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Chapter 20 1. Which of the following is most closely related with the organic growth of an organization? A) acquiring a product or service brand B) entering new market places C) increasing the operational profitability D) increasing productivity of employees E) developing new products from within Answer: E Rationale: Organic growth refers to the expansion of a company's operations through internal processes, such as developing new products from within the organization. Acquiring a product or service brand (option A) and entering new marketplaces (option B) typically involve external activities. While increasing operational profitability (option C) and productivity of employees (option D) are important for growth, they are not inherently related to organic growth, which focuses on internally generated initiatives like developing new products. 2. New-to-the-world products are ________. A) low-cost products designed to obtain an edge in highly competitive markets B) new product enhancements that supplement established products C) new versions of an existing product that has been less successful D) new products that create an entirely new market E) existing products that are targeted to new geographical markets Answer: D Rationale: New-to-the-world products (also known as groundbreaking or pioneering products) are those that create an entirely new market. They introduce innovations that were previously unknown or unavailable to consumers. 3. Which of the following firms is most likely to seek radical innovation? A) a traditional publishing company B) a small scale FMCG company C) a firm that procures and markets wheat D) a high-tech firm in telecommunications E) a firm that sells mineral water Answer: D Rationale: Radical innovation involves the development of entirely new technologies or products that significantly disrupt existing markets. High-tech firms in sectors like telecommunications are more inclined to seek radical innovation as they operate in dynamic environments where technological advancements drive competition and market evolution. 4. Most new-product activities are devoted to ________. A) changing the target markets B) developing new-to-the-world products C) introducing backward integration D) improving existing products E) changing the existing market dynamics Answer: D Rationale: The majority of new-product activities focus on improving existing products. This includes enhancements, modifications, or upgrades to meet changing consumer preferences, technological advancements, or competitive pressures. 5. Which of the following is the best example of a new-to-the-world product? A) Walmart, the retail giant, opens new stores in an underdeveloped African country. B) Pestorica, a publishing company, decides to launch a new sports magazine. C) Tata Motors, an Indian automobile company, acquires Jaguar to extend its business. D) An Asian company licenses a U.S. apparel brand name though the brand is not familiar in Asia. E) Kids-Med, a company that produces childcare products, launches a non-contact thermometer. Answer: E Rationale: A new-to-the-world product is one that introduces a completely new concept or technology to the market. In this case, the non-contact thermometer launched by Kids-Med is a new-to-theworld product as it introduces a novel technology that wasn't previously available in the market. 6. Most established companies focus on ________ innovation when they aim to enter new markets by tweaking existing products, or they want to stay one step ahead in the market by using variations on a core product. A) incremental B) continuous C) spontaneous D) radical E) competitive Answer: A Rationale: Established companies often engage in incremental innovation when they make minor improvements or modifications to existing products to maintain competitiveness or enter new markets. Incremental innovation involves building upon existing products or processes rather than introducing entirely new ones. 7. It has been observed that most new products have shorter product life cycles. What is the reason for this? A) Most new products do not use technology. B) Most new products are not backed by a marketable idea. C) New products do not get adequate management support. D) Social and governmental constraints lead to this failure. E) Rivals quickly copy products that are successful. Answer: E Rationale: Shorter product life cycles for new products are often attributed to the rapid imitation or replication of successful products by competitors. This leads to increased competition and a faster decline in market share for the original product. 8. Which of the following strategies for new-product development incorporates the buyers' preferences in the final design of the product? A) customer-driven engineering B) market leadership C) cost leadership D) incremental innovation E) disruptive technology Answer: A Rationale: Customer-driven engineering involves integrating customer preferences and feedback into the design and development process of new products. This approach ensures that the final product aligns closely with the needs and desires of the target market. 9. Pager, a simple personal device for short messages, became famous in the 1990s. Troveron Communications launched a pager in the early twenty-first century. Due to the introduction of mobile phones and text messaging, the pager industry was on a decline. The company's innovations were not well received by the market and the product became a failure. Which of the following is the most likely reason for the product's failure in this case? A) poor launch timing of the product B) a small and fragmented target market C) high cost of development D) social and economic constraints E) hasty product development Answer: A Rationale: The poor timing of the product launch is the most likely reason for its failure. With the widespread adoption of mobile phones and text messaging, the demand for pagers rapidly declined. Troveron Communications failed to anticipate this shift in consumer behavior, resulting in the product being introduced at a time when its market relevance was diminishing. 10. After creating a product prototype, a company tests it within the firm to see how it performs in different applications. The company refines the prototype to correct the mistakes found in in-house testing. What should be the next step? A) commercializing the product B) performing concept testing C) conducting beta testing with customers D) creating a marketing strategy for the product E) performing business analysis Answer: C Rationale: The next step after in-house testing is conducting beta testing with actual customers. This allows the company to gather feedback from real users in real-world scenarios, which is crucial for identifying any further issues or improvements needed before the product is ready for commercialization. 11. Identify a shortcoming of giving the responsibility of new product development to the product managers of a company. A) They would not be familiar with the industry standards. B) Product managers would not have an operational focus. C) Product managers are often busy managing existing lines. D) They will find it difficult to gain support from employees. E) Product managers are less likely to use participative management. Answer: C Rationale: Product managers are typically responsible for managing existing product lines, which can consume a significant amount of their time and attention. Therefore, entrusting them with new product development may result in divided focus and less dedicated effort towards generating innovative ideas for new products. 12. ________ teams are cross-functional groups charged with developing a specific product or business. A) Virtual B) Venture C) Fundamental D) Elemental E) Transitory Answer: B Rationale: Venture teams are specifically assembled cross-functional groups tasked with the development of a particular product or business venture. They bring together diverse expertise and perspectives to drive innovation and product development. 13. Intercom, Inc. together with its subsidiaries, primarily engages in the generation, transmission, and distribution of electric power in the United States. The company observes that its growth has stagnated over a period of two years. In an attempt to promote growth, it considers adding new features to the existing products and introducing a few new products. The company forms a committee consisting of three top executives, one of the production managers, a few operational managers, and a representative of the HR department to generate ideas. This team is called a(n) ________. A) virtual team B) venture team C) fundamental team D) elemental team E) transitory team Answer: B Rationale: A venture team is a cross-functional group formed to develop specific products or business ventures. In this scenario, Intercom, Inc. forms a venture team to generate ideas for new features and products to stimulate growth. 14. A team formed at Intercom, Inc. to generate ideas for new products, conducts frequent meetings and engages in activities such as mind mapping and brainstorming. Most of the meetings are conducted at informal locations away from office. These workplaces are called ________. A) skunkworks B) idea funnels C) research centers D) stage gate systems E) contextual bases Answer: A Rationale: Informal workplaces away from the office, where innovative teams engage in activities like brainstorming and idea generation, are referred to as skunkworks. These environments foster creativity and encourage out-of-the-box thinking. 