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Instructor Solutions Manual Advertising and Sales Promotion, 1e Ken Kaser.

Advertising and Sales Promotion, Net Bookmark Chapter 1, page 22 http://www.careers-in-marketing.com/adskill.htm Do you think you have what it takes to work in advertising? Though there are many different career paths in advertising, there are several key skills and talents required by anyone who hopes to succeed in the field. Access the website and read the article. Based on the article, which skill is the most important for someone working in advertising? What three adjectives do you think best characterize a successful advertising professional? Answer: Communication skills are the most important for someone working in advertising. Students’ choices for adjectives that characterize advertising professionals will vary.

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Chapter 2, page 36 http://www.edmunds.com/ Online shopping sites, such as Edmunds.com, can help consumers in their decisionmaking process by (1) improving the quality of their choices and (2) reducing the effort required to make those decisions. Access Edmunds.com. Suppose you were in the market for a new car. How can the Edmunds.com site help you complete each step of the consumer decision-making process? Answer: Students’ answers will vary but should focus on each of the five steps in the consumer decision-making process: (1) recognize the problem, (2) search for information, (3) evaluate alternatives, (4) make the purchase, and (5) evaluate the purchase.

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Chapter 3, page 79 http://www.claritas.com/MyBestSegments/Default.jsp When marketers know the demographic and psychographic characteristics of their target audience, their messages can be targeted more effectively. Marketing-information resources company Claritas provides demographic and psychographic information for any residential zip code in the United States. At My Best Segments website, click on the ZIP Code Look-Up link and enter the zip code 40472. (Use the PRIZM segmentation system.) Describe the demographic and psychographic characteristics of the people in that community. Answer: The demographic of zip code 40472 is largely rural and low-income. Psychographic characteristics include attending church, reading hunting magazines, and driving trucks.

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Chapter 4, page 95 http://www.apple.com/ipod/ Is there a difference between a basic MP3 player and an iPod? Millions of satisfied iPod users would answer with a resounding, “Yes!” View Apple’s iPod page. How many different kinds of iPods does Apple sell? How are they different from one another? (Hint: Try the Compare iPod models link.) Which iPod would you characterize as the “basic product”? Why? If you were buying a new iPod, which would best meet your needs? Explain. Answer: Apple sells four different iPods: the iPod shuffle, iPod nano, iPod classic, and iPod touch. The iPod shuffle would probably best be characterized as the “basic product” in this line; it is the least-expensive model and offers the fewest features. Students’ personal choices will vary.

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Chapter 5, page 124 http://www.steaz.com/ Small manufacturers can expand the distribution of their products by branching out from smaller, specialty stores to more mainstream retailers. Steaz is a beverage company that produces certified organic teas and energy drinks. Access Steaz’s website. In what types of stores are Steaz’s products sold? How might a wider distribution strategy benefit Steaz? How might it benefit consumers? Read about Steaz’s various products, and then determine other channels of distribution that you think might be a good fit for Steaz. Explain your reasoning. Answer: The company benefits because of the possibility of increased sales and greater brand awareness. Consumers benefit by having additional choices. Students’ answers regarding other potential distribution channels for this company’s products will vary.

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Chapter 6, page 169 http://www.yelp.com Have you ever asked a friend’s opinion about a product or business? Online review sites such as Yelp—one of the most popular local review directories—allow consumers to post, read, and comment on opinions about all kinds of products and services. Businesses can even respond to reviews on Yelp to create a dialog with their customers. Visit the Yelp website and read some of the reviews. Would a favorable review on Yelp influence your decision to patronize a business? Can you think of some ways businesses might use review sites to put their businesses in a positive light?

Answer: Student responses will vary. Ask students if they have ever used a review website. Have they ever posted product feedback on a website?

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Chapter 7, page 185 http://brandedcontent.adage.com/360/platform.php?id=38 Almost everyone is familiar with National Geographic Magazine. But did you know that the National Geographic Society publishes several other magazines, each targeted to a different audience? Access the website and read about the Society’s publications. Then compare and contrast the characteristics of the target audience for National Geographic Magazine and National Geographic Traveler. What are some products or services that might be appropriate for each of the magazines listed? Answer: Students may answer that the characteristics of the target audience for National Geographic and National Geographic Traveler are similar, but National Geographic Traveler readers might have more active lifestyles. Products or services appropriate for each of the four magazines listed will vary.

