Ch.5 Test Bank Docx Differentiation Advantage

Package Title: Chapter 5, Testbank

Course Title: Dyer, SM 2e

Chapter Number: 5

Question type: Multiple Choice

1) A strategy whereby companies attempt to gain competitive advantage by offering value that is not available in other products or services is known as __________.

a) product depreciation

b) mass customization

c) product differentiation

d) service dissemination

Difficulty: Easy

Section Reference 1: What Is Product Differentiation?

Learning Objective 1: Define product differentiation.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

2) Purple Inc., an interior design company, offers its clients unique design solutions. Clients can choose from Purple’s in-house products, customize them to meet their needs, and see how their home would appear using a 3D visualization software in a mini-theatre at Purple’s office. This gives Purple a competitive advantage over its rivals since none of them offer this unique combination of services. Purple’s advantage is due to its __________.

a) service standardization strategy

b) mass customization strategy

c) product differentiation strategy

d) supply-driven strategy

Difficulty: Hard

Section Reference 1: What Is Product Differentiation?

Learning Objective 1: Define product differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

3) Leo Corp., a mobile manufacturer, attains competitive advantage over its rivals by providing unique features in the phones they manufacture, such as a 3000 mAh battery, facial recognition software, and customized applications. Which of the following is Leo trying to attain through these additional product features?

a) Service standardization

b) Mass customization

c) Product depreciation

d) Product differentiation

Difficulty: Hard

Section Reference 1: What Is Product Differentiation?

Learning Objective 1: Define product differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

4) Which of the following is true of product differentiation?

a) It is a matter of customer thought and perception.

b) It cannot occur when two companies use similar technologies.

c) It does not typically require higher costs.

d) It is independent of intangible features such as brand image and value.

Difficulty: Medium

Section Reference 1: What Is Product Differentiation?

Learning Objective 1: Define product differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

5) Willow Inc., a company that designs and manufactures watches, designs a digital watch allowing users to sync it with their mobile phones. It has a touchscreen, microphone, and Bluetooth device installed in it. The watch is also water-resistant for up to 200 meters. The other general features of the watch remain the same. Which of the following statements is true in this case?

a) The touchscreen feature enables the product to do more jobs on existing functions in terms of product differentiation.

b) The Bluetooth device feature enables the product to do a better job of the existing functions in terms of product differentiation.

c) The feature of water-proof material enables the product do more jobs in terms of product differentiation.

d) The microphone feature enables the product to do a unique job in terms of product differentiation.

Difficulty: Hard

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

6) Time-Threads Inc. sells storage devices, such as memory cards, thumb drives, and external hard disks. Which of the following is most likely true if it achieves product differentiation by designing its products to perform more jobs than its competitors?

a) Its thumb drives come with a tracker to help users locate them.

b) Its memory cards offer more space than most others in the market.

c) Its hard disks are designed for quicker copying of files from various mediums.

d) Its instructions manuals are printed in more languages than its competitors.

Difficulty: Hard

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

7) When a company mass-produces the various modules of a product and then allows customers to select which modules will be combined together, it is known as __________.

a) mass standardization

b) product standardization

c) product differentiation

d) mass customization

Difficulty: Easy

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

8) Ochre Inc. manufactures accessories such as belts, bags, and shoes. It produces the basic models of all these items on large scale. However, customers can customize these products by choosing embellishments of their choice, such as zippers, straps, and buckles. Ochre’s manufacturing process best exemplifies __________.

a) mass optimization

b) mass customization

c) mass consumerism

d) mass production

Difficulty: Hard

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

9) Juan, the manager of Pvari, a chain of jewelry stores, claims that mass customization is the best way to create value for their products. Nate, the senior designer, believes that every product must be customized from the pre-production stage. Which of the following statements will strengthen Juan’s claim?

a) Designers feel their creative skills will be underutilized in mass production.

b) The production costs will reduce to half if products are made in large scale.

c) Customers love the idea of designing their own jewelry from scratch.

d) Their clientele includes a niche group that prefers highly customized products.

