Deck 11: Developing New Products

Question 1

__________ 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) The product life cycle

Answer 1

C

Question 2

Compatibility is important for rapid diffusion of new products because products that are consistent with consumers' past behavior will be more readily accepted.

Answer 2

True

Question 3

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

Answer 3

True

Question 4

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

Question 5

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

Question 6

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 7

The most challenging part of applying the product life cycle concept is that managers do not know exactly how long each stage of the cycle will last.

Question 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

The majority of new products are failures.

Question 14

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

A) early majority substitution.
B) innovation.
C) removal of laggards.
D) pioneer pretesting.
E) beta concept testing.

Question 15

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 16

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

Question 17

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

Question 18

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

Question 19

The diffusion of innovation curve proposes that purchasers can be divided into five groups.The first group consists of buyers who want to be the first on the block to have the new product; they are known as early adopters.

Question 20

In the diffusion of innovation curve,the late majority is the final group of buyers to adopt an innovation.

Question 21

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 22

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) a greater market share that can be held over an extended period of time.
D) the ability to avoid paying pioneers for new product development.
E) all of these.

Question 23

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 24

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

A) Wi-Fi networking
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 25

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) all of these.

Question 26

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 27

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 28

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

A) not always successful.
B) not adopted by everyone at the same time.
C) sometimes copycat brands.
D) not subject to the law of first movers.
E) all of these.

Question 29

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) all of these.

Question 30

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) all of these.

Question 31

Without new products,a firm can:

A) only market to current customers or similar customers.
B) only diversify into new product lines.
C) focus on product reincarnation.
D) increase prices,because they have only a few products.
E) worry less about competitors' actions.

Question 32

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 33

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) all of these.

Question 34

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 35

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 36

If they create new markets,pioneer or breakthrough products:

A) will likely result in late maturity buying.
B) can add tremendous value to firms.
C) incorporate reverse engineering outputs.
D) require the use of concept testing services.
E) must be geographically centered.

Question 37

Motorola was a pioneer in developing cell phone technology,but their early phones weighed several pounds and required frequent recharging.As a pioneer,Motorola:

A) allowed competitors to focus on creating demand for their brand.
B) paved the way for alternative brands in that product category.
C) allowed other competing firms to spend less on introductory advertising.
D) allowed competitors to focus on making improved versions.
E) all of these.

Question 38

By adding new product lines beyond its core business of computer software,like the 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) diversifying and reducing risk.
E) all of these.

Question 39

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 40

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 41

__________ is important for rapid diffusion of new products because products that are consistent with consumers' past behavior and values will be more readily accepted.

A) Relative advantage
B) Compatibility
C) Observability
D) Complexity
E) Trialability

Question 42

When microwaves were new,they often cost over $300,were huge,and full of 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 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 43

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 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) forecast sales for a new product.

Question 45

Robin recently bought Voice Over Internet protocol (VOIP)phone service (phone service delivered over the Internet).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 46

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 47

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 consumers' lifestyle.
C) did not provide benefits that were observable.
D) involved technology that was too complex.
E) could not be easily tried by consumers.

Question 48

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 49

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 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

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 52

Janet is an avid marathon runner.She is what marketers would call an innovator.Janet is likely to:

A) own the newest,most advanced running shoes available.
B) attend or participate in the famous national marathons.
C) subscribe to newsletters about the latest marathon-running health and nutrition information.
D) have a number of marathon running links bookmarked on her computer.
E) all of these.

Question 53

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 54

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 many 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 55

Inkjet personal computer 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 56

Bob and George both live in the U.S.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 57

With an understanding of which consumers buy a firm's new products at each stage of the diffusion of innovation process,the firm can adjust its __________ strategy accordingly.

A) pricing
B) advertising
C) sales promotion
D) distribution
E) all of these

Question 58

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 59

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 60

Ginger is a sales rep for PuttPutt Golf Cart Company.Golf carts are a mature market.She has noted that an increasing percentage of her company's golf cart sales are to non-golfers living in active lifestyle retirement communities.She will use this insight to adjust her firm's:

A) pricing
B) promotion
C) product style
D) distribution
E) all of these

Question 61

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

A) reverse engineering.
B) licensing technology.
C) listening to customers.
D) R&D consortia.
E) clinical trials.

Question 62

Biotechnology companies often conduct internal R&D efforts but do not bring new products to market.Instead,new biotechnology products come to market through:

A) R&D efforts.
B) licensing technology.
C) consumer research.
D) lead users.
E) brainstorming.

Question 63

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

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

Question 64

Personal selling is often used for introducing new products when __________ will slow the diffusion of the product.

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

Question 65

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 66

A __________ is a medical study that tests the safety and effectiveness of a drug or treatment in people.

A) pharmaceutical prototype
B) clinical trial
C) medical protocol
D) treatment identification
E) medical efficacy test

Question 67

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

A) identify the worst ideas.
B) choose one idea to take into production.
C) identify which ideas each person proposed.
D) vote on the best ideas.
E) propose one more new idea each.

Question 68

Concept testing is important because it can:

A) help the firm to refine the promotional plans.
B) lead to immediate roll out 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) all of these.

Question 69

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 70

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 71

Which of the following industries tend to use R&D departments as a significant source of new product ideas?

A) pharmaceuticals.
B) computer software.
C) motion pictures.
D) chemicals.
E) all of these.

Question 72

One of the key characteristics of brainstorming sessions is that:

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 center of attention should always be the manager.

Question 73

R&D consortia often include:

A) university laboratories.
B) government agencies.
C) non-profit organizations.
D) competing firms in an industry.
E) all of these.

Question 74

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) early adopters
B) market testers
C) lead users
D) reverse engineers
E) concept testers

Question 75

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

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

Question 76

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

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

Question 77

Many home design businesses volunteer to provide their latest products for home tour fundraisers because they know their new products will benefit from:

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

Question 78

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 79

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 80

__________ 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