Chapter 8 New-Product Development and Product Life-Cycle Strategies Multiple-Choice 1. _____ is the development of original products, product improvements, product modifications, and new brands through the firm’s own R&D efforts. a. Idea generation b. Concept testing c. Test marketing d. New product development Answer: (d) Difficulty: (1) Page: 264 2. All of the following are different ways a firm can obtain new products, except which one? a. By acquiring a whole new company b. A firm can obtain a new product through patents c.
A firm can obtain a new product by licensing someone else’s new product d. A firm can obtain a new product by using the R department of other firms in the same industry. Answer: (d) Difficulty: (2) Page: 264 3. All of the following are accurate descriptions of reasons why new products fail, except which one? a. Although the market size was correctly estimated, the product idea itself was not good. b. The actual product was not designed as well as it should have been. c. The new product was priced too high. d. The new product was advertised poorly. Answer: (a) Difficulty: (3) Page: 264 . All of the following are accurate descriptions of ways companies are anxious to learn how to improve the odds of new-product success, except which one? a. Find out what successful new products have in common. b. To learn lessons from new product failures. c. Companies have to learn to understand their own consumers. d. Do not overly rely on product innovation when you can succeed by copying others. Answer: (d) Difficulty: (3) Pages: 262-264 5. New-product development starts with _____. a. idea screening b. idea generation c. concept development and testing d. marketing strategy development
Answer: (b) Difficulty: (2) Page: 265 6. _____ is the systematic search for new-product ideas. a. Idea generation b. Idea screening c. Concept development and testing d. Marketing strategy development Answer: (a) Difficulty: (1) Page: 265 7. All of the following are major internal sources of new-product ideas, except which one? a. Picking the brains of company executives, scientists, engineers and salespeople is a good way to generate ideas. b. Intrapreneurial programs that encourage employees to think and develop new-product ideas is a good way to generate ideas. c.
Some companies employ creative approaches, including both “method and madness” in helping them to generate new product ideas. d. Good ideas come from watching and listening to customers. Answer: (d) Difficulty: (3) Page: 266 8. Major sources of new product ideas include _____. a. internal sources, using company R b. creative approaches, using both “method and madness” approaches c. watching and listening to customers d. all of the above are sources of new product ideas Answer: (d) Difficulty: (2) Page: 266 9. All of the following are major external sources of new-product ideas, except which one? a.
Companies can conduct surveys or focus groups to learn about consumer needs and wants. b. Competitors are a good source of new-product ideas. c. Some companies employ creative approaches, including both “method and madness” in helping them to generate new product ideas. d. Good ideas come from watching and listening to customers. Answer: (d) Difficulty: (3) Page: 266 10. All of the following are accurate descriptions of new product ideas, except which one? a. New product development starts with idea generation. b. Some companies use brainstorming exercises that expand people’s minds and generate new ideas around the client’s problem. . At the beginning of the process, carefully scrutinize each idea and throw far-fetched and impractical ones out the window. d. Customers must be careful not to rely too heavily on customer input when developing new products. Answer: (c) Difficulty: (3) Pages: 268-269 11. Some companies have installed a(n) _____ that directs the flow of new ideas to a central point where they can be collected, reviewed, and evaluated. a. new-product development team b. idea management system c. computer system d. satellite system Answer: (b) Difficulty: (3) Page: 269 12.
In order to install an idea management system, whereby all ideas are directed to a central point, a company can do any or all of the following: a. Appoint a respected senior person to be the firm’s idea manager. b. Create a cross-functional idea management committee comprising of people form R&D, finance, engineering and operations to meet and evaluate new product ideas. c. Reward employees through formal recognition programs. d. All of the above are legitimate ways to systematically collect ideas. Answer: (d) Difficulty: (3) Page: 269 13. The purpose of _____ is to generate a large number of ideas. a. idea screening b. dea generation c. concept development and testing d. marketing strategy development Answer: (b) Difficulty: (2) Page: 270 14. The first idea reducing stage is _____ , which helps spot good ideas and drop poor ones as soon as possible. a. idea generation b. idea screening c. concept development and testing d. marketing strategy development Answer: (b) Difficulty: (2) Page: 270 15. A _____ is a detailed version of the idea stated in meaningful consumer terms. a. product idea b. product concept c. product image d. test market Answer: (b) Difficulty: (2) Page: 270 16. A _____ is the way consumers perceive an actual or potential product. . product idea b. product concept c. product image d. test market Answer: (c) Difficulty: (1) Page: 270 17. An attractive idea must be developed into a _____. a. product idea b. product concept c. product image d. test market Answer: (b) Difficulty: (2) Page: 270 18. All of the following are accurate descriptions of activities performed in the idea screening stage of new product development, except which one? a. Idea screening helps spot good ideas and drop poor ones as soon as possible. b. Companies want to go ahead only with the product ideas that will turn into profitable products. c.