15. The ________ used by companies divides the innovation process into stages, with a checkpoint at the end of each stage. A) reverse assumption analysis technique B) skunkworks system C) stage-gate system D) spiral development process E) new-product department technique Answer: C Rationale: The stage-gate system is a structured approach to new product development that divides the process into distinct stages, with a gate review at the end of each stage to evaluate progress and decide whether to proceed to the next stage or halt the project. 16. ________ are informal workplaces, sometimes garages, where intrapreneurial teams attempt to develop new products. A) Stage-gate systems B) Skunkworks C) Funnels D) Opportunity spaces E) Research centers Answer: B Rationale: Skunkworks are informal work environments, often located outside of the main office, where entrepreneurial or intrapreneurial teams work on developing new products or innovations. These spaces encourage creativity and experimentation. 17. Which of the following questions is answered during the business analysis of ideas? A) Will this product meet our profit goals? B) Have we got a technically and commercially sound product? C) Can we find a cost-effective, affordable marketing strategy? D) Can this product meet sales expectations? E) Can we find a good concept consumers say they would try? Answer: D Rationale: Business analysis of ideas involves assessing the potential of new products from a financial perspective. One key aspect is determining whether the product can meet sales expectations, which is crucial for evaluating its viability and potential profitability. 18. During which of the following stages in new product development decision making do managers analyze if they can find a good thought consumers say they would try? A) idea generation B) idea screening C) business analysis D) concept development and testing E) product development and testing Answer: D Rationale: During the concept development and testing stage, managers analyze whether consumers would be willing to try the proposed product concept. This involves obtaining feedback from potential customers to gauge interest and identify potential issues or improvements needed before moving forward with development. 19. ________ process recognizes the value of returning to an earlier stage to make improvements before moving forward. A) Spiral development B) Reactive development C) Market testing D) Proactive development E) Concept testing Answer: A Rationale: Spiral development is a process that recognizes the importance of iteration and refinement throughout the innovation process. It allows for returning to earlier stages to make improvements based on feedback or new insights before advancing to the next stage. 20. The ________ uses observational, anthropological, and ethnographic methods or consumer self-reports to map consumer needs, wants, and even beyond. A) business analysis B) demand landscape C) opportunity space D) strategic blueprint E) internal design analysis Answer: B Rationale: The demand landscape refers to the process of mapping consumer needs, desires, and preferences using various research methods such as observational studies, ethnographic research, or consumer self-reports. This helps companies understand consumer behavior and identify opportunities for innovation and product development. 21. Which of the following uses conceptual lens and structured innovative-thinking tools to achieve market perspectives from different angles? A) business analysis B) strategic blueprint C) internal design analysis D) demand landscape E) opportunity space Answer: E Rationale: The opportunity space involves using conceptual frameworks and structured innovativethinking tools to explore market perspectives from various angles. It helps identify potential opportunities for innovation and new product development by examining customer needs, market trends, and competitive landscapes. 22. Gordon Apparel, Inc. engages in the design, manufacture, and retail of fashion apparel for women, men, children, and pets. The company is known for its timely launch of apparels and stylish designer clothing. The company believes a new product has to create needs and not just satisfy the existing needs. To achieve this goal it engages in controlled idea generation techniques such as brainstorming while creating new designs. Which of the following parts of the DIG framework is given prominence here? A) business analysis B) strategic blueprint C) opportunity space D) internal design analysis E) demand landscape Answer: C Rationale: In this scenario, Gordon Apparel, Inc. focuses on creating new needs rather than simply satisfying existing ones, indicating a strong emphasis on exploring the opportunity space within the market for innovative product ideas. 23. Identify the element in the DIG network that considers how a new product can fit into customers lives and how it can be distinguished from the competitors' products. A) business analysis B) internal design analysis C) strategic blueprint D) demand landscape E) opportunity space Answer: C Rationale: The strategic blueprint element of the DIG framework considers how a new product fits into customers' lives and distinguishes itself from competitors' products. It involves strategic planning and positioning of the product in the market. 24. ________ means inviting the Internet community to help create content or software, often with prize money or a moment of glory involved. A) Stage-gating B) Cocreation C) Microstocking D) Buzzing E) Crowdsourcing Answer: E Rationale: Crowdsourcing involves leveraging the collective intelligence and contributions of a large group of people, often through online platforms, to generate ideas, solve problems, or create content. This can include offering incentives such as prize money or recognition. 25. Surgeons and ER nurses would be considered ________ for surgical equipment. A) venture agents B) internal customers C) buzz agents D) lead users E) connectors Answer: D Rationale: Surgeons and ER nurses, who are directly involved in using surgical equipment, are considered lead users. Lead users are individuals or groups that experience needs or encounter problems before the broader market does, making them valuable sources of insights and feedback for product development. 26. Many believe that customer focus does not help to create better or new products. This belief rests on which of the following ideas? A) Such new product developments decrease the chances of success. B) Customers do not consider the cost of design when suggesting. C) Customers are at times unaware of what they really want. D) It increases the cost of testing a product or service. E) Having too much customer focus leads to a negative brand image. Answer: C Rationale: The belief that customer focus does not help create better or new products often stems from the idea that customers may not always be fully aware of their own needs or desires, leading to potential limitations in relying solely on customer feedback for innovation. 27. The ________ technique for stimulating creativity lists all the characteristics of an object and then modifies each to try to arrive at a new idea. A) reverse assumption analysis B) lateral marketing C) attribute listing D) forced relationship E) morphological analysis Answer: C Rationale: Attribute listing is a creativity technique that involves listing all the characteristics or attributes of an object, then modifying each attribute to generate new ideas or variations. It encourages thinking about objects or concepts in unconventional ways to spark creativity. 28. The ________ technique used for stimulating creativity identifies a problem and then considers the dimension, the medium, and the power source. A) attribute listing B) reverse assumption analysis C) mind mapping D) lateral marketing E) morphological analysis Answer: E Rationale: Morphological analysis is a creativity technique that involves systematically considering various dimensions, mediums, or components of a problem or concept to explore potential solutions or variations. It breaks down the problem into its constituent parts and examines different combinations to generate new ideas. 29. In an attempt to improve the product, a company that manufactures screwdrivers discusses the modification of each attribute, such as replacing the wooden handle with plastic, providing torque power, adding different screw heads, and so on. This creativity technique is called ________. A) attribute listing B) mind mapping C) morphological analysis D) lateral analysis E) reverse analysis Answer: C Rationale: Morphological analysis involves systematically modifying each attribute or characteristic of a product or concept to explore potential improvements or variations. In this scenario, the company is using morphological analysis to generate ideas for improving screwdrivers by considering various modifications to each attribute. 30. Electro Locomotors (EL), Inc. engages in the manufacture, distribution, and marketing of custom vehicles in Brazil. Bono, a hybrid car brand that the company produces, is a market leader in the hybrid vehicles segment. With the increased global focus on nature friendly vehicles and governmental subsidies for companies that manufacture hybrid vehicles, competition has increased for flex-fuel cars like Bono. The heads of the R&D team at EL is in a creative session to generate ideas for improvements to Bono. They consider each part of the car and discuss the possibilities of improvements in each of them. Identify the creativity technique used here. A) attribute listing B) forced relationship analysis C) morphological analysis D) reverse assumption analysis E) mind mapping Answer: A Rationale: The creativity technique used in this scenario involves considering each attribute or part of the product (in this case, each part of the car) and discussing potential improvements or modifications for each. This aligns with the attribute listing technique, where brainstorming is focused on modifying individual attributes to generate new ideas for improvement. 