Chapter 12 Developing and Pricing Products
1) What happens when companies extend their horizons and identify opportunities outside existing product lines?
A) Disconnected product lines
B) Multiple product lines
C) Uniform product lines
D) Universal product lines
E) Tailored product lines
Answer: B
Explanation: B) Many marketers extend their product lines to include multiple, or diversified, product lines. Starbucks, for example, has a line of home brewing equipment, a line of supermarket products, a line of music, etc.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.1: Explain the definition of a product as a value package and classify goods and services.
2) Which defining word or phrase below BEST captures the meaning of capital items?
A) Bulk loads
B) Directly used in the production process
C) To the consumer within a year
D) Longer lasting
E) Governmental purchase
Answer: D
Explanation: D) Capital items are permanent goods or services and they have expected lives of more than a year and typically several years.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.1: Explain the definition of a product as a value package and classify goods and services.
3) When developing the marketing mix, what is the basis for any successful marketing strategy?
A) Customer needs and wants
B) Value packaging
C) Product mix offerings
D) Features and benefits
E) Offering the best product for the least amount of money
Answer: A
Explanation: A) In developing the marketing mix for any product, whether goods or services, marketers must consider what customers really want when they purchase products. Only then can these marketers plan strategies effectively.
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.1: Explain the definition of a product as a value package and classify goods and services.
4) What are the benefits and features associated with a product called?
A) Product features
B) Benefits
C) Service
D) Convenience benefit
E) Value package
Answer: E
Explanation: E) Increasingly, buyers expect to receive products with greater value—with more benefits and features at reasonable costs—so firms must compete on the basis of enhanced value packages.
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.1: Explain the definition of a product as a value package and classify goods and services.
5) Which of the following BEST describes product features?
A) All attributes and features of the product taken together
B) Tangible and intangible quality built into the product
C) Intangible benefits that increase customer satisfaction
D) Speed and convenience of a buyer interaction
E) Benefits that are used directly in the conversion of a process
Answer: B
Explanation: B) Product features are the qualities, tangible and intangible that a company builds into its products.
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.1: Explain the definition of a product as a value package and classify goods and services.
6) What are products that are consumed rapidly and regularly classified as?
A) Industrial goods
B) Shopping goods
C) Specialty goods
D) Convenience goods
E) Production goods
Answer: D
Explanation: D) Convenience goods (such as milk and newspapers) and convenience services (such as those offered by fast-food restaurants) are consumed rapidly and regularly. They are inexpensive and are purchased often and with little input of time and effort.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.1: Explain the definition of a product as a value package and classify goods and services.
7) What type of consumer good is more expensive and therefore receives more evaluation of alternatives before the purchase is made?
A) Specialty goods
B) Production items
C) Shopping goods
D) Expense items
E) Capital items
Answer: C
Explanation: C) Shopping goods (such as appliances and mobile devices) and shopping services (such as hotel or airline reservations) are more expensive and are purchased less often than convenience products. Consumers often compare brands, sometimes in different stores and via Internet searches. They may also evaluate alternatives in terms of style, performance, color, price, and other criteria.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.1: Explain the definition of a product as a value package and classify goods and services.
8) In addition to cost, how are industrial products divided into product categories?
A) What area of the organization will use them
B) Competitive nature of acquiring the item
C) Availability
D) How they will be used
E) How easily the item can be turned into a consumable good
Answer: D
Explanation: D) Depending on how much they cost and how they will be used, industrial products can be divided into three categories.
Difficulty: Difficult
AACSB: Analytical thinking
Objective: 12.1: Explain the definition of a product as a value package and classify goods and services.
9) What is the grouping of products available for sale by a company called?
A) Product line
B) Capital mix
C) Goods and services
D) Specialty goods
E) Product mix
Answer: E
Explanation: E) The group of products that a company makes available for sale, whether consumer, industrial, or both, is its product mix.
Difficulty: Easy
AACSB: Application of knowledge
Objective: 12.1: Explain the definition of a product as a value package and classify goods and services.
10) Which of the following represents the group of products that are closely related or are sold to the same customer group?
A) Product line
B) Specialty product
C) Product mix
D) Convenience mix
E) Production mix
Answer: A
Explanation: A) A group of products that are closely related because they function in a similar manner or are sold to the same customer group who will use them in similar ways is a product line.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.1: Explain the definition of a product as a value package and classify goods and services.
11) What can a company do to offset the consequences of slow sales in a product line?
A) Limit the use of capital items.
B) Diversify the product line.
C) Add convenience goods.
D) Increase the use of shopping goods available to consumers.
E) Reclassify specialty products as convenience products.
