Deck 8: New Products and Innovation

Question 1

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

Answer 1

True

Question 2

Marketing management is involved throughout the new product development process.

Answer 2

True

Question 3

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

Answer 3

True

Question 4

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

Question 5

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

Question 6

Rarely is customer feedback surprising when developing a new product.

Question 7

Bottom-up is sometimes also called "inside out."

Question 8

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

Question 9

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

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' trade-offs.Conny is correct.

Question 11

Zena's company is seeking to improve its current products.Ultimately, the company would do this only to attract new customers.

Question 12

It's been shown that new products increase a company's long-term financial performance and value.

Question 13

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

Question 14

Some companies take a nearly exclusively top-down approach and don't start marketing until the final launch phase.

Question 15

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

Question 16

Change in the market is always occurring.

Question 17

Companies approach the design of new products in the same way.

Question 18

The new product development process is linear.

Question 19

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 20

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

Question 21

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

Question 22

The product life cycle is a popular metaphor in marketing to describe the development of a product before it is introduced to the marketplace.

Question 23

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

Question 24

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

Question 25

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

Question 26

Sales are low and slow in the early phases because distribution is limited.

Question 27

Profit increases through the introduction, growth, and maturity phases of the product life cycle.Profit starts to level off and drop in the decline phase.

Question 28

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 29

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

Question 30

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

Question 31

Area test markets are used frequently because they are inexpensive and easy to set up.

Question 32

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

Question 33

Consumer acceptance tends to be higher when a new product is not overly complex or has a user-friendly interface.

Question 34

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 35

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 36

The FDA is currently under investigation for requiring too much testing, which moves drugs to market too slowly.

Question 37

The first to market is often the first to fail.

Question 38

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

Question 39

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

Question 40

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

Question 41

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 42

Which of the following stages occurs last?

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

Question 43

The opposite of a top-down approach is usually called

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

Question 44

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

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

Question 45

A(n) __________ 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 46

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 47

Because customers typically overstate their purchase intention, research has suggested ratcheting down the purchase intention estimate by a factor of

A) ¼.
B) ¾.
C) ½.
D) ⅛.

Question 48

The test marketing was successful.Now, Jules needs to estimate the sales potential of the new all-natural cleaning product her company developed.Which of the following equations should she use?

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

Question 49

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 50

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 51

When testing the best color for a new detergent, SoapSuds Inc.set up a test market that uses a virtual shopping experience to give customers a chance to buy the product (or not), which is called a(n) __________ test market.

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

Question 52

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 53

__________ are 40-50 small metropolitan areas throughout the United States that have characteristics, such as demographics and socioeconomic status, that are representative of the country as a whole.

A) Simulated test markets
B) Area test markets
C) Metropolitan test markets
D) Country test markets

Question 54

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 55

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 56

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 57

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 58

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 59

Using customer data from test marketing to predict the product's likely success is known as

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

Question 60

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 61

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

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

Question 62

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

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

Question 63

Regarding fast-growing 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 64

In which phase of the product life cycle is customer awareness getting stronger and some buzz occurring in the marketplace?

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

Question 65

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 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 in-store service, better store ambience, etc.What strategy is he using?

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

Question 67

What growth strategy combines new markets and new products?

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

Question 68

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 69

Simone started the meeting at BCD Co.by focusing the attendees on the company's current status."We have a good product mix," she stated."To continue to grow, we need to target more segments." Which strategic path is Simone pursuing?

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

Question 70

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

A) older.
B) less educated.
C) more wealthy.
D) more concerned about the environment.

Question 71

The __________ are more risk averse and waiting to hear that people who have already adopted the product have had favorable experiences with the new product.

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

Question 72

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 73

What sub population is growing faster than any other in the United States?

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

Question 74

ABC Co.wants to grow through innovation.It has modified several of its products and developed two new products for its customers.Which strategy is ABC Co.using?

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

Question 75

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 76

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 77

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 78

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 79

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 80

Which growth strategy is the toughest?

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