Deck 7: New Product Planning and Development

Question 1

 Which of the following observations is correct? 

A) Most new products that are introduced in the market are successful.
B) New product development and introduction is a relatively cheap process.
C) Companies are relatively similar in the effectiveness of their new product programs.
D) Current products sales grow far more rapidly than sales of new product.

Answer 1

D
Explanation: It is commonplace for major companies to have 50 percent or more of their current sales in products introduced within the last 10 years. Companies vary widely in the effectiveness of their new product programs.

Question 2

 "Details" magazine was introduced to the market as a raw and bold "underground nightlife magazine." Sales were low,so the publisher of the magazine relaunched it as a fashion and lifestyle magazine for 20-something males.In which of the following new product categories would this product fall? 

A) New-to-the-world products
B) New-to-the-firm products
C) Product improvements
D) Repositioning

Answer 2

D
Explanation: Authors C. Merle Crawford and Anthony DiBenedetto have developed a useful definition of new products based on different product categories. Repositionings are products that are retargeted for a new use or application.

Question 3

 Which of the following pertains to repositioning? 

A) Products that are retargeted for new use
B) Products that are line extensions
C) Current products that are made better
D) Products that are inventions

Answer 3

A
Explanation: Authors C. Merle Crawford and Anthony DiBenedetto have developed a useful definition of new products based on different product categories. Repositioning refers to products that are retargeted for a new use or application.

Question 4

 A current product of a company has been enhanced to better serve consumer needs.The new product would fall into which of the following categories? 

A) New-to-the-world products
B) New-to-the-firm products
C) Additions to existing product lines
D) Improvements and revisions of existing products

Question 5

The primary reason for new product failure is the inability of the selling company to match its offering to the _____.

A) needs of the customers
B) products offered by competitors
C) prevailing price for the product
D) market leader's selling price

Question 6

HealthPlus Company,a manufacturer of processed food products,recently introduced infant food under the brand name of Nutrababy.Which of the following new product categories does this product fall into? 

A) New-to-the-world products
B) Additions to existing product lines
C) New-to-the-firm products
D) Product improvements

Question 7

 _____ are products that extend subsisting product lines to current markets.

A) New-to-the-world products
B) New-to-the-firm products.
C) Additions to existing product lines
D) Improvements and revisions of existing products

Question 8

 Dexo Co.plans to launch a new version of its soft drink Lime n' Lemon.The new drink will be similar to the current Lime n' Lemon,but it will be fortified with vitamins and minerals.The company has decided to market this new drink as Lime n' Lemon Extreme.Which of the following new product categories does this new soft drink fall into?

A) New-to-the-world products
B) New-to-the-firm products
C) Improvements and revisions of existing products
D) Repositionings

Question 9

 In new product planning and development,?????_____ costs refer not only to alternative uses of funds spent on product failures but also to the time spent in unprofitable product development? 

A) sunk
B) direct
C) research and development
D) opportunity

Question 10

 A major obstacle to effectively predicting new product demand is _____.

A) competition
B) market segmentation
C) limited vision
D) market research

Question 11

 Healthfood Inc.manufactures jelly,made out of gelatin (a colorless,edible protein)in various fruit flavors.However,the sale of its current line of flavored jelly has significantly fallen.The company discovers that women used powdered gelatin dissolved in acetylene (a liquid,organic compound)to strengthen their fingernails.It introduces a flavorless jelly as a nail-building agent in an attempt to boost profits.Identify the product category involved. 

A) Additions to existing product lines
B) Improvements and revisions of existing products
C) Repositionings
D) New-to-the-firm products

Question 12

 Products that take a firm into a product type new to it but that are not new to the world are known as _____.

A) new-to-the-world products
B) new-to-the-firm products
C) additions to product lines
D) product improvements

Question 13

 For the last decade,Green Giant has sold frozen vegetables in various types of sauces.In 2002,the company changed its packaging and began offering frozen vegetables in resealable bags with separate frozen sauce pellets.In which of the new product categories would this new method of packaging frozen vegetables fall? 

A) New-to-the-world products
B) New-to-the-firm products
C) Additions to existing product lines
D) Improvements and revisions of existing products

Question 14

 Del Monte Foods added tomatoes that were already diced and spiced to its line of canned tomato products.In which of the new product categories would diced and spiced canned tomatoes fall? 

A) New-to-the-world products
B) New-to-the-firm products
C) Additions to existing product lines
D) Improvements and revisions of existing products

Question 15

 Kasey's Pretzels & Snack Co.introduced honey-mustard pretzels to its product line.This is an example of _____.

