Deck 7: New Product Planning and Development

Question 1

Rold Gold pretzels introduced honey-mustard pretzels to its product line. This is an example of

A) new-to-the-world products.
B) new category entries.
C) additions to product lines.
D) product improvements.

Answer 1

C
Explanation: Additions to product lines are products that are line extensions, flankers, and so on, to the firm's current markets.

Question 2

"Details" magazine was introduced to the market as a raw and bold "underground nightlife magazine." Sales were low, so the publisher of the magazine re-launched it as a fashion and lifestyle magazine for twenty something males. In which of the new product categories would this product fall?

A) New-to-the-world products
B) New category entries
C) Product improvements
D) Repositioning

Answer 2

D
Explanation: Repositionings are products that are retargeted for a new use or application.

Question 3

Which of the following pertains to repositioning?

A) Products that are retargeted for new use.
B) Products that are line extensions.
C) Current products that are made better.
D) Products that are inventions.

Answer 3

A
Explanation: Repositioning: Products that are retargeted for a new use or application.

Question 4

Richard Simmons Dijon Vinaigrette Salad Spray seemed like a good idea. It was a low-calorie idea for putting salad dressing on salad fixings without overpowering the greens. Unfortunately, the product's association with fitness guru Richard Simmons offended many potential consumers who consider him too flamboyant, and the product failed. What kind of opportunity costs did the salad spray's manufacturer incur?

A) Costs involved in producing the salad spray.
B) Explicit cost
C) Outlay Cost
D) Time spent in unprofitable product development.

Question 5

Products that are inventions are called

A) new-to-the-world products.
B) new category entries.
C) addition to product lines.
D) product improvements.

Question 6

Del Monte Foods added tomatoes that were already diced and spiced to its line of canned tomato products. In which of the new product categories would diced and spiced canned tomatoes fall?

A) New-to-the-world products
B) New category entries
C) Additions to product lines
D) Product improvements

Question 7

The manufacturers of Waterford crystal have usually focused efforts of creating intricate artifacts, and other collectibles. However, in light of competition and demand, they are introducing their first line of dinnerware. In which of the new product categories would the dinnerware fall?

A) New-to-the-world product
B) New category entry
C) Additions to product lines
D) Product improvements

Question 8

The inability to satisfy consumer needs can be attributed to all of the following, except

A) inadequacy of upfront intelligence efforts.
B) failure on the part of company to stick close to its core competencies.
C) the inability to provide better value than competing products and technologies.
D) new product sales growing far more rapidly than sales of current products.

Question 9

For the last decade, Green Giant has sold frozen vegetables in various types of sauces. In 2002, the company changed its packaging and began offering frozen vegetables in re-sealable bags with separate frozen sauce pellets. In which of the new product categories would this new method of packaging frozen vegetables fall?

A) New-to-the-world products
B) New category entries
C) Additions to product lines
D) Product improvements

Question 10

Hallmark sells cards, gift-wrapping materials, and collectibles. However, in the summer of 2000, Hallmark added fresh-cut flower arrangements to its product offering. In which of the new product categories would the floral arrangements fall?

A) New-to-the-world products
B) New category entries
C) Additions to product lines
D) Product improvements

Question 11

Products that take a firm into a product type new to it, but that are not new to the world are known as

A) new-to-the-world products.
B) new category entries.
C) additions to product lines.
D) product improvements.

Question 12

Healthfoods Company manufactures and markets processed food products. It recently introduced infant food under the brand name of Nutrababy. Identify the new product category involved.

A) New-to-the-world products
B) Additions to product lines
C) New category entries
D) Product improvements

Question 13

The primary reason for new product failure is the inability of the selling company to match its offering to the

A) needs of the customers.
B) products offered by competitors.
C) prevailing price for the product.
D) market leader's selling price.

Question 14

A major obstacle to effectively predicting new product demand is

A) competition.
B) market segmentation.
C) limited vision.
D) market research.

