TEST BANK

Principles of Marketing

01/12/23 1
Principles of Marketing

Chapter 10
Test Bank Questions
Maintaining a Competitive Edge with New Offerings

Multiple Choice Questions

1. Which of the following statements about new-to-the-world-products is true?
A. New-to-the-world products are products that are new to a company but not to the
world.
B. New-to-the-world products are products that are additions to a company’s current
product mix.
C. New-to-the-world products are new inventions that create new markets.*
D. New-to-the world products are products that companies have made improvements to.
Solution: C. New-to-the-world products are brand-new to the world and thus create brand-new
markets.
Section 10.1 LO1 Moderate 1-2 minutes
2. When ketchup and mustard manufacturers moved from open-mouth bottles to squeeze-top
bottles, consumers had to adjust how they dispensed these condiments. While some
changes in consumer habits were required, the packaging innovation did not disrupt the
entire market. They type of innovation is known as _______.
A. discontinuous innovation
B. continuous innovation
C. dynamically continuous innovation*
D. repositioned products
Solution: C. Dynamically continuous innovation involves a moderate change in consumer
behavior that is neither disruptive nor marginal in the market.
Section 10.1 LO2 Difficult 2-3 minutes
3. When ABC All-Weather Blanket Company launches a lightweight beach blanket before the
summer season, which of the risks associated with developing new products might they
encounter?
A. A decrease in revenue stream
B. A lack of differentiation as there are many competitors in the market marketing beach
blankets*
C. Poor product launch timing as beach gear should be launched in early winter
D. Lack of technical feasibility as the company isn’t equipped to make beach blankets
Solution: B. When a new product is insufficiently differentiated from other competitors in the
market, consumers may not see any value in choosing it over other companies’ products. Lack
of differentiation is a risk factor of developing a new product.
Section 10.1 LO3 Moderate 1-2 minutes

01/12/23 2
Principles of Marketing

4. In which stage of the new product development process are marketers filtering through
product ideas to determine which ones are most favorable to the company?
A. Idea generation
B. Concept development and testing
C. Market strategy development
D. Idea screening and evaluation*
Solution: D. Idea screening and evaluation occurs after Stage 1, idea generation. In this stage of
the new product development process, marketers examine ideas generated to determine
which ones will generate the most profit or help the company reach other marketing goals.
Section 10.2 LO1 Easy 1-2 minutes
5. During the _______ stage of the new product development process, marketers create a
prototype of the product.
A. product development*
B. idea generation
C. market strategy development
D. idea screening and evaluation
Solution: A. Stage 6 of the new product development process involves turning the product
concept into a physical version of the product, also known as a prototype.
Section 10.2 LO2 Moderate 1-2 minutes
6. During the _______ stage, marketers use internal and external sources to gather as many
ideas as possible for new products.
A. idea generation*
B. concept development and testing
C. market strategy development
D. idea screening and evaluation
Solution: A. Stage 1 of the new product development process involves generating as many ideas
as marketers can for new products. These new ideas can come from internal sources and
external sources.
Section 10.2 LO2 Moderate 1-2 minutes
7. Candymaker Quittles used social media to poll people on which new flavor of candy it
should introduce next. The poll resulted in 13,000 responses. The practice of getting input
from a large group of consumers is known as _______.
A. commercialization
B. crowdsourcing*
C. test-marketing
D. product development
Solution: B. Crowdsourcing can occur in Stage 7 of the new product development process and is
a test-marketing practice that involves gathering input from a large group of people.
Section 10.2 LO2 Moderate 2-3 minutes

