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CHAPTER QUIZ
1. Product ideas are analyzed to determine whether they match the company’s objectives and resources
during the _____ phase of new-product development.
a. concept testing
b. idea generation
c. business analysis
d. product development
e. screening
2. The expectation that a bean burrito at one Taco Bell will be the same as a bean burrito at another
Taco Bell several weeks later demonstrates
a. level of quality.
b. customer service.
c. consistency of quality.
d. product differentiation.
e. standardization.
3. An important aspect of many products such as clothing, furniture, shoes, and cars is their physical
appearance or
4. A phase out approach can be best described as
a. allowing the product to decline without a change in the marketing strategy.
b. exploiting any strengths left in the product.
c. immediately dropping the product from the product mix.
d. intensifying marketing efforts in core markets.
e. stopping production to get rid of material surplus.
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SEMESTER PROJECT
In the last Semester Project exercise, you were asked to describe your product, you, and to define what
value you offer the marketplace. In this exercise, further examine your product, including any product
innovations you intend to undertake.
Step 1: In thinking about you as a product, were there any aspects of your product you wish to modify?
Aesthetics, for example, might transition your look from student to professional employee. How would
these modifications impact you, the product?
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ANSWERS TO DISCUSSION AND REVIEW QUESTIONS
1. What is a line extension, and how does it differ from a product modification?
A line extension is development of a product closely related to existing products in the line, but the
2. Compare and contrast the three major approaches to modifying a product.
Any product modification changes one or more of a product’s characteristics. The three major ways
to modify a product are to alter its quality, function, or aesthetics. Changes affecting a product’s
3. Identify and briefly explain the seven major phases of the new-product development process.
The seven major phases of new-product development are idea generation, screening, concept testing,
business analysis, product development, test marketing, and commercialization. Idea generation is the
activity in which businesses and other organizations look for product ideas which will help them
accomplish their objectives. New product ideas can come from internal sources, such as marketing
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4. Do small companies that manufacture just a few products need to be concerned about
developing and managing products? Why or why not?
Any manufacturing firm, regardless of size or number of products, must be concerned about
5. Why is product development a cross-functional activity—involving finance, engineering,
manufacturing and other functional areas— within an organization?
Long-range strategic planning strengthens the firm’s commitment to product development. Such
commitment involves various functional areas in the process of commercializing a product idea. To
6. What is the major purpose of concept testing, and how is it accomplished?
Concept testing allows an organization to determine consumers’ initial reactions to a product idea
characteristics potential customers find most valuable.
7. What are the benefits and disadvantages of test marketing?
Benefits:
• Marketers can expose a product in a natural environment to gauge its sales performance.
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8. Why can the process of commercialization take a considerable amount of time?
Organizations usually launch a product in stages, beginning in a limited geographic area and
gradually expanding to include other areas. Using this process, known as a roll-out, often means
9. What is product differentiation, and how can it be achieved?
Product differentiation is the process of creating and designing products so customers perceive them
10. Explain how the term quality has been used to differentiate products in the automobile industry
in recent years. What are some makes and models of automobiles that come to mind when you
hear the terms high quality and poor quality?
We have heard the phrase “Quality is Job 1” in commercials for Ford automobiles and references to
11. What is product positioning? Under what conditions would head–to-head product
positioning be appropriate? When should head–to-head positioning be avoided?
Product positioning refers to the decisions and activities intended to create and maintain a certain
12. What types of problems does a weak product cause in a product mix? Describe the most
effective approach for avoiding such problems.
Weak products reduce an organization’s profitability in several ways. First, they drain resources
which could be used to modify stronger products or develop new ones. Second, because fewer
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13. What type of organization might use a venture team to develop new products? What are the
advantages and disadvantages of such a team?
The venture team approach is appropriate for new products, especially those designed for markets
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APPLICATION QUESTIONS
1. When developing a new product, a company often test-markets the proposed product in a
specific area or location. Suppose you wish to test-market your new, revolutionary SuperWax
car wax, which requires only one application for a lifetime finish. Where and how would you
test-market your new product?
