Exam 10: Product Design and Development

If your proposed business was a frozen yogurt store in Michigan, you could get an estimate of the number of customers you might have if you asked those leaving a bakery in California if they'd buy frozen yogurt in the winter.

The approach used to determine when your total sales revenues exactly equal your expenses is called _____.

Large companies seek all of their product ideas from those outside the organization, including current customers.

Talking to people in your prospective industry can be especially helpful if your proposed product is a service.

To research an industry, you begin by looking at smaller sectors of the industry.

The first step in the product development process is to evaluate opportunities and select the best product ideas. What is the second step

Products are either physical goods or services and can't be both.

Market segments can be a group of potential customers in a geographic location.

When Just Born extended its product line to include "Peeps in a chocolate egg," this was considered an extension to an existing product line.

Contribution margin per unit is the excess of revenue per unit over fixed cost per unit.

You should document your idea as soon as you think of it. This can be done by filling out a form, stating the purpose of your invention and the current date, and then sign it and have someone else witness it.

According to the Small Business Administration, 10% of all new product innovations come from small businesses.

Seth Gordon, marketing consultant and author, refers to truly remarkable products as "jackpots."

All of the following are necessary criteria for obtaining a patent except:

Launching a "new-to-the-market" product is very risky and only about 25% of products created fall into this category.

SCENARIO-BASED BetterBuilt Products, a large machine shop in the Pacific Northwest, employs 138 people in design, accounting, sales, purchasing, production, and delivery. The company’s machined products are of the highest quality, production almost always stays “on track,” and delivery generally meets or exceeds customer expectations. Management regularly looks for ways to improve effectiveness and efficiency of operations by reducing production/cycle time and cutting costs. -BetterBuilt provides time and place utility but not form utility.

To break even means that total sales revenue must exactly equal all of your expenses.

____ is one of the hardest tasks in business.

Customers buy products to satisfy _____ needs and expect to derive some value or _____ from them.

SCENARIO-BASED Let’s say you want to open a shoe store that will specialize in high-end shoes. But before you do, you want to determine how many pairs of shoes you have to sell in the first year to break even (have no profit or loss). You also want to know what your profit will be in year two. You have been busy estimating some revenues and costs. Here is what you have so far: -How much is the variable cost per unit