END OF CHAPTER MATERIAL
Discussion Questions
8-1 What is a consumer product? Describe the characteristics of each type of consumer product and
give examples of each. (AACSB: Communication; Reflective Thinking)
Answer: Student answers will vary based on their personal response. Refer to the MyLab for an
8-2 Compare and contrast the two dimensions of product quality. (AACSB: Communication)
Answer:
Product quality is one of the marketer’s major positioning tools. Quality has a direct impact on
product or service performance. Thus, it is closely linked to customer value and satisfaction. In the
narrowest sense, quality can be defined as “freedom from defects.” But most customer-centered
companies go beyond this narrow definition. Instead, they define quality in terms of creating
8-3 What is a product line? Discuss the various product line decisions marketers make and how a
company can expand its product line. (AACSB: Communication)
Answer: Student answers will vary based on their personal response. Refer to the MyLab for an
8-4 Discuss brand equity and brand value. How do marketers use these concepts to build powerful
brands? (AACSB: Communication; Reflective Thinking)
Answer:
Brand equity is the differential effect that knowing the brand name has on customer response to the
product and its marketing. It’s a measure of the brand’s ability to capture consumer preference and
loyalty. A brand has positive brand equity when consumers react more favorably to it than to a generic
or unbranded version of the same product. It has negative brand equity if consumers react less
Thus, positive brand equity derives from consumer feelings about and connections with a brand. A
brand with high brand equity is a very valuable asset. Brand value is the total financial value of a
High brand equity provides a company with many competitive advantages. A powerful brand enjoys a
high level of consumer brand awareness and loyalty. Because consumers expect stores to carry the
particular brand, the company has more leverage in bargaining with resellers. Because a brand name
Brands vary in the amount of power and value they hold in the marketplace. Some brands—such as
Coca-Cola, Nike, Disney, GE, McDonald’s, Harley-Davidson, and others—become larger-than-life
8-5 Explain the four choices companies have when developing brands. Provide an example of each.
(AACSB: Communication; Reflective Thinking)
Answer: Student answers will vary based on their personal response. Refer to the MyLab for an
Critical Thinking Exercises
8-6 Walt Disney created the Disney brand from humble beginnings based on his love of drawing and
animation. The Walt Disney Company has since expanded successfully into a global entertainment
and media brand. Using the internet, research the components that make up the Disney brand and
discuss how The Walt Disney Company has expanded its product mix. (AACSB: Communication;
Use of IT; Reflective Thinking)
Answer:
Simply beginning with the Disney website at www.disney.com provides a head start on examining the
Student responses will vary. However discussion should include ways in which the Disney brand has
expanded its initial product offering of animated films to positioning itself as a top competitor in the
According to The Walt Disney Company Web site and Forbes.com, Disney landed in the No. 1 most
powerful brand spot for 2016, with Brand Finance noting that the company’s strength is “founded on
its rich history and original creations. However, its now dominant position is the result of its many
For additional information, visit
thewaltdisneycompany.com/disney-named-worlds-most-powerful-brand/ and
forbes.com/sites/allenadamson/2014/10/15/disney-knows-its-not-just-magic-that-keeps-a-brand-on-to
p/#38c1f05f44ff.
8-7 Companies must consider four special service characteristics when designing service marketing
programs. Discuss a recent service experience using the four characteristics. Compare your service
experience with that of a classmate. How do they differ? (AACSB: Communication, Reflective
Thinking)
Answer: Student answers will vary based on their personal response. Refer to the MyLab for an
8-8 What is “genericide”? Discuss a recent case and make recommendations regarding how marketers can
avoid it. (AACSB: Communication; Reflective Thinking)
Answer:
“Genericide” is a term used to describe the loss of trademark rights when a brand name enters
An example is Google (see
www.forbes.com/sites/ericgoldman/2014/09/15/google-successfully-defends-its-most-valuable-asset-i
n-court/#5a083b5f3f05). A lawsuit was brought against Google in May 2012 in which the plaintiff
registered domain names that included the Google trademark claiming Google has become a verb that
means searching on the internet and is therefore a generic term. The court ruled that even though
people often use the term “google” as a verb to mean searching on the internet, that does not mean
Another case is Costco alleging that “Tiffany setting,” which refers to the iconic Tiffany diamond
Online, Mobile, and Social Media Marketing: Feeding Pets from Your Smartphone
People lead busy lives, often taking time away from their pets. So Petnet has developed the Smartfeeder,
allowing pet owners to schedule feeding times, monitor food intake, and personalize pet nutrition
information. The Smartfeeder measures out the appropriate amount of food for a pet based on age,
activity, and weight. Additional features include the ability to conveniently store five to seven pounds of
pet food in an attached hopper. Petnet has also seamlessly integrated its products with a smartphone app,
available with iOS (Apple) products. Pet owners can now control feeding times, portion sizes, and food
supply and even order pet food to be delivered directly to their homes, all from a mobile device.
