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ANSWERS TO CHAPTER 8 QUESTIONS
ANSWER 8.1
Customers make the following typical tradeoffs:
A. Quality versus price.
B. Common features versus customization.
ANSWER 8.2
Marketing a product quickly is the best strategy, if the
product is new. Doing so will facilitate: (1) building up the
brand name, (2) creating customer loyalty, (3) retaining
ANSWER 8.3
Some companies elect to pursue the “best follower” strategy
in order to minimize the uncertainties associated with the market
acceptance of new products. As soon as the market for a new
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ANSWER 8.4
One option is to segregate the mechanical aspects
(functionality) of the products from their aesthetic aspects
(look and feel). General Motors is accomplishing this
challenging objective by:
A. Building identical assembly plants for Buicks at four global
locations.
B. Outsourcing major subassemblies to local industries to
minimize import duties and to satisfy local content laws.
ANSWER 8.5
One possible strategy for ABC Company to consider is to (1)
acquire a couple of small competitors to establish a foothold in
ANSWER 8.6
The company has some short-term and long-term options to deal
with the potential threats posed by this new competitor.
The short-term options are:
A. Slash the product prices to a level lower than those offered
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B. Establish a second brand, which carries a different product
name and is sold at the same low price offered by the new
competitor, to eliminate any reason for the company’s current
C. Add value by increasing the efforts of managing customer
relations in order to increase the switching costs (e.g., setting
up Extranet, direct order line and programs, and special service
personnel devoted to major customers).
ANSWER 8.7
In order to introduce the products, it is advisable to
conduct product promotion by advertisement (1) on National TV,
ANSWER 8.8
To promote the company’s current product in a new market
segment, select advertisement mediums suitable for the new
segment (e.g., product exhibitions, magazines, newspapers, etc.).
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To launch a new product in an existing market segment, use
current sales channels to cross-sell. Other steps include (1)