Difficulty: Hard

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Analysis

Standard 1 : AACSB || Reflective Thinking

10) Gear-up Inc., an apparel brand, differentiates its products by manufacturing jeans that last longer than those of other brands. The fabric is durable and does not wear out even after years of regular use. This attracts customers despite Gear-up’s high prices. Which of the following elements of product differentiation is Gear-up primarily providing?

a) Aesthetics

b) Quality

c) Convenience

d) Quantity

Difficulty: Hard

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

11) Which of the following is necessary for a product to be considered reliable?

a) It needs to do a better job as far as performance on existing features is concerned.

b) It needs to do more jobs than products offered by other firms in the market.

c) It needs to last longer than products offered by other firms in the market.

d) It needs to offer unique functions and features that no other firm offers.

Difficulty: Medium

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

12) Which of the following products best exemplifies reliability?

a) A computer that has greater processing speed than others in the market.

b) A phone that offers the unique function of face recognition.

c) A washing machine that works optimally for many years.

d) An air conditioner that detects movement automatically.

Difficulty: Hard

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

13) In terms of product differentiation, convenience refers to ________.

a) how long a product functions optimally

b) how unique a product is when compared to others

c) how efficient a product is in meeting consumers’ primary needs

d) how easy it is for customers to purchase a product

Difficulty: Medium

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

14) Kiara states that, as a customer, the pen she had recently purchased was a very convenient product. In terms of product differentiation, which of the following is Kiara most likely to denote?

a) The pen lasted longer than pens by other brands.

b) The pen came in different colors and shapes.

c) The pen was made with high-quality plastic.

d) The pen was easier to purchase than other products.

Difficulty: Hard

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

15) Dave’s is a retail chain that offers all utility products ranging from home appliances, stationery, and groceries. Its customers prefer the store as they can buy everything they need under one roof. Dave’s has more than a 100 outlets across the state, which makes the store easily accessible for customers easy. These features of Dave’s best exemplify the element of __________.

a) quantity

b) convenience

c) preference

d) quality

Difficulty: Hard

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

16) ________ occur(s) when some products or services are more convenient to use because there is a large network of other users.

a) Network ethics

b) Network effects

c) Network latency

d) Network virtualization

Difficulty: Easy

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

17) Zeal Inc. launches a new software application. The application doesn’t offer any new features but is cheap compared to others in the market. However, because of its low price, customers benefit from network effects. The application often crashes due to bugs in the software. Which of the following is likely to be true in this case?

a) Zeal’s new product is an example of customization.

b) The users of the product can contact other users for queries.

c) Zeal’s new product is likely to be considered reliable although not convenient.

d) The customers are likely to purchase it for the unique job the product does.

Difficulty: Hard

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

18) When products are differentiated through marketing, via advertisements, promotions, and other marketing activities, it is known as __________.

a) brand availability

b) brand conflict

c) brand image

d) brand loyalty

Difficulty: Easy

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

19) Companies focus most on establishing brand image when _________.

a) they can differentiate their products based on their features

b) the quality of their products is higher than that of others in the market

c) the familiarity principle doesn’t work for their products

d) they have trouble differentiating their product based on convenience

Difficulty: Medium

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

20) Tangerine Inc. differentiates its products by building a brand image, whereas Cloud Inc. does not rely on brand image to differentiate its products. Which of the following statements is likely to be true in this case?

a) Tangerine is likely to rely on product features to attract customers.

b) Tangerine is likely to use advertisements to differentiate its products.

c) Cloud is likely to use promotional tools to increase market share.

d) Cloud is unlikely to rely on reliability to boost sales.

