Chapter 11—Developing and Managing Products TRUE/FALSE 1. A product must be a discontinuous innovation to be considered a “new” product. Answer: False Rationale: There are six categories of new products, only one of which is new-to-the-world discontinuous innovative products. 2. Central Bark is a dog day care center. When you check your dog into a Central Bark you know your pooch will be pampered. Since kennels have been boarding dogs for years, the dog day care is not really a new product. Answer: False Rationale: There are many types of new product ranging from new-to-the-world products to low-price products. 3. The development of Coke Zero by Coca Cola would not be considered a new product since the company was already making soft drinks. It would simply be called a line extension. Answer: False Rationale: Line extensions are considered to be a type of new product. Coke Zero is an example of an addition to an existing product line. 4. Very few firms follow a formal new-product development process. Answer: False Rationale: Most companies follow a formal new-product development process. 5. A firm’s new-product strategy links the new-product development process with the objectives of the marketing departments, the business unit, and the corporation. Answer: True Rationale: A firm’s new-product strategy aligns the new-product development process with marketing department, business unit, and corporate objectives. 6. For a firm that adheres to the product concept, the logical place to start generating new-product ideas is with the customers of the firm. Answer: False Rationale: Firms adhering the marketing concept—not the product content—logically start generating new-product ideas from customers. 7. The two techniques considered most useful for generating new-product ideas are customer-generation and competitive imitation. Answer: False Rationale: The two techniques considered most useful for generating new-product ideas are brainstorming and focus group exercises. 8. Seven employees from a company are trying to come up with ideas for new-product development. The employees are all in a room together, shouting out potential ideas. The ideas are written down and evaluated as they are generated. This is an example of brainstorming. Answer: False Rationale: Brainstorming does not involve evaluation of the ideas as they are generated; criticism of any kind is avoided. 9. The first filter in the product development process is called screening. Answer: True Rationale: The initial stage of filtering ideas in the product development process is called screening. 10. It is considered inefficient to use concept tests during the idea screening stage of the new-product development process. Answer: False Rationale: During the idea screening stage of the new-product development process, it is appropriate to use concept tests. 11. Concept tests are considered fairly good predictors of success for line extensions and for products that do not require major changes in consumer behavior. Answer: True Rationale: Concept tests are indeed useful for predicting success, especially for line extensions and products with minimal changes in consumer behavior because they gauge initial consumer reactions. 12. Andersen Electronics is currently engrossed in its first estimations of costs and revenues for a new amusement park video skill game. This firm is engaged in a new-product business analysis. Answer: True Rationale: Andersen Electronics' activities align with the initial stages of new-product business analysis, focusing on estimating costs and revenues for their new amusement park video skill game. 13. Without the Internet, it would be impossible to conduct simultaneous product development from different parts of the world. Answer: True Rationale: The Internet facilitates simultaneous product development across different locations, enabling real-time collaboration and communication that would be otherwise impossible without it. 14. A test market is one example of a focus group test where consumers are encouraged to try a new product and provide feedback to the manufacturer. Answer: False Rationale: A test market is not a focus group. 15. One benefit of test marketing is that the marketing activity is shielded from competitors. Answer: False Rationale: Test marketing may result in a serious problem if a firm’s competitors find out about the new product before it has been fully introduced. 16. The Internet offers a fast, cost-effective way to conduct test marketing. Answer: True Rationale: The Internet provides a rapid and cost-effective platform for conducting test marketing, allowing businesses to reach diverse audiences quickly and gather feedback efficiently. 17. The decision to market a product is called commercialization. Answer: True Rationale: Commercialization refers to the process of launching and promoting a product in the market, encompassing decisions and actions taken to bring a product to market successfully. 18. Increasing globalization of markets and competition provides a reason for multinational firms to consider new-product development from a worldwide perspective. Answer: True Rationale: Globalization increases market access and competition, compelling multinational firms to consider global perspectives in new-product development to meet diverse market needs efficiently. 19. Adaptation is the process by which the adoption of an innovation spreads. Answer: False Rationale: This process is referred to as diffusion. 20. Martina loves her new Kindle and has tweeted to her followers several times about how great the product is. This is an example of communication directly from the marketer to potential adopters. Answer: False Rationale: This is an example of word-of-mouth communication among consumers. 21. Consumers described as laggards tend to rely on group norms when deciding to adopt an innovation. Answer: False Rationale: Laggards do not rely on group norms, and their independence is rooted in their ties to tradition. 22. The Sumatra Coffee Company has two new products. One is a simple hand-cranked coffee grinder. The other is a combination grinder and brewer that also can be used to dispense hot milk. Of these two, the hand-cranked grinder will probably be diffused more quickly because it is less complex. Answer: True Rationale: Simple products like the hand-cranked coffee grinder tend to diffuse more quickly because they are easier to understand and use compared to complex products like the combination grinder and brewer. 23. Procter & Gamble introduced a new fabric softener dispenser that consumers stick to the inside of the dryer drum and sent consumers free samples in the mail. This strategy likely increased the rate of adoption of the new product. Answer: True Rationale: This will encourage trial, which can increase the rate of adoption. 24. The product life cycle is a biological metaphor that traces the stages of a product’s acceptance, from its introduction (birth) to its decline (death). Answer: True Rationale: The product life cycle metaphorically represents the stages of a product's market acceptance, from introduction through growth, maturity, and decline. 25. Messages directed directly from marketers toward early adopters should normally use different appeals than messages directed toward the early majority, the late majority, or the laggards. Answer: True Rationale: Marketers should tailor messages differently for early adopters, early majority, late majority, and laggards based on their differing motivations and readiness to adopt new products. 26. The growth stage is the first stage of the product life cycle. Answer: False Rationale: The introductory stage is the first stage. 27. Increasing competition, aggressive brand advertising, and healthy profits are all characteristics found in the introductory stage of the product life cycle. Answer: False Rationale: This describes the growth stage. 28. Profits typically reach their peak during the growth stage of the product life cycle. Answer: True Rationale: Profits typically peak during the growth stage of the product life cycle as sales increase rapidly while marketing and production costs remain relatively stable. 29. A VCR player is a good example of a product in the maturity stage of the product life cycle. Answer: False Rationale: VCR players are in the decline stage, not the maturity stage. 30. The concept of “organized abandonment” is based upon a periodic audit of all goods and services that a firm markets. Answer: True Rationale: Organized abandonment involves periodically evaluating all goods and services a firm offers to discontinue those that are no longer profitable or relevant. 31. The product life cycle concept encourages marketing managers to act reactively. Answer: False Rationale: The product life cycle concept encourages marketing managers to plan so that they can take the initiative instead of reacting to past events. MULTIPLE CHOICE 1. New products are important to a company for all the following reasons EXCEPT: A. increased revenues B. immediate profits C. sustained growth D. replacement of obsolete items E. increased profits Answer: B Rationale: While new products bring the potential advantage of increased margins, they do not bring immediate profit. 2. New-to-the-world products, where the product category itself is new, are also called: A. discontinuous innovations B. moderate innovations C. slow-diffusing products D. venture products E. creative offerings Answer: A Rationale: These products create an entirely new market. 