New-Product Development and Product Life-Cycle Strategies GENERAL CONTENT: Multiple-Choice Questions

Chapter 9
New-Product Development and Product Life-Cycle Strategies

GENERAL CONTENT: Multiple-Choice Questions
1. Every product seems to go through a life cycle. Which of the following is NOT a
major challenge presented by the PLC?
a. All products eventually decline.
b. A firm must be good at developing new products to replace aging ones.
c. The firm must be good at adapting its marketing strategies.
d. It is difficult to plot the stages that a product goes through.
e. A and C
(Answer: d; p. 252; Moderate; LO3)
2. Products may fail because ________.
a. the market size may have been overestimated
b. the product’s design did not meet consumer expectations
c. they were priced too high
d. they were advertised poorly
e. any of the above
(Answer: e; p. 253; Easy; LO1)
3. All of the following are ways a company can obtain new products by acquisition
EXCEPT ________.
a. buying a whole company
b. buying a patent
c. backward engineering
d. buying a license to produce a product
e. none of the above
(Answer: c; p. 253; Moderate; LO1)
4. Studies indicate that up to ________ of all new consumer products fail.
a. 60 percent
b. 70 percent
c. 80 percent
d. 90 percent
e. 95 percent
(Answer: d; p. 253; Easy; LO1)
5. The first step in the new-product development process is ________.
a. idea generation
b. idea screening
c. concept development
d. concept testing
e. test marketing
(Answer: a; p. 254; Easy; LO2)
252
6. Major sources of new-product ideas include internal sources and external sources. All
of the following are common internal sources of new-product ideas EXCEPT ________.
a. questioning executives and professionals
b. company records and data
c. encouraging intrapreneurism
d. privileged information
e. past sales numbers
(Answer: d; p. 254; Moderate; LO2) {AACSB: Communication}
7. According to one management consultant cited in the text, on average, companies “will
run through _______ ideas before they hit a winner.”
a. 1,000
b. 1,500
c. 2,000
d. 2,500
e. 3,000
8. 3M wants its employees to think up and develop new-product ideas. To this end they
allow their employees to spend ________ of their time “bootlegging.”
a. 5 percent
b. 10 percent
c. 15 percent
d. 20 percent
e. 25 percent
(Answer: c; p. 254; Easy; LO2)
9. Some companies give customers the tools and resources to design their own ________.
a. advertising campaigns
b. products
c. product modifications
d. product applications
e. shelves
(Answer: b; p. 256; Moderate; LO2)
10. Major sources of new-product ideas include internal sources and external sources. All
of the following are common external sources of new-product ideas EXCEPT ________.
a. customers
b. suppliers
c. competitors
d. government agencies
e. C and D
11. How could you use competitors as a choice of external new-product ideas?
a. buy one of their products
b. analyze their sales
c. dismantle one of their products
d. all of the above
18. When developing new products, it is important for a firm to distinguish between a
product concept, a product image, and a product ________.
a. idea
b. proposal
c. life-cycle
d. all of the above
19. Concept testing involves presenting ideas for new products to ________.
a. suppliers
b. employees
c. target customers
d. focus groups
e. competitors
(Answer: c; p. 257; Challenging; LO2)
20. For some concept tests, a simple description consisting of a ________ might be
sufficient.
a. word
b. picture
c. word or picture
d. narrative
e. C or D
21. New-product concepts are often tested with consumers before ________.
a. commercializing them
b. attempting to turn them into a product
c. pricing them
d. creating advertising and promotion
e. developing them
22. The next step, after concept testing, in the development and marketing a new product
is ________.
a. idea screening
b. marketing strategy development
c. business analysis
d. product development
e. test marketing
(Answer: b; p. 258; Challenging; LO2)
23. The first part of the marketing strategy describes the target market, the planned
product positioning, market share, profit goals, and ________.
a. sales
b. the competition
c. the secondary market
d. the competition’s anticipated reaction
e. life-cycle duration
(Answer: a; p. 258; Moderate; LO2)
24. The second part of the marketing strategy statement outlines the product’s planned
price, distribution, and ________ for the first year.
a. advertising
b. promotion
c. marketing budget
d. positioning
25. Grant Tours will include all of the following in the third part of the marketing
strategy
statement EXCEPT ________.
a. long-run sales
b. profit goals
c. marketing mix strategies
d. short-run sales
e. A and C
26. A business analysis reviews sales, costs, and profit projections for a new product to
find out whether they satisfy the company’s ________.
a. plans
b. potential
c. objectives
d. requirements
27. Noel Stookey’s company, New World Records, is conducting a business analysis to
determine which of the many new songs available to management should be released.
Which of the following did your text recommend for forecasting sales?
a. compare the sales history of similar products
b. conduct surveys of market opinions
c. ask identified experts
d. A and B
e. all of the above
28. The next stage in new-product development, following the business analysis test, is
________.
a. concept development
b. product development
c. market testing
d. research and developing
e. product proposal
34. Although test marketing costs can be high, they are often small when compared with
________.
a. the final results
b. making a major mistake
c. management’s approval and acceptance
d. stockholders’ confidence
e. A and B
(Answer: b; p. 260; Moderate; LO2) {AACSB: Ethics}
35. When using test marketing, consumer products companies usually choose one of
three approaches: standard test markets, controlled test markets, or ________.
a. blind tests
b. random sample test markets
c. simulated test markets
d. nonstandard test markets
e. multiple-city test markets
36. Skippy Peanut Butter has a new peanut butter and bacon product and finds a small
number of representative test cities. They plan to use the results to forecast national sales
and profits.Skippy is engaged in using ________.
a. controlled test markets
b. simulated test markets
c. standard test markets
d. random test markets
e. single-city test markets
37. When using standard test markets, which of the following would NOT be useful to
gauge product performance?
a. full marketing campaign
b. store audits
c. consumer and distributor surveys
d. a simulated or controlled market
e. B and D
(Answer: d; p. 261; Challenging; LO2)
38. Which approach to test marketing is still the most widely used approach for major in-
market
testing?
a. standard test markets
b. controlled test markets
c. simulated test markets
d. single-city test markets
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Chapter 9: New-Product Development and Product Life-Cycle Strategies

