Question

1. Products are usually either business or consumer products and cannot be both. (True) or (False) ?  

2. Firms sometimes decide to discontinue a product even when that product is still profitable for the firm.

(True ) or (False) ?

3. Market development refers to marketing an old (i.e., existing) product in a new market.

(True) or (False) ?

4. It is a good idea to place loss leaders at the very front of the store so that consumers can see them quickly and get attracted to them.

(True) or (False) ?

5. Stock-out-cost refers to the cost incurred when a marketer has more inventory in stock than they can carry. (True) or (False)?

Answer 1

1) Consumer products are products purchased for personal, family, or household use. Business products are products and services that companies purchase to produce their own products or to operate their business. Hence, most of the products are covered under these two categories (they might either be used by the customer or by a business). However, no product could be both by the very definition (it cannot be used by consumer as well as by a business).

Therefore, this is True

2) Firms might discontinue profitable products under two conditions:

a) The product is profitable by managing to continue the product is difficult eg. lack of competent staff, need to hire more staff to provide support, etc.

b) The product could be discontinued to make resources available for another product which is more profitable than the existing product or to promote a more profitable product.

Therefore this is True

3) Market development is defined as :

Market development is a strategic step taken by a company to develop the existing market rather than looking for a new market. The company looks for new buyers to pitch the product to a different segment of consumers in an effort to increase sales.

The definition makes it clear that the company tries to increase the number of buyers in the same market or to tap new segments of an existing market. This is different from seeking a new market.

Therefore this is False

4)A loss leader is a product or service that is offered at a price that is not profitable, but it is sold to attract new customers or to sell additional products and services to those customers. Loss leading is a common practice when a business first enters a market.

A loss leader must usually be placed in an inconvenient part of the store, such as at the rear of the store, so that purchasers must walk past other goods that have higher profit margins.

Therefore this is False

5) Stock-out Costs is the cost associated with the lost opportunity caused by the exhaustion of the inventory.

Here, it is clear that stock out costs would be incurred if the marketer has less inventory than what is required, not more inventory than he could carry.

Therefore this is False