COMMUNICATION, POSITIONING, CONSUMER BEHAVIOUR,

PRICE, MARKET RESEARCH, PRODUCT

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1. 120) Name and Answer: Three alternatives to competitive branding are as follows:
briefly explain 1) Brand narratives and storytelling: Rather than outlining specific attributes or benefits, some marketing experts
three less- describe positioning a brand as telling a narrative or story.
structured 2) Brand journalism: Just as editors and writers for newspapers and magazines tell many facets of a story to
alternatives to capture the interests of diverse groups of people, marketers should communicate different messages to different
competitive market segments, as long as they at least broadly fit within the basic broad image of the brand.
brand 3) Cultural branding: For companies to build iconic, leadership brands, they must assemble cultural knowledge,
positioning. strategize according to cultural branding principles, and hire and train cultural experts.
2. 120) What are Answer: The marketing communications mix consists of eight major modes of communication:
the elements of
the marketing 1. Advertising — Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an
communications identified sponsor via print, broadcast, network, electronic, and display media.
mix?. 2. Sales promotion — A variety of short-term incentives to encourage trial or purchase of a product or service
including consumer promotions, trade promotions, and business and sales force promotions.
3. Events and experiences — Company-sponsored activities and programs designed to create daily or special
brand-related interactions with consumers, including sports, arts, entertainment, and cause events as well as less
formal activities.
4. Public relations and publicity — A variety of programs directed internally to employees of the company or
externally to consumers, other firms, the government, and media to promote or protect a company's image or its
individual product communications.
5. Direct marketing — Use of mail, telephone, fax, e-mail, or Internet to communicate directly with or solicit
response or dialogue from specific customers and prospects.
6. Interactive marketing — Online activities and programs designed to engage customers or prospects and directly
or indirectly raise awareness, improve image, or elicit sales of products and services.
7. Word-of-mouth marketing — People-to-people oral, written, or electronic communications that relate to the
merits or experiences of purchasing or using products or services.
8. Personal selling — Face-to-face interaction with one or more prospective purchasers for the purpose of making
presentations, answering questions, and procuring orders
3. 121) Briefly The macromodel of the communications process has nine key factors in effective communication. Two represent
describe the the major parties — sender and receiver. Two represent the major tools — message and media. Four represent
macromodel of major communication functions — encoding, decoding, response, and feedback. The last element in the system is
the marketing noise, random and competing messages that may interfere with the intended communication. Senders must know
communications what audiences they want to reach and what responses they want to get. They must encode their messages so the
process. target audience can decode them. They must transmit the message through media that reach the target audience
and develop feedback channels to monitor the responses. The more the sender's field of experience overlaps that
of the receiver, the more effective the message is likely to be.
4. 128) What are Answer:
the steps 1. Identify target audience
involved in 2. Determine objectives
developing 3. Design communications
effective 4. Select channels
marketing 5. Establish budget
communications? 6. Decide on media mix
7. Measure results
8. Manage integrated marketing communications
5. 138) How do the stages of buyer Answer: Communication tools vary in cost-effectiveness at different stages of buyer readiness.
readiness affect the composition Advertising and publicity play the most important roles in the awareness-building stage.
of a product's marketing Customer comprehension is primarily affected by advertising and personal selling. Customer
communications mix? conviction is influenced mostly by personal selling. Closing the sale is influenced mostly by
personal selling and sales promotion. Reordering is also affected mostly by personal selling
and sales promotion, and somewhat by reminder advertising.
6. 140) Karl Lipton is marketing Answer: Mobile phones have relatively short life cycles. In the introduction stage of the phones'
communications coordinator for a life cycle, advertising, events and experiences, and publicity have the highest cost-effectiveness.
major electronics manufacturer. In-store personal selling helps improve distribution coverage, while sales promotions such as
He is assigned with charting out a discounted accessories, freebies etc., help induce trial. In the growth stage, demand has its own
communications strategy for a momentum through word of mouth and interactive marketing. Web sites are effective tools
new range of mobile phones during the growth stage. As the phones reach the maturity stage, advertising, promotional events
developed by his company. How and experiences, and personal selling again become more important. As the phones enter the
will Karl's communications decline stage of their life cycle, sales promotion takes over as the most important tool in the
strategy look like over the course marketing communications mix, even as other communication tools are reduced, and
of the mobile phones' life cycle? salespeople give the phones only minimal attention.
7. 141) Briefly describe the process Answer: Senior managers want to know the outcomes and revenues resulting from their
of measuring the results of communications investments. Too often, however, their communications directors supply only
marketing communications. inputs and expenses: press clipping counts, numbers of ads placed, media costs. In fairness,
communications directors try to translate inputs into intermediate outputs such as reach and
frequency (the percentage of target market exposed to a communication and the number of
exposures), recall and recognition scores, persuasion changes, and cost-per-thousand
calculations. Ultimately, behavior-change measures capture the real payoff.

After implementing the communications plan, the communications director must measure its
impact. Members of the target audience are asked whether they recognize or recall the message,
how many times they saw it, what points they recall, how they felt about the message, and what
are their previous and current attitudes toward the product and the company. The communicator
should also collect behavioral measures of audience response, such as how many people
bought the product, liked it, and talked to others about it.
8. 142) What is integrated marketing Answer: Many companies still rely on only one or two communication tools. This practice
communications? What is its persists in spite of the fragmenting of mass markets into a multitude of minimarkets, each
significance in the current requiring its own approach; the proliferation of new types of media; and the growing
marketing environment? sophistication of consumers. The wide range of communication tools, messages, and audiences
makes it imperative that companies move toward integrated marketing communications.
Companies must adopt a "360-degree view" of consumers to fully understand all the different
ways that communications can affect consumer behavior in their daily lives.

The American Marketing Association defines integrated marketing communications (IMC) as "a
planning process designed to assure that all brand contacts received by a customer or prospect
for a product, service, or organization are relevant to that person and consistent over time." This
planning process evaluates the strategic roles of a variety of communications disciplines—for
example, general advertising, direct response, sales promotion, and public relations—and
skillfully combines these disciplines to provide clarity, consistency, and maximum impact
through the seamless integration of messages.