Answer: B
Explanation: B) Multiple product lines allow a company to grow rapidly and can help offset the consequences of slow sales in any one product line.
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.1: Explain the definition of a product as a value package and classify goods and services.
12) A product's features may be intangible.
Answer: TRUE
Explanation: Product features are the qualities, tangible and intangible, that a company builds into its products.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.1: Explain the definition of a product as a value package and classify goods and services.
13) A value package consists of an in-store advertisement that makes the product attractive and identifies features and benefits.
Answer: FALSE
Explanation: Today's customer regards a product as a value package that includes a bundle of attributes, benefits, and features. A product's packaging makes it attractive and identifies its features and benefits.
Difficulty: Easy
AACSB: Application of knowledge
Objective: 12.1: Explain the definition of a product as a value package and classify goods and services.
14) Shopping goods are purchased more often than convenience goods.
Answer: FALSE
Explanation: Shopping goods, by definition, are more expensive and purchased less often than convenience goods. Examples of shopping goods are mobile devices and appliances. Examples of convenience goods are milk, bread, and newspapers.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.1: Explain the definition of a product as a value package and classify goods and services.
15) A doctor's office buys a multifunction printer. This purchase is an example of a capital item.
Answer: TRUE
Explanation: Capital items, including computer equipment, are expected to last for several years. In contrast, the paper used in the printer would be an expense item.
Difficulty: Easy
AACSB: Application of knowledge
Objective: 12.1: Explain the definition of a product as a value package and classify goods and services.
16) How does a product mix differ from a product line?
Answer: A product mix is the group of products that a firm makes available for sale. A product line is a group of similar products intended for a similar group of buyers who will use the product in similar ways. A company will have only one product mix but may have multiple product lines.
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.1: Explain the definition of a product as a value package and classify goods and services.
17) How do expense items differ from capital items?
Answer: Expense items are goods or services that are consumed within a year by firms producing other goods or supplying other services. Capital items are permanent goods and services that usually have expected lives of more than a year. How these items are used determines their classification.
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.1: Explain the definition of a product as a value package and classify goods and services.
18) Assuming a company has been gathering ideas for new products, what is the next step in the development process?
A) Test marketing
B) Prototype development
C) Business analysis
D) Concept testing
E) Screening
Answer: E
Explanation: E) The sequential steps in the product development process are idea generation, screening, concept testing, business analysis, prototype development, product testing and test marketing, and commercialization.
Difficulty: Easy
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
19) Which of the following activities describes the development stage of commercialization?
A) Building a prototype
B) Testing the product to see if it meets performance requirements
C) Selling the product on a trial basis in limited areas
D) Beginning full-scale production and marketing
E) Testing consumer reaction to the product in limited areas
Answer: D
Explanation: D) Commercialization involves beginning full-scale production and marketing. This stage can be quite expensive, so it follows creation of a prototype, testing the product, and test marketing.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
20) In which of the following ways is product development different for services than for physical goods?
A) Instead of gathering product ideas, the company goes immediately to the testing phase.
B) Instead of screening ideas, the company tests all of them, since no prototype is needed.
C) Instead of creating a prototype, the company develops a service process design.
D) The business analysis step is not needed, since there are no production costs with services.
E) The commercialization step is gradual for services, but rapid for physical goods.
Answer: C
Explanation: C) The processes are basically the same for physical goods and services, except that the search for service ideas includes defining the service value package, and prototype development is replaced with a three-part service process design.
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.2: Describe the new product development process.
21) What is frequently the most time-consuming stage of product development?
A) Testing
B) Market analysis
C) Design
D) Speed to market
E) Product idea
Answer: A
Explanation: A) Testing, both for FDA approval and for marketing, can be the most time-consuming stage of development.
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.2: Describe the new product development process.
22) On average, how many new product ideas are needed to generate one that reaches the consumer market?
A) 25
B) 50
C) 75
D) 100
E) 500
Answer: B
Explanation: B) It is estimated that it takes 50 new product ideas to generate one product that finally reaches the market. Even then, only a few of these survivors become successful products.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
23) After a new product is developed, about 9 out of 10 fail for what reason?
A) Cost
B) Minimal marketing efforts
C) Lack of significant difference
D) The product is to regional
E) Failure in FDA testing
Answer: C
Explanation: C) About 9 out of 10 new products fail each year because of lack of space or weak customer demand. The single greatest factor in product failure is the lack of significant difference (i.e., the new product is very similar to or imitates, an existing product).
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
24) How can a company establish market leadership for a product?
A) Introduce the product with a lower price than competitors.
B) Do not introduce the product until success is certain.
C) Be sure the product supports the overall goals and strategies of the organization.
