Armstrong Mai12 Tif 08

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Marketing: An Introduction, 12e (Armstrong/Kotler)

Chapter 8 New Product Development and Product LifeC!cle "trategies

1) The new product development process usually starts with ________.

A) idea screening

B) idea generationC) concept development

D) concept testing

E) market strategy developmentAnswer B

Di!!iculty "oderate

Chapter #$ %

Course #$ Descri&e the steps o! the new product development process

%) 'hich o! the !ollowing statements is most likely true a&out the new product development

process(

A) The !irst step in developing a new product involves determining any &udgetary or distri&utionlimitations.

B) "ost !irms discourage employees !rom contri&uting new product ideas &ecause o! legalconcerns.

C) n most cases* concept testing is !ollowed &y concept development.

D) A product concept should &e developed !or each idea &e!ore it goes through idea screening.E) Customers* competitors* and suppliers are ma+or sources o! new product ideas.

Answer E

Di!!iculty "oderate

Chapter #$ %Course #$ Descri&e the steps o! the new product development process

,) 'hich o! the !ollowing is an internal source o! new product ideas !or a company(A) trade maga-ines

B) marketing research !irms

C) government agenciesD) competitors ads

E) intrapreneurial programs

Answer E

Di!!iculty EasyChapter #$ %


1

Copyright / %01 2earson Education* nc.



3) nternal sources o! new product ideas !or a company include its ________.

A) customers

B) distri&utorsC) suppliers

D) employees

E) competitorsAnswer D

Di!!iculty "oderate


) n which o! the !ollowing cases is crowdsourcing used !or new product development(A) A company creates a !orum where anyone can contri&ute new product ideas.

B) A company hires a marketing agency to generate new product ideas.

C) A company reviews the sales* costs* and pro!it pro+ections o! an e4isting product.D) A company depends on its 56D department to come up with new ideas.

E) A company partners with a design agency to create a !ew prototypes.

Answer ADi!!iculty "oderate

Chapter #$ %


AAC7B Analytic thinking

8) A companys e4ternal sources o! new product ideas include its ________.

A) managersB) salespeople

C) engineers

D) manu!acturing sta!! E) suppliers

Answer E

Di!!iculty "oderateChapter #$ %


%




9) :allton is a multinational communications and in!ormation technology corporation. ts

principal products are mo&ile telephones and ta&lets. t recently announced on its 'e& site that

customers can suggest ideas !or its upcoming product model. Contri&utors o! short;listed ideaswill &e ade<uately rewarded. n this case* :allton is using ________ to generate new product

ideas.

A) marketing strategy developmentB) crowdsourcing

C) concept development

D) &usiness analysisE) test marketing

Answer B

Di!!iculty "oderate



=) 'hich statement is most likely true a&out idea generation in the new product development process(

A) dea generation is most e!!ective when it occurs a!ter idea screening.B) "ost companies set a limit !or the num&er o! ideas generated to simpli!y the process.

C) ntrapreneurial programs ena&le customers to contri&ute to the idea generation process.

D) dea generation is usually !ollowed &y procedures that reduce the total num&er o! ideas.E) A company can either develop ideas through internal or e4ternal sources &ut not through &oth.

Answer D

Di!!iculty "oderate


>) ?uest nc. recently conducted a &rainstorming session that generated a large num&er o! ideas

!or adding new products and services. ?uest managers will most likely use ________ ne4t to

arrive at a realistic num&er o! ideas to adopt.A) crowdsourcing

B) idea screening

C) concept testing

D) concept developmentE) &usiness analysis

Answer B




,




10) 'hich o! the !ollowing steps o! the new product development process would most likely use

an 5;';' !ramework(

A) idea generationB) idea screening

C) concept testing

D) test marketingE) commerciali-ation

Answer B



11) A product concept is ________.A) the most promising product idea that develops at the &rainstorming stage

B) a detailed version o! a product idea stated in meaning!ul consumer terms

C) the way consumers perceive an actual or potential product

D) a detailed strategy to promote the launch o! a new productE) a product idea that is generated through crowdsourcing

Answer BDi!!iculty "oderate

Chapter #$ %


1%) A ________ is the way consumers perceive an actual or potential product.

A) product audit

B) product !eatureC) product image

D) product !ramework

E) product conceptAnswer C

Di!!iculty Easy


1,) The stage in which a product concept is presented to groups o! target consumers physicallyor sym&olically is re!erred to as ________.

A) concept testing

B) concept developmentC) test marketing

D) marketing strategy development

E) crowdsourcingAnswer A

Di!!iculty "oderate

Chapter #$ %


3




13) n a se<uential new product development process* concept testing is most likely to &e

!ollowed &y ________.

