Chapter 9

Principles of Marketing, 17e (Kotler/Armstrong)
Chapter 9 Developing New Products and Managing the Product Life Cycle
1) Which of the following is a significant challenge presented by the product life cycle?
A) increased expenses
B) increased competition
C) new product development
D) evaluation of results
E) recognizing the stages as a product goes through them
Answer: C
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.1: Explain how companies find and develop new product ideas.
Difficulty: Easy
2) Acquisition refers to ________.

A) the buying of a whole company, a patent, or a license to produce someone else's product
B) an agreement between two or more commercial companies to produce a common product
C) a partnership between two companies to produce a product in different countries by sharing
risks
D) investments made in a country's businesses by foreign citizens, often in the form of stocks
E) the development of original products, product improvements, product modifications, and
new brands through the firm's own product development strategies
Answer: A
Skill: Concept
Difficulty: Easy
3) Electron Corp. purchased Proton Corp. by buying all of its assets and ownership equity. This
is an example of a(n) ________.
A) new product development
B) acquisition
C) joint venture
D) licensing contract
E) divestment
Answer: B
AACSB: Application of knowledge
Skill: Application
Difficulty: Moderate
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4) Product improvements, product modifications, and original products can all be classified as
________.
A) blueprints
B) new products
C) prototypes
D) product extensions
E) test products
Answer: B
Skill: Concept
Difficulty: Easy
5) Which of the following is a common reason for new product failure?

A) incorrect estimation of the market size
B) low product development costs
C) ineffective social marketing campaigns
D) low selling prices of products
E) patent ownership exclusively held by the company
Answer: A
Skill: Concept
6) A particular firm added three new products earlier this year to increase variety for customers.
Two of the products failed to reach the minimal sales quota. Which of the following is LEAST
likely to have been the cause of their failure?
A) The products were priced too high.
B) The products were advertised incorrectly.
C) Competitors fought back harder than expected.
D) Product research was too extensive.
E) The product development costs were high.
Answer: D
Skill: Application
Difficulty: Challenging
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7) The product life cycle presents challenges. Which of the following is LEAST likely to
require a company to adapt its marketing strategies?
A) developments in technology
B) decreased manufacturing costs
C) competition
D) changing tastes of consumers
E) aging of products
Answer: B
Skill: Application
8) A firm can obtain new products through acquisition or new product development efforts.
Answer: TRUE
Skill: Concept
Difficulty: Easy
9) Acquisition involves the purchase of a whole company, a patent, or a license to produce

someone else's product.
Answer: TRUE
Skill: Concept
Difficulty: Easy
10) Adapting marketing strategies is not a challenge faced in the product life cycle.
Answer: FALSE
Skill: Concept
Difficulty: Easy
11) Explain common reasons for the failure of new products. What must be the goals for a
company to create successful new products?
Answer: Although an idea may be good, the market size may have been overestimated. Other
possible reasons for failure include the following: the actual product was not designed as well
as it should have been; the product may have been incorrectly positioned in the market, priced
too high, or advertised poorly; a high-level executive might have pushed a favorite idea despite
poor marketing research findings; the costs of product development were higher than expected;
or competitors fought back harder than expected. To create successful new products, a company
must understand its customers, markets, and competitors and deliver superior value to
customers.
AACSB: Analytical thinking; Written and oral communications
Skill: Concept
12) New product development starts with ________.

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A) concept development
B) idea screening
C) idea generation
D) concept testing
E) test marketing
Answer: C
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
13) John's fascination for his grandmother's sherbet recipes inspired him to come up with a
recipe for SherBetter, a gourmet sherbet for the American market. Which of the following
stages of the new product development process does this exemplify?
A) idea screening
B) idea generation
C) concept testing
D) product development
E) product manufacturing
Answer: B
Skill: Application
14) Which of the following is an internal source for new product ideas?
A) competitors
B) company employees
C) marketing research firms
D) trade magazines
E) government agencies
Answer: B
Skill: Concept
Difficulty: Easy
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15) Many companies have developed ________ programs that encourage employees to develop
new product ideas.
A) management
B) incentive
C) entrepreneurial
D) intrapreneurial
E) crowdsourcing
Answer: D
Skill: Concept
Difficulty: Easy
16) Why are customers often considered the most important sources of new product ideas?
A) Customers are close to the market and can pass along information about problems and new
product possibilities.
B) The company can analyze customer questions and complaints to find new products that
better solve consumer problems.
C) Customers buy competing new products, take them apart to see how they work, analyze
sales, and then decide to purchase.
D) Customers review the sales, costs, and profit projections for a new product to find out
whether the product satisfies the company's objectives.
E) Customers estimate the minimum and maximum sales to assess the range of risk.
Answer: B
Skill: Concept
17) Which of the following is an external source for ideas?

A) project managers
B) engineers
C) salespeople
D) manufacturing staff
E) suppliers
Answer: E
Skill: Concept
Difficulty: Easy
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18) Who can pass along information about new concepts or techniques to use in new products?
A) competitors
B) salespeople
C) customers
D) suppliers
E) distribution channels
Answer: E
Skill: Concept
Difficulty: Easy
19) Which of the following is the practice of inviting broad communities of customers,
employees, independent researchers, and members of the public into the new product
innovation process?
A) brainstorming
B) idea screening
C) crowdsourcing
D) outsourcing
E) concept testing
Answer: C
Skill: Concept
Difficulty: Easy
20) Which of the following statements is true of the idea generation stage in the new product
development process?
A) The purpose of idea generation is to reduce the number of ideas to the least possible number.
B) Truly innovative companies rely exclusively on a single source for new product ideas.
C) Customers are the least important sources of new product ideas.
D) Truly innovative companies develop extensive innovation networks that capture ideas and
inspiration from every possible source.
E) Truly innovative companies seldom rely on customers and the general public for ideas.
Answer: D
Skill: Concept
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21) In the new product development process, the first idea-reducing stage is ________.
A) business analysis
B) idea generation
C) concept development
D) crowdsourcing
E) idea screening
Answer: E
Skill: Concept
Difficulty: Easy
22) Executives at an automobile manufacturing company conducted a brainstorming session for

