Deck 12: Developing New Products

Question 1

On the diffusion of innovation curve, the first group of buyers who want to be the first on the block to have the new product are known as early adopters.

Answer 1

False

Question 2

The diffusion of innovation curve follows the following sequence: innovators, early majority, late majority, early adopters, and laggards.

Answer 2

False

Question 3

The introduction stage of the product life cycle is characterized by negative or low profits.

Answer 3

True

Question 4

The fact that the Apple iPad is easy to try-demo units are available at Apple stores as well as other retail stores-has helped it diffuse more quickly.

Question 5

One of the key characteristics of brainstorming sessions is that bad ideas should be immediately rejected so the group can focus its attention on good ideas.

Question 6

When consumers see their friends using an innovation, it often persuades them to try it too.

Question 7

New product development adds value to a firm's products and services through innovation.

Question 8

Even if products succeed, not all consumers adopt new-to-the-world products at the same time.

Question 9

New-to-the-world products can establish completely new markets or radically change the rules of competition as well as consumer preferences in a market.

Question 10

As personal computers became popular, the sale of typewriters decreased significantly and now typewriters are only used by a very small segment of consumers. Typewriters are in the maturity stage of the product life cycle.

Question 11

Test marketing refers to customers who modify existing products according to their own ideas to suit their specific needs.

Question 12

The maturity phase of the product life cycle is characterized by greatly reduced competition.

Question 13

The failure rate for new products is high.

Question 14

Fashion trends tend to experience short product life cycles.

Question 15

On the diffusion of innovation curve, the late majority is the final group of buyers who like to avoid change and rely on traditional products until they are no longer available.

Question 16

Although innovation strategies may not work in the long run, overriding short-term reasons compel firms to introduce new products and services.

Question 17

The most challenging part of applying the product life cycle concept is that managers do not know exactly what shape each product's life cycle will take.

Question 18

When Glenn asked a few of his regular customers to test his prototype surfboard, he was engaging in alpha testing.

Question 19

To determine if a new product is commercially viable, a firm can conduct premarket testing.

Question 20

When the iPad Mini came out, Sasha spent the night in front of the store so she could get one before any of her friends. According to the diffusion of innovation, Sasha is an innovator.

Question 21

Whenever Andrew considers upgrading his personal computer system, he consults with Jeremy, a knowledgeable friend who always has the newest technology. For Andrew, Jeremy is a(n) ________ in the diffusion of innovation curve.

A) innovator
B) laggard
C) late majority adopter
D) early majority adopter
E) early adopters

Question 22

The diffusion of innovation theory focuses on

A) the geographic boundaries of innovation.
B) the relationship between pioneer brands and imitators.
C) the psychological traits of innovators.
D) the rate at which consumers are likely to adopt a new product or service.
E) the way a product moves through the product life cycle.

Question 23

In the diffusion of innovation process, innovators enjoy taking risks and are regarded as highly knowledgeable. Marketers want to identify innovators because

A) they prefer products from established market leaders.
B) other consumers defer to their judgment, creating the opportunity for word-of-mouth referrals.
C) they are especially price conscious.
D) they are easily influenced by reminder advertising.
E) they encourage competitors to enter the market.

Question 24

All of the following are benefits of new product development to a firm except

A) reducing the costs of production.
B) satisfying the changing needs of current and new customers.
C) avoiding market saturation from products that have been on the market for a long time.
D) creating diversification and reducing risk.
E) keeping up in a market with short product life cycles where sales come mostly from new products.

Question 25

All of the following were considered a new-to-the-world product or service when introduced except

A) the Internet browser.
B) the Mercedes mini sport utility vehicle.
C) personal digital assistant.
D) the iPad.
E) smartwatches.

Question 26

Even if they succeed, new-to-the-world products are

A) generally not profitable.
B) not adopted by everyone at the same time.
C) not capable of creating new markets.
D) not subject to the law of first movers.
E) typically very short-lived.

Question 27

All of the following groups are included in the diffusion of innovation curve except

A) innovators.
B) nonadopters.
C) late majority.
D) early majority.
E) early adopters.

Question 28

By adding new product lines beyond its core business of computer software, like the Surface Pro tablet and Xbox 360 game system, Microsoft primarily benefits by

A) keeping up in a market where sales come mostly from new products.
B) satisfying the changing needs of the technological research staff.
C) avoiding market saturation from products that have just been introduced to the market.
D) creating diversification and reducing risk.
E) spreading out production costs.

Question 29

________ is the process by which ideas are transformed into new products and services that will help firms grow.

A) Beta testing
B) Concept testing
C) Innovation
D) Reverse engineering
E) Competition

Question 30

Successful first movers create a market or a product category. They often benefit from being readily recognizable to consumers and

A) not having to pay advertising expenses.
B) using prototypes to dominate the market.
C) not needing to do test marketing.
D) establishing an early market share lead.
E) motivating laggards to buy their products.