The aim of test marketing is to determine the extent to which potential customers will buy the
2. A product manager may make quality, functional, or aesthetic modifications when modifying a
product. Identify a familiar product that recently was modified, categorize the modification
(quality, functional, or aesthetic), and describe how you would have modified it differently.
3. Phasing out a product from the product mix often is difficult for an organization. Visit a retail
store in your area, and ask the manager what products he or she has had to discontinue in the
recent past. Find out what factors influenced the decision to delete the product and who was
involved in the decision. Ask the manager to identify any products that should be but have not
been deleted, and try to ascertain the reason.
4. Use the information provided in the text. You are designing a new tablet computer. Begin
by identifying the set of all product attributes. Rate these attributes on a scale of one to ten,
with one being the most important and ten being the least important. For instance, would
you rate ease of use higher than the aesthetic design of the product? How important is it for
the tablet to have the newest technological features? Remember, the more sophisticated and
tech-savvy the product, the more expensive it is likely to be. Finally, make a
recommendation for the new tablet computer design.
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INTERNET EXERCISE
Merck & Company
Merck, a leading global pharmaceutical company, develops, manufactures, and markets a broad range of
health-care products. In addition, the firm’s Merck-Medco Managed Care Division manages pharmacy
benefits for more than 40 million Americans. The company has established a website to serve as an
educational and informational resource for Internet users around the world. To learn more about the
company and its research, visit its award-winning site at www.merck.com.
1. What products has Merck developed and introduced recently?
Answers will vary depending on Merck’s current products. Look on the Research table under
2. What role does research play in Merck’s success? How does research facilitate new-product
development at Merck?
Companies such as Merck must invest heavily in research and development in order to ensure that
3. Find Merck’s mission statement. Is Merck’s focus on research consistent with the firm’s
mission and values?
According to the website, “We have made it our mission to provide innovative, distinctive
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ANSWERS TO DEVELOPING YOUR MARKETING PLAN
The information obtained from these questions should assist you in developing various aspects of your
1. Identify whether your product will be a modification of an existing one in your product mix or
the development of a new product.
2. If the product is an extension of one in your current product mix, determine the type(s) of
modifications that will be performed.
A product modification is changing one or more characteristics of a product. Students should be wary
3. Using Figure 12.1 as a guide, discuss how your product idea would move through the stages of
new-product development. Examine the idea, using the tests and analyses included in the new-
product development process.
Answers to this question will vary depending on the product. Students should be aware that all
4. Discuss how the management of this product will fit into your current organizational structure.
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COMMENTS ON THE CASES
VIDEO CASE 12.1: DO AXE PRODUCTS MAKE MEN MORE
DESIRABLE?
Summary
AXE is the number one male grooming brand in both the United States and Canada. The company’s
advertisements feature women who are very attracted to men who wear AXE body spray. AXE believes
Questions for Discussion
1. How has AXE managed its product mix?
AXE’s product mix must satisfy its target market – men between the ages of 18 and 24. When they
2. How has AXE used line extensions to increase its reach among consumers?
AXE uses line extensions in several ways. It release new scents every year, and it has introduced
3. Why are younger generations attracted to AXE products?
During preadolescence many young men become more conscientious of their appearance and how
CASE 12.2: CATERPILLAR INC. CRAWLS OVER THE
COMPETITION WITH PRODUCT DEVELOPMENT
Summary
Caterpillar, Inc. is a global manufacturer of construction and mining equipment, machinery, and engines.
The company is best known for its more than 300 machines, including tractors, forest machines, off-
highway trucks, wheel dozers, and underground mining machines. The organization must continually
develop new products, modify existing ones, and spread awareness of its offerings to maintain its global
Questions for Discussion
1. Why is it so important for Caterpillar to develop new products on a regular basis?
2. Why is Caterpillar so careful to test-market its products prior to commercialization?
When it comes to actually developing the product, quality is everything for Caterpillar. Creating
3. What are some of the benefits and risks of Caterpillar’s line extensions?