Deck 12: Developing New Products

Question 1

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.

Answer 1

False

Question 2

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

Answer 2

False

Question 3

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

Answer 3

False

Question 4

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

Question 5

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.

Question 6

New-to-the-world products that create new markets can add tremendous value to firms.

Question 7

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

Question 8

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

Question 9

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

Question 10

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 11

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

Question 12

Fashion trends tend to experience short product life cycles.

Question 13

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

Question 14

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

Question 15

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 16

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

Question 17

The majority of new products are failures.

Question 18

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

Question 19

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 20

A product will likely remain in the maturity stage of the product life cycle until a superior product comes along to replace it.

Question 21

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 22

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 23

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 24

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 only market 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 25

Which of the following was NOT a new-to-the-world product or service when it was introduced?

A) Wi-Fi
B) the Mercedes mini sport utility vehicle, a smaller version of its larger SUVs
C) Microsoft's Windows operating system
D) the MP3 player
E) flat screen TVs

Question 26

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

A) not always profitable.
B) not adopted by everyone at the same time.
C) sometimes copycat brands.
D) not subject to the law of first movers.
E) typically very short-lived.

Question 27

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

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 28

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 29

Which of the following is NOT one of the benefits to a firm of new product development?

A) reduced 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 where sales come mostly from new products.

Question 30

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 31

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 32

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 33

Which of the following is NOT one of the five groups in the diffusion of innovation curve?

A) Innovators.
B) Non-adopters.
C) Late majority.
D) Early majority.
E) Early adopters.

Question 34

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 35

__________ 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 36

By adding new product lines beyond its core business of computer software, like the Zune MP3 player 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 37

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

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

Question 38

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) establishing a completely new market.
D) the ability to avoid paying pioneers for new product development.
E) capitalizing on existing consumer preferences.

Question 39

Early personal computers cost several thousand dollars, allowing competitors

A) to focus on creating demand for their brand.
B) to promote alternative brands in that product category.
C) to spend less on introductory advertising.
D) to focus on making improved versions.
E) to introduce lower-priced alternatives.

Question 40

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 41

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 42

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 43

Which of the following is LEAST likely to be a source of ideas for new products?

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

Question 44

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

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

Question 45

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 __________ diffusion of innovation group.

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

Question 46

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
D) early majority
E) early adopter

Question 47

If the __________ diffusion of innovation 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 48

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 49

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 50

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 forty 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 51

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 52

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 53

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 54

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) complexity.
E) trialability.

Question 55

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) forecast sales for a new product.

Question 56

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 57

Zappos.com, an online shoe store, worked to overcome the problem of new product __________ with its easy, no-hassle return procedure.

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

Question 58

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 59

The __________ diffusion of innovation group is the last large group of consumers to adopt a new product or service.

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

Question 60

Between concept testing and market testing, a firm should engage in which stage of the product development process?

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

Question 61

Ron sells commercial-grade tools to building contractors. Whenever he visits his customers, he looks to see whether 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) early adopters
B) market testers
C) lead users
D) reverse engineers
E) concept testers

Question 62

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 63

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

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

Question 64

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 tests.
D) product development.
E) alpha testing.

Question 65

When conducting exploratory concept testing for her firm's new Internet anti-piracy software, Dee knows the most important question is

A) how long it will take to bring the software to market.
B) whether respondents would purchase the software if it becomes available.
C) who will determine the price to be charged.
D) where the product should be sold.
E) which computer trade show will be used to introduce the product.

Question 66

Before the development of computer-assisted design software, many firms handcrafted __________, wooden or clay models that served as rough physical representations of a new product.

A) premarket tests
B) blockbusters
C) prototypes
D) storyboards
E) designer models

Question 67

When testing new products, most firms consider the question of whether testing products on animals

A) should always be done in the animal's natural environment.
B) should be done outside of the United States to avoid consumer backlash.
C) should be done when the new product does not contribute to the health and well-being of human users.
D) should be done only by companies large enough to be ethically responsible.
E) should be done with animal activists present.

Question 68

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 69

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 70

Kristina created a virtual prototype of her new line of swimwear on a website to show to consumers. Kristina will ask consumers what they think of the clothing, but the most important question is

A) what retailers she should use to sell the swimwear.
B) whether they would purchase the swimwear if it becomes available.
C) what wholesale price should be charged.
D) what promotional plan will work best.
E) in which season she should introduce the product.

Question 71

A major limitation in the use of internal R&D departments for new idea generation is that

A) few scientists have ideas.
B) they tend to be dissolved once sufficient ideas have been generated.
C) they tend to create too many blockbusters.
D) few scientists have practical ideas.
E) the costs tend to be quite high.

Question 72

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 73

One reason auto companies spend millions on racing cars is that they offer the opportunity to test new designs and technology under extreme conditions. Car racing provides an opportunity for

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

Question 74

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

Question 75

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 development.
C) brainstorming.
D) reverse engineering.
E) launching the product.

Question 76

The pharmaceutical industry often justifies the high prices for new drugs by arguing that it researches as many as one hundred new compounds before it comes up with one __________, an extremely successful product that pays for the costs associated with the other attempts to develop new products.

A) standout
B) blockbuster
C) first mover
D) pioneer
E) premium product

Question 77

__________ are customers who modify existing products according to their own ideas to suit their specific needs.

A) Early adopters
B) Market testers
C) Lead users
D) Reverse engineers
E) Concept testers

Question 78

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 79

__________ 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 80

Concept testing is important because it can

A) help the firm to refine the promotional plans.
B) lead to immediate rollout of the final product.
C) help a firm avoid the costs of unnecessary product development.
D) reduce the potential loss of sales during the decline stage.
E) increase product development costs.