selected employees. This session resulted in a large number of ideas for developing new cars
after extensive R&D. The executives then planned to filter out the best ideas during the
________ stage.
A) business analysis
B) idea generation
C) concept testing
D) idea screening
E) concept development
Answer: D
Skill: Application
23) Which of the following would most likely be included in an executive's write up of a new
product idea to be presented to a new product committee?
A) the proposed customer value proposition
B) the product image
C) the marketing strategy
D) the business analysis
E) the pricing strategy
Answer: A
Skill: Concept
Difficulty: Easy
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24) Which of the following is NOT likely to be a question asked in the new product screening
process?
A) Is there a real need and desire for the product?
B) Is there a clear product concept?
C) Does the product offer a sustainable advantage?
D) How many items will the company sell in the first two years?
E) Does the product fit the company's overall growth strategy?
Answer: D
Skill: Concept
Difficulty: Easy
25) Which of the following statements best explains why idea screening may be the most
important step of new product development?
A) It increases the number of ideas generated.
B) It provides an opportunity for the marketer to test the prototype in a simulated market.
C) It helps forecast the products' sales and profits accurately for a specific period.
D) It gives research and development team members an opportunity to gather consumer
feedback.
E) It saves the company money in product development costs by going ahead with only the
product ideas that are likely to be profitable.
Answer: E
Skill: Concept
26) A product idea is ________.

A) the way consumers perceive an actual or potential product
B) the knowledge and awareness of a product among consumers
C) a possible product that the company can see itself offering to the market
D) a detailed version of the new product idea stated in meaningful consumer terms
E) the testing of new product concepts with groups of target consumers
Answer: C
Skill: Concept
Difficulty: Easy
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27) A detailed version of a new idea stated in meaningful customer terms is called a product
________.
A) solution
B) concept
C) image
D) proposal
E) lining
Answer: B
Skill: Concept
Difficulty: Easy
28) An attractive product idea must be developed into a ________.

A) concept alternative
B) product concept
C) brand personality
D) brand placement
E) product strategy
Answer: B
Skill: Concept
Difficulty: Easy
29) A ________ is the way consumers perceive an actual or potential product.

A) product idea
B) product concept
C) product image
D) brand personality
E) concept test
Answer: C
Skill: Concept
Difficulty: Easy
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30) JoAnn Fabrics Inc. has created a new combination of colors and fabric types. The firm
wants to know how consumers will perceive the new product. The firm is concerned with the
product ________.
A) idea
B) displacement
C) image
D) activation
E) placement
Answer: C
Skill: Application
31) Which of the following groups do marketers involve for the process of concept testing new
products?
A) suppliers
B) employees
C) target consumers
D) manufacturers
E) competitors
Answer: C
Skill: Concept
Difficulty: Easy
32) For concept test, companies will frequently present customers with ________ of the
concept for a reliable concept test.
A) a verbal description
B) a PowerPoint slide
C) a picture
D) a physical presentation
E) a printed paragraph
Answer: D
Skill: Concept
Difficulty: Easy
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33) Which of the following stages in the new product development would a firm engage in
immediately after the completion of concept testing?
A) idea screening
B) marketing strategy development
C) business analysis
E) idea generation
Answer: B
Skill: Concept
Difficulty: Easy
34) What is included in the first part of a marketing strategy statement?

A) distribution strategy
B) product longevity
C) long-run sales goals
D) promotional mixes
E) target market description
Answer: E
Skill: Concept
Difficulty: Easy
35) Which of the following is included in the second part of the marketing strategy statement?
A) advertising tagline
B) promotional mix
C) planned price
D) customer segmentation
E) operational excellence
Answer: C
Skill: Concept
Difficulty: Easy
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36) Which of the following is included in the third part of the marketing strategy statement?
A) the planned value proposition
B) distribution strategy
C) the product's planned price
D) marketing budget
E) the planned long-run sales
Answer: E
Skill: Concept
Difficulty: Easy
37) A review of the sales, costs, and profit projections for a new product to find out whether
they satisfy the company's objectives is called a ________.
A) business feasibility plan
D) product acceptance
E) business proposal
Answer: C
Skill: Concept
Difficulty: Easy
38) Which stage of new product development requires management to estimate minimum and
maximum sales to assess the range of risk in launching a new product?
A) concept testing
E) test marketing
Answer: C
Skill: Concept
Difficulty: Easy
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39) Once managers of The Grecian Urn have decided on their product concept and marketing
strategy, they can evaluate the business attractiveness of the proposal in the ________ stage of
the new product development process.
A) business transformation
B) test marketing
D) business process reengineering
E) concept testing
Answer: C
Skill: Application
Difficulty: Easy
40) Which of the following statements is true of the new product development process?
A) The purpose of the idea screening stage is to create a large number of ideas.
B) Under the business analysis stage, if the new product satisfies the company's objectives, the
product then moves to the product development stage.
C) A product concept is the way consumers perceive an actual or potential product.
D) The concept testing stage is the stage at which the product and its proposed marketing
program are introduced into realistic market settings.
E) Commercialization is the process of inviting broad communities of people such as
customers, employees, and scientists into the new product innovation process.
Answer: B
Skill: Concept
41) Neutron Inc. is conducting a business analysis to determine which of the many newly
developed apps should be released. To estimate sales, the company must ________.
A) conduct surveys of competitors
B) exclusively consider the government's opinions
C) consider the sales history of similar products
D) apply the PLC concept to industry sales
E) opt for business process reengineering
Answer: C
Skill: Concept
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42) Which figures does the company use to analyze the new product's financial attractiveness?
A) size of population
B) expected market share
C) number of competitors
D) anticipated number of options
E) sales and costs
Answer: E
Skill: Concept
Difficulty: Easy
43) Which of the following stages of the new product development process occurs immediately
after the completion of the business analysis for the product or service?
A) idea screening
B) product development
C) product activation
D) marketing strategy development
E) product design
Answer: B
Skill: Concept
Difficulty: Easy
44) The product development stage requires ________.

