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1. A product category includes all brands that satisfy a particular type of need.
a.
True
b.
False
ANSWER:
True
2. Absolute failure occurs when a product returns a profit but fails to achieve sales, profit, or market share goals.
a.
True
b.
False
ANSWER:
False
3. Daily Farm, a food and beverage manufacturing firm, is known for its unique variety of table sauces. To offer more
variations to its customers, Daily Farm recently launched an olive and pepper sauce. The olive and pepper sauce belongs
to the category of improved products.
a.
True
b.
False
ANSWER:
False
4. A concept test evaluates an existing product idea, after the creation of a prototype.
a.
True
b.
False
ANSWER:
False
5. The product life cycle (PLC) for a brand is usually longer than the PLC for a product form.
a.
True
b.
False
ANSWER:
False
6. The rate of decline of sales is governed by how rapidly consumer tastes change or substitute products are adopted.
a.
True
b.
False
ANSWER:
True
7. A process called 3D printing, or additive manufacturing, is sometimes used to create three-dimensional prototypes
quickly and at a relatively low cost.
a.
True
b.
False
ANSWER:
True
8. A message developed for and targeted toward early adopters will be perceived similarly by late majority adopters.
a.
True
b.
False
ANSWER:
False
9. Unlike the growth stage of the product life cycle, in the introductory stage, emphasis switches from primary demand
promotion to aggressive brand advertising and communication of the differences between brands.
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a.
True
b.
False
ANSWER:
False
10. The growth stage of the product life cycle (PLC) represents the full-scale launch of a new product into the
marketplace.
a.
True
b.
False
ANSWER:
False
11. During the maturity stage of the product life cycle, new users can be added indefinitely.
a.
True
b.
False
ANSWER:
False
12. A new-product strategy links the new-product development process with the objectives of the marketing department,
the business unit, and the corporation.
a.
True
b.
False
ANSWER:
True
13. A firm that starts with a global strategy is better able to develop products that are marketable worldwide.
a.
True
b.
False
ANSWER:
True
14. In the context of diffusion of innovation, a dominant characteristic of innovators is tradition.
a.
True
b.
False
ANSWER:
False
15. Roger, an affluent college graduate, buys gadgets on the day of their launch in the market. He reads expert reviews on
the Internet, and he is not influenced by the opinions of his family and friends while choosing products. Roger is most
likely to belong to the category of _____ in the context of diffusion of innovation.
a.
the late majority
b.
innovators
c.
the early majority
d.
early adopters
ANSWER:
b
16. Which of the following is a similarity between the early majority and the late majority?
a.
Both have the potential to become opinion leaders.
b.
Both rely on science and experts for information.
c.
Both depend on word-of-mouth communication.
d.
Both prefer to be influenced by the mass media.
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ANSWER:
c
17. In the context of the new-product development process, which of the following statements is true of screening?
a.
It eliminates ideas that are inconsistent with an organization’s new-product strategy.
b.
It calculates preliminary figures for demand, cost, sales, and profitability.
c.
It involves getting consumer reactions to visual representations of a proposed product.
d.
It involves making cosmetic or functional changes to existing products.
ANSWER:
a
18. Marketing costs are high in the introductory stage of the product life cycle because:
a.
product design changes become stylistic rather than functional.
b.
high dealer margins are often needed to obtain adequate distribution.
c.
manufacturers scramble to sign up dealers and distributors.
d.
emphasis is given to communication of the differences between brands in the market.
ANSWER:
b
19. Which of the following statements is true of a customer innovation center?
a.
It is an approach to reposition a company’s products.
b.
It promotes status-conscious advertising among customers.
c.
It is a forum for meeting with customers and directly involving them in the innovation process.
d.
It is used in the business analysis stage of the new-product development process.
ANSWER:
c
20. In the context of product characteristics and the rate of adoption, which of the following statements is true of
complexity?
a.
It refers to the degree of difficulty involved in understanding and using a new product.
b.
It refers to the degree to which a new product is consistent with existing values.
c.
It refers to the degree to which a product is perceived as superior to existing substitutes.
d.
It refers to the degree to which a product can be tried on a limited basis.
ANSWER:
a
21. Which of the following statements is true of opinion leaders?
a.
They most likely belong to the late majority category of adopters.
b.
They speed up the diffusion process through word-of-mouth communication.
c.
They are distinguished by demographics.
d.
They have the longest adoption time and the lowest socioeconomic status.
ANSWER:
b
22. Which of the following is an objective of focus group interviews?
a.
To stimulate insightful comments through group interaction
b.
To directly involve customers in test marketing
c.
To reject ideas that are obviously inappropriate for some reason
d.
