Introduction to Business - BA 101-01
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Chapter 13 - Creating and Pricing Products that Satisfy Customers - Review

<< Back to Chapter 13 - Creating and Pricing Products that Satisfy Customers

1) Everything that one receives in an exchange, including all tangible and intangible attributes and expected benefits, is called a product.

2) A good or service that is intended primarily for personal or household use is called a(consumer product.

3) A good or service intended primarily for use in producing other goods or services is a business product.

4) If, in the midst of daily operating activities, Jane Smith finds that the office has run out of paper for the copy machine, she quickly purchases more at the local office supply store. In this case, she is a business customer.

5) For a product such as staples, use of the product determines whether it is a consumer product or a business product.

6) Consumers would most likely treat candy bars as convenience products.

7) Consumer products can be divided into the three categories of shopping, convenience, and specialty.

8) Consumers would most likely treat personal computers as shopping products.

9) Renee collects antique Fabergé eggs. For most of these eggs, only one or a few were created of each design. These Fabergé eggs would best be classified as specialty products.

10) Timber is an example of a raw material that would be used in the production of a physical product.

11) Mama Mia restaurant purchased two large ovens for its kitchen. These ovens are an example of major equipment.

12) A wrench used to make adjustments to machinery that produces copper wire is classified as accessory equipment.

13) Automobile fenders are an example of component parts.

14) When a product experiences sales revenue and profit increases, reaches a peak, and then declines, it goes through what is called a product life cycle.

15) The order of the stages of the product life cycle are introduction, growth, maturity, decline.

16) Characteristics of the introduction stage of the product life cycle include: a) usually, a low profit or even a loss, b) relatively few competitors, c) often, high price, and d) low consumer awareness and acceptance of the product.

17) The marketing challenge of making potential customers aware of the product's existence and its features, benefits, and uses is prevalent in the introduction stage of the product life cycle.

18) The product life cycle stage in which there is a rapid sales increase, other firms have begun to market competing products, and lower unit costs and an overall tendency toward increased profit prevail is called growth.

19) The product life cycle stage in which there is a decrease in the rate of sales growth, the sales curve begins to decline, and dealers simplify their product lines is called maturity.

20) A product usually declines because of technological advances or environmental factors or because consumers have switched to competing brands.

21) When a company changes one or more of a product's characteristics to manage its product mix, it is engaging in product modification.

22) For product modification to be effective, all but which one of the following conditions must be met: a) The modification should make the product more consistent with consumers' desires, b) the product must be modifiable, c) consumers must be able to perceive that a modification has been made, and d)the modification should allow the product to provide greater satisfaction.

23) When Duracell came out with a new battery that significantly outlasted the company's earlier product, the battery had undergone a(n) functional modification.

24) If Tyson, a poultry producer, decided to start producing veggie burgers this would be an example of developing an entirely new product line.

25) Borden, Inc., offers pasta, snacks, grocery, and dairy items as well as films, adhesives, and other nonfood products. These products are referred to as Borden's product mix.

26) When Pepsi introduced Mountain Dew Code Red, it was increasing the depth of a product line.

27) Car-Tunes, a national car stereo retailer, markets stereos and speakers. The company will soon sell car alarms and cellular phones to broaden their product mix.

28) WD-40, Inc., markets only one product, its namesake chemical lubricant. The company offers the product in several different container sizes: smaller ones for household use, larger ones for industrial use. WD-40 would be considered as having a narrow product mix.

29) An aesthetic type of product modification is likely to make the greatest impact on a food product.

30) Companies develop and introduce new products because failing to do so can threaten the future success of the firm.

31) Products that are designed to be similar to and compete with existing products of other firms are called imitations.

32) Entirely new products are called innovations.

33) There are seven stages in the new product development process. They are idea generation, screening, concept testing, business analysis, product development, test marketing, and commercialization.

34) The stage in the evolution of a new product in which a pool of ideas is created is called idea generation.

35) The stage in the evolution of new products in which ideas that match company objectives are analyzed as to whether the firm has the required expertise for the product's development and marketing is called screening.

36) The largest number of product ideas are rejected during the screening stage of new product development.

37) The stage of new product development in which potential customers are presented with a written or oral description of the product to determine their initial attitudes and buying intentions is called concept testing.

38) Borden, Inc., wants to develop a new line of great tasting, low-calorie, low-fat, and low-cholesterol processed cheese products. The managers are studying whether demand is strong enough and whether the new line will yield a favorable return on investment. The managers are currently in the business analysis phase of new product development.