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Chapter 8, page 221 http://www.sierraclub.org/sierra/mediakit/MediaKitOnline.pdf The Sierra Club is the oldest environmental organization in the United States. Access its website and read through the Sierra Club media kit (particularly the demographics and circulation information). What three adjectives best describe the typical Sierra Club member? In which types of products or services do you think Sierra Club members would be interested? Would an online advertising campaign be an effective way to reach Sierra Club members? Why or why not?

Answer: Answers will vary, but students should perceive that Sierra Club members tend to be well educated, politically and socially active, and relatively affluent. Online advertising campaigns would likely be an effective way to reach Sierra Club members, as the organization has a strong online and social media presence.

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Chapter 9, page 243 http://www.channelone.com/life/quiz_body_language/1.htm Body language is the nonverbal communication that occurs in every face-to-face encounter with another person. All of our nonverbal behaviors send strong messages. When we communicate with another person, more than half of our message is transmitted through our body language. How good are you at recognizing and interpreting body language? Access the website and take the Body Language Quiz, making a note of your score on each question. How did you do? If possible, compare your results with a classmate. Did any particular questions stump everyone? Answer: Students’ results will vary. If time permits, allow students to share their test results with the class.

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Chapter 10, page 285 http://www.promotionalcodes.com/ E-retailers use promotional codes (also called key codes or coupon codes) in online ads as well as print ads and direct mail. For example, an online clothing retailer might add the following message to a magazine ad: “Get 10% off when you enter the code 10off at checkout.” Examine the many promotional codes available on the website. How can a company use promotional codes to measure the effectiveness of its advertising? Why might a company use a different promotional code for the same promotional offer on another website? Answer: When customers enter the code, the advertiser will know that they have responded to the advertisement. Using different codes on different websites can help advertisers track the best websites on which to advertise.

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Chapter 11, page 304 www.mysubwaycard.com/ContentManager/Controller.aspx?page=Home/Home

With the Subway Card Rewards Program, customers earn one point for every dollar spent on menu items at participating Subway Restaurants. Reward points can be used to get free food. Browse Subway’s site and click the FAQ link to read about the rewards program. What types of rewards are available? Why does Subway encourage customers to register their Subway Card? How does this program help Subway build brand preference and brand loyalty? Answer: A variety of rewards is available including cookies, chips, beverages, and subs. By registering their Subway Card, customers can help protect the balance remaining on their card if it is ever lost or stolen. Additionally, once registered they are eligible to receive special promotional offers. This program helps build brand preference and loyalty by rewarding customers who make repeat purchases.

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Chapter 12, page 325 http://cgi.money.cnn.com/tools/costofliving/costofliving.html With a cost-of-living calculator, you can find out how your purchasing power would be affected if you moved to another city. In the calculator at the website, enter a current salary of $40,000, the name of your current location, and the name of a destination of your choice. What comparable salary would be required if you made the move? Enter three other destinations. Which city has the lowest cost of living? Answer: Results will vary by location. Have students comment on how the cost of living in the various cities would affect their standard of living.

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Chapter 13, page 352 http://www.msnbc.msn.com/id/17831211/ns/health-kids_and_parenting/t/childrens-tvads-loaded-junk-food/ Many Americans are concerned about ads directed at children. Several countries severely restrict children’s advertising: Greece bans toy ads on TV between certain hours; Sweden bans all TV advertising aimed at children under 12; and Norway doesn’t allow sponsorship of any children’s programs. Access the website and read the article. What have researchers concluded about the content of children’s television ads in the United States? Would you support a ban on TV advertising aimed at children? Why or why not? Answer: Researchers have found that marketing practices from the food and beverage industry are out of balance with recommended diets for children and contribute to an environment that puts children’s health at risk.

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Chapter 14, page 394 http://www.globalization-group.com/edge/resources/color-meanings-by-culture/ The cultural basis for color symbolism can be very powerful. Marketers who are communicating with a culture different than their own need to be aware of how different audiences view colors. Access the website and examine the international cultural meanings of various colors. Suppose you are marketing a new snack food to Latin America. What colors would be appropriate for the product packaging? What colors should be avoided? Would the colors you chose for the Latin American market also work well in India? Explain your answers.

Answer: Students’ answers will vary. Colors have different meanings in different cultures, so marketers must choose colors used in advertisements carefully.

