119. When a movie theater entices customers to view movies during the daytime by offering tickets at a reduced price, it
is trying to resolve the services marketing challenge of:
a. inseparability.
b. intangibility.
c. customer contact.
d. off-peak demand.
e. heterogeneity.
120. Safe Auto Insurance asserts “minimum coverage for minimum budgets” for its automobile insurance. Which of the
following best describes Safe Auto’s approach?
a. Customers often use price as an indicator of quality, and Safe wants to be seen as a low quality provider.
b. The type of advertising used by Safe makes insurance more tangible to the customer.
c. Safe wants to reassure customers that it provides the highest level of service quality available.
d. Because market conditions limit price rise on auto insurance, Safe uses this approach to gain customers.
e. For certain services, customers look for the low-cost provider, which is what Safe claims to be.
Chapter 11 – Developing and Managing Goods and Services
121. American Life utilizes portfolios with leather look covers and high-quality paper and printing for its life insurance
policies in order to indicate:
a. the heterogeneity of its services.
b. the intangibility of its service.
c. the perception of its management.
d. the inseparability of its agents and customers.
e. the quality of its services.
122. A _____ is responsible for marketing a product, product line, or several distinct products in an interrelated group
within an organization.
a. venture team
b. brand manager
c. facilities manager
d. product manager
e. line manager
Chapter 11 – Developing and Managing Goods and Services
123. A brand manager in a multiproduct firm would be responsible for:
a. performance of a specific brand.
b. marketing of all brands within a product line.
c. advertising of several distinct products that make up an interrelated group.
d. functioning of all products in a brand line.
e. promotion of all brands manufactured by the firm.
124. If Megan Roberts is entrusted with the complete marketing responsibility of Diet Cherry 7Up, she would hold the
position of _____ manager.
a. product
b. line
c. venture team
d. advertising
e. brand
Chapter 11 – Developing and Managing Goods and Services
125. Luis Mayo is an accountant at Ralston Purina. However, he is currently working with a group of experts to
determine the feasibility of a new brand of hot breakfast cereal. Luis and the experts are also developing a
marketing strategy for the product. After the product is launched, Luis will resume working in the accounting
department. His present position can be described as a:
a. product manager.
b. brand manager.
c. member of a consulting team.
d. member of a venture team.
e. market account manager.
126. Elizabeth, Manuel, Tony, Cynthia, and Alexandra work in the marketing, finance, production, engineering, and R&D
departments of a company respectively. They are collectively assigned to develop a new low-calorie, high-nutrition
snack treat. These five people constitute a(n) _____ at their company.
a. venture team
b. distributed team
c. brand management group
d. focus group
e. product positioning group
Chapter 11 – Developing and Managing Goods and Services
Scenario 11.1
Use the scenario to answer the questions.
Cheetos Fat-free Crunchies is a product developed through continuous innovation. Cheetos engineered a technique
for making low-fat snacks that taste delicious and also remain fresh for a longer duration. It introduced Fat-free
Crunchies in limited markets in 2012 and began nationwide distribution in 2013.
About18monthslater,aseriesofadsbyCheetos’competitorswasairedtocounterclaimthatCheetosCrunchies
actually contained 1.5 grams of fat along with some percentage of preservatives and additives. Research showed
that Cheetos Crunchies was not well-received by certain groups of customers. To retain its consumer base,
Cheetos reduced the remaining fat of Chrunchies to 0 grams, took out the preservatives, and improved the taste.
127. Refer to Scenario 11.1. The new improved Cheetos Fat-Free Crunchies is an example of _____.
a. product bundling
b. aesthetic modification
c. functional modification
d. brand extension
e. innovative modification
128. Refer to Scenario 11.1. Cheetos produces several cheese-based snacks and is keen on developing a new brand of
crackers. This new Cheetos product would most likely be an example of a(n):
a. brand extension.
b. line extension.
c. quality modification.
d. functional extension.
e. aesthetic modification.