D) Introduce the product before competitors.
E) Introduce a product that supports the rest of the product line.
Answer: D
Explanation: D) The more rapidly a product moves from the laboratory to the marketplace, the more likely it is to survive. By introducing new products ahead of competitors, companies establish market leadership.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
25) Why is speed to market critical to market demand?
A) It reduces overall cost of product development.
B) It allows more time for product recalls.
C) It allows the company to conduct more concept testing.
D) It produces stronger outcomes on the business analysis process.
E) It allows the company to become entrenched in the marketplace.
Answer: E
Explanation: E) One study reports that a product that is only three months late to market (three months behind the leader) loses 12 percent of its lifetime profit potential. After a six-month delay, it will lose 33 percent.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
26) During what step of the product development stage does the firm consider how well a product or idea supports the firm's objectives?
A) Screening
B) Concept testing
C) Prototype development
D) Benefits analysis
E) Product idea
Answer: A
Explanation: A) The screening stage is designed to eliminate ideas that do not mesh with the firm's abilities or objectives.
Difficulty: Easy
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
27) During which step of the product development stage does a company conduct market research on benefits and prices?
A) Screening
B) Concept testing
C) Prototype development
D) Benefits analysis
E) Product idea
Answer: B
Explanation: B) Once ideas have been screened, companies use market research to get consumers' input about benefits and prices. Early test results for similar products by other companies indicated that Merck's product concept offered acceptable scientific chances for possible commercialization.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
28) Why do firms conduct product testing?
A) To determine potential profitability of the product
B) To allow for gradual commercialization over time
C) To ensure the prototype meets performance requirements
D) To determine how well the product fits in with the goals of the organization
E) To determine the potential reaction of consumers
Answer: C
Explanation: C) Applying lessons from the prototype, the company goes into limited production. It then tests the product to see if it meets performance requirements.
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.2: Describe the new product development process.
29) What is the next step in the product development process when test marketing is positive for a product?
A) Prototype development
B) Business analysis
C) Concept testing
D) Commercialization
E) Product diversification
Answer: D
Explanation: D) If test marketing proves positive, the company begins full-scale production and marketing. Gradual commercialization, with the firm providing the product to more and more areas over time, prevents undue strain on initial production capabilities.
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.2: Describe the new product development process.
30) Which of the following includes the tangible and intangible features that characterize a service?
A) Process selection
B) Service process design
C) Product life cycle
D) Benefits
E) Service value package
Answer: E
Explanation: E) The search for service ideas includes defining the service value package, identifying the tangible and intangible features that characterize the service and stating service specifications.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
31) A company that buys products to use to produce or create other goods or services is a(n)
A) convenience buyer.
B) consumer.
C) industrial buyer.
D) capital buyer.
E) rebrander.
Answer: C
Explanation: C) An industrial buyer is a company or other organization that buys products for use in producing other products (goods or services).
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.2: Describe the new product development process.
32) Which of the following best describes production items?
A) Goods consumed within a year by an organization
B) Goods that are specific in nature and where no substitute will be accepted
C) Goods that are consumed rapidly and regularly
D) Goods used in the conversion process
E) Goods consumed within a year by the buyer
Answer: D
Explanation: D) Production items are goods or services that are used directly in the conversion (production) process, such as petroleum that is converted into gasoline, and passenger demand information that is converted into bus or train services.
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.2: Describe the new product development process.
33) When a consumer knows what they want to buy and is not willing to accept a substitute, what type of consumer product is being sought?
A) Production goods
B) Shopping goods
C) Convenience goods
D) Expense goods
E) Specialty goods
Answer: E
Explanation: E) Specialty goods (such as wedding gowns) and specialty services (such as catering for wedding receptions or healthcare insurance) are extremely important and expensive purchases. Consumers usually decide on precisely what they want and will accept no substitutes. They often go from source to source, sometimes spending a great deal of money and time to get a specific product.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
34) What is the difference between a specialty good and a specialty service?
A) A specialty service is an intangible item.
B) A specialty good costs more than a specialty service.
C) A specialty service is often compared to other services before purchase.
D) A specialty good can be compared to other items using the Internet.
E) A specialty service is purchased regularly.
Answer: A
Explanation: A) Specialty goods (such as wedding gowns) and specialty services (such as catering for wedding receptions or healthcare insurance) are extremely important and expensive purchases. Consumers usually decide on precisely what they want and will accept no substitutes. They often go from source to source, sometimes spending a great deal of money and time to get a specific product.
Difficulty: Easy
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
35) Consumers often spend a great deal of time and money doing research to purchase a specific service. These consumer products are referred to as
A) production services.