Difficulty: Hard

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

21) Suede Inc., a company that manufactures bags, makes extensive use of advertising to compete in the market. The features of its product are similar to existing products in the market. It uses other promotional tools such as discounts, coupons, and rebates to increase its customer base. In this scenario, which of the following elements does Suede rely on to differentiate its products?

a) Product reliability

b) Convenience

c) Brand image

d) Quality

Difficulty: Hard

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

22) When firms rely on brand image to differentiate products, some of them associate their products with positive qualities in the minds of customers. These are known as __________.

a) prestige brands

b) convenient brands

c) utility brands

d) functional brands

Difficulty: Easy

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

23) Peter always buys shoes from Brown Boot’s Inc., although other brands offering shoes of same quality are available closer to home and at lower prices. Brown Boots differentiates itself through a strong brand image. Their advertisements associate the brand with class, style, and elegance. Which of the following is a likely reason for Peter’s preference toward Brown Boot’s?

a) Quality

b) Reliability

c) Convenience

d) Prestige

Difficulty: Hard

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

24) The marketing department of a cosmetics brand conducts a research. 40% of its customers said that they prefer the brand because they do not need to reapply the product often, while 30% said that they chose the brand because the products are organic. If the brand segments the customers by the features of the cosmetics they prefer, the segmentation is primarily based on __________.

a) brand image

b) demographics

c) product attributes

d) psychographics of wholesalers

Difficulty: Hard

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

25) Crimson Corp., designs its products based on demographics of its customers. Jaded Inc. designs its products based on product attributes. Which of the following is likely to be true in this case?

a) Crimson is likely to consider reliability of products as the primary factor for customer segmentation.

b) Crimson is unlikely to consider customizability of products as the primary factor for customer segmentation.

c) Jaded is likely to consider income level of customers as the primary factor for customer segmentation.

d) Jaded is unlikely to consider quality of products as the primary factor for customer segmentation.

Difficulty: Hard

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

26) Sasha, the marketing head of a firm, believes that customers hire products to do jobs for them and that these jobs should be the basis for market segmentation. In this case, which of the following is Sasha likely to approve?

a) Segmentation based on age and gender of end consumers.

b) Segmentation based on features such as durability and quality.

c) Segmentation based on the functions provided by a product.

d) Segmentation based on socio-economic factors of customers.

Difficulty: Hard

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

27) Tina prefers buying products for the emotional dimension of the job they perform rather than its functional attributes. Jay prefers to buy products for the social dimension of the job they do rather than its functional or emotional attributes. In this case, which of the following is most likely to be true?

a) Tina buys a bike because of its low rate of fuel consumption.

b) Tina buys an original painting by her favorite artist even though it is not in good condition.

c) Jay buys a car he loves even though his friends think it does not look classy.

d) Jay buys a piece of furniture that allows more storage space despite it looking odd.

Difficulty: Hard

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

28) The research and development department of Chi Inc. studies the buying patterns of its customers. If it starts with the customers in the first step of the consumption chain, which of the following does it most likely study?

a) How do its customers find its products?

b) How do its customers order its products?

c) How do its customers become aware of their needs?

d) How do its customers pay for the products?

Difficulty: Hard

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

29) At Red Inc., a retail store, Mark, the manager, maps the consumption chain to understand the buying patterns of the consumers. He has identified how consumers become aware of their needs for products or services. Which of the following is he likely to do next?

a) He identifies how consumers find the store’s offerings.

b) He identifies why dissatisfied consumers return products.

c) He identifies the kind of help that consumers need in order to use their products.

d) He identifies the mode used to pay for the products.

Difficulty: Hard

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

30) During the process of mapping the consumption chain of a product, Nina looks at the methods followed by companies which send their engineers to check laptops when they detect that a possible bug could be affecting a system. Which of the following questions does this example address?

a) What if customers aren’t satisfied and need a return or exchange?

b) What help do customers need to become familiar with the product?

c) How is your product stored?

d) How is your product repaired, serviced, or disposed of?

Difficulty: Hard

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

31) Tracie, the CEO of Boney’s Inc., wanted to analyze what customers think of their products. She began her survey by finding out how her customers become aware of their needs, how they find the products, how they purchase products, and how the products are serviced or repaired. These steps are part of ________.

a) mapping the consumption chain

b) studying the value chain

c) studying the production cycle

d) mapping the supply chain

Difficulty: Hard

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

32) Kim, a consumer, is in the final stage of selecting a product. Which of the following is true if her actions follow the typical consumption chain?

a) Kim is unlikely to have become aware of her need for a product yet.

b) Kim is likely to be persuaded by the product attributes at this stage.

c) Service providers are likely to assist Kim in helping her use the product.

d) Service providers are likely to detect faults with the performance of the product.

