Exam 10: Product Management and New-Product Development

During the introduction stage of the product life cycle,

The smaller the comparative advantage of a new product over those already on the market, the faster its sales will grow.

With total quality management (TQM), a company's management makes the marketing department solely responsible for quality and customer service.

Passage of the Consumer Product Safety Act means that:

When building quality into services, managers should:

To be called "new" according to the FTC, a product must be entirely new or changed in a functionally significant or substantial respect.

The strategies for all stages of the product life cycle should be growth strategies.

When planning new products, managers need not be too concerned about safe design because it is each consumer's responsibility to decide what products are safe to buy and use.

Two keys to improving how people implement quality service are:

Which of the following provides high immediate satisfaction but low long-run consumer welfare?

Which of the following is a common cause of new product failures?

As a product moves through its product life cycle:

Over the past several years, like other auto manufacturers, General Motors (GM) has introduced many new models of sport utility vehicles (SUVs) in all of its major divisions. This proliferation of SUVs and an increase in gasoline prices have caused sales to level off. In response, General Motors offered rebates of up to $5,000, or no-interest financing, on selected models of SUVs. The largest rebates went to current owners of GM vehicles, so that they would replace their current vehicles with a GM model instead of switching to another brand. The rebates have been heavily advertised on national television. Profit margins per vehicle have shrunk as a result of these costly promotions. In what stage of the product life cycle is GM currently operating?

Use this information for questions that refer to the Wire Products Inc. (WPI) case. Rob Rose sat back to review the portfolio of products his company, Wire Products Inc. (WPI), has in its product line. The company specializes in making various products for consumer and industrial uses from hard laminated wire -- coated with special paints. 1) WPI's "Wire Closet" products have been on the market for 10 years. Consumers install the wire shelves and closet rods themselves. The market leader, Closetmaid, has been selling similar products for more than 20 years, but so far the sales volume and profits for the market continue to grow. Recently, several new competitors have come into the market. 2) Three months ago, WPI entered the lawn and garden market with folding fences made with laminated wire and branded as "Wire Fold-Fence." Previously, WPI had never made fences or been in lawn and garden - although other companies have been making products in this market for years. However, Rob Rose has discovered that recent sales of wire garden fencing have leveled off and profits are declining overall. Still, WPI thinks it has some cost advantages and can grow its own sales and profits in this market. 3) WPI has just developed "Oil Wire," a new concept for the environmental cleanup market. Oil Wire is coated with a special material that cleans up oil spills. There has never been a product like this and WPI wants to quickly get the word out about its benefits. The product is now being rolled out in selective markets. 4) Another business product is "Wire Locker" used for secure storage by gymnasiums or companies. This style of locker has now gone out of fashion and most customers are finding better materials to use for lockers. Aggressive selling has helped Wire Locker's sales stay flat, but the total market for wire style lockers is only half of what it was 10 years ago. 5) WPI's "Wire Window" product is used as a security product to protect glass windows. It sells to homeowners and retailers looking for additional safety. WPI's sales of this product have dropped in recent years because competitors have introduced maintenance-free products. However, the overall market for this type of product continues to show good growth. 6) WPI is running concept tests of a new wire car-top carrier called "Wire Car Top." There are other car-top carrier products on the market, but WPI plans to include options in its carrier that will make it easier to load bikes, skis, and suitcases. "Wire Car Top" is also very easy to put on and take off of the car because of its light weight and ease-of-use features. The concept tests are helping WPI analysts develop rough estimates of costs, sales, and profits. 7) Another new product idea, tentatively called "Wire Tent," is being considered. It would use laminated wires to create a portable tent frame. This product is currently being evaluated to determine its fit with the company's objectives and external market trends. Rob is thinking about the product life cycle, where each product fits, and what he should be doing as part of his marketing plan for each of these products. -According to the definition in your text, which of WPI's products can be called a new product?

Total quality management applies when the firm's product is a physical good, but not if it is a service.

"Continuous improvement" means a commitment to constantly make things better-one step at a time

The shape, length, and current stage of a product life cycle may vary depending:

Even though safety helmets offer protection while riding a bike, many Americans don't use them because they are uncomfortable or restricting. For all these people, safety helmets are a:

The more narrowly we define a product-market, the shorter the product life cycle because improved product ideas come along to replace the old.

When planning for the different stages of the product life cycle, managers should remember that: