Chapter 11—Developing and Managing Products
TRUE/FALSE
1. One advantage for being first on the market with a new product is increased product loyalty.
2. A product must be a discontinuous innovation to be considered a “new” product.
3. The development of Coke Zero by Coca-Cola would not be considered a new product since the
company was already making soft drinks. It would simply be called a line extension.
4. Central Bark is a dog day care center. When you check your dog into a Central Bark you know your
pooch will be pampered. Since kennels have been boarding dogs for years, the dog day care is not
really a new product.
5. Very few firms follow a formal new-product development process.
6. A firm’s new-product strategy links the new-product development process with the objectives of the
marketing departments, the business unit, and the corporation.
7. For a firm that adheres to the product concept, the logical place to start generating new-product ideas
is with the customers of the firm.
8. The two techniques that are considered most useful for generating new-product ideas are
customer-generation and competitive imitation.
9. Seven employees from a company are trying to come up with ideas for new-product development. The
employees are all in a room together, shouting out potential ideas. The ideas are written down and
evaluated as they are generated. This is an example of brainstorming.
10. The first filter in the product development process is called screening.
11. It is considered inefficient to use concept tests during the idea screening stage of the new-product
development process.
12. Concept tests are considered fairly good predictors of success for line extensions and for products that
do not require major changes in consumer behavior.
13. Andersen Electronics is currently engrossed in its first estimations of costs and revenues for a new
amusement park video skill game. This firm is engaged in a new-product business analysis.
14. Without the Internet, it would be impossible to conduct simultaneous product development from
different parts of the world.
15. A test market is one example of a focus group where consumers are encouraged to try a new product
and provide feedback to the manufacturer.
16. One benefit of test marketing is that the marketing activity is shielded from competitors.
17. The Internet offers a fast, cost-effective way to conduct test marketing.
18. The decision to market a product is called commercialization.
19. Relative product failure occurs when the new product returns a profit but fails to achieve sales, profit,
or market share goals.
20. Increasing globalization of markets and of competition provides a reason for multinational firms to
consider new-product development from a worldwide perspective.
21. Adaptation is the process by which the adoption of an innovation spreads.
22. Consumers described as laggards tend to rely on group norms when deciding to adopt an innovation.
23. The Sumatra Coffee Company has two new products. One is a simple hand-cranked coffee grinder.
The other is a combination grinder and brewer that also can be used to dispense hot milk. Of these two,
the hand-cranked grinder will probably be diffused more quickly because it is less complex.
24. Procter & Gamble is introducing a new fabric softener dispenser that consumers stick to the inside of
the dryer drum and plans to send consumers free samples in the mail. This strategy will likely increase
the rate of adoption of the new product.
25. Martina loves her new Kindle and has tweeted to her followers several times about how great the
product is. This is an example of communication directly from the marketer to potential adopters.
26. Messages directed directly from marketers toward early adopters should normally use different appeals
than messages directed toward the early majority, the late majority, or the laggards.
27. The product life cycle is a biological metaphor that traces the stages of a product’s acceptance, from its
introduction (birth) to its decline (death).
28. The growth stage is the first stage of the product life cycle.
29. Increasing competition, aggressive brand advertising, and healthy profits are all characteristics found
in the introductory stage of the product life cycle.
30. Profits typically reach their peak during the growth stage of the product life cycle.
31. A VCR player is a good example of a product in the maturity stage of the product life cycle.
32. The concept of “organized abandonment” is based upon a periodic audit of all goods and services that
a firm markets.
33. The product life cycle concept encourages marketing managers to act reactively.
MULTIPLE CHOICE
1. New products are important to a company for all the following reasons EXCEPT:
a.
increased revenues
b.
immediate profits
c.
sustained growth
d.
increased product loyalty
e.
greater market responsiveness
2. Which of the following would be considered a new product?
a.
A new product line
b.
A new-to–the-world product
c.
An addition to an existing product line
d.
An improvement or revision of an existing product
e.
All of these choices
3. New-to–the-world products, where the product category itself is new, are also called:
a.
discontinuous innovations
b.
moderate innovations
c.
slow-diffusing products
d.
venture products
e.
creative offerings
4. Marketers consider all of the following examples of new products EXCEPT:
a.
a 2010 model year automobile with the same style, parts, and color as the 2009 model
b.
the addition of a management consultant service to a company that once specialized in
investment management
c.
a new design for Reach brand toothbrushes
d.
a new flavor of Ben & Jerry’s brand ice cream
e.
the development of a less-painful procedure for the treatment of varicose veins
5. Sony has developed a wireless speaker that sits unobtrusively on a desktop. The tiny, yet strong twin
speakers use Bluetooth to stream music directly from your PC or MP3 player. This small Sony
wireless speaker, which is radically different from anything currently on the market, would be
classified as a(n):
a.
discontinuous innovation
b.
slow-diffusing product
c.
episodic innovation
d.
venture product
e.
sporadic innovation
6. When P&G began marketing Tide Free & Gentle, which is dye- and perfurme-free, this represented
which new product category?
a.
