Chapter 5 - Multiple choice PDF

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Chapter 5: Differentiation Advantage Multiple Choice Questions 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 Answer: C Level of Difficulty: Easy Section reference: What is Product Differentiation? Learning Objective: 5.1 Bloom’s: Knowledge AACSB: Analytical thinking

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 minitheatre 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 Answer: C Level of Difficulty: Hard Section reference: What is Product Differentiation? Learning Objective: 5.1 Bloom’s: Application AACSB: Application of knowledge

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 Copyright ©2016 John Wiley & Sons, Inc.

Answer: D Level of Difficulty: Hard Section reference: What Is Product Differentiation? Learning Objective: 5.1 Bloom’s: Application AACSB: Application of knowledge

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. Answer: A Level of Difficulty: Moderate Section reference: What Is Product Differentiation? Learning Objective: 5.1 Bloom’s: Comprehension AACSB: Analytical thinking

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. Answer: B Level of Difficulty: Hard Section reference: Sources Of Product Differentiation Learning Objective: 5.2 Bloom’s: Application AACSB: Application of knowledge

Copyright ©2016 John Wiley & Sons, Inc.

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. Answer: C Level of Difficulty: Hard Section reference: Sources of Product Differentiation Learning Objective: 5.2 Bloom’s: Application AACSB: Application of knowledge

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 Answer: D Level of Difficulty: Easy Section reference: Sources Of Product Differentiation Learning Objective: 5.2 Bloom’s: Knowledge AACSB: Analytical thinking

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 Answer: B Level of Difficulty: Hard Section reference: Sources Of Product Differentiation Learning Objective: 5.2 Bloom’s: Application AACSB: Application of knowledge Copyright ©2016 John Wiley & Sons, Inc.

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. Answer: B Level of Difficulty: Hard Section reference: Sources Of Product Differentiation Learning Objective: 5.2 Bloom’s: Analysis 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 Answer: B Level of Difficulty: Hard Section reference: Sources Of Product Differentiation Learning Objective: 5.2 Bloom’s: Application AACSB: Application of knowledge

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. Answer: C Level of Difficulty: Moderate Section reference: Sources Of Product Differentiation Learning Objective: 5.2 Copyright ©2016 John Wiley & Sons, Inc.

Bloom’s: Comprehension AACSB: Analytical thinking

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 Answer: C Level of Difficulty: Hard Section reference: Sources Of Product Differentiation Learning Objective: 5.2 Bloom’s: Application AACSB: Application of knowledge

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. Answer: D Level of Difficulty: Moderate Section reference: Sources Of Product Differentiation Learning Objective: 5.2 Bloom’s: Comprehension AACSB: Analytical thinking

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. Answer: D Level of Difficulty: Hard Section reference: Sources Of Product Differentiation Learning Objective: 5.2 Bloom’s: Application AACSB: Application of knowledge Copyright ©2016 John Wiley & Sons, Inc.

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 Answer: B Level of Difficulty: Hard Section reference: Sources Of Product Differentiation Learning Objective: 5.2 Bloom’s: Application AACSB: Application of knowledge

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 Answer: B Level of Difficulty: Easy Section reference: Sources Of Product Differentiation Learning Objective: 5.2 Bloom’s: Knowledge AACSB: Analytical thinking

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. Answer: B Level of Difficulty: Hard Copyright ©2016 John Wiley & Sons, Inc.

Section reference: Sources Of Product Differentiation Learning Objective: 5.2 Bloom’s: Application AACSB: Application of knowledge

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 Answer: C Level of Difficulty: Easy Section reference: Sources Of Product Differentiation Learning Objective: 5.2 Bloom’s: Knowledge AACSB: Analytical thinking

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. Answer: D Level of Difficulty: Moderate Section reference: Sources Of Product Differentiation Learning Objective: 5.2 Bloom’s: Comprehension AACSB: Analytical thinking

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. Answer: B Level of Difficulty: Hard Section reference: Sources Of Product Differentiation Copyright ©2016 John Wiley & Sons, Inc.

Learning Objective: 5.2 Bloom’s: Application AACSB: Application of knowledge

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 Answer: C Level of Difficulty: Hard Section reference: Sources Of Product Differentiation Learning Objective: 5.2 Bloom’s: Application AACSB: Application of knowledge

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 Answer: A Level of Difficulty: Easy Section reference: Sources Of Product Differentiation Learning Objective: 5.2 Bloom’s: Knowledge AACSB: Analytical thinking

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 Copyright ©2016 John Wiley & Sons, Inc.

D. Prestige Answer: D Level of Difficulty: Hard Section reference: Sources Of Product Differentiation Learning Objective: 5.2 Bloom’s: Application AACSB: Application of knowledge

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 Answer: C Level of Difficulty: Hard Section reference: How to Find Sources of Product Differentiation Learning Objective: 5.3 Bloom’s: Application AACSB: Application of knowledge

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. Answer: B Level of Difficulty: Hard Section reference: How to Find Sources of Product Differentiation Learning Objective: 5.3 Bloom’s: Application AACSB: Application of knowledge Copyright ©2016 John Wiley & Sons, Inc.

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 Answer: B Level of Difficulty: Hard Section reference: How to Find Sources of Product Differentiation Learning Objective: 5.3 Bloom’s: Application AACSB: Application of knowledge

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. Answer: B Level of Difficulty: Hard Section reference: How to Find Sources of Product Differentiation Learning Objective: 5.3 Bloom’s: Application AACSB: Application of knowledge

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? Answer: C Level of Difficulty: Hard Section reference: How to Find Sources of Product Differentiation Copyright ©2016 John Wiley & Sons, Inc.

Learning Objective: 5.3 Bloom’s: Application AACSB: Application of knowledge

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. Answer: A Level of Difficulty: Hard Section reference: How to Find Sources of Product Differentiation Learning Objective: 5.3 Bloom’s: Application AACSB: Application of knowledge

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? Answer: D Level of Difficulty: Hard Section reference: How to Find Sources of Product Differentiation Learning Objective: 5.3 Bloom’s: Application AACSB: Application of knowledge

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. Copyright ©2016 John Wiley & Sons, Inc.

D. mapping the supply chain. Answer: A Level of Difficulty: Hard Section reference: How to Find Sources of Product Differentiation Learning Objective: 5.3 Bloom’s: Application AACSB: Application of knowledge

32. Kim, a consumer, is in the final stage of selecting a product. Which of the following is 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. Answer: B Level of Difficulty: Hard Section reference: How to Find Sources of Product Differentiation Learning Objective: 5.3 Bloom’s: Application AACSB: Applicat...