Deck 7: New Product Planning and Development

Question 1

M's Pizza,a fast food chain,decides to explore the hospitality industry and signs a partnership with the Silverline Chain of Hotels.This partnership will ensure that M's Pizza's specialty pizzas are included in the hotel's room-service menu.In this scenario,which of the following growth strategies is M's Pizza using?

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

Answer 1

A

Question 2

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

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

Answer 2

A

Question 3

Which of the following strategies is used when an automobile manufacturing company introduces a new model to replace an existing one and advertises it in its present market?

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

Answer 3

B

Question 4

In the context of new product development,the inability of a firm to satisfy customer needs can be attributed to:

A)upfront intelligence efforts that prevent further development.
B)a failure on the part of the firm to stick close to its core competencies.
C)excessive competition from inappropriate quarters.
D)a decline in the sales of old products compared to the sales of new products.

Question 5

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 6

HeadStart,an automobile manufacturer,realizes that the sales of its RockStart SUV has fallen over the last few years.Consequently,HeadStart introduces a revamped version of the SUV with additional features,such as the latest GPS technology device and padded dashboards.The company stops the production of its old model to invest all its resources into marketing this new model in its present market.In this scenario,HeadStart is most likely employing the strategy of _____.

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

Question 7

The _____ indicates the direction in which an organization is moving with respect to its current products and markets.

A)growth vector matrix
B)line extension graph
C)market segmentation index
D)market diversification grid

Question 8

In the context of new product planning and development,_____ costs refer not only to the alternative uses of funds spent on product failures but also to the time spent in unprofitable product development.

A)sunk
B)direct
C)acquisition
D)opportunity

Question 9

Which of the following organizational growth strategies seeks to find new customers for existing products?

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

Question 10

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

A)A microprocessor manufacturing firm introduces a new microprocessor chip to replace an older,slower version and markets it in its established markets.
B)McDuffy's fast food restaurant opens its first overseas restaurant that offers its original menu of pizzas and pastas.
C)A carpet manufacturer operating in the United States introduces a new organic stain remover in India that is designed to remove even the worst spills.
D)A beverage manufacturer decides to enter the retail industry by introducing a new range of ethnic wear by capitalizing on the corporate image it has acquired as a beverage manufacturer.

Question 11

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

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

Question 12

The primary reason found for new product failure is an inability on the part of the selling company to match its offerings to the _____.

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

Question 13

A popular television channel ropes in a celebrity to make a guest appearance in an episode of its popular talk show.The show's producer believes that it will attract new viewers for the talk show and also help in increasing the market share of the channel.This scenario is an example of the _____ strategy.

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

Question 14

Which of the following strategies refers to creating new products to replace existing ones?

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

Question 15

In the context of new product planning and development,the success of a new product:

A)does not guarantee that additional low-cost brand extensions will be successful.
B)does not allow a brand to leverage the research and monies spent on the original product to successfully develop a new product.
C)ensures a quick development of other products in different product classes from the same brand.
D)ensures low levels of interaction between the functional areas of an organization.

Question 16

Wardetox Inc. ,a wardrobe manufacturing company,has a huge clientele base in the southern region of a country named Berlinia.Based on excellent customer feedback,it wants to expand its base to the other regions of the country.In this scenario,Wardetox is most likely using the _____ growth strategy.

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

Question 17

Which of the following statements is true of new product planning and development?

A)Most new products that are introduced in the market are successful.
B)New product development and introduction is a relatively cheap process as it does not involve opportunity costs.
C)Companies have relatively similar patterns of effectiveness of their new product programs.
D)New product sales grow far more rapidly than sales of current products.

Question 18

Which of the following statements is true of diversification?

A)It involves the replacement of a defective product with a new,enhanced version.
B)It usually involves an increase in market share of present products in present markets.
C)It often leads an organization into new businesses.
D)It helps ensure that an organization replaces defective products.

Question 19

_____ refers to developing new products and cultivating new markets.

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

Question 20

Which of the following statements is true of an organization pursuing the market penetration strategy?

A)It focuses on cultivating new customers.
B)It seeks to establish a foothold in new markets.
C)It hopes to capitalize on existing markets.
D)It establishes new product development goals and priorities.

Question 21

Firms that have the highest rates of new product success (82.5 percent versus 52.9 percent for other firms):

A)are less likely to rely on portfolio analysis.
B)are less likely to use social media and other communities to gather information.
C)are more likely to have global market and operations strategies.
D)are more likely to employ informal and unstructured processes for concept selection.

Question 22

Which of the following is true of the idea screening phase of the new product development process?

A)New product ideas are not eliminated merely because they are outside the fields of a firm's interest in this stage.
B)Lack of technology and resources is often not a useful reason to discount new product ideas in this stage.
C)A firm needs to consider three categories of risk and its associated risk tolerance in this stage prior to reaching a decision.
D)Unlike the idea generation stage,this stage is not involved in expanding viable ideas into full product concepts.

