Deck 9: Sales Forecasting and Financial Analysis

Question 1

New product projects need to be considered on how well they fit a firm's strategy for innovation.

Answer 1

True

Question 2

Which of the following is true of sales forecasting for new products?

A) If a product's potential is high, sales will materialize in spite of insufficient marketing efforts.
B) Sales forecasting is the final step in a financial analysis.
C) Sales forecasting is conducted only after calculating key financial benchmarks such as net present value or internal rate of return.
D) Sales forecasting is typically the responsibility of the marketing personnel on the new products team.

Answer 2

D

Question 3

Factor analysis can be used to estimate the net present value of a new product when it is still in the concept stage.

Answer 3

False

Question 4

In a new product development process, the financial analysis generally begins with the calculation of the net present value, NPV.

Question 5

In the product development process, sales forecasting is typically the responsibility of the process manager on the new product team.

Question 6

In a bottom-up strategic approach, the firm lays out its strategy first, and then allocates funds across different kinds of projects.

Question 7

Product innovators outside of consumer packaged goods still most often use the simple version of the A-T-A-R model.

Question 8

Many of the mathematical sales forecasting models were initially developed for use on durable goods.

Question 9

Which of the following is a consideration to keep in mind when developing a sales forecast?

A) Advertising may not adequately create awareness.
B) Sales will usually not grow through time even if customers get to try the product.
C) A product's sales do not depend on competitors' strategies.
D) Regardless of the marketing effort, a product's sales will materialize if the product's potential is extremely high.

Question 10

With reference to new product development, the top performing firms tend to rely only on financial criteria.

Question 11

Which of the following is the most straightforward kind of new product forecast to conduct?

A) A "what-if" analysis
B) A market analysis
C) A sales analysis
D) A customer analysis

Question 12

Adoption of innovation refers to the process by which an innovation is spread within a market, over time and over categories of adopters.

Question 13

Even if a product's potential is extremely high, its sales may not materialize due to insufficient marketing effort.

Question 14

Laggards refer to those users who will be among the first to try the product.

Question 15

The A-T-A-R model is one of the pseudo sale market testing methods used later in the new product process, typically when the physical product is available for the consumer to take home and try.

Question 16

In addition to the considerations of time and cost, one should also consider product and market newness when selecting the most appropriate forecasting model.

Question 17

Sales forecasting is typically the responsibility of a _____ on a new product team.

A) project manager
B) technical advisor
C) marketing person
D) process manager

Question 18

An early field use test with a prototype will not assure success, but it can say intended users like what they see.

Question 19

Most common forecasting methods are extrapolations and work well on established products.

Question 20

In a new product development process, which of the following is most likely to be determined first while analyzing the financial aspects of a product?

A) Net present value
B) Sales forecast
C) Internal rate of return
D) Payback period

Question 21

Managers who feel business is suffering from "paralysis by analysis" are most likely to:

A) commit to a strategy of low-cost development and marketing.
B) approve situations, not numbers.
C) forecast what is known.
D) go ahead with sound forecasts but prepare to handle the risks.

Question 22

Leah Hubert senses that her "favorite" product concept might be dismissed due to "inappropriate and unreasonable" financial analysis tools that cannot accurately reflect its potential. Leah has attempted to use her influence to push the concept past such obstacles. In this scenario, Leah is functioning as a _____.

A) product architect
B) financial forecaster
C) product champion
D) financial analyst

Question 23

Which of the following forecasting tools is commonly used for durable goods and is based on the diffusion curve of new products through a population?

A) The A-T-A-R model
B) Econometric analysis
C) Multiple regression analysis
D) The Bass model

Question 24

As per the A-T-A-R model, long-run market share can be expressed as MS = T × R × AW × AV. What does "T" stand for in the equation?

A) Ultimate long-run trial rate
B) Ultimate long-run repeat purchase rate
C) Percent awareness
D) Percent availability

Question 25

In the context of forecasting sales using an A-T-A-R model, which of the following methods can be used if the data availability is inaccurate?

A) A what-if analysis
B) A diffusion analysis
C) A regression analysis
D) A correlation analysis

Question 26

_____ is one of the pseudo sale market testing methods used later in the new product process, typically when the physical product is available for the consumer to take home and try.

A) The Delphi probe model
B) The A-T-A-R model
C) Scenario writing
D) Regression analysis

Question 27

Which of the following is the most commonly used approach to sales forecasting outside of the consumer packaged goods industry?

A) The A-T-A-R model
B) Progressive regression
C) Conjoint analysis
D) Perceptual gap mapping

Question 28

According to the A-T-A-R model, long-run market share can be expressed as MS= T × R × AW × AV. In this equation, "R" is the:

A) ultimate long-run trial rate.
B) ultimate long-run repeat purchase rate.
C) percent availability.
D) percent awareness.

Question 29

Which of the following is a problem associated with sales forecasting?

A) Sales managers tend to make promises a year ahead about sales time and support.
B) New product managers spend a lot of time in conducting field tests on their new products.
C) Most common forecasting methods work well only on new products, and not on established products.
D) Target users don't always know what the new product will actually be or what it will do for them.

