Accounting MRK108 Chapter Notes - Chapter 10: Variety Store, Stock Market Crash, Perfect Competition

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22 Dec 2016

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Explain the importance of developing new products and describe the six categories of new products. New products: a product new to the world, new to the market, new to the producer or seller, new to some combination of these. The importance of new product is to sustain growth, increase revenues, replace obsolete items. Six categories of new products: 1. Smallest category of new products: 2. Able to enter established market: 3. New product to firms established product line: 4. Existing products targeting new/existing markets: 6. Similar performance to competition brands but at a lower price. Explain the steps in the new product development process. New product strategy: a plan that links the new product development process with the objectives of the marketing department, business unit, corporation. Perfect competition: product seen as identified, many sellers, all small, prices are similar, variety store products.

Related Questions

You have recently started working as a product analyst at acompany that manufactures and sells a variety of soft drinkproducts. One of your first jobs is to categorize each of thefirm's new products for the upcoming year into the appropriate newproduct category for a presentation you are putting together foryour manager. A new product is one that is new to a company in anyway. If a product is functionally different from existing productsin the market or is not marketed in its current form or manner bythe company, it can be considered a new product. We categorize newproducts in the following four ways: New-to-the-market products Newcategory entries Product line extensions Revamped products Acompany's core competencies and strengths influence its strategytoward developing new products. Firms that have a strong researchand development (R&D) department will focus on developingnew-to-the-market products to beat the competition, while firmsthat have a strong brand and company image can take advantage ofexisting products to extend or revamp their current product lineswith similar but somehow differentiating attributes. Match the newproduct with the appropriate new product category. 1. Smartphoneapp that can scan any beverage and show you the exact nutritionalcomponents in detail. 2. Candles that make your home smell likeyour favorite cola. 3. Selling a more caffeinated version of yourtraditional cola targeted at younger consumers. 4. A 5-ouncepackage of your popular cola product that is better for theenvironment. 5. New beverage that can be made from concentrate forinternational consumers in a way that has never been done. 6.Selling suntan lotion that has the scent of your favorite cola. 7.New 10-calorie version of the company's cola product that istargeted to male consumers. 8. Diet soda product using a new typeof artificial sweetener.

Budget constraints on marketing research are most likely to leadto:

		a wrong interpretation of the research results.
		an incorrectly formulated sample size and design.
		incorrect reasons regarding why the research is needed.
		pretest measurements of competitive brand sales.

2 points

QUESTION 2

Stacy, a marketing manager at a beverage manufacturing firm,conducts a customer survey to determine the reason for a dip in thesales of Zeal, a cola, in the last quarter. The survey reveals thatthere is an immediate customer demand requiring the use of organicingredients to Zeal. The firm decides to enhance Zeal with theintroduction of organic ingredients. This new product would fallinto the category of ________.

		new-to-the-world products
		new-to-the-firm products
		improvements and revisions of existing products
		additions to existing product lines

2 points

QUESTION 3

Lauren is a brand manager at a company that manufacturestoothpaste. She wants to increase the sales of an existing brand oftoothpaste. To do so, she calls for a meeting with a teamcomprising of members from the administrative department, the humanresource department, and the finance department. All of thesemembers work together to come up with ways to improve the company'stoothpaste brand positioning. Such a team is an example of a________.

		category-management system
		cross-functional team
		departmental team
		marketing-management system

2 points

QUESTION 4

________ are methods used to determine how resources should beallocated among the various strategic business units (SBUs) in anorganization.

		Vector models
		Matrix models
		Variable models
		Portfolio models

2 points

QUESTION 5

For high-involvement products that require extensive decisionmaking, marketers should provide consumers with:

		ready availability of the products in a variety of outlets andat competitive prices.
		factual information that highlights the competitive advantage ofthe products.
		minimum information to encourage a quick purchasing process.
		eye-catching advertisements and in-store displays to encouragethem to make a purchase.

2 points

QUESTION 6

The number of times, on average, that audience members areexposed to an advertisement within a given time period is knownas:

		frame rate.
		time to target market.
		reach intensity.
		average frequency.

