Deck 7: New Product Planning and Development

Question 1

Dexo Inc. plans to launch a new version of its beverage, Lime n' Lemon. The new variant will be similar to the current Lime n' Lemon in terms of taste and packaging, but it will be fortified with vitamins and minerals. The company decides to market the new drink as Lime n' Lemon Extreme. Which of the following new product categories does this new beverage fall into?

A) New-to-the-world products
B) New-to-the-firm products
C) Improvements and revisions of existing products
D) Product repositionings

Answer 1

C

Question 2

With regard to new product 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 monies spent on the original product to successfully develop a new product.
C) ensures quick development of other products in different product classes from the same brand.
D) ensures low levels of interaction between functional areas of an organization.

Answer 2

A

Question 3

Light Eats is a buffet-style salad bar with locations in the South, West, and Midwest United States. It serves a variety of salads, soups, and fresh farm products for the health conscious. Recently, it has introduced a new unit called Frozen Fruits, which serves ice creams and sorbets made from fresh fruits and vegetables. Which of the following new product categories does the Frozen Fruits unit fall into?

A) New-to-the-world products
B) Revisions of existing products
C) Product repositionings
D) Additions to existing product lines

Answer 3

D

Question 4

Which of the following best corresponds to repositioning of products?

A) Products that are retargeted for new use
B) Products that are line extensions
C) Current products that are recovered from sales dips
D) Products that are novel inventions

Question 5

Classics Corp. has been focusing their production efforts entirely on creating intricate artifacts and other collectibles. However, in light of stiff competition and demand, they decide to expand their product class by introducing their first line of dinnerware. In which of the following new product categories would the dinnerware fall?

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

Question 6

Wallflower Inc. sells cards, gift-wrapping materials, and collectibles. To boost sales of its existing products, Wallflower added fresh cut flower arrangements as part of its product offering. In which of the new product categories would the floral arrangements fall?

A) New-to-the-world products
B) New-to-the-firm products
C) Product repositionings
D) Product improvements

Question 7

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 8

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) failure on the part of the firm to stick close to its core competencies.
C) excessive competition from inappropriate quarters.
D) decline in the sales of old products compared to the sales of new products.

Question 9

Fun Time Games Inc. develops and markets mobile entertainment software. The company's application portfolio includes single and multiplayer games, ring tones, and other entertainment content. Its most popular mobile game is the Lightz200. Recently, it released a new, upgraded version compatible with all major mobile handsets called the Lightz201 series. Which of the following product categories would best describe the Lightz201 series?

A) New-to-the-world products
B) Additions to existing product lines
C) Product repositionings
D) Improvements and revisions of existing products

Question 10

Products that are inventions and create a whole new market are called _____.

A) new-to-the-world products
B) new-to-the-firm products
C) additions to existing product lines
D) product improvements

Question 11

_____ are products that extend current product lines to current markets.

A) New-to-the-world products
B) New-to-the-firm products
C) Additions to existing product lines
D) Improvements and revisions of existing products

Question 12

In order to compete with its counterpart, Fine Snacks, Kasey's Pretzels Corp. introduced honey-mustard pretzels to its product line. This is an example of _____.

A) new-to-the-world products
B) new-to-the-firm products
C) additions to existing product lines
D) product repositioning

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

For the last decade, Value Foods has sold frozen vegetables in various types of sauces. In 2002, the company changed its packaging and began offering frozen vegetables in resealable 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-to-the-firm products
C) Additions to existing product lines
D) Improvements and revisions of existing products

Question 15

In new product planning and development, _____ costs refer not only to 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 16

Xapple Inc., a manufacturer of bottled lemonade and other beverages, has released a new, zero-calorie drink called Diet Lemonade. This is an example of _____.

A) new-to-the-world products
B) new-to-the-firm products
C) additions to existing product lines
D) product repositionings

Question 17

To its line of canned tomato products, Value Foods introduces cans of readymade diced-and-spiced tomatoes. In which of the following new product categories would diced-and-spiced canned tomatoes fall?

A) New-to-the-world products
B) New-to-the-firm products
C) Additions to existing product lines
D) Improvements to industry product classes

Question 18

HealthPlus Corp., a popular manufacturer of processed food products, recently introduced specialty infant food under the brand name of Nutrababy. Which of the following new product categories does this product fall into?

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

Question 19

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-to-the-firm products
C) additions to existing product lines
D) product improvements

Question 20

Stacy, a marketing manager at a beverage manufacturing firm, conducts a market research to analyze the sales dip of the company's product, Zeal, in the last quarter. Through research, she understands that there is an immediate customer demand requiring the use of organic ingredients to its cola, Zeal. She discussed with the research and development team and decides to enhance Zeal with the introduction of organic ingredients to it. This new product would fall into the category of _____.

