Deck 6: Customer Needs

Question 1

When companies ask customers about their needs and then develop products and services to meet those needs, innovation is called market push.

Answer 1

False

Question 2

Technology-push innovations are often based on radical technological changes that open up new markets, rather than on incremental technological changes within existing markets.

Answer 2

True

Question 3

Understanding customer needs is a central part of developing new technology products or services because customers don't purchase product attributes - they purchase the satisfaction of their needs.

Answer 3

True

Question 4

The best clue to determine if customers have unsolved problems or problems that could be solved in a better way are provided by putting yourself in the customers' shoes and seeing if you have a need for the product.

Question 5

Companies often fail to accurately assess customer needs because they often underestimate what they already know about customer needs.

Question 6

Prospect theory has shown that people value losses at two to three times the level of gains.

Question 7

Companies need to only consider the interests of the most influential stakeholders that influence customers' buying decisions when developing a new product or service.

Question 8

If a company prices its product as high as possible in order to earn the highest profit, they are most likely engaged in price skimming.

Question 9

If you overestimate how many units your company will produce, your per unit price will be too low for your costs and your company will not make as much money as projected.

Question 10

Versioning is the process of offering components to customers for purchase as a group, usually for less than the price of components separately.

Question 11

A homogeneous market is one in which customers fall into a small number of groups on the basis of their needs.

Question 12

Market segmentation is the process of dividing a market into groups which have common needs.

Question 13

Market research involves the process of gathering and analyzing information about customer needs, preferences for products, and purchasing decisions.

Question 14

Research has shown that using traditional market research techniques to gather information about new-to-the-world products almost always creates problems.

Question 15

With ethnography, information is solicited only from people who are so unhappy with existing products that they are trying to develop products to meet their own needs.

Question 16

One advantage of focus groups is that they are relatively inexpensive for the amount of information they provide.

Question 17

Since it is difficult to assemble a focus group that is representative of a larger population it is extremely difficult for researchers to generalize from focus group data.

Question 18

Established companies have an advantage over new companies when the market and customer preferences for the innovation are well known.

Question 19

What type of innovation is driven by customer needs?

A) market push
B) technology push
C) market pull
D) technology pull

Question 20

If a company would respond to customers' desires by developing a line of clothing with built-in music players, the company's innovation would be classified as:

A) market push
B) technology push
C) market pull
D) technology pull

Question 21

If a company is inventing new technology in the pursuit of the technological advance itself, it would be responding to which force?

A) market push
B) technology push
C) market pull
D) technology pull

Question 22

Developing the technology for an innovation is the first step in which type of innovation?

A) market push
B) technology push
C) market pull
D) technology pull

Question 23

When 3M developed thin plastic film with microlouvers they did not have a commercial application in mind. Innovation of this type would be classified as:

A) market pull
B) technology pull
C) market push
D) technology push

Question 24

Which of the following characteristics tends to differentiate technology-push innovations from market-pull innovations?

A) the innovations are developed with the guidance from customer needs
B) innovations are based on incremental technological changes
C) innovations require a short period of development during which they are adapted to fit market needs
D) innovations face slow customer adopting given an absence of a problem in the marketplace that the technology can solve

Question 25

Which of the following questions helps to determine if customers need a product or service that your company's thinking of developing?

A) do customers have a problem that no existing product or service solves
B) is your solution to the problem significantly better than existing alternatives
C) both questions are important
D) neither question is important

Question 26

What is the best way to determine if customers have unsolved problems or problems that could be solved in a better way by a new product?

A) listening to customer complaints
B) customers expressing an unfulfilled wish
C) to put yourself in the customers' shoes
D) all of the above are equally effective

Question 27

What would be a reason why companies often fail to assess the needs of a customer?

A) product developers tend to be strong believers in the value of the products that they are developing
B) product developers often fail to gather information about customer needs because they often underestimate what they already know
C) all customer needs can be discovered by talking to customers
D) developers often know which customers to ask about their needs

Question 28

What would be a reason why companies often fail to assess the needs of a customer?