2 points

QUESTION 7

Ariston Inc. manufactures a wide range of personal careproducts. Its method of sales forecasting involves conductingdetailed surveys of retailers who stock the company's productstoward the end of a fiscal year. The aim of this survey is toestimate the quantity of Ariston's products the retailers arelikely to order in the next fiscal year. Which of the followingapproaches of sales forecasting is Ariston using?

		Customer expectations method
		Time-series analysis
		Sales forecast composite method
		Jury of executive opinion method

2 points

QUESTION 8

________ carry broad product assortments and compete on thebasis of offering a good selection in different product categoriesand offering lower prices on products in their largeassortments.

		Specialty stores
		Mass merchandisers
		Category killers
		Convenience stores

2 points

QUESTION 9

Which of the following best describes personal selling?

		Personal selling is a paid form of communications about anorganization, its products, or its activities that is transmittedthrough a mass medium.
		Personal selling is an activity that offers customers orresellers a direct inducement for purchasing a product.
		Personal selling is a nonpaid form of communication that seeksto influence the attitudes, feelings, and opinions of stockholders,suppliers, employees, and political bodies about anorganization.
		Personal selling is face-to-face communication with potentialbuyers to inform them about and persuade them to buy anorganization's product.

2 points

QUESTION 10

Which of the following best explains why Delicia Co., amanufacturer of potato chips, prices each bag of potato chips at 99cents rather than $1.00?

		To encourage consumers to think the chips are less expensive
		To increase sales by offering the chips at a discountedprice
		To create a signal that these chips are exceptionally fine
		To attract those consumers who are not too sure about thequality of the chips

2 points

QUESTION 11

Which of the following is NOT a step in the marketing researchprocess?

		Performance of the research
		Plan of the research
		Preview of the research
		Preparation of the research report

2 points

QUESTION 12

In the context of product purchasing, the diffusion ofinnovation is:

		used to describe the ability of an organization to createentirely new products.
		applied to products at the introductory stage of the productlife cycle.
		used to describe an audit task.
		the spread of a product through the population.

2 points

QUESTION 13

Distribution allowances are typical examples of ________.

		push strategies
		profile strategies
		pull strategies
		mixed promotional strategies

2 points

QUESTION 14

Which of the following is a benefit of mathematical modeling asa marketing research method?

		It is ideal for investigating customer beliefs, attitudes,satisfaction, and other issues.
		It generates a substantial number of ideas when compared withother methods.
		It is involved in the analysis and interpretation of primarydata exclusively.
		It provides an efficient way to study problems with extremelylarge secondary data sets.

2 points

QUESTION 15

Identify the persuasion objective of the sales force in personalselling.

		To reassure consumers of product or service superiority throughdemonstrable actions
		To enable prompt delivery of the product or service that exceedscustomer expectations
		To ensure immediate follow-up calls and visits to addressunresolved or new concerns
		To clearly distinguish attributes of a firm's products orservices from those of competitors

2 points

QUESTION 16

Which of the following statements is true of the influences ofprice, product, and promotions on consumer behavior?

		Consistent bombarding of messages about a product will put offpotential consumers.
		Salespeople do not have a direct impact on consumer behavior andits patterns.
		Value-conscious consumers buy products on the basis of placerather than other attributes.
		Marketing communications play a critical role in informingconsumers about products and services.

2 points

QUESTION 17

According to the VALSâ¢ model, Experiencers are:

		driven to demonstrate success.
		driven by a desire for social or physical activity.
		driven by knowledge and principles.
		driven by the level of resources and innovation.

2 points

QUESTION 18

In which of the following stages of the new product developmentprocess is the new product proposal evaluated and responsibilityfor a project assigned to a project team?

		Product development
		Idea screening
		Test marketing
		Project planning

2 points

QUESTION 19

Which of the following is an advantage of secondary data overprimary data?

		Secondary data sources are limited, making the information morevaluable.
		Secondary data are cheaper to obtain and utilize.
		Secondary data are collected specifically for the researchproblem under investigation.
		Secondary data are always available for strategy-specificresearch questions.