A) new-to-the-world products
B) new-to-the-firm products
C) additions to existing product lines
D) improvements and revisions of existing products

Question 16

 Minefree Games Inc.develops and markets mobile entertainment software.The company's application portfolio includes single and multiplayer games,ring tones,and other entertainment content.Their most popular mobile game is the Nightfly200.Recently,they released a new,improved version compatible with all major mobile handsets,the Nightfly201 series.Which of the following product categories would best describe the Nightfly201 series? 

A) New-to-the-world products
B) Additions to existing product lines
C) Repositionings
D) Improvements and revisions of existing products

Question 17

WallFlower,Inc.sells cards,gift-wrapping materials,and collectibles.To boost sales of their products,WallFlower added fresh-cut flower arrangements to its product offering.In which of the new product categories would the floral arrangements fall? 

A) New-to-the-world products
B) New-to-the-firm products
C) Additions to existing product lines
D) Product improvements

Question 18

 All of the following contribute to a firm's inability to meet customer needs EXCEPT:

A) inadequacy of upfront intelligence efforts.
B) failure on the part of the company to stick close to its core competencies.
C) inability to provide better value than competing products and technologies.
D) new product sales grow far more rapidly than sales of current products.

Question 19

 The manufacturers of Waterford crystal have usually focused efforts of creating intricate artifacts and other collectibles.However,in light of competition and demand,they are introducing their first line of dinnerware.In which of the following new product categories would the dinnerware fall? 

A) New-to-the-world products
B) New-to-the-firm products
C) Additions to existing product lines
D) Product improvements

Question 20

 Products that are inventions and create a whole new market are called _____.

A) new-to-the-world products
B) new-to-the-firm products
C) additions to existing product lines
D) product improvements

Question 21

 Which of the following refers to developing new products and cultivating new markets? 

A) Market penetration
B) Diversification
C) Product development
D) Product differentiation

Question 22

 Which of the following organizational growth strategies deals with present products in present markets? 

A) Diversification
B) Product development
C) Market development
D) Market penetration

Question 23

 What kind of new product strategy is being used when an automobile manufacturer introduces a new car model to replace an existing one? 

A) Market development
B) Product development
C) Market diversification
D) Market penetration

Question 24

 Which of the following should be specified by the policy-making criteria on new products?

A) A maximum level of profits that can be expected.
B) The exact market share of the new product.
C) The exact level of expected profits.
D) The availability and cost of capital to develop a new product.

Question 25

 Which of the following denotes a growth direction through the increase in market share for present product markets? 

A) Market penetration
B) Diversification
C) Product development
D) Benchmarking

Question 26

 Which of the following indicates the direction in which the organization is moving with respect to its current products and markets? 

A) Growth vector matrix
B) Line extension
C) Market segmentation
D) Market diversification

Question 27

Which of the following strategies refers to creating new products to replace existing ones? 

A) Market penetration
B) Product development
C) Market development
D) Market diversification

Question 28

 According to the growth vector matrix,which of the following products usually require the firm to make significant investments in research and development and make significant changes in its organizational structure? 

A) New products
B) Repositioned products
C) Improved products
D) Additions to existing products

Question 29

 On earnings associated with new products,it is critical that: 

A) management has a pressure of steady improvement in earnings per share.
B) firms do not become solely preoccupied with a short-term focus.
C) the emphasis should be on short-term profits.
D) the firm realize that profitability will not be supported by the stock market in terms of higher share prices over the long term.

Question 30

 The appearance of special guest stars on a regular television show is a strategy used to find new viewers for the existing show.It also helps in increasing the market share of the network that airs the show.Television networks encourage such guest appearances to implement which of the following growth strategies? 

A) Market development
B) Product development
C) Market saturation
D) Diversification

Question 31

 Light Eats is a buffet-style salad bar with locations in the South,West,and Midwest United States.It serves a variety of salads and soups for the health conscious.Recently it has introduced 'Frozen Fruit' bars serving ice creams and sorbets that are made from fresh fruits and vegetables.Which of the following new product categories does the 'Frozen Fruit' bar fall into?

A) New-to-the-world products
B) New-to-the-firm products
C) Improvements and revisions of existing products
D) Additions to existing product lines

Question 32

 Pizzas n' Pies has entered into a deal with Templeton Hotels to have their brand of specialty pizzas offered on the hotel's room service menu.Which of the following growth strategies is Pizzas n' Pies using?