Question 31

Many restaurants offer daily specials, appetizers, entrees, and desserts not listed on their standard menu. These daily specials primarily provide the new product benefit of

A) keeping up in a market where sales come mostly from new products.
B) satisfying the changing needs of current and new customers.
C) avoiding market saturation from products that have been on the market for a long time.
D) creating diversification and reducing risk.
E) reduction in cost of ingredients.

Question 32

All of the following are reasons for the high failure rate of new products except

A) failing to assess the market properly.
B) neglecting to do appropriate product testing.
C) targeting the wrong segment.
D) overextending a firm's abilities.
E) failing to introduce lower-priced alternatives.

Question 33

Innovators are a critical group of new product adopters because they

A) are the major source of innovation.
B) act as reverse engineering consultants.
C) help with test marketing.
D) help the product gain market acceptance.
E) extend the product life cycle.

Question 34

Eric is a sales rep for an established building materials manufacturer. Business is good, but he is concerned that the company has spent little on new product development and has not created a new product in over five years. Without new products, Eric can market his current products only to his current customers or

A) diversify.
B) intensify his prototyping.
C) expand his early adopter market segment.
D) market the same products to similar customers.
E) focus on concept testing.

Question 35

One of the potential benefits to a firm of introducing new-to-the-world products or services is

A) cost savings.
B) late majority marketing.
C) establishment of a completely new market.
D) the ability to avoid paying pioneers for new product development.
E) the ability to capitalize on existing consumer preferences.

Question 36

Pioneer or breakthrough products

A) will likely result in late maturity buying.
B) can change consumer preferences.
C) incorporate reverse engineering outputs.
D) require the use of concept testing services.
E) must be geographically centered.

Question 37

In many cases, pioneers lose their market lead and initial market share to imitators who

A) capitalize on the pioneers' weaknesses.
B) create similar products with reduced value to consumers.
C) utilize alpha-beta testing.
D) ignore patents and copyrights.
E) target late maturity consumers.

Question 38

Computer game companies constantly monitor computer game-related blogs keeping track of the latest hot products, because they know that their customers crave the "latest and greatest" games. They use this information to create new products that primarily provide the benefit of

A) keeping up in a market where sales come mostly from new products.
B) satisfying the changing needs of former customers.
C) avoiding market penetration from products that have been on the market for a long time.
D) creating diversification and reducing risk.
E) taking advantage of a long product cycle.

Question 39

The process by which the use of a new product or service spreads throughout a market group is referred to as

A) new product introduction.
B) lead user dispersion.
C) diffusion of innovation.
D) the product life cycle.
E) product development diffusion.

Question 40

Brian is trying to sell a new line of ultrasound imaging equipment. Unlike existing technology, these machines are compact, creating the potential for general practice physicians to have and use them in their offices. Brian is trying to identify innovators in his market, knowing these customers will most likely

A) spread positive word of mouth to other physicians.
B) buy one for each office in their practices.
C) reposition his products.
D) create demand among the late majority.
E) not need any service or support when using the product.

Question 41

When the sequel to Star Wars: The Force Awakens eventually shows up on their regular television networks, this group might watch it.

A) laggards
B) early majority
C) late majority
D) early adopters
E) innovators

Question 42

Early personal computer users remember the cumbersome, user-unfriendly DOS system. When Apple introduced System 1 and Microsoft introduced Windows, both of which were much easier to use, these new products diffused rapidly because of their

A) relative advantage.
B) compatibility.
C) observability.
D) associated services.
E) trialability.

Question 43

For new product marketers, early adopters are important because they tend to be

A) few in number.
B) the first to adopt a new product.
C) opinion leaders.
D) fond of prototypes.
E) alpha testing enthusiasts.

Question 44

The diffusion of innovation theory is useful to marketers in helping them

A) adjust to the performance life cycle.
B) avoid the cost of concept testing.
C) predict which types of customers will buy their product immediately and later.
D) predict how long it will take for a new product to gain market acceptance.
E) determine a target market.

Question 45

Bob and George live in the United States. Bob recently asked for George's cell phone number, but George said he didn't own a cell phone. George would probably be considered a(n) ________ in the diffusion of innovation process.

A) innovator
B) laggard
C) late majority adopter
D) early majority adopter
E) early adopter

Question 46

As it pertains to the diffusion of innovation, if the ________ group is relatively small, the number of people who ultimately adopt the innovation likely will also be small.

A) innovator
B) laggard
C) late majority
D) early majority
E) early adopter

Question 47

When John began helping his favorite uncle Burton with his finances, he discovered his uncle was still renting a rotary-dial telephone from the phone company. Uncle Burton had paid thousands of dollars in rental fees over the previous 40 years. Uncle Burton is a(n) ________ in the diffusion of innovation process for telephones.