A) idea screeningB) marketing strategy development

C) &usiness analysis

D) product developmentE) test marketing

Answer B



1) The !irst part o! a marketing strategy statement descri&es the ________ o! a new product.A) planned price

B) marketing &udget

C) marketing mi4 strategy

D) target marketE) planned long;run sales

Answer DDi!!iculty "oderate

Chapter #$ %


18) The second part o! a marketing strategy statement descri&es the ________ o! a new product.

A) marketing mi4 strategy

B) pro!it goalsC) planned price

D) target market

E) planned value propositionAnswer C

Di!!iculty "oderate


19) The third part o! a marketing strategy statement descri&es the ________ o! a new product.A) pro!it goals

B) distri&ution

C) marketing &udgetD) planned value proposition

E) target market


Chapter #$ %





1=) ________ involves a review o! the sales* costs* and pro!it pro+ections !or a new product to

!ind out whether they satis!y a companys o&+ectives.

A) @endor analysisB) 2ort!olio analysis

C) Business analysis

D) 7'$T analysisE) Concept analysis

Answer C



1>) ollingsworth is a retail company that is planning to release a new line o! lu4ury personalcare products. ts managers are now reviewing the sales history o! similar products and

conducting marketing surveys to estimate minimum and ma4imum sales !or the product. n

which o! the !ollowing stages o! the new product development process is the product(

A) test marketingB) idea screening

C) &usiness analysisD) marketing strategy development

E) concept testing

Answer CDi!!iculty "oderate

Chapter #$ %



%0) n a se<uential new product development process* which o! the !ollowing is true o! the

product development step(A) 2roduct development is usually !ollowed &y a &usiness analysis o! the product.

B) 2roduct development involves introducing a product into realistic market settings.

C) 2roduct development avoids testing products on actual customers due to lia&ility concerns.D) 2roduct development is usually !ollowed &y test marketing.

E) 2roduct development helps top management review pro!it pro+ections.

Answer D



8




%1) n a se<uential new product development process* once a product or service passes the

&usiness test* it moves into ________.

A) concept developmentB) product development

C) test marketing

D) strategy developmentE) commerciali-ation

Answer B



%%) n the ________ stage o! new product development* products undergo rigorous tests to makesure that they per!orm sa!ely and e!!ectively* or that consumers will !ind value in them.

A) &usiness analysis

B) idea generation

C) concept screeningD) product development

E) test marketingAnswer D

Di!!iculty Easy


%,) ! a product passes &oth the concept test and the product test* the ne4t step is most likely to

&e ________.A) marketing strategy development

B) product development

C) test marketingD) &usiness analysis

E) concept development


Chapter #$ %


9




%3) 'ayne ndustries* a retail and home improvement store* is developing a new lawnmower.

The marketing strategy !or the product has already &een developed and presented. A prototype

has also &een developed &y the companys 56D team. The prototype is now &eing testedrigorously to ensure that there are no product lia&ility issues. $nce the prototype o! the

lawnmower passes product tests* the ne4t step is most likely to &e ________.

A) test marketingB) port!olio analysis

C) commerciali-ation

D) internal marketingE) &usiness analysis

Answer A

Di!!iculty Di!!icult



%) n which o! the !ollowing cases is little or no test marketing most likely recommended !or a

new product(A) when the product re<uires a ma+or investment

B) when management is unsure o! the pro+ected demand !or the product

C) when the risks associated with introducing the product are high

D) when management is unsure o! the marketing program !or the productE) when the costs o! developing and introducing the product are low

Answer E




%8) Evans and ills* a &everages manu!acturing company* has developed a new line o! specialty

teas and is seeking regular input !rom the test marketing process. To !acilitate this process* the!irm uses Buyer7can* a so!tware that generates store;&y;store* week;&y;week reports on the

actual sales o! tested products and the impact o! in;store and in;home marketing e!!orts. 'hich

o! the !ollowing approaches does this scenario illustrate(

A) standard test marketsB) inventory tracking

C) controlled test markets

D) simulated test marketsE) direct commerciali-ation

Answer C

Di!!iculty Di!!icultChapter #$ %


AAC7B Analytic thinking n!ormation technology

=




%9) ________ is the stage where a product and its proposed marketing program are introduced

into realistic market settings.

A) "arket strategy developmentB) Concept testing

C) Test marketing

D) Concept developmentE) Business analysis

Answer C



%=) sing ________* researchers measure consumer responses to new products and marketingtactics in la&oratory stores or virtual online shopping environments.