A) Market development
B) Product development
C) Market saturation
D) Diversification

Question 33

 Which of the following is an example of a product development strategy? 

A) A microprocessor manufacturer introduces a new microprocessor chip to replace the older, slower version.
B) McDuffy's fast food restaurant opens its first overseas restaurant.
C) A carpet manufacturer introduces an organic stain remover designed to remove even the worst spills.
D) The manufacturer of Nine Lives cat food adds a line of flea collars.

Question 34

 Xapple,Inc.,a manufacturer of bottled lemonade and other soft drinks,has released a new,zero-calorie drink called Diet Lemonade.This is an example of _____.

A) new-to-the-world products
B) new-to-the-firm products
C) additions to existing product lines
D) repositionings

Question 35

 DLW,an automobile manufacturer,has found that sales of it RockStar SUV has fallen over the last few years.It introduces a new,revamped version of the SUV with the latest GPS technology and vehicle safety features.The company stops production of the old model in order to invest all of its resources into marketing this new model.Which of the following growth strategies is DLW employing?

A) Market development
B) Market penetration
C) Product development
D) Market penetration

Question 36

 Devon,Inc.first marketed Silky Soft as a brand of body lotion to compete with other similar body lotions.Today Devon promotes its Silky Soft lotion as an insect repellant that is also good for your skin.Which of the new product categories does Silky Soft lotion fall into? 

A) New-to-the-world products
B) New-to-the-firm products
C) Additions to existing product lines
D) Repositionings

Question 37

 Products that generate a maximum dollar profit with a minimum amount of risk should be: 

A) harvested or divested.
B) developed and marketed.
C) produced only for the local market.
D) shelved for future use.

Question 38

 Which of the following growth strategies either increase frequency of consumption or increase the number of customers using the firm's product(s)? 

A) Diversification and market penetration
B) Product development and diversification
C) Market development and diversification
D) Market development and market penetration

Question 39

 Product development and diversification can be characterized as _____.

A) product mix strategies
B) strategies based on differentiation
C) target market segmentation strategies
D) cost leadership strategies

Question 40

 Which of the following observations about new product policy is true? 

A) Policy-making criteria on new products should specify a working definition of the profit concept that is acceptable to top management.
B) There should be no specific time period for the product to become operational as this disturbs the new product development process.
C) When developing a new product policy, a company should focus more on consumer satisfaction levels than on the product's economic contribution.
D) A short-term focus is necessary for an effective new product policy in order to gain competitive advantage.

Question 41

 Which of the following is critical to providing an atmosphere that stimulates new product activity? 

A) Unionization
B) Politics within the organization
C) Top-management support
D) External consultants

Question 42

 Which of the following is essential to the generation of new product ideas?

A) Market penetration strategies
B) Market development strategies
C) High investment in current products
D) Technology push research activities

Question 43

John and his team are working to develop a new product.The company has given them a fixed budget and a rough estimate of the time left until the product must hit the market.The team's key concern is that the product they have developed would be too costly and time-consuming to produce.Which of the following best describes this risk that John and his team are most concerned with?

A) Strategic risk
B) Market risk
C) Internal risk
D) Credit risk

Question 44

Market pull refers to:

A) basic and applied research that leads to new product ideas.
B) an organization's current market share.
C) market needs that current products are not satisfying.
D) the risk of launching a new product into the market.

Question 45

Helen is an engineer who is part of a cross-functional team that is trying to design a new product.Before she was assigned to the team,Helen had been placed in a retail sales position on a temporary basis.The company had hoped that direct contact with customers and the company's competitors would help her better understand current market needs,which would in turn lead to the development of successful new products.Which of the following mechanisms was Helen's company trying to implement?

A) Skunkworks
B) Out-rotation
C) Rugby approach
D) Market penetration strategy

Question 46

 The first ever reality television show in the U.S.proved that it could draw and sustain a large audience over a certain period of time.Other networks created similar shows.The viewers found that many of the new shows were largely copycats and did not think it was worth the effort to watch them.This illustrates the _____ risk that was not considered during the idea screening phase. 

A) functional
B) hierarchical
C) market
D) internal

Question 47

 Which of the following is a reason for eliminating new product ideas?

A) All new product ideas were heard and evaluated, which lead to a wastage of time.
B) The idea generation stage proved to be too costly.
C) The technology available is not sufficient to produce the product profitably.
D) The organization relied on out-rotation for generating the ideas.

