Chapter 8 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? All products eventually decline. A firm must be good at developing new products to replace aging ones. The firm must be good at adapting its marketing strategies. It is difficult to plot the stages as a product goes through the stages. C and D (Answer: d; p. 239; Moderate) 2. Products may fail because _____. the market size may have been overestimated the products design did not meet consumer expectations they were priced too high they were advertised poorly any of the above (Answer: e; p. 239; Easy) 3. A company can obtain new products through new product development. Which of the following define(s) new products? Original products. Product improvements. Product modification. All of the above. None of the above. (Answer: d; p. 239; Moderate) 4. New products fail at a disturbing rate. Research estimates that _____ of all new products fail within two years. 60 percent 70 percent 80 percent 90 percent 95 percent (Answer: d; p. 239; Easy)

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5. New product development starts with _____. idea generation idea screening concept development concept testing test marketing (Answer: a; p. 240; Easy) 6. Your company decides to use internal sources for developing new product ideas. Which of the following would not be a common internal source? Questioning executives and professionals. Company records and data. Encouraging intrapreneurism. Privileged information. Past sales numbers. (Answer: d; p. 240; Moderate) 7. A _____ is the way consumers perceive an actual or potential product. product idea product concept product image test market concept test (Answer: c; p. 242; Easy) 8. H. J. Heinz Company developed its successful new line of ketchup by observing and listening to its _____. employees sales force customers suppliers competitors (Answer: c; p. 241; Easy) 9. Some companies give customers the tools and resources to design their own _____. advertising campaigns products product modifications product applications shelves (Answer: b; p. 241; Moderate)

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10. At this point your firm wants to use external sources for new product ideas. After consulting with a friend you learn that all of the following are common sources except _____. customers suppliers competitors government agencies B and C (Answer: d; p. 241; Easy) 11. How could you use competitors as a choice of external new product ideas? Buy one of their products. Analyze their sales. Dismantle one of their products. All of the above. None of the above. (Answer: d; p. 241; Easy) 12. Top management can install a(n) _____ to direct the flow of new ideas to a central point where they can be collected, reviewed, and evaluated. idea evaluation system idea management system database MIS data processing system (Answer: b; p. 242; Moderate) 13. The search for new-product ideas should be _____ rather than haphazard. consistent systematic continual strategically planned seldom (Answer: b; p. 242; Moderate) 14. The purpose of idea generation is to create a _____ of ideas. The purpose of succeeding stages is to _____ that number. small number; reduce small number; increase large number; increase large number; reduce small number; maintain (Answer: d; p. 242; Moderate)

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15. GrayBerry Gifts has just brainstormed a large number of ideas for adding new products and services after visiting several buying fairs. The owners will begin the first idea-reducing stage called _____ to arrive at a realistic number to adopt. idea generation idea screening product concept concept development idea dissemination (Answer: b; p. 242; Easy) 16. What do we call a detailed version of a new idea stated in meaningful customer terms? Product idea. Product concept. Product image. Product proposal. Product movement. (Answer: b; p. 242; Moderate) 17. JoAnn Fabrics, Inc., has just created a new combination of colors and fabric types. The firm wants to be sure of the way consumers perceive an actual or potential product called product _____. idea concept image proposal presentation (Answer: c; p. 242; Moderate) 18. When developing new products, it is important for a firm to distinguish between a product concept, a product image, and a product _____. idea proposal life-cycle all of the above none of the above (Answer: a; p. 242; Easy) 19. With what groups do firms conduct concept testing for new products? Suppliers. Employees. Target customers. Focus groups. Competitors. (Answer: c; p. 243; Challenging)

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20. For some concept tests, a simple description consisting of a _____ might be sufficient. word picture word or picture narrative B or D (Answer: c; p. 243; Easy) 21. Many firms routinely test new product concepts with consumers before attempting to _____. commercialize them turn them into actual new product price them create advertising and promotion develop them (Answer: b; p. 243; Moderate) 22. After concept testing, a firm would engage in this stage in developing and marketing a new product. Idea screening. Marketing strategy development. Business analysis. Product development. Test marketing. (Answer: b; p. 244; Challenging) 23. The first part of the marketing strategy describes the target market, the planned product positioning, the sales, profit goals, and _____. market share the competition the secondary market the competitions anticipated reaction life-cycle duration (Answer: a; p. 244; Moderate) 24. The second part of the marketing strategy statement outlines the products planned price, distribution, and _____ for the first year. advertising promotion marketing budget positioning none of the above (Answer: c; p. 244; Moderate)