2 points

QUESTION 20

An automobile manufacturing firm decides to meet all itssuppliers while planning to manufacture a new automobile that is aminor variant of an existing model in terms of design andperformance. The firm wants to provide its loyal customers withautomobiles at a low price without compromising on performance.According to authors Crawford and DiBenedetto, this new productfalls into the category of ________.

		price redemptions
		repositionings
		price exemptions
		cost reductions

skyweasel924

Advanced Management Accounting Case:

Harwood Medical Instruments PLC (HMI), based just outside ofBirmingham, England, manufactured specialty medical instruments andsold them in market niches that were becoming increasinglycompetitive and price sensitive because of pressures toreducehealth care costs. HMI was organized into nine divisions each runby a general manager. Over the years, HMI had gorwn bothorganically and by acquisition. Six of the divisions had beenacquired by HMI within the past decade. All of HMI's divisions soldmedical products to hospital, laboratories, and/or doctors, so theneed for product quality and reliability was high. The divisionsvaried significantly, however, in terms of the degree to whichtheir success depended on, for example, development of newproducts, efficiency of production, and/or customer service.Bonuses for division general managers were paid semi-annually. Upto the year 2009, these bonuses were calculated as 1% of divisionoperating profits. HMI's managing director, Andy Guthrie, hadconcerns though that the operating profit measure was too narrowlyfocused. He had been reading articles about performance measurementand decided to implemnt a "more balanced" scorecard. In November2009, just before introducting a new bonus plan, Mr. Guthrieexplained to his chief financial officer that he was willing to payout higher bonuses than had been paid historically if improvedperformance warrantd doing so. The new plan provided a base bonusfor division general managers of 1% of division operating profitsfor the half-year period. this base bonus was adjusted asfollows:

Increased by $5,000 if over 99%of deliveries were on time; by $2,000 if 95-99% of deliveries wereon time; or by zero if less than 96% of deliveries were ontime.

Increased by $5,000 if sales returnswere less than or equal to 1% of sales, or decreased by 50% of theexcess of sales returns over 1% of sales.

Increased by $1,000 for every patentapplication filed with the UK Intellectual Property Office.

Reduced by the excess of scrap and rworkcosts over 1% of operating profit

Reduced by $5,000 if average customersatisfaction rating were below 90%.

If the bonus calculation resulted in a negative amount for aparticular period, the maanger received no bonus. Negative amountswere not carried forward to the next period. Exhibit 1 showsresults for two representative HMI divisions for the year 2010, thefirst year under the new bonus plan. The surgical InstrumentsDivision (SID), one of HMI's original businesses, sold a variety ofsurgical instruments, including scissors, scalpels, retractors, andclamps. The markets for these products were mature, so growth wasrelatively slow. Not much innovation was needed, but controllingcosts was critical. The Ultrasound Diagnosti Equipment division(Ultrasound), which was acquired in 2007, sold and servicedultrasound probes, transducers, and diagnostic imaging systems. Theultrasound market promised excellent growth and profits if thedivision could keep its sophisticated products on the cutting edgetecnologically and control both product development and productioncosts effectively. In 2009, the total annual bonuses for the yearearned by the managers of SID and Ultrasoundn were approximately$85,000 and $74,000, respectively.

Operating results for the Surgical Instruments andUltrasound Diagnostic Equipment Div, 2010 ($ in 000s)

Surgical InstrumentsDiv. Ultrasound Diagnostic Equip. Div

1st half of2010 2nd half of2010 1st half of2010 2nd half of 2010

Sales $42,000 $44,000 $28,600 $29,000

Operatingprofit $4,620 $4,400 $3,420 $4,060

On-timedeliveries 95.4% 97.3% 98.2% 94.6%

Salesreturns $450 $420 $291 $289

Patent applicationsfiled 0 1 4 8

Scrap and reworkcosts $51.1 $45.0 $39.7 $28.2

Customer satisfaction(average) 78% 89% 81% 91%

The case describes a company whose manager is concerned that theoperating profit measure included in the companyâs bonus plan wastoo narrowly focused. He implemented a new bonus plan that reducedthe weighting of importance placed on operating profit and thatincluded more measures, including on-time deliveries, salesreturns, patent applications, scrap and rework costs, and customersatisfaction.

1. What was the purpose of the change?
2. Calculate the bonus earned by each manager for each 6-monthperiod and for the year 2010.
3. Evaluate the new plan. Is there any evidence that it producedthe desired effects? What
changes to the new plan would you suggest, if any?

Accounting MRK108 Chapter Notes - Chapter 10: Variety Store, Stock Market Crash, Perfect Competition

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