9. Abraham Maslow sought to explain why people are driven by Answer: Maslow's hierarchy of needs in order of importance
particular needs at particular times. Describe Maslow's hierarchy are, physiological needs, safety needs, social needs, esteem
of needs. How does Maslow's theory help marketers? needs, and self-actualization needs. Maslow's theory helps
marketers understand how various products fit into the plans,
goals, and lives of consumers
10. Alan is an executive with an ad agency that has been entrusted Answer: All the four classic response hierarchy models
with accounts for a used-car showroom, a home appliances maker, assume that the buyer passes through cognitive (learn),
and a soap company. With reference to response hierarchy affective (feel), and behavioral stages (do), in that order. Since
models, how does Alan plan communication strategies for the buying a car, used or new, represents a significant investment
three accounts effectively? for the buyer, it can be said that the buyer has involvement in
the purchase decision and perceives high differentiation with
the product category. Hence a "learn-feel-do" sequence is
considered appropriate for the used-car showroom account.

Similarly, a buyer intending to purchase home appliances,

such as a dishwasher or a refrigerator, has high involvement in
the purchase decision, even though he perceives little
differentiation within the product category. Hence, a "do-feel-
learn" approach may be appropriate when planning
communications for the home appliances account.

Finally, a buyer has low involvement in purchasing soap that

has very little differentiation within its category. For the soap
company account, Alan should consider a "learn-do-feel"
sequence for planning communications.
11. As a marketing manager of Kids Care, a manufacturer of baby Answer: Student answers will vary. Tim selects 8 first time
soaps, Tim plans to analyze customer attitudes by using the focus mothers who can adequately represent the users you want to
group research approach. How will he conduct the research in this target. He also appoints a skilled moderator to facilitate the
case? discussion among these women to ensure everyone
participates and stays on track. The moderator provides
questions based on the "script" prepared by Tim. The
discussions are recorded for further analysis.
12. As a marketing researcher of Matrix Private Limited you have Answer: Here the researcher needs to study the effect of the
been asked to forecast the demand for your new range of body discount on the demand for body wash. The objective of this
wash if a discount of 10 percent is offered on each unit sold. research is to establish the cause and effect relationship
Identify the research category into which this market research between the discount and the demand for body wash.
falls. Therefore, this can be categorized as causal research.
13. As the newest member of the marketing department, your Answer: This is an example of the company trying a "two-way
immediate boss asks you to comment on the company's proposal stretch"—introducing products at both ends of the consumer
to add two new shoes to the company's middle-of-the-road market simultaneously.
pricing and product-line strategies. The first pair will retail for $
40.00 and has as its target market the "bargain" shopper. The
second pair will retail for $ 200.00 and is targeted at the
"sophisticated shopper." In relation to product-line strategy, what
is the company trying to accomplish with these two new items?
14. Axis Centre a departmental store has installed CCTV cameras to Answer: Axis has adopted observational research approach to
record consumer actions. Which research approach has been gather fresh data by observing the consumers' actions in the
adopted by Axis and why? store.
15. Belling is a chain of coffee shops. Answer: Student answers may vary.
Give an example of a category A category point-of-parity for Belling could be its freshly-brewed coffee and friendly
point-of-parity and a competitive atmosphere.
point-of-parity for the company. A competitive point-of-parity could be its fast customer service times.
16. Belling is a chain of coffee shops. Answer: Student answers may vary.
Give an example of a point-of- Points-of-parity for Belling could be its freshly-brewed coffee or friendly atmosphere.
parity and a point-of-difference Points-of-difference could be its unusual interior design or laid-back attitude.
for the company.
17. Belling wants to analyze the Answer: To analyze the threats posed by its competitors, Belling must monitor the competitors'
threats posed by its competitors. share of the market, share of mind and share of heart.
Which three variables must it
monitor to achieve this?
18. Briefly describe four brand Answer: In addition to product and service differentiation, the four differentiation strategies are:
differentiation strategies. (1) employee differentiation:
companies can gain a strong competitive advantage through having better-trained people;
(2) channel differentiation:
companies can achieve competitive advantage through the way they design their distribution
channels' coverage, expertise, and performance;
(3) image differentiation:
companies can craft powerful, compelling images that appeal to consumers' social and
psychological needs; and (4) services differentiation:
a service company can differentiate itself by designing a better and faster delivery system that
provides more effective and efficient solutions to consumers.
19. Briefly describe the different Answer: When a company is preparing to sets its price, first of all it has to select its pricing
types of pricing objectives. objectives. The five major objectives available to a company are: survival, maximum current
profit, maximum market share, maximum market skimming, and product-quality leadership.
• Survival - Companies pursue survival as their major objective if they are plagued with
overcapacity, intense competition, or changing consumer wants. As long as prices cover
variable
costs and some fixed costs, the company stays in business.
• Maximum current profit - Companies who try to maximize their current profit, estimate the
demand and costs associated with alternative prices and choose the price that produces
maximum current profit, cash flow, or rate of return on investment. This strategy assumes the
firm knows its demand and cost functions, but in reality, these are difficult to estimate.
• Maximum market share - Companies that want to maximize their market share believe that a
higher sales volume will lead to lower unit costs and higher long-run profit. They set the
lowest price, assuming the market is price sensitive. This is a market-penetration pricing
strategy.
• Maximum market skimming - Companies unveiling a new technology favor setting high
prices to maximize market skimming. Companies that use this, introduce their products at a
high price and slowly drop the price over time.
• Product-quality leadership - Companies that aim to be product quality leaders strive to be
affordable luxuries, i.e., they want their products and services to be characterized by high
levels of perceived quality, taste, and status with a price just high enough not to be out of the
consumer's reach.