A) new-to-the-world products
B) new-to-the-firm products
C) additions to existing product lines
D) improvements and revisions of existing products

Question 21

MNM Foods Inc. manufactures jelly made out of gelatin in various fruit flavors. However, the sale of its current line of flavored jelly has significantly fallen. To recover losses, the company conducts market research and identifies that a significant amount of health benefits can be attributed to the consumption of the food jelly. The firm incorporated new promotion strategies so that consumers would retry the product owing to its projected health benefits. This is an example of:

A) additions to existing product lines.
B) improvements and revisions of existing products.
C) product repositionings.
D) new-to-the-firm products.

Question 22

Which of the following should be specified by the policy-making criteria on new products?

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 23

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

A) firm's management body 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 24

M's Pizzas decides to explore the service industry and therefore signs a partnership with the Silverline Chain of Hotels to have its brand of specialty pizzas offered on the hotel's room-service menu. In this scenario, which of the following growth strategies is M's Pizzas using?

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

Question 25

Which of the following growth strategies aims at either increasing 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 26

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

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

Question 27

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 28

A popular television channel ropes in a celebrity to make a guest appearance in one of the episodes of a popular talk show. The intention of this initiative is to attract new viewers toward watching the talk show. The talk show's producer believes that it also helps in increasing the market share of the network that airs the show. This scenario is an example of _____ strategy.

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

Question 29

Which of the following 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 30

Which of the following strategies is used when an automobile manufacturing company introduces a new car 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

Question 31

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

A) A microprocessor manufacturing firm introduces a new microprocessor chip to replace the older, slower version and markets it in its established markets.
B) McDuffy's fast food restaurant opens its first overseas restaurant, offering its original menu of pizzas and pastas.
C) A carpet manufacturer operating in the U.S. introduces in India a new organic stain remover 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 32

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

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

Question 33

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

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

Question 34

An automobile manufacturing firm consolidates all its suppliers to produce a new automobile that is a minor variant from its older version in terms of design and performance. The intention of the firm in doing so is to provide loyal customers automobiles with similar performance but at a lower price. According to authors Crawford and DiBenedetto, this new product falls into the category of _____.

A) cost reductions
B) price redemptions
C) repositionings
D) price exemptions

Question 35

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 36

Devon Inc. first marketed Silky Soft as a brand of body lotion to compete with other similar body lotions in the market. Owing to mixed responses to the product, Devon promotes its Silky Soft lotion as an insect repellant that is also good for the skin. Into which of the new product categories does Silky Soft lotion fall?

A) Revisions of existing products
B) New-to-the-firm products
C) Additions to existing product lines
D) Product repositionings

Question 37

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

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

Question 38

A new magazine, Valence, was introduced to the market as a raw and bold "underground nightlife magazine." The magazine was not received well by the audience and sales hit an all-time low. Since sales were low, the publisher of the magazine relaunched it as a fashion and lifestyle magazine for 20-something males. In which of the following new product categories would this product fall?

A) Cross-functional strategizing
B) Product modifications
C) Product improvements
D) Product repositionings

Question 39

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

A) Policy-making criteria on new products should specify a working definition of the profit concept that is acceptable to top management.
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 on consumer satisfaction levels rather than the product's economic contribution.
D) A short-term focus is sufficient for an effective new product policy in order to gain competitive advantage.

Question 40

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 41

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 42

Members of a business development team are involved in the ongoing process of creating a new installation hardware device, owing to widespread consumer demand. They are worried that by the time the finished product hits the market, customers' needs might change. Consequently, the new device, unable to satisfy customers' current needs, would become a failure. Which of the following risks does this best exemplify?

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

Question 43

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 are not satisfying
C) Screening ideas from unusual and unprecedented sources
D) Disseminating information gained from customers and other contacts

Question 44

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

A) Most new product ideas were heard and evaluated and therefore not considered
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 profitably
D) Shortage of time results in new ideas being eliminated without proper analysis

Question 45

The producers of a new television show are certain that their new show will be a success due to its gripping storyline and the star-studded cast. However, they are concerned about exceeding their production budget due to shoots that are set in exotic locations and the high pay that some of the stars are demanding. This cost overrun would be an example of a(n) _____ risk.