31. ________ works by listing all the normal assumptions about an entity and then turning them around. A) Lateral marketing B) Attribute listing C) Reverse assumption analysis D) Forced relationships E) Morphological analysis Answer: C Rationale: Reverse assumption analysis involves challenging and reversing common assumptions about a particular entity or situation. By questioning these assumptions, new perspectives and ideas can emerge, leading to innovative solutions or insights. 32. The ________ creativity technique begins in a thought that is written down, then proceeds to develop other thoughts that are linked to the first thought, and finally materializes a new idea by associating all the thoughts. A) mind mapping B) contextual analysis C) attribute listing D) reverse assumption analysis E) morphological analysis Answer: A Rationale: Mind mapping is a creativity technique that involves visually organizing thoughts and ideas in a non-linear manner, starting from a central concept and branching out into related ideas. It encourages associative thinking and helps to generate new ideas by exploring connections between different concepts. 33. Increasingly, new-product ideas arise from ________ that combines two product concepts or ideas to create a new offering. A) reverse assumption analysis B) lateral marketing C) attribute listing D) forced relationships E) morphological analysis Answer: B Rationale: Lateral marketing involves combining or linking two unrelated product concepts or ideas to create a new offering. This approach encourages innovative thinking by exploring unconventional connections between different products or concepts. 34. A group of college graduates decide to start a business. Though they are knowledgeable in various business domains, they are unable to arrive at a valuable business idea. They decide to search for ideas in a structured manner. They meet together and start discussing everyone's ideas. Each idea is recorded and then the thoughts that come up in relation to the ideas are written down and discussed. This process helps them to finalize a business plan. What technique is used here? A) morphological analysis B) forced relationship analysis C) reverse assumption analysis D) attribute listing E) mind mapping Answer: E Rationale: The technique used in this scenario is mind mapping, where ideas are generated and organized in a visual and non-linear manner, allowing for the exploration of associations and connections between different concepts. 35. Morboro Energy, Inc. is a large chain of fuel stations in Europe. The company decided to expand its business by incorporating restaurants and automobile service stations as a part of its fuel outlets. This is an example of ________. A) lateral marketing B) brand extension C) market development D) internal marketing E) brand personification Answer: A Rationale: This is an example of lateral marketing, where the company expands its business by incorporating unrelated or tangential products or services into its existing offerings. In this case, Morboro Energy, Inc. expands its fuel stations to include restaurants and automobile service stations. 36. A ________ error occurs when the company dismisses a good idea. A) probability B) performance C) double counting D) DROP E) GO Answer: D Rationale: A DROP error occurs when a company dismisses a potentially good idea prematurely, failing to recognize its value or potential contribution to the business. 37. A(n) ________ is a possible product the company might offer to the market. A) test brand B) alpha product C) beta version product D) product idea E) product concept Answer: D Rationale: A product idea is a conceptualization of a potential product that the company may offer to the market. It represents an initial stage in the product development process where ideas are generated and explored. 38. A(n) ________ is an elaborated version of a product idea expressed in consumer terms. A) test brand B) alpha product C) beta product D) business schedule E) product concept Answer: E Rationale: A product concept is a refined and elaborated version of a product idea, expressed in terms that resonate with consumers. It articulates the value proposition and key features of the potential product in a way that is understandable and appealing to the target market. 39. ________ means presenting the product concept to target consumers, symbolically or physically, and getting their reactions. A) Perceptual mapping B) Brand-positioning mapping C) Brand attribute mapping D) Concept development E) Concept testing Answer: E Rationale: Concept testing involves presenting the product concept to target consumers, either symbolically or physically, to gather their reactions, feedback, and insights. This helps assess the appeal, viability, and potential success of the product concept before investing in fullscale development and launch. 40. Modern firms use the ________ concept testing tool to design products on a computer and then produce rough models to show potential consumers for their reactions. A) morphological analysis B) rapid prototyping C) concept testing D) perceptual mapping E) conjoint analysis Answer: B Rationale: Rapid prototyping is a concept testing tool used by modern firms to quickly design and produce rough models or prototypes of products. These prototypes can then be shown to potential consumers to gather feedback and assess their reactions before proceeding with fullscale production. 41. Brown & Smith, Inc. engages in the design, development, making, and retail of designer jewelry in North America. Before approving a new design of jewelry the company draws it on a computer and then produces models to show potential consumers for their reactions. This allows the company to analyze the possible customer reaction. Identify the concept testing method used here. A) conjoint analysis B) perceptual mapping C) virtual reality testing D) rapid prototyping E) digital fabrication Answer: D Rationale: The concept testing method used here is rapid prototyping. Rapid prototyping involves quickly creating physical models or prototypes of a product concept to gather feedback from potential consumers and analyze their reactions before proceeding with full-scale production. 42. Consumer preferences for alternative product concepts can be measured through ________, a method for deriving the utility values that consumers attach to varying levels of a product's attributes. A) concept testing B) perceptual mapping C) gap level analysis D) conjoint analysis E) morphological analysis Answer: D Rationale: Conjoint analysis is a method used to measure consumer preferences for different product concepts by presenting respondents with hypothetical product offerings that vary in terms of attributes, then deriving utility values based on their preferences for these attributes. 43. With ________, respondents see different hypothetical offers formed by combining varying levels of the attributes, then rank the various offers. A) gap level analysis B) conjoint analysis C) perceptual mapping D) concept testing E) morphological analysis Answer: B Rationale: Conjoint analysis involves presenting respondents with different hypothetical product offerings that vary in terms of attributes, then asking them to rank or rate these offerings. This helps derive the relative importance of different product attributes and their impact on consumer preferences. 44. Universal Services, Inc. provides communication services to residential and business customers in rural and small urban communities primarily in northern England. The company offers services such as local and long distance voice, data, and Internet and broadband product offerings. The company, in an attempt to increase the attractiveness of its offerings, decides to provide special voice and data packages to its customers. The company designs eight different packs that offer varying voice and data benefits to customers. The company then asks a few of its customers to rank the packs in order to choose two best packs. Which of the following testing methods is being used in the above scenario? A) virtual reality testing B) conjoint analysis C) perceptual mapping D) product fabrication E) rapid prototyping Answer: B Rationale: The testing method used in the scenario is conjoint analysis, where respondents are presented with different hypothetical product offerings (in this case, voice and data packages) with varying attributes and are asked to rank or rate them. This helps determine the relative importance of different attributes and their impact on customer preferences. 45. The trade-off approach may be easier to use when there are/is ________. A) many variables B) only a few alternatives C) observers that are biased D) possible offers that are limited E) only one highly desirable solution Answer: A Rationale: The trade-off approach, such as conjoint analysis, is often easier to use when there are many variables involved, as it allows respondents to evaluate and trade-off between different attribute levels to determine their preferences. 46. ________ is a "hybrid" data collection technique that combines self-explicated importance ratings with pair-wise trade-off tasks. A) Sales wave analysis B) Simulative data testing C) Adaptive conjoint analysis D) Business analysis E) Exponential data collection Answer: C Rationale: Adaptive conjoint analysis is a hybrid data collection technique that combines self-explicated importance ratings with pair-wise trade-off tasks. It adapts the presentation of attribute combinations based on respondents' previous ratings to efficiently determine their preferences. 