20. Briefly explain Freud's theory on Answer: Sigmund Freud assumed that the psychological forces shaping people's behavior are
human motivation and explain how largely unconscious, and that a person cannot fully understand his or her own stated
this might be related to marketing. capabilities. When a person examines specific brands, he or she will react not only to their
stated capabilities, but also to other, less conscious cues.
21. Companies can achieve Answer: Considerations to achieve competitive advantage in the distribution channel are in the
competitive advantage through areas of coverage, expertise, and performance.
the way they design their
distribution channel. What three
areas are considered in this
design process?
22. Copra, a manufacturer of Answer: Copra undertakes the survey to assess people's knowledge, beliefs, preferences, and
cigarettes, conducts a survey satisfaction and to measure these magnitudes in the general population.
before launching its new range
of herbal cigarettes. What is the
basic purpose of undertaking
such a survey by Copra?
23. Culture is the fundamental Answer: According to the text, a child growing up in the United States is exposed to values such
determinant of a person's wants as achievement and success, activity, efficiency and practicality, progress, material comfort,
and behavior. The growing child individualism, freedom, external comfort, humanitarianism, and youthfulness.
acquires a set of values,
perceptions, preferences, and
behaviors through his or her
family and other key
institutions. What values are
typical American young
children exposed to?
24. Define a brand mantra and Answer: Student answers may vary.
provide an example of a brand A brand mantra is an articulation of the heart and soul of the brand and is closely related to other
mantra. branding concepts like "brand essence" and "core brand promise." Brand mantras are short, three-
to five-word phrases that capture the irrefutable essence or spirit of the brand positioning.
American Express's "World Class Service, Personal Recognition," is an example of a brand mantra.
25. Describe how the problem Answer: The buying process starts when the buyer recognizes a problem or need. With an
recognition process works in internal stimulus, one of the person's normal needs—hunger, thirst, sex—rises to a threshold level
the five-stage model of the and becomes a drive; or a need can be aroused by an external stimuli such as an advertisement.
consumer buying process.
26. Describe the communication- Answer: Communication-effect research, called copy testing, seeks to determine whether an ad is
effect research method of communicating effectively. Marketers should perform this test both before an ad is put into media
evaluating advertising and after it is printed or broadcast. Pretest critics maintain that agencies can design ads that test
effectiveness. well but may not necessarily perform well in the marketplace. Proponents maintain that useful
diagnostic information can emerge and that pretests should not be used as the sole decision
criterion anyway. Many advertisers use posttests to assess the overall impact of a completed
campaign. If a company hoped to increase brand awareness from 20 percent to 50 percent and
succeeded in increasing it to only 30 percent, then the company is not spending enough, its ads
are poor, or it has overlooked some other factor.
27. Describe the lexicographic Answer: The lexicographic heuristic is in use when the consumer chooses the best brand on the
heuristic used to make basis of its perceived most important attribute.
consumer choices.
28. Describe the six main service differentiators. Answer: The main service differentiators are ordering ease, delivery,
installation, customer training, customer consulting, and maintenance
and repair.
Ordering ease refers to how easy it is for the customer to place an
order with the company.
Delivery refers to how well the product or service is brought to the
customer. It includes speed, accuracy, and care throughout the process.
Installation refers to the work done to make a product operational in its
planned location. Ease of installation is a true selling point for buyers
of complex products like heavy equipment and for technology novices.
Customer training helps the customer's employees use the vendor's
equipment properly and efficiently.
Customer consulting includes data, information systems, and advice
services the seller offers to buyers.
Maintenance and repair programs help customers keep purchased
products in good working order.
29. Describe three methods by which a brand can Answer: There are three main ways to convey a brand's category
communicate category membership. membership:
1. Announcing category benefits. To reassure consumers that a brand
will deliver on the fundamental reason for using a category, marketers
frequently use benefits to announce category membership.
2. Comparing to exemplars. Well-known, noteworthy brands in a
category can also help a
brand specify its category membership.
3. Relying on the product descriptor. The product descriptor that
follows the brand name is often a concise means of conveying
category origin.
30. Discuss the different ways which can be adopted by Answer: The small firms can adopt the following ways to conduct
small manufacturing firms to conduct market research. market research:
1) They can engage students or professors to design and carry out
projects. 2) They can collect considerable information at very little cost
by examining competitors' Web sites, monitoring chat rooms, and
accessing published data. 3) The owners of small business firms can
routinely visit competitors to learn about changes they have made. 4)
By tapping into marketing partner expertise.
31. During a meeting, you were asked by the vice-president Answer: Product-mix pricing includes product-line pricing, optional-
of marketing, to comment on the company's pricing feature pricing, captive-product pricing, two-part pricing, by-product
strategy for its products. Recalling your marketing pricing, and product-bundling pricing.
management course in college, your comments define
the six situations involving product-mix pricing. List these
six product-mix pricing strategies.
32. Each person has personality characteristics that Answer: Personality is often described in terms of such buying traits as
influence his or her buying behavior. What does self-confidence, dominance, autonomy, deference, sociability,
personality mean in terms of buying traits? defensiveness, and adaptability. Personality can be a useful variable in
analyzing consumer brand choices. The idea is that brands also have
personalities, and consumers are likely to choose brands whose
personalities match their own.
33. Explain the Answer: (1) Informative advertising aims to create brand awareness and knowledge of new products or new
classification of features of existing products.
advertising (2) Persuasive advertising aims to create liking, preference, conviction, and purchase of a product or service.
objectives. Some persuasive advertising uses comparative advertising, which makes an explicit comparison of the
attributes of two or more brands. Comparative advertising works best when it elicits cognitive and affective
motivations simultaneously, and when consumers are processing advertising in a detailed, analytical mode.
(3) Reminder advertising aims to stimulate repeat purchase of products and services.
(4) Reinforcement advertising aims to convince current purchasers that they made the right choice.
34. Explain the concept Answer: Line stretching occurs when a company lengthens its product line beyond its current range. It
of line stretching includes down-market stretch (introduce a lower-priced line), up-market stretch (introduce an upscale line), or
and the three uses two-way stretch (introduce both an upscale line and a down-scale line).
for it.