B) specialty services.
C) convenience services.
D) industrial services.
E) shopping services.
Answer: B
Explanation: B) Consumers usually decide on precisely what they want and will accept no substitutes. They often go from source to source, sometimes spending a great deal of money and time to get a specific product.
Difficulty: Easy
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
36) Most ideas for new products eventually reach the market.
Answer: FALSE
Explanation: According to the chapter, it takes an estimated 50 new product ideas to generate one product that finally reaches the market.
Difficulty: Easy
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
37) Speed to market increases the chance that a new product will survive.
Answer: TRUE
Explanation: The more rapidly a product moves from the laboratory to the marketplace, the more likely it is to survive. Speed to market establishes market leadership before competitors arrive on the scene.
Difficulty: Easy
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
38) The process of product development begins with concept testing.
Answer: FALSE
Explanation: The seven sequential steps of the development process are product ideas, screening, concept testing, business analysis, prototype development, product testing and test marketing, and commercialization.
Difficulty: Easy
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
39) A private brand is a brand name developed by a wholesaler or retailer for their product.
Answer: TRUE
Explanation: A private brand is created when a wholesaler or retailer develops a brand name and has a manufacturer put it on a product. An example is Sears, which carries the brand of Kenmore appliances.
Difficulty: Easy
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
40) Sears' Craftsman Tools is an example of a private brand.
Answer: TRUE
Explanation: When a wholesaler or retailer develops a brand name and has a manufacturer put it on a product, the resulting name is a private brand.
Difficulty: Easy
AACSB: Analytical thinking
Objective: 12.2: Describe the new product development process.
41) Packaging can serve as an in-store advertisement that makes the product attractive, displays the brand name, and identifies features and benefits.
Answer: TRUE
Explanation: In addition, advances in materials have created added uses—such as the use of the paper—based material that doubles as a cooking container for Budget Gourmet dinners.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
42) The marketing process to the consumer is significantly different than the marketing process for the industrial buyer.
Answer: TRUE
Explanation: The consumer and industrial buying processes differ significantly. Similarly, marketing products to consumers is vastly different from marketing products to companies and other organizations.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
43) Consumers will often spend a great deal of time and money to find a specialty good and will generally not accept a substitute.
Answer: TRUE
Explanation: Consumers usually decide on precisely what they want and will accept no substitutes. They often go from source to source, sometimes spending a great deal of money and time to get a specific product.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
44) Why is new product development expensive?
Answer: Mortality rates for new ideas are high, so only a few products reach the market out of many ideas generated. Also, speed to market is often as important as care in developing a product, so companies must move fast as well as carefully. These are the two reasons given in the chapter in answer to the question of why firms devote so many resources to R&D.
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.2: Describe the new product development process.
45) Where do organizations get new product ideas?
Answer: Ideas typically come from consumers, the sales force, R&D departments, suppliers, and engineering personnel. These are the sources mentioned in the chapter. Students may identify other sources as well.
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.2: Describe the new product development process.
46) What is involved in service process design?
Answer: The design involves three parts. First, process selection identifies each step in the service, including sequence and timing. Second, worker requirements are employee behaviors, skills, capabilities, and interactions with customers during the service encounter. Finally, facility requirements designate all the equipment needed to support the delivery of services. Instead of prototype development, services require a three-part service process design: (1) process selection; (2) worker requirements; and (3) facility requirements.
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.2: Describe the new product development process.
47) Why is speed to market so important?
Answer: According to the textbook, one study reports that a product that is only three months late to market (three months behind the leader) loses 12 percent of its lifetime profit potential. At six months, it will lose 33 percent. Another term is time compression that captures a firm's speed in responding to consumer needs.
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.2: Describe the new product development process.
48) Discuss the difference between production items, expense items, and capital items.
Answer: Production items are goods or services that are used directly in the conversion (production) process, such as petroleum that is converted into gasoline, and passenger demand information that is converted into bus or train services. Expense items are goods and services that are consumed within a year by organizations producing other goods or supplying other services. The term expense items stems from the tradition of accounting in which expenditures are classified as either (1) expense items or (2) capital items, depending on how quickly they are consumed. Capital items are longer-lasting (expensive and sometimes permanent) goods and services. They have expected lives of more than a year; they typically are expected to last several years.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.2: Describe the new product development process.
49) What is selling the rights to place a brand name on products such as t-shirts referred to as?
A) International branding
B) National branding
C) Private branding
D) Regional branding
E) Licensed branding
Answer: E
Explanation: E) Marketers exploit brands for their public appeal and need to license their brands.
