MKTG3 ch 09 - Developing and managing products PDF

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Developing and managing products...

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CHAPTER 9 – Developing and managing products TRUE/FALSE 1.

If Coca-Cola released a new energy drink this would be considered to be in the maturity stage of the product life cycle at the launch date. ANS: F PTS: 1 TOP 1: Explain the concept of product life cycles.

2.

DIF:

DIF:

DIF:

DIF:

Moderate

If your company adopts the marketing concept, then, during the idea-generation stage of the new-product development process, a logical starting point should be the customers. ANS: T PTS: 1 DIF: TOP 4: Explain the steps in the new-product development process.

8.

Moderate

The growth stage directly precedes the decline stage in the product life cycle. ANS: F PTS: 1 TOP 1: Explain the concept of product life cycles.

7.

Easy

A company’s new-product strategy is part of its overall marketing. ANS: T PTS: 1 TOP 2: Explain the importance of developing new products.

6.

Easy

While developing new products is far from an exact science, most firms do follow a formal new-product development process. ANS: T PTS: 1 DIF: TOP 4: Explain the steps in the new-product development process.

5.

Easy

Your usual deodorant has just undergone a minor change in fragrance, although the manufacturer is still able to call the soap a new product, as in ‘new and improved.’ ANS: T PTS: 1 TOP 3: Describe the six categories of new products.

4.

Easy

The development of a garlic-butter-flavoured cinnamon roll by Heavenly Breads would be in the introductory stage of the product life cycle on the date of its market launch. ANS: T PTS: 1 TOP 1: Explain the concept of product life cycles.

3.

DIF:

Easy

Two techniques that are considered particularly useful for generating new-product ideas are brainstorming and focus groups. ANS: T PTS: 1 DIF: TOP 4: Explain the steps in the new-product development process.

Easy

9.

A product life cycle adopts an organisation’s product line as its unit of analysis. ANS: F PTS: 1 TOP 1: Explain the concept of product life cycles.

DIF:

Moderate

10. Employees at Horse World are trying to come up with ideas for a new product. Some employees are in a room together, shouting out and evaluating potential ideas as they are mentioned. This is an example of brainstorming. ANS: F PTS: 1 DIF: TOP 4: Explain the steps in the new-product development process.

Easy

11. It is unsuitable to adopt concept tests during the new-product development process to screen out ideas inconsistent with the organisation’s strategy. ANS: F PTS: 1 DIF: TOP 4: Explain the steps in the new-product development process.

Easy

12. Having progressed through the screening process, your fast-moving consumer goods company is currently engaged in developing its initial estimates of costs and revenues for a new project. Your firm is therefore engaged in a new-product business analysis. ANS: T PTS: 1 DIF: TOP 4: Explain the steps in the new-product development process.

Difficult

13. Development of the initial new product prototype and initial development of the four Ps occur during the development stage of the new-product process. ANS: T PTS: 1 DIF: TOP 4: Explain the steps in the new-product development process.

Moderate

14. The urban area a firm chooses as its test market should only reflect the demographic and other characteristics of the entire nation if that is an accurate representation of the producer’s intended market for the product. ANS: T PTS: 1 DIF: TOP 4: Explain the steps in the new-product development process.

Moderate

15. Test marketing is best conducted in a laboratory, where feedback on the new product is more immediate. ANS: F PTS: 1 DIF: TOP 4: Explain the steps in the new-product development process.

Moderate

16. A test market should reflect the market conditions of the producer’s intended market. ANS: T PTS: 1 DIF: TOP 4: Explain the steps in the new-product development process.

Easy

17. During the test marketing stage, competitors may find out about the firm’s new product, which is generally undesirable.

ANS: T PTS: 1 DIF: TOP 4: Explain the steps in the new-product development process.

Easy

18. Tongariro Ski Company is in the process of developing a new kind of snow ski. The company has already performed screening, development and testing. The results coincide with profit and cost expectations; therefore, the most likely next step is commercialisation. ANS: T PTS: 1 DIF: TOP 4: Explain the steps in the new-product development process.