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25. Grant Tours will include all of the following in the third part of the marketing strategy statement except _____. long-run sales profit goals marketing mix strategies short-run sales A and C (Answer: d; p. 244; Moderate) 26. A review of the sales, costs, and profit projections for a new product to find out whether they satisfy the companys objectives is called a _____. business feasibility feasibility study business analysis product acceptance proposal (Answer: c; p. 245; Easy) 27. New World Releases is conducting a business analysis to determine which of the many new songs available to management should be released. Sales must be first estimated before costs can be estimated. Which of the following did your text recommend for forecasting sales? Compare the sales history of similar products. Conduct surveys of market opinions. c. Compare the sales history of similar products and conduct surveys of market opinions. All of the above. None of the above. (Answer: c; p. 245; Challenging) 28. Once the product or service passes the business analysis test, it moves into what stage? Concept development. Product development. Market testing. Research and developing. Product proposal. (Answer: b; p. 245; Moderate)

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29. During product development which group or department develops the product into a physical product? Research and development. Engineering. Production. None of the above. A or B (Answer: e; p. 245; Easy) 30. Once Wainwright Industries new riding lawnmower made especially for women passes functional and consumer tests, the next step is _____. test marketing focus group surveys commercialization post-testing none of the above (Answer: a; p. 246; Easy) 31. What advantage(s) does test marketing offer the marketer? Provides experience before full introductions. Allows testing of the marketing program. Allows testing of positioning, advertising, distribution, and pricing. All of the above. None of the above. (Answer: d; p. 246; Moderate) 32. Bonneville Communications is concerned about test marketing and the possible related problems. Choose from the following the one item that is not a disadvantage. Test marketing costs can be high. It can take much time to test market. It allows time for competition to spy and gain advantages. People who are surveyed tend to tell less than the truth. B and C (Answer: d; p. 246; Moderate) 33. Under what circumstances might a company do more than the average amount of test marketing? When a new product requires a major investment. When management is not sure of the product. When management is not sure of the marketing program. When the product has no substitutes and is new in its category. All of the above. (Answer: e; p. 246; Easy)

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34. Although test marketing costs can be high, they are often small when compared with _____. the final results making a major mistake managements approval and acceptance stockholders confidence A and B (Answer: b; p. 246; Moderate) 35. An attractive idea must be developed into a _____. product idea product concept product image test market none of the above (Answer: b; p. 242; Challenging) 36. _____ calls for testing new-product concepts with groups of target consumers. Concept development Concept testing Idea generation Idea screening Test marketing (Answer: b; p. 243; Easy) 37. The marketing strategy statement in new product development consists of three parts: _____, _____, and _____. idea generation; idea screening; concept development idea generation; concept development; concept testing idea generation; idea screening; idea management target market description; planned product positioning; sales goals idea generation; test marketing; commercialization (Answer: d; p. 244; Challenging) 38. _____ involves a review of the sales, costs, and profit projections for a new product to find out whether they satisfy the companys objectives. Idea generation Idea screening Business analysis Concept development and testing Test marketing (Answer: c; p. 245; Moderate)

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39. In the _____ of new-product development, often products undergo rigorous tests to make sure that they perform safely and effectively or that consumers will find value in them. business analysis stage idea generation concept development and testing product development phase marketing mix phase (Answer: d; p. 245; Challenging) 40. Introducing a new product into the market is called _____. test marketing new product development experimenting commercialization none of the above (Answer: d; p. 247; Challenging) 41. A company getting ready to launch a new product must make several decisions. However, the company must first decide on _____. whether to launch the product in a single location whether to launch the product in a region whether to launch the product into full national distribution timing of the new product introduction packaging (Answer: d; p. 247; Easy) 42. _____ 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. Team-based product development Simultaneous product development Sequential product development Product life-cycle analysis Micromarketing (Answer: c; p. 247; Moderate) 43. All of the following are limitations of the simultaneous team-based approach to newproduct development, except which one? Superfast product development can be riskier than the sequential approach. This approach often creates increased organizational tension and confusion. The objective of this approach is to assure that quality will not be sacrificed. Top management gives the product development team a new idea or work plan. Organizational tension can have a negative impact on employee morale. (Answer: d; p. 248; Moderate)

