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Chapter 9: Products: Consumer Offerings

Every problem in the chapter beside the book’s answer, a chapter at a time as you scroll.

Chapter 9: Products: Consumer Offerings

43 problems · 0 figures

Knowledge Check 9.1.1 §9.1 source ↗

Which of the following is the best example of a pure service?
  1. a.
    Haircut
  2. b.
    Meal at a restaurant
  3. c.
    Frozen waffles
  4. d.
    Sports car

Answer

A. Haircut
A haircut is a service because it cannot be touched, owned, or stored for later use.

Knowledge Check 9.1.2 §9.1 source ↗

Jorge visited his favorite retailer to find that the store had transformed into a space with product demonstrations, product trials, and technology, which improved his overall perception of the brand. This is called a(n) ________
  1. a.
    product
  2. b.
    service
  3. c.
    experience
  4. d.
    advertisement

Answer

C. experience
An experience combines marketing, technology, and service to alter the consumer's perception.

Knowledge Check 9.1.3 §9.1 source ↗

A package of gum at the checkout of a grocery store is considered a(n) ________ product.
  1. a.
    convenience
  2. b.
    shopping
  3. c.
    specialty
  4. d.
    unsought

Answer

A. convenience
A convenience product is widely available, has a low cost, and does not require a lot of consideration.

Knowledge Check 9.1.4 §9.1 source ↗

Potbelly Sandwich Shops use paper bags to hold customers' sandwiches. What type of industrial product is the bag?
  1. a.
    Raw materials
  2. b.
    Manufactured materials and parts
  3. c.
    Capital items
  4. d.
    Supplies and services

Answer

D. Supplies and services
A bag is a supply that does not retain value on a balance sheet.

Knowledge Check 9.1.5 §9.1 source ↗

At the beginning of this chapter, we learned about the Peloton brand. Peloton users use not only the physical bike also but online classes with an instructor to stay fit within their own homes. This need represents the ________ product.
  1. a.
    core
  2. b.
    actual
  3. c.
    augmented
  4. d.
    valued

Answer

C. augmented
The customer seeks both the core product (the bike) and the online classes, warranty, customer service, and support (the augmented product) in order to stay fit.

Knowledge Check 9.2.1 §9.2 source ↗

Oreo's selection of flavors would be considered a ________.
  1. a.
    product
  2. b.
    product line
  3. c.
    product mix
  4. d.
    product category

Answer

B. product line
Oreo's selection of flavors represents a product line because it encompasses multiple similar products.

Knowledge Check 9.2.2 §9.2 source ↗

A product mix contains ________.
  1. a.
    a mix of the company’s most popular products
  2. b.
    a singular product
  3. c.
    all the products that a company sells
  4. d.
    a group of similar products

Answer

C. all the products that a company sells
A product mix contains all the products that a company sells.

Knowledge Check 9.2.3 §9.2 source ↗

If Domino's were to add a Chicago-style stuffed pizza to its menu, this would represent an expansion of the ________ of its pizza offerings.
  1. a.
    product line depth
  2. b.
    product mix width
  3. c.
    product items
  4. d.
    product differentiation

Answer

A. product line depth
An addition of a type of pizza would represent product line depth.

Knowledge Check 9.2.4 §9.2 source ↗

Product line depth refers to ________.
  1. a.
    product characteristics
  2. b.
    the number of product lines
  3. c.
    product assortment
  4. d.
    the number of products in the product line

Answer

D. the number of products in the product line
Product line depth refers to the number of products in a product line. Products must be similar or complementary to be part of the same product line.

Knowledge Check 9.2.5 §9.2 source ↗

Which of the following is a benefit of product line filling?
  1. a.
    Less money spent on research and development
  2. b.
    Protection against competitors
  3. c.
    Creates a product line assortment
  4. d.
    Stretches the product line

Answer

B. Protection against competitors
Product line filling has the benefit of protecting a brand from competitors that might enter the market with a similar offering and utilizes the brand’s capacity to produce more products.