39. Test marketing can be sabotaged by competition that may alter accurate results. All of
the
following are ways to do this EXCEPT ________.
a. cut prices in test cities
b. increase their promotion
c. run counter ads in the media
d. buy up the product being tested
e. A and B
40. One of the most devastating strategies a competitor might use during test marketing is
to
_________.
a. introduce an equally good product in the same market
b. cut their prices in the test cities
c. buy up the product being tested
d. run comparative advertising campaigns
e. all of the above
(Answer: a; p. 261; Challenging; LO2)
41. Two advantages that controlled test markets have over standard test markets are that
they take
less time to conduct and ________.
a. are easier to administer
b. are easier for respondents to understand
c. cost less
d. are easier to gain top management’s approval
e. utilize multiple cities
42. Companies use simulated test markets to test new products in a simulated ________
environment.
a. e-commerce
b. shopping
c. trial use
d. competition-free
43. During simulated test markets researchers note how many consumers buy the
________ and
________.
a. new product; the company’s substitute
b. company’s old product; the new product
c. new product; competing brands
d. new product; how much they buy
e. old product; notice the new one
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49. Several alternatives exist as to where to introduce a new product. Small companies
may enter
new markets after testing by entering attractive ________.
a. cities
b. regions
c. cities or regions, one at a time
d. distributors or retailers, one at a time
50. Companies with international distribution systems may introduce new products
through this
method.
a. global rollouts
b. one country at a time
c. paired countries with similar markets
d. global timing
e. all of the above
(Answer: a; p. 263; Easy; LO2) {AACSB: Global}
51. All of the following are potential disadvantages of a sequential product development
approach EXCEPT ________.
a. product failures
b. lost sales and profits
c. ease of entering competitive markets
d. crumbling market positions
e. all of the above
52. Many companies are adopting a way to get new products to the market sooner by a
faster,
simultaneous approach called ________.
a. simulated product development
b. sequential product development
c. team-based new-product development
d. phased-in product development
e. market development
53. The team-based new-product development approach is faster because departments
work
closely together through ________.
a. team efforts
b. better planning
c. the help of a consultant
d. cross-functional teams
e. departmentalization
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Part 3: Designing a Customer-Driven Marketing Strategy and Integrated Marketing Mix