A) simulated test markets

B) controlled test markets

C) &usiness analysisD) standard test markets

E) concept developmentAnswer A

Di!!iculty "oderate


%>) ntroducing a new product into the market is called ________.A) test marketing

B) segmentation

C) product developmentD) commerciali-ation

E) market penetration

Answer DDi!!iculty Easy

Chapter #$ %


,0) 'hich o! the !ollowing costs is most likely associated with commerciali-ation(

A) &uilding or renting a manu!acturing !acility

B) paying groups o! consumers !or participating in crowdsourcing activitiesC) determining a products planned price* distri&ution* and marketing &udget

D) developing a prototype o! a product

E) using simulated tests to measure market capacityAnswer A

Di!!iculty "oderate

Chapter #$ %


>




,1) A company launching a new product must !irst decide ________.

A) where to launch the product

B) the sample si-e o! the marketC) when to launch the product

D) the via&ility o! a glo&al launch

E) the &udget !or print advertisingAnswer C

Di!!iculty "oderate


,%) nder a ________ new product development approach* company departments work closely

together in cross;!unctional groups* overlapping the steps in the product development process tosave time and increase e!!ectiveness.

A) cross;sectional

B) simultaneous

C) se<uentialD) team;&ased

E) systematicAnswer D

Di!!iculty "oderate


,,) nder a ________ product development approach* one company department works tocomplete its stage o! the product development process &e!ore passing the new product along to

the ne4t department and stage.

A) cross;sectionalB) simultaneous

C) se<uential

D) team;&asedE) systematic

Answer C

Di!!iculty Easy


10




,3) The team;&ased new product development approach saves times &ecause departments work

closely together in ________.

A) divisional teamsB) pro&lem;solving teams

C) sel!;managed groups

D) cross;!unctional teamsE) independent groups

Answer D



,) 'hich o! the !ollowing is a disadvantage o! a team;&ased approach to new productdevelopment(

A) t lengthens the time re<uired to get the right products to market.

B) t involves the use o! a rigid* se<uential product development approach.

C) A &ottleneck at one place can seriously hinder the entire pro+ect.D) $rgani-ational con!usion and tension are likely to a!!ect the process.

E) The process is highly ine!!ective !or products with short li!e cycles.Answer D

Di!!iculty "oderate


,8) 'hen an end users pro&lems and e4periences de!ine a new product* the approach is called

________.A) customer;centered new product development

B) team;&ased new product development

C) se<uential product developmentD) supplydemand new product development

E) systematic new product development

Answer ADi!!iculty Easy

Chapter #$ %


11




,9) At antastic lavors* a large regional chain o! candy stores* employees !rom marketing*

design* production* and !inance departments work in cross;!unctional groups to save time and

money in the new product development process. rom this description* it can &e in!erred thatantastic lavors uses aFn) ________ approach.

A) intradepartmental new product development

B) se<uential new product developmentC) team;&ased new product development

D) simulated test market

E) controlled test marketAnswer C


Chapter #$ %

Course #$ Descri&e the steps o! the new product development processAAC7B Analytic thinking

,=) An innovation management system would most likely &e used &y ________.

A) managers to update details a&out customer in!ormationB) &rand managers to collect* review* and evaluate new product ideas

C) suppliers to access inventory in!ormationD) product managers to track logistics o! a new product

E) human resource managers to update in!ormation on employee incentives

Answer BDi!!iculty "oderate

Chapter #$ %


,>) ________ is used to study the course o! a products sales and pro!its !or the duration that it is

produced and sold in the market.

A) A se<uential product development processB) A product li!e cycle

C) Business analysis

D) @endor analysisE) 2ort!olio analysis

Answer B

Di!!iculty Easy

Chapter #$ ,Course #$ Discuss the product li!e cycle

1%




30) 'hich o! the !ollowing statements is most likely true a&out the product li!e cycle(

A) Throughout the product introduction stage* sales are -ero.

B) The growth stage is the longest stage o! the product li!e cycle.C) 2ro!its are none4istent in the growth stage.

D) Growth is a period o! rapid market acceptance and increasing pro!its.

E) "aturity is the period when sales !all o!! &ut pro!its continue to rise.Answer D

Di!!iculty "oderate


31) A product li!e cycle has !ive distinct stages product development* introduction* growth*maturity* and ________.

A) sta&ili-ation

B) re&randingC) decline

D) progression

E) segmentationAnswer C

Di!!iculty Easy

Chapter #$ ,

Course #$ Discuss the product li!e cycle

3%) 'hich o! the !ollowing is true o! the product li!e cycle F2#C)(

A) All products generally go through all !ive stages o! the 2#C.B) All products pass through the stages o! 2#C in the same order.

C) t is generally di!!icult to !orecast the sales level at each 2#C stage.

D) The 2#C concept can &e applied to styles &ut not to !ashions and !ads.E) 2roduct !orms have longer li!e cycles than product classes.

