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Jonathan Moore, president of Polar Manufacturing Company, has just reviewed the performance reports for the previous
year and sees that there are some areas in which the company needs to improve. He specifically feels they could do a
better job in managing Polar's product mix. Jonathan calls a meeting of all the managers responsible for each of the
product lines that Polar currently manufactures. The group decides that they need to eliminate the complete industrial
product line of ice chests, and plan to do so by letting the product decline without any changes in the marketing strategy or
product. The group also decides to delete Polar's line of personal thermal underwear, however this product is to be
discontinued within the week due to its unprofitability. While discussing these strategies, the group has also uncovered
several customer groups for which new products could be developed. The managers decide to assemble a group of people
from all functional areas of the company and give them the responsibility for all aspects of the new-product development.
Refer to Scenario 12.2. Because some products are not doing well, Jonathan Moore thinks that the company should set up
a procedure to evaluate each product so that management will know when and how a product should be discontinued. He
is suggesting a
a.
product-drop decision.
b.
discontinuance procedure.
c.
performance review.
d.
closing system.
e.
systematic review.
111. Many of the so-called new products that are launched each year are in fact line extensions.
a.
True
b.
False
112. Line extensions are less common than other new products because line extensions are more expensive and more
risky.
a.
True
b.
False
113. Quality modifications never seek to reduce product quality.
a.
True
b.
False
114. Quality modification of an existing product aims at changing the product's safety, convenience, or versatility.
a.
True
b.
False
115. Functional modifications usually require that the product be redesigned.
a.
True
b.
False
116. Functional modifications make an existing product more durable.
a.
True
b.
False
117. Functional modifications help an organization achieve and maintain a progressive image.
a.
True
b.
False
118. Automobile makers rely heavily on aesthetic modifications.
a.
True
b.
False
119. The major drawback in using aesthetic modifications is that their value is determined subjectively.
a.
True
b.
False
120. New products are classified solely as innovations that have never been sold by any organization.
a.
True
b.
False
121. Firms marketing a quality product that generates strong sales can afford to keep expenses down by eliminating new-
product development.
a.
True
b.
False
122. Sales personnel are an external source for new product ideas.
a.
True
b.
False
123. Concept testing gives reliable feedback, but at a relatively high cost.
a.
True
b.
False
124. Concept testing presents a small sample of potential buyers with a trial version of the new product to determine their
initial reactions.
a.
True
b.
False
125. The business analysis stage of new-product development explores how well the new product fits in with the firm's
existing product mix.
a.
True
b.
False
126. Business analysis provides a tentative sketch of a product's profitability.
a.
True
b.
False
127. An important question in the business analysis stage of new-product development is, "Is demand strong enough to
justify entering the market and will this demand endure?"
a.
True
b.
False
128. Estimates of sales are an important component of business analysis.
a.
True
b.
False
129. The product development stage determines the technical feasibility of producing the new product.
a.
True
b.
False
130. Relatively few product ideas are put into the product development stage.
a.
True
b.
False
131. Test marketing is a sample launching of the entire marketing mix.
a.
True
b.
False
132. Test marketing is an extension of the product screening process.
a.
True
b.
False
133. Test marketing should be conducted when a product has been given a low probability of success.
a.
True
b.
False
134. New-product development does not include planning for advertising.
a.
True
b.
False
135. Test marketing is used by companies of all sizes, primarily because of the perceived risk of product failure on the
open market and the associated consequences.
a.
True
b.
False
136. Time spent in test marketing can benefit a firm's competitors.
a.
True
b.
False
137. During the commercialization phase of new-product development, plans for full-scale manufacturing and marketing
are refined and settled.
a.
True
b.
False
138. The majority of new-product projects initiated by major companies reach the commercialization stage.
a.
True
b.
False
139. Designing a product that customers perceive as different from competing products is an example of product
differentiation.
a.
True
b.
False
140. Consistency of product quality means giving consumers the quality they expect every time they purchase a product.
a.
True
b.
False
141. The concept of product quality is the same from consumer to consumer and from consumer markets to organizational
markets.
a.
True
b.
False
142. The overall characteristics of a product that allow it to perform as expected in satisfying customer needs is called
product quality.
a.
True
b.
False
143. If you buy McDonald's French fries in Fort Collins, Colorado, and later buy McDonald's French fries in College
Station, Texas, you expect them to be of the same quality. This is referred to consistency of quality.
a.
True
b.
False
144. Product design is the process of creating and designing products so that consumers perceive them as different from
competing products.
a.
True
b.
False
145. How a pair of jeans looks, regardless of the price, is an example of styling.
a.
True
b.
False
146. Product support services are important mainly for products that are mechanical in nature.
a.
True
b.
False
147. Delivery, installation, financing, repair, warranties, and guarantees are all examples of product features.
a.
True
b.
False
148. Warranties and customer training are examples of customer services.
a.
True
b.
False
149. The decision to drop a product should always be a unanimous decision of the management team.
a.
True
b.
False
150. Systematic reviews of a company's product mix aid in determining when product deletion is necessary.
a.
True
b.
False
151. The phase-out approach to product deletion involves a process of continuous price increases to make as much profit
as possible before the product is finally priced out of existence.
a.
True
b.
False
152. The phase-out approach to product deletion exploits any strengths left in the product.
a.
True
b.
False
153. The run-out approach to product deletion is used for technologically obsolete products.
a.
True
b.
False
154. A run-out approach to product deletion lets the product decline without changing the marketing strategy.
a.
True
b.
False
155. The dropping approach to product deletion generates a sales spurt just before removing the product from the market.
a.
True
b.
False
156. To manage products effectively, the product manager must be independent of other departments.
a.