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44. _____ is the period when sales fall off and profits drop. Introduction Growth Maturity Decline A or D (Answer: d; p.250; Challenging) 45. All of the following are accurate descriptions of the life cycle of a style product, except which one? Style products appear in home, clothing, and art. Once a style is invented, it may last for generations. A style has a cycle showing several periods of renewed interest. Styles last only a short time and tend to attract only a limited following. B or C (Answer: d; p. 251; Easy) 46. In the _____, the firm faces a trade-off between high market share and high current profit. growth stage decline stage maturity stage introduction stage commercialization stage (Answer: a; p. 253; Moderate) 47. The major purpose of test marketing is to provide management with the information needed to make a final decision about _____. whether to compete in the market which market to compete in whether to launch the new product how to compete in the market how long to compete in the market (Answer: c; p. 247; Easy) 48. Following the decision to time the introduction of the new product, a company must decide _____ to launch the new product. where how to what degree why all of the above (Answer: a; p. 243; Moderate)

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49. Small companies may enter new markets after testing by entering attractive _____. cities regions cities or regions, one at a time distributors or retailers, one at a time none of the above (Answer: c; p. 247; Moderate) 50. Companies with international distribution systems may introduce new products through this method. What is the method? Global rollouts. One country at a time. Paired countries with similar markets. Global timing. All of the above. (Answer: a; p. 247; Easy) 51. All of the following are potential disadvantages of a sequential product development approach except _____. product failures lost sales and profits ease of entering competitive markets crumbling market positions all of the above (Answer: c; p. 247; Moderate) 52. In order to get their new products to market more quickly, many companies are adopting a faster, team-oriented approach called _____. simulated product development sequential product development simultaneous product development phased-in product development market development (Answer: c; p. 247; Easy) 53. The simultaneous product development approach is faster because departments work closely together through _____. team efforts better planning the help of a consultant cross-functional teams departmentalization (Answer: d; p. 247; Moderate)

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54. The simultaneous product development approach uses cross-functional teams that overlap the steps in the process to achieve what goals? Save time and reduce errors. Save time and increase effectiveness. Increase effectiveness and employee satisfaction. Speed product to market and reduce costs. B and D (Answer: b; pp. 247248; Easy) 55. It is typical for top management to give the product development team general strategic directions but no _____ or _____. clear-cut product idea; resource limitation clear-cut product idea; work plan work plan; budget freedom limitation; budget restraints budget; resources (Answer: b; p. 248; Challenging) 56. The simultaneous team-based approach does have some limitations. Which item does not fit the list? a. Superfast product development can be riskier. b. Superfast product development can be more costly. c. Superfast product development can create increased organizational tension and confusion. d. Superfast product development produces equal or better quality. e. Superfast product development produces employees with high morale. (Answer: d; p. 248; Challenging) 57. Companies that get new and improved products to the market faster than their competition often gain a dramatic _____. first place in the marketplace competitive edge penetration pricing strategy market share none of the above (Answer: b; p. 248; Easy) 58. Light Metal Industries has discovered that new product success is hard work and complex. It actually takes a _____ commitment to succeed. total-company total-department total-management total-employee total-product (Answer: a; p. 248; Moderate)

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59. Which stage of the typical consumer product life cycle is out of place? Product development. Introduction. Maturity. Growth. A and B (Answer: c; p. 250; Moderate) 60. This stage in the PLC is characterized by rapid market acceptance, increasing sales, and increasing profits. What is it? Introduction. Maturity. Growth. Decline. Development. (Answer: c; p. 250; Easy) 61. Which of the following cannot be described by the PLC concept? It is not so obvious. Product class. Product form. Product image. Brand. None of the above. (Answer: c; p. 251; Moderate) 62. Sherris Exclusives wants to apply the PLC to the following list. Which one will not work? Styles. Fashions. Fads. Formal wear. Trends. (Answer: d; p. 251; Easy) 63. Sherris Exclusives sells currently accepted and popular clothing items in given fields. What does she stock in her store? Styles. Fashions. Fads. Exclusives. Services. (Answer: b; p. 251; Moderate)

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64. The PLC concept can be applied by marketers as a useful framework for describing how _____. to forecast product performance to develop marketing strategies products and markets work the PLC curve will shape up trends fade away (Answer: c; p. 252; Challenging) 65. Using the PLC concept to develop marketing strategy can be difficult because strategy is both a _____ and a(n) _____ of the products life cycle. mirror image; cause cause; result result; mirror image beginning; end purpose; effect (Answer: b; p. 252; Challenging) 66. During the introduction stage in the PLC a firm will incur high costs in all of the following areas except which one?. Distribution. Promotion. Product development. Reminder advertising. Informative advertising. (Answer: d; p. 253; Easy) 67. Why do profits increase during the growth stage of the PLC? Promotion costs are spread over a large volume. Unit manufacturing costs fall. Competition has not yet taken sales away. All of the above. None of the above. (Answer: d; p. 253; Moderate) 68. Which stage in the PLC normally lasts longer and poses strong challenges to the marketing managers? Introduction. Growth. Maturity. Decline. Phase-in (Answer: c; p. 253; Easy)