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Chapter 15, page 417 http://www.healthyworkplacebill.org/ The problem of workplace bullying is not new. Millions of working adults say they have been bullied at some point in their working lives. Legislation called the Healthy Workplace Bill (HWB) would make bullying illegal and has been introduced in more than 20 states since 2003. Access the website to read about workplace bullying and the Healthy Workplace Bill. What are the terms of the HWB? Do you believe such a law is needed? Why or why not? Answer: The terms of the HWB define an abusive work environment, provide an avenue for legal redress for victims, and hold employers accountable.

Chapter 1 | What Is Advertising

Name_________________________________________

Chapter 1: What Is Advertising? FillintheBlanks 1. A(n) infomercial benefits of a product. 2.

Green marketing environment.

3. A(n) brand product, or product line. 4.

Corporate

5. The

consumer

is a lengthy paid advertisement that showcases the involves the use of advertising to support and improve the is the combination of unique qualities of a company, advertising is used to enhance a company’s reputation. is the end user of a product or service.

6. The advertiser is an advertising agency’s client that needs creative messages (advertisements) and advertising campaigns to reach target markets. 7. 8.

advertising uses rational arguments to communicate why Product consumers need a specific product. Blogs

are websites visited by individuals with common interests.

Industry trade groups are associations that are founded and funded by businesses operating in a specific industry to handle public relations activities.

10.

is a paid form of communication intended to inform, Advertising persuade, and remind an audience to take some kind of action.

True/False Questions

11. Advertising is the most effective way to reach consumers and create product/service awareness. 12. Businesses that use green marketing are at a disadvantage in the marketplace.

13. The advertiser creates the advertisement for a client.

14. The account planner at the advertising agency serves as the main link between the client and the advertising agency. 15. Inventions that had an impact on advertising include the printing press, radio, television, and the Internet. 16. Advertising agencies outsource projects to boutique advertising agencies.

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17. Social media provides new opportunities for communicating advertising messages. 18. During the 19th century, advertising became more youth-oriented.

19. Cable television enables advertisers to target customers with specific interests.

20. P. T. Barnum helped spur the growth of outdoor advertising with the use of banners to advertise his museum and traveling circus.

Chapter 1 | What Is Advertising?

A. Advertising History Advertising has been around since the beginning of time. Select TWO of the following historic time periods: 3000 B.C. (Egyptian Empire); 500 B.C. (Greek Civilization); Roaring Twenties; the Great Depression; World War II; Civil Rights Movement; the 21st Century. On the lines below, identify the time periods you selected and list five major events that occurred during those time periods. Then create a print advertisement that would be appropriate for the time periods selected. 1.

Time Period Selected

Answers will vary based on the time period selected.

Time Period Selected

Answers will vary based on the time period selected.

3. On a separate sheet of paper, design an advertising timeline that illustrates historic events that have had an impact on advertising. The timeline should include appropriate captions and pictures if possible. Answers will vary. The timeline may include the following: 3000 B.C.—inscriptions on Egyptian tombs; 500 B.C.—theater advertisements engraved in stone; Colonial Americans— public message boards in town squares; 18th century—Ben Franklin and newspaper advertising;19th century—Industrial Revolution; Roaring 20s—glamorous advertising that promoted consumption during prosperous times; Great Depression—no-nonsense approach for advertising; 1950s—television ads; 1960s and 1970s—more creative and innovative advertisements; 1980s—advertisements that promoted consumption in prosperous times.

Chapter 1 | What Is Advertising

Name_________________________________________

B. Using Advertising When Environmental Disasters Strike Choose a recent national environmental disaster associated with a specific company or industry (example: British Petroleum Gulf Coast oil spill) and answer the questions below. Then create a billboard advertisement for the company/industry that will help improve its image. 1. What was the environmental disaster and what company was associated with it? Answers will vary. The British Petroleum (BP) Gulf Oil Spill is one example. It negatively affected Gulf Coast industries and tourism.

2. Did the company use an advertising campaign to overcome the negative publicity from the environmental disaster? If so, describe it. Answers will vary. BP created advertisements to encourage people to visit the Gulf Coast. It also developed commercials to show how it was working to clean up the areas affected by the oil spill.

C. Political Advertising Conduct research about the political advertising used by a local, state, or national politician. Then answer the following questions. 1. Who is the political candidate? Answers will vary. 2. Describe the candidate’s political advertising campaign. Answers will vary.

3. What suggestions do you have for improving the candidate’s political advertising campaign? Answers will vary.

Chapter 1 | What Is Advertising?

