Chapter 9: Product Management and New-Product Development

Which of the following statements about organizing for new-product development is true? A. For a firm to be successful in its new-product development endeavors, it should encourage a culture that supports innovation. B. All of these statements are true. C. Top-level support is not vital to the success of new-product development. D. No one should be put in charge of new-product development; it should be left to anyone who demonstrates an interest in taking the initiative. E. A company's R&D specialists, operations, and marketing personnel should avoid working together when evaluating the feasibility of new ideas.

A. For a firm to be successful in its new-product development endeavors, it should encourage a culture that supports innovation.

Lee works as a market researcher for a company that makes frozen foods. The company is considering releasing a new line of frozen dinners featuring flavors from around the world. The dinners have not been created yet, so Lee creates an online survey to ask potential consumers questions and gauge how well the new products will meet the needs and tastes of customers. Lee is engaging in A. concept testing. B. reverse engineering. C. data exhaust. D. market testing. E. screening.

A. concept testing. - This is an example of concept testing. Concept testing involves getting reactions from customers about how well a new-product idea might meet their needs. Unlike market testing, it does not require a physical product.

Which of the following is not one of the stages of the product life cycle? A. economic competition B. market maturity C. sales decline D. market introduction E. market growth

A. economic competition

Product or brand managers are commonly used when a firm A. has several different kinds of products or brands. B. wants to eliminate the job of the advertising manager. C. wants one person to have authority over all the functional areas that affect the profitability of a particular product. D. has only one or a few related products. E. wants to dismiss the use of cross-functional teams.

A. has several different kinds of products or brands - When a firm has products in several different product categories, management may decide to put product managers or brand managers in charge of each category, or each brand, to be sure that attention to these products is not lost in the rush of everyday business.

Maria's company makes televisions. The Clarity, a 4K television featuring wireless capabilities, is their best selling model, and the company plans to release a new version in a month. However, next year Maria's company plans to release a television featuring brand new technology that offers even better picture quality than the Clarity. This is an example of A. planned obsolescence. B. dynamic innovation. C. discontinuous innovation. D. patent holdback. E. patent piggybacking.

A. planned obsolescence. - This is an example of planned obsolescence, which is when a company releases a new product that it plans to quickly replace with improved, new versions.

Product ideas that survive the screening and idea evaluation steps get further investment of time and money, including the creation of a(n) _____, which is an early sample or model built to test a concept. A. prototype B. wireframe C. imitation D. storyboard E. replica

A. prototype

Which of the following is true of the types of new product categories? A. Dynamically continuous innovations do not require changes in customer behavior. B. Discontinuous innovations require that customers adopting the innovation significantly change their behavior. C. Continuous innovations result in completely new product-markets and new product life cycles. D. Continuous innovations require customers to learn new behaviors. E. Discontinuous innovations entail minor variations on existing products.

B. Discontinuous innovations require that customers adopting the innovation significantly change their behavior.

Which of the following statements is true of the market introduction stage of the product life cycle? A. Customers actively seek out the new product in this stage. B. In this stage, there is a need for informative promotion. C. In this stage, profits are at their highest. D. It is during this stage that sales decline and then rise. E. Competition is greatest during this stage.

B. In this stage, there is a need for informative promotion.

Which of the following statements regarding the market growth stage of the product life cycle is false? A. Many competitors enter the market during this stage resulting in great product variety. B. Innovators still earn profits, but this stage is less profitable for them than the previous stage. C. Monopolistic competition is typical of this stage. D. Toward the end of the this stage, competition and consumer price sensitivity increase. E. The sales of the total industry rise fairly rapidly during this stage as more and more customers buy.

B. Innovators still earn profits, but this stage is less profitable for them than the previous stage.

Whirlpool introduced a new high gloss white finish to its refrigerators. This innovation would be classified as a ______ innovation. A. dynamic B. continuous C. dynamically continuous D. simple E. discontinuous

B. continuous

Which of the following can the Consumer Product Safety Commission do? A. It can order costly repairs of "unsafe products." B. It can back up its orders with jail sentences. C. It can order returns of "unsafe products." D. It can back up its orders with fines. E. All of these alternatives are correct.