47. ________ exhibit replacement cycles dictated by physical wear or obsolescence associated with changing style, features, and performance. A) Frequently purchased products B) High-moving goods C) Inexpensive products D) Commodity products E) Infrequently purchased products Answer: E Rationale: Infrequently purchased products typically exhibit replacement cycles dictated by factors such as physical wear or obsolescence due to changing styles, features, and performance. These products are not bought frequently and are often replaced after a longer period. 48. To estimate replacement sales, management must research the product's ________, the number of units that fail in year one, two, three, and so on. A) survival-age distribution B) lifecycle ratio C) obsolescence rate D) business turnover ratio E) product-performance usage Answer: A Rationale: To estimate replacement sales, management must research the survival-age distribution of the product, which refers to the number of units that fail or need replacement in each year of the product's lifecycle. 49. For a frequently purchased new product, the seller estimates repeat sales as well as firsttime sales. A high rate of repeat purchasing means customers ________. A) value price more than differentiation B) do not support innovation on brands C) value differentiation more than price D) prefer personalized products rather than standard ones E) are satisfied with the product Answer: E Rationale: A high rate of repeat purchasing for a frequently purchased new product indicates that customers are satisfied with the product and find value in it, leading them to purchase it repeatedly. 50. ________ contribution lists the changes in income to other company products caused by the introduction of a new product. A) Supplementary B) Dragalong C) Gross D) Cumulative E) Net Answer: B Rationale: Dragalong contribution refers to the changes in income to other company products caused by the introduction of a new product. It reflects the positive impact of the new product on the sales or performance of existing products within the company's portfolio. 51. The highest loss a project can create is called ________. A) rapid prototyping income B) payback income C) maximum investment exposure D) incremental yearly exposure E) cannibalized income Answer: C Rationale: Maximum investment exposure refers to the highest potential loss a project can incur. It represents the maximum amount of investment at risk in a project. 52. The job of translating target customer requirements into a working prototype is helped by a set of methods referred to as ________. A) quality function deployment B) quality control processes C) rapid prototyping D) marketing control E) control system formation Answer: A Rationale: Quality function deployment (QFD) is a set of methods used to translate target customer requirements into specific engineering attributes that can be used to design and develop products or services that meet customer needs effectively. 53. Which of the following methodologies takes the list of desired customer attributes (CAs) generated by market research and turns them into a list of engineering attributes (EAs) that engineers can use? A) quality control processes B) quality function deployment C) rapid prototyping D) marketing control E) control system formation Answer: B Rationale: Quality function deployment (QFD) is the methodology that takes the list of desired customer attributes (CAs) generated by market research and turns them into a list of engineering attributes (EAs) that engineers can use. 54. ________ is a customer test that involves placing the product within the firm to see how it performs in different applications. A) Beta testing B) Research testing C) Sales-wave testing D) Alpha testing E) Simulated testing Answer: D Rationale: Alpha testing involves placing the product within the firm to see how it performs in different applications before it is released to external customers. 55. In consumer-goods market testing, the company seeks to estimate four variables. These four variables are: trial, first repeat, adoption, and ________. A) guaranteed response B) price sensitivity C) purchase frequency D) usage convenience E) preferential treatment Answer: C Rationale: In consumer-goods market testing, the company seeks to estimate four variables: trial, first repeat, adoption, and purchase frequency, to gauge the potential success and acceptance of the product in the market. 56. A large FMCG company decides to test market Kora, a new brand of face cleanser, to be launched soon. The company initially distributes a few free samples to some prospective consumers. Later it offers the product to the customers at a discounted price and observes that not only more than seventy percent of the customers are purchasing it but the same number are also satisfied using it. The company keeps using this process 3-4 times to obtain a correct count of the number of people purchasing the product repeatedly. Which of the following testing methods is being used here? A) simulated testing B) controlled testing C) full test marketing D) parallel testing E) sales-wave research Answer: E Rationale: The testing method used here is sales-wave research, where the company distributes samples or offers the product at discounted prices to gauge customer response and measure variables such as repeat purchase behavior and satisfaction levels. 57. Which of the following is an advantage of sales-wave research? A) It gives surprisingly accurate results on advertising effectiveness. B) It allows the brand to gain favorable shelf position. C) It guarantees immediate brand recognition and high sales volume. D) It can be implemented quickly with a fair amount of security. E) It easily creates a buzz in the minds of customers. Answer: D Rationale: An advantage of sales-wave research is that it can be implemented quickly with a fair amount of security, allowing companies to gather valuable insights into customer behavior and market response without significant time delays or investment. 58. Which of the following is usually referred to as a full-blown test market? A) an internal focus group B) a discussion group C) a country D) a city or a few cities E) a laboratory Answer: D Rationale: A full-blown test market typically refers to testing a product in a city or a few cities, where the product is made available to real consumers in real market conditions to assess its performance and acceptance before a broader rollout. 59. Which of the following products is most likely to undergo alpha and beta testing? A) food products B) industrial goods C) consumer products D) commodities E) FMCG products Answer: B Rationale: Industrial goods are most likely to undergo alpha and beta testing, which involves placing the product within the firm and then testing it externally with selected customers to identify and rectify any potential issues before full-scale production and launch. 60. During ________, the company's technical people observe how customers use the product, a practice that often exposes unanticipated problems of safety and servicing and alerts the company to customer training and servicing requirements. A) beta testing B) research testing C) sales-wave testing D) alpha testing E) simulated testing Answer: A Rationale: During beta testing, the company's technical personnel observe how customers use the product, which often exposes unanticipated problems of safety and servicing and alerts the company to customer training and servicing requirements. 61. Poga International, a multinational beverage corporation identifies that one of its competitors is launching an apple flavored drink. The company decides to launch an apple flavor brand along with its competitor. What timing strategy is used here? A) first entry B) blunt entry C) parallel entry D) late entry E) exchange entry Answer: C Rationale: The timing strategy used here is parallel entry, where the company launches its product simultaneously with a competitor's product to directly compete in the market. 62. Some firms might delay the launch of their products until after the competitor has borne the cost of educating the market. Such an entry is called ________ entry. A) strategic pay off B) parallel C) balancing D) late E) compensating Answer: D Rationale: Late entry refers to delaying the launch of a product until after competitors have educated the market and borne the costs of market development. 63. A(n) ________ is any good, service, or idea that is perceived as new, no matter how long its history. A) commodity B) innovation C) adoption D) invention E) novel product Answer: B Rationale: An innovation is any good, service, or idea that is perceived as new, regardless of its actual age or history. 64. Adopters of new products move through five stages. These stages begin with ________ and follow with interest, evaluation, trial, and adoption. A) awareness B) investigation C) trial D) innovation E) diffusion Answer: A Rationale: The stages of the consumer adoption process begin with awareness, followed by interest, evaluation, trial, and finally adoption. 65. Identify the stage in the consumer adoption process in which the customer is stimulated to seek information about the innovation. A) awareness B) adoption C) interest D) evaluation E) trial Answer: C Rationale: The interest stage in the consumer adoption process is when the customer is stimulated to seek information about the innovation. 