Many companies require their executives to write up new product ideas on a standard form that can be reviewed by a new-product committee. d. Setting up a toll-free number or Web site for anyone who wants to send a new idea to the idea manager. Answer: (d) Difficulty: (2) Page: 270 19. _____ calls for testing new-product concepts with groups of target consumers. a. Concept development b. Concept testing c. Idea generation d. Idea screening Answer: (b) Difficulty: (2) Page: 271 20. _____ entails testing new-product concepts with a target group of consumers to find out if the concepts have strong consumer appeal. a. Concept development . Concept testing c. Idea generation d. Idea screening Answer: (b) Difficulty: (1) Page: 271 21. Product concepts are presented to consumers during concept testing in any of the following ways, except which one? a. A word or picture description is presented to consumers. b. A concrete and physical presentation of the concept will increase the reliability of the concept test. c. Some companies are using virtual reality to test product concepts. d. Companies are reluctant to use the Web to test product concepts. Answer: (d) Difficulty: (3) Pages: 271-272 22. Designing an initial marketing strategy for a new product based on the ____ is called marketing strategy development. a. new product idea b. product concept c. test market results d. product prototype Answer: (b) Difficulty: (3) Page: 272 23. The marketing strategy statement in new product development consists of three parts: _____, _____, and _____. a. idea generation; idea screening; concept development b. idea generation; concept development; concept testing c. idea generation; idea screening; idea management d. target market description; planned product positioning; sales, market share, and profit goals for the first few years.
Answer: (d) Difficulty: (2) Page: 272 24. _____ involves a review of the sales, costs, and profit projections for a new product to find out whether they satisfy the company’s objectives. a. Idea generation b. Idea screening c. Business analysis d. Concept development and testing Answer: (c) Difficulty: (2) Page: 273 25. If a product concept passes the _____, it moves into _____. a. business analysis test; product development b. concept development stage; product development c. concept testing stage; product development d. idea generation stage; product development Answer: (a) Difficulty: (2) Page: 273 26.
Once management has decided on a product concept and marketing strategy, it can next evaluate the _____ of the proposal. a. product idea portion b. product development part c. business attractiveness d. commercial viability Answer: (c) Difficulty: (2) Page: 273 27. In the product concept stage of new-product development, the product is merely a _____. a. word description b. crude mock-up c. drawing d. all of the above Answer: (d) Difficulty: (2) Page: 273 28. In the _____ of new-product development, often products undergo rigorous tests to make sure that they perform safely and effectively or that consumers will find value in them. . business analysis stage b. idea generation c. concept development and testing stage d. product development phase Answer: (d) Difficulty: (3) Page: 273 29. _____ is the stage of new-product development in which the product and marketing program are tested in more realistic market settings. a. Business analysis b. Idea generation c. Test marketing d. Marketing strategy development Answer: (c) Difficulty: (2) Page: 274 30. All of the following are accurate descriptions of test marketing, except which one? a. Test marketing is the stage at which the product and marketing program are introduced into realistic market settings. . Test marketing by consumer-packaged goods firms has been increasing in recent years. c. Test marketing costs can be high, and it takes time that may allow competitors to gain advantages. d. Companies often do not test market simple line extensions. Answer: (b) Difficulty: (3) Page: 274 31. Introducing a new product into the market is called _____. a. test marketing b. new product development c. experimenting d. commercialization Answer: (d) Difficulty: (2) Page: 275 32. A company getting ready to launch a new product must make several decisions. However, the company must first decide on _____. . whether to launch the product in a single location b. whether to launch the product in a region c. whether to launch the product into full national or international distribution d. timing of the new product introduction Answer: (d) Difficulty: (3) Page: 275 33. _____ is a new-product development approach in which one company department works to complete its stage of the process before passing the new product along to the next department and stage. a. Team-based product development b. Simultaneous product development c. Sequential product development d. Product life-cycle analysis
Answer: (c) Difficulty: (2) Page: 276 34. In order to get their new products to market more quickly, many companies are adopting a faster, team-oriented approach called _____. a. sequential product development b. simultaneous product development c. commercialization d. introduction timing Answer: (b) Difficulty: (2) Page: 276 35. All of the following statements are accurate descriptions of the simultaneous product development approach to new product development, except which one? a. The simultaneous product development approach is also known as collaborative product development. b.