Chapter 11 – Developing and Managing Goods and Services
129. Refer to Scenario 11.1. In 2012, which of the following phases of the new-product development process was
Cheetos in?
a. Idea screening
b. Product development
c. Test marketing
d. Business analysis
e. Idea generation
130. Refer to Scenario 11.1. Suppose that Cheetos stops its production of Fat-free Crunchies and sells all of its
remaining inventory to a warehouse club. This would be an example of a(n):
a. strategy for the maturity phase.
b. phase-out product deletion strategy.
c. immediate drop decision.
d. pull-out product deletion policy.
e. return to test marketing.
Chapter 11 – Developing and Managing Goods and Services
Scenario 11.2
Use the scenario to answer the questions.
Jonathan Moore, President of Polar Manufacturing Company, has just reviewed the performance reports for the
previous year and observes that there are certain areas in which the company needs to improve. He specifically
feels that Polar’s product mix can be managed in a more effective way. Jonathan summons a meeting of all the
managers responsible for each of the product lines that Polar currently manufactures. The group reaches a
consensus that the complete industrial product line of ice chests needs to be eliminated. It contemplates to do so by
letting the product decline without making any changes in the marketing strategy or product. The group also decides
to delete Polar’s line of personal thermal underwear within a week, owing to its unprofitability. While discussing
these strategies, the group also uncovers several customer segments at which new products could be targeted. The
managers decide to assemble a group of people from all functional areas of the company and confer them
responsibilities for all aspects of the new-product development.
131. Refer to Scenario 11.2. The Polar management team is currently in the _____ stage of the new-product
development process.
a. idea generation
b. screening
c. concept testing
d. product development
e. test marketing
132. Refer to Scenario 11.2. The decision to delete the industrial product line of ice chests is an example of deleting a
product through a(n) _____, while the decision to drop the thermal underwear line is an example of a(n) _____.
a. run-out; phase-out
b. phase-out; immediate drop
c. immediate drop; run-out
d. immediate drop; phase-out
e. phase-out; run-out
Chapter 11 – Developing and Managing Goods and Services
133. Refer to Scenario 11.2. Since some products are not performing well, Jonathan Moore thinks that the company
should set up a procedure to evaluate each product so that management will know when and how a product should
be eliminated. He is suggesting a:
a. product-drop decision.
b. discontinuance procedure.
c. product deletion strategy.
d. closing system.
e. systematic review.
134. Refer to Scenario 11.2. The group of people that the management has assembled to take on the task of new-
product development can be best described as a:
a. buying center.
b. focus group.
c. virtual team.
d. venture team.
e. brand management team.
Chapter 11 – Developing and Managing Goods and Services
Scenario 11.3
Use the scenario to answer the questions.
The YMCA in mid-town Atlanta has recently upgraded its facilities, which includes construction of a new Olympic-
sized swimming pool and a children’s playground. All locations of the Atlanta “Y” are open from 6:00 am until 11:00
pm, all year round. The children’s playground is accessible for members alone, and is a fenced and secured area.
During the weekdays, children under the age of 12 can engage themselves in recreation activities at the playground
under supervision, for no additional fee. Additionally, swimming lessons are conducted for children of all age groups,
which are also covered under the monthly membership fee. The swimming pool is very popular among
professionals who stop by for a swimming workout before or after work.
Many of the YMCA sites are bustling with activities throughout the day; however, the midtown “Y” is busier during
early morning hours and early evenings. At a recent meeting, Maya Sinclair, its manager, shares her concerns
about getting more people into the “Y” at other times of the day. She asks her staff for ideas on ways to attract
more customers during the off-peak hours. She also declares that the city of Atlanta has reduced YMCA’s funding
for the next year by 20%. This would require the “Y” to either gain additional members or increase its monthly and
annual membership fees per head.
135. Refer to Scenario 11.3. The children who take swimming lessons must be present at the poolside during the time of
their appointment. The need for the children to be present in order to receive the lesson is an example of the _____
feature of a service, while the need for them to be there at the time of their appointment, represents the _____
feature.
a. inseparability; heterogeneity
b. heterogeneity; perishability
c. inseparability; perishability
d. intangibility; perishability
e. intangibility; inseparability
Chapter 11 – Developing and Managing Goods and Services
Scenario 11.4
Use the scenario to answer the questions.
