletion is the process of eliminating a product from the product mix, usually because it no longer satisfies a
sufficient number of customers. A declining product reduces an organization’s profitability and drains resources that
could be used to modify other products or develop new ones. A marginal product may require shorter production runs,
which can increase per-unit production costs. Finally, when a dying product completely loses favor with customers, the
negative feelings may transfer to some of the company’s other products. There are three basic ways to delete a product:
phase it out, run it out, or drop it immediately. A phase-out allows the product to decline without a change in the
marketing strategy; no attempt is made to give the product new life. A run-out exploits any strengths left in the product.
The third alternative, an immediate drop of an unprofitable product, is the best strategy when losses are too great to
prolong the product’s life.
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287. Product positioning refers to the decisions and activities intended to create and maintain a certain concept of a firm’s
product (relative to competitive brands) in customers’ minds. When marketers introduce a product, they try to position it
so that it appears to have the characteristics that the target market most desires. Marketers can use several bases for
product positioning. A common basis for positioning products is to use competitors. A firm can position a product to
compete head-on with another brand. Head–to-head competition may be a marketer’s positioning objective if the product’s
performance characteristics are at least equal to those of competitive brands and if the product is priced lower. Head-to–
head positioning may be appropriate even when the price is higher if the product’s performance characteristics are
superior. A product’s position can be based on specific product attributes or features. If a product has been planned
properly, its features will give it the distinct appeal needed. The target market can also be a positioning basis caused by
marketing. This type of positioning relies heavily on promoting to the types of people who use the product. Other bases
for product positioning include price, quality level, and benefits provided by the product.
288. In concept testing, a small sample of potential buyers is presented with a product idea through a written or oral
description (and perhaps a few drawings) to determine their attitudes and initial buying intentions regarding a product. For
a single product idea, an organization can test one or several concepts of the same product. Concept testing is important
because it is a low-cost procedure that allows a company to determine customers’ initial reactions to a product idea before
it invests considerable resources in research and development.
289. Customer contact refers to the level of interaction between a service provider and a customer that is necessary to
deliver a service. High-contact services include healthcare, real estate, legal, and spa services. These services generally
involve actions directed toward people, who must be present during production. When a customer must be present, the
process of production may be just as important as its final outcome. High-contact services typically require that the
customer go to the production facility. Thus, the physical appearance of the facility may be a major component of the
customer’s overall evaluation of the service. Employees of high-contact service providers are part of a very important
ingredient in creating satisfied customers. A fundamental precept of customer contact is that satisfied employees lead to
satisfied customers. To minimize the problems that customer contact can create, service organizations must take steps to
understand and meet the needs of employees by training them adequately, empowering them to make more decisions, and
rewarding them for customer-oriented behavior.
Not all services require a high degree of customer contact, but many do. Examples of low-contact services are tax
preparation, auto repair, travel reservations, and dry cleaning. Technology has enabled many service-oriented businesses
to reduce their level of customer contact. Even in low-contact service situations, the appearance of the facility is important
because the customer likely will need to be present to initiate and finalize the service transaction.
290. Providers of time-sensitive services often use demand-based pricing to manage the problem of balancing supply and
demand. They charge top prices during peak demand and lower prices during off-peak demand to encourage more
customers to use the service.
291. Most organizations find it difficult to delete a product because a decision to drop a product may be opposed by
managers and other employees who believe that the product is necessary to the product mix. Salespeople who still have
some loyal customers are especially upset when a product is dropped. Considerable resources and effort are sometimes
spent trying to change a slipping product’s marketing mix to improve its sales and thus avoid having to eliminate it.
292. A line extension is the development of a product closely related to one or more products in the existing product line
but designed specifically to meet somewhat different customer needs. On the other hand, a product modification involves
changing one or more characteristics of a product. A product modification differs from a line extension because the
original product does not remain in the line. However, like a line extension, a product modification entails less risk than
developing new products.