35. Explain the concept Answer: Selective retention says that consumers are likely to remember good points about a product we like
of selective and forget good points about competing products. Selective retention works to the advantage of strong
retention and its brands. It also means that marketers need to use repetition in sending messages to their target markets to
association with make sure their message is not overlooked.
marketing.
36. Explain the Answer: The width of a product mix refers to how many different product lines the company carries. The
concepts of length of a product mix refers to the total number of items in the mix. The depth of a product mix refers to
product-mix width, how many variants are offered of each product in the line and is determined by dividing the total number of
length, depth, and items by the number of lines. The consistency of the product mix refers to how closely related the various
consistency. product lines are in end use, production requirements, distribution channels, or some other way.
37. Explain the Answer: Culture is the fundamental determinant of a person's wants and behavior. Subcultures provide more
differences specific identification and socialization of their members. Subcultures include nationalities, religions, racial
between culture, groups, and geographic regions. Social class is a relatively homogeneous and enduring division in a society,
subculture, and that are hierarchically ordered and whose members share similar values, interests, and behaviors.
social class.
38. Explain three Answer: In general, the firm should monitor three variables when analyzing potential threats posed by
variables a firm competitors:
should consider 1. Share of market—The competitors' share of the target market.
when analyzing 2. Share of mind—The percentage of customers who named the competitor in responding to the statement,
potential threats "Name the first company that comes to mind in this industry."
posed by 3. Share of heart—The percentage of customers who named the competitor in responding to the statement,
competitors. "Name the company from which you would prefer to buy the product."
39. Explain what Answer: Qualitative research techniques are relatively unstructured measurement approaches to permit a range
qualitative research of possible responses, and they are a creative means of ascertaining consumer perceptions that may
is and why it might otherwise be difficult to uncover. Because of the freedom it affords both researchers in their probes and
be useful to consumers in their responses, qualitative research can often be an especially useful first step in exploring
marketers. What are consumers' brand and product perceptions. It is indirect in nature, so consumers may be less guarded and
its major reveal more about themselves in the process.
drawbacks? Qualitative research does have its drawbacks. Marketers must temper the in-depth insights that emerge with
the fact that the samples are often very small and may not necessarily generalize to broader populations. And
different researchers examining the same qualitative results may draw very different conclusions.
40. The family is the most important Answer: The family of orientation consists of parents and siblings. From parents a person
consumer buying organization in acquires an orientation toward religion, politics, and economics and a sense of personal
society, and family members ambition, self-worth, and love. Even if the buyer no longer interacts very much with his or her
constitute the most influential parents, their influence on behavior can be significant. A more direct influence on everyday
primary reference group. We buying behavior is the family of procreation—namely, one's spouse and children.
can distinguish between two
family categorization in the
buyer's life. Name the two
families and their impact on
buying behavior.
41. Frederick Herzberg developed Answer: Herzberg's theory has two implications. First, sellers should do their best to avoid
a two-factor theory that dissatisfiers (for example, a poor training manual or a poor service policy). Although these things
distinguishes dissatisfiers and will not sell a product, they might easily unsell it. Second, the seller should identify the major
satisfiers. How does Herzberg's satisfiers or motivators of purchase in the market and then supply them. These satisfiers will make
theory affect sellers' marketing the major difference as to which brand the customer buys.
strategy?
42. Give an account of experimental Answer: Experimental research is designed to capture cause-and-effect relationships by
research. eliminating competing explanations of the observed findings. If the experiment is well designed
and executed, research and marketing managers can have confidence in the conclusions.
Experiments call for selecting matched groups of subjects, subjecting them to different
treatments, controlling extraneous variables, and checking whether observed response
differences are statistically significant.
43. Give an example of a cognitive Answer: Cognitive campaigns try to educate and inform people. A cognitive campaign might
social marketing campaign. explain the nutritional value of different foods or demonstrate the importance of conservation.
44. Give reasons to justify that Answer: Increased broadband penetration offers online research even more flexibility and
online research is versatile. capabilities. For instance, virtual reality software lets visitors inspect 3-D models of products
such as cameras, cars, and medical equipment and manipulate product characteristics. Even at
the basic tactile level, online surveys can make answering a questionnaire easier and more fun
than paper-and-pencil versions. Online community blogs allow customer participants to interact
with each other.
45. Gravity is a company that Answer: The macromodel of the communications process comprises of nine key factors in
markets customized T-shirts to effective communication. Two represent the major parties - sender (Gravity) and receiver
its customers. Gravity runs an ad (audience). Two represent the major tools - message (content of the ad) and media (print, TV,
that seeks to attract more radio, etc). Four represent the major communications functions - encoding (creation and
customers. Apply the transmission of the ad by Gravity), decoding (the reception and comprehension of the ad by the
macromodel of the audience), response (either ignoring the message or buying Gravity shirts), and feedback
communications process to (customers providing information about the ad to measure its effectiveness). The last element is
describe the communication noise, random and competing messages that may interfere with the intended communication.
between Gravity and its target Examples of noise in this case could be misunderstood messages from the ad, similar ads from
customers. competitors, etc.
46. Greenfoods, a manufacturer of Answer: By putting out so many surveys each month, Greenfoods may run the risk of creating
ready-to-eat foods, conducts "survey burnout" and seeing response rates drop sharply.
over 60,000 customer surveys
each month through its retail
outlets. What risk is Greenfoods
likely to face by putting out so
many surveys each month?
47. Heuristics can come into play Answer: Consumers will use this heuristic when the consumer arrives at an initial judgment and
when consumers forecast the then makes adjustments of that first impression based on additional information.
likelihood of future outcomes
or events. When would a
consumer use an anchoring
and adjustment heuristic?
48. How do the stages in a Answer: In the introduction stage of the product life cycle, advertising, events and experiences,
product's life cycle influence and publicity have the highest cost-effectiveness, followed by personal selling to gain distribution
the marketing communications coverage and sales promotion and direct marketing to induce trial. In the growth stage, demand
mix? has its own momentum through word of mouth and interactive marketing. Advertising, events and
experiences, and personal selling all become more important in the maturity stage. In the decline
stage, sales promotion continues strong, other communication tools are reduced, and salespeople
give the product only minimal attention.