Repositioning strategy
b.
New product line
c.
Addition to an existing product line
d.
Discontinuous innovation
e.
Revision to existing products
7. Heinz is expected to introduce more than 400 new products in the next two years. One of the products
is a spicier ketchup aimed at the baby boomer market. The spicier ketchup would be considered what
type of new product?
a.
Discontinuous innovation
b.
New-to–market
c.
New product line
d.
Lower-priced products
e.
Addition to existing product line
8. For years, Diet Dr. Pepper has been considered a diet drink. After declining sales, the company is
attempting to present Diet Dr. Pepper as an alternative to having a dessert. This is an example of a
_____ strategy.
a.
discontinuous innovation
b.
niche
c.
new-product-line
d.
retargeting
e.
repositioning
9. Apple recently introduced a newly designed iPod nano with Multi-Touch capability, a built-in FM
radio, and mix-making Genius. Since it was not trying to reach a new target market, Apple was using
which new product strategy?
a.
Improvement or revision of existing product
b.
Addition to an existing product line
c.
Discontinuous innovation
d.
Repositioned product
e.
New product line
10. When Procter & Gamble wanted to enter the hair care market, it purchased Wella, a leading German
company specializing in hair care products. What new product category does this acquisition
represent for P&G?
a.
repositioning strategy
b.
new product line
c.
addition to an existing product line
d.
discontinuous innovation
e.
revision to existing products
11. Oakley, a manufacturer of protective eyewear for various kinds of sports, has introduced sunglasses
that play music. The glasses weigh just a few ounces and can hold up to 120 songs. These sunglasses
would be an example of a(n):
a.
repositioning strategy
b.
new product line
c.
addition to an existing product line
d.
discontinuous innovation
e.
revision to existing products
12. Dial Corporation has introduced Dial Basics, a premium soap product with an emphasis on value.
Dial Basics would be an example of which strategy to create a new product?
a.
New-to–the-world product
b.
New product line
c.
Repositioned product
d.
Addition to a current product line
e.
Lower-priced products
13. _____ occurs when an existing product is targeted toward new market segments. It is another type of
new-product development because the product is new to that segment.
a.
Brainstorming
b.
Diffusing
c.
Repositioning
d.
Screening
e.
Reciprocity
14. Companies that are most likely to succeed in the development and introduction of new products
typically are characterized by all of the following EXCEPT:
a.
establish an environment conducive to achieving new-product objectives
b.
make the long-term commitment needed to support innovation and new-product
development
c.
capitalize on experience to achieve and maintain competitive advantage
d.
use a company-specific approach that is driven by corporate objectives and strategies with
a well-defined new-product strategy at its core
e.
introduce ten new products every year
15. A(n) _____ links the new-product development process with the objectives of the marketing
department, business unit, and corporation.
a.
product-review committee
b.
concept test
c.
episodic innovation
d.
new-product strategy
e.
product strategy bridge
16. A new-product strategy:
a.
links the new-product development process with the objectives of the marketing
department, the business unit, and the corporation
b.
is part of an organization’s overall marketing strategy
c.
specifies the roles new products play in the organization’s overall plans
d.
describes the characteristics of products the organization wants to offer and the markets it
wants to serve
e.
is accurately described by all of these
17. The first stage of the new-product development process is:
a.
screening and concept testing
b.
establishing the new-product strategy
c.
exploring opportunities
d.
developing a business analysis
e.
the building of a prototype
18. Which of the following is the LEAST likely source for new-product ideas?
a.
A company’s distributors
b.
Its customers
c.
Its employees
d.
Its financial lenders
e.
Its competitors
19. Scientific research aimed at discovering new technologies is called:
a.
basic research
b.
primary research
c.
applied research
d.
secondary research
e.
experimental research
20. The process of converting applications for new technologies into marketable products is called:
a.
basic research
b.
product modification
c.
marketing development
d.
product development
e.
correlation analysis
21. _____ is a process where a group thinks of as many ways to vary a product or solve a problem as
possible without considering the practicality of the ideas.
a.
New-product brain dumping
b.
Screening
c.
A focus-group interview
d.
Brainstorming
e.