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

Question 46

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 47

Creswell Farms produces and sells clover honey. Its owners identify the need to expand the company's product line. A brainstorming session results in 40 different product suggestions, some of which include honey-based salad dressing, honey-flavored sandwich spreads, honey-coated peanuts, a fruit dip, a honey-flavored yogurt, and a ham glaze. Which of the following stages of the new product development process does this indicate?

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

Question 48

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.
B) Lack of technology and resources is often not a useful reason to discount new product ideas.
C) A firm must consider three categories of risk and risk tolerance in the idea screening phase prior to reaching a decision.
D) Unlike the idea generation stage, the idea screening stage is not involved in expanding viable ideas into full product concepts.

Question 49

Establishing progress goals that facilitate the go or no-go decisions regarding continuation of projects is an integral part of managing the _____ risk of new product development.

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

Question 50

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 the 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 the organization

Question 51

In an ideal selling situation, 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 52

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) Avoiding radical new product ideas
C) De-emphasizing funneling of ideas for screening
D) Facilitating top-management support

Question 53

Identifying huge consumer demand, Jumpstart Inc., an automobile manufacturer, pioneered the production of battery-operated cars. The product met with initial success in the market leading Jumpstart Inc. to increase production in huge volumes. However, over a period of time, consumer needs evolved and consumers sought more sophisticated technology-driven cars, and the sales of these cars dropped heavily. This illustrates the _____ risk that was not considered during the idea screening phase.

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

Question 54

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 idea generation.
D) It is the most expensive stage of the new product development process in terms of investments in funds, time, and personnel.

Question 55

When evaluating risks in the idea screening phase, if a firm is found to lack the necessary resources or expertise, it should:

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 56

Joe and his team are working to develop a new product. They have been given a fixed budget and a rough estimate of the time left until the product must hit the market. The team's key concern is that the product would be too costly and time-consuming to produce. Which of the following kinds 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 57

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 while customers' needs have changed.
C) A new product does not take off as it is not in pace with the technological changes that have evolved.
D) A new product fails to deliver as it has not been developed within a desired time and budget.

Question 58

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 that is totally unnecessary at this stage.
C) to avoid ideas coming from unusual sources that have a high level of escalation of commitment.
D) to ensure that all new product ideas available to the company at least have a chance to be heard and evaluated.

Question 59

Which of the following stages of 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 60

_____ 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 61

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 in order to implement the organization's strategic plan.
C) It is a team consisting of members from different functional areas of the 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 62

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 63

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 will lead to one of the organizations in the alliance gaining a competitive advantage over the other.
C) It will lead to market expansion and greater penetration of current markets.
D) It typically reduces the market risk of introducing a new product.

Question 64

In the idea screening phase of a new product development process, a firm finds that it lacks the resources and expertise necessary to produce the 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 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 the 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

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 67

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 flavor of tasty brew 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 68

Marked Technologies Inc. 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 Z-High Airlines. Today Z-High Airlines uses this rudder on its commercial passenger jets. 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 69

After spending years on experimentation in developing a new MP3 player, Musique Inc. has finally launched its new product in the market. The company has assigned its best marketing managers to handle the launch. It has also employed an extensive marketing campaign with advertisements on television, newspapers, and billboards. In which of the following stages of the new product development process is Musique currently?

A) Concept testing
B) Product development
C) Test marketing
D) Commercialization

Question 70

Identify the stage of new product development process where emphasis is given to following up on elements that include bugs in design, production costs, quality control, and inventory requirements.

A) Commercialization
B) Test marketing
C) Personal selling
D) Direct marketing

Question 71

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

Question 72

A project team that comprises of members from different departments who work together toward jointly establishing new product development goals and priorities is known as a _____ team.

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

Question 73

Anchor Investments Inc. is an investment bank that 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. This alternative approach to project management is called _____.

A) crashstakes
B) skunkworks
C) relay approach
D) rugby approach

Question 74

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 75

_____ is a method of creating and managing the project teams, where groups in different areas of the company simultaneously work on the project.

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

Question 76

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

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

Question 77

Best City Corp. opened cell phone stores at nine locations in Manhattan to gauge consumer's reactions to them. These stores, called Best City Mobile, carried more than 80 cell phone brands from big manufacturers. Shoppers had the option to choose from seven cell phone carriers. Based on positive consumer 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 78

The product launching step where 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 79

Which of the following is a key component that contributes to the success of new product development efforts?

A) Assigning the task of new product development exclusively to top management
B) Limiting the budget in order to reduce losses in case the product fails
C) Creating a cross-functional team early in the development process
D) Assigning a group of marketers the task of developing new products

Question 80

Fred is a marketing manager 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 Fred's project team following?

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