66. Robert has heard about the latest cell phone from LG electronics that features Wi-Fi hotspot technology. Wi-Fi hotspot is a technology that allows users to share mobile internet with other Wi-Fi enabled devices. Robert visits the company's Web site to read more about the phone. Robert is in the ________ stage of consumer-adoption process. A) interest B) awareness C) evaluation D) trial E) adoption Answer: A Rationale: Robert is in the interest stage of the consumer adoption process because he is seeking information about the product and its features. 67. Armordo is a famous vacuum cleaner brand in Africa. Clara has heard of Armordo and she knows that the product is a success. She has started considering whether or not to buy the vacuum cleaner. What stage of the consumer-adoption process is Clara in? A) awareness B) adoption C) evaluation D) trial E) interest Answer: C Rationale: Clara is in the evaluation stage of the consumer adoption process because she is considering whether or not to buy the product and is likely comparing it to other options. 68. Which of the following is the mental step in consumer-adoption process where the customer starts considering whether to try the innovation? A) adoption B) trial C) awareness D) evaluation E) interest Answer: D Rationale: The evaluation stage in the consumer adoption process is where the customer starts considering whether to try the innovation by assessing its benefits and drawbacks. 69. People who are technology enthusiasts, venturesome, and who enjoy tinkering with new products and mastering their intricacies are called ________. A) innovators B) early adopters C) early majority D) investigators E) experimenters Answer: A Rationale: Innovators are the first adopter group in the diffusion of innovation theory, characterized by their willingness to try new technologies and their adventurous nature. 70. Troma Inc., is a famous manufacturer of cookware, that follows a traditional distributorretailer system to distribute its products. The company abstains from the use of automated supply chain management (SCM) system mainly due to the fear of unknown. However, rapidly escalating operational costs and inefficiencies have made it absolutely necessary for the company to implement an SCM system. The company goes for a big-bang installation of SCM system to become more competitive and cost effective. Identify the adopter group to which Troma belongs. A) innovator B) early adopter C) early majority D) laggard E) late majority Answer: D Rationale: Troma Inc. belongs to the laggards adopter group, as they resist adopting new technologies or systems until they are proven and widely accepted in the market. 71. Which of the following characteristics is closely associated with late majority adopter groups? A) superior technological knowledge B) low price sensitiveness C) opinion leadership D) deliberate pragmatism E) high risk aversion Answer: E Rationale: Late majority adopter groups are characterized by high risk aversion, meaning they are cautious about adopting new innovations and tend to wait until they are proven and widely accepted before making a decision. 72. Joseph, a student of Columbia University, finds many of his classmates have purchased the iPad tablet PC from Apple Computers. The iPad, launched a few months before, has been identified as a very useful product, and many students in the U.S. have rated it highly. Considering all these, Joseph also decides to purchase an iPad. Which of the following is the adopter group to which Joseph belongs? A) early adopter B) innovator C) late majority D) laggard E) early majority Answer: E Rationale: Joseph belongs to the early majority adopter group because he adopts the iPad after a significant portion of the market has already adopted it and its usefulness and acceptance are well established. 73. Five characteristics influence the rate of adoption of an innovation. One of these is ________. A) marketing expertise B) relative advantage C) packaging attractiveness D) government regulations E) place of value exchange Answer: B Rationale: One of the characteristics that influence the rate of adoption of an innovation is its relative advantage, which refers to the degree to which the innovation is perceived as superior to existing alternatives. 74. ________ is the effect one person has on another's attitude or purchase probability. A) Sharing power B) Collaborative power C) Market influence D) Brand power E) Personal influence Answer: E Rationale: Personal influence is the effect one person has on another's attitude or purchase probability, often through word-of-mouth recommendations or opinions. 75. Relative advantage of an innovation refers to the degree to which ________. A) it matches the values and experiences of the individuals B) it is difficult to understand or use C) it can be tried on a limited basis D) it appears superior to existing products E) the benefits of use are observable or describable to others Answer: D Rationale: Relative advantage refers to the degree to which an innovation appears superior to existing products or solutions, making it more attractive for adoption. 76. The degree to which the beneficial results of an innovation's use are observable or describable to others is called ________. A) divisibility B) communicability C) compatibility D) relative advantage E) plainness Answer: B Rationale: Communicability is the degree to which the beneficial results of an innovation's use are observable or describable to others, which can influence its rate of adoption. 77. Which of the following terms refers to the degree to which the innovation can be tried on a limited basis? A) compatibility B) relative advantage C) divisibility D) communicability E) complexity Answer: C Rationale: Divisibility refers to the degree to which an innovation can be tried on a limited basis, allowing potential adopters to experiment with it before fully committing. 78. Organic growth refers to increasing the profitability of the organization by increasing employee productivity. Answer: False Rationale: Organic growth refers to the growth of a company through internal resources and activities, such as increasing sales and expanding market share, rather than through mergers, acquisitions, or other external means. It is not specifically tied to increasing employee productivity. 79. Companies typically must create a strong R&D and marketing partnership to pull off a radical innovation. Answer: True Rationale: Radical innovations often require a strong partnership between research and development (R&D) teams and marketing departments to ensure that innovative products are not only technologically feasible but also meet the needs and preferences of customers. 80. High-tech firms that function in a market with high technological uncertainty, high market uncertainty, and high investment costs are not likely to seek radical innovation. Answer: False Rationale: High-tech firms operating in environments with high technological uncertainty, market uncertainty, and investment costs often seek radical innovation to stay competitive and to create breakthrough products that can disrupt markets and create new opportunities. 81. Companies that fail to develop new products leave their existing offerings vulnerable to increased domestic and foreign competition. Answer: True Rationale: Developing new products is essential for companies to stay competitive and meet changing customer needs. Failure to innovate can result in stagnation and leave companies vulnerable to competitors who introduce new and improved products. 82. Most established companies focus on incremental innovation rather than radical innovation. Answer: True Rationale: Established companies often focus on incremental innovation, making gradual improvements to existing products or processes, rather than pursuing radical innovation, which involves developing entirely new products or technologies. 83. Shorter product life cycles are common in industries characterized by low level of competition. Answer: False Rationale: Shorter product life cycles are more commonly associated with industries characterized by high levels of competition and rapid technological advancements. In such industries, companies must continuously innovate and update their products to stay ahead of competitors. 84. Companies should use normal investment criteria to budget for new-product developments. Answer: False Rationale: Budgeting for new-product development requires special consideration because of the uncertainty and risk involved. Normal investment criteria may not adequately account for the unique challenges and potential returns associated with new-product development. 85. Almost all companies use the conventional percentage-of-sales figure while budgeting for new product development. Answer: False Rationale: While some companies may use the percentage-of-sales method for budgeting new product development, it is not the only approach. Other methods, such as the stage-gate process or activity-based costing, may also be used depending on the company's specific circumstances and objectives. 86. Skunkworks are formal workplaces where intrapreneurial teams attempt to develop new products. Answer: False Rationale: Skunkworks are informal workplaces, often set up outside the formal organizational structure, where small, cross-functional teams work on innovative projects with a high degree of autonomy. 87. Venture teams are cross-functional groups charged with developing a specific product or business. Answer: True Rationale: Venture teams are typically cross-functional groups within an organization tasked with developing new products or pursuing new business opportunities. These teams often have the autonomy and resources needed to innovate and bring new ideas to market. 