To eliminate ideas that are inconsistent with an organization’s new-product strategy
ANSWER:
a
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23. Nutrioats, an oatmeal cookie product, has been in the market for over seven years. However, the product is now in its
decline stage. In this case, which of the following will be a successful strategy to market Nutrioats?
a.
Lengthening the product line
b.
Focusing on adding new users
c.
Spending heavily on advertising to educate consumers about the product’s benefits
d.
Eliminating all nonessential marketing expenses and letting sales decline
ANSWER:
d
24. Hakimo Corp., a manufacturer of audio equipment, has developed a unique wireless speaker system that runs on solar
power. The speakers can operate for sixteen hours after being exposed to the sun for two hours. This new product, which
is radically different from anything available in the market, would fall in the new product category of _____.
a.
repositioned products
b.
revised products
c.
discontinuous innovations
d.
new and improved products
ANSWER:
c
25. Which of the following statements is true of simulated market testing?
a.
It is often conducted on prototype models during the development stage.
b.
It is a useful tool for implementing simultaneous product development.
c.
It is the final stage in the new-product development and marketing process.
d.
It is used to monitor shopper behavior to assess a product’s performance.
ANSWER:
d
26. Which of the following statements best describes simultaneous product development?
a.
It is a strategy that provides general guidelines for generating, screening, and evaluating new-product ideas.
b.
It is used to determine the reactions of potential customers in a market situation.
c.
It is the process where all the involved areas work together rather than sequentially during a product’s
development.
d.
It is a strategy that links the new-product development process with the objectives of the marketing
department, the business unit, and the corporation.
ANSWER:
c
27. Jenny, the owner of an ice cream parlor, has been experimenting with different flavors to create a new exotic ice
cream for her customers. After much deliberation and many tests, she decides to market the new Beet Cake with Black
Walnut variant. In this scenario, the chosen ice cream flavor has entered the _____ stage of the new-product development
process.
a.
business analysis
b.
development
c.
test marketing
d.
commercialization
ANSWER:
d
28. In the context of the new-product development process, the decision to market a product is made during _____.
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a.
commercialization
b.
test marketing
c.
development
d.
business analysis
ANSWER:
a
29. In the context of diffusion of innovation, the dominant value of laggards is _____.
a.
skepticism
b.
deliberateness
c.
adventure
d.
tradition
ANSWER:
d
30. Which of the following is a characteristic of products produced by multinational corporations?
a.
Products are developed to meet unique market requirements whenever possible.
b.
A firm that starts with a local strategy is better able to develop global products.
c.
Products are inadequately distributed in local markets.
d.
Test marketing is not required for products developed by multinational firms.
ANSWER:
a
31. Which of the following is a disadvantage of test marketing?
a.
It requires major changes in consumer behavior such as rejecting microwave ovens.
b.
It promotes the criticism of an idea, no matter how ridiculous it may seem.
c.
It inaccurately predicts the success of a product that creates new consumption patterns.
d.
It exposes the new product and its marketing mix to its competitors before its introduction.
ANSWER:
d
32. Cleanz Inc., a toiletries manufacturing firm, has launched a new range of organic sanitizing wipes. It wants to test its
consumers’ reactions to this new product in an economical way. Therefore, Cleanz sends out flyers to a few selected
members of the target market advertising several of its products along with the new product. Besides this, it also takes the
members to a mock shop and monitors their shopping behavior. In this scenario, Cleanz is using _____.
a.
scanner-based research testing
b.
simulated market testing
c.
virtual test marketing
d.
traditional test marketing
ANSWER:
b
33. Steve, a retiree, wants to open a day care facility for dogs with his savings. After deciding on the services that he
would be providing to his customers, he calculates costs versus the demand and the profit he could make depending on the
volume of sales. After extensive deliberation, Steve decides to take credit from the bank for opening the facility as the
initial investment required is too high. Steve is currently in the _____ stage of the new-product development process.
a.
commercialization
b.
business analysis
c.
idea generation
d.
test marketing
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ANSWER:
b
34. Fournotts Corp. manufactures and sells accessories for cell phones. To boost its sales, the research and development
team decides to use the method of product modification. In this scenario, the research and development team will most
likely:
a.
eliminate products that are inconsistent with Fournotts’s business mission.
b.
develop products by the application of a new technology.
c.
make a slight change in the design or function of the existing products.
d.
add new products to supplement Fournotts’s established product line.
ANSWER:
c
35. In the context of product characteristics and the rate of adoption, which of the following statements is true of relative
advantage?
a.
It refers to the degree of difficulty involved in understanding and using a new product.
b.