3. Sony has developed a wireless speaker that sits unobtrusively on a desktop. The tiny yet strong twin speakers use Bluetooth to stream music directly from a PC or MP3 player. This small Sony wireless speaker, which is radically different from anything currently on the market, would be classified as a(n): A. discontinuous innovation B. slow-diffusing product C. episodic innovation D. venture product E. sporadic innovation Answer: A Rationale: New-to-the-world products, where the product category itself is new, are also called discontinuous innovations. 4. Which of the following would be considered a new product? A. A new product line B. A new-to-the-world product C. An addition to an existing product line D. An improvement or revision of an existing product E. All of these choices Answer: E Rationale: A new product is a product new to the world, the market, the producer, the seller, or some combination of these, and there are six categories of new products. 5. Marketers consider all of the following examples of new products EXCEPT: A. a 2010 model year automobile with the same style, parts, and color as the 2009 model. B. the addition of a management consultant service to a company that once specialized in investment management. C. a new design for Reach brand toothbrushes. D. a new flavor of Ben & Jerry’s brand ice cream. E. the development of a less-painful procedure for the treatment of varicose veins. Answer: A Rationale: All these are new products except the new model year with no other changes than the date. 6. When P&G began marketing Tide Free & Gentle, which is dye- and perfume-free, this represented which new product category? A. Repositioning strategy B. New product line C. Addition to existing product line D. Discontinuous innovation E. Revision of existing products Answer: C Rationale: This was a new product that supplemented, but did not replace, a firm’s established line. 7. Heinz is expected to introduce more than 400 new products in the next two years. One of the products is a spicier ketchup aimed at the baby boomer market. The spicier ketchup would be considered what type of new product? A. Discontinuous innovation B. New to market C. New product line D. Lower priced E. Addition to existing product line Answer: E Rationale: Heinz is well established in the ketchup market. The spicier ketchup will be an addition to its existing product line. 8. For years, Diet Dr. Pepper has been considered a diet drink. After declining sales, the company is attempting to present Diet Dr. Pepper as an alternative to having a dessert. This is an example of a _____ strategy. A. discontinuous innovation B. niche C. new-product-line D. retargeting E. repositioning Answer: E Rationale: One way to create innovative products is to target new markets through repositioning. Repositioning is an attempt to change the market’s perception of a product. 9. Apple recently introduced a newly designed iPod nano with Multi-Touch capability, a built-in FM radio, and mix-making Genius. Since it was not trying to reach a new target market, Apple was using which new product strategy? A. Improvement or revision of existing product B. Addition to existing product line C. Discontinuous innovation D. Repositioned product E. New product line Answer: A Rationale: Apple was improving its iPod nano product. 10. When Procter & Gamble wanted to enter the hair-care market, it purchased Wella, a leading German company specializing in hair-care products. What new product category does this acquisition represent for P&G? A. Repositioning strategy B. New product line C. Addition to existing product line D. Discontinuous innovation E. Revision of existing products Answer: B Rationale: New product lines are defined as products that a firm has not previously offered. 11. Oakley, a manufacturer of protective eyewear for various kinds of sports, has introduced sunglasses that play music. The glasses weigh just a few ounces and can hold up to 120 songs. These sunglasses would be an example of a(n): A. repositioning strategy B. new product line C. addition to existing product line D. discontinuous innovation E. revision of existing products Answer: C Rationale: The new sunglasses supplement the firm’s established product line. 12. Dial Corporation has introduced Dial Basics, a premium soap product with an emphasis on value. Dial Basics would be an example of which strategy to create a new product? A. New-to-the-world product B. New product line C. Repositioned product D. Addition to a current product line E. Lower-priced products Answer: B Rationale: Dial Basics is marketed as a value brand which had not previously been offered. 13. _____ occurs when an existing product is targeted toward new market segments. It is another type of new-product development because the product is new to that segment. A. Brainstorming B. Diffusing C. Repositioning D. Screening E. Reciprocity Answer: C Rationale: Repositioned products are existing products targeted at new markets or market segments, or ones repositioned to change the current market’s perception of the product. 14. Companies that are most likely to succeed in the development and introduction of new products typically are characterized by all of the following EXCEPT: A. establishing an environment conducive to achieving new-product objectives. B. making the long-term commitment needed to support innovation and new-product development. C. capitalizing on experience to achieve and maintain competitive advantage. D. using a company-specific approach, driven by corporate objectives and strategies, with a well-defined new-product strategy at its core. E. introducing ten new products every year. Answer: E Rationale: Introducing a specific number of new products each year is not one of the factors identified for success. 15. A(n) _____ links the new-product development process with the objectives of the marketing department, the business unit, and the corporation. A. product-review committee B. concept test C. episodic innovation D. new-product strategy E. product strategy bridge Answer: D Rationale: This is the definition of new-product strategy. 16. The first stage of the new-product development process is: A. screening and concept testing B. establishing the new-product strategy C. exploring opportunities D. developing a business analysis E. the building of a prototype Answer: B Rationale: See Exhibit 11.1. New-product strategy is the first subset of the organization’s new-product development plan. It specifies what roles new products play in the organization’s overall plan and describes goals. 17. A new-product strategy: A. links the new-product development process with the objectives of the marketing department, the business unit, and the corporation B. is part of an organization’s overall marketing strategy C. specifies the roles new products play in the organization’s overall plans D. describes the characteristics of products the organization wants to offer and the markets it wants to serve E. is accurately described by all of these Answer: E Rationale: All of these statements accurately describe a new-product strategy. 18. Which of the following is the LEAST likely source for new-product ideas? A. A company’s distributors B. Its customers C. Its employees D. Its financial lenders E. Its competitors Answer: D Rationale: Customers, employees, distributors, and competitors are interacting with the marketplace and may have ideas for goods to serve customer needs. The bank from which the company gets its debt financing is the least likely alternative here. 19. A manufacturer of office furnishings is finding it difficult to compete with cheaper imported merchandise. Which of the following is a potential source of new-product ideas that would allow it to compete more effectively? A. Current retailers who carry the manufacturer’s equipment B. Its foreign competitors C. The company’s employees D. Customers who have requested its catalogs E. All of these Answer: E Rationale: Customers, employees, distributors, and competitors are interacting with the marketplace and may have ideas for goods to serve customer needs. 20. The process of converting applications for new technologies into marketable products is called: A. basic research B. product modification C. marketing development D. product development E. correlation analysis Answer: D Rationale: Product development is a marketing strategy that entails the creation of marketable new products. 21. _____ is a process where a group thinks of as many ways to vary a product or solve a problem as possible without considering the practicality of the ideas. A. New-product brain dumping B. Screening C. A focus group interview D. Brainstorming E. Diffusion Answer: D Rationale: The goal of brainstorming is to get a group to think of unlimited ways to vary a product or solve a problem, no matter how ridiculous it may seem. 22. Mosaic Labs has developed a chemical compound that prevents mildew in even the most humid climates. The week after the compound was invented, a group of the firm’s employees got together and listed ways the product might be used. This is an example of: A. quality control B. brainstorming C. concept testing D. venture group activities E. screening Answer: B Rationale: Brainstorming is a process where a group thinks of as many ways to vary a product or solve a problem. 