A) product developers tend to be strong believers in the value of the products that they are developing
B) companies have structures or processes that make it difficult for them to collect information from customers
C) needs change over time
D) all of the above are reasons

Question 29

Which theory helps to explain why new products must offer benefits to customers that are significantly greater than those offered by existing alternatives?

A) ethnography
B) penetration pricing theory
C) prospect theory
D) sampling frame theory

Question 30

According to prospect theory, how much better do the benefits of the new product have to be in order for a customer to adopt in?

A) one times
B) two to three times
C) five to ten times
D) ten to twenty times

Question 31

Why is developing a profitable product difficult?

A) you have to figure out a level of sales at which you can make money
B) you have to estimate future costs
C) you have to estimate future profits
D) all of the above are difficult

Question 32

What pricing theory includes setting a high price to earn the highest possible profit?

A) lead user pricing
B) price skimming
C) penetration pricing
D) bundling

Question 33

What pricing theory includes setting a low price to get the highest possible market share?

A) lead user pricing
B) price skimming
C) penetration pricing
D) bundling

Question 34

If you need to introduce a product to a large market and there was the opportunity to raise prices in the future, what pricing strategy would be most effective?

A) lead user pricing
B) price skimming
C) penetration pricing
D) bundling

Question 35

What pricing strategy was PayPal using when it paid its customers to use its online payment system initially because it knew that if customers adopted its service, it would be hard for competitors to dislodge it, and it could raise prices later?

A) penetration pricing
B) price skimming
C) bundling
D) lead user pricing

Question 36

Which of the following factors needs to be considered when setting a pricing strategy?

A) the timing of market entry
B) the nature of the market into which you are selling
C) how products are paid for in your industry
D) all of the above

Question 37

For which pricing factor do you need to consider the relationship between the price of a product and customer adoption patterns?

A) the timing of market entry
B) the nature of the market into which you are selling
C) how products are paid for in your industry
D) the company's cost structure

Question 38

For which pricing factor do you need to remember that even totally new products are limited in their price range because customers will substitute related products if the price of the new product is not within the expected range?

A) the timing of market entry
B) the nature of the market into which you are selling
C) how products are paid for in your industry
D) the company's cost structure

Question 39

If prices are routinely discounted for your product, which factor needs particular attention when setting the price?

A) the timing of market entry
B) the nature of the market into which you are selling
C) how products are paid for in your industry
D) the company's cost structure

Question 40

For which pricing factor is it critically important to understand the relationship between fixed and variable costs?

A) the timing of market entry
B) the nature of the market into which you are selling
C) how products are paid for in your industry
D) the company's cost structure

Question 41

What pricing strategy involves offering different forms of a product of different quality at different prices to different sets of customers based on their needs?

A) bundling
B) lead user pricing
C) versioning
D) price skimming

Question 42

Which pricing strategy involves offering components to customers for purchase as a group, usually for less than the price of components separately?

A) bundling
B) lead user pricing
C) versioning
D) price skimming

Question 43

If you have a product where one component is purchased once and another component is purchased repeatedly, under which pricing strategy would you probably want to price the nonrepeat component low to encourage customers to make an initial purchase into your system?

A) bundling
B) lead user pricing
C) versioning
D) price skimming

Question 44

Under what factor is market segmentation particularly helpful?

A) when the technology underlying the product or service is effective in solving most customers' problems
B) the importance of the solution that the company can provide is consistent across groups of customers
C) the organization has the ability to serve all of the market at once
D) competitors respond differently to efforts to sell to different groups of customers

Question 45

Why is market research useful?

A) it identifies potential customers and the market segments that are most interested in a product or service
B) it specifies the product features that customers prefer
C) it identifies the factors that influence customer purchasing decisions
D) all of the above

Question 46

When a researcher is obtaining information specifically for a research project, they are collecting:

A) primary data
B) secondary data
C) deductive data
D) inductive data

Question 47

What approach do you need to rely on more when conducting market research on new-to-the-world products?