49. How is the expectancy-value Answer: The expectancy-value model of attitude formation posits that consumers evaluate
model used in the evaluation products and services by combining their brand beliefs—the positives and negatives—according to
of alternatives as a consumer importance. The model assists consumers in making choices.
engages in a buying process?
50. Identify some of the brand Answer: A successful cause-marketing program can improve social welfare, create differentiated
benefits that can accrue to a brand positioning, build strong consumer bonds, enhance the company's public image, create a
company that engages in reservoir of goodwill, boost internal morale and galvanize employees, drive sales, and increase
cause marketing. the firm's market value. Consumers may develop a strong, unique bond with the firm running the
cause-marketing that transcends normal marketplace transactions. Specifically, cause marketing
can (1) build brand awareness, (2) enhance brand image, (3) establish brand credibility, (4) evoke
brand feelings, (5) create a sense of brand community, and (6) elicit brand engagement.
51. Identify three types of risk Answer: Consumers might perceive physical risk (an unsafe car poses a safety risk to the physical
consumers might perceive in well-being of the driver and passengers), a financial risk (the car might be overpriced or may
the context of purchasing a car. decline in value so rapidly that it will have minimal resale value when the consumer tries to resell
it), and a functional risk (the car may not perform to the expectations of the consumer). Students
may identify other risks, including social, psychological, and time risks.
52. In planning its market offering, Answer: Each layer adds more customer value, and the five levels are: (1) the core benefit—the
the marketer must address the service or benefit the customer is really buying; (2) the basic product—the actual product that
five product levels of the provides the core benefit; (3) expected product—a set of attributes and conditions buyers normally
customer-value hierarchy. expect when they purchase the product; (4) the augmented product—the marketer exceeds
Describe the "customer-value customer expectations; and (5) the potential product—which encompasses all the possible
hierarchy" and identify the five augmentations and transformations the product or offering might undergo in the future. These five
levels of product contained elements constitute the buyers' consumption system.
within.
53. In your position as a marketing manager for a small Answer: The nine ways that physical products can be differentiated are
industrial company, you have been asked by the form, features, customization, performance quality, conformance quality,
president to help differentiate the company's product durability, reliability, reparability, and style.
from its competitors. In reviewing your marketing
management notes, you note that the text stated that
physical products could be differentiated in nine
ways. These nine areas comprise the "meat" of the
memo you are writing to the president of your firm.
What are the nine ways that physical products can be
differentiated?
54. Jane is a marketing researcher of a cellular service Answer: After deciding on the research approach and instruments, Jane
providing firm. She is conducting a market research must design a sampling plan.
before the firm decides to launch its 3G services. In order to design the plan, Jane has to decide upon the sampling unit
After deciding on the research approach and (whom she should survey?), the sample size (how many people should
instruments, what is the next step that Jane should she survey?), sampling procedure (how should she choose the
follow? What are the three things that she is required respondents?).
to consider in this step?
55. List and briefly characterize Maslow's Hierarchy of Answer: Beginning with the most basic needs to the most advanced, the
Needs. need structure is as follows: (1) physiological needs—food, water, shelter;
(2) safety needs—security, protection; (3) social needs—sense of
belonging, love; (4) esteem needs—self-esteem, recognition, status; and (5)
self-actualization needs—self-development and realization.
56. List the challenges faced to conduct a good focus Answer: There are many challenges to conducting a good focus group.
group discussion. Some researchers believe consumers have been so bombarded with ads,
they unconsciously parrot back what they've already heard instead of what
they really think. There's always a concern that participants are just trying
to maintain their self-image and public persona or have a need to identify
with the other members of the group. Participants also may not be willing
to acknowledge in public—or may not even recognize—their behavior
patterns and motivations. And the "loudmouth or know-it-all" problem
often crops up when one highly opinionated person drowns out the rest of
the group.
57. Mars Group is a market research firm which sells field Answer: No, Mars group is a specialty-line marketing research firm as it
interviewing services to a software development firm. sells field interviewing services, whereas a custom marketing research is
Can Mars Group be categorized as a custom market hired to carry out specific projects.
research firm? Give reasons to support your answer.
58. Mention the personal factors that can influence the Answer: Personal characteristics that influence a buyer's decision include
decision of a buyer. age and stage in the life cycle, occupation and economic circumstances,
personality and self-concept, and lifestyle and values. Because many of
these have a direct impact on consumer behavior, it is important for
marketers to follow them closely.
59. ) Name a few products for which personal influence Answer: Personal influence carries especially great weight (1) when
plays a significant role in marketing communications. products are expensive, risky, or purchased infrequently, and (2) when
products suggest something about the user's status or taste. On that count,
life insurance, real estate, health services, automobiles, luxury items,
consultation services, etc. can be expected to be significantly influenced
by word-of-mouth and endorsements by credible sources.
60. People can emerge with different Answer: The three processes are selective attention, selective distortion, and selective
perceptions of the same object because retention. Selective attention occurs because a person cannot possibly attend to all the
of three perceptual processes. List and stimuli that he or she is exposed to during an average day. Some will be screened out.
briefly characterize these processes. Selective distortion is the tendency to interpret information in a way that will fit our
perceptions. Selective retention occurs because people will fail to register much
information to which they are exposed in memory, but will tend to retain information that
supports their attitudes and beliefs.
61. People from the same subculture, social Answer: Consumers who worry about the environment, want products to be produced in
class, and occupation may lead quite a sustainable way, and spend money to advance their personal development and
different lifestyles. A lifestyle is a potential have been named "LOHAS." The name is an acronym standing for lifestyles of
person's pattern of living in the world as health and sustainability. The market for LOHAS products encompasses things such as
expressed in activities, interests, and organic foods, energy-efficient appliances, and solar panels as well as alternative
opinions. Lifestyle portrays the "whole medicine, yoga tapes, and ecotourism.
person" interacting with his or her
environment. Given this information,
describe the LOHAS (an acronym)
lifestyle described in the text and its
usefulness in marketing.