Answer C

Di!!iculty "oderateChapter #$ ,


3,) 7ome products that have entered the decline stage can &e cycled &ack to the growth stagethrough ________.

A) concept testing

B) test marketingC) sole sourcing

D) repositioning

E) data miningAnswer D

Di!!iculty "oderate

Chapter #$ ,


1,




33) ads are characteri-ed &y their ________.

A) enduring nature that spans several generations

B) low rates o! adoption &y consumersC) unusually high sales and rapid decline

D) &asic and distinctive modes o! e4pression that seldom &ecome unpopular

E) non;attainment o! the last two stages o! the product li!e cycleAnswer C

Di!!iculty "oderate


3) 'hich o! the !ollowing would most likely have the longest duration in a market and &echaracteri-ed &y several periods o! renewed interest(

A) a style

B) a !ashionC) a !ad

D) a trend

E) a dri!tAnswer A

Di!!iculty "oderate

Chapter #$ ,


38) lurr&ies* a line o! winter accessories &y a leading !ashion la&el* <uickly !ell in and out o!

!avor with customers. lurr&ies represents an e4ample o! aFn) ________.A) !orm

B) !ashion

C) !adD) style

E) dri!t


Chapter #$ ,


39) 'hen a product hits the ________ stage* pro!its level o!! or decline &ecause o! increased

marketing outlays to de!end the product against competition.

A) productionB) decline

C) maturity

D) test marketingE) conception

Answer C

Di!!iculty "oderate


13




3=) n which stage o! the product li!e cycle will promotional e4penditures &e signi!icantly high

in an attempt to create consumer awareness o! a product and its !eatures(

A) product developmentB) introduction

C) growth

D) maturityE) adoption

Answer B

Di!!iculty EasyChapter #$ ,


3>) 'hich o! the !ollowing is true a&out the introduction stage o! a new product(

A) 2ro!its are typically high.

B) 2romotion spending is relatively low.C) #ess money is needed to attract distri&utors.

D) Companies tend to avoid &asic versions o! the product.

E) 7ales growth tends to &e slow.Answer E

Di!!iculty "oderate

Chapter #$ ,

Course #$ Discuss the product li!e cycleAAC7B Analytic thinking

0) n the ________ stage* a !irm most likely !aces a trade;o!! &etween high market share andhigh current pro!it.

A) growth

B) declineC) maturity

D) introduction

E) commerciali-ationAnswer A

Di!!iculty Easy

Chapter #$ ,


1) 'hich o! the !ollowing is true o! the growth stage o! the product li!e cycle(

A) Hew competitors avoid the market.B) 2rices tend to increase signi!icantly.

C) Early adopters stop &uying the product.

D) 2ro!its are none4istent at this stage.E) 7ales start clim&ing <uickly.

Answer E

Di!!iculty "oderate


1




%) Cra!t nc.s :rayons is a multi;color chalk material that was released in the market over a

century ago. 7ince the release* the company has had remarka&le sales and :rayons has remained

unchanged. owever* over the last !ew years* sales o! :rayons have &een stagnant. Competitorshave &egun marking prices down* and increasing their advertising and sales promotions. Cra!ts

:rayons is most likely in the ________ stage o! the 2#C.

A) introductionB) maturity

C) growth

D) declineE) incu&ation

Answer B




,) Tavera* an automo&ile company* e4perienced a signi!icant decline in sales over the last 10

months o! its !lagship car* Tetra. n response* Tavera reduced its 56D* advertising* and salese4penditures !or Tetra in an attempt to improve short;run pro!its. 'hich term &est descri&es

Taveras actions with regards to Tetra(

A) sales outsourcing

B) product modi!icationC) industry repositioning

D) product harvesting

E) marketing mi4 modi!icationAnswer D




3) 2arvon* a cleaning product* is in the maturity stage o! the product li!e cycle* and 2arvon

managers have decided to modi!y the market. 'hich o! the !ollowing steps should 2arvon

managers most likely take to achieve this goal(

A) !ind new market segments !or the &randB) improve the overall <uality o! the product

C) reduce mass media advertising e4penses

D) o!!er improved services to new &uyersE) conduct controlled test marketing activities

Answer A




18




) Gershwin* a musical toy !or toddlers* is in the maturity stage o! the product li!e cycle* and

Gershwin managers have decided to modi!y the product. 'hat will Gershwin managers most

likely do to achieve this goal(A) change distri&utors

B) o!!er coupons !or the toy

C) change the packaging o! the toyD) launch an online advertising campaign

E) cut prices o! the toy to attract new customers


Chapter #$ ,



8) A product is in the maturity stage o! the product li!e cycle* and the company decides tomodi!y the marketing mi4. 'hich o! the !ollowing steps is the company most likely to take(

A) use aggressive sales promotions

B) change !eatures o! the productC) improve product <uality

D) !ind new uses !or the product

E) e4plore new market segments


Chapter #$ ,


9) 'hich o! the !ollowing is most likely true o! a product in the maturity stage o! the productli!e cycle(

A) 7ales are -ero* and the companys investment costs mount.