Company departments work closely together through cross-functional teams. c. Companies assemble a team of people from various departments that stay with the new product from start to finish. d. Companies often pass the new product from department to department in each stage of the process. Answer: (d) Difficulty: (3) Page: 276 36. All of the following are accurate descriptions of new-product development approaches used by companies in the commercialization phase of the process, except which one? a. New-product development teams in the simultaneous approach tend to stay with the new product from start to finish. . In the simultaneous approach, top management gives the product development team general strategic direction but no clear-cut product idea or work plan. c. In order to get their new products to market more quickly, many companies are adopting a faster approach called sequential product development. d. The simultaneous team-based approach can be riskier and more costly than the slower, more orderly sequential approach. Answer: (c) Difficulty: (3) Page: 276 37. All of the following are limitations of the simultaneous team-based approach to new-product development, except which one? . Superfast product development can be riskier and more costly than the slower, more orderly sequential approach. b. This approach often creates increased organizational tension and confusion. c. The objective of this approach is to ensure that rushing a product to market doesn’t adversely affect its quality. d. Top management gives the product development team a clear-cut product idea or work plan. Answer: (d) Difficulty: (2) Page: 276 38. All of the following statements accurately reflect the requisites of new-product success, except which one? a.
Thinking of a few good ideas, turning them into products, and finding customers for them. b. A systematic approach for finding new ways to create value for target consumers, from generating and screening new-product ideas to creating and rolling out want-satisfying products to customers. c. New-product success requires a total-company commitment. d. At firms known for their new-product success, their culture does not encourage, support, and reward innovation. Answer: (d) Difficulty: (2) Page: 277 39. _____ begins when the company finds and develops a new-product idea.
During product development, sales are zero and the company’s investment costs mount. a. Introduction b. Growth c. Maturity d. Product development Answer: (d) Difficulty: (2) Page: 277 40. _____ is a period of slow sales growth as the product is introduced into the market. Profits are non-existent in this stage because of the heavy expenses of product introduction. a. Growth b. Product development c. Maturity d. Introduction Answer: (d) Difficulty: (2) Page: 277 41. _____ is a period of market acceptance and increasing profits. a. Product development b. Maturity c. Growth d. Introduction Answer: (c) Difficulty: (2) Page: 277 2. _____ is the course of a product’s sales and profits over its lifetime, involving five distinct stages: product development, introduction, growth, maturity, and decline. a. Product life cycle b. Maturity c. Growth d. Decline Answer: (a) Difficulty: (2) Page: 277 43. _____ is the period when sales fall off and profits drop. a. Introduction b. Growth c. Maturity d. Decline Answer: (d) Difficulty: (2) Page: 277 44. All of the following are accurate descriptions of the product life cycle concept, except which one? a. The PLC concept can describe a product class. b. The PLC concept can describe a product form. c.
The PLC concept can describe a brand. d. Product forms tend to have the longest life cycles. Answer: (d) Difficulty: (3) Page: 278 45. All of the following are accurate descriptions of the application of the product life cycle concept, except which one? a. The PLC concept can be applied to styles. b. The PLC concept can be applied to fashions. c. The PLC concept can be applied to fads. d. The PLC concept can be applied to all of the above. Answer: (d) Difficulty: (2) Page: 278 46. All of the following are accurate descriptions of the life cycle of a style product, except which one? a. Style products appear in homes, clothing, and art. . Once a style is invented, it may last for generations. c. A style has a cycle showing several periods of renewed interest. d. Styles last only a short time and tend to attract only a limited following. Answer: (d) Difficulty: (2) Page: 279 47. _____ are fashions that enter quickly, are adopted with great zeal, peak early, and decline very quickly. a. Fashion b. Fads c. Styles d. Mature products Answer: (b) Difficulty: (2) Page: 279 48. The product life-cycle stage in which the new product is first distributed and made available for purchase is called the _____. a. maturity stage b. growth stage c. introduction stage d. decline stage
Answer: (c) Difficulty: (2) Page: 280 49. All of the following are characteristics of the introduction stage of the PLC, except which one? a. Profits are usually negative or low because of low sales. b. Profits are usually negative or low because of high distribution and promotion expenses. c. Lots of money is needed to attract distributors and build inventories. d. Educating the market remains a goal, but now the company must also meet the competition. Answer: (d) Difficulty: (2) Page: 281 50. All of the following are accurate descriptions of product launch strategies that are recommended of market pioneers, except which one? . The product launch strategy must be consistent with the intended product positioning. b. The initial strategy is just the first step in a grander marketing plan for the product’s entire life cycle. c. Pioneers must avoid sacrificing long-run revenue for the sake of short-run gain. d. Pioneers have the best chance of building and retaining market share if they decide to take risks from the start. Answer: (d) Difficulty: (3) Page: 281 51. If the new product satisfies the market, it will enter a(an) _____, in which sales will start climbing quickly. a. introduction stage b. growth stage c. maturity stage . decline stage Answer: (b) Difficulty: (2) Page: 281 52. At some point, a product’s sales growth will slow down, and the product will enter the _____. a. introduction stage b. growth stage c. maturity stage d. decline stage Answer: (c) Difficulty: (2) Page: 281 53. All of the following are characteristics of the growth stage of the product life cycle, except which one? a. The slowdown in sales growth results in many producers with many products to sell. b. The early adopters will continue to buy, and later buyers will start following their lead, especially with favorable word of mouth. c.