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69. What actually leads to greater competition in the maturity stage of the PLC? Overcapacity. Many competitors. Poor management. Inadequate promotion. A lack of money. (Answer: a; p. 253; Moderate) 70. At some point between maturity and decline, a company or business can attempt to raise the PLC curve or give it new life by using which one of the following techniques? Find new global markets. Increase the advertising budget. Increase free samples as incentives to buy. Find new uses and new users. None of the above. (Answer: d; p. 253; Moderate) 71. At some point between maturity and decline, a company or store may lift the PLC by doing the which of the following? Expand the products usefulness. Expand the products safety. Expand the products convenience. Enhance the products packaging. All of the above. (Answer: e; p. 254; Easy) 72. When a firm attempts to increase sales during the maturity stage of the PLC by changing one or more marketing mix elements, it is _____. modifying the marketing mix changing promotion improving advertising increasing promotion budget altering publicity (Answer: a; p. 254; Moderate) 73. Sales decline in the decline stage of the PLC because of technological advances, increased competition, and _____. shifts in the economy shifts in unemployment shifts in consumer tastes and preferences foreign imports none of the above (Answer: c; p. 255; Moderate)

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74. In general, which choice would a company make toward declining products? Maintain or harvest them. Harvest or drop them. Maintain, harvest, or drop them. Maintain or drop them. None of the above. (Answer: c; p. 255; Moderate) 75. All of the following are stages in the PLC, except which one? Introduction. Adoption. Growth. Decline. Maturity. (Answer: b; p. 250; Moderate) True/False 76. Given the rapid changes in consumer tastes, technology, and competition, companies must develop a steady stream of new products and services. (True; p. 239; Easy) 77. Common reasons why so many new products fail in the marketplace include the market size may have been overestimated, the product was not well designed, the product was incorrectly positioned in the market priced too low, or the product was advertised poorly. (False; p. 239; Challenging) 78. New product development begins with a systematic search for new product ideas through idea generation. (True; p. 240; Easy) 79. Malibu Beach Parties finds that the tastes and preferences of its customers change more rapidly than in the past. The manager is constantly looking for external ideas from customers, suppliers, competition, and the sales force. (True; p. 241; Easy) 80. Companies rarely ever give their customers the tools and resources to design their own products. (False; p. 241; Easy)

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81. To avoid too few new product ideas and the failure of many good ideas, top management should install an idea management system. This system directs the flow of new ideas to each department where they can be collected, reviewed, and evaluated. (False; p. 242; Challenging) 82. Blair Housewares wants to add new lines of products to its 46-store chain. Managers believe the purpose of idea generation is to create a few ideas, and the purpose of succeeding stages is to increase that number. (False; p. 242; Easy) 83. A product idea is a possible product a company can offer the market. A product concept is a detailed version of the idea stated in meaningful consumer terms. A product image is the way consumers perceive an actual or potential product. (True; p. 242; Moderate) 84. Concept testing works best with people who are familiar with the new idea and the new products purpose. This generally includes top management, the sales force, and research and development. (False; p. 243; Moderate) 85. GreenTree Lawn and Garden Products is engaged in marketing strategy development. Management must first create a statement outlining the products planned price, distribution, and marketing budget for the first year. (False; p. 244; Challenging) 86. 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 companys objectives. This activity is called business product development. (False; p. 245; Easy) 87. To test the product concept of a new idea, a firm will develop a prototype that will satisfy and excite consumers and be produced quickly at budgeted costs. (True; p. 245; Easy) 88. The stage at which new product and marketing programs are introduced into more realistic market settings is called concept test marketing. (False; p. 243; Moderate) 89. When a company determines that test marketing costs will become high, it is generally better to reconsider the proposal than make the mistake of spending too much. (False; p. 246; Easy)

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90. A company launching a new product into the market must first decide on where to launch the product. (False; p. 247; Moderate) 91. New product development begins with idea generation. (True; p. 240; Easy) 92. A firm can obtain new products in two ways: acquisition or new-product development. (True; p. 239; Moderate) 93. JumBo Games is launching a new set of game toys in the commercialization stage. The first decision to make is introduction timing and the second is where to launch the new product. (True; p. 247; Moderate) 94. Sequential product development has the advantage of not only being a team-oriented approach, but it is faster in bringing products to market. (False; p. 247; Easy) 95. In choosing a method of test marketing, Best Bargain finds that superfast product development can be riskier and more costly than the other methods. It often creates increased organizational tension and confusion. Best Bargain must be thinking about the simultaneous team-based approach. (True; p. 248; Challenging) 96. The highest profits earned by a consumer product usually occur during the maturity stage. (False; p. 250; Easy) 97. Using the PLC concept to develop marketing strategy can be difficult because strategy is both a cause and a result of the products life cycle. (True; p. 252; Challenging) 98. The maturity stage of the PLC is characterized by a slowdown in sales growth. (True; p. 250; Easy) 99. During the introduction stage, a company that acts as a market planner must choose a launch strategy that is consistent with the intended product and company image. (False; p. 253; Moderate)