A) innovator
B) laggard
C) late majority
D) early majority
E) early adopter

Question 48

Warby Parker, an online retailer for prescription eyewear, offers a free, try-on at home program for its customers. Customers browse frames on Warby Parker's website and select five pairs they would like to try on before buying-or not. Warby Parker handles all the shipping costs and provides all the return packaging. This relates to the________ of its products.

A) relative advantage
B) compatibility
C) observability
D) complexity
E) trialability

Question 49

As soon as she saw one, Hillary wanted a flat-screen television, but she was worried about making the wrong choice. She waited until there were alternatives in the market with lower prices and improved quality. Hillary is part of the ________ diffusion of innovation group.

A) innovator
B) laggard
C) late majority
D) early majority
E) early adopter

Question 50

As a promotion technique, samples are often used for new products when ________ will influence the diffusion of the product.

A) relative advantage
B) compatibility
C) observability
D) complexity
E) trialability

Question 51

When microwaves were new, they often cost over $300, were huge, and had numerous settings and options. Brenda and Bart waited, concerned about potential health hazards and wishing for more choices in the market. By the time they purchased a microwave, sales of microwaves had leveled off and prices had declined significantly. Brenda and Bart were part of the ________ diffusion of innovation group.

A) innovator
B) laggard
C) late majority
D) early majority
E) early adopter

Question 52

Inkjet printers were a big improvement over the dot-matrix printers they replaced. Inkjet printers gained rapid acceptance in the marketplace primarily because of their

A) relative advantage.
B) compatibility.
C) observability.
D) complexity.
E) trialability.

Question 53

When automobile manufacturers introduced SUVs, they distributed and promoted them in the United States, but not in Europe where gasoline is heavily taxed and roads are much smaller. Car manufacturers recognized that this new line of cars

A) provided equivalent relative advantage for both European and U.S. customers.
B) were not compatible with European market conditions.
C) did not provide benefits that were observable.
D) involved technology that was too complex.
E) could not be easily tried by consumers.

Question 54

Laptop computers, personal digital assistants, and cellular phones were all readily accepted and diffused in U.S. markets where business and personal lifestyles tend to be faster-paced, compared to many other areas in the world. These products offered ________ with consumers' needs and priorities.

A) relative positioning
B) compatibility
C) observability
D) complexity
E) trialability

Question 55

In the product development process, what takes place between concept testing and market testing?

A) securing financial backing
B) conducting marketing research
C) brainstorming
D) determining potential ROI
E) product design

Question 56

By the time BMW got into the mini-SUV market, sales had leveled off and were even starting to decline. BMW had to target its marketing efforts toward the ________ adopters.

A) innovator
B) laggard
C) late majority
D) early majority
E) early adopter

Question 57

The ________ diffusion of innovation group is crucial because few new products can be profitable until this large group buys them.

A) innovator
B) laggard
C) late majority
D) early majority
E) early adopter

Question 58

Robin recently bought Voice over Internet Protocol (VoIP) phone service. A few of Robin's friends bought VoIP before she did, but many other friends were interested in Robin's opinions of the new phone service. Robin is a(n) ________ in this product category.

A) innovator
B) laggard
C) late majority adopter
D) early majority adopter
E) early adopter

Question 59

Many home design businesses volunteer to provide their latest products for tours-of-homes fundraisers because they know their new products will benefit from

A) relative advantage.
B) compatibility.
C) observability.
D) complexity.
E) trialability.

Question 60

To generate ideas for new products, some firms will purchase the rights to use another firm's technology. This is known as

A) R&D.
B) licensing.
C) consumer research.
D) outsourcing.
E) brainstorming.

Question 61

________ involves taking apart a product, analyzing it, and creating an improved product that does not infringe on the competitor's patents.

A) Reverse innovation
B) Reverse engineering
C) Selective dissection
D) Redistribution
E) Creative destruction

Question 62

One of the key characteristics of brainstorming sessions is

A) no idea is immediately accepted or rejected.
B) everyone must come up with ideas.
C) the first idea is almost always the best idea.
D) only the marketing team is included in these sessions.
E) the manager should always make the final decision.

Question 63

Companies that develop customized business software often work closely with their users when installing their products. This close contact often creates new product ideas through

A) reverse engineering.
B) licensing technology.
C) customer input.
D) R&D consortia.
E) clinical trials.

Question 64

Kristina created a virtual prototype of her new line of swimwear on a website to show to consumers. Kristina realizes there are multiple lines of swimwear out there and hers will need to be unique. For Kristina, which important question should she be asking at this point?

A) What retailers should be used to sell the swimwear?
B) Will this swimwear line satisfy an unmet need?
C) What wholesale price should be charged?
D) What promotional plan will work best?
E) In which season should we introduce the product?