54. The team-based new-product development approach uses cross-functional teams that
overlap
the steps in the process to achieve what goals?
a. save time and reduce errors
b. save time and increase effectiveness
c. increase effectiveness and employee satisfaction
d. speed product to market and reduce costs
e. B and D
(Answer: b; p. 264; Easy; LO2)
55. The innovation management system approach yields two favorable outcomes: it helps
create
an innovation-oriented company culture, and it ________.
a. will clearly assign responsibility for the process
b. will yield a larger number of new-product ideas
c. will identify successful products
d. will free up senior management time
e. will take less budget support
(Answer: b; p. 266; Challenging; LO2)
56. The team-based new-product development approach does have some limitations. All
of the
following are included EXCEPT ________.
a. it can be riskier
b. it can create more confusion
c. it can create increased organizational tension
d. it may be slow to reach market
(Answer: d; p. 264; Challenging; LO2)
57. Companies that get new and improved products to the market faster than their
competition
often gain a dramatic ________.
a. first place in the marketplace
b. competitive edge
c. penetration pricing strategy
d. market share
(Answer: b; p. 264; Easy; LO2)
58. Good new-product development requires a total-company ________ effort.
a. cross-functional
b. total-department
c. total-management
d. total-employee
e. total-product
59. In the typical consumer product life cycle, which of the following is an incorrect
stage?
a. product development
b. introduction
c. plateau
d. growth
e. decline
262

65. Under the PLC concept the introduction stage takes time, and ________ is(are) apt to
be
slow.
a. consumers
b. sales growth
c. cost reductions
d. price increases
e. competitor product entries
66. The introduction stage in the PLC is a time of high costs for the firm in all of the
following
areas EXCEPT ________.
a. distribution
b. promotion
c. product development
d. reminder advertising
e. informative advertising
67. Why do profits increase during the growth stage of the PLC?
a. Promotion costs are spread over a large volume.
b. Unit manufacturing costs fall.
c. Competition has not yet taken sales away.
d. All of the above.
e. None of the above.
68. All of the following are stages in the PLC EXCEPT ________.
a. introduction
b. growth
c. maturity
d. plateau
e. decline
69. What actually leads to greater competition in the maturity stage of the PLC?
a. overcapacity
b. many competitors
c. poor management
d. inadequate promotion
e. a lack of money
70. As the PLC curve approaches the decline stage, a company can attempt to raise the
PLC
curve or jumpstart it again by using which of the following?
a. find new global markets
b. increase the advertising budget
c. increase free samples as incentives to buy
d. find new uses and new users
264
71. At some point between maturity and decline, a company or store may lift the PLC by
doing
which of the following?
a. expand the product’s usefulness
b. expand the product’s safety
c. expand the product’s convenience
d. enhance the product’s packaging
e. all of the above
72. WD-40, by attempting to increase sales during the maturity stage of the PLC by
changing one
or more marketing mix elements was engaging in ________.
a. modifying the marketing mix
b. changing promotion
c. improving advertising
d. increasing promotion budget
e. altering publicity
73. Sales decline in the decline stage of the PLC because of technological advances,
shifts in
consumer tastes and preferences, and ________.
a. shifts in the economy
b. shifts in unemployment
c. increased competition
d. foreign imports
74. Companies with products in the decline stage of the PLC have several courses of
action they
might take. Which of the following best lists these choices?
a. maintain or harvest them
b. harvest or drop them
c. maintain, harvest, or drop them
d. maintain or drop them
75. All of the following are ways to attempt to change a product’s position in the PLC
EXCEPT
________.
a. modify the package
b. find new users
c. find new uses
d. change the price
(Answer: e; p. 270; Moderate; LO4)
True/False
76. Given the rapid changes in consumer tastes, technology, and competition, companies
must
develop a steady stream of new products and services.
(True; p. 253; Easy; LO1)
265