62. Perception is the process by which an Answer: The key point is that perceptions can vary widely among individuals exposed to
individual selects, organizes, and the same reality. In marketing, perceptions are more important than the reality, as it is
interprets information inputs to create a perceptions that will affect consumers' actual behavior.
meaningful picture of the world. For a
marketer, what is the key point of
perception?
63. ) Product-mix pricing can involve a Answer: There are six situations involving product-mix pricing: (1) product-line pricing—
number of pricing strategies for the low-, medium-, and high-priced products within the same line, such as different priced
brand manager. List each of these ties; (2) optional-feature pricing—charging for "extra" features, such as leather seats in a
strategies and briefly define each. car; (3) captive-product pricing—when the "user" has no choice but to use the high-
priced "disposable" products that make the entire product work (for example, ink
cartridges for printers); (4) two-part pricing—consisting of a fixed fee and a variable
usage fee (cell phone usage); (5) by-product pricing—the price of the by-products of
goods being used for other purposes (oil refining for example); and (6) product-bundling
pricing—pure bundling when the firm offers its products only as a bundle, or mixed
bundling when the firm offers its products as a "bundle" and/or individually.
64. Provide a general description of the Answer: Micromodels of marketing communications concentrate on consumers' specific
four classic response hierarchy models. responses to communications. All the response hierarchy models assume the buyer
passes through cognitive, affective, and behavioral stages, in that order. This "learn-feel-
do" sequence is appropriate when the audience has high involvement with a product
category perceived to have high differentiation, such as an automobile or house. An
alternative sequence, "do-feel-learn," is relevant when the audience has high involvement
but perceives little or no differentiation within the product category, such as an airline
ticket or personal computer. A third sequence, "learn-do-feel," is relevant when the
audience has low involvement and perceives little differentiation, such as with salt or
batteries. By choosing the right sequence, the marketer can do a better job of planning
communications.
65. Provide three examples of negatively Answer: Student answers may vary.
correlated attributes and benefits. Some examples of negatively correlated attributes and benefits are: low price versus
high quality, taste versus low calories, strong versus refined, powerful versus safe, and
ubiquitous versus exclusive.
66. Ryan has been appointed by Target Internationals, a hardware Answer: After defining the problem, the decision alternatives,
manufacturing firm, as a marketing researcher and has been asked and research objectives, the researcher develops the most
to conduct a marketing research to produce new insights of efficient plan for gathering the needed information, and will
consumer attitude on its vacuum tubes. Ryan begins with the estimate the cost of conducting the research.
research process by defining the problem, the decision
alternatives, and research objectives. Mention the next step that
Ryan will follow to continue with the research.
67. Sally's is a boutique bakery that specializes in cupcakes. Give one Answer: Student answers may vary.
method by which Sally's can conduct low-cost market research. There are a variety of low-cost marketing research methods
that help small businesses connect with customers and study
competitors. One way is to set up course projects at local
colleges and universities to access the expertise of both
students and professors.
68. Sally's is a boutique bakery that specializes in cupcakes. Give some Answer: Student answers may vary.
methods by which Sally's can position itself without spending a lot Because small businesses often must rely on word of mouth
on promotions. to establish their positioning, public relations, social
networking, and low-cost promotions and sponsorship can
be inexpensive alternatives for Sally's. Creating a vibrant
brand community among current and prospective customers
can also be a cost-effective way to reinforce loyalty and
help spread the word to new prospects.
69. Sally's is a boutique bakery that specializes in cupcakes. How can Answer: Student answers may vary.
Sally's create channel differentiation to stand apart from its Sally's can more effectively and efficiently design its
competitors? distribution channels' coverage, expertise, and performance
to make buying the product easier and more enjoyable and
rewarding. It can set up an online store or undertake home
deliveries.
70. Sally's is a boutique bakery that specializes in cupcakes. How can Answer: Student answers may vary.
Sally's create image differentiation to stand apart from its Sally's can use innovative and distinctive packaging for its
competitors? products, or use interior design to give the store a distinctive
look.
71. Studying how consumers shop, how they use a particular product or Answer: This is called the user's total consumption system,
service, and how they dispose of the product when consumed is defined as the way the user performs the tasks of getting
important for marketers. This information forms the basis of and using products and related services. This is important
product strategy. Define the consumption system and identify the because it will contain information useful in the product-
two upcoming product strategies that are affected by this augmentation strategy and the potential product strategy.
knowledge.
72. There are three key consumer criteria that determine whether a Answer: Student answers may vary.
brand association can truly function as a point-of-difference. Consumers must see the brand association as personally
When the Westin Stamford hotel in Singapore advertised that it relevant to them. Staying in the tallest hotel might not be a
was the world's tallest hotel, it attempted to create a point-of- necessary need for most tourists, there might be other
difference (POD). Explain why the hotel may not have been factors that are more important. The hotel was not successful
successful in its attempt to create its POD. in its attempt to create its POD because of the desirability
criteria associated with PODs.
73. Through market research a consumer gathers information about the Answer: The four sets are: (1) the total set, (2) the awareness
competing brands of a product and their features. The consumer set, (3) the consideration set, and (4) the choice set.
then advances through four sets with respect to brands before a
decision is reached. What are those four sets?
74. The vast array of products that Answer: The four main areas are: (1) Convenience goods are bought frequently,
consumers buy can be classified on the immediately, and with a minimum of effort; (2) shopping goods are goods that the
basis of shopping habits and are broken consumer characteristically compares on such bases as suitability, quality, price, and
down into four main areas. List these style; (3) specialty goods have unique characteristics or brand identification for which a
four main classifications of consumer sufficient number of buyers are willing to make a special purchasing effort; and (4)
goods and explain what elements are unsought goods are those goods that the consumer does not know about or does not
included within. normally think of buying.