B) Hew competitors enter the market.C) A slowdown occurs in sales growth.

D) 7ales increase with decreasing competition.

E) Hew distri&ution channels are ac<uired.


Chapter #$ ,


19




=) A product has hit the ________ stage when sales plunge to -ero* or they drop to a low level

where they continue !or many years.

A) declineB) growth

C) maturity

D) ideationE) analysis

Answer A



>) As a result o! ________* a company cannot make its product illegally similar to acompetitors already esta&lished product.

A) anti;monopoly laws

B) patent laws

C) antitrust lawsD) product warranties

E) product lia&ilityAnswer B

Di!!iculty "oderate

Chapter #$ 3Course #$ Descri&e the steps o! the new product development process

AAC7B Ethical understanding and reasoning

80) 7ome companies are now appointing ________* whose +o& is to protect consumers !rom

harm and the company !rom lia&ility &y proactively !erreting out potential product pro&lems.

A) intradepartmental teamsB) idea generation teams

C) product audit committees

D) product stewardsE) listening o!!icers

Answer D

Di!!iculty Easy



81) n the conte4t o! new product development* new products include original products that a

!irm develops through its 56D e!!orts.

Answer T5EDi!!iculty "oderate

Chapter #$ 1


1=




8%) Ac<uisition is one o! the ways through which a company o&tains new products.

Answer T5E

Di!!iculty EasyChapter #$ 1


8,) Customers o! a &rand are internal sources o! new product ideas !or the &rand.

Answer A#7E



83) 7ince suppliers are so close to the market* they are valua&le sources o! in!ormation a&outconsumer pro&lems* marketing opportunities* and new product possi&ilities.

Answer A#7E

Di!!iculty "oderate


8) n the new product development process* the purpose o! idea generation is to create a large

num&er o! ideas* and the purpose o! the stages !ollowing it is to reduce that num&er.


Chapter #$ %


88) A concrete and physical presentation o! a product concept is likely to increase the relia&ility

o! the concept test.


Chapter #$ %


89) During concept testing* a product is evaluated &y management without any input !rom

e4ternal sources.Answer A#7E

Di!!iculty "oderate


8=) The stage at which new product and marketing programs are introduced into realistic marketsettings is called concept testing.

Answer A#7E

Di!!iculty Easy


1>




8>) 'ith the crowdsourcing approach* a company can estimate the sales volume that a new

product will generate.

Answer A#7EDi!!iculty "oderate

Chapter #$ %


90) 'hen developing a new product* concept testing should ideally &e !ollowed &y marketing

strategy development.Answer T5E

Di!!iculty "oderate

Chapter #$ %


91) The &usiness analysis stage is the !inal step in the new product development process.

Answer A#7E



9%) 2roduct development usually costs the least among all the steps o! the new product

development process.Answer A#7E

Di!!iculty Easy

Chapter #$ %


9,) CisTech is test marketing its new computers &y measuring consumer responses to the new

computers and its marketing tactics in la&oratory stores. CisTech is using controlled testmarketing in this scenario.

Answer A#7E




93) 7e<uential product development* which is a team;oriented approach* ena&les !irms to &ring

products to market very <uickly.Answer A#7E

Di!!iculty "oderate


%0




9) Team;&ased new product development encourages employees o! all departments to work

within the roles and &oundaries o! their individual departments &e!ore com&ining the results o!

their e!!orts at the commerciali-ation stage.Answer A#7E

Di!!iculty "oderate


98) An innovation management system collects* reviews* evaluates* and manages new productideas.

Answer T5E

Di!!iculty Easy


99) Test marketing gives management the in!ormation needed to make a !inal decision a&out

whether to launch a new product.Answer T5E



9=) According to the author* when tough economic times hit* or when a company !aces !inancial

di!!iculties* management should stop spending on new product development.

Answer A#7E



9>) The maturity stage o! the 2#C is characteri-ed &y a slowdown in sales growth.

Answer T5E



=0) "odi!ying a product is an ine!!ective strategy in the maturity period o! the product li!e cycle &ecause the products decline is irreversi&le at this stage.

Answer A#7E



%1




=1) During the decline stage o! the 2#C* product sales may plunge to -ero* or they may drop to a

low level where they continue !or many years.