Question 48

 Creswell Farms produces and sells clover honey.Its owners,Jack Creswell and Bonnie Creswell,felt they needed to expand the company's product line.After a brainstorming session,they came up with about 40 different product concepts including honey-based salad dressing,honey-flavored sandwich spreads,honey-coated peanuts,a fruit dip,a honey-flavored yogurt,and a ham glaze.The Creswells are engaged in which stage of the new product development process? 

A) Project planning
B) Test marketing
C) Idea generation
D) Product development

Question 49

Which of the following is the least costly stage in the new product development process?

A) Product development
B) Commercialization
C) Test marketing
D) Idea generation

Question 50

 When evaluating risks in the idea screening phase,if a firm is found to lack the necessary resources or expertise,it should:

A) reject the new product idea.
B) not act too hastily in discounting the new product idea.
C) ignore the risks and commercialize the new product idea.
D) consider other alternatives.

Question 51

 What does out-rotation involve? 

A) Gathering and disseminating information gained from research conducted about competition.
B) Determining the growth direction through the increase in market share for present product markets.
C) Placing employees in positions that require direct contact with customers, competitors, and other key outside groups.
D) The risk of not matching the role or purpose of a new product with a specific strategic need or issue of the organization.

Question 52

Which of the following stages of new product development process involves expanding viable ideas into full product concepts?

A) Project planning
B) Idea generation
C) Product development
D) Idea screening

Question 53

 To facilitate top-management support,it is essential that new product development be focused on: 

A) designing new selling concepts.
B) facilitating rapid R&D.
C) gathering vast channel sources.
D) meeting market needs.

Question 54

 Members of a venture team that is trying to create a new product are worried that by the time the finished product is released,customer needs might change.Consequently,the product,unable to satisfy the customers' needs,would become a failure.Which of the following best describes this risk of developing the new product?

A) Strategic risk
B) Market risk
C) Credit risk
D) Internal risk

Question 55

 Establishing progress goals that facilitate the "proceed" or "do not proceed" decisions regarding continuation of projects is an integral part of managing the _____ risk of new product development.

A) strategic
B) competitive
C) internal
D) market

Question 56

 Which of the following observations about idea generation is true? 

A) Top management should be completely uninvolved in this stage of the new product development process.
B) Only ideas with a high potential for economic success should be considered during idea generation.
C) Ideas are the raw materials for product development and the whole planning process depends on the quality of idea generation.
D) All new product ideas have an equal opportunity for success if the organization will invest enough resources in them.

Question 57

In the idea screening phase of new product development,a firm finds that it lacks the resources and expertise necessary to produce the product.Which of the following is the best course of action for the firm?

A) It should consider the strategy of selling its existing products at lower prices.
B) It should stop wasting time, manpower, and funds on new product development.
C) It should quickly discount the new product idea.
D) It should consider forming joint or strategic alliances with other firms.

Question 58

_____ risk is the risk that a new product will not be developed within the desired time and budget.

A) Strategic
B) Credit
C) Market
D) Internal

Question 59

 In which stage of the new product development process are you most likely to find "out-rotation" being used? 

A) Idea screening
B) Test marketing
C) Project planning
D) Idea generation

Question 60

 The producers of a new television show are certain that their new show will be a success due to the gripping storyline and the star-studded cast.However,they are concerned about exceeding their production budget due to shoots that are set in exotic locations and the high salary that some of the stars are demanding.This cost overrun would be an example of a(n)_____ risk. 

A) functional
B) hierarchical
C) market
D) internal

Question 61

What is the main goal of a test market? 

A) Evaluate and adjust the general marketing strategy to be used and the appropriate marketing mix.
B) Place emphasis on the organizational structure and management talent needed to implement the marketing strategy.
C) Evaluate the product plan from the standpoint of engineering, manufacturing, finance and marketing.
D) Increase frequency of consumption or increase the number of customers using the firm's product(s).

Question 62

What is a strategic alliance?

A) It is a long-term partnership between two organizations designed to accomplish the strategic goals of both parties.
B) It is a collaboration of two different departments within an organization in order to implement the organization's strategic plan.
C) It is a team, consisting of members from different functional areas of the organization, that work together to create a strategic plan
D) It is an alliance with experts outside the organization who are called in to help the company generate new product ideas.

Question 63

 Best City Co.opened cellular phone stores at nine locations in Manhattan to gauge consumer's reactions to them.These stores,called Best City Mobile,carried more than 80 cell phones from big manufacturers.Shoppers had the option to choose from seven mobile phone service carriers.Based on positive consumer reaction and the success of these stores,Best City opened stores nationwide.This is an example of _____.