75. What are the different possible Answer: Although consumers have fairly good knowledge of price ranges, surprisingly
consumer reference prices? few can accurately recall specific prices. When examining prices, consumers often
employ reference prices, comparing an observed price to an internal reference price
they remember or an external frame of reference such as a posted "regular retail price."
These reference prices include:
• Fair price - what consumers feels the product should cost
• Typical price
• Last price paid
• Upper-bound price - reservation price or the maximum most consumers would pay
• Lower-bound price - lower threshold price or the minimum most consumers would pay
• Historical competitor price
• Expected future price
• Usual discounted price
76. What are the different price-setting Answer: The six major price-setting methods are: markup pricing, target-return pricing,
methods? Briefly describe each of them. perceived-value pricing, value pricing, going-rate pricing, and auction-type pricing.
• Markup pricing - This is the most elementary pricing method wherein a standard markup
is added to the product's cost.
• Target-return pricing - Here, the firm determines the price that yields its target rate of
return on investment.
• Perceived-value pricing - Perceived value is made up of a host of inputs, such as the
buyer's image of the product performance, the channel deliverables, the warranty quality,
customer support, and softer attributes such as the supplier's reputation, trustworthiness,
and esteem. Companies must deliver the value promised by their value proposition, and
the customer must perceive this value.
• Value pricing - Companies win loyal customers by charging a fairly low price for a
highly-quality offering. Value price is just not a matter of lowering the prices but also it is
a matter of reengineering the company's operations to become a low-cost producer
without sacrificing quality, to attract a large number of value conscious customers.
• Going-rate pricing - Here, the firm bases its price largely on competitors' prices.
• Auction-type pricing - There are three major types of auctions and their separate pricing
procedures:
i. English auctions - These have one seller and many buyers. The highest bidder gets the
item.
ii. Dutch auctions - This features one seller and many buyers, or one buyer and many
sellers. In the first kind, an auctioneer announces a high price for a product and then
slowly decreases the price until a bidder accepts. In the other, the buyer announces
something he wants to buy, and potential sellers compete to offer the lowest price.
iii. Sealed-bid auction - This lets would-be suppliers submit only one bid. The suppliers
have no knowledge about the other bids.
77. What are the Answer: The different types of price discounts and allowances are:
different • Discount - This is a price reduction given to buyers who pay their bills promptly.
types of price • Quantity discount - This is a price reduction offered to those who buy in large volumes.
discounts and • Functional discount - This is offered by a manufacturer to trade-channel members if they perform certain functions
allowances? like selling, storing, and record keeping.
• Seasonal discount - This is a price reduction given to those who buy merchandise or services out of season.
• Allowance - This is an extra payment designed to gain reseller participation in special programs. These are of two
types:
i. Trade-in allowances - These are granted for turning in an old item when buying a new one.
ii. Promotional allowances - These reward dealers for participating in advertising and sales support programs.
78. What are the Answer: Companies can use any of the following pricing techniques to stimulate early purchase:
different • Loss-leader pricing - Supermarkets and department stores often drop the price on well-known
types of brands to stimulate additional store traffic. This pays if the revenue on the additional sales compensates for the
promotional lower margins on the loss-leader items.
pricing? • Special event pricing - Sellers can establish special prices in certain seasons to draw in more
customers.
• Special customer pricing - Sellers can offer special prices exclusively to certain customers.
• Cash rebates - Auto companies and other consumer-goods companies offer cash rebates to
encourage purchase of the manufacturers' products within a specified time period. Rebates
can help clear inventories without cutting the stated list price.
• Low-interest financing - Instead of cutting its price, the company can offer customers low-interest financing.
• Longer payment terms - Sellers stretch loans over longer periods and thus lower the monthly payments.
Consumers often worry less about the interest rate of a loan, and more about whether they can afford the monthly
payment.
• Warranties and service contracts - Companies can promote sales by adding a free or low-cost
warranty or service contract.
• Psychological discounting - This strategy sets an artificially high price and then offers the
product at substantial savings.
79. What are the Answer: The five stages are problem recognition, information search, evaluation of alternatives, purchase decision,
five stages of and postpurchase behavior.
the consumer
buying
process?
80. What are the Answer: The major shortcomings of marketing-mix modeling are- 1) Although marketing-mix modeling helps to
major isolate effects, it is less effective at assessing how different marketing elements work in combination. 2) Marketing-
shortcomings mix modeling focuses on incremental growth instead of baseline sales or long term effects. 3) The integration of
of marketing- important metrics such as customer satisfaction, awareness, and brand equity into marketing-mix modeling is limited.
mix 4) Marketing-mix modeling generally fails to incorporate metrics related to competitors, the trade, or the sales force.
modeling?
81. What are the Answer: An area of increasing interest is online focus groups. These may cost less than a fourth of a traditional, in-
relative person focus group. Online focus groups also offer the advantages of being less intrusive, allowing geographically
advantages of diverse subjects to participate, and yielding fast results. They are useful at collecting reactions to focused topics
online and in- such as a specific new product concept.
person focus Proponents of in-person focus groups, on the other hand, maintain that in-person focus groups allow marketers to
groups? be immersed in the research process, get a close-up look to people's emotional and physical reactions, and ensure
that sensitive materials are not leaked. Marketers can also make spontaneous adjustments to the flow of discussion
and delve deeply into more complex topics, such as alternative creative concepts for a new ad campaign.
82. What are the requirements Answer: Positioning requires that marketers define and communicate similarities and differences
for deciding on a between their brand and its competitors. Specifically, deciding on a positioning requires: (1)
positioning strategy? determining a frame of reference by identifying the target market and relevant competition, (2)
identifying the optimal points-of-parity and points-of-difference brand associations given that frame of
reference, and (3) creating a brand mantra to summarize the positioning and essence of the brand.
83. What are the six steps Answer: The six steps are: (1) define the problem and research objectives, (2) develop the research
involved in the marketing plan, (3) collect the information, (4) analyze the information, (5) present the findings, and (6) make the
research process? decision.