01/12/23 3
Principles of Marketing

8. Which of the following statements best explains why establishing metrics for new products
is important?
A. Companies must establish metrics to make sure they are making the most efficient use
of resources and to ensure they are meeting both short-term and long-term goals.*
B. Establishing metrics for new products ensures that internal and external product
sources are reliable.
C. Companies establish metrics to ensure a new product was test-marketed successfully.
D. Companies rely on metrics to measure how well the new product was developed.
Solution: A. There are costs, risks, time, and money associated with new product development.
Establishing metrics allows marketers to measure performance against these factors to ensure
they are making the most efficient use of resources.
Section 10.3 LO1 Difficult 2-3 minutes
9. Which of the following new product key performance indicators (KPIs) is a quick way to
estimate a product’s future value?
A. R&D spending as a percentage of sales
B. Current year percentage of sales*
C. Time to value (TTV)
D. Product adoption rate
Solution: B. As a new product KPI, the current year percentage of sales calculates the cost of
goods sold, inventory, cash, and other financial line items as a percentage of sales and then
applies that percentage to future sales estimates.
Section 10.3 LO2 Moderate 1-2 minutes
10. Which new product performance metric measures the overall value of an investment in a
new product?
A. R&D spending as a percentage of sales
B. Current year percentage of sales
C. Return on investment (ROI)*
D. Product adoption rate
Solution: C. Return on investment (ROI) evaluates the profitability of an investment in a new
product by subtracting marketing costs from marketing sales, dividing by marketing costs, and
then multiplying by 100.
Section 10.3 LO2 Easy 1-2 minutes

01/12/23 4
Principles of Marketing

11. Which of the following statements about the time to value (TTV) metric is true?
A. TTV is the process by which people learn about a product and begin using it.
B. TTV measures the return or profit that a company earns over the investment.
C. TTV measures the effectiveness of R&D expenditures.
D. TTV refers to how long it takes new users to recognize the new product’s value.*
Solution: D. Time to value (TTV) measures the distance or time between the time a customer
purchases a product and the time they get to experience the product.
Section 10.3 LO2 Moderate 1-2 minutes
12. Which of the following factors contributes to the success of a new product launch?
A. Planning before development*
B. Lack of product point of difference
C. Prolonged development in entering the market
D. Failure to understand consumer wants and needs
Solution: A. The “rule of thumb” in successful new product development is to thoroughly define
the product before development gets underway.
Section 10.4 LO1 Moderate 1-2 minutes
13. Which of the following success factors is a measure of the potential value of a new product?
A. A product being able to deliver unique benefits to users
B. Planning before development of the new product
C. The technological synergy and quality of a new product
D. The market attractiveness of the new product *
Solution: D. Market attractiveness is a measure of the potential value and considers factors like
short- and long-term profit, market growth rate, the current level of competition, the cost of
entry, and the degree to which the product satisfies the needs of customers.
Section 10.4 LO1 Moderate 1-2 minutes
14. Facebook Home was an attempt by Facebook (now Meta) to turn a user’s home phone
screen into their Facebook feed. Most people reported that the design was awkward and
that it depleted battery life quickly. Which of the following factors explains why Facebook
Home likely failed?
A. Facebook Home failed to understand needs and wants of consumers.*
B. Facebook was targeting the wrong market.
C. Facebook Home lacked product uniqueness.
D. Facebook Home implemented a poor pricing strategy.
Solution: A. When a company fails to design a new product to meets the wants and needs of
customers, the product will likely fail.
Section 10.4 LO2 Difficult 2-3 minutes
15. Which stage in the consumer adoption process involves consumers recognizing the
existence of a product?