8-9 What kind of product is Petnet’s Smartfeeder? How should this type of product be marketed?
(AACSB: Communication; Reflective Thinking)
Answer:
The Petnet Smartfeeder is best classified as a consumer product, used for personal consumption.
More specifically, it can be classified as a shopping product. The buyer will likely evaluate other
products in the market before making a final purchase. Pet owners will likely review quality, prices,
8-10 What are customers really buying when they purchase a Petnet Smartfeeder? Identify the core,
actual, and augmented product levels for this product. (AACSB: Communication; Reflective
Thinking)
Answer:
The core benefit of the Smartfeeder is automated pet feeding and food monitoring. Many consumers
would purchase the product simply for solving this one problem. Petnet’s actual product is the nuts
and bolts, design, packaging, and other features of the Smartfeeder. The augmented product includes
Marketing Ethics: Geographical Indication
Scotch whiskey, Champagne sparkling wine, Parmesan cheese, Dijon mustard—what do all of these have
in common? They are not brand names but rather geographical indicators (GIs) of the origin of these
foodstuffs. Europe has a long history of gastronomical delicacies that the European Union has been strong
to protect for economic reasons. For example, not just any sparkling wine can be labeled “champagne”
because only sparkling wine produced in the Champagne region of France can put that on the label. The
British government is launching a registry of Scottish whiskey makers to protect its $4 billion industry
from imitators who label their whiskey as Scotch. True Scotch must be aged in oak casks in Scotland for
at least three years. Dijon mustard must be produced in Dijon, France, made with chardonnay wine from
the Burgundy wine region. Parmesan cheese was developed more than 2,000 years ago in Parma, Italy,
which also boasts of Parma ham (Prosciutto di Parma). True Swiss cheeses, such as Emmental, Gruyere,
and other varieties, are produced in Switzerland following strict rules to guarantee purity, and the
authorities there identify counterfeits with DNA fingerprinting based on the 10,000 strains of milk
bacteria that are used for authentic Swiss cheeses. All of these come with a higher price tag for
consumers. For example, Portugal Algarve Salt or French Fleur de Sel sea salt cost about $80 per pound
compared with 30¢ per pound for regular table salt.
8-11 Are products with geographical indications actually superior to other similar ones not originating
from that geographical region? Is it ethical for makers of these products to command higher prices
when others can make or grow them just as well? (AACSB: Communication; Reflective Thinking;
Ethical Reasoning)
Answer:
Students’ answers will vary. Some will argue that geographical indications (GIs) are similar to brand
names, which offer consumers several benefits, such as guarantees of quality. Others will argue that it
8-12 Do geographical indications (GIs) offer benefits to consumers? Are there disadvantages for sellers?
Explain. (AACSB: Communication; Reflective Thinking)
Answer:
GIs may offer the same benefits to buyers as do brands. Like brand names, GIs may help consumers
identify products that might benefit them and also say something about product quality and
Marketing by the Numbers: Pop-Tarts Gone Nutty!
Kellogg’s, maker of Pop-Tarts, recently introduced Pop-Tarts Gone Nutty! The new product includes
flavors such as peanut butter and chocolate peanut butter. Although the new Gone Nutty! product will
reap a higher wholesale price for the company ($1.20 per eight-count package of the new product versus
$1.00 per package for the original product), it also comes with higher variable costs ($0.55 per
eight-count package for the new product versus $0.30 per eight-count package for the original product).
8-13 What brand development strategy is Kellogg’s undertaking? (AACSB: Communication; Reflective
Thinking)
Answer:
Pop-Tarts Gone Nutty! is a line extension. A line extension occurs when a company extends existing
Unite d State s
Numb e r o f Bra nds
8-14 Assume the company expects to sell 5 million packages of Pop-Tarts Gone Nutty! in the first year
after introduction but expects that 80 percent of those sales will come from buyers who would
normally purchase existing Pop-Tart flavors (that is, cannibalized sales). Assuming the sales of
regular Pop-Tarts are normally 300 million packages per year and that the company will incur an
increase in fixed costs of $500,000 during the first year to launch Gone Nutty! will the new product
be profitable for the company? Refer to the discussion of cannibalization in Appendix 2: Marketing
by the Numbers for an explanation regarding how to conduct this analysis. (Objective 4) (AACSB:
Communication; Analytical Reasoning)
Answer:
This is a cannibalization problem. To analyze this problem, we need to determine unit contributions:
Kellogg’s will lose $0.05 for every package cannibalized from the original product.