Knowledge Check 9.3.1 §9.3 source ↗

Which of the following is NOT a stage of the product life cycle?
  1. a.
    Introduction
  2. b.
    Growth
  3. c.
    Maturity
  4. d.
    Profitability

Answer

D. Profitability
While profitability is measured along the product life cycle, it is not a stage of the product life cycle.

Knowledge Check 9.3.2 §9.3 source ↗

Which criterion does the product life cycle use?
  1. a.
    Sales
  2. b.
    Profitability
  3. c.
    A and B
  4. d.
    None of these are correct.

Answer

C. A and B
The product life cycle follows a product’s sales and profitability.

Knowledge Check 9.3.3 §9.3 source ↗

Which stage of the product life cycle is characterized by a rapid increase in sales?
  1. a.
    Introduction
  2. b.
    Growth
  3. c.
    Maturity
  4. d.
    Decline

Answer

B. Growth
The growth stage is characterized by a rapid increase in sales.

Knowledge Check 9.3.4 §9.3 source ↗

Which stage of the product life cycle is characterized by stable sales and profitability?
  1. a.
    Introduction
  2. b.
    Growth
  3. c.
    Maturity
  4. d.
    Decline

Answer

C. Maturity
Stable sales and profitability characterize the maturity stage.

Knowledge Check 9.3.5 §9.3 source ↗

Which of the following is a reason that brands may not follow the product life cycle sequentially?
  1. a.
    Brands can grow rapidly.
  2. b.
    Brands can skip the product life cycle all together.
  3. c.
    Brands can be a fad.
  4. d.
    Brands can skip to maturity right away.

Answer

C. Brands can be a fad.
Brands that are a fad are typically introduced, grow rapidly, and decline quickly.

Knowledge Check 9.4.1 §9.4 source ↗

Mohammad's Shoe Company is expanding distribution for its most popular shoe line. The shoe line is in the ________ stage of the product life cycle.
  1. a.
    introduction
  2. b.
    growth
  3. c.
    maturity
  4. d.
    decline

Answer

B. growth
The growth stage of the product life cycle is characterized by increasing distribution channels.

Knowledge Check 9.4.2 §9.4 source ↗

Jia has established a rapid skimming strategy for her ice cream shop. The ice cream shop is in the ________ stage of the product life cycle.
  1. a.
    introduction
  2. b.
    growth
  3. c.
    maturity
  4. d.
    decline

Answer

A. introduction
Pricing strategies are most common during the introduction stage of the product life cycle.

Knowledge Check 9.4.3 §9.4 source ↗

Carlos has ceased all nonessential spending for his computer repair business. The computer repair business is in the ________ stage of the product life cycle.
  1. a.
    introduction
  2. b.
    growth
  3. c.
    maturity
  4. d.
    decline

Answer

D. decline
Harvesting and divesture are most common during the decline stage of the product life cycle.

Knowledge Check 9.4.4 §9.4 source ↗

LaToya has found a new market for her restaurant by expanding to catering. The restaurant is in the ________ stage of the product life cycle.
  1. a.
    introduction
  2. b.
    growth
  3. c.
    maturity
  4. d.
    decline

Answer

C. maturity
Product and market modification are most common during the maturity stage of the product life cycle. LaToya is engaging in both product and market modification.

Knowledge Check 9.4.5 §9.4 source ↗

Jamie’s legal business has had some early success and decided to add estate planning to its business portfolio. The legal business is in the ________ stage of the product life cycle.
  1. a.
    introduction
  2. b.
    growth
  3. c.
    maturity
  4. d.
    decline

Answer

B. growth
Expanding distribution, improving product quality, and messaging are most common during the growth stage of the product life cycle.

Knowledge Check 9.5.1 §9.5 source ↗

Which of the following is a benefit of a brand?
  1. a.
    Consumers always choose name brands.
  2. b.
    Brands can command higher prices.
  3. c.
    Shareholders demand strong brands.
  4. d.
    Every company must have a brand.

Answer

B. Brands can command higher prices.
Brands often evoke positive feelings that allow a company to charge more for its product or service.