Question 15

Minefree Games Inc. develops and markets mobile entertainment software. The company's application portfolio includes single and multiplayer games, ring tones, and other entertainment content. Their most popular mobile game is the Nightfly 200. Recently, they released a new improved version compatible with all major mobile handsets, the Nightfly 201 series. Which is the product category that would best describe Nightfly 201 series?

A) New-to-the-world products
B) Additions to product lines
C) Repositionings
D) Product improvements

Question 16

Identify the products that are considered as flankers to the firm's current market.

A) New-to-the-world products
B) New category entries
C) Additions to product lines
D) Product improvements

Question 17

Which of the following observations is incorrect?

A) Many new products are failures.
B) A major obstacle to effectively predicting new product demand is limited vision.
C) Companies vary widely in the effectiveness of their new product programs.
D) Current products sales grow far more rapidly than sales of new product.

Question 18

Compared to current products, new product sales typically

A) grow very slowly.
B) remain the same.
C) grow far more rapidly.
D) come down.

Question 19

These refer not only to alternative uses of funds spent on product failures but also to the time spent in unprofitable product development.

A) Sunk costs
B) Quality costs
C) Research and development costs
D) Opportunity costs

Question 20

A current product of a company has been enhanced to better serve consumer needs. The new product would fall into which of the following categories?

A) New-to-the-world products
B) New category entries
C) Additions to product lines
D) Product improvements

Question 21

A goal of these types of strategies is to either increase frequency of consumption or increase the number of customers using the firm's product(s).

A) Diversification and market penetration
B) Product development and diversification
C) Market development and diversification
D) Market development and market penetration

Question 22

This refers to creating new products to replace existing ones.

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

Question 23

According to the growth vector matrix these products usually require the firm to make significant investments in research and development and may require significant changes in its organizational structure.

A) New products
B) Repositioned products
C) Improved products
D) Additions to existing products

Question 24

The manufacturer of Snapple lemonade adds a diet lemonade beverage to its current markets. This is an example of

A) new-to-the-world products.
B) new category entries.
C) additions to product lines.
D) product improvements.

Question 25

Pontiac introduces a new model of its Montana SUV that has better features than last year's model. The new model of the Montana SUV would fall into which of the following categories?

A) New-to-the-world products
B) New category entries
C) Additions to product lines
D) Product improvements

Question 26

What kind of new product strategy is being used when an automobile manufacturer introduces a new car model to replace an existing one?

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

Question 27

Which of the following refers to developing new products and cultivating new markets?

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

Question 28

Which of the following indicates the direction in which the organization is moving with respect to its current products and markets?

A) Growth vector matrix
B) Line extension
C) Market segmentation
D) Market diversification

Question 29

The use of movie stars like Brad Pitt on NBC's Friends television show is a strategy used to find new viewers for the existing show. It also helps in increasing NBC's market share. NBC encourages such guest appearances to implement which growth strategy?

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

Question 30

Which of the following denotes a growth direction through the increase in market share for present product markets?

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

Question 31

Light Eats is a buffet-style salad bar with locations in the South, West and Midwest United States. It serves a variety of salads and soups for the health conscious. Recently it has introduced 'Frozen Fruit' bars serving ice creams and sorbets, inspired from flavors of Mexico and made from fresh fruits and vegetables in unique ethnic flavors. Which new products based categories would the frozen fruit bars come under?

A) New-to-the-world products
B) New category entries
C) Product improvements
D) Additions to product lines

Question 32

An approach to the new product question developed by H. Igor Ansoff is termed

A) corporate marketing.
B) marketing mix.
C) growth vectors.
D) benchmarking.

Question 33

Avon first marketed its Skin So Soft lotion as a body lotion to compete with other similar body lotions. Today Avon promotes its Skin So Soft lotion as an insect repellant that is good to your skin. In which of the new product categories would Skin So Soft lotion fall?

A) New-to-the-world products
B) New category entries
C) Additions to product lines
D) Repositionings

Question 34

Product development and diversification can be characterized as

A) product mix strategies.
B) strategies based on differentiation.
C) target market segmentation strategies.
D) cost leadership strategies.