It refers to the degree to which a new product is consistent with existing values.
c.
It refers to the degree to which a product is perceived as superior to existing substitutes.
d.
It refers to the degree to which a product can be tried on a limited basis.
ANSWER:
c
36. Which of the following statements is true of the development stage of the new-product development process?
a.
Costs decrease dramatically once a product idea enters the development stage.
b.
It involves evaluating a new-product idea before creating any prototype.
c.
Simultaneous product development increases the time spent in the development process.
d.
It involves examining the feasibility of manufacturing a product at an acceptable cost.
ANSWER:
d
37. Steven, a construction worker, tends to buy a new gadget if most of his friends have them. He relies on reviews from
his friends rather than on television or newspaper advertisements to make his purchase decisions. It can be inferred that
Steven belongs to the category of _____ in the diffusion of innovation.
a.
laggards
b.
innovators
c.
the late majority
d.
the early majority
ANSWER:
c
38. Which of the following is a similarity between early adopters and the early majority?
a.
Both have the potential to become opinion leaders.
b.
Both rely on group norms and values.
c.
Both desire to earn the respect of others.
d.
Both are influenced by advertising and promotions.
ANSWER:
b
39. Which of the following statements is true of the maturity stage of the product life cycle (PLC)?
a.
The beginning of this stage is signaled by increased sales.
b.
Niche marketers that target the underserved segments of a market emerge.
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c.
It is the shortest stage of the PLC.
d.
Product design changes tend to become functional rather than stylistic.
ANSWER:
b
40. In the context of the product life cycle, a long-run drop in a product’s sales signals the beginning of the _____.
a.
introductory stage
b.
growth stage
c.
maturity stage
d.
decline stage
ANSWER:
d
41. Magnira Corp. is an apparel company. After a slow start, it saw a steep rise in its clientele and a remarkable increase
in its profits. However, with the launch of other apparel manufacturers in the market, the profits of Magnira have started
declining. To sustain its growth in the market, the managers of Magnira should:
a.
focus on primary demand stimulation rather than advertising the brand.
b.
shift to aggressive brand advertising and open new branches.
c.
suggest top management to reduce the number of employees in the company.
d.
distribute the company’s products at limited outlets.
ANSWER:
b
42. In comparison to early adopters, which of the following statements is true of the early majority?
a.
They are more likely to be opinion leaders.
b.
They are less likely to extend the adoption process.
c.
They are self-confident, and they rely less on group norms.
d.
They are likely to collect more information and evaluate more brands.
ANSWER:
d
43. In which of the following ways does the concept of product life cycle (PLC) help marketing managers?
a.
It tells managers the length of a product’s life cycle.
b.
It can be used to analyze a brand, a product form, or a product category.
c.
It dictates the marketing strategy to be used for a product.
d.
It informs marketers about the duration of a product in the various stages of its life cycle.
ANSWER:
b
44. Which of the following is an advantage of simultaneous product development?
a.
It shortens the development process and reduces costs.
b.
It eliminates the need for conducting laboratory tests on product prototypes.
c.
It ensures that product development occurs in highly structured stages.
d.
It eliminates the need for test marketing a new product.
ANSWER:
a
45. Which of the following is the most important factor in successful new-product introduction?
a.
The features of the new product should be similar to its substitutes in the market.
b.
The product should not be developed using crowdsourcing.
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idea for development, it no longer tries to develop the idea from the ground up with its own resources and
time. Instead, it issues a brief to its network of thinkers, researchers, technology entrepreneurs, and inventors
c.
The new product should be priced lower than the other products in the same category.
d.
The new product should deliver a meaningful and perceivable benefit to a sizable number of people.
ANSWER:
d
46. In the context of the new-product development process, which of the following is true of a new-product strategy?
a.
It refrains from adopting ideas suggested by customers and competitors.
b.
It is the last stage of the new-product development process.
c.
It must be compatible with the objectives of the marketing department, the business unit, and the corporation.
d.
It involves targeting existing products at new markets.
ANSWER:
c
47. _____ is the degree to which a product can be sampled on a limited basis.
a.
Compatibility
b.
Trialability
c.
Observability
d.
Complexity
ANSWER:
b
48. Which of the following statements is true of the product life cycle (PLC)?
a.
The PLC dictates the marketing strategy to be used for a product.
b.
A product spends the same amount of time in the different stages of the life cycle.
c.
The PLC for a product form is longer than the PLC for any one brand.
d.
Changes in a product, its uses, its image, or its positioning do not affect its life cycle.