D. Types of Advertisements Product, brand, and corporate advertisements are used to convey information about a product, brand, or business to the consumer. Find an example of each type of advertisement. In a short report, describe and/or display each advertisement and explain why it is an example of product, brand, or corporate advertising.

E. Advertising Agency Careers Conduct research to learn more about TWO of the following careers in an advertising agency. On a separate sheet of paper, prepare a short job description for each position, listing five to ten job responsibilities, education requirements, salary level, and any other special job requirements. • • • • • •

account executive account planner media planner art director copywriter creative director

• • • • •

producer executive media director group media director associate media director executive media buying director

F. Focus Groups Select one of your current favorite advertisements. Arrange to show clips of the TV commercial, copies of the print ad, or pictures of the billboard ad to a focus group consisting of five to ten classmates. Create a survey that allows focus group members to rate the advertisement based on its effectiveness. List the survey questions below. Answers will vary. Survey questions should be open-ended to generate explanatory answers.

Chapter 2 | Consumer Behavior

Name ________________________________________

Chapter 2: Consumer Behavior Fill‐in‐the‐Blanks 1. A(n)

want

is something that is desired but not essential for living.

decision making is used for frequently purchased, low-cost Routine products that require little thought.

Convenience

products are purchased regularly without much planning.

Specialty

products are those that have a strong brand loyalty.

Buying motives and services.

are the driving forces that cause consumers to buy products

Emotional motives beliefs, or attitudes.

involve reasons to make a purchase based on feelings,

7. Purchases that are based on loyalty are driven by patronage motives

8. Purchases that are based on facts or logic are influenced by rational motives

9. An organization or group of people that an individual identifies with and admires is called a(n) reference group . 10. The advertising campaign is a series of related advertisements with a common theme or idea that focuses on a specific product, service, brand, or message.

True/False Questions F

11. Understanding customers is a relatively easy process for businesses.

12. According to Maslow’s Hierarchy of Needs, physiological needs such as food, sleep, water, and shelter must first be satisfied before an individual can focus on higher-level needs. 13. Scarcity means that the resources used in the production of products are limited.

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14. Products that are more expensive and purchased less frequently often require limited decision making. 15. Marketers do not have to be concerned with the level of decision making the consumer uses when making purchases. 16. Purchasing the same products and services over and over again is known as a modified purchase. 17. Consumers’ specific interests can increase the level of involvement in their buying decisions. 18. Unsought products are a top priority for consumers. 19. If consumers believe there is little difference among products or brands, they will search for the best price. 20. Advertising must be a continuous process.

Chapter 2 | Consumer Behavior

A. Consumer Decision Making Consumers must make decisions daily about purchases that meet their needs and wants. Classify each of the following items as a need or want. (Note: If you think some items could be classified as both, indicate so.) Then list the approximate monthly cost of each item. Item

Need or Want

$ Per Month

Food

Need

Monthly costs will vary.

Car

Need or Want

Clothing

Need or Want

Cable television

Want

Vacation

Want

Fuel for the car

Need or Want

Electricity for home/apartment

Need

B. Scarcity Scarcity means having limited resources to meet personal needs. Individuals are faced with scarcity because they do not have enough financial resources (income) to purchase everything they desire. Gas prices have risen drastically over the past year. The amount you spend on gas now accounts for a greater portion of your budget. However, you still need to get to school and work. List three alternative transportation strategies that will help you save money. 1.

Strategy #1

Answers will vary but could include walking to school, work, or both.

Strategy #2

Answers will vary but could include using a bicycle for transportation.

Strategy #3

Answers will vary but could include car-pooling.

Chapter 2 | Consumer Behavior

Name ________________________________________

C. Advertising for Different Levels of Decision Making Different purchases require different levels of decision making. Deciding where to attend college involves extensive decision making because you will put forth much time and effort to ensure you make the right decision. When buying an unfamiliar product or brand, such as a new HD television set, you will use limited decision making by taking a moderate amount of time to comparison shop. Deciding which toothpaste to buy involves routine decision making that requires little thought. Categorize the level of decision making required for each of the following products as extensive, limited, or routine. Then describe the type of media (print, radio, TV, Internet) you would use to promote the product and the emphasis of the advertisement.

Purchase

Level of Decision Making

New home

Extensive

New automobile

Extensive

Answers will vary but could include car features, financing options, and fuel-efficiency.