88. A business analysis is performed mainly to identify if a company has got a technically and commercially sound product. Answer: False Rationale: While assessing technical and commercial viability is an important aspect of business analysis, it also involves evaluating market demand, potential competition, financial feasibility, and other factors to determine the overall viability of a new product or business venture. 89. A spiral development process recognizes the value of returning to an earlier stage to make improvements before moving forward. Answer: True Rationale: In a spiral development process, iterations of development occur, allowing for revisiting and refining previous stages before proceeding further. This iterative approach acknowledges the importance of feedback and continuous improvement throughout the development cycle. 90. The demand landscape uses conceptual lens and structured innovative-thinking tools to achieve market perspectives from different angles. Answer: False Rationale: The demand landscape is a term used to describe the current and future market demand for a product or service, considering factors such as customer needs, preferences, and trends. It does not involve innovative-thinking tools but rather focuses on understanding market dynamics. 91. The strategic blueprint thinks about how the new product can fit into customers' lives and how it can be distinguished from competitors. Answer: True Rationale: The strategic blueprint involves planning and strategizing how a new product will meet customer needs and preferences while also differentiating itself from competitors in the market. 92. Crowdsourcing means inviting the Internet community to help create content or software, often with prize money or a moment of glory as an incentive. Answer: False Rationale: Crowdsourcing involves outsourcing tasks or obtaining input from a large group of people, often via the internet, but it may not always involve prize money or glory as incentives. It can encompass various activities beyond content creation or software development. 93. Cocreation can help a company create favorable word of mouth. Answer: True Rationale: Cocreation involves collaborating with customers or other stakeholders in the product or service development process. When customers feel involved in the creation process, they are more likely to feel a sense of ownership and may spread positive word-of-mouth about the product or brand. 94. Employees can be a source of ideas for improving production, products, and services. Answer: True Rationale: Employees are often closest to the production process and have firsthand knowledge of potential areas for improvement. Encouraging employee involvement in idea generation can lead to valuable insights and innovations. 95. Attribute listing lists several ideas and considers each in relationship to the others. Answer: False Rationale: Attribute listing involves generating a list of attributes or characteristics of a product, service, or concept, typically without considering their relationship to each other. 96. Reverse assumption analysis lists all the normal assumptions about an entity and then turns them around. Answer: True Rationale: Reverse assumption analysis involves questioning or challenging conventional assumptions by considering their opposites or turning them around to stimulate creative thinking and generate new ideas. 97. Morphological analysis starts by forming a new dimension and then thinks about the possible problems of the dimension. Answer: False Rationale: Morphological analysis involves systematically considering and combining various dimensions or parameters to explore potential solutions or outcomes. It does not necessarily start with forming a new dimension but rather involves systematically exploring existing dimensions. 98. A DROP-error occurs when the company accepts a bad idea. Answer: False Rationale: A DROP-error occurs when the company dismisses a good idea, rather than accepting a bad one. 99. A category concept defines the product's attributes and features. Answer: False Rationale: A category concept typically refers to a broader classification or grouping within which a product or service falls, rather than specifically defining its attributes and features. 100. Concept testing means validating the product concept by discussing within the design group. Answer: False Rationale: Concept testing involves presenting the product concept to target consumers, either symbolically or physically, and obtaining their reactions, feedback, and preferences. It is not limited to discussions within the design group. 101. Rapid prototyping refers to designing products on a computer and then producing rough models to show potential consumers for their reactions. Answer: True Rationale: Rapid prototyping involves quickly creating physical prototypes or models of a product based on computer-generated designs. These prototypes can then be used for testing and gathering feedback from potential consumers. 102. Perceived value refers to the gap between actual needs and satisfied needs of a customer. Answer: False Rationale: Perceived value refers to the customer's assessment of the product's benefits compared to its cost. It reflects the customer's perception of the product's worth relative to alternatives available in the market. 103. Consumer preferences for alternative product concepts can be measured with conjoint analysis. Answer: True Rationale: Conjoint analysis is a method used to measure consumer preferences for various product attributes or features by presenting respondents with different hypothetical product profiles and asking them to choose among them. 104. A major drawback of conjoint analysis is that it cannot be used to measure objective attributes such as estimated market share and profit. Answer: False Rationale: Conjoint analysis can be used to estimate consumer preferences for various product attributes and features, as well as their willingness to pay for different combinations of these attributes. However, it may not directly measure objective outcomes like market share or profit. 105. The trade-off approach may be easier to use when there are only a few variables and alternatives. Answer: False Rationale: The trade-off approach, such as conjoint analysis, is often more complex and requires careful consideration of multiple variables and alternatives to derive meaningful insights into consumer preferences and choices. 106. After a test, the most customer-appealing offer will be the most profitable offer to make. Answer: False Rationale: While a customer-appealing offer may attract more customers, its profitability depends on various factors such as production costs, pricing strategy, and market demand. The most customer-appealing offer may not always be the most profitable one to produce. 107. A business analysis is typically performed after the management has developed the product concept and marketing strategy. Answer: True Rationale: A business analysis evaluates the potential profitability and feasibility of a new product idea or concept. It typically occurs after the product concept and marketing strategy have been developed to assess the viability of moving forward with the idea. 108. Survival-age distribution refers to the number of customers that the product has in year one, two, three, and so on. Answer: False Rationale: Survival-age distribution refers to the proportion of products or units that remain operational or in use over time, often represented as a percentage or distribution across different time periods. 109. Dragalong income refers to additional income whereas cannibalized income refers to reduced income. Answer: True Rationale: Dragalong income refers to additional income generated by the introduction of a new product or service, while cannibalized income refers to the reduction in income from existing products or services due to the introduction of a new, competing offering. 110. Modular function deployment methodology takes the list of desired customer attributes generated by market research and turns them into a list of engineering attributes that engineers can use. Answer: False Rationale: Quality function deployment (QFD), not modular function deployment, is the methodology that takes customer requirements and turns them into engineering specifications or attributes. QFD ensures that the final product design aligns with customer needs and preferences. 111. Beta testing tests the product within the firm to see how it performs in different applications. Answer: False Rationale: Beta testing involves releasing a pre-release version of a product to selected customers or external testers outside of the firm to gather feedback on its performance, usability, and reliability in real-world environments. It is not conducted within the firm. 112. Sales-wave research can be implemented quickly and carried out without final packaging and advertising. Answer: True Rationale: Sales-wave research involves testing a new product or service by releasing it in waves to different target markets. This approach allows for quick implementation without the need for final packaging and extensive advertising because it focuses on gauging initial market response and adjusting accordingly. 113. Expensive industrial goods and new technologies will normally undergo alpha and beta testing. Answer: True Rationale: Alpha and beta testing are common practices for expensive industrial goods and new technologies to ensure their functionality, usability, and reliability before mass production and market release. Alpha testing is typically conducted internally by the developing company, while beta testing involves real-world usage by a select group of external users. 