Deck 11: Sales Forecasting and Financial Analysis

Question 1

In order to calculate the NPV (net present value)that might be associated with a proposed product,it is necessary to:

A)create a sales forecast.
B)calculate the internal rate of return (IRR).
C)define the payback period.
D)assess costs.

Answer 1

A

Question 2

In the new product development process,sales forecasting is typically the responsibility of the process manager on the new product team.

Answer 2

False

Question 3

Ancon Inc. ,typically forecasts potential product sales based on the number of customers who say they would either definitely or probably buy the product,on a five-point scale.The firm's sales forecast is based upon _____.

A)regression analysis
B)the A-T-A-R model
C)purchase intentions
D)test market results

Answer 3

C

Question 4

Advanced time series is difficult to learn but its results are easy to interpret.

Question 5

In a bottom-up strategic approach,the firm lays out its strategy first,and then allocates funds across different kinds of projects.

Question 6

The each adopter category is a separate,isolated customer group which does not influence other adopter categories,and each requires a tailored marketing plan.

Question 7

Even if a product's potential is extremely high,its sales may not materialize due to insufficient marketing effort.

Question 8

The A-T-A-R model is the basis of many simulated test markets.

Question 9

In the new product development process,the financial analysis generally begins with the calculation of the net present value (NPV).

Question 10

Most common forecasting methods are extrapolations and work well on established products.

Question 11

With reference to new product development,the top performing firms tend to rely only on financial criteria.

Question 12

Many of the mathematical sales forecasting models were initially developed for use on durable goods.

Question 13

Which of the following forecasting techniques is most likely to be suitable for a time horizon of less than three months?

A)Delphi probe
B)Simple regression
C)Scenario writing
D)Jury of executive opinion

Question 14

New product projects need to be considered on how well they fit the firm's strategy for innovation.

Question 15

Sales forecasting is typically the responsibility of the _____ on the new product team.

A)project manager
B)technical advisor
C)marketing person
D)process manager

Question 16

Typically,product innovators including consumer packaged goods innovators still most often use a simple version of the A-T-A-R model.

Question 17

Factor analysis can be used to estimate the net present value of a new product when it is still in the concept stage.

Question 18

An early field use test with a prototype will not assure success,but it can say intended users like what they see.

Question 19

In the new product development process,which of the following is most likely to be determined first while analyzing the financial aspects of the product?

A)Net present value
B)Sales forecast
C)Internal rate of return
D)Payback period

Question 20

Adoption of innovation refers to the process by which an innovation is spread within a market,over time and over categories of adopters.

Question 21

Which of the following forecasting techniques is most likely to be difficult to use as a result of its complexity and / or data requirements?

A)Econometric analysis
B)Simple regression
C)Simple time series
D)Jury of executive opinion

Question 22

Which of the following forecasting tools is commonly used for durable goods and is based on the diffusion curve of new products through a population?

A)The A-T-A-R model
B)Econometric analysis
C)Multiple regression analysis
D)The Bass model

Question 23

Which of the following forecasting techniques most likely has the lowest cost?

A)Simple time series
B)Scenario writing
C)Delphi probe
D)Econometric analysis

Question 24

Leah Hubert feels that her "favorite" product concept is likely to be dismissed due to "inappropriate and unreasonable" financial analysis tools that cannot accurately reflect its potential.Leah has attempted to use her influence to push the concept past such obstacles.She is functioning as a _____.

A)product architect
B)financial forecaster
C)product champion
D)financial analyst

Question 25

On occasion,NewPro Inc. ,places new products it really believes in,into limited distribution,in spite of weak financial estimates so as to see where the solution might lie.Based on this information we can say that NewPro Inc. ,is employing _____.

A)market testing rollouts
B)econometric modeling
C)life cycle analysis
D)diffusion modeling

Question 26

With reference to the Bass diffusion model,which of the following best represents the growth in total number of purchases typically based on adoption by innovators?

A)The cumulative expenditures curve
B)Skimming
C)Initial diffusion rate
D)Itemized response

Question 27

In the new product development process,the concept test is conducted during the _____ phase of the process.

A)opportunity identification and selection
B)concept generation
C)concept / project evaluation
D)development

Question 28

Which of the following forecasting techniques is suitable for medium time horizon,has a low cost,but it is advised that its results be interpreted with caution?

A)Simple regression
B)Simple time series
C)Advanced time series
D)Jury of executive opinion

Question 29

Management's primary task in sales forecasting is to:

A)purchase state-of-the-art forecasting models.
B)make necessary estimates as solid as possible.
C)ensure that all past sales records are accurately archived.
D)conduct training on sales forecasting.

Question 30

Which forecasting technique will be used for a time horizon of more than two years?