A) a huge jump in investment
B) salespeople to contact potential customers
C) financial analysis
D) a few hours
E) management approval
Answer: A
Skill: Concept
Difficulty: Easy
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45) In the ________ stage of the new product development process, products undergo rigorous
tests to make sure that they perform safely and effectively, or that consumers will find value in
them.
A) product design
B) idea generation
C) concept development and testing
E) product activation
Answer: D
Skill: Concept
Difficulty: Easy
46) A group of business entrepreneurs who worried about their teenage children drinking and
driving decided there must be some way to approach this problem proactively. They came up
with an idea for a pair of blurry goggles. They believed looking through the goggles would
simulate what the world looks like when someone is seriously intoxicated. They developed a
crude pair of blurry goggles to show prospective customers. This crude pair of goggles is
known as a ________.
A) prototype
B) concept test
C) product concept
D) product image
E) product idea
Answer: A
Skill: Application
47) Once the prototype of Wainwright Industries' new riding lawnmower, made especially for
women, passes product tests, the next step is ________.
A) test marketing
B) focus group surveys
C) commercialization
D) concept testing
E) business analysis
Answer: A
Skill: Concept
48) In a ________, new products and marketing tactics are tested online in a virtual shopping
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environment.
A) controlled test market
B) simulated test market
C) standard test market
D) focus group
E) survey
Answer: B
AACSB: Information technology
Skill: Concept
Difficulty: Easy
49) Starbucks introduced a less-than-perfect mobile payments app, then worked out the flaws
after the launch. The company chose speed to market over a perfect app at introduction. This
illustrates ________.
A) why many companies engage in crowdsourcing
B) the influence of fast-changing market developments
C) why prototypes are so important
D) how idea screening can make a product a commercial success
E) the importance of different sources for idea generation
Answer: B
Skill: Application
50) Yummy Peanut Butter created a new coconut-flavored peanut butter that it tested in a small
number of representative cities. The company plans to use the results to forecast national sales
and profits. Which of the following did the firm use?
A) controlled test markets
B) simulated test markets
C) standard test markets
D) ambush marketing
E) affinity marketing
Answer: C
Skill: Application
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51) In a(n) ________, consumers interact with new products and marketing tactics in laboratory
stores or virtual online shopping environments.
A) standard test market
B) focus group
C) controlled test market
D) simulated test market
E) individual survey
Answer: D
Skill: Concept
Difficulty: Easy
52) In a(n) ________, new products and marketing tactics are tested among specifically
identified groups of customers and stores.
A) controlled test market
B) simulated test market
C) standard test market
D) systematic sample
E) accidental sample
Answer: A
Skill: Concept
Difficulty: Easy
53) All of the following are disadvantages of test marketing EXCEPT that test marketing
________.
A) is typically expensive
B) can be time consuming
C) enables competitors to gain advantages
D) encourages dishonesty among participants
E) fails to guarantee product success in the market
Answer: D
Skill: Concept
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54) Which of the following is the most likely circumstance for a company to decide to do little
or no test marketing?
A) when the new product requires a major investment
B) when management lacks confidence in the new product
C) when management lacks confidence in the marketing strategy
D) when the product has no substitutes and is new in its category
E) when the costs of developing and introducing the product are low
Answer: E
Skill: Concept
55) Which of the following statements is true of test marketing?