Question 23

Creswell Farms produces and sells clover honey and wants to expand its product line.A brainstorming session results in 40 different product suggestions,which include honey-based salad dressings,honey-flavored sandwich spreads,honey-coated peanuts,honey-flavored yogurts,and a ham glaze.In this scenario,Creswell Farms is in the _____ stage of the new product development process.

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

Question 24

Members of a business development team work together to create a new hardware installation device.The team is worried that by the time the finished product hits the market,customers' needs might change and the device would become a failure.Which of the following risks does this scenario best exemplify?

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

Question 25

Which of the following is a typical reason for eliminating new product ideas during the idea screening stage?

A)Most new product ideas have already been heard and evaluated.
B)Firms lack the expertise to efficiently assess the worth of the new ideas.
C)The technology available is not sufficient to produce the product at a profit.
D)Shortage of time results in new ideas being eliminated without proper analysis.

Question 26

Which of the following is most likely to help the management of an organization in avoiding market risks?

A)It must be willing to dedicate the necessary resources and time to pursue critical projects.
B)It must establish progress goals so that "proceed" or "do not proceed" decisions can be reached.
C)It must be willing and able to shift its new product efforts to keep pace with change.
D)It must decide the level of commitment it will extend in terms of time and budgetary expenditures.

Question 27

According to the growth vector matrix,which of the following products usually requires a firm to make significant investments in research and is likely to require major changes in its organizational structure?

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

Question 28

Which of the following growth strategies aims at either increasing the frequency of consumption or increasing the number of customers using a 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 29

Which of the following does a strategic risk involve?

A)The risk that a new product will not be developed within the desired time and budget
B)The risk of not matching the role of a new product with a specific strategic need of an organization
C)The risk that a new product will not meet a market need in a strategic,value-added,differentiated way
D)The risk of environmental influences that inhibit the strategic functioning of an organization

Question 30

On earnings associated with new products of a firm,it is critical that the:

A)firm's management has the pressure of steady improvement in earnings per share.
B)firm does not become solely preoccupied with a short-term focus.
C)firm does not focus on the ultimate economic contribution.
D)firm realizes that profitability will not be supported by the stock market in terms of higher share prices over the long term.

Question 31

Which of the following is critical to providing an atmosphere that stimulates new product activity at the idea generation stage of the new product development process?

A)Filtering of ideas from unusual sources
B)Avoidance of radical product ideas
C)De-emphasizing funneling of ideas for screening
D)Top-management support

Question 32

Which of the following stages of the new product development process involves expanding viable ideas into full product concepts?

A)Project planning
B)Idea generation
C)Product development
D)Idea screening

Question 33

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 local markets.
D)shelved for future use.

Question 34

Which of the following is an example of a technology push activity?

A)Conducting basic and applied research for new ideas
B)Identifying market needs that current products fail to satisfy
C)Screening ideas from unusual and unprecedented sources
D)Disseminating information gained from customers and other contacts

Question 35

Which of the following is the least costly stage in the new product development process?

A)Product development
B)Commercialization
C)Test marketing
D)Idea generation

Question 36

Policy-making criteria on new products should specify:

A)a maximum level of profits that can be expected.
B)the exact market share of a new product.
C)the exact level of expected profits.
D)the availability and cost of capital to develop a new product.

Question 37

Which of the following is true of the idea generation stage of the new product development process?

A)The role of the top management of an organization is insignificant at this stage of the new product development process.
B)New product ideas at this stage of the new product development process have a low mortality rate.
C)Ideas are the raw materials for product development,and the whole planning process depends on the quality of the idea generation and screening process.
D)It is the most expensive stage of the new product development process in terms of investments in funds,time,and personnel.

Question 38

Which of the following is essential to the generation of new product ideas?

A)Technology penetration strategies
B)Technology pull research activities
C)Market push research strategies
D)Technology push research activities

Question 39

A problem during the idea generation stage of the new product development process within an organization is:

A)the heavy costs involved in terms of investment in funds,time,and personnel.
B)the interference of the top management of the organization.
C)to avoid ideas coming from unusual sources that are likely to have a high level of escalation of commitment.
D)to ensure that all new product ideas available to the organization at least have a chance to be heard and evaluated.

Question 40

Which of the following is an example of a strategic risk?

A)A new product fails as it does not meet a specific need or purpose of an organization.
B)A new product is unsuccessful owing to its inability to meet market needs because customers' needs have changed.
C)A new product does not take off as it is not in pace with the evolution of technology.
D)A new product fails to deliver as it has not been developed within a desired time and budget.

Question 41

In which of the following stages 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 42

_____ refers to a method used for creating and managing project teams whereby a project team can work in relative privacy away from the rest of an organization.