Attracted by opportunities for profit, new competitors will enter the market. d. Prices remain where they are or fall only slightly. Answer: (a) Difficulty: (2) Page: 281 54. Profits increase during the _____ as promotion costs are spread over a large volume and as unit manufacturing costs fall. a. introduction stage b. decline stage c. maturity stage d. growth stage Answer: (d) Difficulty: (2) Page: 281 55. In the ____, the firm faces a trade-off between high market share and high current profit. a. growth stage b. decline stage c. maturity stage d. introduction stage Answer: (a) Difficulty: (2) Page: 281 6. Mattel’s Barbie is an example of age-defying products. Barbie, both timeless and trendy, is in the _____ of the PLC. a. introduction stage b. growth stage c. maturity stage d. decline stage Answer: (c) Difficulty: (2) Page: 283 57. Over the past 100 years or so, Binney and Smith’s Crayola crayons have become a household staple in more than 80 countries around the world. Crayola crayons is in the _____ of the PLC. a. introduction stage b. maturity stage c. growth stage d. decline stage Answer: (b) Difficulty: (2) Page: 283 58. Johnson and Johnson targeted the adult market with its baby powder and shampoo.
In _____, Johnson and Johnson increased the consumption of the current product. a. modifying the product b. modifying the market c. modifying the pricing strategy d. modifying the distribution Answer: (b) Difficulty: (2) Page: 281 59. Mattel’s Barbie and Binney and Smith’s Crayola crayons are two examples of products that might have been only _____, but instead were turned into long-term market winners with plenty of staying power. a. fashion products b. fads c. style products d. all of the above Answer: (b) Difficulty: (3) Pages: 283-284 60. “Pet rocks” are a classic example of a _____. a. fashion product . style product c. fad d. none of the above Answer: (c) Difficulty: (3) Page: 279 61. When Heinz introduced EZ Squirt packaging and new colors such as Blastin’ Green and Awesome Orange to revitalize consumer buying, the company was _____. a. modifying the market b. modifying the pricing strategy c. modifying the distribution d. modifying the product Answer: (d) Difficulty: (3) Page: 282 62. The WD-40 Company’s knack for finding new uses has made this popular substance one of the truly essential survival items in most homes. WD-40 is in the _____ of the PLC. a. introduction stage b. growth stage c. aturity stage d. decline stage Answer: (c) Difficulty: (2) Page: 282 63. All of the following are accurate descriptions of different ways companies extend the maturity stage of the PLC, except which one? a. modifying the market b. modifying the product c. modifying the marketing mix d. pruning the product offerings Answer: (d) Difficulty: (2) Pages: 281-282 64. The product life-cycle stage, in which sales plunge to zero or drop to a low level at which they continue for many years, is the _____. a. introduction stage b. growth stage c. maturity stage d. decline stage Answer: (d) Difficulty: (2) Page: 285 5. Product sales decline for many reasons, including which of the following? a. recent technological advances b. shifts in consumer tastes c. increased competition d. all of the above Answer: (d) Difficulty: (1) Page: 285 66. Management must decide whether to maintain, harvest, or drop aging products in the _____ of the PLC. a. introduction stage b. growth stage c. maturity stage d. decline stage Answer: (d) Difficulty: (2) Page: 285 67. All of the following are characteristics of the decline stage of the PLC, except which one? a. As sales and profits decline, some firms withdraw from the market. b.