One way to analyze this is to assess the incremental contribution gained (or lost) by adding the new
Contribution lost due to cannibalization = 4,000,000 packages ($0.05)
However, it is estimated that the new product will generate an additional 1 million packages in sales
Contribution due to net new volume = 1,000,000 packages $0.65 per unit
The net effect is that the company will gain $450,000 in contribution by introducing the Pop-Tarts
This increase in total contribution is less than the $500,000 increase in fixed costs to introduce this
Another way to see this is to compare total contribution with and without the introduction of the new
product:
Original Pop-Tarts Pop-Tarts Gone Nutty!
Original Pop-Tarts
300 million packages x $0.70 =
296 million packages x $0.70 =
Pop-Tarts Gone
Nutty!
0 5 million packages. $0.65 =
Notice that the difference in the total contribution is a net gain of $450,000 ($210,450,000
$210,000,000 = $450,000), which we found using the incremental method. Again, because the
Company Case Notes
Airbnb: Making Hospitality Authentic
Synopsis
This case focuses on the hospitality services industry. Airbnb has pulled off a truly amazing rise to market
leadership. Attacking an industry that has been set in stone for more than 100 years, Airbnb has become
bigger than any hotel chain in terms of rooms available, annual revenue, and stock price. And, it has done
it all in less than a decade. Airbnb has accomplished the impossible by focusing on providing a customer
experience that the standardized hotel model simply cannot. By building a network of private property
owners who rent all or part of their homes in a convenient and price competitive manner, Airbnb has
discovered a huge market that previously was left underserved—travelers who want to experience the
world as locals do.
Teaching Objectives
The teaching objectives for this case are to:
1. To learn the four characteristics of services.
2. Gain an understanding of the service-profit chain through application.
3. To be able to apply the concepts of differentiation and positioning to services.
4. To understand the competitive challenges that service providers face.
Discussion Questions
8-18 How do the four characteristics of services apply to Airbnb? How does Airbnb deal with each
characteristic?
Intangible – in a manner similar to the conventional hotel industry, buyers may be
reluctant because they cannot easily or readily assess what the service will be like
because they can not see, touch, or try it out. Airbnb deals with this in various ways:
oPostings feature extensive details about each listing, accompanied by photos.
oAirbnb rating and comment system provides knowledge up front on what
Inseparable – the service is performed at the same location that it is consumed. Because
the customer has to be there, the biggest way that Airbnb has dealt with this is to build
Inconsistent – This characteristic does not affect Airbnb as much as it does standard
hotel chains. In fact, it is one of their competitive advantages. “No two rooms alike” kind
However, Airbnb customers expect consistency in aspects such as property safety,
cleanliness, comfort of beds, and demeanor of hosts. Airbnb provides training and
Inventory (perishable) – This characteristic of services is all about matching supply with
demand at any given point in time, as the performance of a service is inherently linked to
However, perishability is less of an issue for Airbnb than it is for hotel chains because
Airbnb does not own any properties and does not employ any service providers at the
8-19 Apply the service profit chain concept to Airbnb.
The relevance of the service profit chain to Airbnb is a bit different because they do not directly
employ any of the service providers. However, conceptually, the concept still plays out.
Internal service quality. Airbnb hosts must register and be vetted to ensure legitimacy.
Satisfied and productive service employees. Hosts are given good terms. Airbnb provides
Greater service value. Hosts that are profitable and who see the link between the quality
Satisfied and loyal customers. The customer experience determines the level of customer
Healthy service profits and growth. The more bookings hosts make, the more Airbnb
8-20 How does Airbnb differentiate its offer, delivery, and image?
Offer – No two rooms are alike. See the world from the perspective of locals.
Image – Unconventional, out-of-the-box, by the people for the people.
8-21 How much of a threat is competition to Airbnb?
While there are numerous services similar to Airbnb that have developed into large networks, there
are none quite like it. No other property rental/sharing service seems to offer that core element of
Airbnb services—that hosts are there and involved in the customer experience. This aspect of Airbnb
While the conventional hotel chains are building more hotels and rooms in places where adventure
seekers want to be, this is not likely to be much of a threat to Airbnb. They are constrained by costs of
8-22 Will Airbnb last as long as Hilton Worldwide has? Explain.
This one is open for discussion and students will have differing opinions. There is certainly a lot in
However, future generations will likely only be more open to the product sharing than customers are
today. So, the market should grow.