Easy

19. The diffusion process has five categories: innovators, early adopters, early majority, late majority and laggards.

ANS: T PTS: 1 DIF: Difficult TOP 6: Explain the diffusion process through which new products are adopted. 20. The more complex the product, the slower the diffusion. ANS: T PTS: 1 DIF: Easy TOP 6: Explain the diffusion process through which new products are adopted. 21. Snuggly Blankets Pty Ltd is going to promote its new merino wool blanket by giving away some free product samples. This plan is likely to increase the product’s rate of diffusion. ANS: T PTS: 1 DIF: Moderate TOP 6: Explain the diffusion process through which new products are adopted. 22. The product life cycle may refer to a product category or a product class. ANS: T PTS: 1 TOP 1: Explain the concept of product life cycles.

DIF:

Easy

23. The length of time a product spends in any one stage of the product life cycle may vary dramatically. ANS: T PTS: 1 DIF: Difficult TOP 1: Explain the concept of product life cycles. 24. The makers of Jameson Irish Whiskey believe their product has reached market saturation. This would imply that Irish Whiskey is in the maturity stage of its product life cycle. ANS: T PTS: 1 TOP 1: Explain the concept of product life cycles.

DIF:

Difficult

25. Increasing competition, more-aggressive brand advertising and healthy profits are all characteristics found in the growth stage of the product life cycle.

ANS: T PTS: 1 TOP 1: Explain the concept of product life cycles.

DIF:

Easy

26. The product life cycle concept encourages marketing managers to be reactive. ANS: F PTS: 1 TOP 1: Explain the concept of product life cycles.

DIF:

Easy

27. Alex is troubled by economic concerns. Since the introduction of her new software for the medical profession, production and promotional costs have risen, and losses are being made. Such poor business performance is typical of firms in the introductory stage of the product life cycle. ANS: T PTS: 1 TOP 1: Explain the concept of product life cycles.

DIF:

Moderate

28. Profits typically reach their peak during the growth stage of the product life cycle. ANS: T PTS: 1 TOP 1: Explain the concept of product life cycles.

DIF:

Easy

29. Chatty Communications have noticed that sales of their latest product have slowed over the last five months. They don’t need to worry as the product is still in the growth stage of the product life cycle. ANS: F PTS: 1 TOP 1: Explain the concept of product life cycles.

DIF:

Moderate

30. While many products may experience short-term sales fluctuations, a longer-term sales drop is likely to signify that a product is in the decline stage of the product life cycle. ANS: T PTS: 1 TOP 1: Explain the concept of product life cycles.

DIF:

Moderate

31. Diffusion is the process by which the adoption of an innovation spreads. ANS: T PTS: 1 DIF: Moderate TOP 6: Explain the diffusion process through which new products are adopted. 32. The Bali Coffee Company has two new products. One is a simple hand-cranked coffee grinder. The other is a combination grinder and brewer that also can be used to dispense hot milk. Of these two, the hand-cranked grinder will probably be diffused more quickly because it is less complex. ANS: T PTS: 1 DIF: Moderate TOP 6: Explain the diffusion process through which new products are adopted. 33. An adopter is a consumer who was happy enough with their product trial experience to use it again. ANS:

T

PTS:

1

DIF:

Moderate

TOP 6: Explain the diffusion process through which new products are adopted. MULTIPLE CHOICE 1.

If LifeSavers marketed a product with the hole of its traditional LifeSavers sweets filled with a soft centre, the product would: A not be considered new because it is not a radical (discontinuous) innovation. B not be accepted in the market until a personal selling campaign was launched. C be easily sold to many foreign countries using the same, popular LifeSaver brand name. D be an example of inventing a product and then trying to create a need. E

be a new product because it is an improvement or revision of an existing product.

ANS: E PTS: 1 TOP 3: Describe the six categories of new products. 2.

DIF:

Moderate

New-to-the-world products, where the product category itself is new, are also called: A discontinuous innovations. B new-to-the-world innovations. C new-to-the-market products. D diversified products. E

creative offerings.