ANSWER:
c
49. Describe the growth stage of the product life cycle.
ANSWER:
Answers will vary. If a product category survives the introductory stage, it then advances to the growth stage
of the life cycle. In this stage, sales typically grow at an increasing rate, many competitors enter the market,
and large companies may start to acquire small pioneering firms. Profits rise rapidly in the growth stage,
reach their peak, and begin declining as competition intensifies. Emphasis switches from primary demand
promotion to aggressive brand advertising and communication of the differences between
brands.Distribution becomes a major key to success during the growth stage, as well as in later stages.
Manufacturers scramble to sign up dealers and distributors and to build long-term relationships. Others are
able to market direct to consumers using electronic media. Without adequate distribution, it is impossible to
establish a strong market position.
50. How is the Internet important for implementing simultaneous product development?
ANSWER:
Answers will vary. The Internet is a useful tool for implementing simultaneous product development. On the
Web, multiple partners from a variety of locations can meet regularly to assess new-product ideas, analyze
markets and demographics, and review cost information. Ideas judged to be feasible can quickly be
converted into new products. The best-managed global firms leverage their global networks by sharing best
practices, knowledge, and technology. Without the Internet, it would be impossible to conduct simultaneous
product development from different parts of the world. Some firms use online brain trusts to solve technical
problems. InnoCentive Inc. is a network of 80,000 self-selected science problem solvers in 173 countries. Its
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around the world, hoping to generate dialogue, suggestions, and solutions.Innovative firms are also gathering
a variety of research and development input from customers online. Wheaties NEXT Challenge allowed
customers to vote for which elite athlete would be featured on the next Wheaties cereal box by logging
workouts through the MapMyFitness program. For each workout that was logged, a vote was cast for the
participant’s favorite Wheaties athlete. More than 71,000 people participated in the challenge.
51. What are the major implications of the new-product development process and the diffusion process to marketing
managers?
ANSWER:
Answers will vary. The new-product development process is sometimes illustrated as a decay curve with
roughly half of the ideas approved at one stage rejected at the next stage. While the actual numbers vary
widely among firms and industries, the relationship between the stages can be generalized. This reinforces
the notion that an organized effort to generate many ideas from various sources is important for any firm that
wishes to produce a continuing flow of new products.The major implication of the diffusion process to
marketing managers is that the message may need to change over time. The targeted adopter and media may
need to shift based on how various categories of adopters gather product information. A message developed
for and targeted toward early adopters will not be perceived similarly by late majority adopters.
52. Explain absolute and relative product failure. Why do a large proportion of new product introductions fail?
ANSWER:
Answers will vary. Despite the amount of time and money spent on developing and testing new products, a
large proportion of new product introductions fail. Products fail for a number of reasons. One common
reason is that they simply do not offer any discernible benefit compared to existing products. Another
commonly cited factor in new-product failures is a poor match between product features and customer
desires. For example, there are telephone systems on the market with more than 700 different functions,
although the average user is happy with just ten functions. Other reasons for failure include overestimation of
market size, incorrect targeting or positioning, a price too high or too low, inadequate distribution, poor
promotion, or simply an inferior product.Failure can be a matter of degree. Absolute failure occurs when a
company cannot recoup its development, marketing, and production costs—the product actually loses money
for the company. A relative product failure results when the product returns a profit but fails to achieve sales,
profit, or market share goals. Examples of product failures in 2014 include the Amazon Fire Phone,
detergent-free laundry systems, the Nike FuelBand, and Burger King’s Satisfries, a healthier alternative to
regular fries.
53. Explain the differences between innovators and early adopters.
ANSWER:
Answers will vary. Innovators are the first 2.5 percent of all those who adopt a new product. Innovators are
eager to try new ideas and products, almost as an obsession. In addition to having higher incomes, they are
more worldly and more active outside their community than noninnovators. They rely less on group norms
and are more self-confident. Because they are well educated, they are more likely to get their information
from scientific sources and experts. Innovators are characterized as being venturesome.Early adopters, on the
other hand, are the next 13.5 percent to adopt the product. Although early adopters are not the very first, they
do adopt early in the product’s life cycle. Compared to innovators, they rely much more on group norms and
values. They are also more oriented to the local community, in contrast to the innovators’ worldly outlook.
Early adopters are more likely than innovators to be opinion leaders because of their closer affiliation with
groups. Early adopters are a new product’s best friends. The characteristic influencers share is their desire to
talk to others about their experiences with goods and services. A desire to earn the respect of others is a
dominant characteristic among early adopters.
ANSWER:
Answers will vary. Increasing globalization of markets and competition provides a reason for multinational
firms to consider new-product development from a worldwide perspective. A firm that starts with a global
strategy is better able to develop products that are marketable worldwide. In many multinational
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