A) The amount of test marketing needed remains constant for each new product.
B) When the costs of developing and introducing the product are low, the company will have to
do significant test marketing.
C) Test marketing is seldom done on products that are risky.
D) Test marketing is seldom done when management is not sure of the product or its marketing
program.
E) Test marketing costs can be high, and it takes time that may allow competitors to gain
advantages.
Answer: E
Skill: Concept
56) The major purpose of test marketing is to provide management with the information needed
to make a final decision about ________.
A) the entire marketing program
B) which market to compete in
C) whether to launch the new product
D) how to compete in the market
E) how long to compete in the market
Answer: A
Skill: Concept
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57) Introducing a new product into the market is called ________.
A) test marketing
B) simulation
C) co-marketing
D) commercialization
E) segmentation
Answer: D
Skill: Concept
Difficulty: Easy
58) P&G introduced its Duncan Hines ready-to-spread frosting in a small geographic area.
When General Mills became aware of the product, it rushed to market its own Betty Crocker
ready-to-spread frosting, which eclipsed the Duncan Hines product introduction. General Foods
was able to enter the ________ stage of the new product development process before P&G
could.
A) commercialization
B) co-marketing
C) idea generation
D) idea screening
E) simulation
Answer: A
Skill: Application
59) Which of the following involves costs that most likely occur during the commercialization
stage of new product development?
A) building or renting a manufacturing facility
B) paying target customers for product feedback
C) determining the product's planned distribution
D) developing a prototype of the product
E) identifying target markets
Answer: A
Skill: Concept
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60) A company getting ready to launch a new product must make several decisions. The
company must first decide on ________.
A) whether to launch the product in a single location
B) whether to launch the product in a region
C) whether to launch the product into full national distribution
D) when to introduce the product
E) when to develop a planned market rollout
Answer: D
Skill: Concept
61) According to the commercialization stage of the new product development process,
following the decision to introduce the new product at a particular time, a company must next
decide ________.
A) where to launch the new product
B) how to launch the new product
C) why to launch the new product
D) what pricing strategies to implement
E) what marketing mix elements to use
Answer: A
Skill: Concept
Difficulty: Easy
62) Steelz Inc. has designed a process that manufactures an improved version of steel more
efficiently, which will save the firm both money and resources. In considering the launch of this
new steel in the market, the firm must first decide on ________.
A) timing
B) location
C) organizational structure
D) test marketing
E) product mix
Answer: A
Skill: Application
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63) Which of the following focuses on finding new ways to solve customer problems and create
more customer-satisfying experiences?
A) concept testing process
B) customer value proposition
C) customer-centered new product development
D) customer lifetime value
E) team-based new product development
Answer: C
Skill: Concept
Difficulty: Easy
64) Skyrim Corp. lacks the capital and capacity to launch its new helicopter for full national
and international distribution. If the test market results look promising, what should be
management's next step?
A) retest the product in additional markets
B) develop a planned market rollout over time
C) liquidate its assets to gain capital and capacity
D) seek the help of a nationally known consultant
E) develop a prototype
Answer: B
Skill: Application
65) ________ is a new product development approach in which one company department
works to complete its stage of the process before passing the new product along to the next
department and stage.
A) Team-based product development
B) Simultaneous product development
C) Sequential product development
D) Horizontal integration
E) Vertical integration
Answer: C
Skill: Concept
Difficulty: Easy
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66) Under a team-based new product development approach, ________.
A) a single departmental team works to complete different stages of the process before passing
the new product along to the next department and stage
B) the organizational tension and confusion is less than under the sequential approach
C) company departments work closely together in cross-functional teams
D) a bottleneck at one phase can seriously delay an entire project
E) the new product passes from one department to another before finalizing
Answer: C
Skill: Concept
67) At Fantastic Flavors, a large regional chain of candy stores, employees from marketing,
design, production, and finance work in cross-functional groups to save time and money in the
new product development process. Fantastic Flavors uses a ________ approach.
A) customer-centered new product development
B) sequential product development
C) team-based new product development
D) heuristic
E) functional
Answer: C
Skill: Application
68) Which of the following is the goal of the team-based new product development approach
when it uses cross-functional teams that overlap the steps in the process?
A) gain a big competitive edge by getting the right new products to market
B) save time and increase effectiveness
C) increase production efficiency and customer satisfaction
D) speed product distribution to market and reduce costs
E) reduce organizational tension and confusion
Answer: B
Skill: Concept
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69) Which of the following is a disadvantage of a team-based approach to new product
development?
A) It takes longer for the development of a new product.
B) The development effort is not as effective because of employee inexperience.
C) It decreases the efficiency of the new product development process.
D) It can result in organizational confusion and tension.
E) The process does not work with the shorter life cycles of many of today's products.
Answer: D
Skill: Concept
70) According to the text, the search for new product ideas should most likely be ________.
A) intermittent
B) holistic
C) segmented
D) compartmentalized
E) flexible
Answer: B
Skill: Concept
Difficulty: Easy
71) A company can install a(n) ________ management system to collect, review, evaluate, and
manage new product ideas.
A) quality
B) innovation
C) content
D) supply chain
E) customer relationship
Answer: B
Skill: Concept
Difficulty: Easy
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72) The innovation management system approach yields two favorable outcomes: it helps
create an innovation-oriented company culture, and it ________.
A) clearly assigns responsibility for the process to a single department
B) yields a larger number of new product ideas
C) guarantees successful products
D) frees up senior management time
E) requires less budget support
Answer: B
Skill: Concept
73) New product success requires all of the following EXCEPT ________.
A) a whole-company commitment
B) a holistic approach for finding new ways to create valued customer experiences
C) thinking up a few good ideas
D) introducing products that will satisfy a want or need for customers
E) efficient engineering and manufacturing
Answer: E
Skill: Concept
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Refer to the scenario below to answer the following question(s).
Most people laughed when Evelyn Ringler explained her product idea: a solar-powered vacuum
cleaner. But the concept was practical and the technology used in the vacuum was the same as
that used in many electronic toys. After setting up a demonstration booth in a mall in a Chicago
suburb, Evelyn felt more assured than ever that her idea would be a hit. Consumers seemed
receptive and offered helpful pieces of advice, such as how much they would pay for the
vacuum, what colors they would prefer, and why they would not buy the vacuum.
The vacuum itself was shaped like a small saucer, with a filter bag on top and sensory nodes
along the edges. After being charged in the sunlight, the vacuum could run for 7 hours,
covering a floor area of 600 square feet. As the apparatus lightly bumped into table legs, chairs,
and so on, the sensory nodes allowed the vacuum to move around the objects in various
directions. This is the same type of technology used in the manufacture of children's racecars
and walking dolls.
Evelyn knew that the solar-powered vacuum would be especially helpful to both elderly
consumers, who may have a more difficult time with vacuuming, and on-the-go consumers who
lead busy lives. The price would be above average but would likely be reduced after Evelyn
recouped some of her costs.
After a 500-unit production run and a substantial financial investment, Evelyn set up a
multiple-city test market, in a Chicago mall and in an appliance store in New Jersey and several
other retail stores in Florida. "It's such a novel idea," Evelyn added. "People will notice it, even
if they don't buy it right away."
74) Evelyn's ________ is the practical use of solar power in a vacuum cleaner that is designed
to effortlessly vacuum clean the floors of on-the-go and elderly consumers.
A) product placement
B) product concept
C) product image
D) product idea
E) virtual product
Answer: B
Skill: Application
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75) Which of the following stages of new product development was Evelyn involved in when
she set up a demonstration booth to learn about consumers' feelings toward her vacuum
cleaner?
A) concept testing
C) idea screening
D) commercializing
E) crowdsourcing
Answer: A
Skill: Application
76) New product development begins with a systematic search for new product ideas through
idea generation.
Answer: TRUE
Skill: Concept
Difficulty: Easy
77) Companies seldom solicit ideas from customers during the idea generation stage of product
development.
Answer: FALSE
Skill: Concept
Difficulty: Easy
78) A product idea is an idea for a possible product that a company can offer the market.
Answer: TRUE
Skill: Concept
Difficulty: Easy
79) Blair Housewares wants to add new products to its existing line of products. Managers are
correct in believing that the purpose of idea generation is to create a few ideas, and the purpose
of succeeding stages is to increase that number.
Answer: FALSE
Skill: Application
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80) In the concept development stage, a firm will create a single product concept to test.
Answer: FALSE
Skill: Concept
81) Concept testing works best with people who are familiar with the new idea and the new
product's purpose. This generally includes top management, the sales force, and research and
development.
Answer: FALSE
Skill: Concept
82) GreenTree Lawn and Garden Products is engaged in marketing strategy development. The
first part of the marketing strategy statement created by management should outline the
product's planned price, distribution, and marketing budget for the first year.
Answer: FALSE
Skill: Application
83) The business analysis stage represents the first large jump in financial investment in the
new product development process.
Answer: FALSE
Skill: Concept
84) GreenTree Lawn and Garden Products is engaged in a review of the sales, costs, and profit
projections for some new products to find out whether they satisfy the company's objectives.
This activity is called business product development.
Answer: FALSE
Skill: Concept
Difficulty: Easy
85) Marketers often involve actual customers in product testing.