A) product development
B) test marketing
C) project planning
D) idea screening

Question 64

 After spending years developing and testing a new MP3 player,Musique,Inc.has finally launched its new product in the market.The company has assigned its best marketing managers to handle the launch.It has also employed an extensive marketing campaign with ads in television,newspapers,and billboards.Which of the following stages of the product development process is Musique currently in?

A) Concept testing
B) Product development
C) Test marketing
D) Commercialization

Question 65

 The product-launch step where the firm commits to introducing the product into the marketplace is referred to as _____.

A) commercialization
B) test marketing
C) personal selling
D) direct marketing

Question 66

 Identify the two methods commonly used for creating and managing project teams. 

A) Idea screening and observational research
B) Test marketing and marketing applications
C) Skunkworks and rugby approach
D) Idea generation and consumer research

Question 67

 What does strategic risk involve? 

A) The risk that a new product will not be developed within the desired time and budget.
B) The risk of not matching the role of a new product with a specific strategic need of the organization.
C) The risk that a new product will not meet a market need in a strategic, value-added, differentiated way.
D) The risk of environmental influences that inhibit the strategic functioning of the organization.

Question 68

Which of the following is a potential benefit of forming a strategic alliance?

A) The assurance that the new product developed through the alliance will be successful.
B) One of the organizations in the alliance will gain a competitive advantage over the other.
C) It will lead to market expansion and greater penetration of current markets.
D) It typically reduces the market risk of introducing a new product.

Question 69

Fred is part of a cross-functional team that is working on a project to develop a new product.At the project planning stage of the process,he and the other project team members are working in relative privacy away from the rest of the organization.Which of the following methods is the company using to manage Fred's project team?

A) Rugby approach
B) Out-rotation
C) Skunkworks
D) Brainstorming

Question 70

When the product reaches the _____ stage of the new product development process,the new product idea has been evaluated from the standpoint of engineering,manufacturing,finance,and marketing.

A) idea generation
B) product development
C) idea screening
D) project planning

Question 71

_____ refers to a method used for creating and managing the project team,where a project team can work in relative privacy away from the rest of the organization.

A) Skunkworks
B) Relay approach
C) Isolation theory
D) Rugby approach

Question 72

 Rita is a successful entrepreneur who owns a small coffee shop.She serves her customers her own homemade brew of coffee.Recently she developed a new tasty brew and gave free samples of this to her regular customers.She then got them to give their feedback.This is an example of _____.

A) brand positioning
B) test marketing
C) commercialization
D) product development

Question 73

 Dynamic Technologies,Inc.had an idea for a new airplane rudder.When it could not gain access to the resources it needed to develop the new product,it entered into a long-term partnership with Starway Airlines.Today Starway uses this rudder on its commercial passenger jets.The relationship between Dynamic Technologies and Starway is an example of a(n) _____.

A) merger
B) budget plan
C) acquisition
D) strategic alliance

Question 74

 Identify the stage of new product development process where emphasis is given to following up on such things as bugs in the design,production costs,quality control,and inventory requirements.

A) Commercialization
B) Test marketing
C) Personal selling
D) Direct marketing

Question 75

In the _____ stage of the new product development process,procedures and responsibility for evaluating the success of the new product by comparison with projections are finalized.

A) commercialization
B) idea screening
C) idea generation
D) test marketing

Question 76

 _____ is a method of creating and managing the project teams,where groups in different areas of the company simultaneously work on the project.

A) Skunkworks
B) Rugby approach
C) Idea equity
D) Out-rotation

Question 77

 Which of the following refers to the elapsed time between product definition and product availability? 

A) Scalability
B) Time to market
C) Cycle time
D) Information provision

Question 78

At the product development stage,which of the following details should be present in the development report that is presented to management?

A) Production facilities design
B) Results of the test-market program
C) Initial customer reviews following commercialization
D) Viable product ideas

Question 79

Which of the following is a key component that contributes to the success of new product development efforts?

A) Leaving the task of new product development exclusively to top management
B) Limiting the budget in order to reduce losses in case the product fails
C) Creating a cross-functional team early in the development process
D) Assigning a group of marketers the task of creating new products

Question 80

 In which stage of the new product development process is a development budget established and some preliminary marketing and technical research undertaken? 

A) Idea generation
B) Project planning
C) Test marketing
D) Commercialization