23. The same manufacturer produces Hanes, Playtex, and Bali clothing for women. This manufacturer assembled a group of nine regular customers and asked them to discuss what they like and do not like about its current product line for full-figured women and to suggest new-product ideas, such as jewelry, wide shoes, and belts. The manufacturer used a research technique called a: A. focus group B. brainstorming session C. buying center D. product-review committee E. venture team Answer: A Rationale: An objective of focus group interviews is to stimulate insightful comments through group interaction. 24. Which of the following stages of the new-product development process is the first filter, which serves to eliminate new-product ideas that are inconsistent with the organization’s new-product strategy or are obviously inappropriate for some other reason? A. Applied diffusion B. Introductory diffusion C. Business analysis D. Test marketing E. Idea screening Answer: E Rationale: Most new-product ideas are rejected at this stage, called the idea screening stage. 25. At what stage of the new-product development process are most new-product ideas rejected? A. Test marketing B. Diffusion C. Business analysis D. Idea screening E. Idea generation Answer: D Rationale: Screening is the stage when the bulk of the ideas are rejected for being incompatible or impractical. 26. After the research team at Nabisco had generated more than two dozen new-product ideas for a substitute for partially hydrogenated oils that tastes the same but has zero trans fat, the company formed a committee to analyze whether the product ideas were consistent with the organization’s new-product strategy. This is called: A. business analysis B. diffusion C. idea screening D. test marketing E. idea generation Answer: C Rationale: Idea screening is the first filter in the product development process. It serves to eliminate new product ideas that are inconsistent with the organization’s new-product strategy. 27. Top managers at a commercial real estate firm that specializes in site location and installation of cell phone towers considered providing the same service for windmill location and installation but decided this was not within the company’s corporate mission. Which stage of the new-product development process was reached? A. Development B. Idea generation C. Idea screening D. Business analysis E. Customer testing Answer: C Rationale: Screening involves rejecting products that don’t fit with company plans. 28. A European dairy that is famous for its rich ice creams has introduced basil-, tomato-, fennel-, and oregano-flavored ice creams. In the process of developing these new flavors, the dairy surveyed world-famous chefs to determine which nontraditional flavors had the greatest level of marketability. This survey would have happened during which stage of the product development process? A. Concept testing B. Brainstorming C. Basic research D. Idea screening E. Applied research Answer: D Rationale: The idea screening stage eliminates ideas that are inconsistent with the organization’s new-product strategy or are obviously inappropriate for some other reason. 29. The screening and concept testing stage of the new-product development process is used to: A. eliminate undesirable ideas and predict consumer acceptance B. refine the promotion campaign to be used with the new product C. determine the potential profits to be gained from the new product D. determine how long the test market should be run E. generate new-product ideas Answer: A Rationale: Concept tests involve describing the product idea to consumers, usually before any prototype has been created, and asking for their evaluations. 30. _____ evaluate new-product ideas usually before any prototype has been created. A. Concept tests B. Simulated market tests C. Market tests D. User tests E. Venture analyses Answer: A Rationale: Concepts test are often used at the screening stage to rate concept (or product) alternatives. 31. After Mattel evaluated many new products to add to its Barbie product line and before any prototype was created, the toy manufacturer instructed a committee to select three of the ideas to present to a group of consumers. The consumer group was asked to evaluate the ideas in terms of their marketability. This stage of new-product development is called: A. prototype screening B. concept testing C. market testing D. idea manipulation E. idea diffusing Answer: B Rationale: Concept tests evaluate new-product ideas usually before any prototype has been created. 32. In the _____ stage of new-product development, preliminary demand, cost, sales, and profitability estimates are made. A. prototype screening B. idea generation C. concept testing D. post-brainstorming E. business analysis Answer: E Rationale: New-product ideas that survive the initial screening process move to the business analysis stage, where preliminary figures for demand, cost, sales, and profitability are calculated. 33. Which of the following questions is NOT likely to be asked during the business analysis stage? A. What is the likely demand for the product? B. Which celebrity spokesperson can we hire to promote the product? C. Would current customers benefit from the product? D. What is the risk of failure? E. What new facilities would be needed? Answer: B Rationale: In the business analysis stage, preliminary figures for demand, cost, sales, and profitability are calculated. Finding an appropriate spokesperson is not a concern at this stage. 34. The accuracy of revenue projections for products are affected by: A. the newness of the product. B. the size of the market. C. the nature of the competition. D. all of the above. E. none of the above. Answer: D Rationale: The newness of the product, the size of the market, and the nature of the competition all affect the accuracy of revenue projections. 35. In the _____ stage of new-product development, the technical feasibility of manufacturing the new product is examined as a prototype is produced. A. screening B. development C. market testing D. concept testing E. business analysis Answer: B Rationale: During the development stage, the technical feasibility of manufacturing the product at a reasonable cost is thoroughly examined. This stage can be long and expensive and can involve a great deal of testing. Products are often modified after the testing. 36. A team-oriented approach to new-product development is referred to as: A. simultaneous product development B. synergistic product development C. commercialized product development D. synchronized product development E. parallel product development Answer: A Rationale: The development process works best when all the involved areas (research and development, marketing, engineering, production, and even suppliers) work together rather than sequentially, a process call simultaneous product development. 37. Which of the following statements about simultaneous product development is FALSE? A. Simultaneous product development refers to the practice of developing multiple new products at the same time. B. With simultaneous product development, all relevant functional areas and outside suppliers participate in all stages of the development process. C. All departments within the company work together at the same time, but to maintain a high level of secrecy, no one outside the company is involved in simultaneous product development. D. Simultaneous product development actually increases the length of time it takes to get a product to market and the time the product will stay in the growth stage of its product life cycle. E. The Internet has not yet proven to be a useful tool for implementing simultaneous product development. Answer: E Rationale: The Internet has indeed proven a useful tool for this process. 38. _____ is a limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation. A. Use testing B. Test marketing C. Concept testing D. Laboratory testing E. Discontinuous innovation Answer: B Rationale: After products and marketing programs have been developed, they are usually tested in the marketplace using test marketing, which is the limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation. 39. When selecting a test market city, a researcher should look for a city: A. where the demographics and purchasing habits mirror the overall market for the product. B. that has media spillover from other cities to increase media alternatives. C. that is as large as possible. D. that has limited distribution. E. where there is no competition. Answer: A Rationale: Test marketing is a limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation. The market city should be similar to the overall market for accuracy of results. 40. A(n) _____ typically entails showing members of the product’s target market advertising and other promotional materials for several products, including the test product. These people are then taken to a mock or real store, where their purchases are recorded. A. adoption-rate test B. real test market C. concept test D. simulated (laboratory) market test E. consumer juried test Answer: D Rationale: This is a description of a simulated (laboratory) market test. 41. The maker of Purell hand sanitizer tested consumers’ reactions to its Purell Sanitizing Wipes by getting consumers to look through a newspaper with grocery store ads, make out a grocery list, and then “shop” in a mock store filled with real products, including the new product. This is an example of a(n): A. adoption-rate test B. simulated (laboratory) market test C. concept test D. use test E. juried consumer test Answer: B Rationale: Simulated (laboratory) market tests typically entail showing members of the target market advertising for a variety of products and then monitoring purchase behavior in a mock or real store. 