39) Of the seven stages in the evolution of a new product. The stage in which an idea is determined to be technically feasible is product development.

40) Product ideas are transformed into prototypes during the product development stage of the product development process

41) The stage in the evolution of new products in which the product is introduced in a limited way to determine buyers' reactions is called test marketing.

42) A new product should be left in a test market long enough to allow buyers a chance to repurchase the item.

43) The stage in the evolution of new products in which the product is launched into full-scale manufacturing and marketing is called commercialization.

44) A brand is all of the following except an item usually owned by the producer or manufacturer.

45) A brand is a name, term, symbol, design, or any combination of these that identifies a seller's products as distinct from other sellers.

46) The part of a brand that can be spoken—letters, words, numbers, and/or pronounceable symbols—is called a brand name.

47) A symbol or word that is registered with the U.S. Patent and Trademark Office and is thus legally protected from use by anyone but its owner is a trademark.

48) A brand that is owned by a producer is called a manufacturer brand.

49) Equate, a brand of health and beauty care products, is available only at Wal-Mart stores. Equate is a private brand.

50) Generic brands are the least commonly purchased at grocery stores.

51) A generic brand is a product with no brand name at all.

52) Yo-yo, aspirin, and thermos all were once brand names that have since been declared generic terms.

53) A branding strategy in which a firm uses a different brand for each of its products is called individual branding.

54) A branding strategy in which a firm uses the same brand for all or most of its products is called family branding.

55) All of the activities involved in developing and providing a container for a product are called packaging.

56) Multiple packaging does not work well for infrequently used products.

57) To promote an overall company image, Borden dairy products are packaged in similar designs and colors. This approach is known as family packaging.

58) Functions of packaging include consumer convenience, promotion, and added benefits.

59) The presentation of information on a product or its package is known as labeling.

60) A number of federal regulations specify the information that must be included in labeling. Information includes fabric content, safety precautions, ingredient content, and fabric cleaning instructions.

61) A written explanation of the responsibilities of the producer in the event the product is found to be defective or otherwise unsatisfactory is called an express warranty.

62) The amount of money that a seller is willing to accept in exchange for a product, at a given time and under given circumstances, is called the price.

63) The quantity of a product that buyers are willing to purchase at various prices is called demand.

64) Price competition occurs when a seller emphasizes the low price of a product.

65) A major drawback of price competition is that competitors can also lower their prices.

66) Nonprice competition is competition based on factors such as product quality, promotion, customer service, and packaging.

67) Buyers may relate price to quality. To such a buyer, a higher price for a product is an indicator of higher quality.

68) If company A references company B in determining what price to sell its own product at, it exercises the status quo pricing objective.

69) In cost-based pricing, a producer adds an amount to the total production cost to provide a profit. The amount added to the production cost is called a markup.

70) For any product, the breakeven quantity is the number sold such that costs equal revenues.

71) The total amount received from the sales of a product is referred to as total revenue.

72) Costs that are incurred no matter how many units of a product are produced or sold are called fixed costs.

73) Costs that depend on the number of units produced are called variable costs.

74) The sum of the fixed costs and the variable costs of producing a certain number of units is called the total cost.

75) Price differentiation attempts to sell identical products at different times at different prices.<> 76) Demand-based pricing, unlike cost-based pricing, places firms in a better position to attain higher profit levels.

77) Competition-based pricing is used when costs and revenues are considered secondary to competitors' prices.

78) The strategy of setting a low price for a new product to gain a large market share for the product quickly is called penetration pricing.

79) The fact that senior citizens are charged a lower price at movie theaters than are younger adults is an example of differential pricing.

80) The temporary reduction of prices on a patterned or systemic basis is called periodic discounting.

81) The strategy of setting prices at uneven amounts that are slightly below an even or whole number of dollars is called odd-number pricing.

82) The strategy of setting a single price for two or more units is known as multiple-unit pricing.

83) Price leaders are sometimes sold at less than cost in hopes that sales of other products will increase.

84) A pricing strategy in which a manufacturer pays for the shipping cost of its merchandise to the wholesaler is called FOB desstination pricing.

85) A deduction from the price of an item is called a discount.

86) A discount from the list, or retail, price offered to intermediaries, is a(n) trade discount.

87) Discounts given to customers who buy in large amounts are called quantity discounts.

88) Discounts offered to encourage early payment of outstanding accounts are called cash discounts.

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