Answer: TRUE
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Skill: Concept
Difficulty: Easy
86) A company introducing a product that is similar to its competitors' product will do a
complete test market to gain maximum information before product introduction.
Answer: FALSE
Skill: Concept
Difficulty: Easy
87) A company launching a new product into the market must first decide where to launch the
product.
Answer: FALSE
Skill: Concept
Difficulty: Easy
88) JumBo Games is in the commercialization stage. The first decision that the firm should
make while introducing the product in the market is introduction timing.
Answer: TRUE
Skill: Application
89) Sequential product development has the advantage of not only being a team-oriented
approach, but also of being faster in bringing products to market.
Answer: FALSE
Skill: Concept
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90) To avoid too few new product ideas and the failure of many good ideas, management
should implement an innovation management system that collects, reviews, evaluates, and
manages new product ideas.
Answer: TRUE
Skill: Concept
91) What elements may help to create a product image?

Answer: A product image is the way consumers perceive an actual or potential product. Any
number of product attributes, as well as packaging and intended use, create product image; the
promotional campaign also affects product image.
AACSB: Written and oral communication
Skill: Concept
92) How might a firm benefit from implementing an "intrapreneurial" program?

Answer: Many companies have developed successful internal social networks and
intrapreneurial programs that encourage employees to develop new product ideas. For example,
Twitter hosts periodic "hackathons," which actively promotes internal innovation through
experimentation around the company.
Skill: Concept
93) Why are competitors considered a good external idea source?

Answer: Marketers can pay particular attention to competitors' ads to get clues about their new
products. They buy competing new products, take them apart to see how they work, analyze
their sales, and decide whether they should bring out a new product of their own.
Skill: Concept
29
94) The potential sales, costs, and profit projections are being determined for a new product
idea at Art for Kids. Which of the following stages of the new product development process
does this illustrate?
Answer: The projections for potential sales, costs, and profits occur in the business analysis
stage of the new product development process.
Skill: Application
Difficulty: Easy
95) What factors are assessed in test marketing?

Answer: Test marketing lets a company assess customer response to its product and the
effectiveness of its positioning strategy, advertising, distribution, pricing, branding, and
packaging.
Skill: Concept
96) A marketer has selected a single city in which to conduct a test market. What can be
concluded from this choice of a single-city test market?
Answer: The marketer may be confident that consumers in that city are representative of the
overall market.
Skill: Application
97) A marketer has chosen a multiple-city test market. What can be concluded from this choice
of a multiple-city test market?
Answer: The marketer likely understands that the product being tested will be perceived
differently in different geographic regions.
Skill: Application
30
98) Differentiate between controlled test markets and simulated test markets.
Answer: In controlled test markets, new products and tactics are tested among controlled
panels of shoppers and stores. Using simulated test markets, researchers measure consumer
responses to new products and marketing tactics in laboratory stores or virtual online shopping
environments. Both controlled test markets and simulated test markets reduce the costs of test
marketing and speed up the process.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
99) Why might individual departments prefer sequential product development?

Answer: This process allows each individual department to work with a new idea, completing
its stage of development before passing the product on to the next department and stage; other
departments are less likely to interfere.
Skill: Concept
Difficulty: Easy
100) Briefly describe the steps in the new product development process.
Answer: 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. Next, a prototype will be created
in the product development stage. Test marketing will follow, introducing the new product and
its marketing program into more realistic market settings. The last step is to launch or not
launch the new product. If the company decides to launch the product, it will go ahead with the
commercialization stage and later test its sales and profit results.
Skill: Concept
31
101) Identify the major sources of external new product ideas and explain why these sources
offer advantages over internal sources.
Answer: The major external sources of new product ideas include customers, suppliers and
distributors, competitors, and research firms. These sources are close to the market and tend to
reflect current tastes and preferences. Firms can better match their product offerings to
customer needs and wants.
Skill: Concept
102) Differentiate between a product idea, a product concept, and a product image.
Answer: A product idea is an idea for a product that a company can imagine itself offering to
the market. A product concept takes the idea several steps further, with a detailed version of the
idea stated in meaningful consumer terms. Finally, a product image is the way consumers
perceive an actual or potential product.
Skill: Concept
Difficulty: Easy
103) Explain concept testing.