42. Which of the following has been found to be an efficient substitute for traditional methods of conducting test markets? A. Product sampling B. Simulated product adoption C. Online test marketing D. Simulated diffusion E. Market concentration Answer: C Rationale: The text describes Proctor & Gamble’s online test marketing. 43. The final stage in the new-product development process is: A. product testing B. market testing C. commercialization D. product prototyping E. simulated marketing Answer: C Rationale: Commercialization is the decision to market a product. 44. During the _____ stage of the new-product development process, production starts, inventories are built up, the product is shipped to distribution points, the sales force is trained, and advertising and promotion begin. A. commercialization B. product testing C. market analysis D. product prototyping E. simulated marketing Answer: A Rationale: The commercialization stage is the decision to market a product and sets several task in motion. 45. Jeni’s Splendid Ice Creams has decided to put its new Beet Cake with Black Walnut ice cream on the market. This product has entered the _____ stage of new-product development. A. business analysis B. development C. test marketing D. commercialization E. research and development Answer: D Rationale: Commercialization is the decision to market a product. 46. The MOST important factor in successful new-product introduction is: A. a good match between the product and market needs. B. strong company leadership. C. an obsession with quantity rather than quality D. project-based team approach to new-product development. E. history of carefully listening to customers. Answer: A Rationale: All of the factors listed are important, but the most important is a good match between the product and market needs—as the marketing concept would predict. 47. The main goal of the global product development process is to: A. come up with a single standard product or product line suitable for all global markets B. expand the number of different new-product offerings so that individual country needs are more likely to be met C. develop every product for potential worldwide distribution and adaptation to other countries D. come up with new-product ideas in the United States and use global markets as test markets E. repeat the steps in the process with marketing teams in each and every foreign country targeted Answer: C Rationale: Multinational companies develop each product for potential worldwide usage, with minor unique requirements incorporated. 48. A product that is perceived as new by a potential adopter, whether the product is “new to the world” or simply new to the individual, is called a(n): A. innovation B. diffusion C. discontinuous product D. laggard E. simulated new product Answer: A Rationale: An innovation is a product perceived as new by a potential adopter. 49. Roger has lots of nice photos of his family on his digital camera and wishes he could display them on his desk at work without having to print them out. A coworker told him that he could purchase a digital photo frame to download and display his digital photos. Because Roger did not know such a product existed, digital photo frames represented a(n) _____ to him. A. heterogeneous shopping product B. diffusion C. market laggard D. product diversification E. innovation Answer: E Rationale: An innovation is a product perceived as new by a potential adopter. 50. The process by which the adoption of an innovation spreads is referred to as: A. diffusion B. circulation C. transmission D. dissemination E. dispersion Answer: A Rationale: This is the definition of diffusion. 51. The process by which the adoption of 3D HD televisions spreads is an example of: A. test marketing B. diffusion C. product dissemination D. innovative dispersal E. marketing communication Answer: B Rationale: Diffusion is the process by which the adoption of an innovation spreads. 52. _____ are eager to try new ideas and products. They typically have higher incomes, are better educated, and are more cosmopolitan than other categories of adopters. A. Early adopters B. Innovators C. Early majority D. Late majority E. Laggards Answer: B Rationale: These are characteristics of innovators, who are almost obsessed with trying new ideas and products. 53. Kathy purchased an Amazon Kindle e-book reader as soon as they came onto the market. She paid $399 for the product, which she bought the first day it was released. Kathy works in Information Technology and is always looking for new electronic products to buy. She would best be described as a(n): A. early adopter B. early majority C. innovator D. diffusers E. lead consumer Answer: C Rationale: Innovators make up the first 2.5 percent of all those who adopt the product, are well-educated, venturesome, have higher incomes, and are self-confident. 54. _____ embrace products relatively early in the product life cycle, are likely to be community oriented, and often are opinion leaders themselves. A. Early adopters B. Innovators C. Early majority D. Late majority E. Laggards Answer: A Rationale: Although early adopters are not the very first, they do adopt early in the product’s life cycle. 55. Joaquin didn’t buy a netbook computer when they first came out, but he did purchase one a year after they were introduced to the market. He is very active in his church and local arts council, and many of his friends asked him which brand to buy when they were considering purchasing a netbook. Joaquin is best described as a(n): A. innovator B. early adopter C. early majority D. leading consumer E. proactive Answer: B Rationale: Although early adopters are not the very first, they do adopt early in the product’s life cycle. 56. One hot August day, Tom saw a can of AriZona Beverage Company’s Arnold Palmer Half-and-Half iced tea and lemonade drink at the local convenience store. He decided to try the product and found that he really liked it. Now, Tom regularly purchases this product to quench his thirst on hot days. Tom is an example of a(n): A. opt-in buyer. B. innovator. C. adopter. D. luddite. E. laggard. Answer: C Rationale: Adopters are consumers who were sufficiently satisfied with their trial experience with a product to proceed with some further usage. 57. Which of the following adopters is MOST likely to become an opinion leader? A. Luddite B. Early majority C. Early adopter D. Proactive adopter E. Innovator Answer: C Rationale: Early adopters are more likely than innovators to become opinion leaders because of their closer affiliation with groups. 58. A dominant characteristic of the late majority is: A. deliberateness B. skepticism C. respect of others D. cheerfulness E. optimism Answer: B Rationale: The late majority tend to be very skeptical of marketing. 59. All of the following statements about how adopters participate in the diffusion process are true EXCEPT: A. early adopters may also be opinion leaders B. laggards are the last consumers to adopt a new product C. there are three categories of consumers who will adopt an innovation D. the dominant characteristic of members of the late majority is skepticism E. innovators are the first to purchase a new product Answer: C Rationale: There are five categories: innovator, early adopter, early majority, late majority, and laggard. 60. All of the following are categories of adopters in the diffusion process of innovations EXCEPT: A. laggards B. innovators C. early majority D. early adopters E. doubters Answer: E Rationale: The five categories of adopters are innovators, early adopters, early majority, late majority, and laggards. 61. A company has learned that members of its target market are likely to collect more information and evaluate more brands than early adopters. They are cautious and thoughtful and do not try the product without asking someone else. The customers’ dominant characteristic is deliberateness. In terms of the diffusion process, these customers are most likely: A. innovators B. early minority C. laggards D. early majority E. late majority Answer: D Rationale: The early majority will collect more information and evaluate more brands than do early adopters. They rely on friends, neighbors, and opinion leaders for information. 62. Liz tends to adopt new products sooner than a lot of other people, but she weighs the pros and cons before buying. She does considerable product research, but her friends don’t really look to her for information. She really deliberates before she makes a purchase. Liz is best described as a(n): A. innovator B. early adopter C. early majority D. late majority E. laggard Answer: C Rationale: These are characteristics of the early majority category of adopters. 63. The _____ adopt a product because most of their friends have already done so, and their adoption is usually the result of pressure to conform because they rely on group norms. A. laggards B. early adopters C. early majority D. innovators E. late majority Answer: E Rationale: The late majority adopt a product because they are influenced by social norms and pressure to conform, waiting until a product is well-established and widely accepted before adopting it themselves. 64. Which category of adopters adopt a new product because most of their friends have already adopted it? A. Innovators B. Early majority C. Early adopters D. Laggards E. Late majority Answer: E Rationale: This describes the late majority, who tend to rely on group norms, and their adoption stems from pressure to conform. 