Some firms prune their product offerings. c. Some firms drop smaller market segments and marginal trade channels. d. Some firms modify the market. Answer: (d) Difficulty: (3) Page: 285 68. All of the following are stages in the PLC, except which one? a. introduction b. adoption c. growth d. decline Answer: (b) Difficulty: (2) Page: 277 69. Soft drink makers, such as Coca-Cola and Pepsi Cola, know very well that their flagship brands are in the _____ of the PLC. Greater competition, price markdowns, increase in advertising and sales promotion and, higher R&D budgets, are characteristics of this stage. a. roduct development b. introduction c. growth d. maturity Answer: (d) Difficulty: (2) Page: 281 70. Profits begin to slowly decline even before sales begin to drop significantly. This indicates a product is in the _____ of the PLC. a. introduction stage b. growth stage c. maturity stage d. decline stage Answer: (c) Difficulty: (2) Page: 280 71. All of the following are accurate descriptions of practical problems faced by marketers using the PLC concept, except which one? a. The PLC concept can be used as framework to describe how products and markets work. b. The PLC concept can be used to forecast product performance. . The PLC concept can be used to develop marketing strategies. d. The PLC concept can be used to determine the factors that affect the product’s movement through the stages. Answer: (a) Difficulty: (3) Page: 280 72. In the _____ of the PLC, marketers use increased sales promotion to encourage brand switching. a. introduction stage b. product development stage c. growth stage d. maturity stage Answer: (d) Difficulty: (3) Page: 286 73. In the _____ of the PLC, marketers price to penetrate the market. a. introduction stage b. growth stage c. maturity stage d. product development stage Answer: (b) Difficulty: (3) Page: 286 4. In the _____ of the PLC, marketers build product awareness among early adopters and dealers. a. growth stage b. introduction c. maturity stage d. decline Answer: (b) Difficulty: (2) Page: 286 75. The best example of a product(s) towards the end of the maturity stage and/or early decline stages of the product life cycle is _____. a. cellular telephones b. high definition television (HDTV) c. 3. 5 inch floppy disks d. electric cars Answer: (c) Difficulty: (3) Page: 281 76. According to the text, all of the following are accurate descriptions of Microsoft, except which one? a.
Microsoft has long been regarded as a product innovator. b. Microsoft has long been regarded as “a big fat copycat. ” c. Microsoft used its brute force to muscle into dominance of the operating system world. d. Microsoft is now innovating at a breakneck pace. Answer: (a) Difficulty: (3) Page: 262 77. After idea generation and screening, consumers may then be asked to react to the _____ by answering a few questions. a. marketing strategy b. product concept c. business analysis d. product development Answer: (b) Difficulty: (2) Page: 273 78. Some marketers are finding innovative ways to make _____ more real to consumer subjects.
For example, some are using virtual-reality programs to simulate reality. a. ideas b. product concepts c. business analysis d. marketing strategy Answer: (b) Difficulty: (3) Page: 271 79. Test marketing is not needed normally under the following conditions, except which one? a. When simple line extensions are introduced. b. When copies of successful competitor products are marketed. c. When management is already confident about the new product. d. When introducing a new product requires a big investment. Answer: (d) Difficulty: (3) Page: 274 80. Introducing a new product into the market requires a lot of investment in time and money.
The company may have to build or rent a manufacturing facility. And it may have to spend, in the case of consumer packaged goods, between $10 million and $200 million for advertising, sales promotion and other marketing efforts. The company is getting ready to go ahead with _____. a. idea screening b. product development c. concept development and testing d. commercialization Answer: (d) Difficulty: (3) Page: 265 81. According to the text, in the _____ of the PLC, there are many _____. A weak product may take up too much of management’s time. It often requires frequent price and inventory adjustments. a. ntroduction stage; costs b. growth stage; hidden costs c. maturity stage; hidden costs d. decline stage; hidden costs Answer: (d) Difficulty: (3) Page: 285 82. All of the following are examples of hidden costs in the decline stage of the PLC, except which one? a. A weak product may take up too much of management’s time. b. Carrying a weak product requires frequent price and inventory adjustments. c. Carrying a weak product requires advertising and sales force attention that might be better used to make “healthy” products more profitable. d. Carrying a weak product is not necessarily bad for a firm’s future.