Answer T5EDi!!iculty Easy

Chapter #$ ,


=%) 'hen a company decides to maintain a product in the decline stage* it has no alternative &ut

to sell the product to another !irm or simply li<uidate it at salvage value.Answer A#7E

Di!!iculty "oderate

Chapter #$ ,


=,) The !ederal government has the legal authority to prevent a company !rom adding products

through ac<uisitions i! the ac<uisition threatens to lessen competition.




=3) The Consumer 2roduct 7a!ety Act o! 1>9% esta&lished the Consumer 2roduct 7a!ety

Commission* which has the authority to &an or sei-e potentially harm!ul products and set severe

penalties !or violation o! the law.


Chapter #$ 3

Course #$ Descri&e the steps o! the new product development processAAC7B Ethical understanding and reasoning

=) 'hen a company decides to go international with a product* it must !irst !igure out what products and services to introduce and in which countries.

Answer T5E

Di!!iculty Easy


%%




=8) #ist and e4plain some o! the reasons why new products !ail.

Answer There are several reasons why a new product may !ail. Although an idea may &e good*

a company might have overestimated the market si-e. The actual product itsel! may have &een poorly designed. Another possi&le reason is that the product may have &een incorrectly

positioned in the market. t may have &een priced too high* or advertised poorly. t is also

possi&le that a high;level e4ecutive pushed a !avorite idea despite poor market research !indings.7ometimes* the costs o! product development are higher than e4pected. The product may have

&een launched at the wrong time* or competitors may have !ought &ack harder than e4pected.

Di!!iculty "oderateChapter #$ 1



=9) Brie!ly descri&e the steps in the new product development process.

Answer The new product development process generally consists o! eight se<uential stages.The process starts with idea generation. dea generation can &e done through internal or e4ternal

sources. He4t comes idea screening , which reduces the num&er o! ideas &ased on the companys

own criteria. deas that pass the screening stage continue through product concept development , in which a detailed version o! the new product idea is stated in meaning!ul consumer terms. This

stage includes concept testing , in which new product concepts are tested with a group o! target

consumers to determine whether the concepts have strong consumer appeal. 7trong concepts

proceed to marketing strategy development , in which an initial marketing strategy !or the new product is developed !rom the product concept. n the &usiness;analysis stage* a review o! the

sales* costs* and pro!it pro+ections !or a new product is conducted to determine whether the new

product is likely to satis!y the companys o&+ectives. 'ith positive results here* the ideas &ecomemore concrete through product development* where the product concept is developed into a

physical product and test marketing* where the product and its proposed marketing program are

introduced into realistic market settings. ! all goes well* the product gets launched duringcommerciali-ation. Hew product development involves more than +ust going through a set o!

steps. Companies must take a systematic* holistic approach to managing this process. 7uccess!ul

new product development re<uires a customer;centered* team;&ased* systematic e!!ort.Di!!iculty "oderate

Chapter #$ %



%,




==) 'hat are the ma+or e4ternal sources o! new product ideas( 'hat type o! in!ormation can &e

gathered !rom each o! these sources( ow do !irms &ene!it !rom such in!ormation(

Answer The ma+or e4ternal sources o! new product ideas include customers* suppliers*distri&utors* competitors* and research !irms. These sources are close to the market and tend to

re!lect current tastes and pre!erences. Distri&utors are linked to the market and can pass along

in!ormation a&out consumer pro&lems and new product possi&ilities. 7uppliers can tell acompany a&out new concepts* techni<ues* and materials that can &e used to develop new

products. Consumers o!ten create new products and services on their own. The company can

analy-e customer <uestions and complaints to !ind new products that &etter solve consumer pro&lems. $r it can invite customers to share suggestions and ideas. Companies can also directly

involve customers in the innovation process through customer co;creation. $ther idea sources

include trade maga-ines* shows* 'e& sites* and seminars government agencies advertising

agencies marketing research !irms university and commercial la&oratories and inventors.Companies can also watch competitors ads to get clues a&out their new products. They &uy

competing new products* take them apart to see how they work* analy-e their sales* and decide

whether they should &ring out a new product o! their own. Companies can &etter match their

product o!!erings to customer needs and wants when these sources are involved in the new product development process.