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100. Why do profits rise during the growth stage of the PLC? It is because promotion costs are spread over a large volume and unit manufacturing costs fall. (True; p. 253; Easy) 101. Although products that remain in the maturity stage of the PLC seem unchanged, the most successful ones actually evolve to meet changing consumer needs. (True; p. 253; Moderate) 102. When sales of a product falter during the PLC, a company can take several approaches. The more common ones are to modify the marketing mix, modify the product, modify the market, or add new features that expand the products safety, usefulness, or convenience. (True; p. 253; Moderate) 103. Sales for the time-tried household cleansers made by Brite and New, Inc., have been declining for some time. If these products are typical, sales are declining because of technological advances, shifts in consumer tastes, or lack of raw materials from foreign suppliers. (False; p. 255; Challenging) 104. Companies need to pay more attention to their aging products. Management must regularly review sales, market shares, costs, and profit trends. The next step is to decide whether to harvest or drop these declining products. (True; p. 255; Moderate) 105. When a company decides to harvest a product in the decline stage, it will reduce costs and hope that sales hold up to increase the profits in the short run. (True; p. 255; Moderate) Essay 106. Given the rapid changes in consumer tastes, technology, and competition, companies must develop a steady stream of new products and services. Briefly explain the common ways of accomplishing this. One way to develop new products and services is through acquisitionby buying a whole company, a patent, or a license to produce someone elses product. The other way is through new product development in the companys own research and development department. (p. 239; Easy)

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107. Explain why so many new products fail and provide some ideas for a company to improve its odds of new product success. Although an idea may be good, the market size may have been overestimated. The actual product was not designed as well as it should have been. It may have been incorrectly positioned in the market, priced too high, or advertised poorly. A highlevel executive may push a favorite idea despite poor marketing research findings. Sometimes the costs of product development are higher than expected, and sometimes competitors fight back harder than expected. One way to improve the odds is to identify successful new products and find out what they have in common. Another is to study new product features to see what lessons can be learned. A company must understand its customers, markets, and competitors and develop superior value to customers. (p. 239; Challenging) Briefly describe the steps in the new-product development process. New-product development starts with idea generation from internal and/or external sources. Next, the ideas must be reduced through idea screening. Once the new ideas are decided upon, the product concept must be developed and tested. A marketing strategy must be developed to introduce the product to the market. Once the product concept and marketing strategy are chosen, a business analysis is conducted to review the sales, costs, and profit projections to see if they will satisfy the companys objectives. A prototype will next be created in the product development stage. Test marketing will follow where the new product and its marketing program will be introduced into more realistic market settings. The last step 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. (p. 240; Challenging) 109. Provide the major sources of external new product ideas and explain why these sources offer advantages over internal sources. The major sources of new product ideas from external sources include customers, suppliers/distributors, competitors, and research firms. These sources are closer to the market and tend to reflect current tastes and preferences. Firms can better match their product offerings to customer needs and wants. Consumers often create new products and services on their own. Some companies even give customers the tools and resources to design their own products. (p. 241; Moderate)

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110. What are the two advantages of an idea management system for developing new products? Provide five ideas for a company to use to accomplish a successful system. An idea management system helps create an innovation-oriented company culture. It shows that top management supports, encourages, and rewards innovation. It will yield a larger number of ideas, among which will be found some especially good ones. As the system matures, ideas will flow more freely. The company can do the following: (1) Appoint a respected senior person to be the companys idea manager; (2) create a cross-functional idea management committee with people from each department; (3) set up a toll-free number or Web site for anyone who wants to send a new idea to the idea manager; (4) encourage all company stakeholders to send their ideas to the idea manager; and (5) set up formal recognition programs to reward those who contribute the best new ideas. (p. 242; Challenging) 111. Define commercialization. During the product launch stage, the company must first decide on two important issues. Explain. 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 productin 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, firms plan a market rollout over time. Large companies pursue a national rollout while some firms plan global rollouts. For example, Colgate introduced a battery-powered toothbrush into 50 countries in a year. (p. 247; Easy) 112. Each product will have a life cycle, although its exact shape and length is not known in advance. Briefly explain each step in the PLC. Product development begins when the company finds and develops a new product idea. Sales are zero and the companys 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. (p. 250; Challenging)

