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Question 543 - CSCP discussion

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Which of the following statements about functional products is true?

A.
They have a short life cycle.
Answers
A.
They have a short life cycle.
B.
They have low profit margins.
Answers
B.
They have low profit margins.
C.
They have an unpredictable demand.
Answers
C.
They have an unpredictable demand.
D.
They are sold at a limited number of locations.
Answers
D.
They are sold at a limited number of locations.
Suggested answer: B

Explanation:

Functional products are typically characterized by predictable demand, long product life cycles, and stability in the market. They are often commodities or staple items that do not vary much in terms of design and innovation. Because of their stable and predictable nature, they tend to have low profit margins compared to innovative or fashion products, which can command higher margins due to their uniqueness and higher perceived value. Functional products are sold widely and have an established market presence, contrary to having a limited number of locations.

Reference: Fisher, M. L. (1997). 'What is the Right Supply Chain for Your Product?' Harvard Business Review.

asked 16/09/2024
Kevin Margan
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