Fast food meal

Routine

Answers will vary but could include value menus and quick service.

Laptop computer

Limited

Answers will vary but could include price, preloaded software, memory capacity, and so forth.

Blue jeans

Limited

Answers will vary but could include status and image.

Type of Media Examples in this column will vary but could include TV, radio, print, billboard, or Internet ads.

Emphasis of Advertisement Answers will vary but could include quality materials, value, house designs, neighborhoods, and lifestyle.

Chapter 2 | Consumer Behavior

D. Types of Purchases Consumer purchases can be categorized as new (the purchase of a product for the first time), modified (the purchase of a new or different brand), or repeat (the purchase of the same product or brand). Advertising strategies are different for each type of purchase. Identify a product for each purchase category and describe the advertising strategy you would use for it. New Purchase:

Answers will vary but could include a new home.

Advertising Strategy:

Emphasize energy-efficiency, value of owning a home vs. renting, nice

community, convenient location, and so forth.

Modified Purchase:

Answers will vary but could include an automobile.

Advertising Strategy:

Emphasize fuel-efficiency, safety ratings, price, and features such as

heated seats, leather interior, GPS navigation system, and so forth.

Repeat Purchase:

Answers will vary but could include shampoo.

Advertising Strategy:

Emphasize the benefits derived from using the shampoo—healthy, shiny

hair.

E. Types of Products Products purchased by consumers can be classified as convenience, shopping, specialty, and unsought products. Define the four categories of products and explain how advertising should differ for each category. Then select a product for each category and create a print ad for it. Convenience products are purchased regularly in convenient locations. Ads for convenience products should emphasize easy access to the product. Shopping products consist of products that consumers want to own after they meet personal needs. Ads for shopping products should emphasize product features and benefits most important to the target market. Specialty products are those that have a strong brand loyalty. Ads for specialty products should emphasize the uniqueness of the product. Unsought products are not actively sought out by consumers. Ads for unsought products should emphasize how the product can satisfy consumer needs.

Chapter 3 | The Basics of Marketing

Name ________________________________________

Chapter 3: The Basics of Marketing FillintheBlanks 1. The marketing mix is the combination of four marketing elements—product, price, distribution, and promotion. 2. involves all of the processes used to identify, create, and Marketing maintain exchange relationships that satisfy individuals and organizations. 3. The marketing plan is a written description of the marketing objectives and the planned marketing strategies and activities. 4. The target market is a specific group of consumers to whom the business wants to sell its products or services. 5. A(n) niche market is a smaller market that has a unique set of needs. 6.

marketing communication is used to plan, execute, and Integrated monitor all promotional messages about a product to ensure consistency among all those messages. 7. Demographics include consumer characteristics such as age, gender, race, marital status, income, education level, and occupation. 8. Psychographics are consumer interests, attitudes, opinions, and lifestyles. 9.

Market segmentation is the process of dividing a large group of consumers into meaningful subgroups based on identifiable characteristics and needs. 10. Market share is a business’s portion of the total sales generated by all of the businesses operating in the same market.

True/False Questions T

11. Marketing has not always been viewed as an important business function.

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12. The marketing concept focuses on identifying and satisfying the needs of customers during the development and marketing of a product or service. 13. Price plays a major role in what will be produced and consumed.

14. Advertising is the only form of promotion used by businesses.

15. Selling involves collecting information to make marketing decisions.

16. Distribution involves determining the best methods and procedures to use so that customers can locate, obtain, and use a product or service. 17. When businesses choose to serve two or more markets, they will use a concentrated target market strategy. 18. Mass marketing is an attempt to appeal to a small specific group of consumers.

F F T F

19. A market segment is a subgroup of individuals within a larger market who share one or more characteristics. 20. Market potential is based on quantity of production.

Chapter 3 | The Basics of Marketing

A. The Four P’s of Marketing The 4 P’s of Marketing are product, price, place (distribution), and promotion. Conduct research to determine the price and place (where the product is distributed) for each of the products listed below. Record this information in the table. Then recommend a promotion for each product. The first item has been completed as an example.

Product

Price

Place (Distribution)

Promotion

BMW 328i

$42,000

Dealerships throughout the country

Answers will vary. TV commercials could promote special financing.

Coca-Cola (two-liter bottle)

$0.99–$2.19

Supermarkets, convenience stores, gas stations

Answers will vary. Newspaper ads, coupons, and local grocery flyers could promote special prices.

