Chapter 12
Test Bank
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 that create new markets can add tremendous value to firms.
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.
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, early adopters, late majority, 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—is helping 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.
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
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
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
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
26. All of the following are benefits of new product development to a firm
27. Pioneer or breakthrough products
28. All of the following were considered a new-to-the-world product or service when introduced except
29. One of the potential benefits to a firm of introducing new-to-the-world products or services is
30. Successful first movers create a market or a product category. They often benefit from being readily recognizable to consumers and
31. In many cases, pioneers lose their market lead and initial market share to imitators who
32. All of the following are reasons for the high failure rate of new products except
33. Even if they succeed, new-to-the-world products are
34. The process by which the use of a new product or service spreads throughout a market group is referred to as
35. The diffusion of innovation theory focuses on
36. All of the following groups are included in the diffusion of innovation curve except
37. Innovators are a critical group of new product adopters because they
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.
39. In the diffusion of innovation process, innovators enjoy taking risks and are regarded as highly knowledgeable. Marketers want to identify
innovators because
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
41. For new product marketers, early adopters are important because they tend to be
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.
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.
44. The __________ diffusion of innovation group is crucial because few new products can be profitable until this large group buys them.
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.
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.
47. When the sequel to eventually shows up on their regular television networks, this group might watch it.
48. By the time BMW got into the mini-SUV market, sales had leveled off and were even starting to decline. BMW had to target its marketing efforts
toward the __________ diffusion of innovation group.
49. Bob and George live in the United States. Bob recently asked for George’s cell phone number, but George said he didn’t own a cell phone. George
would probably be considered a(n) __________ in the diffusion of innovation process.
50. When John began helping his favorite uncle Burton with his finances, he discovered his uncle was still renting a rotary-dial telephone from the
phone company. Uncle Burton had paid thousands of dollars in rental fees over the previous 40 years. Uncle Burton is a(n) __________ in the diffusion
of innovation process for telephones.
51. The diffusion of innovation theory is useful to marketers in helping them
52. Early personal computer users remember the cumbersome, user-unfriendly DOS system. When Apple introduced System 1 and Microsoft
introduced Windows, both of which were much easier to use, these new products diffused rapidly because of their
53. Inkjet printers were a big improvement over the dot-matrix printers they replaced. Inkjet printers gained rapid acceptance in the marketplace
primarily because of their
54. When automobile manufacturers introduced SUVs, they distributed and promoted them in the United States, but not in Europe where gasoline is
heavily taxed and roads are much smaller. Car manufacturers recognized that this new line of cars
55. Laptop computers, personal digital assistants, and cellular phones were all readily accepted and diffused in U.S. markets where business and
personal lifestyles tend to be faster-paced, compared to many other areas in the world. These products offered __________ with consumers’ needs and
priorities.
56. Many home design businesses volunteer to provide their latest products for tours-of-homes fundraisers because they know their new products will
benefit from
57. As a promotion technique, samples are often used for new products when __________ will influence the diffusion of the product.
58. Zappos.com, an online shoe store, offers an easy, no-hassle return procedure. This relates to the _______ of its products.
12–14
59. Which of the following is least likely to be a source of ideas for new products?
60. In the product development process, what takes place between concept testing and market testing?
61. Many restaurants roll out new ideas first in Orlando, Florida, a location that attracts a vast range of diverse tourists and thus might offer insights into
62. When a global firm turns to its subsidiaries in less developed markets for new product ideas, such as when Coca-Cola developed Minute Maid Pulpy
out of its Shanghai research center and then moved the product into other markets around the world, the firm is engaged in
63. Suppose that you work for an advertising agency and are brought into a meeting where everyone is asked to generate ideas for names for a new
beach resort. You are engaged in __________, a form of new idea generation.
64. One of the key characteristics of brainstorming sessions is
65. At the end of a brainstorming session, participants are often asked to
66. __________ involves taking apart a product, analyzing it, and creating an improved product that does not infringe on the competitor’s patents.
67. Companies that develop customized business software often work closely with their users when installing their products. This close contact often
creates new product ideas through
68. Ron sells commercial-grade tools to building contractors. Whenever he visits his customers, he looks to see if they are using his tools for other tasks
or have modified the tools for some other purpose. These customers are __________, who can provide ideas for new and improved products.
69. The National Institutes of Health (NIH) sponsors medical foundations to conduct research to treat rare diseases. The research is then disseminated to
the medical community, thus encouraging the development of drugs and therapies more quickly and at a lower cost than would be possible if the
research were privately funded. This is an example of
70. A company has a new concept for a lightweight electric scooter that can be easily folded and taken with you inside a building or on public
transportation. The company is currently engaged in concept testing. The most important question during this phase of product development pertains to
71. When conducting exploratory concept testing for her firm’s new Internet antipiracy software, which is the most important question that Dee should
ask?
72. Kristina created a virtual prototype of her new line of swimwear on a website to show to consumers. Kristina will ask consumers what they think of
the clothing. Which is the most important question that Kristina should ask?
73. If a new product concept gets positive evaluations from potential customers during concept testing, the next step for a firm is
74. Hollywood studios typically release movies targeted toward general audiences (G– or PG-rated movies) during the summer when children are out of
school. The timing of the release pertains to the product’s
75. Barbara is using a test model of her firm’s new inline skates to see if they work according to the design specifications. Barbara is involved in