Difficulty: Hard

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

33) Leo Foods is an eatery that sells organic food. It opens a number of outlets across the state, creates a website that makes ordering and take-away easy, and also does not charge a delivery fee for its regular customers. Which step of the consumption chain does this scenario depict?

a) The sixth step: how is your product stored/moved around?

b) The fourth step: how do consumers become aware of their need?

c) The tenth step: how is your product/service paid for?

d) The second step: how do consumers find your offering?

Difficulty: Hard

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

34) Home Shore Inc., an electronics store, provides value to its customers by setting up televisions at customers’ homes for free. The company also provides instructional manuals on how to set them up without professional help. Which step of the consumption chain does this scenario depict?

a) The sixth step: how do consumers find your offering?

b) The seventh step: how is your product stored/moved around?

c) The tenth step: what if customers aren’t satisfied and need to return or exchange?

d) The fifth step: how is your product/service delivered?

Difficulty: Hard

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

35) Floyd Inc., a manufacturer of washing machines, encourages customers to choose their brand through extensive marketing. Features of Floyd’s products are compared with those of other brands, and customers are made to see the benefits they get from purchasing Floyd’s products. Which step of the consumption chain does this scenario depict?

a) The eighth step: what do customers need help with when they use your product?

b) The ninth step: what if customers aren’t satisfied and need a return or exchange?

c) The third step: how do consumers make their final selections?

d) The fourth step: how do customers order and purchase your product?

Difficulty: Hard

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

36) Rita lives in a dorm with other students of her college. She hesitates to buy furniture owing to lack of space. She wants to buy a new study desk, one that can easily fold away and be dismantled so that it doesn’t occupy much space when not in use. What is Rita’s main concern?

a) How to use the product

b) How to store the product

c) How to assemble the product

d) How to locate the product

Difficulty: Hard

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

37) Saturn Inc., a manufacturer of home appliances, familiarizes customers with its products through advertising. Apart from attracting new customers, it offers quick demos in mass media that assist existing customers. Which of the following stages in the consumption chain is depicted in this scenario?

a) The eighth step: what do customers need help with when they use a product?

b) The ninth step: what if customers aren’t satisfied and need a return or exchange?

c) The third step: how do customers make their final selections?

d) The fourth step: how do customers order and purchase a product?

Difficulty: Hard

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

38) Whenever customers of Black Inc., a mobile manufacturer, have a complaint to make about a product not being up to the mark, the company makes it a point to contact the customer or even go to their homes to understand the issue. The company believes that this will help retain customers and create better products. Which step of the consumption chain is this scenario depicting?

a) The third step: how do consumers make their final selections?

b) The fifth step: how is your product/service delivered?

c) The sixth step: how is your product/service paid for?

d) The ninth step: what if customers aren’t satisfied and need a return or exchange?

Difficulty: Hard

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Application

Standard 1 : AACSB || Analytic

39) Which of the following questions denotes the last step in a consumption chain?

a) How do consumers find your offering?

b) How is your product stored/moved around?

c) How is your product repaired, serviced, or disposed of?

d) How is your product/service delivered?

Difficulty: Easy

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

40) Frieda, the manager of a retail store, believes that a customer, Jake, is in the selection making stage. Nina, the sales person, believes that Jake is at the stage where he requires help in using the product. Which of the following statements strengthens Frieda’s argument?

a) Jake is unaware of his need for a product.

b) Jake had placed an order for the product earlier and was in the store to pick it up.

c) Jake is comparing the product features offered by two brands.

d) Jake had purchased the product and is looking for a manual.

Difficulty: Hard

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Analysis

Standard 1 : AACSB || Reflective Thinking

41) Identify a true statement about product differentiation.

a) When the perceived value of a product increases in the mind of the customer, it also increases the customer's willingness to pay a higher price.

b) Companies that invest resources to create unique features in their products often charge a lower price.

c) It exists only when the products of two different companies are different in terms of technical features.

d) It is a strategy whereby companies attempt to gain advantage by producing similar products in bulk to reduce costs.

Difficulty: Medium

Section Reference 1: What Is Product Differentiation?