65. Leon is not very quick to purchase innovative products when they come out, but after a while he breaks down and buys if after most of his friends have bought it. He gets most of his information from them when he decides to buy something. He is very skeptical of marketing, so he trusts his friends more than anything. Leon is best described as a(n): A. innovator B. early adopter C. early majority D. late majority E. laggard Answer: D Rationale: This is characteristic of the late majority, who tend to be influenced by group norms. 66. Among the late majority group, adoption of a product primarily results from: A. word-of-mouth communications. B. print advertising. C. advertising in nontraditional media. D. broadcast advertising. E. sales promotions. Answer: A Rationale: This group attains information about new products primarily from word-of-mouth communication rather than the mass media. 67. In the adopter categories, the final 16 percent to adopt are similar to innovators in that they do not rely on the norms of the group but are independent because they are bound to tradition. They tend to have the lowest socioeconomic status, are suspicious of new products, and are alienated from a rapidly advancing society. They are called: A. generics. B. late majority. C. decliners. D. laggards. E. luddites. Answer: D Rationale: By the time laggards adopt an innovation, it has probably become outmoded and been replaced by something else. 68. Which is the last adopter category to adopt an innovation? A. Late majority B. Laggards C. Late diffusers D. Reluctant adopters E. Traditionalists Answer: B Rationale: Laggards represent the final 16 percent to adopt an innovation. By the time they adopt an innovation, it has probably become outmoded and replaced by something else. 69. All of the following are product characteristics influencing the rate of adoption EXCEPT: A. complexity. B. compatibility. C. relative advantage. D. observability. E. distribution. Answer: E Rationale: While it is a marketing factor that may influence the rate of adoption of a new product, distribution is not a product factor influencing the rate of adoption. 70. Which product factor influencing the rate of adoption represents the degree of difficulty involved in understanding and using a new product? A. Complexity B. Compatibility C. Relative advantage D. Observability E. Trialability Answer: A Rationale: The more complex the product, the slower is its diffusion. 71. Oakley, the manufacturer of protective eyewear for sports enthusiasts, has recently introduced Oakley’s Thump, UV sunglasses that allow the wearer to store and listen to 120 different songs. Which of the following product characteristics would likely exert the greatest influence on the market success of these new glasses? A. Compatibility B. Comparability C. Complexity D. Tangibility E. Competitive advantage Answer: C Rationale: Complexity refers to the degree of difficulty involved in using the new product. 72. Which product characteristic affecting the rate of adoption represents the degree to which the new product is consistent with existing values and product knowledge, past experiences, and current needs? A. Complexity B. Compatibility C. Relative advantage D. Observability E. Trialability Answer: B Rationale: Products that are compatible with others will gain from existing product knowledge, past experiences, and current needs. 73. Jeni’s Splendid Ice Creams is famous for its unusual flavors, such as Wildberry Lavender, Goat Cheese with Red Cherries, and Sweet Corn and Black Raspberries. Which of the following product characteristics would most likely influence the market success of these flavors? A. Compatibility B. Comparability C. Complexity D. Tangibility E. Competitive advantage Answer: A Rationale: Is the ice cream consistent with existing product experiences? 74. When the Segway Human Transporter was introduced in 2002, many people expected the product to be a phenomenal success. While the Segway is still on the market, it has never been the success so many expected. A recent Wall Street Journal article suggested that the Segway, while brilliant technologically, seemed impractical to most people since it could not be used to replace their current method of transportation. In other words, the Segway had problems with: A. compatibility. B. relative advantage. C. observability. D. trialability. E. longevity. Answer: A Rationale: Since the Segway could not replace consumer’s current transportation, it was incompatible with consumers’ transportation needs. 75. Many product failures such as Cucumber antiperspirant spray, Toaster Eggs, and Health-Sea sea-sausages most likely did not succeed because they did not conform to the product characteristic of: A. complexity. B. trialability. C. total advantage. D. observability. E. compatibility. Answer: E Rationale: These products most likely failed because they were not compatible with existing products and because customers could not relate to them. 76. The product characteristic affecting the rate of adoption characterized by the degree to which a product is perceived as superior to existing substitutes is: A. compatibility B. complexity C. relative advantage D. product differentiation E. competitive advantage Answer: C Rationale: The relative advantage is the degree to which a product is perceived to be superior to existing substitutes. 77. Biopure Corp. is developing a human blood substitute called Hemopure. Unlike donated human blood that needs to be refrigerated and expires after a short period of time, Hemopure is shelf stable and can be stored for two years or more. Also, it does not need to be matched to a person’s blood type. These factors make it well-suited for trauma cases where blood must be transfused at an accident site or on the battlefield. Which product characteristic influencing the rate of adoption does this represent? A. Complexity B. Compatibility C. Relative advantage D. Observability E. Trialability Answer: C Rationale: Hemopure is superior to existing substitutes in that it does not need to be matched to blood type and can be stored for a longer period of time. 78. Which product characteristic affecting the rate of adoption of a new product represents the degree to which the benefits or other results of using the product can be communicated to target customers? A. Observability B. Diffusion C. Adoption D. Trialability E. Complexity Answer: A Rationale: If target customers can see the benefits, the rate of adoption will be faster. 79. Razor scooters gained instant popularity because walkers and runners frequently saw people on the scooters zipping by them and having fun. This information suggests the adoption rate of the Razor scooter was most affected by which product characteristic? A. Complexity B. Trialability C. Relative advantage D. Observability E. Compatibility Answer: D Rationale: Observability refers to the degree to which the product benefits can be observed. 80. A new medication to eliminate fungal growths on people’s toenails may have a slow rate of adoption because it is not a highly visible item in homes. Also, this item is not often discussed among friends and coworkers. This is an example of how the characteristic of _____ can work to slow the adoption process. A. relative advantage B. observability C. trialability D. complexity E. compatibility Answer: B Rationale: Observability refers to the degree to which the benefits or other results of using a product can be observed by others and communicated to target customers. 81. The degree to which a product can be used on a limited basis represents which product characteristic influencing the rate of adoption? A. Complexity B. Trialability C. Observability D. Relative advantage E. Sampling Answer: B Rationale: Trialability is the degree to which a product can be tried on a limited basis. 82. Which of the following products has the lowest level of trialability? A. An Internet chat room B. Low-fat ice cream C. Surgically implanted hearing aids D. Organic pet food E. A new air freshener Answer: C Rationale: Trialability is the degree to which the product can be tried on a limited basis. Surgically implanted hearing aids would more likely be a permanent procedure. 83. When Coca-Cola North American debuted Gold Peak iced tea, a spokesperson for the company said, “In looking at the ready-to-drink tea market, we found that the one place that nobody seemed to be playing was in the category of classic iced teas like mother used to make. Gold Peak is a quality product that brings back that classic taste. We’re going to do a lot of sampling with this product because we believe that if people try it, they’re going to love it and stick with it.” In other words, its adoption rate will rely on its: A. compatibility B. comparability C. complexity D. trialability E. competitive advantage Answer: D Rationale: Trialability refers to the degree to which a product can be tried on a limited basis. 84. A biological metaphor that traces the stages of a product’s acceptance, from its introduction (birth) to its decline (death) is called the: A. product diffusion process B. product phase C. product adoption stages D. product evolution cycle E. product life cycle Answer: E Rationale: The product life cycle is a useful marketing management diagnostic tool and a general guide for marketing planning in various “life cycle” stages. 85. The stages of the product life cycle, in order, are: A. introduction, maturity, decline B. introduction, growth, maturity, decline C. growth, maturity, plateau, decline D. innovation, early adoption, late adoption, laggard E. category acceptance, category growth, brand acceptance, brand growth Answer: B Rationale: The four stages of the product life cycle are introduction, growth, maturity, and decline. 