114. Some firms might delay new product launch until after the competitor has borne the cost of educating the market and its product may reveal flaws the late entrant can avoid. This can be classified as a parallel entry. Answer: False Rationale: The described scenario represents a form of a late entry strategy, not a parallel entry. Parallel entry involves multiple firms entering a market simultaneously with similar products or services, aiming to compete directly with each other from the beginning. Delaying entry to capitalize on competitors' investments and market education is more characteristic of a late entry strategy. 115. At the interest stage of the consumer-adoption process, the consumer becomes aware of the innovation but lacks information about it. Answer: False Rationale: The interest stage of the consumer-adoption process is where the consumer actively seeks information about the innovation after becoming aware of it. This stage involves gathering information to understand the innovation's features, benefits, and how it fits into their needs or lifestyle. Therefore, consumers at this stage do not lack information but actively seek it out. 116. Compatibility refers to the degree to which the innovation matches the values and experiences of the individuals. Answer: False Rationale: Compatibility refers to the degree to which an innovation is perceived as consistent with the existing values, experiences, and needs of potential adopters or the target market. It assesses how well the innovation fits into the current situation or context of the individuals, rather than focusing solely on their values and experiences. 117. What are the types of new products that a firm can introduce? What are the problems associated with introducing a truly innovative product? What are the necessary conditions to create a radically innovative product? Answer: New products range from new-to-the-world products that create an entirely new market to minor improvements or revisions of existing products. Most new-product activity is devoted to improving existing products. Truly innovative and new to the world products incur the greatest cost and risk. Although radical innovations can hurt the company's bottom line in the short run, if they succeed they can create a greater sustainable competitive advantage than ordinary products and produce significant financial rewards as a result. Companies typically must create a strong R&D and marketing partnership to pull off a radical innovation. The right corporate culture is another crucial determinant; the firm must prepare to cannibalize existing products, tolerate risk, and maintain a future market orientation. Few reliable techniques exist for estimating demand for radical innovations. 118. Identify the major reasons why new product failures occur. Answer: The following are some of the possible reasons for the failure of new products. (1) Shortage of important ideas in certain areas, (2) fragmented markets, (3) social, economic, and governmental constraints, (4) high cost of development, (4) capital shortages, (5) shorter required development time, (6) poor launch timing, shorter product life cycles, and (7) organizational support. 119. How do companies organize new product development? Answer: Companies handle the organizational aspect of new-product development in several ways. Many assign responsibility to product managers. Some employ new-product managers who report to category managers. A few companies have growth leaders, a full-time job for its most creative and successful managers. Some companies have a high-level management committee charged with reviewing and approving proposals. Large companies often establish a new-product department headed by a manager with substantial authority and access to top management whose responsibilities include generating and screening new ideas, working with the R&D department, and carrying out field testing and commercialization. 120. Explain how stage-gate systems are used by companies to manage innovation and new product launches. Answer: Many top companies use the stage-gate system to divide the innovation process into stages, with a gate or checkpoint at the end of each. The project leader, working with a crossfunctional team, must bring a set of known deliverables to each gate before the project can pass to the next stage. To move from the business plan stage into product development requires a convincing market research study of consumer needs and interest, a competitive analysis, and a technical appraisal. Senior managers review the criteria at each gate to make one of four decisions: go, kill, hold, or recycle. Stage-gate systems make the innovation process visible to all and clarify the project leaders and team's responsibilities at each stage. The gates or controls should not be so rigid, however, that they inhibit learning and the development of novel products. Many firms have parallel sets of projects working through the process, each at a different stage. Some firms use a spiral development process that recognizes the value of returning to an earlier stage to make improvements before moving forward. 121. Briefly explain the three parts of the demand-first innovation and growth (DIG) framework. Answer: The three parts of the DIG framework are the following. (1) The demand landscape: Use observational, anthropological, and ethnographic methods or consumer self-reports to map consumer needs, wants, and even beyond. (2) The opportunity space: Use conceptual lens and structured innovative-thinking tools to achieve market perspectives from different angles. (3) The strategic blueprint: Think about how the new product can fit into customers' lives and how it can be distinguished from competitors. 122. Explain three techniques for stimulating creativity to generate better ideas. Answer: The following are some of the techniques. (1) Attribute listing: List the attributes of an object, such as a screwdriver. Then modify each attribute, such as replacing the wooden handle with plastic, providing torque power, adding different screw heads, and so on. (2) Forced relationships: List several ideas and consider each in relationship to each of the others. (3) Morphological analysis: Start with a problem, such as "getting something from one place to another via a powered vehicle." Now think of dimensions, such as the type of platform (cart, chair, sling, bed), the medium (air, water, oil, rails), and the power source (compressed air, electric motor, magnetic fields. By listing every possible combination, you can generate many new solutions. (4) Reverse assumption analysis: List all the normal assumptions about an entity and then reverse them. Instead of assuming that a restaurant has menus, charges for food, and serves food, reverse each assumption. (5) New contexts: Take familiar processes, such as people-helping services, and put them into a new context. (6) Mind mapping: Start with a thought, such as a car, write it on a piece of paper, then think of the next thought that comes up (say Mercedes), link it to car, then think of the next association (Germany), and do this with all associations that come up with each new word. Perhaps a whole new idea will materialize. Students may explain any three of these techniques. 123. What is concept testing? What is its importance? Explain two modern techniques used for concept testing. Answer: Concept testing means presenting the product concept to target consumers, physically or symbolically, and getting their reactions. The more the tested concepts resemble the final product or experience, the more dependable concept testing is. Concept testing of prototypes can help avoid costly mistakes, but it may be especially challenging with radically different, new-to-the-world products. Rapid prototyping can be used to design products on a computer and then produce rough models to show potential consumers for their reactions. Companies are also using virtual reality to test product concepts. Virtual reality programs use computers and sensory devices (such as gloves or goggles) to simulate reality. 124. Explain the concepts of sales-wave research and simulated test marketing. Answer: In sales-wave research, consumers who initially try the product at no cost are reoffered it, or a competitor's product, at slightly reduced prices. The offer may be made as many as five times (sales waves), while the company notes how many customers select it again and their reported level of satisfaction. During simulated test marketing, thirty to forty qualified shoppers are asked about brand familiarity and preferences in a specific product category and attend a brief screening of both well-known and new TV commercials and print ads. One ad advertises the new product but is not singled out for attention. Consumers receive a small amount of money and are invited into a store where they may buy any items. 125. Briefly explain the three choices available to companies when deciding the timing of market entry. Answer: Companies face three choices when deciding the timing. (1) First entry: The first firm entering a market usually enjoys the "first mover advantages" of locking up key distributors and customers and gaining leadership. But if rushed to market before it has been thoroughly debugged, the first entry can backfire. (2) Parallel entry: The firm might time its entry to coincide with the competitor's entry. The market may pay more attention when two companies are advertising the new product. (3) Late entry: The firm might delay its launch until after the competitor has borne the cost of educating the market, and its product may reveal flaws the late entrant can avoid. The late entrant can also learn the size of the market. 