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113. Your assignment is to prepare a presentation about the application of the PLC to as many of your companys operations as possible. What would you include? The PLC can be applied to new product and services. It also applies to a 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. (p. 251; Moderate) Distinguish among a product idea, a product concept, and a product image. A product idea is an idea for a product that a company can imagine itself offering to the market. A product concept is a detailed version of the idea stated in meaningful consumer terms. A product image is the way consumers perceive an actual or potential product. (p. 242; Easy) Explain concept testing. Concept testing calls for testing new product concepts with groups of target consumers. The concepts may be physical or symbolic. 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. (p. 243; Easy) APPLICATION CONTENT: Multiple-Choice Questions 116. Your firm added three new products earlier this year to add variety for customers. Two of them failed to reach even minimal sales. What could be a possible cause? a. The market size may have been overestimated. b. The actual products may not have been designed as well as they should have been. c. The products were not positioned correctly in the market. d. All of the above. e. None of the above. (Answer: d; p. 239; Moderate)

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117. Your firm added three new products earlier this year to add variety for customers. Two of them failed to reach even minimal sales. What could possibly not be a cause? The products were priced too high. The products were advertised incorrectly. Competitors fought back harder than expected. Research was too extensive. B and D (Answer: d; p. 239; Easy) 118. Once management of The Grecian Urn has decided on its product concept and marketing strategy, they can evaluate the business attractiveness of the proposal called _____. business feasibility feasibility study business analysis product acceptance concept testing (Answer: c; p. 245; Challenging) 119. Wainwright Industries has built a new prototype riding lawnmower especially for women. Joe Wainwright and his staff have incorporated the functional features and must now convey the _____. image advertising safety features intended psychological characteristics visual characteristics (Answer: d; p. 246; Challenging) 120. Mattels Barbie is an example of an age-defying product. Barbie, both timeless and trendy, is in the _____ stage of the PLC. introduction growth maturity decline adoption (Answer: c; p. 253; Challenging)

a. b. c. d. e.

a. b. c. d. e.

a. b. c. d. e.

246

a. b. c. d. e.

121. Over the past 100 years or so, Binney and Smiths Crayola crayons have become a household staple in more than 80 countries around the world. Crayola crayons are in the _____ stage of the PLC. introduction maturity growth decline incubation (Answer: b; p. 253; Challenging) 122. Proctor & Gamble has sold off a number of lesser or declining brands such as Oxydol detergent and Jif peanut butter. In these examples, management decided to _____ the products. further test maintain drop harvest ignore the test market results of (Answer: c; p. 255; Challenging) 123. Anitas DayCare plans to offer third-shift childcare, based upon the opening of two new manufacturing plants in her area. Together the plants will hire 423 employees and run all three shifts. Initial test marketing results look promising. In considering launching this new service, Anita must first decide on _____. timing expansion costs hiring suitable employees checking local and state regulations food costs (Answer: a; p. 247; Easy) 124. Altas Steel Corporation lacks the confidence, capital, and capacity to launch its new steel product into full national or international distribution. Even though test market results look promising, what will be managements next step? Retest the product in additional markets. Develop a planned market rollout over time. Secure a loan to provide confidence, capital, and capacity. Seek the help of a nationally known consultant. Develop a prototype. (Answer: b; p. 247; Challenging)

a. b. c. d. e.

a. b. c. d. e.

a. b. c. d. e.

247

a. b. c. d. e.

125. 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 market modifying the pricing strategy modifying the distribution modifying the product dropping the product (Answer: d; p. 254; Challenging) 126. Big Moose Toys is a market pioneer introducing a modern version of Bullwinkle the Moose. Their version of Rocky the Flying Squirrel targeted to baby boomers was a strong success. The new launch strategy for Bullwinkle must be consistent with the intended _____. promotion campaign product positioning company image target market use (Answer: b; p. 253; Challenging) 127. Its Whats Hip, a chain of 18 music and CD stores, has discovered that carrying a weak product during the decline stage of the PLC can be very costly to a firm, and not just in profit terms. Which one of these is not likely to be one of those costs? Take up much of managements time. Frequent price and inventory adjustment. Requires advertising and sales force attention. Few concerns about company image and other products. All of the above. (Answer: d; p. 255; Challenging) 128. Superior Luggage Company has undertaken the task of identifying its products in the decline stage of the PLC by using all of these areas but one. Which one? Regularly reviewing sales. Regularly reviewing market shares. Regularly reviewing costs an profit trends. Regularly reviewing managements pet projects. None of the above. (Answer: d; p. 255; Easy) Concept testing will likely not reveal one of the following. Which one? Whether consumers are interested in the idea. Whether the idea is functional. The price that customers are most likely to pay for it. B and C None of the above. (Answer: c; p. 243; Easy) 248

a. b. c. d. e.

a. b. c. d. e.

a. b. c. d. e.