Difficulty: Easy
AACSB: Application of knowledge
Objective: 12.3: Describe the stages of the product life cycle (PLC) and methods for extending a product's life.
50) When a wholesaler or retailer develops a brand name and has the manufacturer place that name on the product, what is that product name called?
A) National brand
B) Private brand
C) Luxury brand
D) Licensed brand
E) Manufacturer brand
Answer: B
Explanation: B) Examples of private brands include Craftsman tools and Canyon River Blues denim clothing.
Difficulty: Easy
AACSB: Application of knowledge
Objective: 12.3: Describe the stages of the product life cycle (PLC) and methods for extending a product's life.
51) During the product life cycle, when do sales begin to climb and the product begin to show profit?
A) Ascending
B) Mature
C) Initial
D) Growth
E) Accelerated
Answer: D
Explanation: D) In the growth stage, sales start to climb rapidly if the new product attracts enough consumers. The product starts to show profit, and other firms move rapidly to introduce their own versions.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.3: Describe the stages of the product life cycle (PLC) and methods for extending a product's life.
52) During the product life cycle, when do sales begin to slow down even though profit levels are high?
A) Decline
B) Maturity
C) Introduction
D) Growth
E) Promotion
Answer: B
Explanation: B) Sales start to slow in the maturity stage. Although the product earns its highest profit level early in this stage, increased competition eventually forces price cutting and lower profits.
Difficulty: Easy
AACSB: Application of knowledge
Objective: 12.3: Describe the stages of the product life cycle (PLC) and methods for extending a product's life.
53) How can a firm increase the life of a product without involving product changes?
A) Product extension
B) Product adaption
C) Rebranding
D) New product placement
E) Reintroduction
Answer: A
Explanation: A) In product extension, an existing product is marketed globally instead of just domestically.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.3: Describe the stages of the product life cycle (PLC) and methods for extending a product's life.
54) Using symbols and names to communicate the qualities of a product is a function of what?
A) Awareness
B) Reintroduction
C) Product adaptation
D) Product extension
E) Branding
Answer: E
Explanation: E) Brands are designed to signal uniform quality and customers who try and like a product can return to it by remembering its name or its logo.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.3: Describe the stages of the product life cycle (PLC) and methods for extending a product's life.
55) What is one of the key benefits to successful branding?
A) Brand extension
B) Brand loyalty
C) Preferred product placement
D) Ease of licensing
E) Ease in adaptation
Answer: B
Explanation: B) Several benefits result from successful branding including brand loyalty and brand awareness, and supports the brand name that first comes to mind when you consider a particular product category.
Difficulty: Moderate
AACSB: Application of knowledge
Objective: 12.3: Describe the stages of the product life cycle (PLC) and methods for extending a product's life.
56) In additional to social networking and viral marketing, how do firms successfully increase brand awareness?
A) Reintroduction
B) Globalization
C) Rebranding
D) Product placement
E) Packaging
Answer: D
Explanation: D) In addition to using viral marketing and social networking, recent successes have been found with product placements.
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.3: Describe the stages of the product life cycle (PLC) and methods for extending a product's life.
57) Which of the following best describes product placement?
A) Placing products on the shelf where they receive the most attention
B) Identifying specific products for viral marketing campaigns
C) Placing products in movies and television shows
D) Placing a national brand next to a store brand for better comparison
E) Determining if a product should be sold only online or only in brick and mortar shops
Answer: C
Explanation: C) Product placement is a promotional tactic for brand exposure in which characters in television, film, music, magazines, or video games use a real product with a brand visible to viewers.
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.3: Describe the stages of the product life cycle (PLC) and methods for extending a product's life.
58) Which of the following indicated a firm sold the rights to put their name on a product not produced by them?
A) Asset brands
B) National brands
C) Licensed brands
D) Private brands
E) Private labels
Answer: C
Explanation: C) We have become used to companies (and even personalities) selling the rights to put their names on products. These are called licensed brands.
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.3: Describe the stages of the product life cycle (PLC) and methods for extending a product's life.
59) Which of the following best describes a private label brand?
A) A retailer uses packaging as a form of advertising.
B) A retailer develops a brand name and has a manufacturer put it on a product.
C) A manufacturer puts its name on an unrelated product for a fee.
D) A brand name is used throughout a series of products made by the same manufacturer.
E) A brand is reintroduced in a new, often global, market.
Answer: B
Explanation: B) When a wholesaler or retailer develops a brand name and has a manufacturer put it on a product, the resulting name is a private brand (or private label).
Difficulty: Moderate
AACSB: Analytical thinking
Objective: 12.3: Describe the stages of the product life cycle (PLC) and methods for extending a product's life.
60) How do customers most benefit from packaging design?