293. Services delivered by people are susceptible to heterogeneity, or variation in quality. Quality of manufactured goods
is easier to control with standardized procedures, and mistakes are easier to isolate and correct. Because of the nature of
human behavior, however, it is very difficult for service providers to maintain a consistent quality of service delivery.
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This variation in quality can occur from one organization to another, from one service person to another within the same
service facility, and from one service facility to another within the same organization. Heterogeneity usually increases as
the degree of labor intensiveness increases. Many services, such as auto repair, education, and hairstyling, rely heavily on
human labor. People-based services are often prone to fluctuations in quality from one time period to the next.
294. There are three major ways to modify products: quality, functional, and aesthetic modifications. Quality
modifications are changes relating to a product’s dependability and durability. The changes usually are executed by
altering the materials or the production process. For instance, for a service, such as air travel, quality modifications may
involve increasing leg room in the seating area. Changes that affect a product’s versatility, effectiveness, convenience, or
safety are called functional modifications; they usually require that the product be redesigned. For example, making
programs available in 3-D on DirectTV is a functional modification. Aesthetic modifications change the sensory appeal of
a product by altering its taste, texture, sound, smell, or appearance. The fashion industry relies heavily on aesthetic
modifications from season to season. For example, Louis Vuitton clothing, handbags, and leather goods are leaders in the
haute couture industry. In order to maintain its reputation for the utmost level of quality and style, the company performs
aesthetic modifications on its products regularly.
295. During the business analysis stage, a product idea is evaluated to determine its potential contribution to a firm’s
sales, costs, and profits. In the course of a business analysis, evaluators determine whether a product fits with the
organization’s existing product mix. They also ascertain if demand of the product is strong enough to justify entering a
market, and whether the demand will endure. Moreover, the evaluators estimate types of environmental and competitive
changes that can affect the product’s future sales, costs, and profits.
During the business analysis stage, a firm determines whether its research, development, engineering, and production
capabilities are adequate to develop a product; whether new facilities must be constructed, how quickly they can be built,
and how much they will cost; and whether the necessary financing for development and commercialization is on hand or
is obtainable based upon terms consistent with a favorable return on investment.
296. Test marketing provides several benefits. It lets marketers expose a product in a natural marketing environment to
measure its sales performance. A company can strive to identify weaknesses in a product or in other parts of the marketing
mix. A product weakness discovered after a nationwide introduction can be expensive to correct. Moreover, if consumers’
early reactions are negative, marketers may be unable to persuade consumers to try the product again. Thus, making
adjustments after test marketing can be crucial to the success of a new product. On the other hand, test marketing results
may be positive enough to warrant accelerating the product’s introduction. Test marketing also allows marketers to
experiment with variations in advertising, pricing, and packaging in different test areas and to measure the extent of brand
awareness, brand switching, and repeat purchases resulting from these alterations in the marketing mix.
Test marketing is not without risks. It is expensive, and competitors may try to interfere. A competitor may attempt to
“jam” the test program by increasing its own advertising or promotions, lowering prices, and offering special incentives,
all to combat the recognition and purchase of the new brand. Sometimes, too, competitors copy the product in the testing
stage and rush to introduce a similar product. It is desirable to move to the commercialization phase as soon as possible
after successful testing.
297. The intangibility of services results in several promotion-related challenges to service marketers. Because it may not
be possible to depict the actual performance of a service in an advertisement or to display it in a store, explaining a service
to customers can be a difficult task. Promotion of services typically includes tangible cues that symbolize the service. To
make a service more tangible, advertisements for services often show pictures of facilities, equipment, and service
personnel. Marketers may also promote their services as a tangible expression of consumers’ lifestyles.
Compared with goods marketers, service providers are more likely to promote price, guarantees, performance
documentation, availability, and training and certification of contact personnel. It is common, for example, for gyms and
yoga or aerobics studios to promote their trainers’ degrees and certifications as a way to ensure customers that their
trainers are well-qualified to help them reach their fitness goals.
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