Diffusion
22. Mosaic Labs has developed a chemical compound that prevents mildew in even the most humid
climates. The week after the compound was invented, a group of the firm’s employees got together and
listed ways the product might be used. This is an example of:
a.
quality control
b.
brainstorming
c.
concept testing
d.
venture group activities
e.
screening
23. The same manufacturer produces Hanes, Playtex, and Bali clothing for women. This manufacturer
assembled a group of nine regular customers and asked them to discuss what they like and do not like
about its current product line for full-figured women and to suggest new-product ideas, such as
jewelry, wide shoes, and belts. The manufacturer used a research technique called a:
a.
focus group
b.
brainstorming session
c.
buying center
d.
product-review committee
e.
venture team
24. Which of the following stages of the new-product development process is the first filter in the
new-product development process and serves to eliminate new-product ideas that are inconsistent with
the organization’s new-product strategy or are obviously inappropriate for some other reason?
a.
Applied diffusion
b.
Introductory diffusion
c.
Business analysis
d.
Test marketing
e.
Idea screening
25. At what stage of the new-product development process are most new-product ideas rejected?
a.
Test marketing
b.
Diffusion
c.
Business analysis
d.
Idea screening
e.
Idea generation
26. After the research team at Nabisco had generated more than two dozen new-product ideas for a
substitute for partially hydrogenated oils that tastes the same but has zero trans fat, the company
formed a committee to analyze whether the product ideas were consistent with the organization’s
new-product strategy. This is called:
a.
business analysis
b.
diffusion
c.
idea screening
d.
test marketing
e.
idea generation
27. Top managers at a commercial real estate firm that specializes in site location and installation of
cellphone towers considered providing the same service for windmill location and installation but
decided this was not within the company’s corporate mission. Which stage of the new-product
development process did its new-product development process reach?
a.
Development
b.
Idea generation
c.
Idea screening
d.
Business analysis
e.
Customer testing
28. A European dairy, which is famous for its rich ice creams, has introduced basil, tomato, fennel, and
oregano flavored ice creams. In the process of developing these new flavors, the dairy surveyed
world-famous chefs to determine which nontraditional flavors had the greatest level of marketability.
This survey would have happened during which stage of the product development process?
a.
Concept testing
b.
Brainstorming
c.
Basic research
d.
Idea screening
e.
Applied research
29. The screening and concept testing stage of the new-product development process is used to:
a.
eliminate undesirable ideas and predict consumer acceptance
b.
refine the promotion campaign to be used with the new product
c.
determine the potential profits to be gained from the new product
d.
determine how long the test market should be run
e.
generate new-product ideas
30. _____ evaluate new-product ideas usually before any prototype has been created.
a.
Concept tests
b.
Simulated market tests
c.
Market tests
d.
User tests
e.
Venture analyses
31. After Mattel evaluated many new products to add to its Barbie product line and before any prototype
was created, the toy manufacturer instructed a committee to select three of the ideas to present to a
group of consumers. The consumer group was asked to evaluate the three product ideas in terms of
their marketability. This stage of new-product development is called:
a.
prototype screening
b.
concept testing
c.
market testing
d.
idea manipulation
e.
idea diffusing
32. In the _____ stage of new-product development, preliminary demand, cost, sales, and profitability
estimates are made.
a.
prototype screening
b.
idea generation
c.
concept testing
d.
post-brainstorming
e.
business analysis
33. The accuracy of revenue projections for products are affected by:
a.
the newness of the product
b.
the size of the market
c.
the nature of the competition
d.
all of the above
e.
none of the above
34. Which of the following questions is NOT likely to be asked during the business analysis stage?
a.
What is the likely demand for the product?
b.
Which celebrity spokesperson can we hire to promote the product?
c.
Would current customers benefit from the product?
d.
What is the risk of failure?
e.
What new facilities would be needed?
35. In the _____ stage of new-product development, the technical feasibility of manufacturing the new
product is examined as a prototype is produced.
a.
screening
b.
development
c.
market testing
d.
concept testing
e.
business analysis
36. A team-oriented approach to new-product development is referred to as:
a.
simultaneous product development
b.
synergistic product development
c.
commercialized product development
d.
synchronized product development
e.
parallel product development
37. Which of the following statements about simultaneous product development is FALSE?
a.
Simultaneous product development refers to the practice of developing multiple new
products at the same time.
b.
With simultaneous product development, all relevant functional areas and outside
suppliers participate in all stages of the new-product development process.
c.
All departments within the company work together at the same time, but to maintain a
high level of secrecy, no one outside the company is involved in simultaneous product
development.
d.
Simultaneous product development actually increases the length of time it takes to get a
product to market and the time the product will stay in the growth stage of its product life
cycle.
e.