129. a. b. c. d. e.

130. a. b. c. d. e.

Which of the following will likely not be revealed in a test market? Price sensitivity. Time of day the typical purchase is made. Consumers reactions to an end-of-aisle display. Distance traveled by the typical consumer in order to make the purchase. None of the above. (Answer: e; p. 246; Easy) Increasing profits most likely will occur at which stage of the PLC? Product development. Introduction. Growth. Maturity. Decline. (Answer: c; p. 250; Easy) 132. In which stage of the PLC will promotional expenditures be especially high in an attempt to create consumer awareness? Product development. Introduction. Growth. Maturity. Decline. (Answer: b; p. 253; Easy) 133. In which stage of the PLC will promotional expenditures be especially high in an attempt to react to increasing competition? Product development. Introduction. Growth. Maturity. Decline. (Answer: c; p. 253; Moderate) 134. Which of the following is(are) most likely to pass through a regular history of introduction, growth, maturity, and decline? Pharmaceuticals. Cassette tapes. Electronics. Fashions. B and D (Answer: e; p. 251; Challenging)

131. a. b. c. d. e.

a. b. c. d. e.

a. b. c. d. e.

a. b. c. d. e.

249

135. Which of the following statements best explains why idea screening may be the most import step of new product development? a. It reduces the number of ideas generated. b. Some potentially profitable ideas may be ill perceived by the idea screeners. c. Some ideas that will become market disasters may be originally viewed favorably by the idea screeners. d. B and C e. None of the above. (Answer: d; p. 242; Challenging) Short Answer 136. What has sparked Nokia to launch an increasingly large number of new products in the last four years? Nokia operates in an innovative industry in which the marketing of the same old products to the same old customers does not work. (p. 249; Moderate) How might a firm benefit from implementing an intrapreneurial program? Such programs encourage employees to be innovative and to develop new product ideas. (p. 240; Moderate) What elements may help to create a product image? Any number of product attributes, as well as packaging and intended use, create product image; the promotional campaign also affects product image. (p. 242; Easy) In a brief statement, what is the purpose of concept testing? A concept test merely confirms what customers think of a new product idea. (p. 243; Moderate) What may be learned in a test market? A test market may reveal who is buying and when, as well as at what time of day. Sensitivity to price may also be determined. (p. 246; Moderate)

137.

138.

139.

140.

250

141. A marketer has selected a single city in which to conduct a test market. What might we conclude in this choice of a single-city test market? The marketer may feel assured that the typical consumers in that single city represent the overall market. (p. 247; Challenging) 142. A marketer has chosen a multiple-city test market. What might we conclude in this choice of a multiple-city test market? The marketer likely understands that the product being tested will be perceived differently in different geographic regions. (p. 247; Challenging) Why might ad expenditures be high for products in the introductory stage of the PLC? Consumers have very little awareness about such products; therefore, heavy promotional spending can enhance customer awareness. (p. 253; Moderate) Why might ad expenditures remain high in the growth stage of the PLC? Though sales are increasing for such products, competition becomes fierce as competitors attempt to enter the market; therefore, ad dollars remain high in an effort to offset competitive threats. (p. 253; Moderate) 145. Some products remain in the maturity stage of the PLC for long periods of time, whereas others pass through quickly. List three possible conditions that may allow a product to remain in the maturity stage for a long period of time. Whether a new technology will soon replace the current one, whether the competitive environment is especially fierce, and whether the product can be modified slightly from time to time in order to keep up with changing consumer tastes may prolong the maturity stage. (p. 253; Challenging) 146. You have recently sent a proposal for a fictional novel to an editor at a major publishing firm. The editor, alone, will carry out the idea screening. Why might you feel this process is unfair? The success of your proposal, or at least the likelihood that it will be published, is at the mercy of that one individual. There are many successful writers whose successful ideas were turned down by numerous idea screeners. (p. 242; Challenging) 251

143.

144.