Answer: (d) Difficulty: (2) Page: 285 83. Procter and Gamble has sold off a number of lesser or declining brands such as Oxydol detergent and Jif peanut butter. In these examples, management decided to _____ the products. a. maintain b. harvest c. drop d. none of the above Answer: (c) Difficulty: (3) Page: 286 84. Often in the decline stage of the PLC, management decides to reduce costs (plant and equipment, R&D, advertising) and hopes sales hold up. This is an example of _____ the product. a. harvesting b. maintaining c. dropping d. ignoring Answer: (a) Difficulty: (2) Page: 286 85.
Often management may decide to sell a product to another firm or simply liquidate it at salvage value in the _____ of the PLC. a. growth stage b. maturity stage c. product development stage d. decline stage Answer: (d) Difficulty: (2) Page: 287 True/False 86. Using external sources, the company can find new ideas through formal research and development. Answer: (False) Difficulty: (1) Page: 266 87. Generating new product ideas by watching and listening to customers is an example of an external idea source. Answer: (True) Difficulty: (1) Page: 266 88. The systematic search for new-product ideas is called idea screening.
Answer: (False) Difficulty: (2) Page: 265 89. Major sources of new-product ideas include internal sources and external sources. Answer: (True) Difficulty: (1) Page: 265 90. New product development begins with idea generation. Answer: (True) Difficulty: (1) Page: 265 91. Some companies believe that no idea is too far-fetched or impractical on the first day. Answer: (True) Difficulty: (1) Page: 268 92. A firm can obtain new products in two ways: acquisition or new product development. Answer: (True) Difficulty: (2) Page: 264 93. Companies must rely heavily on consumer input when developing new products.
Answer: (False) Difficulty: (2) Page: 269 94. New products fail due to several reasons. Although an idea may be good, the market size may have been overestimated. Answer: (True) Difficulty: (2) Page: 264 95. The search for new-product ideas should be systematic rather than haphazard. Answer: (True) Difficulty: (2) Page: 269 96. An idea management system directs the flow of new ideas to a central point where they can be collected, reviewed, and evaluated. Answer: (True) Difficulty: (2) Page: 269 97. The idea manager approach helps create an innovation-oriented company culture.
Answer: (True) Difficulty: (2) Page: 270 98. The purpose of idea screening is to create a large number of ideas. Answer: (False) Difficulty: (2) Page: 270 99. An attractive idea must be developed into a marketing strategy. Answer: (False) Difficulty: (2) Page: 270 100. Testing new-product concepts with a group of target consumers to find out if the concepts have strong consumer appeal is called concept testing. Answer: (True) Difficulty: (2) Page: 271 101. Some marketers are using virtual reality to test product concepts. Answer: (True) Difficulty: (2) Page: 271 102.
Marketing strategy development entails designing an initial marketing strategy for a new product based on the product concept. Answer: (True) Difficulty: (2) Page: 271 103. Marketing strategy statement consists of three parts. The second part describes the target market; the planned product positioning; and the sales, market share, and profit goals for the first few years. Answer: (False) Difficulty: (2) Page: 272 104. Business analysis involves a review of the sales, costs, and profit projections for a new product to find out if they satisfy the company’s objectives. Answer: (True) Difficulty: (2) Page: 273 05. The product concept exists as a prototype of the actual product. Answer: (False) Difficulty: (2) Page: 273 106. The product concept exists as a word description, a drawing, or a crude mock-up. Answer: (True) Difficulty: (2) Page: 273 107. Developing the product concept into a physical product in order to ensure that the product idea can be turned into a workable product is called product development. Answer: (True) Difficulty: (2) Page: 273 108. The stage of new product development, in which the product and marketing program are tested in more realistic market settings, is called test marketing.
Answer: (True) Difficulty: (2) Page: 274 109. When the costs of developing and introducing the product are low, the company may do little or no test marketing. Answer: (True) Difficulty: (2) Page: 274 110. Test marketing costs are usually low. Answer: (False) Difficulty: (2) Page: 274 111. Test marketing by consumer packaged-goods firms has been increasing in recent years. Answer: (False) Difficulty: (2) Page: 274 112. Companies often test market simple line extensions or copies of successful competitor products. Answer: (False) Difficulty: (2) Page: 274 113.