Answer: Concept testing calls for testing new product concepts with groups of target
consumers. The concepts may be presented to consumers physically or symbolically. A more
concrete and physical presentation, however, will increase the reliability of the concept test.
After being exposed to the concept, consumers are asked questions about it; their answers
reveal to the marketer whether the concept needs to be altered in any way.
Skill: Concept
Difficulty: Easy
104) Define commercialization. Explain two important decisions the company must make
during this stage.
Answer: Introducing a new product into the market is called commercialization. The company
launching a new product must first decide on introduction timing. Next, the company must
decide where to launch the new product—in a single location, a region, the national market, or
the international market. Confidence, capital, and capacity are required to launch new products
on a large-scale basis. Hence, many firms plan a market rollout over time.
Skill: Concept
32
105) What are the two advantages of an innovation management system for developing new
products? Provide four strategies for a company to use to establish a successful system.
Answer: The first advantage of an innovation management system is that it helps create an
innovation-oriented company culture. It shows that top management supports, encourages, and
rewards innovation. The second advantage is that it will yield a larger number of new product
ideas, among which will be found some especially good ones. As the system matures, ideas will
flow more freely.
To establish a successful system a company can do the following:
1. Appoint a respected senior person to be the company's innovation manager.
2. Create a cross-functional innovation management committee with people from each
department.
3. Set up a Web site for anyone who wants to become involved in finding and developing new
products.
4. Encourage all company stakeholders to send their ideas to the idea manager.
5. Set up formal recognition programs to reward those who contribute the best new ideas.
Skill: Concept
106) Which of the following refers to the course that a product's sales and profits take over its
lifetime?
A) total product process
B) service life
C) product mix
D) product life cycle
E) marketing mix
Answer: D
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
107) Which of the following best characterizes the decline stage of product development?
A) rapid market acceptance
B) slow sales growth
C) sales and profits decline
D) high investment costs
E) increasing profits
Answer: C
Skill: Concept
108) Which of the following statements characterizes the introduction stage of the PLC?
33
A) There are increased marketing outlays.
B) Profits are nonexistent.
C) The company incurs minimal expenses.
D) The product achieves acceptance by most potential buyers.
E) Promotional expenditures are zero.
Answer: B
Skill: Concept
109) Which stage in the product life cycle is characterized by rapid market acceptance and
increasing profits?
A) introduction
B) maturity
C) growth
D) decline
E) product development
Answer: C
Skill: Concept
Difficulty: Easy
110) ________ is the product life cycle period when sales fall off and profits drop.
A) Introduction
B) Growth
C) Maturity
D) Decline
E) Product development
Answer: D
Skill: Concept
Difficulty: Easy
34
111) ________ is the product life cycle period when sales growth slows because the product
has achieved acceptance. Profits level off because marketing costs increase in the face of
competition.
A) Decline
B) Maturity
C) Product development
D) Introduction
E) Growth
Answer: B
Skill: Concept
Difficulty: Easy
112) Some products that have entered the decline stage have been cycled back to the growth
stage through ________.
A) repositioning
B) harvesting
C) maintaining
D) pruning
E) expanding
Answer: A
Skill: Concept
Difficulty: Easy
113) What causes a specific brand's life cycle to change quickly?

