Kotler 09 - New-Product Development and Product Life-Cycle Strategies PDF

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

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)

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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 (Answer: e; p. 254; Easy; LO2) 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 (Answer: d; p. 255; Easy; LO2) 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 e. none of the above (Answer: d; p. 256; Easy; LO2) 253

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

12. The purpose of idea generation is to create a large number of ideas. The purpose of the succeeding stages is to ________ that number. a. refine b. reduce c. evaluate d. expand e. none of the above (Answer: b; p. 256; Moderate; LO2) 13. Beyond customers, companies can tap several other external sources including all of the following EXCEPT ________. a. competitors b. their outside sales force c. distributors d. suppliers e. trade magazines (Answer: b; p. 256; Moderate; LO2) 14. The first idea-reducing stage in the new-product development process is ________. a. business analysis b. prototype production c. concept testing d. idea screening e. test marketing (Answer: d; p. 256; Moderate; LO2) {AACSB: Communication} 15. Just after reviewing a large stack of catalogs, Strawberry Hill Gallery has brainstormed a list of possible new products. They will now begin the first idea-reducing stage called ________ to arrive at a realistic number to purchase for resale. a. idea generation b. idea screening c. product concept d. concept development e. idea dissemination (Answer: b; p. 256; Easy; LO2) 16. What do we call a detailed version of a new idea stated in meaningful customer terms? a. product idea b. product concept c. product image d. product proposal e. product movement (Answer: b; p. 257; Moderate; LO2) 17. What do we call the way consumers perceive an actual or potential product? a. product idea b. product concept c. product image d. product proposal e. product presentation (Answer: c; p. 257; Moderate; LO2) 254

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

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 e. none of the above (Answer: a; p. 257; Easy; LO2) 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 (Answer: c; p. 257; Easy; LO2) 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 (Answer: b; p. 258; Moderate; LO2) 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)

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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 e. none of the above (Answer: c; p. 259; Moderate; LO2) 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 (Answer: d; p. 259; Moderate; LO2) 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 e. none of the above (Answer: c; p. 259; Easy; LO2) 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 (Answer: c; p. 259; Challenging; LO2) 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 (Answer: b; p. 259; Moderate; LO2)

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

29. During product development which group or department develops the product into a physical product? a. research and development b. engineering c. production d. none of the above e. A or B (Answer: e; p. 259; Easy; LO2) 30. Once Wainwright Industries’ new riding lawnmower, made especially for women, passes functional and consumer tests, the next step is ________. a. test marketing b. focus group surveys c. commercialization d. post-testing e. none of the above (Answer: a; p. 260; Easy; LO2) 31. What advantage(s) does test marketing offer the marketer? a. provides experience before full introductions b. allows testing of the marketing program c. allows testing of positioning, advertising, distribution, and pricing d. all of the above e. none of the above (Answer: d; p. 260; Moderate; LO2) 32. Carville Communications is concerned about test marketing and the possible related problems. Such problems might include all of the following EXCEPT ________. a. test marketing costs can be high b. it can take much time to test market c. it allows time for competition to spy and gain advantages d. people who are surveyed tend to tell less than the truth e. C and D (Answer: d; p. 260; Moderate; LO2) {AACSB: Ethics} 33. Under what circumstances might a company do more than the average amount of test marketing? a. when a new product requires a major investment b. when management is not sure of the product c. when management is not sure of the marketing program d. when the product has no substitutes and is new in its category e. all of the above (Answer: e; p. 260; Easy; LO2)

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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 (Answer: c; p. 261; Challenging; LO2) 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 (Answer: c; p. 261; Easy; LO2) 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 e. none of the above (Answer: a; p. 261; Moderate; LO2)

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

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 (Answer: c; p. 261; Challenging; LO2) 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 (Answer: c; p. 261; Easy; LO2) 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 e. none of the above (Answer: b; p. 262; Moderate; LO2) 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 (Answer: c; p. 262; Moderate; LO2)

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44. Several weeks after a purchase has been made in a simulated test market, companies often interview the consumers by phone to determine attitudes and which of the following? a. usage b. satisfaction c. repurchase intentions d. level of loyalty e. all of the above (Answer: e; p.262; Challenging; LO2) {AACSB: Communication} 45. Using sophisticated computer models, simulated test market researchers project ________ from the results of the simulated test market. a. test costs b. national sales c. regional sales d. statewide sales e. international sales (Answer: b; p. 262; Easy; LO2) {AACSB: Technology} 46. The major disadvantages of results obtained with simulated test markets would include ________. a. being too expensive and requiring complex skills b. being less accurate and reliable c. taking too long and producing questionable results d. requiring management’s constant attention e. providing immeasurable results (Answer: b; p. 262; Moderate; LO2) 47. The major purpose of test marketing is to provide management with the information needed to make a final decision about ________. a. whether to compete in the market 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: c; p. 262; Easy; LO2) 48. The first decision in commercialization of a new product is when to launch. The next decision is ________ to launch the new product. a. where b. how c. to what degree d. why e. all of the above (Answer: a; p. 263; Moderate; LO2)

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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 e. none of the above (Answer: c; p. 263; Moderate; LO2) 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 (Answer: c; p. 264; Moderate; LO2) 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 (Answer: c; p. 264; Easy; LO2) 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 (Answer: d; p. 264; Moderate; LO2)

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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 e. none of the above (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 e. none of the above (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 (Answer: a; p. 264; Moderate; LO2) 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 (Answer: c; p. 267; Moderate; LO3) 262

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

60. Which of the stages in the product life cycle is characterized by rapid market acceptance, increasing sales, and increasing profits? a. introduction b. maturity c. growth d. decline e. development (Answer: c; p. 267; Easy; LO3) 61. The product life cycle concept can describe all of the following EXCEPT ________. a. product class b. product form c. product image d. brand e. none of the above (Answer: c; p. 268; Moderate; LO3) 62. Emma’s Fine Dry Goods wants to apply the PLC to further their understanding of the following. Unfortunately it will NOT apply to ________. a. styles b. fashions c. fads d. formal wear e. trends (Answer: d; p. 268; Easy; LO4) 63. Sherri’s Exclusives sells currently accepted and popular clothing items in given fields. What does she stock in her store? a. styles b. fashions c. fads d. exclusives e. services (Answer: b; p. 268; Moderate; LO4) 64. The PLC concept can be applied by marketers as a useful framework for describing how ________. a. to forecast product performance b. to develop marketing strategies c. products and markets work d. the PLC curve will shape up e. trends fade away (Answer: c; p. 269; Challenging; LO4)

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

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 (Answer: b; p. 269; Moderate; LO4) 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 (Answer: d; p. 269; Easy; LO4) 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. (Answer: d; p. 270; Moderate; LO4) 68. All of the following are stages in the PLC EXCEPT ________. a. introduction b. growth c. maturity d. plateau e. decline (Answer: d; p. 267; Easy; LO3) 69. What actually leads to greater competition in the maturity stage of the PLC? a. overcapacity b. many competitors c. poor m...