M: Marketing, 6e (Grewal)
Chapter 12 Developing New Products
1) New product development adds value to a firm’s products and services through innovation.
2) Although innovation strategies may not work in the long run, overriding short-term reasons
compel firms to introduce new products and services.
3) New-to-the-world products can establish completely new markets or radically change the rules
of competition as well as consumer preferences in a market.
4) The failure rate for new products is high.
5) Even if products succeed, not all consumers adopt new–to–the-world products at the same
time.
3
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
6) One of the key characteristics of brainstorming sessions is that bad ideas should be
immediately rejected so the group can focus its attention on good ideas.
7) Test marketing refers to customers who modify existing products according to their own ideas
to suit their specific needs.
8) When Glenn asked a few of his regular customers to test his prototype surfboard, he was
engaging in alpha testing.
9) To determine if a new product is commercially viable, a firm can conduct premarket testing.
10) The introduction stage of the product life cycle is characterized by negative or low profits.
11) The maturity phase of the product life cycle is characterized by greatly reduced competition.
12) The most challenging part of applying the product life cycle concept is that managers do not
know exactly what shape each product’s life cycle will take.
13) On the diffusion of innovation curve, the first group of buyers who want to be the first on the
block to have the new product are known as early adopters.
14) On the diffusion of innovation curve, the late majority is the final group of buyers who like
to avoid change and rely on traditional products until they are no longer available.
15) The diffusion of innovation curve follows the following sequence: innovators, early majority,
late majority, early adopters, and laggards.
16) The fact that the Apple iPad is easy to try—demo units are available at Apple stores as well
as other retail stores—has helped it diffuse more quickly.
17) When consumers see their friends using an innovation, it often persuades them to try it too.
18) As personal computers became popular, the sale of typewriters decreased significantly and
now typewriters are only used by a very small segment of consumers. Typewriters are in the
maturity stage of the product life cycle.
19) Fashion trends tend to experience short product life cycles.
20) When the iPad Mini came out, Sasha spent the night in front of the store so she could get one
before any of her friends. According to the diffusion of innovation, Sasha is an innovator.
21) ________ is the process by which ideas are transformed into new products and services that
will help firms grow.
A) Beta testing
B) Concept testing
C) Innovation
D) Reverse engineering
E) Competition
22) Eric is a sales rep for an established building materials manufacturer. Business is good, but
he is concerned that the company has spent little on new product development and has not
created a new product in over five years. Without new products, Eric can market his current
products only to his current customers or
A) diversify.
B) intensify his prototyping.
C) expand his early adopter market segment.
D) market the same products to similar customers.
E) focus on concept testing.
23) Many restaurants offer daily specials, appetizers, entrees, and desserts not listed on their
standard menu. These daily specials primarily provide the new product benefit of
A) keeping up in a market where sales come mostly from new products.
B) satisfying the changing needs of current and new customers.
C) avoiding market saturation from products that have been on the market for a long time.
D) creating diversification and reducing risk.
E) reduction in cost of ingredients.
24) By adding new product lines beyond its core business of computer software, like the Surface
Pro tablet and Xbox 360 game system, Microsoft primarily benefits by
A) keeping up in a market where sales come mostly from new products.
B) satisfying the changing needs of the technological research staff.
C) avoiding market saturation from products that have just been introduced to the market.
D) creating diversification and reducing risk.
E) spreading out production costs.
25) Computer game companies constantly monitor computer game-related blogs keeping track of
the latest hot products, because they know that their customers crave the “latest and greatest”
games. They use this information to create new products that primarily provide the benefit of
A) keeping up in a market where sales come mostly from new products.
B) satisfying the changing needs of former customers.
C) avoiding market penetration from products that have been on the market for a long time.
D) creating diversification and reducing risk.
E) taking advantage of a long product cycle.
26) All of the following are benefits of new product development to a firm except
A) reducing the costs of production.
B) satisfying the changing needs of current and new customers.
C) avoiding market saturation from products that have been on the market for a long time.
D) creating diversification and reducing risk.
E) keeping up in a market with short product life cycles where sales come mostly from new
products.
27) Pioneer or breakthrough products
A) will likely result in late maturity buying.
B) can change consumer preferences.
C) incorporate reverse engineering outputs.
D) require the use of concept testing services.
E) must be geographically centered.
28) All of the following were considered a new-to-the-world product or service when introduced
except
A) the Internet browser.
B) the Mercedes mini sport utility vehicle.
C) personal digital assistant.
D) the iPad.
E) smartwatches.
29) One of the potential benefits to a firm of introducing new-to-the-world products or services
is
A) cost savings.
B) late majority marketing.