A) primary
B) secondary
C) deductive
D) inductive

Question 48

When should you consider an iterative approach to market research?

A) when the risk of new product failure is low and the cost of obtaining inaccurate feedback is low
B) when the risk of new product failure is high and the cost of obtaining inaccurate feedback is low
C) when the risk of new product failure is low and the cost of obtaining inaccurate feedback is high
D) when the risk of new product failure is high and the cost of obtaining inaccurate feedback is high

Question 49

Which method of collecting data involves the description of a group and its activities based on observation and participation?

A) surveys
B) ethnography
C) lead user technique
D) all of the above

Question 50

Which method of collecting data is particularly useful for gathering information about customer needs for new-to-the-world products?

A) surveys
B) focus groups
C) lead user techniques
D) ethnography

Question 51

Which method of collecting data solicits information only from people who are so unhappy with existing products that they are trying to develop products to meet their won needs?

A) surveys
B) focus groups
C) lead user techniques
D) ethnography

Question 52

Which method of collecting data involves discussion sessions of between eight and twelve individuals, who meet for two to three hours to discuss their needs, preferences for different product features, or interest in new products and services?

A) surveys
B) focus groups
C) lead user techniques
D) ethnography

Question 53

What is a disadvantage of focus groups?

A) participants are more likely to answer all of the questions asked
B) they have low response rates
C) people prefer to complete surveys as compared to attend focus groups
D) all of the above are disadvantages

Question 54

Which of the following is an advantage of focus groups?

A) they are relatively inexpensive for the amount of information they provide
B) they have high response rates
C) data obtained from focus group participants are independent of the views of other focus group members
D) it is easy to assemble a focus group that is representative of a larger population

Question 55

For which method of data collection do you attempt to gather information from a portion of the population in order to make inferences about the population?

A) focus groups
B) ethnography
C) surveys
D) lead user technique

Question 56

What term refers to the targeted group of respondents that represents the population about which you seek to gather information?

A) census
B) beta group
C) prototype
D) sample frame

Question 57

Which approach to market research has the advantage of getting information from customers who cannot articulate their needs?

A) iterative approaches
B) ethnography
C) lead user method
D) focus groups

Question 58

Providing open-ended information from a group with high response rates is an advantage of which method?

A) focus groups
B) survey research
C) lead user method
D) ethnography

Question 59

Which approach to market research has the advantage of getting information relatively cheaply from a representative sample?

A) iterative approaches
B) ethnography
C) focus groups
D) survey research

Question 60

If you were looking to get information from customers very interested in adopting your new product, you would most likely use which approach to market research?

A) iterative approaches
B) ethnography
C) lead user method
D) focus groups

Question 61

If you really needed to get useful information from customers in a new market, which approach to market research would you be most likely to use?

A) iterative approaches
B) ethnography
C) lead user method
D) focus groups

Question 62

Which approach to market research has the disadvantage of focusing on the needs of a very select part of the market?

A) iterative approaches
B) ethnography
C) lead user analysis
D) focus groups

Question 63

Under which approach to market research would you likely hurt the company's reputation if the product fails?

A) ethnography
B) iterative approaches
C) focus groups
D) lead user analysis

Question 64

Describe and contrast technology push and market pull innovation.

Question 65

Define a customer need and describe the process you would follow to identify what a customer needs.

Question 66

Explain why it is difficult to identify customer needs.

Question 67

Describe the difference between price skimming and penetration pricing. Provide examples of when you may want to use each strategy.

Question 68

Explain bundling as a pricing strategy. Under what situations would you consider using a bundling strategy?

Question 69

Explain why market segmentation is particularly helpful for new products and services

Question 70

Define market research and explain how it is valuable to companies.

Question 71

Define and explain the advantages and disadvantages associated with ethnography, lead user method, focus groups, and survey research.