E II - OBJ 3.01 MC

The full array of tangible products offered for sale by a business represents the business's

• product mix.

• services.

• depth.

• product line.

Answer explanation

Product mix. Businesses offer particular assortments of products that they feel will meet their market's needs and the company's goals. A product line is a group of related products. Depth is a product mix dimension referring to the number of products and the assortment of sizes, colors, and models offered in a product line. Services are intangible products.

A group of related product items is called a

• product line.

• product class.

• product mix.

• customer group.

Answer explanation

Product line. The items in a product line can be set up according to product class, similarity of function or purpose, customer group, price and/or quality, and distribution method. Product class refers to a product line that consists of products with similar characteristics. Customer group refers to a product line that appeals to a certain market. Product mix refers to the assortment of products offered by a business.

Which of the following is a reason for a business to offer a deep (many items) product mix:

• To compete effectively

• To specialize in a product line

• To ensure similar methods of distribution

• To control costs

Answer explanation

To compete effectively. The business with a deep product mix offers a great many items in the product line. This allows the business to meet the needs of a variety of consumers, use a range of prices, and compete effectively. A shallow product mix helps a business control its costs. The use of a narrow product mix enables a business to specialize in a product line. The use of similar methods of distribution relates to the consistency of a company's product lines.

ABC Company added a new product to its product mix. This product-mix strategy is called

• expansion.

• positioning.

• contraction.

• alteration.

Answer explanation

Expansion. When a company adds product items or lines to its product mix, it is using the product-mix strategy of expansion. Positioning is a product-mix strategy in which a business creates a certain image or impression of a product in the minds of consumers. Contraction is a product-mix strategy in which a business removes, or deletes, product items or product lines from its product mix. Alteration is a product-mix strategy in which a business makes changes to its products or product lines.

Describing the product mix as narrow or broad refers to the __________ of its product lines.

• number

• depth

• class

• consistency

Answer explanation

Number. The width, or breadth, of a firm's product mix refers to the number of product lines carried by the company. Depth refers to the number of items in the product line. Consistency refers to how closely a company's product lines are related in terms of the products' end use, methods of distribution and production, target market(s), and/or price range. Products with similar characteristics are said to be in the same class.

A cosmetic firm designing a new package for a product is an example of the product-mix strategy known as

• alteration.

• trading up.

• expansion.

• positioning.

Answer explanation

Alteration. This may include redesign of a package, making a change in the basic style, or changing the price of the product. Trading up involves adding a higher priced product or product line to the company's product mix. A business adding product items or product lines to its product mix is using the expansion strategy. Positioning describes the efforts of marketers to find and keep a particular place for their product(s) in the marketplace.

To meet the needs of its customers and help it achieve its company goals, a drugstore offers a large assortment of products, known as its product

• mix.

• depth.

• width.

• consistency.

Answer explanation

Mix. The assortment of products a business offers is its product mix. Every business must decide what products to offer. The size and nature of a product mix will vary from business to business. Product depth refers to the assortment of sizes, colors, flavors, and models offered in a company’s product lines. Product width refers to the number of product lines offered by a company. Product consistency refers to the relationship between the product lines.

Which of the following is an example of a product line:

• Kraft meats

• A1 Steak Sauce

• Philadelphia Cream Cheese

• Capri Sun

Answer explanation

Kraft meats. Meats are one of Kraft Food’s many product lines. Product lines are groups of related product items. A1 Steak Sauce, Philadelphia Cream Cheese, and Capri Sun are all product items within Kraft’s product lines. A product item is an individual good, service, or idea that a business offers for sale.

Which of the following is a reason for a business to have a narrow product mix:

• To allow the company to specialize

• To use a wide range of prices

• To allow the company to meet the needs of a variety of consumers

• To reduce the costs of the goods the company purchases for resale

Answer explanation

To allow the company to specialize. A company that has a narrow product mix offers a limited number of product lines. This enables the company to specialize effectively, to produce efficiently, and to concentrate on marketing the product lines. The needs of a variety of consumers and the use of a wide range of prices are addressed with a deep product mix. A broad product mix reduces the costs of goods a company purchases for resale.

Which of the following is a reason that a business would make changes to its products:

• To keep up with changing consumer preferences

• To make room for other products

• To spread risk over a wider area

• To predict the success of the changed product

Answer explanation

To keep up with changing consumer preferences. Customers’ attitudes toward products change over time, and their preference for a product may change. Altering the product in some way can renew customers’ interest. Making room for other products is a reason for using the contraction strategy. By adding products to the product mix, businesses are able to spread risk over a wider area. A limitation to the alteration strategy is that businesses cannot predict the success of altered products.