Kaycee is looking for a new company to prepare her tax returns this year. She explores the yellow pages of her
phone book, and browses the Internet to find information about tax preparers in the area. She finds the names and
contact details of several accountants, as well as popular tax preparation companies such as H&R Block and
Jackson Hewitt. Since Kaycee is currently short of money, she decides to approach an accountant rather than the
two popular companies. She finds the contact details of three accountants on the Internet, and visits their respective
offices. The first office is located in an impoverished part of the town, but has an attractive interior and also a
friendly receptionist. The second office is situated in an affluent locality, but does not have any employee other than
the accountant himself. Moreover, the interiors of the office are shabby. The third office that Kaycee visits, is
overall in a better condition with pleasant interiors and well-groomed staff. The accountant seems well-disposed, so
Kaycee selects him for preparing her tax returns.
136. Refer to Scenario 11.4. The accountant whom Kaycee selects to prepare her taxes will most likely require her to
schedule an appointment due to the _____ characteristic of the service. If Kaycee schedules an appointment
during the month of February, the accountant will most likely use _____ when charging for the service.
a. inseparability; time-based pricing
b. inseparability; off-peak demand pricing
c. perishability; bundled pricing
d. perishability; demand-based pricing
e. intangibility; time-based pricing
137. Quality modifications never seek to reduce quality of existing products.
a. True
b. False
Chapter 11 – Developing and Managing Goods and Services
138. Quality modification of an existing product aims at changing the product’s safety, convenience, or versatility.
a. True
b. False
139. Functional modifications usually require that a product be redesigned.
a. True
b. False
140. Functional modifications make an existing product more durable.
a. True
b. False
Chapter 11 – Developing and Managing Goods and Services
141. Functional modifications of existing products help an organization achieve and maintain a progressive image.
a. True
b. False
142. New products are classified solely as innovations that have never been sold by any organization.
a. True
b. False
143. In the idea generation phase of the new-product development process, sales personnel constitute an external source
for new product ideas.
a. True
b. False
Chapter 11 – Developing and Managing Goods and Services
144. The concept testing phase of the new-product development process presents a small sample of potential buyers
with a trial version of a new product to determine their initial reactions.
a. True
b. False
145. The business analysis stage of the new-product development process explores how well a new product fits in with
a firm’s existing product mix.
a. True
b. False
146. The business analysis phase of the new-product development process provides a tentative sketch of a product’s
profitability.
a. True
b. False
Chapter 11 – Developing and Managing Goods and Services
147. An important question in the business analysis stage of the new-product development process is, “Will a new
productmeetanorganization’sprofitgoal?”
a. True
b. False
148. Estimates of sales are an important component of the business analysis stage of the new-product development
process.
a. True
b. False
149. The product development stage of the new-product development process determines the technical feasibility of
producing a new product.
a. True
b. False
Chapter 11 – Developing and Managing Goods and Services
150. Relatively few product ideas are put into the product development stage of the new-product development process
as this stage is frequently lengthy and expensive.
a. True
b. False
151. The test marketing stage of the new-product development process is an extension of the product development
stage.
a. True
b. False
152. Test marketing should be conducted when a product has been given a low probability of success.
a. True
b. False
Chapter 11 – Developing and Managing Goods and Services
153. The new-product development process does not include planning for advertising.
a. True
b. False
154. Test marketing is conducted by companies of all sizes, primarily because of the perceived risk of product failure on
open market and the associated consequences.
a. True
b. False
155. Time spent in test marketing can benefit a firm’s competitors.
a. True
b. False
Chapter 11 – Developing and Managing Goods and Services
156. During the commercialization phase of the new-product development process, plans for full-scale manufacturing
and marketing are refined and settled.
a. True
b. False
157. Designing a product that customers perceive as different from competing products is an example of product
differentiation.
a. True
b. False
158. The concept of product quality is the same for different consumer groups and remains constant across consumer
and business markets.
a. True
b. False
Chapter 11 – Developing and Managing Goods and Services