Deck 8: New Products and Innovation

Question 1

Some companies take a nearly exclusively top-down approach and use a new product development process.

Answer 1

True

Question 2

Bottom up is sometimes also called "inside out".

Answer 2

False

Question 3

The most typical method of product testing involves many good, old-fashioned coffee-fueled brainstorming meetings.

Answer 3

False

Question 4

After many ideas have been generated, marketing starts a focus group with all ideas.

Question 5

Change is not fun.

Question 6

Frank is a senior executive at Company XYZ, and has argued that a top-down approach to new product development should be implemented. Frank explains that just because the top-down approach has few steps in the process doesn't mean the products are simple, or that the process unfolds quickly. Frank's explanation of the top-down approach is correct.

Question 7

Customers and marketing research are involved in the idea generation, concept testing, product testing, and test marketing stages.

Question 8

Zena's company is seeking to improve its current products. Ultimately, the company would do this for one reason only.

Question 9

Companies are ever­evolving and the primary way they make changes is by offering "new and improved" goods
and services to customers.

Question 10

In attempting to determine what drives customers' decisions, Conny explains to Karl that conjoint analysis is a great research method because it reveals customers' trade­offs. Conny is correct.

Question 11

In the real world, companies do not use a purely bottom up or top down marketing process.

Question 12

Marketing management is involved throughout the new product development process.

Question 13

In more marketing-oriented companies, customer feedback is sought at most phases in the process.

Question 14

Rarely is customer feedback surprising when developing a new product.

Question 15

Many ideas for new products come from marketers observing the world around them.

Question 16

Change in the market is always occurring.

Question 17

The process of developing new products depends first on a company's location.

Question 18

It's been shown that new products increase a company's long­term financial performance and the firm's value.

Question 19

The New Product Development Process is linear.

Question 20

The form of the marketing research at the concept testing stage is usually focus groups and web surveys.

Question 21

Upon completion of the idea generation stage, the marketing manager takes the customer data and tries to predict
the product's likely success.

Question 22

Sales Potential = Market Potential x Purchase Intention x Price, or $SP = MP x PI x Pr.

Question 23

Typically a company will repeat the concept testing phase until it has one product in mind. It will then make a single prototype.

Question 24

The length of product-category life cycles tends to be shorter than those of individual-brand life cycles.

Question 25

Area test markets are small areas that represent the larger population of the country in terms of demographics and socioeconomic status.

Question 26

New product development can move along fairly quickly for straightforward brand or line extensions in the context of a mature consumer packaged goods company, but in other settings, the process can be very slow.

Question 27

If a firm has an old product at the end of the life cycle, it can divest it, harvest it, or rejuvenate it.

Question 28

Showing company marketing information to customers helps clarify the image of the products and allows the company to get feedback on the marketing information itself.

Question 29

Profits rise in the introduction and growth stages, but sometime within the growth stage, or certainly by maturity and decline, profits drop.

Question 30

The percentage of "innovators" and "early adopters" is about 20­25% of the market.

Question 31

In general, sales increase from the introduction to growth phases of the product life cycle, and drop in the maturity phase.

Question 32

Consumer acceptance tends to be higher when a new product is compatible with the customer's lifestyle.

Question 33

The goal of forecasting is to estimate the stock potential "$SP."

Question 34

At market maturity, profits decline because of higher marketing costs and lower prices.

Question 35

The FDA is currently under investigation, being accused of pushing drugs to market too slowly.

Question 36

Gary is a marketer for a new type of beer and he wants to see how well it would sell. He sets up a simulated test market by placing his beer among other types in a virtual reality situation where testers will select a beer from the shelf. The goal of this simulated test is to see how often customers will pick his beer in real life.

Question 37

One marketing trend is the growing concern for environmental and corporate social responsibility.

Question 38

Marketers can speed up imitators (make p bigger) by introducing price decreases early, or speed up innovators (make q bigger) by introducing price decreases later.

Question 39

The first to market is often the first to fail.

Question 40

The product life cycle is a very popular metaphor in marketing to describe the evolution and duration of a product being available in the marketplace.

Question 41

A approach is found frequently among companies with strong engineering orientations, pharmaceutical and biomedical firms, financial services, and many high-technology companies.

A) bottom-up
B) top-down
C) upward
D) downward

Question 42

The process of developing new products depends first on a company's .

A) bottom line
B) size
C) location
D) culture

Question 43

A test market that uses a virtual shopping experience to give customers a chance to buy the product (or not) is called a test market.

A) simulated
B) area
C) electronic
D) computerized

Question 44

Focus groups and web surveys are used mostly during which phase of product development?

A) brainstorming
B) beta testing
C) concept testing
D) launch

Question 45

Traditionally, 40-50 small metropolitan areas throughout the U.S. are known to marketing research firms as having characteristics representative of the country as a whole. These are called .

A) simulated test markets.
B) area test markets.
C) electronic test markets.
D) country test markets.

Question 46

What term refers to using customer data to try to predict the product's likely success?

A) forecasting
B) foreshadowing
C) test marketing
D) profit prediction

Question 47

During , a new product (good or service) is brought into the marketplace with heavy marketing spending.

A) market growth
B) market introduction
C) maturity
D) decline

Question 48

Top down is also called because the idea comes from within the company, and then feedback from the outside is sought later in the process.

A) inside out
B) outside in
C) long term
D) short term

Question 49

Adam and Jose are attempting to identify the bundle of product features most likely to attract customers. Jose argues that they should conduct a(n) , which involves comparing different combinations of attributes, and the customer simply determines which product combination sounds best, next best, and so on.