=>) 'hat is crowdsourcing( ow is crowdsourcing use!ul in new product development(

Answer Crowdsourcing re!ers to throwing the innovation doors wide open and inviting &roadcommunities o! peopleIcustomers* employees* independent scientists and researchers* and even

the pu&lic at largeIinto the new product innovation process. "any companies are now

developing crowdsourcing or open;innovation new product idea programs. 5ather than creatingand managing their own crowdsourcing plat!orms* companies can use third;party crowdsourcing

networks* such as nnoCentive* TopCoder* ypios* and Jovoto. or e4ample* organi-ations

ranging !rom ace&ook and 2ay2al to E72H* HA7A* and the 7alk nstitute tap into TopCodersnetwork o! nearly 300*000 mathematicians* engineers* so!tware developers* and designers !or

ideas and solutions. Crowdsourcing can produce a !lood o! innovative ideas. t ena&les

companies to rely not only on one source or another &ut on e4tensive innovation networks that

capture ideas and inspirations !rom multiple sources.Di!!iculty "oderate

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Course #$ Descri&e the steps o! the new product development processAAC7B Analytic thinking

>0) Distinguish &etween a product idea* a product concept* and a product image.Answer A product idea is an idea !or a possi&le product that a company can see itsel! o!!ering to

the market. A product concept is a detailed version o! the product idea stated in meaning!ul

consumer terms. A product image is the way consumers perceive an actual or potential product.



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>1) E4plain what happens during the concept testing stage o! new product development.

Answer Concept testing re!ers to testing new product concepts with groups o! target consumers.The concepts may &e presented to consumers sym&olically or physically. or some concept tests*

a word or picture description might &e su!!icient. owever* concrete and physical presentations

usually increase the relia&ility o! the concept test. A!ter &eing e4posed to the concept* consumersare asked <uestions a&out it. Their answers will help the company decide which concept has the

strongest appeal.



>%) E4plain what happens during the &usiness analysis stage o! new product development.Answer Business analysis involves a review o! the sales* costs* and pro!it pro+ections !or a new

product to !ind out whether they satis!y a companys o&+ectives. ! they do* the product can move

to the product development stage. To estimate sales* the company might look at the sales history

o! similar products and conduct market surveys. t can then estimate minimum and ma4imumsales to assess the range o! risk. A!ter preparing the sales !orecast* management can estimate the

e4pected costs and pro!its !or the product* including marketing* 56D* operations* accounting*and !inance costs. The company then uses the sales and costs !igures to analy-e the new

products !inancial attractiveness.



>,) 'hat is test marketing( 'hat role does it play in new product development( 'hat !actors do

!irms consider when determining whether or not to conduct test marketing(

Answer Test marketing is the stage at which a product and its proposed marketing program areintroduced into realistic market settings. A product reaches this stage only a!ter it passes the

concept test and product test stage. Test marketing gives the marketer e4perience with marketing

a product &e!ore going to the great e4pense o! !ull introduction. t lets a company test the productand its entire marketing programItargeting and positioning strategy* advertising* distri&ution*

pricing* &randing and packaging* and &udget levels. The amount o! test marketing needed varies

with each new product. Test marketing costs can &e high* and testing takes time that may allow

market opportunities to slip &y or competitors to gain advantages. A company may do little or notest marketing when the costs o! developing and introducing a new product are low* or when

management is already con!ident a&out the new product.




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>3) De!ine commerciali-ation. E4plain the two important issues that a company must decide

during this stage.

Answer ntroducing a new product into a market is called commerciali-ation. A companylaunching a new product must !irst decide on introduction timing. ! the new product will eat into

the sales o! other company products* the introduction may &e delayed. ! the product can &e

improved !urther* or i! the economy is down* the company may wait until the !ollowing year tolaunch it. owever* i! competitors are ready to introduce their own competing products* the

company may push to introduce its new product sooner. He4t* the company must decide where to

launch the new productIin a single location* a region* the national market* or the internationalmarket. 7ome companies may <uickly introduce new models into the !ull national market.

Companies with international distri&ution systems may introduce new products through swi!t

glo&al rollouts.



>) 'hat are the advantages o! an innovation management system !or developing new products(Answer The new product development process should &e holistic and systematic rather than

compartmentali-ed and hapha-ard. $therwise* !ew new ideas will sur!ace* and many good ideaswill sputter and die. To avoid these pro&lems* a company can install an innovation management

system to collect* review* evaluate* and manage new product ideas. The innovation management

system approach yields two !avora&le outcomes. irst* it helps create an innovation;orientedcompany culture. t shows that top management supports* encourages* and rewards innovation.

7econd* it will yield a larger num&er o! new product ideas* among which will &e !ound some

especially good ones. The good new ideas will &e more systematically developed* producing

more new product successes. Good ideas will not su!!er !rom the lack o! a sounding &oard or asenior product advocate.

Di!!iculty "oderate


>8) Brie!ly e4plain each step in a typical product li!e cycle.

Answer 2roduct development &egins when a company !inds and develops a new product idea.

During this stage* sales are -ero and the companys investment costs mount. ntroduction is a

period o! slow sales growth as the product is introduced in the market. 2ro!its are none4istent inthis stage &ecause o! the heavy e4penses o! product introduction. Growth is a period o! rapid

market acceptance and increasing pro!its. "aturity is a period o! slowdown in sales growth

&ecause the product has achieved acceptance &y most potential &uyers. 2ro!its level o!! ordecline &ecause o! increased marketing outlays to de!end the product against competition.