Skechers

$50–$100

Department stores, shoe stores

Answers will vary. TV commercials or print ads could promote the fashionable, athletic shoes.

John Deere riding lawn mower

$300–$2,000 depending on the size of the mower

John Deere dealerships, home improvement stores

Answers will vary. TV commercials could advertise the reliability of the John Deere brand.

Gallon of regular unleaded gasoline

$3 and higher depending on economic factors

Gas stations, supermarkets, convenience stores

Local newspaper

$0.50–$3.00 depending on circulation (daily, weekly, and so forth)

Supermarkets, news stands, airport shops, home delivery

Answers will vary. Supermarkets may promote lower gas prices based on accumulation of grocery sales. Answers will vary. Telemarketers and radio and newspaper ads could promote subscription specials.

Chapter 3 | The Basics of Marketing

Name ________________________________________

B. Marketing Functions Marketing functions are related activities that must be completed to accomplish marketing goals. The nine marketing functions are listed in the table below. List three to four activities associated with each marketing function, as is done for the first marketing function. Marketing Function

Activity #1

Activity #2

Activity #3

Activity #4

Market Planning

Identify target market

Develop effective target marketing strategy

Develop marketing mix

Produce a satisfying exchange relationship

Product and Service Management

Create products and services that meet the needs of customers

Gather customer input

Conduct research

Test product ideas

Distribution

Determine best methods to use to get products and services to customers

Use supply chain management to coordinate flow of products and services

Make sure product can be located and obtained by customers when needed

Determine most costefficient methods of getting products to customers

Pricing

Establish prices

Communicate value of products through prices

Establish a link between price and customer satisfaction

Promotion

Communicate information about products and services to customers Use direct personal communication to reach customers

Create advertisements and sales promotions

Use personal selling to reach customers

Garner positive publicity

Assess needs of customers

Explain how products and services satisfy customer needs

Listen to customers and offer product solutions to solve their problems

MarketingInformation Management

Collect information about the market

Manage information about the market

Make marketing decisions based on information collected

Study changes and trends in the market

Financing

Budget to ensure business has financial resources needed

Provide financial assistance to customers

Offer various forms of customer payment plans

Risk Management

Identify potential risks associated with marketing mix

Develop a risk management strategy

Prevent risk

Selling

Reduce risk

Chapter 3 | The Basics of Marketing

C. Market Segmentation You are interested in opening a new restaurant that offers American fare. Before doing so, you must gain a better understanding of your target market to determine the type of restaurant atmosphere that will be the most successful in your community. Online resources such as the U.S. Census Bureau, the Department of Economic Development (for most U.S. cities and states), American FactFinder, and Nielsen MyBestSegments (an online market segmentation tool) provide valuable information about demographics and psychographics for communities throughout the United States. Conduct research to learn more about the population of your community. Record demographic and psychographic data below. Based on the data you collect, describe the restaurant you will open in your community and explain why you think this restaurant will be a success with your target market. Then create a customer profile that describes the individual who is likely to visit your restaurant (the target market). Demographic data for your community:

Answers will vary. Demographic information may

include size of the population, ethnic mixture, income levels, education levels, home ownership rates, and number of workers per household.

Psychographic data for your community: Answers will vary. Psychographic data should describe common interests, lifestyles, and social activities of those living in the community. The Nielsen MyBest Segments website is a useful resource for psychographic data.

Description of restaurant:

Answers will vary. The restaurant should offer a menu and prices

that are relevant to the city’s population. The restaurant may be designated as a familyfriendly restaurant, an upscale restaurant that caters to professionals or higher-income customers, or something in between.

Customer profile:

Answers will vary. A customer profile is a description of the

characteristics of those most likely to buy the business’s products and services.

Chapter 4 | Product and Price Planning

Name ________________________________________

Chapter 4: Product and Price Planning FillintheBlanks 1. A(n) trademark grants a business the exclusive right to use a brand name, symbol, or design. 2. The product line is a group of closely related products with slight variations developed by the same business. 3. A(n) licensed brand is a well-known brand owned by one company that is sold for use by another company. 4. The product life cycle is a sequence of stages that a new product goes through during its time on the market. 5. Brand extension is a marketing strategy that allows a business to use one of its well-known brand names in a new product category. 6. Obsolescence occurs when a product is out of date, no longer wanted, or unusable. 7. Price skimming involves setting a high price to emphasize the uniqueness of a product and to recover the product development costs quickly. 8. Penetration pricing involves setting a low price for new products to gain a larger market share rapidly. 9. When the demand of a product is affected by its price, the product has . elastic demand 10. A(n) nonprice competition strategy tries to distinguish a product or service from competing products based on design, quality, and workmanship instead of price.