Knowledge Check 9.5.2 §9.5 source ↗

Which of the following describes the financial asset associated with a brand?
  1. a.
    Brand price
  2. b.
    Brand name
  3. c.
    Brand equity
  4. d.
    Brand value

Answer

D. Brand value
Brand value is the financial asset associated with a brand.

Knowledge Check 9.5.3 §9.5 source ↗

Which of the following is NOT a means of brand positioning?
  1. a.
    Value
  2. b.
    Benefits
  3. c.
    Brand equity
  4. d.
    Attributes

Answer

C. Brand equity
Brand equity is the additional value that a brand has over its competitors, while values, benefits, and attributes are all associated with brand positioning.

Knowledge Check 9.5.4 §9.5 source ↗

The Whole Foods 365 brand is an example of a ________.
  1. a.
    national brand
  2. b.
    private brand
  3. c.
    licensed brand
  4. d.
    co-brand

Answer

B. private brand
Whole Foods uses the 365 brand as a private label for its products.

Knowledge Check 9.5.5 §9.5 source ↗

Uber and Spotify teamed up to bring custom playlists to Uber rides. This is an example of a ________.
  1. a.
    national brand
  2. b.
    private brand
  3. c.
    licensed brand
  4. d.
    co-brand

Answer

D. co-brand
The two brands collaborated on one offering.

Knowledge Check 9.6.1 §9.6 source ↗

Domino's Pizza recently added sandwiches to its menu. This is an example of a ________.
  1. a.
    line extension
  2. b.
    brand extension
  3. c.
    multibrand
  4. d.
    new brand

Answer

B. brand extension
Domino's is leveraging its brand to a new category of products.

Knowledge Check 9.6.2 §9.6 source ↗

The North Face adds a new parka to its line of North Face–branded winter coats. This is an example of a ________.
  1. a.
    line extension
  2. b.
    brand extension
  3. c.
    multibrand
  4. d.
    new brand

Answer

A. line extension
A line extension retains the product category and brand.

Knowledge Check 9.6.3 §9.6 source ↗

Bethany purchases a different bar soap every time she shops based on what is on sale. Bethany can be considered a ________.
  1. a.
    switcher
  2. b.
    shifting loyal
  3. c.
    split loyal
  4. d.
    hard-core loyal

Answer

A. switcher
Customers who frequently change brands are switchers.

Knowledge Check 9.6.4 §9.6 source ↗

Jorge only purchases Apple computers and will not accept a substitute. Jorge can be considered a ________.
  1. a.
    switcher
  2. b.
    shifting loyal
  3. c.
    split loyal
  4. d.
    hard-core loyal

Answer

D. hard-core loyal
Hard-core loyal customers primarily purchase one brand in the category.

Knowledge Check 9.6.5 §9.6 source ↗

Which of the following brand metrics measures intended behavior?
  1. a.
    Brand lift
  2. b.
    Brand engagement
  3. c.
    Brand preference
  4. d.
    Brand equity

Answer

C. Brand preference
Brand preference measures intended behavior.

Marketing Dashboard 9.6 §9.6 source ↗

Table 9.3 in the book ↗
Total revenue $6.25
COGS $3.50
Administrative, sales $0.75
Taxes, depreciation, debt payments, amortization $0.50

Profit margins are a widely used financial measure to determine the profitability of a business, considering the cost to manufacture and sell a product or service and measuring how much of every dollar in sales or services your company keeps from its earnings. Cost of goods sold, or COGS, describes expenses directly attributable to the product or service. It is important to deduct COGS from profitability to fully understand how much direct costs impact profitability. However, expenses don’t end once manufacturing costs are considered. Companies pay for overhead, such as office space, trucks, and warehouses. They also account for depreciation on their assets, pay taxes, and incur costs for employee salaries. All of these expenses chip away at profitability. Profit margin calculates profitability after expenses.

There are two types of profit margin on an income statement: gross profit and net profit.

Gross profit margin equates to net sales minus the cost of goods sold. The gross margin shows the amount of profit made before deducting selling, general, and administrative (SG&A) costs. The formula for gross profit margin is

Gross Profit Margin=Net Sales-COGSNet Sales× 100

The calculation is expressed as a percentage.