Question 35

Healthfood Inc. manufactures jelly, made out of gelatin - a colorless, edible protein - in various fruit flavors. The company discovers that women used powdered gelatin dissolved in acetylene - a liquid organic compound - to strengthen their fingernails. It introduces a flavorless jelly as a nail-building agent. The new-use strategy was directed toward revamping the sales of a product whose growth, based on its original conceived use, had slowed down. Identify the product category involved.

A) Additions to product lines
B) Product improvements
C) Repositionings
D) New category entries

Question 36

What type of new product strategy is Pizza Hut using if it allows Marriott to offer its new specialty pizzas in the hotel chain's room service menu?

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

Question 37

Coca-Cola plans to launch a new version of Diet Coke called Diet Coke Plus. The drink will be similar to the current Diet Coke, but it will be fortified with vitamins and minerals. The Diet Coke Plus would be a part of which of the following new products based categories?

A) New-to-the-world products
B) New category entries
C) Product improvements
D) Repositionings

Question 38

Which of the following is an example of a product development strategy?

A) Jeep introduces a new four-wheel drive vehicle to replace the Jeep Cherokee.
B) McDonald's continually seeking expansion into overseas markets.
C) A carpet manufacturer introduces an organic stain remover designed to remove even the worst spills.
D) The manufacturer of Nine Lives cat food adds a line of flea collars.

Question 39

Which of the following growth strategies are examples of product mix strategies?

A) Diversification and market penetration
B) Product development and diversification
C) Market development and diversification
D) Market development and market penetration

Question 40

What type of new product strategy is being used when Pontiac introduces a new model of its Montana SUV that makes last year's model outdated and is intended to encourage present Montana drivers to want the newer model?

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

Question 41

Policy-making criteria on new products should specify which of the following?

A) A maximum level of profit.
B) The exact market share of the new product.
C) An exact level of profits.
D) The availability and cost of capital to develop a new product.

Question 42

) Identify the six step process of the new product development.

A) Business analysis, Commercialization, Idea screening, Project planning, Test marketing, Product development
B) Idea screening, Project planning, Product design, Product development, Test marketing, Commercialization
C) Idea generation, Idea screening, Project planning, Product development, Test marketing, Commercialization
D) Idea screening, Project planning, Product development, Test marketing, Management, Research

Question 43

This involves placing employees in positions that require direct contact with customers, competitors, and other key outside groups.

A) Out-rotation
B) Line extension
C) Outsider planning
D) Internal risk

Question 44

Which of the following is (are) critical to providing an atmosphere that stimulates new product activity?

A) Unionization
B) Politics within the organization
C) Top-management support
D) External consultants

Question 45

Policy-making criteria on new products should specify all of the following except

A) a working definition of the profit concept acceptable to top management.
B) an exact level of profits.
C) the availability and cost of capital to develop a new product.
D) a specified time period in which the new product must recoup its operating costs and begin contributing to profits.

Question 46

In terms of new product development, identify an advantage that some Japanese firms appear to possess.

A) Their managers understand the fact that market share will not lead to customer loyalty, which in turn will not lead to profits.
B) The emphasis on short-term profits by their managers.
C) Their management is free from the pressure of steady improvement in earnings per share.
D) The knowledge that profitability in the long run is not supported by the stock market.

Question 47

Which of the following is not essential to the generation of new product ideas?

A) Technology push
B) Market pull
C) Customer needs and wants
D) High investments

Question 48

Ideally, products that generate a maximum dollar profit with a minimum amount of risk should be

A) harvested or divested.
B) developed and marketed.
C) produced only for the local market.
D) shelved for future use.

Question 49

Which of the following observations about idea generation is true?

A) Top-management should be completely uninvolved in this stage of the new product development process.
B) Only ideas with a high potential for economic success should be considered during idea generation.
C) Ideas are the raw materials for product development, and the whole planning process depends on the quality of idea generation.
D) All new product ideas have an equal opportunity for success if the organization will invest enough resources in them.