A) costs of raw materials
B) changing demographics
C) shift in company strategy
D) competitive attacks and responses
E) new technology
Answer: D
Skill: Concept
35
114) A style is best defined as a ________.
A) currently popular trend in retail goods
B) popular consumer taste at a given time
C) temporary period of unusually high sales
D) short-term component of the marketing mix
E) basic and distinctive mode of expression
Answer: E
Skill: Concept
Difficulty: Easy
115) The more formal "business attire" look of corporate dress of the 1980s and 1990s gave
way to the "business casual" look of the 2000s and 2010s. This is an example of a ________.
A) style
B) fashion
C) fad
D) subculture
E) norm
Answer: B
Skill: Concept
116) Apple's iPod has been called "one of the greatest consumer electronics hits of all time."
iPods have been sold in huge numbers, and Apple captures a large share of the music player
market. This success has attracted many large, resourceful competitors. The iPod is in the
________ stage of the product life cycle.
A) introduction
B) growth
C) maturity
D) decline
E) adoption
Answer: C
Skill: Application
36
117) Flurrbies, a brand of unique winter accessories that quickly fell in and out of favor with
customers, is an example of a ________.
A) style
B) fashion
C) fad
D) norm
E) subculture
Answer: C
Skill: Application
118) The PLC concept can be applied by marketers as a useful framework for describing how
________.
A) competitors' moves are predicted
B) marketing strategies are developed
C) products and markets work
D) concept testing is conducted
E) product ideas are developed
Answer: C
Skill: Concept
Difficulty: Easy
119) According to the PLC, the ________ stage is reached when sales plunge to zero, or when
they drop to a low level where they continue for many years.
A) laggard
B) decline
C) maturity
D) growth
E) incubation
Answer: B
Skill: Concept
Difficulty: Easy
37
120) Which of the following stages of the PLC is characterized with high promotional
expenditures that result from an effort to create consumer awareness?
A) growth
B) product development
C) maturity
D) introduction
E) decline
Answer: D
Skill: Concept
Difficulty: Easy
121) A(n) ________ chooses a strategy consistent with the intended product positioning. To
gain market leadership requires correct decisions from the beginning.
A) brand evangelist
B) market pioneer
C) early adopter
D) laggard
E) harvester
Answer: B
Skill: Concept
Difficulty: Easy
122) Which of the following stages of the PLC is characterized with the same level or slightly
higher level of promotional expenditures in an attempt to respond to increasing competition?
A) growth
B) decline
C) maturity
E) adoption
Answer: A
Skill: Concept
Difficulty: Easy
38
123) Kellogg's begins to sell its cereals in new markets after conducting extensive marketing
research. After the cereal begins to appear in these new markets, the company increases its
promotion expenditure to counteract competitive responses. Kellogg's is in the ________ stage
of the product life cycle.
A) introduction
B) growth
C) maturity
D) decline
E) adoption
Answer: B
Skill: Application
124) Big Moose Toys is a market pioneer introducing a modern version of Bubble the Moose, a
character from an animated television series originally broadcast in the '50s and '60s. The
company's version of Sandy the Flying Squirrel, a character from the show targeted to baby
boomers, was a strong success. Since the firm is a market pioneer, it needs to make the new
launch strategy for Bubble the Moose consistent with the intended ________.
A) pricing
B) product positioning
C) brand extension
D) prototype
E) fad
Answer: B
Skill: Application
125) Which stage in the PLC normally lasts longest and poses strong challenges to marketing
managers?
A) growth
B) decline
C) maturity
D) introduction
E) adoption
Answer: C
Skill: Concept
Difficulty: Easy
39
126) At which stage in the PLC do profits increase as promotion costs are spread over a large
volume, and as the firm enters new market segments?
A) maturity
B) introduction
C) decline
D) growth
E) harvest
Answer: D
Skill: Concept
Difficulty: Easy
127) Which of the following would lead to greater competition in the maturity stage of the
PLC?
A) overcapacity
B) market pioneers
C) poor management
D) inadequate promotion
E) diminishing budgets
Answer: A
Skill: Concept
Difficulty: Easy
128) Most products in the marketplace are in the ________ stage of the product life cycle.
A) growth
B) decline
C) maturity
D) introduction
E) development
Answer: C
Skill: Concept
Difficulty: Easy
40
129) Over the past few years, Binney and Smith's Crayola crayons has expanded to more than
80 countries around the world. Crayola crayons are in the ________ stage of the PLC.
A) introduction
B) laggard
C) maturity
D) decline
E) incubation
Answer: C
Skill: Application
130) When a product is in the maturity stage, the company should most likely consider
________.
A) harvesting the product or market
B) modifying the product, market, or marketing mix
C) divesting the product line
D) liquidating the firm's assets
E) dropping the product from its market offerings
Answer: B
Skill: Concept
Difficulty: Easy
131) When Heinz introduced EZ Squirt packaging and new colors such as Blastin' Green and
Awesome Orange to revitalize consumer buying, the company was modifying the ________.
A) market
B) pricing strategy
C) distribution
D) product
E) competition
Answer: D
Skill: Application
41
132) P&G has sold off a number of lesser or declining brands such as Folgers coffee and Cover
Girl cosmetics. In these examples, management decided to ________ the products.
A) modify
B) maintain
C) drop
D) harvest
E) franchise
Answer: C
Skill: Application
133) Due to dropping sales, a company that manufactures soaps begins to sell them to
restaurants and hotels to extend their product's life. The soap manufacturer is in the ________
stage of PLC.
A) introduction
B) growth
C) maturity
D) decline
E) development
Answer: D
Skill: Application
134) When Kraft focused on cost cutting with its older, established brands, leaving them to
wither without much investment or modification, Kraft decided to ________ the older products.
A) extend
B) modify
C) drop
D) harvest
E) analyze
Answer: D
Skill: Application
42
Refer to the scenario below to answer the following question(s).
Most people laughed when Evelyn Ringler explained her product idea: a solar-powered vacuum
cleaner. But the concept was practical and the technology used in the vacuum was the same as
that used in many electronic toys. After setting up a demonstration booth in a mall in a Chicago
suburb, Evelyn felt more assured than ever that her idea would be a hit. Consumers seemed
receptive and offered helpful pieces of advice, such as how much they would pay for the
vacuum, what colors they would prefer, and why they would not buy the vacuum.
The vacuum itself was shaped like a small saucer, with a filter bag on top and sensory nodes
along the edges. After being charged in the sunlight, the vacuum could run for 7 hours,
covering a floor area of 600 square feet. As the apparatus lightly bumped into table legs, chairs,
and so on, the sensory nodes allowed the vacuum to move around the objects in various
directions. This is the same type of technology used in the manufacture of children's racecars
and walking dolls.
Evelyn knew that the solar-powered vacuum would be especially helpful to both elderly
consumers, who may have a more difficult time with vacuuming, and on-the-go consumers who
lead busy lives. The price would be above average but would likely be reduced after Evelyn
recouped some of her costs.
After a 500-unit production run and a substantial financial investment, Evelyn set up a
multiple-city test market, in a Chicago mall and in an appliance store in New Jersey and several
other retail stores in Florida. "It's such a novel idea," Evelyn added. "People will notice it, even
if they don't buy it right away."
135) Evelyn's vacuum is at the ________ stage of the product life cycle.
A) product development
B) introduction
C) growth
D) decline
E) maturity
Answer: A
Skill: Application
136) Using the PLC concept to develop marketing strategy can be problematic because strategy
is both a cause and a result of the product's life cycle.
Answer: TRUE
Skill: Concept
137) Most successful products are immediately accepted, and quickly move to the growth stage
43
of the PLC.
Answer: FALSE
Skill: Concept
138) Profits drop during the growth stage of the PLC because per customer promotion costs are
high.
Answer: FALSE
Skill: Concept
139) Although products that remain in the maturity stage of the PLC seem unchanged, the most
successful ones actually evolve to meet changing consumer needs.
Answer: TRUE
Skill: Concept
140) When sales of a product drop during the decline stage of the PLC, a company typically
modifies the marketing mix, the product, or the market.
Answer: FALSE
Skill: Concept
141) Sales of products decline because of technological advances, shifts in consumer tastes, and
increased competition.
Answer: TRUE
Skill: Concept
Difficulty: Easy
142) Harvesting the product involves reducing various costs such as maintenance, R&D, and
advertising to increase profits.
Answer: TRUE
Skill: Concept
143) The distribution strategy during the decline stage of PLC involves building more intensive
44
distribution networks.
Answer: FALSE
Skill: Concept
144) Explain how the PLC applies differently to a product class than to a product form.
Answer: Product classes have longer life cycles, while product forms tend to have the standard
PLC shape.
Skill: Concept
145) Why are ad expenditures high for products in the introduction stage of the PLC?
Answer: Consumers have very little awareness about such products; promotional spending can
enhance customer awareness.
Skill: Concept
Difficulty: Easy
146) Why do ad expenditures remain high in the growth stage of the PLC?
Answer: Though sales are increasing for such products, competition becomes fierce as
competitors attempt to enter the market; therefore, ad expenses remain high in an effort to
offset competitive threats.
Skill: Concept
Difficulty: Easy
45
147) Marketers can prolong the lives of many products in the maturity or decline stages of the
PLC, sometimes even moving these products back into the growth stage. How is this
undertaken?
Answer: Marketers can change any element of the marketing mix, find new users and new
market segments for its brands, change characteristics such as quality, features, style,
packaging, or technology platforms, and so on.
Skill: Concept
148) Each product will have a life cycle, although its exact shape and length is not known in
advance. Briefly explain each phase of the product life cycle.
Answer:
-Product development begins when the company finds and develops a new product idea. Sales
are zero and the company's investment costs mount.
-Introduction is a period of slow sales growth as the product is introduced in the market. Profits
are nonexistent in this stage because of the heavy expenses of product introduction.
-Growth is a period of rapid market acceptance and increasing profits.
-Maturity is a period of slowdown in sales growth because the product has achieved acceptance
by most potential buyers. Profits level off or decline because of increased marketing outlays to
defend the product against competition.
-Decline is the period when sales fall off and profits drop. A company may seek to reinvigorate
a product in decline or maintain it hoping competition will diminish or harvest it or drop it.
Skill: Concept
149) Explain why the PLC can be applied to more than just brands.
Answer: The PLC can be applied to new products and services. It can also be applied to
product class, a product form, or a brand. The PLC concept lends itself to styles, fashions, and
fads. The concept can be used as a useful framework for describing how products and markets
work, as well as developing marketing strategy for each stage of the product life cycle.
Managers may have difficulties using the PLC concept to forecast product performance or
develop general marketing strategies.
Skill: Application
46
150) Manufacturers must comply with specific laws regarding ________.
A) profit margins
B) product quality and safety
C) product harvesting
D) distribution channel length
E) product life cycles
Answer: B
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions
and international product and services marketing.
Difficulty: Easy
151) Because of ________, a company cannot make its product illegally similar to a
competitor's already established product.
A) anti-monopoly laws
B) patent laws
C) the Consumer Product Safety Act
D) product warranties
E) product liability
Answer: B
Skill: Concept
Difficulty: Easy
152) CellTones, a new company selling several types of cellular phones, has closely modeled
its products after successful products that are already in the marketplace. As it prepares to enter
the market with its new products and services, which of the following should concern
CellTones the most?
A) legal obligations to suppliers and dealers
B) patent laws
C) distribution requirements
D) product liability suits
E) limited warranties
Answer: B
Skill: Application
47
153) Which of the following best describes the role of a product steward?
A) to protect employees and laborers from harm
B) to evaluate new product ideas against a set of general criteria
C) to develop a new product concept into a physical product
D) to protect consumers from harm and the company from liability
E) to decide whether to maintain, harvest, or drop the product in the decline stage of the PLC
Answer: D
Skill: Concept
154) Which of the following is a consequence of standardizing an international product?