147. The potential market strengths and weaknesses are being determined for a new product idea. In what stage of the new product development process does this occur? It occurs in the business analysis stage of the new product development process. (p. 245; Easy) 148. 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 can this happen? Marketers can change any element of the marketing mix, change the number of uses and the number of users, or even change the frequency of product use. (p. 255; Moderate) How might competitors be a good external idea source? Marketers can pay particular attention to competitors ads to get clues about their new products. In addition, salespeople in the field can learn about competitors plans if prospects may purposefully, or even inadvertently, reveal them. (p. 241; Moderate) 150. Of what three parts is the marketing strategy statement comprised? The marketing strategy statement consists of a description of the target market, a description of the planned product positioning, and sales, market share and profit goals. (p. 244; Moderate) Explain the role of timing in the commercialization stage. Introduction timing is critical so that a product launch does not take attention away from existing successful products. In addition, if the economy is experiencing a downturn, a marketer may want to launch the product later to avoid a slow start. (p. 247; Challenging) How might simultaneous product development enhance efficiency? This team-based approach to product development allows cross-functional teams, comprised of people across numerous departments, to work on product development together; this allows the product-development process to avoid sending the product from department to department. (p. 247; Moderate)

149.

151.

152.

252

153.

Explain how the PLC applies differently to a product class than to a product form. In looking at gas-powered automobiles, the product class may fall in the mature stage of the PLCwhere gas-powered automobiles have been and will be for many decades; however, a product formsuch as SUVsmay fall into the decline stage quickly, based on a change in popularity, as other product forms gain in popularity. (p. 251; Challenging) 154. Give two examples of fads that passed through the PLC quickly. Pet rocks and Rubics cubes are examples; examples are numerous. (p. 251; Easy) Why might individual departments prefer sequential product development? This process allows individual departments to work individually with a new idea, completing its stage of development before passing the product on; other departments are less likely to interfere. (p. 247; Moderate) Scenario Most people laughed when Evelyn Ringler explained her product ideaa solarpowered vacuum cleaner. But the concept was practical and the technology used in the vacuum was the same as that used in many childrens 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 dome-shaped, something 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 10 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 childrens race cars 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 reduce after Evelyn recouped some of her costs. After a 500-unit production run and a substantial financial investment, Evelyn Ringler set up a multiple-city test marketin a Chicago mall and in an appliance store in New Jersey. Its such a novel idea, Evelyn added. People will notice it, even if they dont buy it right away.

155.

253

156.

Explain Evelyns product concept. The product concept is based on the practical use of solar power installed in a vacuum cleaner, designed to effortlessly sweep the floors of on-the-go and elderly consumers. (p. 242; Moderate) Explain Evelyns concept test. Evelyn set up a demonstration booth to learn about consumers feelings toward her vacuum cleaner; she learned what price consumers would pay, what colors they would buy, and whether they would buy. (p. 243; Moderate) Explain the target market to be outlined in the market strategy development. Evelyn wants to target on-the-go consumers, likely dual-income households, and elderly consumers who may find vacuuming to be difficult. (p. 244; Easy) How might Evelyn Ringler forecast first-year sales of her novel idea? She may look at the sales history of similar products or conduct surveys of market opinion. (p. 252; Moderate) What might Evelyn learn from the multiple-city test market? The test market will reveal who the typical customer is, the time of day she purchases, what color of vacuum she prefers, what price she will pay, and whether the results vary dramatically between the two cities. (p. 246; Moderate) 161. If Evelyns vacuum cleaner passes the test market, why might ad expenditures be high in the introductory stage of the PLC? Consumer awareness for this novel idea will be limited, and those consumers who are aware of the solar-powered vacuum may be skeptical; therefore, high ad expenditures will enhance promotion, increasing consumer awareness. (p. 253; Moderate) Why might Evelyn prefer to launch the vacuum with a high price? For such a novel idea, it is difficult to determine how quickly the vacuum will pass through the life cycle; therefore, a high price will allow Evelyn to recoup her costs early on. 254

157.

158.

159.

160.

162.

(p. 252; Challenging) 163. Assuming that the solar-powered vacuum reaches the growth stage of the PLC, what might Evelyn expect? Ad expenditures may likely remain high in an attempt to offset any increased competition that may emerge. In the growth stage, increased sales may be the result of either increased customers or mere repeat purchases; therefore, strong promotions will continue to enhance awareness in an effort to capture a larger share of the market. (p. 253; Challenging) What factors, if any, may prevent this vacuum from reaching maturity? Though the technology and design are likely to be patented, a more advanced or easier-to-use technology may emerge. This product is such a novel idea that competitors may try to push it out of the market with ideas of their own. (p. 253; Challenging) What are two ways in which Evelyn could modify her product for future use? The vacuum could be transformed into a battery-powered device, accommodating those consumers who may forget to recharge their units; the vacuum could also come with an option that allows consumers to manually operate the sweeper if needed. (p. 254; Challenging)

164.

165.

255