01/12/23 5
Principles of Marketing

A. Stage 1: product awareness*

B. Stage: 2: product interest
C. Stage 3: product evaluation
D. Stage 4: product trial
Solution: A. The first stage of the consumer adoption process is “product awareness.” In this
stage, marketers have developed a successful enough marketing strategy that consumers are
cognizant that the product exists.
Section 10.5 LO1 Easy 1-2 minutes
16. In which stage of the consumer adoption process do consumers examine the new product
by looking at its social media page and website?
A. Stage 1: product awareness
B. Stage: 2: product interest
C. Stage 3: product evaluation*
D. Stage 4: product trial
Solution: C. The third stage of the consumer adoption process is “product evaluation.” In this
stage, consumers are examining, comparing, and evaluating the product to determine if they
will eventually try it.
Section 10.5 LO1 Easy 1-2 minutes
17. Which stage in the consumer adoption process might involve a consumer getting a free
sample of a product?
A. Stage 1: product awareness
B. Stage: 2: product interest
C. Stage 3: product evaluation
D. Stage 4: product trial*
Solution: D. The fourth stage of the consumer adoption process is “product trial.” In this stage,
consumers actually try the product out through a free sample or trial purchase.
Section 10.5 LO1 Easy 1-2 minutes
18. When Coca-Cola launched its limited-edition Starlight beverage, a highly educated, tech-
savvy market of customers was the first to try it. This group is known as _______.
A. early adopters
B. early majority
C. innovators*
D. laggards
Solution: C. Innovators are the risk-takers in the market. They generally have a higher-than-
average income and are typically well-educated. They enjoy the rush of taking a risk alongside
the consequences of a product failing.
Section 10.5 LO2 Moderate 2-3 minutes

01/12/23 6
Principles of Marketing

19. When movie-streaming services first launched, the baby boomer generation waited the
longest to transition to the new format. A group that waits the longest to adopt a new
product is known as _______.
A. early adopters
B. early majority
C. innovators
D. laggards*
Solution: D. Laggards are highly skeptical of new products and are the slowest to adopt
products that veer away from the way they have always done things.
Section 10.5 LO2 Moderate 2-3 minutes

Short Answer Questions

Note: Responses to open-ended questions will vary. The sample answers provide some
elements or themes that a student might consider.
1. Describe the difference between new-to-the-firm products and additions to existing product
lines.
[Solution: New-to-the-firm products are products that are brand-new to the company but not
to the world. Marketers recognize that they have the capability of entering this market and
filling a gap that may exist. Additions to existing product lines is a category of new products that
entails a company taking a current product line and introducing a product extension.]
Section 10.1 LO2 Easy 4-5 minutes
2. Describe the new product development process and identify the stages.
[Solution: The new product development process includes all the activities involved in taking a
product from concept to market. It includes the following stages:
Stage 1: idea generation, Stage 2: idea screening and evaluation, Stage 3: concept development
and testing, Stage 4: market strategy and development, Stage 5: business analytics, Stage 6:
product development, Stage 7: test marketing, Stage 8: commercialization, and Stage 9:
evaluation of results.]
Section 10.2 LO1 Moderate 4-5 minutes
3. Describe one factor that contributes to the success of a new product and one factor that
contributes to the failure of a new product.
[Solution: One reason why new products succeed is because the product itself delivers unique
benefits. The product has been designed with customers’ needs and wants at its core. The
result is that consumers perceive the product as offering something different from what
competitors offer. One factor that contributes to the failure of a new product is a prolonged
development or a delayed entry into the market. If a company takes too long to bring a product
to market, the product may suffer from uncontrollable factors such as a downturn in the
economy or a competitor reaching the market first.]
Section 10.4 LO2 Moderate 3-4 minutes

01/12/23 7
Principles of Marketing

4. Describe the stages of the consumer adoption process.

[Solution: The consumer adoption process starts with product awareness. Product awareness
occurs when consumers recognize the existence of the product. In the second stage, consumers
move from product awareness to product interest. Interest in a product builds as consumers
consume information about the product through websites, blogs, and instructional videos. As
interest builds, consumers then move to the third stage, which involves product evaluation.
Here, consumers examine and compare the product to other products. They may read
customer reviews and social media comments to determine if it’s a product they would like to
try. This leads to the fourth stage of the process. In the product trial stage, consumers are ready
to try the product. Trial may come in the form of samples or a free trial. During this stage,
consumers experience the promise that the product makes. In the final stage of the consumer
adoption process, consumers are ready to buy, whether it is online or in store.]
Section 10.5 LO1 Difficult 3-4 minutes

This file is copyright 2023, Rice University. All Rights Reserved.

01/12/23 8