A) focus group
B) interview
C) conjoint study
D) web survey

Question 50

At which stage in the new product development process does the company have a number of ideas that it thinks might work, and gets customers' feedback as to which ideas sound most promising?

A) test marketing
B) concept testing
C) product development
D) product testing

Question 51

All of the following are stages in the product life cycle EXCEPT:

A) growth
B) maturity
C) introduction
D) concept testing

Question 52

The opposite of a top-down approach is usually called .

A) outside-in
B) inside-out
C) co-creation
D) bottom-up

Question 53

In order to calculate sales potential, we need to know what three things?

A) market price, purchase potential, target market
B) test market size, purchase intention, target market
C) market intention, purchase potential, price
D) market potential, purchase intention, price

Question 54

The goal of forecasting is to estimate the "$SP." What does "$SP" stand for?

A) systematic process
B) simulated price
C) sales potential
D) sustained profitability

Question 55

Marketing management is involved throughout the new product development process, and especially in the stage.

A) test marketing
B) concept testing
C) product development
D) idea-generation

Question 56

Forecasting is represented by which of the following equations?

A) $SP = (MP x PI) + Pr
B) $SP = (MP + PI) x Pr
C) $SP = MP + PI + Pr
D) $SP = MP x PI x Pr

Question 57

Research has suggested ratcheting down the purchase intention estimate by a factor of .

A) 1/4
B) 3/4
C) 1/2
D) 1/8

Question 58

Saying, "Okay, maybe some ideas are in fact bad ideas" corresponds to which step in the process of creating new products?

A) in-house winnowing and refinement
B) brainstorming meetings
C) concept testing
D) design development

Question 59

What term refers to the likelihood that the target segment will buy the product?

A) sales intention
B) market potential
C) purchase intention
D) sales potential

Question 60

Which of the following steps comes immediately after idea creation in the new product development process?

A) in-house winnowing and refinement
B) concept testing
C) product testing
D) test marketing

Question 61

The most stunning demographic trend in America and Western Europe is that the population is .

A) aging
B) getting less and less education
C) becoming more and more religious
D) getting younger

Question 62

If a company wants to be innovative, which strategy are they most likely to use?

A) market penetration
B) product development
C) market development
D) diversification

Question 63

tends to be higher when the product has a clear relative advantage over existing products, is compatible with the customer's lifestyle, and is not overly complex (or the complexity is masked by a user­ friendly interface), and is easily tried or sampled, to facilitate initial assessment.

A) Consumer acceptance
B) Risk
C) Cost
D) Efficiency

Question 64

What growth strategy combines new markets and new products?

A) market penetration
B) product development
C) market development
D) diversification

Question 65

Company ABC is about to launch a fuller product line in an effort to satisfy more customer segments in the market. Given these activities, Company ABC's current product(s) is most likely in which stage of the Product Life Cycle?

A) maturity
B) market introduction
C) decline
D) market growth

Question 66

Amos does not want to find new customers or create new products. Instead, he is opening more stores and improving the marketing mix-more intriguing advertising, better pricing, better reward program, better in­store service, better store ambience, etc. What strategy is he using?

A) market penetration
B) product development
C) market development
D) diversification

Question 67

Hannah and Ellen rely on consistent messages received via word of mouth, and are older and more conservative than other customers of Product X. Hannah and Ellen most likely fall into which of the following categories?

A) late majority
B) early majority
C) laggards
D) innovators

Question 68

There is less risk with new products than with new products.

A) inexpensive, expensive
B) expensive, inexpensive
C) incrementally, really
D) really, incrementally

Question 69

The are more risk averse and waiting to hear that earlier adopters have had favorable experiences with the new product.

A) early adopters
B) late majority
C) innovators
D) early majority

Question 70

In which phase of the Product Life Cycle is customer awareness getting stronger, and there may be some buzz in the marketplace?

A) market introduction
B) decline
C) market growth
D) maturity

Question 71

is the path we take when we're settled on our product mix and we think there are more segment opportunities to target.

A) Product development
B) Market penetration
C) Market development
D) Diversification

Question 72

The are a group of approximately 10-15% of the population who is so influential that the loss of one of these customers costs the firm more than the loss of later adopters.

A) innovators
B) late majority
C) early majority
D) early adopters

Question 73

A product has more competition during the stage than in any other stage in its life cycle.

A) market maturity
B) market growth
C) market introduction
D) market decline

Question 74

What term refers to the group of people who are the most risk averse, skeptical of new products, and stereotypically lower in income?

A) early adopters
B) early majority
C) innovators
D) laggards

Question 75

Procter & Gamble determined that its Thermacare Heat Wrap was underperforming and lacked a desired level of growth potential, so it decided to sell the brand. In what phase of the product life cycle was Thermacare Heat Wrap?

A) growth
B) decline
C) maturity
D) failure

Question 76

The are 3-5% of consumers who like to try new ideas and are willing to take risks. They tend to be relatively educated, and capable and confident in assessing information about a product on their own.

A) early adopters
B) innovators
C) early majority
D) laggards

Question 77

Which growth strategy is the toughest?

A) market penetration
B) product development
C) market development
D) diversification

Question 78

The stage of the Product Life Cycle where sales and profits drop and new products replace older generations is called .

A) market growth.
B) market introduction.
C) decline.
D) maturity.

Question 79

Regarding fast­growing economies, what does "BRIC" stand for?

A) Brazil, Russia, India, China
B) Britain, Russia, Italy, Canada
C) Brazil, Romania, India, Canada
D) Britain, Romania, Italy, China

Question 80

What sub-population is growing faster than any other in the U.S.?

A) African American
B) Hispanic
C) Asian
D) Caucasian