ANS: A PTS: 1 TOP 3: Describe the six categories of new products. 3.

DIF:

Moderate

Tech Company has developed wireless speakers that sit unobtrusively on a desktop. The tiny, yet strong twin speakers use Bluetooth to stream music directly from your PC or MP4 player. This small wireless speaker, which is radically different from anything currently on the market, would be classified as a: A discontinuous innovation. B moderate innovation. C new-to-the-market products. D new-to-the-world innovations. E

creative offering.

ANS: A PTS: 1 TOP 1: Explain the concept of product life cycles.

DIF:

Moderate

4.

Arnott’s has developed a lunchbox-sized snack pack of Tiny Teddy biscuits to add to its popular line of biscuit products. Is this a new product? A No, Teddy Bear biscuits cannot be considered an innovation. B Yes, additions to the product line are new products. C No, it is only a product addition. D Yes, this is a discontinuous innovation. E

No, this is not a product improvement.

ANS: B PTS: 1 TOP 1: Explain the concept of product life cycles. 5.

DIF:

Easy

Like the first telephone, the first mobile phone was a new-to-the-world product; it introduced a revolution in the communications marketplace. This type of new product would be a: A discontinuous innovation. B new-to-the-market products. C new-to-the-world innovations. D venture product. E

incremental innovation.

ANS: A; New-to-the-world products, where the product category itself is new, are also called discontinuous innovations. PTS: 1 DIF: Moderate TOP 2: 2Explain the importance of developing new products. 6.

When the manufacturer of Redken shampoo introduced shampoos designed specifically to appeal to pre-teens, the product was: A not considered new, because it was not discontinuous. B not accepted well in the market until a personal selling campaign was launched. C easily sold to many foreign countries using the same, popular Redken brand name. D an example of inventing a product and then trying to create a need. E

a new product because it was an improvement or revision of an existing product.

ANS: E PTS: 1 TOP 3: Describe the six categories of new products. 7.

DIF:

Moderate

The product life cycle represents a model which: A has a number of stages that products pass through from their market introduction.

B is a model that describes how products and their market shares develop, grow, and eventually decline. C uses the individual product level as the unit of analysis. D All of these E

None of these

ANS: D PTS: 1 TOP 1: Explain the concept of product life cycles. 8.

DIF:

Easy

In its early years of operation, MLK Ingredients, Inc. sold ethanol and animal feed. A steep drop in its sales led the company to focus on developing the first low-carb wheat proteins and starches. These low-carb products would be an example of a(n): A repositioning strategy. B new product line. C addition to an existing product line. D discontinuous innovation. E

line extension.

ANS: B PTS: 1 TOP 1: Explain the concept of product life cycles. 9.

DIF:

Moderate

Victorinex has long manufactured Swiss Army knives. As a result of 9/11 and changes in airline policies, the company experienced a decline of 30 per cent in its sales. To compensate for this loss of sales, Victorinex developed a line of upscale Swiss Army watches. The Swiss Army brand gave the company credibility over other watch manufacturers, and allowed it to continue targeting sports-minded males between the ages of 18 and 35. Victorinex used which strategy to create new products? A New-to-the-world product B New product line C Repositioned product D Incremental innovation E

Discontinuous innovation

ANS: B PTS: 1 TOP 1: Explain the concept of product life cycles.

DIF:

Moderate

10. When Glade brand air freshener began marketing a clean-linen-scented air spray, the action could be classified as a(n) ________________. A new-to-the-world product

B new product line C repositioned product D addition to a current product line E

discontinuous innovation

ANS: B PTS: 1 TOP 1: Explain the concept of product life cycles.

DIF:

Moderate

11. One is always amazed by the vast selection of potato chips that keep entering the marketplace. These products are ________________. A new-to-the-world products B new product lines C repositioned products D improvements or revisions of existing products E

None of these

ANS: D PTS: 1 TOP 3: Describe the six categories of new products.