When introducing a new product requires a big investment, a company may do little or no test marketing. Answer: (False) Difficulty: (2) Page: 274 114. Introducing a new product into the market is called product development. Answer: (False) Difficulty: (2) Page: 275 115. A company launching a new product into the market must first decide on where to launch the product. Answer: (False) Difficulty: (2) Page: 275 Essay 116. New product development begins with lots of ideas. Companies everywhere use several sources to develop new ideas. Identify and discuss the sources of new-product ideas. Answer:
Major sources of new-product ideas include internal sources and external sources, such as customers, competitors, distributors and suppliers, and others. Using internal sources, the company can find new ideas through formal R. Company executives, scientists (3M), engineers, manufacturing staff, and salespeople. Some companies have developed “intrapreneurial” programs to develop new-product ideas. TI’s IDEA program provides funds for employees who pursue their own ideas. Firms like Eureka! Ranch employ both ” method and madness” to help companies jumpstart their new-product idea generation process. Listening to customers nd conducting focus groups or surveys to learn about consumer needs and wants is a good way to pursue new ideas. Using customers as innovators has become a hot new way to create value. Some firms do not overly rely on consumer input, as they are not experts or informed enough on a particular innovation. Competitors, distributors and suppliers also contribute many good new-product ideas. Other idea sources include trade magazines, shows, seminars, and other commercial marketing firms. Difficulty: (2) Pages: 265-270 117. New-product failure rates range anywhere from a low of 30 percent to a high of 95 percent.
There are several reasons for new product failure. Explain, using examples wherever necessary. Answer: Although an idea may be good, the market size may have been overestimated. Perhaps the actual product was not designed as well as it should have been. Maybe the product was incorrectly positioned in the market, priced too high, or advertised poorly. A high-level executive might push a favorite idea despite poor marketing research findings. Sometimes the costs of product development are higher than expected and sometimes competitors fight back harder than expected.
The reasons behind some new-product failures seem pretty obvious. For example, RJR’s smokeless cigarette, Premier, was a classic case of targeting the wrong group. Other companies failed because they attached their brand names to something totally out of character. Difficulty: (2) Page: 264 118. According to the text, companies can benefit by relying on consumer-generated ideas. Discuss the pros and cons of each. Answer: External idea sources are some examples of consumer generated new-product ideas. The company can analyze customer questions and complaints to find new products that better solve consumer problems.
Company engineers or salespeople can meet with and work alongside customers to get suggestions and ideas. The company can conducts surveys or focus groups to learn about consumer needs and wants. For example, Heinz approached children to get fresh ideas to make ketchup more appealing. Changing the color of ketchup was the kids’ idea so Heinz came up with EZ Squirt, emitting a thin stream of ketchup. Companies can also benefit by letting consumers create new products and uses on their own. Other firms go to the extent of giving consumers the tools and resources to design their own products.
Tools include computer simulation and rapid prototyping to make product development faster and less expensive. Difficulty: (2) Pages: 265-270 119. According to the text, companies must be careful not to rely too heavily on consumer input when developing new products. Explain why. Answer: Companies must be careful not to overly rely on consumer-generated ideas, as customers may not know what they need for some technical products. It is not wise to expect customers to come up with solutions, as they are not expert or informed enough for that part of the innovation process.
Some marketers strongly believe that the R&D team is better suited to ideas; customers should be asked only for outcomes — what they want a product or service to do for them. Difficulty: (2) Page: 269 120. What is an idea management system? Explain. Answer: An idea management system directs the flow of new ideas to a central point where they can be collected, reviewed, and evaluated. In setting up such a system, a company can do any or all of the following: – Appoint a respected senior person to be the company’s idea manager. Create a cross-functional idea management committee consisting of people from R, engineering, purchasing, operations, finance, and sales and marketing to meet regularly and evaluate proposed new product and service ideas. – Set up a toll-free number or Web site for anyone who wants to send a new idea to the idea manager. – Encourage all company stakeholders — employees, suppliers, distributors, dealers-to send their ideas to the idea manager. – Set up formal recognition programs to reward those who contribute the best new ideas. An idea manager approach yields two basic outcomes.
First, it creates an innovation-oriented company culture. It shows that top management supports, encourages, and rewards innovation. Second, it will yield a larger number of ideas among which will be found some especially good ones. As the system matures, ideas will flow freely. Difficulty: (2) Pages: 269-270 121. Define new-product development. Outline the major steps in the new product development process. Answer: New-product development is the development of original products, product improvements, product modifications, and new-products through the firm’s own R&D department.