One other threat that the case does not discuss is simply the volatile nature of new markets in a
Teaching Suggestions
Prior to digging in to the details of the case and the discussion questions, generate a discussion based on
students’ experiences with property rental services. Most specifically, focus on Airbnb and possibly
CouchSurfing.com, services that put people in places where
This case was developed for use with Chapter 8. However, this case is very versatile, working well with
numerous other chapters including the customer value chapter (Chapter 1), the marketing environment
chapter (Chapter 3), the consumer behavior chapter (Chapter 5), the new products chapter (Chapter 9),
and the distribution chapter (Chapter 12).
Go to mymktlab.com for the answers to the following assisted-graded writing questions:
8-23 Describe the four characteristics of services that marketers must consider
when designing marketing programs. How do the services offered by a
doctor’s office differ from those offered by a bank?
8-24 List the names of the store brands found in the following stores: Walmart,
Best Buy, and Whole Foods. Identify the private label brands of another
retailer of your choice and compare the price and quality of one of the
products to a comparable national brand.
ADDITIONAL PROJECTS, ASSIGNMENTS, AND EXAMPLES
Projects
1. What is your all-time favorite brand? What do you most like about the product and/or brand name?
What (if anything) do you dislike? What image does the brand have in your mind? How loyal are you
toward the brand? Why? (Objective 2)
2. Go to the supermarket and take a look at the brand extensions that exist for Coke. Do you think this
makes sense or not? When is brand extension a good strategy? When is it a poor one? (Objective 2)
3. Consider Starbucks coffee. Consumers sometimes bond very closely with their preferred brands.
What type of brand equity do you believe they have established over the years? How did this happen?
(Objective 4)
4. What do you like about your bank? How would you compare the services you receive from your bank
to other competing banks and to your “ideal” bank? What is good about the service you currently
receive? Review the service using the material from the chapter. What specifics about the service
make it very good from a marketing standpoint? (Objective 3)
Small Group Assignments
1. Read the chapter-opening vignette on GoPro. Form students into groups of three to five. Each group
should then answer the following questions and share those answers with the class. (Objective 1 and
4)
a. What “product” is GoPro really selling?
b. How does GoPro successfully promote bonding between customers and its products?
c. How would you compare the GoPro “brand” to that of other camera companies? What other
industry might you believe GoPro belongs in?
2. Form students into groups of three to five. Each group should review Table 8.1 (Marketing
Considerations for Consumer Products). Each group should then answer the following questions and
share those answers with the class. (Objective 1)
a. Make a list of five specialty products with which you are familiar (not covered in the book).
Discuss the promotion methods used to reach customers and typical customer buyer behavior.
b. Make a list of five unsought products with which you are familiar, but have little or no interest in
purchasing. Discuss promotion methods that you would employ to successfully market these
products.
Individual Assignments
1. Review the gaming industry in Mississippi. How has that industry positioned itself in the overall
gaming market? How have they attempted to build customer value? How successful do you believe
they have been in this effort? (Objective 2)
2. Take a look at Saab automobiles (http://www.saabcars.com). Discuss the product width, length, depth,
and consistency of the company. (Objective 2)
Think-Pair-Share
Consider the following questions, formulate an answer, pair with the student on your right, share your
thoughts with one another, and respond to questions from the instructor.
1. Define “product.” (Objective 1)
2. Your text states, “The product is a key element in the overall market offering.” What does this
mean? (Objective 1)
3. When a buyer purchases a product, what are they really buying? (Objective 1)
4. What is the difference between shopping goods and specialty goods? (Objective 1)
5. How do products and services really differ? (Objective 3)
Outside Examples
1. In many parts of the world, birth control is an unsought product. Assume you have been given the
task of promoting birth control in a region of the world where it has traditionally been unused. How
would you attempt to make inroads? (Objective 1)
Possible Solution:
This is a very difficult and touchy subject in many societies. Remember, unsought products
are consumer products that the consumer either does not know about or knows about but does not
normally think of buying. It would be important to bring the actual existence of birth control
2. Restaurants embody many of the fundamental service characteristics discussed in the chapter.
Everyone is familiar with fast food and McDonald’s. Visit a local McDonald’s (or other fast food
establishment) and discuss the basic characteristics of service you experienced. (Objective 3)
Possible Solution:
Service characteristics are often difficult for students to fully comprehend. The services we are
dealing with in this situation pertain to the interaction between restaurant employees and the customer
(student). Listed below are basic service characteristics and what students may encounter at
McDonald’s:
Service intangibility means that services cannot be seen, tasted, felt, heard, or smelled
Service inseparability means that services cannot be separated from their providers,
whether the providers are people or machines. Because the customer is also present as the service
Service variability means that the quality of services depends on who provides them as
Service perishability means that services cannot be stored for later sale or use. If you had