A) image consistency
B) regional design flexibility
C) decreased product demand
D) increased manufacturing costs
E) higher marketing costs
Answer: A
AACSB: Diverse and multicultural work environments
Skill: Concept
155) The federal government may prevent a company from adding products through
acquisitions if acquisition threatens to lessen competition.
Answer: TRUE
Skill: Concept
156) As long as a product is not identical to a competitor's product offering, a company can
introduce, market and sell it without penalty.
Answer: FALSE
Skill: Concept
Difficulty: Easy
48
157) The international growth of many professional and business services such as accounting,
consulting, and advertising led to the globalization of the client companies they served.
Answer: FALSE
AACSB: Diverse and multicultural work environments
Skill: Concept
158) Why has the cost of product liability insurance risen so dramatically?
Answer: Consumers who have been injured by a product with a defective design can sue
manufacturers or dealers of the product; though manufacturers are only found to be at fault in a
small percentage of cases, awards can run into the tens or even hundreds of millions of dollars.
This litigation phenomenon has resulted in huge increases in product liability insurance
premiums, causing big problems in some industries.
Skill: Concept
159) Describe three public policy issues or regulations that marketers should carefully consider
as they make decisions about adding or dropping products.
Answer: The government may prevent companies from adding products through acquisitions if
the effect threatens to lessen competition. On the other hand, companies dropping products
must be aware that they have legal obligations to their suppliers, dealers, and customers who
have a stake in the dropped product. Companies must also obey U.S. patent laws when
developing new products, meaning that a company cannot make its product illegally similar to
another company's established product. Manufacturers must also comply with specific laws
regarding product quality and safety. The Federal Food, Drug, and Cosmetic Act and the
Consumer Product Safety Act are just two of many laws that protect consumers from
potentially harmful products. If consumers have been injured by a product that has a defective
design, they can sue manufacturers or dealers.
Skill: Concept
49

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Principles of Marketing, 17e (Kotler/Armstrong)

2) Acquisition refers to ________.

5) Which of the following is a common reason for new product failure?

9) Acquisition involves the purchase of a whole company, a patent, or a license to produce

12) New product development starts with ________.

17) Which of the following is an external source for ideas?

22) Executives at an automobile manufacturing company conducted a brainstorming session for

26) A product idea is ________.

28) An attractive product idea must be developed into a ________.

29) A ________ is the way consumers perceive an actual or potential product.

34) What is included in the first part of a marketing strategy statement?

44) The product development stage requires ________.

55) Which of the following statements is true of test marketing?

85) Marketers often involve actual customers in product testing.

91) What elements may help to create a product image?

92) How might a firm benefit from implementing an "intrapreneurial" program?

93) Why are competitors considered a good external idea source?

95) What factors are assessed in test marketing?

99) Why might individual departments prefer sequential product development?

103) Explain concept testing.

113) What causes a specific brand's life cycle to change quickly?

154) Which of the following is a consequence of standardizing an international product?

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