The Internet has not proven to be a useful tool for implementing simultaneous product
development.
38. _____ is a limited introduction of a product and a marketing program to determine the reactions of
potential customers in a market situation.
a.
Use testing
b.
Test marketing
c.
Concept testing
d.
Laboratory testing
e.
Discontinuous innovation
39. When selecting a test market city, a researcher should look for a city:
a.
where the demographics and purchasing habits mirror the overall market for the product
b.
that has media spillover from other cities to increase media alternatives
c.
that is as large as possible
d.
that has limited distribution
e.
where there is no competition
40. A(n) _____ typically entails showing members of the product’s target market advertising and other
promotional materials for several products, including the test product. These people are then taken to a
mock or real store where their purchases are recorded.
a.
adoption-rate test
b.
real test market
c.
concept test
d.
simulated (laboratory) market test
e.
consumer juried test
41. The maker of Purell hand sanitizer tested consumers’ reactions to its Purell Sanitizing Wipes by getting
consumers to look through a newspaper with grocery store ads, make out a grocery list, and then
“shop” in a mock store filled with real products, including the new product. This is an example of a(n):
a.
adoption-rate test
b.
simulated (laboratory) market test
c.
concept test
d.
use test
e.
juried consumer test
42. Which of the following has been found to be an efficient substitute for traditional methods of
conducting test markets?
a.
Product sampling
b.
Simulated product adoption
c.
Online test marketing
d.
Simulated diffusion
e.
Market concentration
43. The final stage in the new-product development process is:
a.
product testing
b.
market testing
c.
commercialization
d.
product prototyping
e.
simulated marketing
44. Jeni’s Splendid Ice Creams has decided to put its new Beet Cake with Black Walnut ice cream on the
market. This product has entered the _____ stage of new-product development.
a.
business analysis
b.
development
c.
test marketing
d.
commercialization
e.
research and development
45. During the _____ stage of the new-product development process, production starts, inventories are
built up, the product is shipped to distribution points, the sales force is trained, and advertising and
promotion begin.
a.
commercialization
b.
product testing
c.
market analysis
d.
product prototyping
e.
simulated marketing
46. All of the following are reasons products fail EXCEPT:
a.
overestimation of market size
b.
poor match between product features and customer desires
c.
a price too high or too low
d.
direct distribution
e.
not offering any discernible benefit compared to existing products
47. What degree of failure occurs when a company cannot recoup its development, marketing, and
production costs?
a.
Primary
b.
Secondary
c.
Absolute
d.
Conditional
e.
Relative
48. What degree of product failure results when the product returns a profit but fails to achieve sales,
profit, or market share goals?
a.
Primary
b.
Secondary
c.
Absolute
d.
Conditional
e.
Relative
49. The MOST important factor in successful new-product introduction is:
a.
a good match between the product and market needs
b.
strong company leadership
c.
an obsession with quantity rather than quality
d.
a project-based team approach to new-product development
e.
a history of carefully listening to customers
50. The main goal of the global product development process is to:
a.
come up with a single standard product or product line suitable for all global markets
b.
expand the number of different new-product offerings so that individual country needs are
more likely to be met
c.
develop every product for potential worldwide distribution and adaptation to other
countries
d.
come up with new-product ideas in the United States and use global markets as test
markets
e.
repeat the steps in the process with marketing teams in each and every foreign country
targeted
51. A product that is perceived as new by a potential adopter, whether the product is “new to the world” or
simply new to the individual, is a(n):
a.
innovation
b.
diffusion
c.
discontinuous product
d.
laggard
e.
simulated new product
52. Roger has lots of nice photos of his family on his digital camera and wishes he could display them on
his desk at work without having to print them out. A coworker told him that he could purchase a
digital photo frame to download and display his digital photos. Because Roger did not know such a
product existed, digital photo frames represented a(n) _____ to him.
a.
heterogeneous shopping product
b.
diffusion
c.
market laggard
d.
product diversification
e.
innovation
53. A(n) _____ is a consumer who was sufficiently satisfied with his or her trial experience with a product
to proceed with some further usage.
a.
laggard
b.
adopter
c.
innovator
d.
diffuser
e.
opt-in buyer
54. One hot August day, Tom saw a can of AriZona Beverage Company’s Arnold Palmer Half-and-Half
iced tea and lemonade drink at the local convenience store. He decided to try the product and found
that he really liked it. Now, Tom regularly purchases this product to quench his thirst on hot days. Tom
is an example of a(n):
a.
opt-in buyer
b.
innovator
c.
adopter
d.
Luddite
e.
laggard