Decline is the period when sales !all o!! and pro!its drop. At this stage* a company may decide to

maintain* harvest* or drop a product.Di!!iculty "oderate

Chapter #$ ,


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>9) Di!!erentiate &etween styles* !ashions* and !ads. llustrate your response with e4amples o!

each.

Answer A style is a &asic and distinctive mode o! e4pression. or e4ample* styles appear inhomes Fcolonial* ranch* transitional)* clothing F!ormal* casual)* and art Frealist* surrealist*

a&stract). $nce a style is invented* it may last !or generations* passing in and out o! vogue. A

style has a cycle showing several periods o! renewed interest.A !ashion is a currently accepted or popular style in a given !ield. or e4ample* the more !ormal

K&usiness attireK look o! corporate dress o! the 1>=0s and 1>>0s gave way to the K&usiness

casualK look o! the %000s and %010s. ashions tend to grow slowly* remain popular !or a while*and then decline slowly. ads are temporary periods o! unusually high sales driven &y consumer

enthusiasm and immediate product or &rand popularity. A !ad may &e part o! an otherwise normal

li!e cycle* as in the case o! recent surges in the sales o! poker chips and accessories. $r the !ad

may comprise a &rands or products entire li!e cycle.Di!!iculty Di!!icult

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>=) Brie!ly descri&e the maturity stage o! the product li!e cycle.Answer At some point* a products sales growth will slow down* and it will enter the maturity

stage. This maturity stage normally lasts longer than the previous stages* and it poses strong

challenges to marketing management. "ost products are in the maturity stage o! the li!e cycle*and there!ore most o! marketing management deals with the mature product. The slowdown in

sales growth results in many producers with many products to sell. n turn* this overcapacity

leads to greater competition. Competitors &egin marking down prices* increasing their

advertising and sales promotions* and upping their product development &udgets to !ind &etterversions o! the product. These steps lead to a drop in pro!it. 7ome o! the weaker competitors start

dropping out* and the industry eventually contains only well;esta&lished competitors. Although

many products in the mature stage appear to remain unchanged !or long periods* most success!ulones are actually evolving to meet changing consumer needs. 2roduct managers should do more

than simply ride along with or de!end their mature productsIa good o!!ense is the &est de!ense.

They should consider modi!ying the market* product o!!ering* and marketing mi4.Di!!iculty "oderate

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>>) 'hat options are availa&le to a !irm that has a product in the decline stage o! the product li!e

cycle( Brie!ly discuss each option.

Answer A !irm has many options with regard to a !ailing product. t may decide to maintain its &rand* repositioning or reinvigorating it in hopes o! moving it &ack into the growth stage o! the

product li!e cycle. "anagement may decide to harvest the product* which means reducing

various costs Fplant and e<uipment* maintenance* 56D* advertising* sales !orce)* hoping thatsales hold up. ! success!ul* harvesting will increase the companys pro!its in the short run.

inally* management may decide to drop the product !rom its line. The company can sell the

product to another !irm or simply li<uidate it at salvage value. ! the company plans to !ind a &uyer* it will not want to run down the product through harvesting.

Di!!iculty "oderate

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100) Discuss pu&lic policy issues* government regulations* and laws that a!!ect new product

development.Answer "arketers should care!ully consider pu&lic policy issues and regulations regarding

ac<uiring or dropping products* patent protection* product <uality and sa!ety* and productwarranties. 5egarding new products* the government may prevent companies !rom adding

products through ac<uisitions i! the e!!ect threatens to lessen competition. Companies dropping

products must &e aware that they have legal o&ligations* written or implied* to their suppliers*dealers* and customers who have a stake in the dropped product. Companies must also o&ey .7.

patent laws when developing new products. A company cannot make its product illegally similar

to another companys esta&lished product.

"anu!acturers must comply with speci!ic laws regarding product <uality and sa!ety. The ederalood* Drug* and Cosmetic Act protects consumers !rom unsa!e and adulterated !ood* drugs* and

cosmetics. @arious acts provide !or the inspection o! sanitary conditions in the meat; and poultry;

processing industries. 7a!ety legislation has &een passed to regulate !a&rics* chemical su&stances*automo&iles* toys* and drugs and poisons. The Consumer 2roduct 7a!ety Act o! 1>9% esta&lished

the Consumer 2roduct 7a!ety Commission* which has the authority to &an or sei-e potentially

harm!ul products and set severe penalties !or violation o! the law.Di!!iculty "oderate

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Armstrong Mai12 Tif 08

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