Net profit margin takes the calculation one step further. It deducts all expenses from profitability, including administrative, sales, amortization, debt payments, taxes, income, and asset depreciation. This provides a more accurate look at profitability because it considers all the costs associated with producing and selling the product or service. The formula for net profit margin is

Net Profit Margin=Revenue-COGS-Other Taxes & ExpensesRevenue× 100

The calculation is expressed as a percentage.

Suppose your sandwich shop is interested in its profit margins for a single order. Look at the chart and calculate the gross and net profit margins.

Answer

Gross profit margin: 44%

Net profit margin: 24%

Marketing Dashboard 9.6 (b) §9.6 source ↗

Table 9.3 in the book ↗
Total revenue $6.25
COGS $3.50
Administrative, sales $0.75
Taxes, depreciation, debt payments, amortization $0.50

Profit margins are a widely used financial measure to determine the profitability of a business, considering the cost to manufacture and sell a product or service and measuring how much of every dollar in sales or services your company keeps from its earnings. Cost of goods sold, or COGS, describes expenses directly attributable to the product or service. It is important to deduct COGS from profitability to fully understand how much direct costs impact profitability. However, expenses don’t end once manufacturing costs are considered. Companies pay for overhead, such as office space, trucks, and warehouses. They also account for depreciation on their assets, pay taxes, and incur costs for employee salaries. All of these expenses chip away at profitability. Profit margin calculates profitability after expenses.

There are two types of profit margin on an income statement: gross profit and net profit.

Gross profit margin equates to net sales minus the cost of goods sold. The gross margin shows the amount of profit made before deducting selling, general, and administrative (SG&A) costs. The formula for gross profit margin is

Gross Profit Margin=Net Sales-COGSNet Sales× 100

The calculation is expressed as a percentage.

Net profit margin takes the calculation one step further. It deducts all expenses from profitability, including administrative, sales, amortization, debt payments, taxes, income, and asset depreciation. This provides a more accurate look at profitability because it considers all the costs associated with producing and selling the product or service. The formula for net profit margin is

Net Profit Margin=Revenue-COGS-Other Taxes & ExpensesRevenue× 100

The calculation is expressed as a percentage.

Which measure is more accurate?

Answer

Net profit margin considers all expenses, so it is a more accurate measure than gross profit margin that only considers COGS.

Marketing Dashboard 9.6 (c) §9.6 source ↗

Table 9.3 in the book ↗
Total revenue $6.25
COGS $3.50
Administrative, sales $0.75
Taxes, depreciation, debt payments, amortization $0.50

Profit margins are a widely used financial measure to determine the profitability of a business, considering the cost to manufacture and sell a product or service and measuring how much of every dollar in sales or services your company keeps from its earnings. Cost of goods sold, or COGS, describes expenses directly attributable to the product or service. It is important to deduct COGS from profitability to fully understand how much direct costs impact profitability. However, expenses don’t end once manufacturing costs are considered. Companies pay for overhead, such as office space, trucks, and warehouses. They also account for depreciation on their assets, pay taxes, and incur costs for employee salaries. All of these expenses chip away at profitability. Profit margin calculates profitability after expenses.

There are two types of profit margin on an income statement: gross profit and net profit.

Gross profit margin equates to net sales minus the cost of goods sold. The gross margin shows the amount of profit made before deducting selling, general, and administrative (SG&A) costs. The formula for gross profit margin is

Gross Profit Margin=Net Sales-COGSNet Sales× 100

The calculation is expressed as a percentage.

Net profit margin takes the calculation one step further. It deducts all expenses from profitability, including administrative, sales, amortization, debt payments, taxes, income, and asset depreciation. This provides a more accurate look at profitability because it considers all the costs associated with producing and selling the product or service. The formula for net profit margin is

Net Profit Margin=Revenue-COGS-Other Taxes & ExpensesRevenue× 100

The calculation is expressed as a percentage.