86. All the brands that satisfy a particular type of need such as shaving products, laundry detergent, soft drinks, and furniture make up a(n): A. product life cycle stage. B. primary group. C. adopter category. D. product category. E. reference group. Answer: D Rationale: This is the definition of a product category. 87. Microwave ovens, staplers, frozen yogurt, and purses are examples of: A. PLC line items. B. line-extendable categories. C. brand classes. D. brand groupings. E. product categories. Answer: E Rationale: A product category includes all brands that satisfy a particular type of need, such as those listed. 88. A brand of iced tea called Gold Peak has high marketing costs as well as high production costs. Promotions for the product are aimed at gaining distribution and informing consumers that this premium product tastes like its home brewed. In which stage of the product life cycle is Gold Peak iced tea? A. Introductory B. Growth C. Maturity D. Decline E. Saturation Answer: A Rationale: These characteristics illustrate the introductory stage of the product life cycle. 89. The length of the introductory stage of the product life cycle for a new product is largely determined by: A. the size of the product B. the product’s marketing mix C. the efficiency of the test marketing D. product characteristics, such as advantages over substitute products E. the size of the market Answer: D Rationale: The introductory stage of the product life cycle is affected by how customers perceive the characteristics of the product. Other factors that affect the length of the introductory stage are the educational effort required to use the item and management’s resource commitment to the item. 90. The phase of the product life cycle in which healthy profits usually begin to appear is the _____ stage. A. growth B. decline C. introductory D. maturity E. commercialization Answer: A Rationale: Because losses often occur during the introductory stage, profits first appear in the growth stage. 91. During the growth stage of the product life cycle: A. there is little emphasis on the distribution strategy B. demand for the product is limited to high-income consumers C. prices increase due to economies of scale D. there is decreased direct competition E. profits peak Answer: E Rationale: During the growth stage of the product life cycle, profits rise rapidly, reach their peak, and begin declining as competition intensifies. 92. At the beginning of the maturity stage of the product life cycle, sales typically: A. become flat and do not change B. increase at an increasing rate C. decrease at a decreasing rate D. decrease at an increasing rate E. increase at a decreasing rate Answer: E Rationale: In the maturity stage, sales are still increasing, but the rate of increase has slowed down. 93. Normally, the longest stage of the product life cycle is the _____ stage. A. maturity B. growth C. introductory D. decline E. development Answer: A Rationale: Many products stay in this stage of their life cycles and have been for years. 94. In which stage of the product life cycle do marginal competitors start dropping out of the market? A. Introduction B. Growth C. Maturity D. Decline E. Shake-out Answer: C Rationale: In the maturity stage, sales increase at a decreasing rate, and as prices and profits continue to fall, marginal competitors start dropping out of the market. 95. A long-run drop in sales signals the beginning of which stage in the product life cycle? A. Laggard B. Saturation C. Deterioration D. Decline E. Decay Answer: D Rationale: This is a characteristic of the decline stage of the product life cycle. 96. Which of the following products is most likely to be in the decline stage of its product life cycle? A. Cookie mixes B. Wireless mobile phones C. Programmable CD-ROMs D. Funeral caskets E. Prerecorded audiocassette tapes Answer: E Rationale: Sales are falling, and the product is not being supported by marketing efforts even though there are still some cassette tape players in use. 97. The rate of sales decline during the decline stage of the product life cycle is largely governed by: A. the amount of money spent on advertising. B. the number of competitors in the market. C. the intensity of the competition’s marketing efforts. D. the amount of shelf space allotted to the product. E. how rapidly consumer tastes change or substitute products are adopted. Answer: E Rationale: Changing consumer tastes can force a product into decline, particularly if an alternative is available. 98. You are a product manager for a manufacturer of trampolines. You have determined that the trampoline is in the maturity stage of the product life cycle. To keep your product from entering the decline stage, you should: A. use promotion to increase primary demand for trampolines B. abandon peripheral target markets for trampolines C. raise the price of your trampolines because customers are not price sensitive in this stage D. eliminate all unnecessary marketing expense E. promote trampolines heavily to dealers and customers Answer: E Rationale: Review Learning Outcome 5. In the maturity stage of the product life cycle, competition is strong, and market saturation can lead to stagnation or decline. Heavy promotion helps maintain or increase market share by stimulating sales and maintaining visibility among dealers and customers. 99. Washing machines and refrigerators are in the _____ stage of the product life cycle. A. maturity B. growth C. introductory D. decline E. development Answer: A Rationale: Many major household appliances are in this stage of their life cycles and have been for years. 100. Which of the following statements about the product life cycle (PLC) is true? A. The PLC concept encourages marketing managers to think reactively. B. Marketers do not yet understand the relationship between the adopter categories and the stages of the PLC. C. There are as many new buyers in the maturity stage of the PLC as in the growth stage. D. The PLC is especially useful as a predicting tool. E. Just as there are five adopter categories, there are five PLC stages. Answer: D Rationale: The PLC concept encourages marketing managers to think proactively about where a product will go in its life cycle. Fitbit The pedometer is getting kicked up a notch with the new Fitbit device. The Fitbit is a $99 motion-detecting sensing device that can measure the user’s activity even when asleep. It digitally records the distance a user walks or runs, right down to the number of steps, and calories burned. The device wirelessly sends data to its Web site, fitbit.com, giving users minute-by-minute details. Users can add consumption information at the Web site, allowing an accurate picture of calorie consumption and expenditures. Unlike other devices, like the Nike + iPod Sport Kit that monitors walking and running and sells for $29 or the Zeo Personal Sleep Coach that records brainwaves while the user is sleeping and sells for $399, the Fitbit combines both functions. The first-time Fitbit setup isn’t very easy for users, but once over that hurdle, it’s relative easy to use. 101. Refer to Fitbit. The company marketing the Fitbit does not currently market a product like this. Which of the following best represents the category of new product the Fitbit is for this company? A. New-to-the-world product B. New product line C. Addition to existing product lines D. Repositioned product E. Incremental product Answer: B Rationale: The category of new product lines represents products that the firm has not previously offered. 102. Refer to Fitbit. The idea for the Fitbit was generated from an employee retreat in which everyone was encouraged to think of unlimited product ideas for the fitness-minded consumer. Participants did not critique any of the ideas, as the goal at that point was just to generate ideas. What idea-generating technique does this illustrate? A. Brainstorming B. Brain dumping C. Snowball sampling D. Laddering E. Entropy Answer: A Rationale: The goal of brainstorming is to get a group to think of unlimited ways to vary a product or solve a problem. Members avoid criticism of an idea no matter how ridiculous it may seem. 103. Refer to Fitbit. In terms of the new-product development process, Fitbit’s availability in retail stores and online shows that it is in the _____ stage. A. idea screening B. idea generation C. business analysis D. test marketing E. commercialization Answer: E Rationale: The final stage in the new-product development process is commercialization, the decision to market the product. 104. Refer to Fitbit. The process by which the adoption of this innovative product spreads is called the: A. diffusion process B. product life cycle C. consumption process D. viral process E. two-stage process Answer: A Rationale: The diffusion process is the process by which the adoption of an innovation spreads. 