A)Skunkworks
B)Relay approach
C)Six sigma
D)Rugby approach

Question 43

Which of the following best describes a strategic alliance?

A)It is a long-term partnership between two organizations designed to accomplish the strategic goals of both parties.
B)It is a collaboration of two different departments within an organization to implement the organization's strategic plan.
C)It is a team consisting of members from different functional areas of an organization that work together to solve a strategic issue.
D)It is an alliance with experts outside an organization who are called in to help the organization generate new product ideas.

Question 44

_____ risk is the risk that a new product will not be developed within the desired time and budget.

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

Question 45

_____ is a method of creating and managing project teams that involves groups in different areas of an organization working simultaneously on a project.

A)Skunkworks
B)The rugby approach
C)Idea equity
D)Out-rotation

Question 46

When evaluating risks associated with a new product idea in the idea screening phase,a firm should _____ because of a lack of resources or expertise.

A)completely reject the new product idea
B)not act too hastily in discounting the new product idea
C)ignore the risks and commercialize the new product idea
D)not reconsider other alternatives

Question 47

In the idea screening phase of a new product development process,a firm finds that it lacks the resources and expertise necessary to produce a product.Which of the following is the best course of action for the firm?

A)It should consider the strategy of selling its existing products at lower prices.
B)It should stop wasting time,manpower,and funds on new product development.
C)It should quickly discount the new product idea.
D)It should consider forming joint or strategic alliances with other firms.

Question 48

Marked Technologies Inc.has an idea for a new airplane rudder.After extensive research,it realizes that it lacks the resources needed to develop the rudder and enters into a long-term partnership with Z-High Airlines.Z-High Airlines was on the lookout for a new rudder design to be used in its commercial passenger jets.In this scenario,the relationship between Marked Technologies and Z-High Airlines is an example of a(n)_____.

A)intrapreneurial venture
B)franchise
C)acquisition
D)strategic alliance

Question 49

In _____ teams,members from many different departments come together to jointly establish new product development goals and priorities and to develop new product development schedules.

A)intra-departmental
B)global virtual
C)task force
D)cross-functional

Question 50

A key component that contributes to the success of many companies' product development efforts relates to the emphasis placed on:

A)assigning the task of new product development exclusively to the top management
B)limiting the budget to reduce losses in case the product fails
C)creating cross-junctional teams early in the development process
D)assigning the task of developing new products to a group of marketers

Question 51

The producers of a new television show are certain that their new show will be a success due to its gripping storyline and star-studded cast.However,they are concerned about exceeding the production budget because of shooting in exotic locations and paying a high salary to the stars.In this scenario,the cost overrun is most likely an example of a(n)_____ risk.

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

Question 52

In the project planning stage of the new product development process,a project proposal _____.

A)is finally given to top management for a go or no-go decision
B)is used to produce a finished good that is submitted outside a company for customer approval
C)lists the eliminated ideas that failed to be profitable when marketed by a company
D)lists the three categories of risk and its associated risk tolerance

Question 53

Which of the following methods are 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

Question 54

In which of the following stages of the new product development process is the new product proposal evaluated and responsibility for a project assigned to a project team?

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

Question 55

Joe and his team have been given a fixed budget and a time frame for the development of a new product.The team's key concern is that the development is likely to overshoot the given budget and time frame.Which of the following categories of risk is likely to be faced by Joe and his team?

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

Question 56

Fred is a marketing consultant working in tandem with members from other functional areas that include engineering,production,and administrative staff.While evaluating a new product proposal,Fred and his team members from other functional areas work simultaneously toward reaching a conclusion.Which of the following methods is illustrated in this scenario?

A)Rugby approach
B)Out rotation
C)Skunkworks
D)Brainstorming

Question 57

Jumpstart Inc. ,an automobile manufacturer,are better-known as the pioneers in the production of battery-operated cars.These cars were a huge success in the initial years of their launch,and Jumpstart manufactured them in huge volumes.However,over a period of time,consumer needs evolved and consumers sought more sophisticated technology-driven cars,leading to a considerable dip in the sales of these cars.This scenario illustrates the _____ risk that was not considered during the idea screening phase.

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

Question 58

Anchor Investments Inc. ,an investment bank,acts as a financial advisory body to many independent asset owners.The bank acquires a high-stakes project that requires the exclusive involvement of senior project managers.They therefore work in relative privacy away from the rest of the organization.In this scenario,Anchor Investments is most likely using the _____ approach.

A)crash stakes
B)skunkworks
C)relay approach
D)rugby approach

Question 59

Which of the following is a potential benefit of forming a strategic alliance?

A)It primarily helps both firms in accomplishing their short-term operational goals.
B)It enables one of the organizations in the alliance to gain a competitive advantage over the other.
C)It leads to market expansion and greater penetration of current markets.
D)It typically reduces the market risk of introducing a new product.