Your business partner, Priya, wants to decrease the revenue of a single order to $5.50. How will that impact your profit margins?

Answer

Profitability per order will decrease if revenue decreases unless COGS or other expenses are reduced in turn.

Knowledge Check 9.7.1 §9.7 source ↗

How can a brand capture attention with packaging?
  1. a.
    Location in store
  2. b.
    Supply chain
  3. c.
    Colors, fonts, and logos
  4. d.
    Printing the price on the package

Answer

C. Colors, fonts, and logos
Colors, fonts, and logos can capture attention.

Knowledge Check 9.7.2 §9.7 source ↗

Which of the following functional benefits of packaging is at play when the package becomes a part of the product?
  1. a.
    Storage
  2. b.
    Convenience
  3. c.
    Safety
  4. d.
    Usability

Answer

D. Usability
A package as product indicates usability.

Knowledge Check 9.7.3 §9.7 source ↗

Which of the following functional benefits of packaging is at play when the package protects the customer from personal harm?
  1. a.
    Storage
  2. b.
    Convenience
  3. c.
    Safety
  4. d.
    Usability

Answer

C. Safety
Packaging can provide safety from personal harm from the product.

Knowledge Check 9.7.4 §9.7 source ↗

Maria purchased a Louis Vuitton purse for her mom because of the dust cover that protects the purse from wear and tear. This is an example of packaging used as a marketing tool for ________.
  1. a.
    brand differentiation
  2. b.
    creating customer experience
  3. c.
    displaying value
  4. d.
    encouraging people to purchase

Answer

C. displaying value
The package displayed value to the consumer.

Knowledge Check 9.7.5 §9.7 source ↗

The brand team at a technology company created product packaging that was enjoyable to unbox. This is an example of packaging used as a marketing tool for ________.
  1. a.
    brand differentiation
  2. b.
    creating customer experience
  3. c.
    displaying value
  4. d.
    encouraging people to purchase

Answer

B. creating customer experience
Customer experience is created when the package adds to the experience of consuming the brand.

Knowledge Check 9.8.1 §9.8 source ↗

Which of the following is not a type of grocery product packaging?
  1. a.
    Paper
  2. b.
    Plastic
  3. c.
    Metal
  4. d.
    Wood

Answer

D. Wood
Typically, wood is not used in grocery packaging.

Knowledge Check 9.8.2 §9.8 source ↗

Which of the following is not part of the technical cycle?
  1. a.
    Product
  2. b.
    Use
  3. c.
    Disassembly
  4. d.
    Natural resources

Answer

D. Natural resources
Natural resources are part of the biological cycle.

Knowledge Check 9.8.3 §9.8 source ↗

Which of the following is a trend in sustainable packaging?
  1. a.
    Increasing the amount of packaging
  2. b.
    Using boxes
  3. c.
    Using only necessary resources
  4. d.
    Using plastic

Answer

C. Using only necessary resources
Companies are trying to reduce packaging to only the necessary parts in their sustainability efforts.

Knowledge Check 9.8.4 §9.8 source ↗

Where can discarded packaging be found?
  1. a.
    Water sources
  2. b.
    Landfills
  3. c.
    On the ground
  4. d.
    All of these are correct.

Answer

D. All of these are correct.
Discarded packaging can be found in water sources, in landfills, and on the ground.

Knowledge Check 9.8.5 §9.8 source ↗

Which part of the cradle-to-cradle approach is regenerative?
  1. a.
    Production
  2. b.
    Product
  3. c.
    Use
  4. d.
    Biodegradation

Answer

D. Biodegradation
Biodegradation turns the product back into a natural resource that becomes a nutrient for plants.

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Problems and answers are adapted from Principles of Marketing by Maria Gomez Albrecht, Mark Green and Linda Hoffman, OpenStax, and are used under the CC BY-NC-SA 4.0 licence. Access for free at https://openstax.org/books/principles-marketing/pages/1-unit-introduction. Illustrations: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license. This adaptation is released under the same licence, is non-commercial, and is neither affiliated with nor endorsed by OpenStax or Rice University.