105. Refer to Fitbit. The fact that Fitbit can monitor motion while awake and asleep makes it different from competing products that might increase its rate of adoption. Which product characteristic affecting the rate of adoption does this illustrate? A. Complexity B. Compatibility C. Relative advantage D. Observability E. Trialability Answer: C Rationale: Fitbit has a relative advantage over the Nike + iPod and the Zeo devices because it monitors what both of them do separately. Rapala VMC Corporation Finland-based Rapala VMC Corporation is the world’s largest fishing lure manufacturer. It developed its first fishing lure––a cigar-shaped minnow––in 1962. The annual market for fishing lures in terms of retail sales is approximately $600 million. Rapala VMC garnered one-third of that amount in 2008. New lures must be introduced each year in order to stay competitive in this industry. Like other lure manufacturers, Rapala focuses on two questions in developing and making new lures: Does it work, and does it look good? Developing a new lure takes two or three years and involves extensive field testing by tournament professionals and fishing guides. At the annual fishing industry trade show in 2008, Rapala unveiled the “dream lure for the 21st century.” 106. Refer to Rapala. The “dream lure for the 21st century” will more than likely be an example of a(n): A. new product line B. addition to existing product line C. discontinuous innovation D. improvement of existing product E. repositioned product Answer: B Rationale: The firm makes lures and is simply adding a new one to its product mix. 107. Refer to Rapala. The testing of new lures by tournament professionals and fishing guides would take place in which stage of new-product development? A. Commercialization B. Idea generation C. Idea screening D. Concept testing E. Product development Answer: E Rationale: These lures would be prototypes. 108. Refer to Rapala. After the trade show, the newest lure made by Rapala will enter which stage of the new-product development process? A. Commercialization B. Idea generation C. Idea screening D. Concept testing E. Product development Answer: A Rationale: The final stage of the new-product development process is commercialization, the decision to market a product. 109. Refer to Rapala. Because buyers of fishing lures want to have the newest, most technologically improved lure, most of Rapala’s customers would more than likely fall into the _____ category of adopters. A. laggards B. prompt diffusers C. early adopters D. innovators E. early majority Answer: D Rationale: Innovators are the first 2.5 percent of all those who adopt the product. 110. Refer to Rapala. The degree to which the newest lures are perceived as superior to earlier models refers to their _____, a characteristic used to predict the rate of adoption. A. trialability B. observability C. relative advantage D. differentiation capability E. complexity Answer: C Rationale: Relative advantage is the degree to which a product is perceived as superior to existing substitutes. 111. Refer to Rapala. Fishing lures are most likely in the _____ stage of their product life cycle. A. saturation B. maturity C. growth D. innovation E. decline Answer: B Rationale: One of the characteristics of products in the maturity stage is the addition of annual models. Going to the Dogs Demand for pet services is greatly increasing across the United States. In fact, Americans will spend nearly $44 billion dollars on their pets this year. Many American dog owners are seeking out “doggy day cares” that are more like a resort or spa than an ordinary kennel for their canine companion. Day care services for dogs now include toy rooms, outside play areas, doggie massages, treadmills, swimming pools, and cushy beds for nap time. Pet owners can watch their pets via a webcam, and some doggy day cares have a phone where owners can talk to their dogs when they feel their pets need to hear their voices. Rates vary from $20 to $45 a day per pet, depending on the amenities that the pet owner chooses. 112. Refer to Going to the Dogs. The doggy day care center is more like a dog resort than a dog kennel. A dog day care represents what type of new product? A. Competitive innovation B. Discontinuous innovation C. New product line D. Revision of existing product E. Higher-priced product Answer: D Rationale: The dog day care is an improvement on the standard dog-boarding kennel and, as such, is a revision of an existing product. 113. Refer to Going to the Dogs. Suppose that before opening the It’s a Dog’s Life doggy resort the owners gathered together a group of ten dog owners to discuss what they would want to see in the ideal dog day care center. This would be an example of: A. idea screening B. diffusion C. a focus group interview D. basic research E. observation Answer: C Rationale: An objective of focus group interviews is to stimulate insightful comments through group interaction. 114. Refer to Going to the Dogs. Before opening the It’s a Dog’s Life doggy resort, the potential company owners projected the costs involved in providing the services the target market (dog owners) appears to desire. Unfortunately, a decision was made to not proceed with the doggy resort, as the owners felt the cost to provide the services was too high considering the rates the target market would be willing to pay. This would be an example of: A. idea screening. B. concept testing. C. business analysis. D. commercialization. E. test marketing. Answer: C Rationale: In the business analysis stage preliminary figures for demand, cost, sales, and profitability are calculated 115. Refer to Going to the Dogs. Laura felt a little bad about leaving her dog, Toby, at home all day while she was at work. She remarked to a coworker one day about her concerns and was surprised when the coworker told her about the local “doggy daycare” business, which she had never heard of before. Because Laura did not know such a service existed, “doggy daycare” represented a(n) _____ to her. A. heterogeneous shopping product B. diffusion C. market laggard D. product diversification E. innovation Answer: E Rationale: An innovation is a product perceived as new by a potential adopter. 116. Refer to Going to the Dogs. For many dog owners, it may be hard to understand the difference between a traditional kennel and a dog day care, especially given the price differential. As a result, dog day cares may offer special low rates for first-time users in an effort to reduce which of the following issues concerning the rate of diffusion? A. Compatibility B. Complexity C. Observability D. Innovativeness E. Relative advantage Answer: C Rationale: By lowering the price for first-time users, the dog day care will make it easier for dog owners to try the facility and experience its benefits. 117. Refer to Going to the Dogs. One challenge to adoption of the dog day care is the fact that dog owners are used to paying a somewhat minimal fee for boarding their dogs in a kennel, while a day care center may demand many times as much for the same time span. This suggests that the _____ of the new product may affect the rate of diffusion. A. compatibility B. complexity C. relative advantage D. observability E. trialability Answer: A Rationale: Compatibility refers to the degree to which the new product is consistent with existing values and product knowledge. 118. Refer to Going to the Dogs. Central Bark Doggie Day Care currently has 31 locations, with a new Gainesville, Florida, location coming soon. With the opening of competition in the form of Camp Bow Wow and others, it appears that the dog day care product is moving into the _____ stage of the product life cycle. A. commercialization B. introductory C. growth D. maturity E. decline Answer: C Rationale: A competitor entering the market is an indicator of the growth stage in the product life cycle. ESSAY 1. Name and describe the six categories of new products. Answer: NEW-TO-THE-WORLD PRODUCTS (DISCONTINUOUS INNOVATIONS) create an entirely new market. New-to-the-world products represent the smallest category of new products. NEW PRODUCT LINES are products the firm has not offered in the past but will introduce into an established market. ADDITIONS TO EXISTING PRODUCT LINES are new products that supplement a firm’s established line. Complementary products can also supplement a firm’s offerings. IMPROVEMENTS OR REVISIONS OF EXISTING PRODUCTS are usually minor changes that may entail addition or deletion of ingredients. Many of these products are labeled “new and improved.” REPOSITIONED PRODUCTS are existing products targeted at new markets or market segments. LOWER-PRICED PRODUCTS are those that provide similar performance to competing brands at a lower cost. Lower cost may result from technological advantages, economies of scale in production, or lower marketing costs. 2. List the seven steps of the new-product development process. Answer: 1. New-product strategy 2. Idea generation 3. Idea screening 4. Business analysis 5. Development 6. Test marketing 7. Commercialization 3. Name five sources of new-product ideas. Which two techniques are considered the most useful for generating creative thinking for new-product ideas? Answer: The chapter discusses several sources of ideas: customers, employees, distributors, vendors, competitors, research and development, and consultants. The two approaches considered most useful for generating new-product ideas are brainstorming and focus group exercises. 4. After successful business analysis of a new product, the development stage begins. Describe the development process and explain the difference between laboratory testing and use testing. Answer: While a prototype product is being physically developed by the research and development or engineering department, the marketing department begins to develop marketing strategies. Packaging, branding, and labeling decisions are made, while preliminary promotion, price, and distribution strategies are developed. Technical feasibility of manufacturing the product at a reasonable cost is also examined. Prototype product models are often laboratory and use tested during the development stage. Laboratory tests subject products to much more severe treatment than is expected by end users. Laboratory testing can ensure products conform to established safety standards. Use tests place the prototype in consumers’ homes or businesses for trial. 