Question 30

The management's primary task in sales forecasting is to:

A) purchase state-of-the-art forecasting models.
B) make necessary estimates as solid as possible.
C) ensure that all past sales records are accurately archived.
D) conduct training on sales forecasting.

Question 31

With reference to the Bass diffusion model, which of the following best represents the growth in the total number of purchases that is typically based on adoption by innovators?

A) The cumulative expenditures curve
B) Skimming
C) Initial diffusion rate
D) Itemized response

Question 32

The _____ tool includes several ways to assess strategic fit and market attractiveness, and also considers financial performance.

A) opportunity identification and selection
B) concept generation
C) concept evaluation
D) development

Question 33

_____ analysis may be used to estimate the net present value of a new product when it is still in the concept stage.

A) Real-options
B) Progressive regression
C) Factor
D) Conjoint

Question 34

Those users who will be among the first to try a product are called:

A) early adopters.
B) the early majority.
C) the late majority.
D) laggards.

Question 35

Ancon Inc., typically forecasts potential product sales based on the number of customers who say they would either definitely or probably buy the product, on a five-point scale. The firm's sales forecast is based upon _____.

A) regression analysis
B) the A-T-A-R model
C) purchase intentions
D) test market results

Question 36

Which of the following is a way of putting risk back into product innovation while managing it well?

A) Isolating or neutralizing the in-house critics
B) Demanding precise financial analysis at the time of screening
C) Implementing a product idea on a large scale when the financial analysis is weak
D) Avoiding the use of market testing rollouts

Question 37

Which of the following serves as the basis of many simulated test markets?

A) The cumulative expenditures curve
B) The risk or payoff matrix
C) The A-T-A-R model
D) The decay curve

Question 38

Firms that develop a stream of new items that differ very little from those now on the market, insert them into the market without great fanfare, watch which ones end users rebuy, and drop those that do not find favor are using the policy of _____.

A) low-cost development and marketing
B) forecasting and risk management
C) approving situations, not numbers
D) forecasting what is known

Question 39

When faced with weak financial estimates, NewPro Inc. sometimes implements its new product ideas on a small scale to see where the solution might lie. Based on this information, we can say that NewPro Inc. is employing _____.

A) market testing rollouts
B) econometric modeling
C) life cycle analysis
D) diffusion modeling

Question 40

_____ refers to the process by which an innovation is spread within a market, over time and over categories of adopters.

A) Diffusion of innovation
B) Adoption of innovation
C) Adaptation of innovation
D) Simulation of innovation

Question 41

According to the Hoechst-U.S. scoring model, which of the following factors is based on financial criterion?

A) Probability of technical success
B) Business-strategy fit
C) Strategic leverage
D) Reward

Question 42

Discuss the Bass diffusion model.

Question 43

Under the _____, the firm or SBU lays out a strategy, and then allocates funds across different kinds of projects.

A) top-down strategic approach
B) top-two-boxes approach
C) market testing approach
D) bottom-up strategic approach

Question 44

What are some of the considerations to keep in mind when developing a sales forecast?

Question 45

According to the Hoechst-U.S. scoring model, which of the following is a full-screen feasibility factor?

A) Probability of technical success
B) Business-strategy fit
C) Strategic leverage
D) Reward

Question 46

Summarize the problems associated with forecasting.

Question 47

Discuss any four ways in which dependence on poor forecasts can be reduced.

Question 48

In the new product development process, the product use test is conducted during the _____ phase of the process.

A) opportunity identification and selection
B) concept generation
C) project evaluation
D) development

Question 49

A firm may approve many new product projects if:

A) simple financial hurdles are not the only criterion.
B) resource constraints are included in the NPV calculations.
C) the management ignores small, quick-hit projects to focus on developing new product technologies.
D) low-quality work reduces the quality of information used for decision making.

Question 50

Strategic criteria for new product development are best analyzed through the use of _____.

A) financial modeling
B) sales forecasting
C) PIC evaluation
D) NPV calculation

Question 51

If a firm is already involved in plenty of quick-hit projects, strategic portfolio considerations would indicate that new funding would be better routed to a long-term, major technology development. The firm, as per the example, follows a(n) _____.

A) top-down strategic approach
B) bottom-up strategic approach
C) portfolio approach
D) inductive approach

Question 52

Which of the following is true of top-performing firms?

A) They predominantly take a bottom-up approach for strategy development by building strategic criteria into their project selection tools.
B) They only use the top-down approach for strategy development.
C) They often use a combination of top-down and bottom-up approaches for strategy development.
D) They often rely only on financial criteria when selecting projects.

Question 53

According to the Hoechst-U.S. scoring model, which of the following is a factor related to the firm's product innovation charter (PIC)?

A) Probability of technical success
B) Probability of commercial success
C) Reward
D) Strategic leverage

Question 54

Explain the top-down and bottom-up approaches to strategy development.

Question 55

Firms that build strategic criteria into their project selection tools are using a _____ strategic approach.

A) top-down
B) top-two-boxes
C) market testing
D) bottom-up