True
b.
False
157. Product managers can be responsible for a single product, a product line, or several products.
a.
True
b.
False
158. A brand manager is a type of product manager.
a.
True
b.
False
159. There is no best approach to managing products.
a.
True
b.
False
160. Brand and product managers operate cross-functionally.
a.
True
b.
False
161. Product managers are most useful in the development of new products.
a.
True
b.
False
162. A venture team has the authority to execute plans for the development of products.
a.
True
b.
False
163. Venture teams work outside of established organization divisions.
a.
True
b.
False
164. Venture team members usually come from the same functional areas within the firm.
a.
True
b.
False
165. Your company makes personal hygiene products for young men. Your product line includes deodorants and shaving
products. You are responsible for managing the company’s relationships with the major retailers in the western U.S.
region. In a recent meeting with a store manager you noticed young men selecting the company’s deodorant product then
moving down the aisle to select a competitor’s body wash product. As you think about it more, it makes perfect sense that
a young man buying deodorant would also be interested in a body wash product. Your company currently does not make a
body wash product.
Based on your in-store observations, which of the following product management actions would you recommend to take
advantage of this deodorant and body wash linkage?
a.
a line extension
b.
a quality modification
c.
a functional modification
d.
an aesthetic modification
e.
New packaging
166. The annual Consumer Reports magazine rating of your company’s flagship product was just released. Generally
speaking the rating was good but not great. Based on the consumer comments that were referenced in the rating, it appears
that many consumers have a negative view of the product’s convenience and safety attributes.
In order to address these consumer concerns your company should consider doing which of the following?
a.
Make aesthetic modifications to the product.
b.
Make line extensions to the product.
c.
Make functional modifications to the product.
d.
Lower the price of the product.
e.
Make quality modifications to the product.
167. You were just hired to manage the new product development process at a consumer products company. In your first
meeting with the CEO since being hired, she recounted to you the numerous times in the past when the company launched
products it thought would be successful. However, it later came to realize the products had a detrimental impact on the
company’s overall costs and profits mix. She wants you to revamp the company’s new product development process to
prevent this from happening in the future.
Which of the following steps in the new product development process should you overhaul in order to address the CEO’s
concerns?
a.
Concept testing
b.
Product development
c.
Idea generation
d.
Test marketing
e.
Business analysis
168. You are in the new product development process for a new consumer electronics product. So far, everything has been
very positive and you are starting to believe this product might be a blockbuster. As you prepare for the next stage of the
process, you are concerned that your competition might try to “jam” your new product by increasing promotional
activities for their own products. More importantly, you are concerned that these competitors might try to copy your
product as you move into this next stage.
Which of the following stages of the new product development process are you about to enter?
a.
Product development
b.
Test marketing
c.
Concept testing
d.
Commercialization
e.
Screening
169. Your company is preparing to launch a new product next month. Since you are leading the launch effort, you called a
meeting of all stakeholders to discuss how the product should be positioned in the market. You acknowledge that the
product will carry a higher price than competing products, but all the independent rating agencies have concluded that the
product has superior performance characteristics relative to its competing brands.
Which of the following bases for positioning should you use for this product?
a.
Avoiding competition should be the basis for positioning the product.
b.
The style of the product should be the basis for positioning the product.
c.
The target market for the product should be the basis for positioning the product.
d.
Head-to-head competition should the basis for positioning the product.
e.
The price of the product should be the basis for positioning the product.
170. As head of sales and marketing for your company, one of your key responsibilities is to regularly review the
company’s product mix to determine if any products should be deleted. You are meeting with your marketing team to
decide the fate of Product A. The following comments about Product A are made by different members of the team:
• “There are no strengths left in the product.”
• “The losses on the product are huge and they keep growing.”
Which of the following actions should you take with Product A?
a.
It should be immediately dropped from the product mix.
b.
It should be phased-out from the product mix.
c.
It should be run-out from the product mix.
d.
Aesthetic modifications to the product should be considered.
e.
Functional modifications to the product should be considered.
171. ______________ refers to how a product is conceived, planned and produced.
a.
Product differentiation
b.
Level of quality
c.
Product positioning
d.
Product features
e.
Product design
172. Which of the following statements is true about product support services?
a.
They only include human efforts.
b.
They do not impact customer satisfaction.
c.
They include delivery, installation, financing and customer training.
d.
They do not add product value.
e.
Some marketers do not provide these to any degree.
173. If a company is introducing a brand into a market where it already has one or more brands, it would likely choose
which of the following basis for positioning the new product?
a.
Avoiding competition positioning
b.
Head-to-head competition positioning
c.
Positioning based on price
d.
Target market positioning
e.
Positioning based on style
174. Your company has a product that is struggling in its market. However, the product appears to have some strength left
that can be exploited. Which of the following product deletion actions would be most appropriate for the product?
a.
Increase the price and implement a run-out strategy.
b.
Immediately drop the product.
c.
Increase the marketing for the product and gradually phase it out.
d.
Reduce the price and implement a run-out strategy.
e.
Increase the marketing expenditures on the product and implement a run-out strategy.
175. A _________ works outside established organizational divisions and has greater flexibility to apply innovative
approaches to new products and markets.
a.
Market manager
b.
Venture team
c.
Brand manager
d.
Product manager
e.
Marketing manager
176. Which of the following statements is true about organizational structures for managing products?
a.
A product manager is responsible for several distinct products which make up a group.
b.
Brand managers do not operate cross-functionally in an organization.
c.
Market managers are responsible for managing multiple brands.
d.
Product managers do not operate cross-functionally in an organization.
e.
A brand manager is responsible for a product line.