Question 65

Lorraine belongs to a national consumer panel created by a market research company. She regularly receives samples of new products from a variety of firms and fills out questionnaires about the products. The national consumer panel Lorraine is part of is engaged in

A) premarket testing.
B) product launch.
C) test marketing.
D) product development.
E) concept testing.

Question 66

The National Institutes of Health (NIH) sponsors medical foundations to conduct research to treat rare diseases. The research is then disseminated to the medical community, thus encouraging the development of drugs and therapies more quickly and at a lower cost than would be possible if the research were privately funded. This is an example of

A) early adopters.
B) market testers.
C) an R&D consortia.
D) reverse engineers.
E) concept testers.

Question 67

If a new product concept gets positive evaluations from potential customers during concept testing, the next step for a firm is

A) market testing.
B) product design.
C) brainstorming.
D) reverse engineering.
E) launching of the product.

Question 68

Before Segway manufactured its two-wheeled people movers, it built a prototype and had staff engineers test it for performance and stability. At this stage, Segway was involved in

A) alpha testing.
B) product launch.
C) test marketing.
D) beta testing.
E) concept testing.

Question 69

Many restaurants roll out new ideas first in Orlando, Florida, a location that attracts a vast range of diverse tourists and thus might offer insights into what various consumer groups will like. This is an example of

A) target marketing.
B) test marketing.
C) product marketing.
D) product launching.
E) premarket testing.

Question 70

Barbara is using a test model of her firm's new inline skates to see if they work according to the design specifications. Barbara is involved in

A) test marketing.
B) product launch.
C) alpha testing.
D) target marketing.
E) concept testing.

Question 71

Golf ball manufacturers use "Iron Mike," a machine that swings a golf club at a constant velocity, to test the distance for new golf ball designs. When using Iron Mike, the manufacturers are engaged in

A) concept testing.
B) market testing.
C) premarket testing.
D) product development.
E) alpha testing.

Question 72

Ron sells commercial-grade tools to building contractors. Whenever he visits his customers, he looks to see if they are using his tools for other tasks or have modified the tools for some other purpose. These customers are ________, who can provide ideas for new and improved products.

A) laggards
B) market testers
C) lead users
D) reverse engineers
E) concept testers

Question 73

A company has a new concept for a lightweight electric scooter that can be easily folded and taken with you inside a building or on public transportation. The company is currently engaged in concept testing. The most important question during this phase of product development pertains to

A) the cost of research and development.
B) the price of the final product.
C) the cost to manufacture the product.
D) the costs of marketing and advertising.
E) the respondent's purchase intentions if the product were made available.

Question 74

Hollywood studios typically release movies targeted toward general audiences (G- or PG-rated movies) during the summer when children are out of school. The timing of the release pertains to the product's

A) premarket test.
B) launch.
C) evaluation.
D) research and development.
E) test marketing.

Question 75

One reason auto companies spend millions on racing cars is that they offer the opportunity to test new designs and technology under extreme conditions. Using the cars in a real-use setting provides an opportunity for ________ the product.

A) pretesting
B) beta testing
C) test marketing
D) alpha testing
E) concept testing

Question 76

At the end of a brainstorming session, participants are often asked to

A) identify the worst ideas.
B) defer to management for the final decision.
C) identify which ideas each person proposed.
D) vote on the best ideas.
E) propose one more new idea each.

Question 77

When a global firm turns to its subsidiaries in less developed markets for new product ideas, such as when Coca-Cola developed Minute Maid Pulpy out of its Shanghai research center and then moved the product into other markets around the world, the firm is engaged in

A) a consortia.
B) reverse innovation.
C) competitive engineering.
D) pioneering.
E) beta testing.

Question 78

YouEye is developing eye tracking technology that works with an individual's webcam. Instead of needing to spend thousands of dollars on eye tracking equipment and having customers come into labs, firms will be able to utilize everyday webcams to track not only what a person attends to on a computer screen but also his or her emotional reactions to these products. Firms such as YouEye are automating the

A) premarket testing process.
B) alpha testing process.
C) beta testing process.
D) evaluation process.
E) concept testing process.

Question 79

When conducting exploratory concept testing for her firm's new Internet antipiracy software, which is the most important question that Dee should ask?

A) How long will it take to bring the software to market?
B) Will respondents purchase the software if it becomes available?
C) Who will determine the price to be charged?
D) Where should the product be sold?
E) Which computer trade show will be used to introduce the product?

Question 80

Suppose that you work for an advertising agency and are brought into a meeting where everyone is asked to generate ideas for names for a new beach resort. You are engaged in ________, a form of new idea generation.

A) R&D
B) licensing technology
C) consumer research
D) geodemographic analysis
E) brainstorming