Question 60

In _____ risk,progress goals must be established so that "proceed" or "do not proceed" decisions can be reached regarding continuation of projects.

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

Question 61

Best City Corp.opened stores at nine different locations in Manhattan.It wanted to gauge customers' reactions to 80 cell phone brands from popular manufacturers.Shoppers had the option to choose from seven different service providers.Based on positive customer reaction and the success of these stores,Best City Corp.opened stores nationwide.This is an example of _____.

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

Question 62

Which of the following is defined as the elapsed time between product definition and product availability?

A)Scalability
B)Time to market
C)Cycle time
D)Information provision

Question 63

Which of the following refers to a practical issue surrounding product safety?

A)A product that is safe to use will lower production cost and thus lead to higher profits for an organization.
B)When users get harmed by a product,they may stop buying the product or tell others about their experience.
C)When a user is harmed by misusing a product,the company that sold it can be sued.
D)A safe product has a lower internal risk during development and production.

Question 64

In the _____ stage of the new product development process,management goes outside the company and submits a product candidate for customer approval.

A)idea generation
B)test marketing
C)idea screening
D)project planning

Question 65

The primary goal of a test market is to:

A)evaluate and adjust the general marketing strategy to be used and the appropriate marketing mix.
B)place emphasis on the organizational structure and management talent needed to implement a marketing strategy.
C)evaluate the product plan from the standpoint of engineering,manufacturing,finance,and marketing.
D)increase frequency of consumption or increase the number of customers using the firm's product(s).

Question 66

In the _____ stage of the new product development process,emphasis is given to following up on elements such as bugs in design,production costs,quality control,and inventory requirements.

A)commercialization
B)test marketing
C)personal selling
D)direct marketing

Question 67

Musique Inc.decides to launch its new MP3 player in the market.The best marketing managers have been shortlisted to handle the launch,and an extensive marketing campaign with advertisements on television,newspapers,and billboards has also been planned.In this scenario,Musique is in the _____ stage of the new product development process.

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

Question 68

It is important to design a new product with both ease of use and aesthetic appeal because it:

A)lowers the cost of manufacturing the new product.
B)eliminates the strategic risk of developing the new product.
C)can clearly differentiate the new product from competitors.
D)can reduce the internal risk of developing the new product.

Question 69

Rita is a successful entrepreneur who owns a small coffee shop and serves her customers regular homemade coffee.She recently experimented with a new flavor and distributed free samples to her regular customers.She then sought their feedback on the new flavor.This is an example of _____.

A)brand positioning
B)test marketing
C)commercialization
D)brand retailing

Question 70

In the _____ stage of the new product development process,procedures and responsibility for evaluating the success of a new product by comparison with projections are finalized.

A)commercialization
B)idea screening
C)idea generation
D)test marketing

Question 71

The product launching step in which a firm commits to introducing a product into the marketplace is referred to as _____.

A)commercialization
B)test marketing
C)personal selling
D)direct marketing

Question 72

"Only 50 and not more" is the tagline ValueFood Inc.uses to market its latest range of snacks.All the snacks that are offered have a calorie count of 50 per serving as opposed to its competitor's high calorie-count snacks.In this case,ValueFood is marketing its product's _____.

A)packaging
B)pricing
C)feature
D)design

Question 73

Which of the following defines a product feature?

A)It refers to the design of a firm's production facilities.
B)It refers to a producer's unstated promise of delivering high product quality.
C)It refers to an assurance by a manufacturer that a product will perform properly.
D)It refers to a fact or particular specification about a product.

Question 74

Which of the following is an important marketing cause of new product failures after the products have been carefully screened,developed,and marketed?

A)Anticipated reactions from competitors
B)Competitive point of difference
C)Improper channels of distribution selected
D)Extensive use of advertisements to position brand differences

Question 75

Which of the following best describes guarantee?

A)It refers to the statement of what a selling company will do to compensate a buyer if a product is defective.
B)It refers to the measure used to check if products conform to established standards of safety.
C)It is an assurance that a product is as represented and will perform properly.
D)It is a promise by a customer to pay for goods and services in a timely manner.

Question 76

In an organization,which of the following will most likely result in a well-designed new product that pleases customers and is also economical?

A)Allowing the top management to create the design for the new product
B)Using a cross-functional team to develop its products
C)Using a skunkworks approach toward the end of the development process
D)Assigning the task of designing its products solely to marketers

Question 77

A producer's statement of what it will do to compensate buyers if the sold products are defective or do not work properly is known as a(n)_____.

A)surety
B)warranty
C)insurance
D)liability

Question 78

At which of the following stages of the new product development process has a new product idea been evaluated from the standpoint of engineering,manufacturing,finance,and marketing?

A)Idea generation
B)Product development
C)Idea screening
D)Project planning