Learning Objective 1: Define product differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

42) Which of the following is a source of differentiation advantage?

a) More convenient to find, purchase, or use

b) Reduced quality or reliability

c) Manufacturing products with similar features

d) Manufacturing different products for each feature

Difficulty: Medium

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

43) Identify a way in which companies can differentiate their products based on features.

a) By offering customers a feeling of prestige upon using their products

b) By making their products easily available to customers

c) By designing products to be customizable by customers

d) By designing products of superior quality compared to others in the market

Difficulty: Medium

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

44) A product is said to be differentiated by quality or reliability when _________.

a) it gives customers a certain feeling or idea

b) it is easily available when the customer needs or wants it

c) it does a better job on features available in other products

d) it does the same job as other products, but does it for longer

Difficulty: Medium

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

45) Firms use convenience as a source of differentiation advantage by __________.

a) making a product easier to find and purchase

b) promoting a product through advertisements and promotions

c) making a product identical to other products on the market

d) selling their products only in the company's exclusive stores

Difficulty: Medium

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

46) Which of the following is a characteristic of network effects?

a) They cannot be reproduced by competitors.

b) They make a service more convenient to use.

c) They offer customers the satisfaction of owning a unique product.

d) They add more value to a product when the product has few customers.

Difficulty: Medium

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

47) When do companies often turn to brand image as a source of differentiation advantage?

a) When their products have achieved top-of-mind awareness in their customers

b) When there is difficulty differentiating products based upon features, reliability, or convenience

c) When their products or services have the largest network of loyal customers in the industry

d) When they produce services that are more reliable than the services of their competitors

Difficulty: Medium

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

48) Why do many people prefer prestige brands over other products in the same industry?

a) They always come with a longer warranty.

b) They help them feel part of an elite group or “club.”

c) They are almost always manufactured in specialized plants with highly-skilled workers.

d) They are functionally superior products which can be purchased at a much lower price.

Difficulty: Medium

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

49) How do companies pursuing customer segmentation as a differentiation strategy become successful?

a) By grouping customers based on similar needs

b) By designing a specific product for each customer

c) By creating products that meet the needs of their entire customer base

d) By allowing customers to customize their products based on their individual preferences

Difficulty: Medium

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

50) Marketers typically segment markets based on __________.

a) the production capacity of a firm

b) various attributes or the price of products

c) the number of competitors in the market

d) network effects that make products convenient to use

Difficulty: Medium

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

51) What is meant by mapping the consumption chain?

a) Differentiating products by associating them with positive qualities in the minds of customers

b) Grouping customers based on similar needs

c) Identifying all the steps through which customers pass, from the time they first become aware of a product to the time they have to dispose it

d) Differentiating products through marketing via advertisements, promotions, and other marketing activities

Difficulty: Medium

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

52) Identify the best way a company can enable consumers to find its products once they are aware of a need.

a) By investing heavily in marketing

b) By imitating the product design of a successful brand

c) By placing the products at convenient locations where consumers are likely to find them

d) By selling the products solely at certain shops at a significantly high price

Difficulty: Medium

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

53) Which of the following ways can be used by companies to influence a consumer's product selection process?

a) Imitating the product design of a successful brand

b) Making the product easier to find and purchase

c) Designing products to signal the user when they are no longer effective and have to be replaced

d) Providing customers with side-by-side comparisons of their products with those of competitors

Difficulty: Medium

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

54) ________ requires acquiring and allocating resources.

a) Segmentation of the market

b) Mapping the consumption chain

c) Building the capacity to deliver unique value

d) Analyzing a company's differentiation strategy

Difficulty: Medium

Section Reference 1: Building the Resources and Capabilities to Differentiate

Learning Objective 1: Discuss how to build the resources and capabilities to differentiate.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

55) Identify a true statement about the Net Promoter Score.

a) It is a tool used to assess a business model.

b) It is used to measure the brand image of a product.

c) It is used to build resources and capabilities to deliver value.

d) It is a useful tool for assessing customer satisfaction.