A)Simple time series
B)Delphi probe
C)Simple regression
D)Advanced time series

Question 31

Given that financial analyses are badly needed by firms for evaluating new product concepts and that good analyses are difficult to make,a manager can take all of the following steps to overcome this problem EXCEPT:

A)improve the new product process currently in use.
B)use the life cycle concept of financial analysis.
C)reduce dependence on poor forecasts.
D)focus the financial analysis at one particular point.

Question 32

In theory,individuals in which of the following adopter categories initially influence the purchase behaviors of others,through word of mouth and other influence processes?

A)Early adopters
B)Early majority
C)Late majority
D)Laggards

Question 33

Which of the following is the most commonly used approach to sales forecasting outside of the consumer packaged goods industry?

A)A simple version of the A-T-A-R model
B)Progressive regression
C)Conjoint analysis
D)Perceptual gap mapping

Question 34

_____ refers to the process by which an innovation is spread within a market,over time and over categories of adopters.

A)Diffusion of innovation
B)Adoption of innovation
C)Adaptation of innovation
D)Simulation of innovation

Question 35

Which of the following is NOT a way of putting risk back into product innovation while managing it well?

A)Isolating or neutralizing the in-house critics
B)Deferring financial analysis until later in the development process
C)Demanding precise financial analyses at the time of screening
D)Using market testing rollouts

Question 36

Which of the following tools is most likely to be the basis of many of the simulated test markets?

A)The cumulative expenditures curve
B)The risk / payoff matrix
C)The A-T-A-R model
D)The decay curve

Question 37

This strategy especially appeals to managers who feel business is suffering from "paralysis by analysis."

A)Low cost development and marketing
B)Go ahead with sound forecasts but prepare to handle the risks
C)Approve situations,not numbers
D)Forecast what is known

Question 38

It is most difficult to predict / forecast success for _____.

A)product improvements
B)line extensions
C)new-to-the-market products
D)me-too products

Question 39

In the new product development process,the product use test is conducted during the _____ phase of the process.

A)opportunity identification and selection
B)concept generation
C)concept / project evaluation
D)development

Question 40

Firms which develop a stream of new items that differ very little from those now on the market,insert them into the market without great fanfare,watch which ones end users rebuy,and drop those that do not find favor are using the policy of _____.

A)low-cost development and marketing
B)forecasting and risk management
C)approving situations,not numbers
D)forecasting what is known

Question 41

Strategic criteria for new product development is best analyzed through use of _____.

A)financial modeling
B)sales forecasting
C)PIC evaluation
D)NPV calculation

Question 42

Explain the top-down and bottom-up approaches to strategy development.

Question 43

Discuss the Bass diffusion model.

Question 44

Generally,"hurdle rates" for return on investment will be highest for products whose strategic role or purpose is to:

A)combat competitive entry.
B)establish a foothold in a new market.
C)capitalize on existing markets.
D)introduce line extensions.

Question 45

What are some of the considerations to keep in mind when developing a sales forecast?

Question 46

Firms that build strategic criteria into their project selection tools are using a _____ strategic approach.

A)top-down
B)top-two-boxes
C)market testing
D)bottom-up

Question 47

Discuss any four ways in which dependence on poor forecasts can be reduced.

Question 48

Many of the very successful product developing firms have realized that only focusing on financial analysis for a new product project is not enough.One must also reconsider the _____ and the strategic criteria it implies.

A)NPV
B)PIC
C)IRR
D)EPA

Question 49

Under the _____,the firm or SBU lays out a strategy,and then allocates funds across different kinds of projects.

A)top-down strategic approach
B)top-two-boxes approach
C)market testing approach
D)bottom-up strategic approach

Question 50

According to the Hoechst-U.S.scoring model,which of the following is a full-screen feasibility factor?

A)Probability of technical success
B)Business-strategy fit
C)Strategic leverage
D)Reward

Question 51

Which of the following is NOT a key factor in the Hoechst-U.S.scoring model?

A)Probability of technical success
B)Probability of commercial success
C)Competitive response
D)Strategic leverage

Question 52

Summarize the problems associated with forecasting.

Question 53

According to the Hoechst-U.S.scoring model,which of the following factors is based on financial criterion?

A)Probability of technical success
B)Business-strategy fit
C)Strategic leverage
D)Reward

Question 54

A firm may approve too many new product projects if:

A)simple financial hurdles are not the only criterion.
B)resource constraints are included in NPV calculations.
C)management does not overemphasize small,quick-hit projects.
D)low-quality work reduces the quality of information used for decision making.

Question 55

_____ analysis may be used to estimate the net present value of a new product when it is still in the concept stage.

A)Real-options
B)Progressive regression
C)Factor
D)Conjoint