E. All of these alternatives are correct.

A new product that requires only minor changes in customer behavior A. is not subject to time limits for the use of the word "new" as imposed by the FTC. B. is called a dynamically continuous innovation. C. is called a discontinuous innovation. D. does not require concept testing. E. is called a reverse prototype.

B. is called a dynamically continuous innovation.

Which of the following terms refers to the legal obligation of sellers to pay damages to individuals who are injured by defective or unsafe products? A. product quality B. product liability C. product reliability D. product failure E. product integrity

B. product liability

Which of the following statements is true of a second-mover? A. A second-mover is always at a disadvantage when compared to a pioneer. B. A second-mover is the first to market with a new product idea. C. A second-mover is one that quickly follows a pioneer. D. A second-mover has a weak customer focus. E. A second-mover is always less profitable over the long-run.

C. A second-mover is one that quickly follows a pioneer. -More often, there is an advantage to being the second-mover—one that quickly follows the pioneer. Second-movers that have a strong customer focus and respond quickly with a superior marketing mix can build market share during the market growth stage. There are many examples of successful second-movers.

Which of the following is true of patents? A. They are almost impossible to enforce, leading to piracy of new technology. B. They are indefinite, protecting the new technology for as long as the firm wishes. C. They give firms a short-term monopoly on their new technology. D. They apply only to technology in new industries. E. They protect the rights of a producer of creative work.

C. They give firms a short-term monopoly on their new technology.

Cloud Storage Solutions works closely with customers—showing them early versions of its software and interface and then quickly making changes based on customer feedback before soliciting feedback again. The company wants to fail early and often so that it quickly brings to market a product that meets customer needs. In this scenario, Cloud Storage Solutions is using A. benchmarking B. product champion. C. a co-creation process. D. the market insight approach. E. reverse engineering.

C. a co-creation process - Companies may use a co-creation process where customers react to prototypes and suggest improvements. This process often uses rapid prototyping, where customer input is received and quickly designed into a revision of the product. The revised product is then fed back to customers for further input. The repetitive process in rapid prototyping encourages innovations to "fail early and fail often" so the best ideas get to market more quickly.

BlueSpray Co. has created a new clothes dryer that uses light to dry clothes. The company has created a prototype and is testing a marketing mix. The product manager has developed an estimate of the return on investment. Considering these activities, the product is most likely in the _____ stage of the new-product development process. A. idea generation B. idea evaluation C. development D. screening E. commercialization

C. development - The development step involves R&D, developing a model or service prototype, testing the marketing mix, revising plans, and generating an ROI estimate. Therefore, in this scenario, the dryer is in the development stage of the new-product development process.

Albert works as a server for a restaurant that gives him a certain amount of autonomy. For example, if customers complain about their meal, Albert is allowed to provide them with a free dessert or otherwise compensate them as he deems appropriate. He does not need to check with management before he makes his decision. In this case, the restaurant Albert works for is promoting better service quality through A. touchpoints. B. strict regulations. C. empowerment. D. reduction of defects. E. innovation.

C. empowerment.

Karina works for a company that makes fans, space heaters, and air purifiers. When the competition comes out with a new air purifier that is supposed to clean air twice as fast with half the energy usage, Karina buys one of the new purifiers so that her research and design team can disassemble it and attempt to build their own highly efficient version. This is an example of A. planned obsolescence. B. data exhaust. C. reverse engineering. D. copyright infringement. E. crowdsourcing.

C. reverse engineering.

Using total quality management to improve the implementation of a marketing plan is likely to involve A. an emphasis on physical goods over service products. B. a flexible quality program with no specifications on exactly what tasks have to be done and by whom. C. the training and empowerment of employees to identify and solve customer problems. D. a lack of participation from the top-level management. E. the assumption that defects are inevitable and acceptable.

C. the training and empowerment of employees to identify and solve customer problems.

Consumer Product Safety Act

a 1972 law that set up the Consumer Product Safety Commission to encourage more awareness of safety in product design and better quality control - can set safety standards, order costly repairs, return unsafe orders, fines and jail sentences

continuous improvement

a commitment to constantly make things better one step at a time - two keys to improving service quality are: 1. training and 2. empowerment

Which of the following statements about fashion-related products is false? A. Fashion products are often seasonal. B. Fashion products are usually marked by innovation and creativity. C. Fashion products are often the hottest selling products in the short term. D. Fashion products have long life cycles. E. Fashion products require marketing managers to make frequent product changes.