Difficulty: Medium

Section Reference 1: Building the Resources and Capabilities to Differentiate

Learning Objective 1: Discuss how to build the resources and capabilities to differentiate.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

Question type: Text Entry

56) When products are differentiated by being associated with positive qualities in the minds of customers, they are considered ___.

Difficulty: Easy

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

57) Network effect occurs when some products or services are more convenient to use because there is a ___ of other users.

Difficulty: Easy

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

58) ___ is grouping customers based on similar needs.

Difficulty: Easy

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

Question type: Essay

59) What are the three ways in which product features can be offered for the purpose of differentiation?

Difficulty: Medium

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

Solution: The following are the three ways in which product features can be offered.
1) The product does a “better job” of meeting a customer need on existing product features.
2) The product does “more jobs” for a customer than other products.
3) The product does a “unique job” that nothing else does.

60) Briefly discuss the questions that a company must ask in order to figure how to deliver the unique value of a product.

Difficulty: Medium

Section Reference 1: Building the Resources and Capabilities to Differentiate

Learning Objective 1: Discuss how to build the resources and capabilities to differentiate.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

Solution: It is important for a company to figure out how to deliver the unique value of a product. For example, how does a company consistently offer different features in its products? How does a company deliver high quality and reliability? How does a company build a brand image? Building the capacity to deliver unique value requires acquiring and allocating resources.

61) Explain product differentiation.

Difficulty: Easy

Section Reference 1: What Is Product Differentiation?

Learning Objective 1: Define product differentiation.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

Solution: Product differentiation is a strategy whereby companies attempt to gain competitive advantage by offering value that is not available in other products or services or that other products don’t do as well. This value may come in the form of different product features, product quality or reliability, convenience, or brand image. It is important to remember that product differentiation is always a matter of customer perception. The actual products of two different companies may be similar in terms of technical features, but if one product is perceived as being different in a way that is valued by customers, then product differentiation exists.

62) Define mass customization and explain what companies must do in order for this method to be successful.

Difficulty: Easy

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

Solution: Mass customization is when a company mass-produces the various modules of a product and then allows customers to select which modules will be combined together. Companies that choose this approach must develop the resources and capabilities necessary to create their products in modules and to accurately combine those modules as customers request.

63) What is brand image and when does a company make use of this product differentiation method?

Difficulty: Medium

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

Solution: Brand image is when products are differentiated through marketing, advertisements, promotions, and other marketing activities. Companies often turn to this source of advantage when they have difficulty differentiating their products based on features, reliability, or convenience. Numerous studies have shown that the more people are exposed to something, be it a brand, company, or product, the more they come to trust it.

64) Explain how product features can be used to create differentiation in the market.

Difficulty: Medium

Section Reference 1: Sources of Product Differentiation

Learning Objective 1: Describe the four major categories or sources of product or service differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

Solution: It is useful to think about offering different product features in three ways:
1) The product does a “better job” of meeting a customer need on existing product features.
2) The product does “more jobs” for a customer than other products.
3) The product does a “unique job” that nothing else does.

Does a better job on existing features: Some companies differentiate their products by focusing on one particular feature and doing a better job than other products of providing value on that particular feature. Some companies succeed by doing a better job providing service to customers by figuring out ways to exceed customer expectations.

Does more jobs: In some cases, a product might not do a better job on existing features but simply does more jobs, or meets more needs, for customers than competitor offerings.

Does a unique job: Some products do a completely unique job that other products simply do not do. Rather than simply doing existing jobs better or doing more of jobs than other products, they offer a completely new feature to the market.

65) What is customer segmentation? Mention the three types of customer segmentation.

Difficulty: Medium

Section Reference 1: How to Find Sources of Product Differentiation

Learning Objective 1: Explain how to find sources of product differentiation.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

Solution: customer segmentation involves grouping customers based on similar needs. Customer segments are groups of people who share similar needs and thus are likely to desire the same features in a product. Along with defining customer segments, a company must choose which segments are actually in its target market. Marketers typically segment markets in one of three ways:
1) Based on various attributes or the price of products
2) Based on attributes of the individuals or companies who are customers, including demographics or psychographics
3) Based on the job-to-be-done view, an alternative way of segmenting customers that has emerged recently