True/False Questions F

11. The cost of introducing a new product to the marketplace is inexpensive.

12. The product bundle includes all of the different products a business sells.

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13. An extended product can include the services or discounts that a car dealership offers with the purchase of a new automobile. 14. The product line width refers to the number of product lines a business offers.

15. The final stage of the product life cycle is the maturity stage.

16. The two main functions of a product’s package are protection and promotion.

17. Typically, maturity is the shortest stage in the life cycle of a product.

18. Intensive distribution involves selling a product at as many locations as possible during the maturity stage of the product life cycle. 19. The point at which demand and supply are equal is called the price equilibrium.

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20. Trade credit is made available by retailers to assist consumers in making purchases.

Chapter 4 | Product and Price Planning

A. Creating a New Product Businesses and entrepreneurs are challenged to create new, exciting products while maintaining profits. When developing a new product, innovators must generate numerous ideas to meet the needs of a target market. Once a list of possibilities is generated, ideas must be screened for sales potential, profit potential, production costs, legal and safety issues, and competition. You have the opportunity to propose a new product. Complete the table below as if you were preparing for the screening process of product development.

Concept

Description

New product idea

Answers will vary. Example: Automobile that uses water instead of gas or electricity.

Need for product

High fuel costs, need to conserve the environment

Sales potential for product

Great sales potential coinciding with a big “go green” movement

Profit potential for product

High profit potential if the automobile is priced to meet the consumers’ budgets

Production costs for product

Expensive initial cost to design and manufacture new product

Legal and safety issues associated with product

Possible backlash of using too much of a natural resource for automobiles; safety issues are minimal

Competition

No competition currently; success will attract more competitors

Chapter 4 | Product and Price Planning

Name ________________________________________

B. Finding Investors for New Products Investors often play the essential role of financing newly developed products. Using your proposed new product from Activity A, describe how you will pitch the product to potential investors to convince them to invest in your new product. Include an explanation of why your product idea is innovative and has high potential for profits. Answers will vary. Continuing with the example in Activity A, the pitch to investors should emphasize the need for alternative fuel to operate cars, the recyclable nature of water, economic advantages for the new product, and the need to make the product affordable for consumers. Investors need to realize that the high demand for this type of product will result in high returns on their investment.

C. Basic vs. Enhanced Products Basic products are the essentials that meet consumer expectations. Enhanced products may have advanced features, higher-quality materials, more desirable options, greater appeal, and usually, a higher price tag. Describe enhanced versions of the following basic products. The first item has been completed as an example. Basic Product

Enhanced Product

Base model for a new car

Car with a sun roof, leather seats, and blue tooth technology

Economy plane ticket

Business or first-class plane ticket

Hotel room with queen-size bed

Hotel suite with a kitchen, living room, and other amenities

Laminate flooring

Ceramic tile, hard wood floors

Steak dinner at restaurant

Four-course meal that includes salad, soup, main course, and dessert

Chapter 4 | Product and Price Planning

D. Product Width and Depth Width is the number of product lines offered by a business. Depth refers to the number of products within each product line. Choose your favorite automobile dealership, clothing store, or electronics store. Define the width and depth of the product line for your chosen business. Business:

Answers will vary. Example: Houston’s Momentum BMW Dealership

Product width:

Momentum BMW has 11 product lines: Series 1, Series 3, Series 5, Series 6,

Series 7, X3, X5, X6, Z4, M Series, and Mini Cooper.

Product depth:

The depth of Momentum BMW’s 11 product lines include the following:

Series 1—five products; Series 3—fifteen products; Series 5—seven products; Series 6—two products; Series 7—seven products; X3—two products; X5—six products; X6—three products; Z4—three products; M Series—three products; Mini Cooper—two products.

E. Product Label s Many popular products are easily recognized by the package label. Advertising involves designing a label that captures a customer’s attention but also includes information as required by law. Select a food product and answer the questions below about the design and contents of the label, paying special attention to the information required by law. Then using a separate sheet of paper, design and create a new label utilizing your suggested improvements. Product:

Answers will vary, but could include a food item such as a can of soup.