DIF:

Moderate

12. O’Neill, a manufacturer of protective eyewear for various kinds of sports, has introduced sunglasses that play music. The glasses weigh a little over half a kilogram and can hold up to 120 songs. These sunglasses would be an example of a(n) ________________. A new-to-the-world product B product extension C repositioned product D improvement or revision of an existing product E

discontinuous (radical) innovation

ANS: D PTS: 1 TOP 3: Describe the six categories of new products.

DIF:

Moderate

13. In the _____ stage of the product life cycle unprofitable models and brands should be eliminated. A growth B introduction C decline D maturity

E

None of these

ANS: D PTS: 1 TOP 1: Explain the concept of product life cycles.

DIF:

Moderate

14. For years, the Ralph Lauren clothing brand targeted 40-something male consumers. However, through its new execution of a _____ strategy, the company now targets both male and female fashion-conscious consumers in their 20s with everything from moon boots to shearling coats. A diversification B diffusion C screening D repositioning E

product development

ANS: C PTS: 1 DIF: TOP 4: Explain the steps in the new-product development process.

Moderate

15. Repositioning is another type of _____ because the product is new to that segment. A diversification B diffusion C new product development D incremental innovation E

rebranding

ANS: C PTS: 1 TOP 3: Describe the six categories of new products.

DIF:

Moderate

16. Originally targeted at mothers with new babies, Pampers now targets families more generally. Pampers conducted a(n) ________________. A revision of existing products B cost reduction C product line segmentation D repositioning E

reformulation

ANS: D PTS: 1 TOP 3: Describe the six categories of new products.

DIF:

Moderate

17. _____ is the first step of the organisation’s new-product development plan; it specifies what roles new products play in the organisation’s overall plan and describes goals. A Branding B Repositioning C New-product strategy D Marketing mix development E

Market research

ANS: B PTS: 1 TOP 3: Describe the six categories of new products.

DIF:

Moderate

18. _____ of markets and competition provides a reason for multinational organisations to consider new product development from a worldwide perspective. A Increasing globalisation B Increasing protectionism C Saturation D Decline E

None of these

ANS: A PTS: 1 TOP 5: Discuss the global issues in new-product development

DIF:

Easy

DIF:

Difficult

19. Which of the following is NOT a product modification change? A Component modification B Quality modification C Functional modification D Style modification ANS: A PTS: 1 TOP 2: 2Explain the importance of developing new products.

20. Andrew’s Butchery has come to consult with you about finding new product ideas. As a marketing consultant, you suggest a number of sources of ideas. Which is the LEAST likely source of new-product ideas? A Distributors B Customers C Employees

D Financial lenders E

Competitors

ANS: D PTS: 1 DIF: TOP 4: Explain the steps in the new-product development process.

Easy

21. With the reduction in trade barriers, it is challenging for your firm to compete against imported merchandise with its current products. It has been decided to participates in developing a new product tailored for the home market. Which of the following is a potential source of new-product ideas? A Current retailers who stock the manufacturer’s products B Current customers C The company’s employees D Past customers E

Each of these

ANS: E PTS: 1 DIF: TOP 4: Explain the steps in the new-product development process.

Difficult

22. In the decline stage of the product life cycle, organisations experience a: A medium-run drop in sales. B medium-run drop in profit. C short-run drop in profit. D short-run drop in sales. E

long-run drop in sales.

ANS: E PTS: 1 TOP 1: Explain the concept of product life cycles.

DIF:

Moderate

23. The final stage of the new-product development process is ________________. A idea generation B decline stage C business analysis D test marketing E

commercialisation

ANS: E PTS: 1 DIF: TOP 4: Explain the steps in the new-product development process.

Easy

24. La Moda Company invented a fireproof, tear-proof, edible fabric. Later, in a planning meeting, a group of the firm’s employees got together and listed ways the product might be used, which illustrates (a) ________________. A focus group B brainstorming C concept testing D quantitative research E

screening

ANS: B PTS: 1 DIF: TOP 4: Explain the steps in the new-product development process.

Easy

25. Serving to eliminate new-product ideas unaligned with the organisation’s new...