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BUSML 3250 EXAM 3 (CH11-13,15,18 & 20) QUESTIONS WITH CORRECT ANSWERS
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BUSML 3250 EXAM 3 (CH11-13,15,18 & 20) QUESTIONS WITH CORRECT ANSWERS
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BUSML 3250 EXAM 3 (CH11-13,15,18 &20) QUESTIONS WITH CORRECT
ANSWERS
CH 11 - Answer-Managing Products and Brands
product life cycle - Answer-Describes the stages a new product goes through in the
marketplace:
1. introduction,
2. growth,
3. maturity,
4. decline.
1. introduction - Answer-slow sales growth, basically no profit bc of large investment
costs (so low variations), the whole marketing objective here is to create "consumer
awareness and stimulate trial"
ads + promotion to create "primary demand" (desire for product)
company either uses "skimming strategy" or "penetration pricing"
examples: smart TVs & electric cars
primary demand - Answer-the desire for the product class rather than for a specific
brand, since there are few competitors with the same product
skimming strategy - Answer-high initial price to help the company recover the costs of
development as well as capitalize on the price insensitivity of early buyers
con is that competitors want in w/ high prices
penetration pricing strategy - Answer-Low initial price to convince consumers to try a
product, build market share, and help build unit volume
con be careful of too low price bc you gotta cover costs!
2. growth - Answer-period of rapid market acceptance and increasing sales/profits w/
"repeat purchasers"
changes to product to differentiate btw brands and it is important to broaden distribution
for the product (like fighting for shelf space)
ads + promotion to create "selective demand" (preference for a brand)
,examples: e-book readers and 3D printers
selective demand - Answer-the preference for a specific brand
3. maturity - Answer-Period of slowdown in sales growth due to its acceptance by
market
low competitors leave market but profits still decline because of competition btw among
top sellers (to maintain market share) and cost of gaining new buyers
examples: carbonated soft drinks and presweetened breakfast cereals
4. decline - Answer-the period when sales fall off and profits drop
products here consume expensive resources (financial and management) so
companies either do (1) "deletion or (2) "harvesting"
examples: analog TVs and personal desktops
product deletion - Answer-the elimination of 1(+) products from product line
extreme action, used lightly because some ppl still use these products
harvesting - Answer-when a company retains the product to meet customer demand but
reduces marketing costs
3 aspects of the product life cycle - Answer-1. length
2. shape of their sales curves
3. diff btw product classes and forms
1. length - Answer-no set time that it takes a product to move through its life cycle
in general consumer products have shorter life cycles compared to business products
generalized life cycle - Answer-product life-cycle sales curve
a. high-learning product (education required & extended introductory period)
b. low-learning product (immediate sales so focus on distribution so competitors don't
steal)
c. fashion product (introduced, decline, & return all in months/years/decades)
d. fad product (rapid sales during introduction but then equally rapid decline; think fidget
spinners)
product class - Answer-Refers to the entire product category or industry.
EX. prerecorded music
, product form - Answer-pertains to variations of a product within the product class
EX: cassette tapes, discs, digital music
Diffusion of Innovation Concept - Answer-a product diffuses, or spreads, through the
population
the life cycle of a product depends on sales to consumers. Not all consumers rush to
buy a product in the introductory stage, and the shapes of the life cycle curves indicate
that most sales occur after the product has been on the market for some time.
innovators - 2.5% (higher ed., mult info sources)
early adopters - 13.5% (above avg ed, social leaders)
early majority - 34% (deliberate, # of social contracts)
late majority - 34% (skeptical, below avg social status)
laggards - 16% (fear of debt, friends are info sources)
Common barriers for resisting product in introductory stage - Answer--usage barriers
(product isn't compatible w/ habits)
-value barriers (no incentive to change)
-risk barriers (physical, economic, or social)
-psychological barriers (cultural differences or image)
product managers (brand managers) - Answer-manage marketing of specific products
-develop & execute marketing program, approving ad copy, media selection, and
package design.
-data analysis related to their products: sales, market share, and profit trends. often use
CDI and BDI
Category Development Index (CDI) - Answer-shows if it is an above-avg product
category purchases by market segment (>100) or below-avg purchases (<100)
Brand Development Index (BDI) - Answer-The percentage of a brand's total sales in an
area divided by the total population in the area; it indicates the sales potential of a
particular brand in a specific market area.
product modification - Answer-Involves altering one or more of a product's
characteristics, such as its quality, performance, or appearance, to increase the
product's value to customers and increase sales.
or even product bundling (selling 2+ separate products together)
market modification - Answer-Strategies by which a company tries to (!) find new
customers, (2) increase a product's use among existing customers, or (3) create new
use situations.
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