Based on food labeling laws, what information must be included on this product’s label? Answers will vary but include nutritional content, number of servings, ingredients, cooking directions, location where the product was manufactured, and net quantity.

How will you improve the label design? Answers will vary but could include use of more color, print that is easier to read, and an appealing logo or image.

Chapter 5 | Distribution Planning

Name ________________________________________

Chapter 5: Distribution Planning FillintheBlanks 1. When producers sell directly to final consumers, they are using a direct channel

2. The channel of distribution is the path on which products and services flow from the producer to the final consumer. 3. A(n) indirect channel involves intermediaries, or individuals and businesses that move a product from the producer to the consumer. 4.

Imports

are products and services purchased from another country.

marketing occurs when businesses purchase products or Business-to-business services from other businesses.

6. A(n) invoice the terms of payment.

is an itemized bill for products and services that states

7. A(n) purchase order ordered.

lists the types, quantities, and prices of products

is the management of business operations, such as Logistics transportation, storage, and delivery of products, along the supply chain.

9. A(n) warehouse products safely.

is a building designed to store large quantities of

10. A(n) distribution center is a large facility that offers a variety of supply chain services to help move a product to market more efficiently.

True/False Questions

11. Distribution involves the methods used by businesses to get their products to customers. 12. Wholesalers are businesses that sell products directly to consumers.

13. The simplest distribution channel involves only the producer and the consumer.

T T

14. When a direct channel of distribution is used, the producer or consumer is responsible for completing all of the marketing functions. 15. The point-of-sale (POS) system updates inventory records as each sale occurs.

16. Computerized systems tend to slow down the warehousing process.

17. Exports are products and services sold to another country.

18. Outsourcing occurs when the manufacturer or supplier hires a third party to perform specific supply chain management functions. 19. For rapid, inexpensive delivery of products, many businesses rely on railroads.

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20. The growth of international trade has increased the transportation of products by ship or boat.

Chapter 5 | Distribution Planning

A. Transporting Products from Producers to Consumers Distribution is the process of moving products and services from the producer to the consumer. Trace the distribution of the following products from the producer to the consumer. List some of the likely location(s) of the producer and the type(s) of transportation likely used to move the product along the supply chain to the consumer. The first item has been completed as an example.

Product

Producer Location(s)

Transportation

Ford Fusion automobile

North America, Mexico

Truck, boat, railroad

Apple iPod

Thailand, Malaysia, the Czech Republic, South Korea, Singapore, the Philippines

Airplane, truck, boat

Vizio flat-screen television

Taiwan, California

Airplane, truck, boat

Polo shirt by Ralph Lauren

Italy, the Philippines

Airplane, truck

Oil from Marathon Oil Company

Louisiana

Pipeline

Levi jeans

California and China

Airplane, truck

DiGiorno frozen pizza

California

Truck

Omaha Steaks

Nebraska

Airplane, truck

Chapter 5 | Distribution Planning

Name ________________________________________

B. Providing Goods and Services to Consumers A top college football team generates 55 percent of the college community’s annual revenue during football season. The school’s stadium holds approximately 103,000 fans. Retailers in the community must try to determine the needs of football fans during the busy football season. Using the first item as an example, list four additional products or services and explain why they would be in high demand. Product or Service Demanded

Rationale for Product or Service

Transportation to the stadium from shopping centers

Avoid traffic jams and the fight for limited parking spaces

Restaurants within walking distance of the stadium

Food and entertainment close to the game

Clothing and other gear bearing the university’s logo

Natural product extension for the big football game

Hotels near the stadium

Out-of-town guests

Individual seats with backs to hook to the bleacher seats

Comfort and assurance that the fan has his or her allotted space

C. Kiosks One form of nontraditional distribution of products is the kiosk. It is often used to distribute information about products. Kiosks can also be used to display and sell specialty products, as is often the case with kiosks found in shopping malls. Design a kiosk to sell a unique product. Assume the kiosk will also have a computer where customers can place orders. Answer the questions below about your kiosk. Then using a separate sheet of paper, create a sign for the kiosk and a poster to promote it. 1. What type of product would you sell at the kiosk? Answers will vary. For example, a kiosk could be used to sell batteries for graphing calculators and other electronics. 2. Where would you locate the kiosk?

Answers will vary but could include school campuses,

malls, and wi-fi cafes. 3. What forms of payment would be accepted by the kiosk?

Answers will vary but could

include cash, credit/debit card, or student ID card. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.