Chapter 10

Question 1

Product:

Answer 1

A good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received in exchange for money or some other unit of value.

Question 2

Product Line:

Answer 2

A group of products that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range.

Question 3

Stock Keeping Unit (SKU):

Answer 3

Unique identification number for inventory purposes.

Question 4

Product Mix:

Answer 4

Number of product lines offered by a company.

Question 5

Consumer Goods:

Answer 5

Products purchased by the ultimate consumer (Apple Computer)

Question 6

Business Goods:

Answer 6

Products that assist directly or indirectly in providing products for resale

Question 7

3 Categories of Degree Product Intangibility:

Answer 7

1. Non-durable goods: item consumed in one or a few uses (Food products or fuel).
2. Durable Goods: Product that lasts over an extended number of uses, such as appliances, automobiles, and stereo equipment.
3. Services: activities, deeds, or other basic intangibles offered for sale to consumers in exchange for money or something else of value.

Question 8

Types of Goods:

Answer 8

Convenience goods: Items that the customer purchases frequently and within a minimum shopping effort. (Toothpaste, Cake)

Shopping Goods: Items for which the consumer compares several alternatives on such criteria as price, quality, or style. (Cameras, TV’s, Briefcase)

Specialty Goods: Items that a consumer makes a special effort to search out and buy. (Tiffany’s Sterling silver). (Rolls- Royce Cars, Rolex watches, heart surgery)

Unsought Goods: Items that the consumer either does not know about or knows about but does not initially want. (Burial Insurance, Thesaurus)

Product Goods: Items used in the manufacturing process that becomes part of the final product. (Raw materials such as lumber, component parts)

Support Goods: Items used to assist in producing other goods and services. (Installations, accessory equipment supplies and services)
Installations - consist of buildings and fixed equipment. Because a significant amount of capital is required to purchase installations, the business buyer deals directly with construction company and manufacturers through sales representatives. The pricing of installations is often by competitive bidding.

Question 9

Levels of Newness/Innovation:

Answer 9

Lowest Level – Product Line extension (Coke Zero from Coke)

Second Level – Significant jump in innovation or technology (manufacturer offering new cellphone)

Third Level – True innovation, a truly revolutionary product. Apple Computer or IPad Air.

Fourth level – Consumption effects define newness

Question 10

Types of Innovations:

Answer 10

Continuous Innovation: Requires no new learning by customers
New improved shaver, toothpaste

Dynamically Continuous Innovation:
Disrupts customer’s normal routine but does not require totally new learning (Electric Toothbrush, Ketchup bottle redesign)

Discontinuous Innovation:
Requires new learning and consumption patterns by customers

Question 11

Seven Categories of New Services:

Answer 11

1. Major Service Innovations – new core products for which the market had not been previously defined. FedEx overnight delivery, eBay’s online auction.
2. Major Process Innovations – innovative new process to deliver existing core services. Online Colleges and Universities have revolutionized the way we learn Online MBA.
3. Service-line extensions – additions to existing services. Canadian banks now offer insurance offerings.
4. Process line extensions – Greater convenience. Bank offering telephone or Internet banking.
5. Supplementary-service innovations – adding new elements to the core service or improving existing supplementary services to accompany the core services. Value parking for family members visiting their relatives.
6. Basic service improvements – Changing the current service to perform better.
7. Style Changes – does not require any changes in the service core of service process. New uniform, color scheme.

Question 12

New-product process:

Answer 12

The stages a firm uses to identify business opportunities and convert them to a saleable good or service.

Question 13

Stages of new-product process:

Answer 13

1. New product strategy development
2. Idea generation
3. Screening and evaluation
4. Business analysis
5. Development
6. Market testing
7. Commercialization

Question 14

Types of Test Marketing:

Answer 14

1. Standard Test Market : Company develops product and sells it through normal distribution channels in a number of test. Producer sells the products to distributors, wholesalers, and retailers.
2. Controlled Test Market : contracting the entire test program to an outside service.
3. Simulated Test Markets : Laboratory test markets. Public is used, and they are placed into a simulation of the actual process.

Question 15

Slotting fee vs failure fee:

Answer 15

Slotting Fee : A payment a manufacturer makes to place a new item in a retailer’s shelf.

Failure fee : A penalty payment a manufacturer makes to compensate a retailer for failed sales from its valuable shelf space.