The steps in new-product development are: 1. Idea generation: The systematic search for new-product ideas. 2. Idea screening: To spot good ideas and drop poor ones as soon as possible. 3. Concept development and testing: An illustration, written description of the product or crude-mockup is developed and tested in this stage. The testing ends with questions about consumer intentions to buy the product. 4. Marketing strategy developing: Designing an initial marketing strategy for a new product based on the product concept. 5.
Business Analysis: A review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives. 6. Product development: Developing the product to ensure that the idea can be turned into a workable product. 7. Test marketing: Product and marketing program is introduced into more realistic market settings. 8. Commercialization: Introducing a new product into the market. Difficulty: (2) Pages: 264-276 122. Define test marketing. Discuss the pros and cons of test marketing. Answer:
Limited introduction of a new product and the marketing program to simulate realistic market settings is called test marketing. Test marketing gives the marketer experience with marketing the product before going to the expense of full introduction. The amount of test marketing needed varies with each new product. Test marketing costs can be high and it takes time that may allow competitors to gain advantages. When the costs of developing and introducing the product are low, or when management is already confident about the new product, the firm may do little or no test marketing.
In fact, test marketing by consumer packaged goods firms has been declining in recent years. Companies often do not test-market simple line extensions or copies of successful competitor products. Sometimes, when introducing a new product requires a big investment or when management is not sure of the product or marketing program, a company may do a lot of test marketing. There are also times when test marketing does not guarantee success. Subsequent to testing, product failures have occurred. Difficulty: (2) Pages: 274-275 123. Define commercialization.
During the product launch stage, the company must first decide on two important issues. Explain. Answer: Introducing a new product into the market is called commercialization. The company launching a new product must first decide on introduction timing. Next, the company must decide where to launch the new product — in a single location, a region, the national market, or the international market. Confidence, capital, and capacity are required to launch new products on a large-scale basis. Hence, firms plan a market rollout over time. Large companies pursue a national rollout while some firms plan global rollouts.
For example, Colgate introduced a battery-powered toothbrush into 50 countries in a year. Difficulty: (2) Pages: 275-276 124. Distinguish between a style product, a fashion product, and a fad product. Answer: A style is a basic and distinctive mode of expression. Styles are seen in homes, clothing, and art. A style goes through several periods of renewed interest. A fashion is a currently accepted or popular style in a given field. Fashions tend to grow slowly, remain popular for a while, and then decline slowly. Fads are fashions that enter quickly, are adopted with enthusiasm, peak early, and then decline very quickly.
They last for a short while and tend to attract only a limited following. Difficulty: (2) Page: 280 125. Distinguish between the application of the PLC concept across a product class, product form, and a brand. Answer: The PLC concept can be used to describe a product class (gasoline-powered automobiles, laundry soaps), a product form (minivans, SUV), or a brand (the Ford Explorer). Product classes tend to have the longest life cycles; they tend to stay in the mature stage for a long time. Product forms tend to have the standard PLC shape. Examples include dial telephones and cassette tapes.
Brand life cycles tend to be shorter today, due to competitive pressures. Difficulty: (2) Page: 278 Application 126. Pick any automobile company and apply the PLC concepts to each of these cases: product class, product form and a brand; style, fashion and fad products. Answer: Students can pick any automobile company of their choice. Daimler-Chrysler is a case in point of an automobile company with a lot of history attached to it, having undergone several changes. Product class: Gasoline-powered automobiles have been around for over a century.
Product form: Chrysler, the pioneer of minivans (Dodge Caravan and Plymouth Voyager), is now riding the SUV wave. Now in the mature stage of the life cycle, minivans are slowly losing ground to SUVs in the northeast USA. SUVs are in the growth phase of the PLC. Brand: A plethora of brands can be found under the umbrella of Daimler-Chrysler. Dodge Viper, ML 320, 320 C Class, Dodge Caravan are some of the brands in different stages of the PLC. Style product: Aerodynamic shape of cars is a classic example of a style product. It goes through cyclical patterns, with interest being revived now and then.
At times, the mini-version and box-type look come back. The sleek look of the 1980s has stood its course for nearly three decades. Fashion product: For example, it is fashionable to own an SUV. Considered to be ideal for all terrain weather, or a work horse to shepherd the kids to school and to perform other household tasks with lots of luggage room and leg room, SUVs have been around for over five to seven years. Fad: Mercedes, in a joint venture with SMH Corp. , built a car. It was somewhat successful in Europe but never introduced to the USA. Difficulty: (2) Pages: 277-286