126. What is the consumer-adoption process? What are the various steps in the process? Answer: The consumer-adoption process is the mental steps through which an individual passes from first hearing about an innovation to final adoption. The steps are the following: (1) Awareness: The consumer becomes aware of the innovation but lacks information about it. (2) Interest: The consumer is stimulated to seek information about the innovation. (3) Evaluation: The consumer considers whether to try the innovation. (4) Trial: The consumer tries the innovation to improve his or her estimate of its value. (5) Adoption: The consumer decides to make full and regular use of the innovation. 127. What does the term organic growth mean? Answer: Organic growth refers to the development of new products from within. 128. I-ball, a cell phone manufacturer introduces a cell phone targeted at customers aged above 70. It has features such as loud volume, large keys, and so forth. How do you classify this product innovation? What could be a possible disadvantage of this product? Answer: This can be considered a new-to-the-world product. New-to-the-world products are products that create an entirely new market. The product has the greatest cost and risk of all product types. 129. What is incremental innovation? Give an example of incremental innovation. Answer: Incremental innovation refers to entering new markets by tweaking products for new customers, using variations on a core product to stay one step ahead of the market, and creating interim solutions for industry-wide problems. When Scott Paper couldn't compete with Fort Howard Paper Co. on price for the lucrative institutional toilet tissue market, it borrowed a solution from European companies: a dispenser that held bigger rolls. Scott made the larger rolls of paper and provided institutional customers with free dispensers, later doing the same thing with paper towels. Scott not only won over customers in a new market; it became less vulnerable to competitors, such as Fort Howard, which could lower prices but weren't offering the larger rolls or tailor-made dispensers. 130. Tosho Electronics, a leading Japanese, electronic manufacturer believes shorter product life cycles of new products reduces the scope for R&D and innovation. Offer a possible reason for shorter lifecycles. Answer: Rivals are quick to copy success of an innovation. An innovative product is copied even before the company recovers the cost of R&D. This leads to shorter product life cycles for products. 131. Dormentor, Inc. produces converts and markets packaging products including boxboard, container board and numerous other specialty packaging products. In an attempt to increase its organic growth, the company decides to introduce new products. It asks the managers and employees to send in ideas for new products. Before launching products based on any of these ideas, what are the stages that it has to go through? Answer: The following are the steps that Dormentor has to go through before launching: (1) It must screen the ideas that are obtained. (2) The ideas that pass the screening should be concept tested. (3) After concept testing a few are screened out and the remaining should be placed for product development. (4) After developing the product, product has to be test marketed. Ideas that are successfully test marketed can be launched. 132. Interno Computers Inc., together with subsidiaries, designs, manufactures, and markets personal computers and mobile communication and media devices, as well as selling related software, services, peripherals, networking solutions, and applications worldwide. The company is planning to launch a high-end portable digital music player worldwide. What is the best way to organize this product launch? Answer: Large companies, like Interno, often establish a new-product department headed by a manager with substantial authority and access to top management whose responsibilities include generating and screening new ideas, working with the R&D department, and carrying out field testing and commercialization. This model is necessary here as the product is going to be launched worldwide. 133. What is a spiral development process? Answer: A spiral development process recognizes the value of returning to an earlier stage to make improvements before moving forward. 134. Andersen, the CEO of a home appliance manufacturer, believes in controlled idea generation techniques such as brainstorming when creating new designs and ideas for product revisions. He does not engage in observational methods. What part of DIG framework is eminently used here? Answer: The opportunity space is used here. It uses conceptual lens and structured innovative-thinking tools to achieve market perspectives from different angles. 135. What is crowdsourcing? Answer: Crowdsourcing means inviting the Internet community to help create content or software, often with prize money or a moment of glory as an incentive. 136. What is the purpose of appointing an idea manager? Answer: A company can motivate its employees to submit new ideas to an idea manager whose name and contact information are widely circulated. 137. Horon Furniture is a manufacturer of office furniture. The company is known for its innovative multi-purpose furniture. When designing a new product, the designers list several ideas and consider each in relationship to others. For example, The company considers various options such as an office table, foldable chairs, and filing cabinet, etc. Finally the company may come up with a foldable office table with chairs attached and with a filing cabinet. Describe the creativity technique used at Horon Furniture. Answer: The company uses forced relationship techniques. This method lists several ideas and considers each in relationship to each of the others. 138. Use reverse assumption analysis to analyze a school. Answer: Student answers may vary. Instead of assuming that a school is a place where teachers teach according to a set syllabus and timetable, you could assume that a school is a place where students choose what they want to learn and how they want to learn it. Students could choose people to teach them, depending on what they want to study. 139. A group of young students run an Internet center. In an attempt to increase their profitability they start a cafe alongside the existing business. Explain the type of marketing used here. Answer: Lateral marketing is used here. It combines two product concepts or ideas to create a new offering. 140. What is a brand-positioning map? Answer: A brand-positioning map is a perceptual map showing the current positions of various existing brands competing with each other. 141. Caribou Coffee Company, Inc. operates coffeehouses primarily in the United States. The company wants to launch a new brand of specialty coffee and it has created a few hypothetical combinations. The company wants to select two of the combinations after obtaining a ranking by customers based on their preference. What concept testing method is suited here? Answer: The company can use conjoint analysis, a method for deriving the utility values that consumers attach to varying levels of a product's attributes. 142. What is the significance of performing business analysis? Answer: Business analysis is performed to study a proposal's business attractiveness. Management prepares sales, cost, and profit projections to determine whether they satisfy company objectives. 143. GameTech International Inc. engages in the design, development, and marketing of interactive electronic bingo systems primarily in the United States. Some top managers want to collect sales-wave research, but others disagree, offering several disadvantages. List these disadvantages. Answer: Sales-wave research can be implemented quickly, conducted with a fair amount of security, and carried out without final packaging and advertising. However, because customers are preselected, it does not indicate trial rates the product would achieve with different sales incentives, nor does it indicate the brand's power to gain distribution and favorable shelf position. 144. Mobile phone company HCF delayed the introduction of a new cellphone model with innovative features so that the launch could coincide with that of its competitor, LCM, which was introducing a phone with similar features. What kind of entry did HCF use? How can this benefit the company? Answer: HCF used a parallel entry strategy. The market may pay more attention when two companies are advertising the new product. 145. GameTech International Inc. engages in the design, development, and marketing of interactive electronic bingo systems primarily in the United States. The company has plans to enter developing markets such as Brazil and India. TechToys, GameTech's major competitor has already started operations in India. GameTech decides to delay its entry to India and to closely observe Techtoy's operations in India. What is the possible rationale behind this delaying decision? Answer: GameTech is using the late entry strategy. The firm will delay its launch until after the competitor has borne the cost of educating the market. It can also avoid the mistakes that TechToys make. The company can also learn the size of the market. 146. A customer survey at a mall revealed that Zoe is considered to be an early adopter. What does this mean? Answer: Early adopters are opinion leaders who carefully search for new technologies that might give them a dramatic competitive advantage. They are less price sensitive and willing to adopt the product if given personalized solutions and good service support. Test Bank for Marketing Management Philip T Kotler, Kevin Lane Keller 9780132102926, 9780273753360, 9781292092621, 9780133856460, 9789332587403, 9780136009986