Question 50

To facilitate top-management support, it is essential that new product development be focused on

A) designing new selling concepts.
B) facilitating rapid R&D.
C) gathering vast channel sources.
D) meeting market needs.

Question 51

Creswell Farms produces and sells clover honey. Its owners, Jack Creswell and Bonnie Creswell, felt they needed to expand the company's product line. After a brainstorming session, they came up with about 40 different product concepts including honey-based salad dressing, honey-flavored sandwich spreads, honey-coated peanuts, a fruit dip, a honey-flavored yogurt, and a ham glaze. Creswells are engaged in which stage of the new product development process?

A) Project planning
B) Test marketing
C) Idea generation
D) Product development

Question 52

New product ideas may be eliminated because of all of the following reasons, except

A) they are outside the field of the firm's interest.
B) the firm does not have the necessary resources required to produce the product at a profit.
C) the technology available is not sufficient to produce the product profitably.
D) the organization relied out-rotation for generating the ideas.

Question 53

Which of the following observations about new product policy is true?

A) New product policy should specify a minimum level or floor of profits.
B) There should be no specific time period for the product to become operational as this disturbs the new-product development process.
C) When developing a new product policy, a company should focus more on consumer satisfaction levels than on the product's economic contribution.
D) A short-term focus is necessary for an effective new product policy in order to gain competitive advantage.

Question 54

Which of the following is not a category of risk that the organization has to consider in the idea screening phase prior to reaching a decision?

A) Strategic risk
B) Market risk
C) Credit risk
D) Internal risk

Question 55

In which stage of the new product development process is a development budget established and some preliminary marketing and technical research undertaken?

A) Idea generation
B) Project planning
C) Test marketing
D) Commercialization

Question 56

On earnings associated with new products it is critical that

A) management has a pressure of steady improvement in earnings per share.
B) firms do not become solely preoccupied with a short-term focus.
C) the emphasis should be on short-term profits.
D) the firm realize that profitability will not be supported by the stock market in terms of higher share prices over the long term.

Question 57

What does out-rotation involve?

A) Gathering and disseminating information gained from research conducted about competition.
B) Determining the growth direction through the increase in market share for present product markets.
C) Placing employees in positions that require direct contacts with customers, competitors, and other key outside groups.
D) The risk of not matching the role or purpose of a new product with a specific strategic need or issue of the organization.

Question 58

Which of the following organizational growth strategies deal with present products in present markets?

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

Question 59

What does strategic risk involve?

A) The risk that a new product won't be developed within the desired time and budget.
B) The risk of not matching the role or purpose of a new product with a specific strategic need or issue of the organization.
C) The risk that a new product won't meet a market need in a value-added, differentiated way.
D) The risk of environmental influences such as natural disasters that inhibit the functioning of the firm.

Question 60

In which stage of the new product development process are you most likely to find "out-rotation" being used?

A) Idea screening
B) Test marketing
C) Project planning
D) Idea generation

Question 61

Establishing progress goals that facilitate the "proceed" or "do not proceed" decisions regarding continuation of projects is an integral part of managing

A) strategic risk.
B) competitive risk.
C) internal risk.
D) market risk.

Question 62

Rita is a successful entrepreneur who owns a small coffee shop. She serves her customers her own homemade brew of coffee. Recently she developed a new tasty brew and gave free samples of this to her regular customers. She then got them to give their feedback. This is an example of

A) brand positioning.
B) test marketing.
C) commercialization.
D) product feature.

Question 63

The first ever reality television show in the U.S. proved that it could draw and sustain a large audience over a certain period of time. Other networks created similar shows. The viewers found that many of the new shows were largely copycats and did not think it was worth the effort to watch them. This illustrates the _____ risk that was not considered during the idea screening phase.

A) functional
B) hierarchical
C) market
D) internal

Question 64

A firm may discount a new product idea because

A) the source of the idea.
B) first impressions.
C) lack of time.
D) lack of profitability.

Question 65

Product testing, product endorsement, accidental discovery are all associated with which source of new product ideas?