D. Fashion products have long life cycles.

An industry with tough competition faces falling profits, and its sales growth is slow. Demand for individual brands has become quite elastic—as consumers see competing products as almost homogeneous. Several firms have dropped out. Which of the following stages of the product life cycle does this indicate? A. sales decline B. market growth C. market introduction D. market maturity E. product renewal

D. market maturity - In the market maturity stage of product development, industry sales level off and competition gets tougher. Many aggressive competitors enter and industry profits go down as promotion costs rise and some competitors cut prices to attract business. Less efficient firms cannot compete with this pressure and eventually drop out of the market.

When Yahoo! develops new online services, the company develops a version of the service and shows it to customers. It solicits immediate feedback and then revises the trial version of the product. This process is continued. In this case, Yahoo! is utilizing A. concept testing. B. protocol development. C. swift idea generation. D. rapid prototyping. E. wireframing.

D. rapid prototyping.

Which of the following would not be good advice for an organization trying to make new-product development a total company effort? A. Develop a culture that supports innovation. B. Get top management support. C. Manage costs to add value. D. Designate a person, department, or team to be responsible for new-product development. E. Use only R&D insights to drive market needs.

E. Use only R&D insights to drive market needs. - From the idea generation stage to the commercialization stage, the R&D specialists, the operations people, and the marketing people must work together to evaluate the feasibility of new ideas.

Which of the following strategies is not used to rejuvenate the sales of a product that is heading toward the sales decline stage of the product life cycle? A. adding a successful innovation to the original product idea B. adding appealing services or sales promotions that target loyal customers C. selling the product in geographic regions where the product is not in the final stage of the life cycle D. finding new uses for the product E. devising a phase-out strategy

E. devising a phase-out strategy

new product

a product that is new in any way for the company concerned - new products can be loosely grouped into 3 categories based on the extent to which customers have to change their behavior to adopt the new product a. continuous innovations don't require customers to learn new behaviors b. dynamically continuous innovation requires minor changes in customer behavior c. discontinuous innovation requires that customers adopting the innovation significantly change their behavior

market growth

a stage of the product life cycle when industry sales grow fast but industry profits rise and then start falling. - biggest profits for the industry - monopolistic competition with down-sloping demand curves typical of this stage

market maturity

a stage of the product life cycle when industry sales level off and competition gets tougher - many aggressive competitors - industry profits go down - new firms may still enter market - persuasive promotion becomes more important - price sensitivity

sales decline

a stage of the product life cycle when new products replace the old - price competition

market introduction

a stage of the product life cycle when sales are low as a new idea is first introduced to a market - informative promotion is needed - loses from money on product, place, and promotion

prototype

an early sample or model built to test a concept

fad

an idea that is fashionable only to certain groups who are enthusiastic about it - even more short-lived than a regular fashion

fashion

currently accepted or popular style - tend to have short life-cycle

concept testing

getting reactions from customers about how well a new product idea fits their needs

empowerment

giving employees the authority to correct a problem without first checking with management

patent

grants the inventor the ability to "exclude others from making, using, offering for sales, or selling the invention" - incentive to share new technology - copyright law protects producer giving them exclusive rights to reproduce the work

product/brand managers

manage specific products, often taking over the jobs formerly handled by an advertising manager - promotion is major responsibility

Federal Trade Commission (FTC)

the federal government agency that polices anti-monopoly laws - products must be entirely new or changed in a "functionally significant or substantial respect"

product liability

the legal obligation of sellers to pay damages to individuals who are injured by defective or unsafe products

Total Quality Management (TQM)

the philosophy that everyone in the organization is concerned about quality, throughout all of the firm's activities, to better serve customer needs

product life cycle

the stages a new product idea goes through in the marketplace from beginning to end: introduction, growth, maturity, and decline

product life cycles describe industry sales and profits for a product idea ___________________

within a particular product market