C) establishment of a completely new market.
D) the ability to avoid paying pioneers for new product development.
E) the ability to capitalize on existing consumer preferences.
30) Successful first movers create a market or a product category. They often benefit from being
readily recognizable to consumers and
A) not having to pay advertising expenses.
B) using prototypes to dominate the market.
C) not needing to do test marketing.
D) establishing an early market share lead.
E) motivating laggards to buy their products.
31) In many cases, pioneers lose their market lead and initial market share to imitators who
A) capitalize on the pioneers’ weaknesses.
B) create similar products with reduced value to consumers.
C) utilize alpha-beta testing.
E) target late maturity consumers.
32) All of the following are reasons for the high failure rate of new products except
A) failing to assess the market properly.
B) neglecting to do appropriate product testing.
C) targeting the wrong segment.
D) overextending a firm’s abilities.
E) failing to introduce lower-priced alternatives.
33) Even if they succeed, new-to-the-world products are
A) generally not profitable.
B) not adopted by everyone at the same time.
C) not capable of creating new markets.
D) not subject to the law of first movers.
E) typically very short-lived.
34) The process by which the use of a new product or service spreads throughout a market group
is referred to as
A) new product introduction.
B) lead user dispersion.
C) diffusion of innovation.
D) the product life cycle.
E) product development diffusion.
35) The diffusion of innovation theory focuses on
A) the geographic boundaries of innovation.
B) the relationship between pioneer brands and imitators.
C) the psychological traits of innovators.
D) the rate at which consumers are likely to adopt a new product or service.
E) the way a product moves through the product life cycle.
36) All of the following groups are included in the diffusion of innovation curve except
A) innovators.
B) nonadopters.
C) late majority.
D) early majority.
E) early adopters.
37) Innovators are a critical group of new product adopters because they
A) are the major source of innovation.
B) act as reverse engineering consultants.
C) help with test marketing.
D) help the product gain market acceptance.
E) extend the product life cycle.
38) Whenever Andrew considers upgrading his personal computer system, he consults with
Jeremy, a knowledgeable friend who always has the newest technology. For Andrew, Jeremy is
a(n) ________ in the diffusion of innovation curve.
A) innovator
B) laggard
C) late majority adopter
D) early majority adopter
E) early adopters
39) In the diffusion of innovation process, innovators enjoy taking risks and are regarded as
highly knowledgeable. Marketers want to identify innovators because
A) they prefer products from established market leaders.
B) other consumers defer to their judgment, creating the opportunity for word-of-mouth referrals.
C) they are especially price conscious.
D) they are easily influenced by reminder advertising.
E) they encourage competitors to enter the market.
40) Brian is trying to sell a new line of ultrasound imaging equipment. Unlike existing
technology, these machines are compact, creating the potential for general practice physicians to
have and use them in their offices. Brian is trying to identify innovators in his market, knowing
these customers will most likely
A) spread positive word of mouth to other physicians.
B) buy one for each office in their practices.
C) reposition his products.
D) create demand among the late majority.
E) not need any service or support when using the product.
41) For new product marketers, early adopters are important because they tend to be
A) few in number.
B) the first to adopt a new product.
C) opinion leaders.
D) fond of prototypes.
E) alpha testing enthusiasts.
42) Robin recently bought Voice over Internet Protocol (VoIP) phone service. A few of Robin’s
friends bought VoIP before she did, but many other friends were interested in Robin’s opinions
of the new phone service. Robin is a(n) ________ in this product category.
A) innovator
B) laggard
C) late majority adopter
D) early majority adopter
E) early adopter
43) As it pertains to the diffusion of innovation, if the ________ group is relatively small, the
number of people who ultimately adopt the innovation likely will also be small.
A) innovator
B) laggard
C) late majority
D) early majority
E) early adopter
44) The ________ diffusion of innovation group is crucial because few new products can be
profitable until this large group buys them.
A) innovator
B) laggard
C) late majority
D) early majority
E) early adopter
45) As soon as she saw one, Hillary wanted a flat-screen television, but she was worried about
making the wrong choice. She waited until there were alternatives in the market with lower
prices and improved quality. Hillary is part of the ________ diffusion of innovation group.
A) innovator
B) laggard
C) late majority
D) early majority
E) early adopter
46) When microwaves were new, they often cost over $300, were huge, and had numerous
settings and options. Brenda and Bart waited, concerned about potential health hazards and
wishing for more choices in the market. By the time they purchased a microwave, sales of
microwaves had leveled off and prices had declined significantly. Brenda and Bart were part of
the ________ diffusion of innovation group.
A) innovator
B) laggard
C) late majority
D) early majority
E) early adopter