MN3141 MCQ Assignment 2 (March-April)

1.     Making an offering more intangible involves making:

• Fewer promises to customers

• Greater promises to customers

• Greater use of search attributes

• Less use of credence and experience attributes

Answer explanation

This question tests your understanding of tangibility and intangibility and in particular the factors that contribute to this characteristic of products and services. See section 8.9.2 of the Study Guide for more information.

 

Difficulty level: moderate.

 

The correct answer is: Greater promises to customers

1.     We also will invest in our infrastructure to expand our presence internationally, and continue to invest in research and development behind what we believe is a significant opportunity to premiumize home beverages in both our hot and cold platforms.

Keurig Green Mountain Fiscal 2014 Annual Report

 

What does Keurig likely mean with the use of the term 'premiumize'?

• Lower prices for the same benefits

• Higher prices for greater benefits

• Higher prices for lower benefits

• Lower prices for greater benefits

Answer explanation

This question is based on section 8.2 of the Study Guide. Understanding the issues in this question will help you to recognise how marketers make use of the notion of value in their marketing activities. In this example, we see how a firm decides to add value (premiumisation) in order to position their offering against competitors as one which offers customers more benefits in return for higher prices.

 

Difficulty level: hard.

 

The correct answer is: Higher prices for greater benefits

1.     According to service dominant logic (Vargo & Lusch 2008:146),

• it is only when a customer sells a car that it has value

• it is only when a customer exchanges a car that it has value

• it is only when a customer makes use of a car in his/her own life that it has value

• it is only when a customer buys a car that it has value

Answer explanation

This question also focuses on some of the essential characteristics of service-dominant logic that distinguish the concept from goods-dominant logic. See section 8.9.4 of the Study Guide for more information.

 

Difficulty level: easy.

 

The correct answer is: it is only when a customer makes use of a car in his/her own life that it has value.

1.     This type of cue is product related, but not part of the physical product.

• intrinsic cue

• extrinsic cue

• quality cue

• stimuli

Answer explanation

This question is about the difference between extrinsic and intrinsic cues. This is an important element of the syllabus since you are likely to require a knowledge of cues in order to answer exam questions across a range of topics. See section 8.4 of the Study Guide for more information.

 

Difficulty level: moderate.

 

The correct answer is: Extrinsic

1.     Offering customers greater value always the more ethical option.

• true

• false

Answer explanation

Offering greater value means offering more in the way of benefits compared to costs. However greater short-term benefits may come at the expense of longer-term benefits e.g. in the case of the supersizing of fast foods.

 

The following paper has more details should you wish to find out the argument in depth:

 

Haws, K. L., & Winterich, K. P. (2013) When Value Trumps Health in a Supersized World. Journal of Marketing 77, pp48-64

This question is based on section 8.2 of the Study Guide and also section 13.2.

 

The benefit of understanding the issues underpinning this question is that you will recognise that delivering more value to customers is not always in customers best interests. Some students may otherwise believe that delivering more and more value is better for consumers and indeed some marketers present this argument. But it is not necessarily true. Where customers receive more value in the form of goods that may be detrimental to health, for example, in the long term the value may be negative as they suffer the health consequences.

 

Difficulty level: hard.

 

The correct answer is 'False'.

1.     At the introduction stage of the product lifecycle which marketing objective is identified by Kotler & Armstrong (2012) as generally being most appropriate? There may be instances where this approach is not always used.

• Maximise profit

• Maximise market share

• Reduce expenditure

• Create product awareness

Answer explanation

It's very likely that the firm will need to raise awareness for something that does not already exist.

 

Each stage of the product lifecycle is characterised as having different objectives and different marketing strategies. You can consult any edition of Kotler and Armstrong for more information about the different stages of the product lifecycle.

 

Difficulty level: moderate.

 

The correct answer is: Create product awareness

Which element of the communications mix involves "obtaining favourable publicity".

• Public relations

• Direct marketing

• Personal selling

• Advertising

Answer explanation

It is through the use of public relations that the firm hopes to achieve publicity. However, since public relations does not involve paying the media for publicity - the marketer is reliant on the newsworthiness of their public relations activity.

 

This question focuses on the definition of public relations. You should use the glossary section of any edition of Kotler and Armstrong in order to identify the definitions of the different elements of the promotion mix. These definitions focus on important distinguishing features of each element of the promotion mix.

 

As you will see in the answer explanations a key to understanding the salient feature of public relations is the meaning of the term "publicity". The latter refers to the media e.g. newspapers, radio and television stations, discussing a product or service as part of their editorial coverage i.e. as a news item. This brings the product/service to the attention of potential customers, but because it is not through advertising, it is more likely to be believed.

 

Difficulty level: easy

The correct answer is: Public relations

An airline uses its frequent flyer programme to enable customers to pay for tickets using a combination of points accumulated and cash.

 

This is an example of the firm trying to influence customers' sensitivity to prices using the

 _____ effect.

• substitution awareness

• total expenditure

• difficult comparison

• sunk cost

Answer explanation

Passengers cannot easily convert the air miles that they have collected into a cash equivalent and this makes it more difficult for them to make comparisons with other airlines' fares.

 

This question focuses on the methods firms can use to influence customers' price sensitivity. See section 11.2.1 of the Study Guide for more information.

 

Difficulty level: hard.

The correct answer is: difficult comparison

A tourist attraction in a developing country prices tickets at a lower price for local residents (who need to show ID cards in order to enter), and a higher price for foreign tourists.

 

Which type of price discrimination is this?

• Indirect price discrimination

• Perfect price discrimination

• Unfair price discrimination

• Direct price discrimination

Answer explanation

The marketer is setting the basis for discrimination.

 

This question relates to the price discrimination topic which is covered in section 11.3 of the Study Guide. This question tests your ability to apply the reelvant concept to actual business practice.

 

Difficulty level: moderate

 

The correct answer is: Direct price discrimination

Whether a marketer seeks to distribute a product in as many channels as possible or to restrict the number of dealers to a select few, can depend on the type of goods being sold.

 

What is the distribution type most likely to be used for shopping products?

• Exclusive

• Selective

• Intensive

• All of the above

Answer explanation

Intensive distribution refers to stocking the product in as many outlets as possible and this is more likely to be used for convenience goods. In contrast shopping goods where customers need to make comparisons before making a purchase and will likely be willing to travel to the relevant outlets, a selective coverage strategy may be more effective. Exclusive distribution is effective for specialty goods. See section 12.6 of the Study Guide for more information.

 

Difficulty level: moderate