89. When a company determines that test marketing costs will become high, it is
generally better
to reconsider the proposal than make the mistake of spending too much.
(False; p. 260; Easy; LO2)
90. Some of the limitations of standard test marketing are: potentially high costs, time-
consuming
activities, and competition monitoring.
(True; p. 260; Moderate; LO2)
91. The typical length of time to conduct controlled test markets is 6 to 12 months.
92. Simulated test markets usually cost much less than standard or controlled test
markets, and
can be run in as little as four to six weeks, which keeps the new product out of
competitors’
view.
(False; p. 262; Moderate; LO2)
93. JumBo Games is launching a new set of game toys in the commercialization stage.
The first
decision to make is introduction timing and the second is where to launch the new
product.
94. Sequential product development has the advantage of not only being a team-oriented
approach, but it is faster in bringing products to market.
95. In choosing a method of test marketing, Best Bargain finds that superfast product
development can be riskier and more costly than the other methods. It often creates
increased
organizational tension and confusion. Best Bargain must be thinking about the team-
based
new-product development approach.
(True; p. 264; Challenging; LO2)
96. The greatest profits earned by a consumer product most often occur during the
introduction
stage.
97. Using the PLC concept to develop marketing strategy can be difficult because
strategy is both
a cause and a result of the product’s life cycle.
(True; p. 269; Challenging; LO3)
98. The plateau stage of the PLC is characterized by a slowdown in sales growth.
99. During the introduction stage, profits are negative or low because of the low sales and
high
distribution and promotion expenses.
100. Because promotion costs are spread over a large volume and unit manufacturing
costs fall,
profits rise during the growth stage of the PLC.
(True; p. 270; Easy; LO4)
101. Although products that remain in the maturity stage of the PLC seem unchanged, the
most
successful ones actually evolve to meet changing consumer needs.
267

102. When sales of a product falter during the PLC, a company can take several
approaches. The
more common ones are to modify the marketing mix, modify the product, modify the
market,
or add new features that expand the product’s safety, usefulness, or convenience.
103. Sales for products in the decline stage of the PLC drop for many reasons, including
technological advances and shifts in consumer tastes.
104. Companies need to pay more attention to their aging products. Often the next step is
to decide
whether to harvest or drop these declining products.
105. When a company decides to harvest a product in the decline stage, it will reduce
costs and
hope that sales hold up to increase the profits in the short run.
Essay
106. To be successful over time companies must develop a steady stream of new products
and
services. Briefly explain the common ways of accomplishing this.
One way to develop new products and services is through acquisition—by buying a
whole
company, a patent, or a license to produce someone else’s product. The other way is
through
new-product development in the company’s own research and development department.
(p. 253; Easy; LO1)
107. A very high percentage of new products fail. Offer a discussion of several reason
why this is
the case.
Although an idea may be good, the market size may have been overestimated. The actual
product was not designed as well as it should have been. It may have been incorrectly
positioned in the market, priced too high, or advertised poorly. A high-level executive
may
push a favorite idea despite poor marketing research findings. Sometimes the costs of
product
development are higher than expected, and sometimes competitors fight back harder than
expected.
(p. 253; Challenging; LO1)
108. Briefly describe the steps in the new-product development process.
New product development starts with idea generation from internal and/or external
sources.
Next, the ideas must be reduced through idea screening. Once the new ideas are decided
upon, the product concept must be developed and tested. A marketing strategy must be
developed to introduce the product to the market. Once the product concept and
marketing
strategy are chosen, a business analysis is conducted to review the sales, costs, and profit
projections to see if they will satisfy the company’s objectives. A prototype will next be
created in the product development stage. Test marketing will follow where the new
product
and its marketing program will be introduced into more realistic market settings. The last
step
268

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Chapter 9

New-Product Development and Product Life-Cycle Strategies

Chapter 9: New-Product Development and Product Life-Cycle Strategies

Chapter 9: New-Product Development and Product Life-Cycle Strategies

Part 3: Designing a Customer-Driven Marketing Strategy and Integrated Marketing Mix

Part 3: Designing a Customer-Driven Marketing Strategy and Integrated Marketing Mix

Chapter 9: New-Product Development and Product Life-Cycle Strategies

Part 3: Designing a Customer-Driven Marketing Strategy and Integrated Marketing Mix

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