A) Customers
B) Research and engineering
C) Distribution channels
D) Business and management

Question 66

In this approach for creating and managing the project teams, groups in different areas of the company simultaneously work on the project.

A) Iceberg
B) Rugby
C) Idea equity
D) Tag team

Question 67

Internal risk is the risk

A) that a new product won't be developed within the desired time and budget.
B) of not matching the role or purpose of a new product with a specific strategic need or issue of the organization.
C) of not having the resources or the technology to produce the product at a profit.
D) of price change due to the unique circumstances of a specific security, as opposed to the overall market.

Question 68

During the product development stage of the new product development process, a development report is prepared for management. This report spells out in detail all of the following except

A) the new products estimated release time.
B) how the product supports the company's organizational mission.
C) production facilities design.
D) results of the studies by the engineering department.

Question 69

Define a strategic alliance.

A) Members from many different departments coming together to jointly establish new product development goals and priorities.
B) A relationship between an organization and it employees.
C) A long-term partnership between two organizations designed to accomplish the strategic goals of both parties.
D) A relationship between a business and the community in which it is headquartered.

Question 70

Some ideas for new television shows appear to be certain successes because of story-lines and/or actors performing in them. However, such television shows typically have a budget that may be exceeded by a show set in more exotic locations around the world or by the increased salary demands of its stars. This cost overrun would be an example of a (n) _____ risk.

A) functional
B) hierarchical
C) market
D) internal

Question 71

Aerospace Technologies, Australia, had an idea for a new airplane rudder. When it could not gain access to the resources it needed to develop the new product, it entered into a long-term partnership with Boeing. Today Boeing uses this rudder on its 777 commercial passenger jet. The relationship between Aerospace and Boeing is an example of a(n)

A) merger.
B) budget plan.
C) acquisition.
D) strategic alliance.

Question 72

Identify the roles of an inventor in the new product development process.

A) Spokesperson boosts productivity and increases output.
B) Basement inventor, judge and pusher.
C) Mentor, integrator and translator.
D) Creative scientist, basement inventor and idea source.

Question 73

Potential benefits to be gained from alliances include all of the following, except

A) increased access to technology, funding, and information.
B) a guarantee that the product will meet a market need in a value-added, differentiated way.
C) market expansion and greater penetration of current markets.
D) de-escalated competitive rivalries.

Question 74

Various alternatives exist for creating and managing cross-functional product development teams. Two of the better-known methods are the establishment of skunkworks and

A) rugby approach.
B) the iceberg method.
C) idea equity.
D) the tag team approach.

Question 75

The 78^th McDonald's outlets in Hawaii introduced a breakfast meal that consists of egg, rice and spam. McDonald's management decides to serve spam for breakfast through the end of July and base its decision to include it in the regular menu consisting of rice, Portuguese sausage, and saimin, based on its popularity. This best illustrates

A) product development.
B) test marketing.
C) sales promotion.
D) direct marketing.

Question 76

Best City Co. opened Mobile Phone-only stores at nine locations in Manhattan to gauge consumer's reactions to them. These stores, called Best City Mobile, carried more than 80 cell phones from big manufacturers. Shoppers here also had the option to choose from seven mobile phone service carriers. Based on positive consumer reaction and the success of these stores, Best City opened stores nation wide. This is an example of

A) product development.
B) test marketing.
C) project planning.
D) idea screening.

Question 77

Customers can be used as a source for new product ideas. These ideas would come from all of the following sources except

A) customer requests.
B) customer complaints.
C) industry movements.
D) focus groups.

Question 78

Consultants, academic journals, and periodicals are _____ sources of new product ideas.

A) competing
B) internal
C) research
D) external

Question 79

Which of the following is an internal source of new product ideas?

A) Academic journals
B) Management
C) Consultants
D) Focus groups

Question 80

Identify the two methods commonly used for creating and managing project teams.

A) Idea screening and observational research.
B) Test marketing and marketing applications.
C) Skunkworks and rugby approach.
D) Idea generation and consumer research.