5. Describe the idea screening stage of the new-product development process. Describe a common test used during the screening stage. Answer: The screening process is used as an initial filter to eliminate new-product ideas that are inconsistent with the organization’s new-product strategy or are inappropriate for some other reason. The review is usually done by a group formally appointed to screen new-product ideas. Most of the ideas are rejected at this stage. Concept tests are often used at the screening stage to evaluate product concept alternatives. These tests can be good predictors of early trial and repeat purchases for line extensions. They are not as accurate in predicting the success of new products that create new consumption patterns and require major changes in consumer behavior. 6. After products and marketing programs have been developed for new products, they are usually tested in the marketplace. What is test marketing? How may a company benefit from the use of such marketing? How can test marketing cause problems for a company? Answer: Test marketing is a limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation. An advantage of test marketing is that it allows management to evaluate alternative strategies and see how well the various aspects of the marketing mix fit together. Test marketing may reduce risk by allowing modification of a marketing mix before national introduction or by withdrawal of a product with failure characteristics. However, test markets have several disadvantages: costs of test markets are high, it reveals the product to competitors, and a product’s success in a test market does not guarantee it will be a nationwide hit. 7. Discuss alternatives to traditional test marketing. Answer: Supermarket scanner testing (single-source research) is one test marketing alternative. Another alternative is simulated (laboratory) market testing. These tests entail showing people promotional materials for several products, including the test products. These people then shop at a mock or real grocery store, where purchases are recorded. Another alternative is online test marketing. Many firms are finding that the Internet offers a fast, cost-effective way to conduct test marketing. 8. What is the final stage in the new-product development process? What tasks are set in motion during this stage? Answer: The final stage in the new-product development process is commercialization. The decision to commercialize sets several tasks in motion: ordering production materials and equipment, starting production, building inventories, shipping the product to field distribution points, training the sales force, announcing the product to the trade, and advertising to potential customers. 9. Global R&D is important for two reasons. What are they? Answer: Global R&D is important for two reasons. First, large companies have become global and no longer are focused only on one market. Global R&D is needed to connect with customers in different parts of the world. Second, companies want to tap into the world’s best talent. 10. Describe how a multinational corporation can most efficiently and effectively meet the needs of the global market. Answer: A firm that adopts a worldwide new-product development strategy is better able to develop products with specifications that are marketable in multiple countries. Ideally, products should be developed for potential worldwide distribution, and unique multinational market requirements are incorporated into the base product whenever technically feasible. A company could also design products to meet regulations and other key requirements in its major market and then meet smaller markets’ requirements on a country-by-country basis. The main goal of the global product development process is not to develop a standard product or product line, but to build adaptability into products that are expected to achieve worldwide appeal. 11. There are five categories of adopters participating in the diffusion process. Name and briefly describe each of these five categories in the correct order from first adopter to last adopter. Answer: INNOVATORS represent the first 2.5 percent of adopters. They are venturesome and eager to try new products. They have higher incomes, better education, and more self-confidence than non-innovators and rely less on group norms. Moreover, they are active outside their communities. Innovators obtain information from scientific sources and experts. EARLY ADOPTERS represent the next 13.5 percent of adopters. They are reliant on group norms and values, oriented to the local community, and likely to be opinion leaders. THE EARLY MAJORITY is the next 34 percent to adopt. They are deliberate in their information collection and are likely to be the friends and neighbors of opinion leaders. THE LATE MAJORITY is the next 34 percent to adopt. They adopt to conform to social pressure. They tend to be older and below average in income and education. They rely on word-of-mouth communication rather than the mass media. Their dominant characteristic is skepticism. LAGGARDS are the final 16 percent to adopt. They are tradition bound and do not rely on group norms. Laggards have the lowest socioeconomic status, are suspicious of new products, and are alienated from a rapidly advancing society. Marketers typically ignore laggards. 12. Hemopure is a blood substitute developed by Biopure Corporation. It does not have to be refrigerated or blood typed like donated human blood that is currently being used in blood transfusions. It comes in bags just like donated blood, so it can be used with intravenous tubes and needles just like donated human blood. As a result, medical personnel will not have to make any adjustments if they adopt this product. Name and describe the five product characteristics influencing the rate of adoption of new products, and explain how each factor will influence the rate of adoption of a blood substitute like Hemopure. Answer: COMPLEXITY refers to the degree of difficulty involved in understanding and using a new product. The more complex the product, the slower its diffusion. Hemopure is administered the same way as donated blood, so the complexity will be low for this product and will increase the rate of adoption. COMPATIBILITY refers to the degree to which the new product is consistent with existing values and product knowledge, past experiences, and current needs. Incompatible products diffuse more slowly than compatible products. Hemopure is very compatible with how medical personnel currently meet patients’ need for blood transfusions, so the rate of adoption will increase. RELATIVE ADVANTAGE is the degree to which a product is perceived to be superior to existing substitutes. Superiority increases the diffusion rate. Because Hemopure does not have to be refrigerated or blood typed, it is superior to donated human blood. This will increase the rate of adoption. OBSERVABILITY refers to the degree to which the benefit or other results of using the product can be observed by others and communicated to target customers. A higher degree of observability enhances diffusion. Medical professionals can see the benefit of the product by looking at the results of clinical trials. TRIALABILITY is the degree to which a product can be tried on a limited basis. Demonstrations and sampling help trialability. Products with low levels of trialability experience slower diffusion. Hospitals could be given the blood to test, which would likely increase the rate of adoption. 13. Draw the sales line and the profit line of the product life cycle in the following diagram, and label each line. Then indicate the names of the four stages of the product life cycle in the blanks provided. Answer: See Exhibit 11.2. The sales line should start at zero sales at the beginning of the introductory stage, accelerate during the growth stage, peak in the maturity stage, and decrease during the decline stage. The profit line should start in the negative range during the introductory stage, break even at the start of the growth stage, peak during the growth stage, and reach a near-zero asymptote during the maturity and decline stages. At no point should the profit line be above the sales line. 14. List the four stages of the product life cycle and discuss the typical characteristics of each stage. Answer: The INTRODUCTORY STAGE is characterized by a high failure rate, little competition, frequent product modification, limited distribution, high marketing and production costs, negative profits, and promotion that stimulates primary demand. The GROWTH STAGE is characterized by increased sales, new competitors, healthy profits that peak, aggressive brand promotion, expanded distribution, price reductions, and possible acquisitions. The MATURITY STAGE is characterized by a peak in sales, lengthened product lines, style modifications, price reductions, falling profits, competitor turnover, heavy promotion, and brand “wars.” The DECLINE STAGE is characterized by a long-run drop in sales and profits, less demand, widespread competitor failure, reduction of advertising costs, and possible elimination of the product. Test Bank for MKTG Charles W. Lamb, Jr. Hair, Joseph F., Carl McDaniel 9781285091860
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