84. What does the learning Answer: The learning theory teaches marketers that they can build demand for a product by
theory teach marketers associating it with strong drives, using motivating cues, and providing positive reinforcement.
about demand for
products?
85. What do you understand Answer: Marketers need to identify the hierarchy of attributes that guide consumer decision making in
by the term market order to understand different competitive forces and how these various sets get formed. This process
partitioning? of identifying the hierarchy is called market partitioning.
86. What four strategies can Answer: The four strategies are: (1) linking the product to some involving issue; (2) linking the product
marketers of low- to some involving personal situation; (3) designing advertising to trigger strong emotions related to
involvement products personal values or ego defense; and (4) adding important features to the product.
employ in an effort to
convert their products into
ones of higher
involvement?
87. What is a reference group? Answer: Reference groups consist of all the groups that have a direct (face-to-face) or indirect
Describe three different influence on attitudes or behavior. Types of reference groups that can impact a consumer's purchasing
types of reference groups behavior include membership groups, primary groups, secondary groups, aspirational groups, and
that can have an impact on disassociative groups.
a consumer's purchasing Membership groups are the groups which have a direct influence on the person. Primary groups are
behavior. the groups with whom the person interacts fairly continuously and informally, such as family, friends,
neighbors, and coworkers. Secondary groups tend to be more formal and require less continuous
interaction. Aspirational groups are those a person hopes to join; and dissociative groups are those
whose values or behavior an individual rejects.
88. What is the chief Answer: The chief advantage of each contact method mentioned is (1) mail questionnairethe best way
advantage of using each of to reach people who would not give personal interviews or whose responses might be biased or
the following contact distorted by the interviews, (2) telephone interviewsthe best method for gathering information quickly
methods: mail and the interviewer is also able to clarify questions if respondents do not understand them, and (3)
questionnaire, telephone personal interviewthe most versatile method because they can ask more questions and record
interview, and personal additional observations about the respondent.
interview?
89. What is the significance of Answer: Design offers a potent way to differentiate and position a company's products and services.
design for a company's Design is the totality of features that affect how a product looks, feels, and functions to a consumer.
products and services? Design offers functional and aesthetic benefits and appeals to both our rational and emotional sides.
What are the advantages The designer must figure out how much to invest in form, feature development, performance,
of a good design? conformance, durability, reliability, reparability, and style. To the company, a well-designed product is
easy to manufacture and distribute. To the customer, a well-designed product is pleasant to look at
and easy to open, install, use, repair, and dispose of. The designer must take all these factors into
account.
Design can shift consumer perceptions to make brand experiences more rewarding. Design should
penetrate all aspects of the marketing program so that all design aspects work together.
90. When a physical product cannot easily be Answer: The six main service differentiators are (1) ordering ease, (2) delivery,
differentiated, the key to competitive success may (3) installation, (4) customer training, (5) customer consulting, and (6)
lie in adding valued services and improving quality. maintenance and repair.
Identify the six main service differentiators.
91. When asked about their preferred brand of instant Answer: The objective for Nissin's marketing communications objective should
noodles outside a supermarket setting, customers be to build brand awareness, i.e. fostering the consumer's ability to recognize
could not remember Nissin's name, but relied on or recall the brand within the category, in sufficient detail to make a purchase.
the distinct packaging to help them spot the Recognition is easier to achieve than recall—consumers asked to think of a
noodles while shopping. Describe how this brand of frozen entrées are more likely to recognize Stouffer's distinctive
problem can be addressed through the objective orange packages than to recall the brand. Brand recall is important outside
of Nissin's marketing communications. the store; brand recognition is important inside the store. Brand awareness
provides a foundation for brand equity.
92. Within the context of the Freudian theory, explain Answer: Shape, size, weight, material, color, and brand name can all trigger
how the laddering technique can be used. certain associations and emotions. A technique called laddering can be used
to trace a person's motivations from the stated instrumental ones to the more
terminal ones. Then the marketer can decide at what level to develop the
message and appeal.
93. With respect to positioning, explain points-of- Answer: Points-of-difference (PODs) are attributes or benefits consumers
parity and points-of-difference. strongly associate with a brand, positively evaluate, and believe that they
could not find to the same extent with a competitive brand. Points-of-parity
(POPs), on the other hand, are associations that are not necessarily unique to
the brand but may in fact be shared with other brands.
94. With the help of an example, explain straddle Answer: Occasionally, a company will be able to straddle two frames of
positioning. reference with one set of points-of-difference and points-of-parity. In these
cases, the points-of-difference for one category become points-of-parity for
the other and vice versa. Subway restaurants are positioned as offering
healthy, good-tasting sandwiches. This positioning allows the brand to create
a POP on taste and a POD on health with respect to quick-serve restaurants
such as McDonald's and Burger King and, at the same time, a POP on health
and a POD on taste with respect to health food restaurants and cafés.
Straddle positions allow brands to expand their market coverage and
potential customer base.
95. Write a short note on "brand awareness" as an Answer: Brand awareness refers to fostering the consumer's ability to
objective of marketing communications. recognize or recall the brand within the category, in sufficient detail to make a
purchase. Recognition is easier to achieve than recall. Brand recall is
important outside the store; brand recognition is important inside the store.
Brand awareness provides a foundation for brand equity.
96. You know that marketers have traditionally Answer: (1) Nondurable goods—the appropriate strategy is to make them
classified products based on characteristics of available in many locations, charge only a small markup, and advertise
durability, tangibility, and use. You also know that heavily to induce trial and build preference. (2) Durable goods—tangible
each product type has an appropriate marketing- goods that normally survive many uses. Durable products normally require
mix strategy attached. In analyzing your more personal selling and service, command a higher margin, and require
company's products, you decide to list each of more seller guarantees. (3) Services—intangible, inseparable, variable, and
these products and the appropriate marketing-mix perishable products. They require more quality control, supplier credibility,
strategy to understand where your products "fit." and adaptability.
List these products and their appropriate
marketing-mix strategies.