Ch 12
Laggards make up roughly ______ of the market.
16%
Product development entails a variety of processes and considerations to determine which aspects of a product or service?
Form and features
Listening to customer input helps firms with which tasks?
Idea generation and product development
______ defines the stages products move through as they enter, get established in, and ultimately leave the marketplace.
The product life cycle
Which if the following are traits of breakthrough products?
They can alter consumer preferences. They are referred to as pioneers. They can change the rules of competition.
True or False: Targeting the wrong segment and poor positioning are contributing factors to the high rate of failure for new products.
True
Firms need to continue to innovate because customer needs ______.
are constantly changing
A [...] is abrief written description of the product.
concept
Once a product stops generating sales or profits, or sales and profits are very low, the product is in the [...] stage of the product life cycle and eventually exits the market.
decline
When a product goes into the [...] stage of the product life cycle, the product eventually exits the market.
decline
Innovators
first group of consumers, those buyers who want to be the first to have the new product or service. Would line up outside the store to be the first to buy it
During the ______ stage of the product life cycle, firms attempt to reach new consumers by studying their preferences and producing many different product variations.
growth
While the ______ is first to adopt the item, the ______ adopts next.
innovator; early adopter
If a company invests all its time and effort into a new product and the product fails, ______.
it will be extremely difficult for the firm to recover
In the ______ user approach to customer input for developing new products, a company studies how innovative product users modify existing products for their needs.
lead
A good or service may pass through many stages as it establishes itself in the marketplace. Marketing managers refer to this as the product product [...] cycle.
life
A [...] is the first physical form or service description of a new product, still in rough form, that has the same properties as the product.
prototype
As industry sales increase, profits in the growth stage will ______ because of the economies of scale associated with manufacturing and marketing costs.
rise
When firms decide to develop new products, it is typically a long process that is broken into ______ stages.
six
True or False: During test marketing, a firm will introduce all the elements of the marketing mix to determine demand for the entire market.
true
The problem with using the product life cycle concept is that no one can predict the shape that the product's life cycle will take; therefore, it is impossible to know ______.
which stage the product is in
What are some advantages experienced by pioneer firms over later entrants?
More likely to command a greater market share over a longer period Establish an early market share lead More readily recognizable to consumers
During concept testing it is important to present a brief written description to ______ to obtain their reactions to the idea(s) presented.
potential buyers or users
Which of the following traits are associated with the innovators consumer group?
Highly knowledgeable (about the product/service) Risk takers
Which of the following factors influence how rapidly a product will move through the product life cycle?
How different the product is from other offerings in the market How valuable the product is to the consumer
A firm that joins with other firms as well as government and educational institutions to research a costly new technology is participating in which of the following?
Research consortium
[...] engineering refers to taking apart a competitor's product, analyzing it, and creating an improved product that does not infringe on the competitor's patents.
Reverse
Without innovation, what options would be available to firms?
Take current products to new markets Continue to market current products to current customers
Which of the following is a market testing method that offers a strong predictor of product success based on actual purchasing behavior?
Test marketing
What happens during an industry shakeout in the growth stage of the product life cycle?
Firms that have not established a strong hold in the market decide to exit.
While pioneers capture an early and commanding market share, imitators often enter the market and gain which advantages?
Focusing marketing efforts on demand for their brand Capitalizing on the pioneer brand's weaknesses Offering better products at lower prices
What are the key characteristics of the growth stage of the product life cycle?
Sales rise Competitors increase
Crucial to the success of new products are early adopters, who are responsible for influencing what?
The other three categories of consumers
What are the steps taken by firms that have products in the decline stage of the product life cycle?
Completely exit market Target a niche segment
While early adopters are crucial to the success of a new product, they still only make up a relatively small percentage of the total consumers in a given product market. This percentage is approximately how big?
13.5%
What percentage of new products is estimated to succeed?
3 percent
The early majority represents approximately ______ of the total consumer market and is crucial to the profitability of a product or service. Without them, the product or service will typically fail.
34%
While late to the party, the late majority category of consumers is still significant, making up roughly ______ of the total consumer market.
34%
Which type of firm is most likely to engage in a licensing approach to R&D?
A firm with a low budget and a need to get a product to market quickly
Some products, such as appliances, stay in the maturity stage for a long time and are unlikely to decline unless what occurs?
A superior solution replaces them.
Innovators generally keep themselves knowledgeable about the product category through which activities?
Attending product-related seminars Subscribing to trade magazines Frequenting product-specific blogs
If you are a customer of a company and are asked to use a product prototype, you would be engaging in what type of testing?
Beta testing
Which of the following is a way by which risk can be diversified?
By creating a broader portfolio of products through innovation
Which of the following processes could be considered an acceptable method for generating ideas?
Communicating with a firm's R&D department Conducting consumer research Brainstorming within the firm Researching competitors' products and services
Which of the following are potential impacts to the company when a new product launch is a failure?
Company may fail Negative financial impacts Product may not recover from failure
What might a concept include along with a brief written description of the product?
Customer needs it satisfies Visual images
Which of the following can a firm accomplish with knowledge gained from the diffusion of innovation theory?
Developing effective marketing strategies to increase product acceptance across all consumer groups
After a new product is launched, what is the next step of the product development process?
Evaluation of results
True or False: New products must be targeted toward end consumers.
False
True or False: Prototypes are never crafted individually.
False
In addition to consumers, innovators may also come from which group?
Firms
What is a key characteristic of the maturity stage?
Firms defending market share
Which of the following statements about firms' expectations regarding the success of internal research and development efforts is true?
Firms expect that a few highly successful products will cover the costs of the entire R&D effort.
During which stage of the product life cycle does the product gain acceptance, experience increased demand and sales, and encounter increasing competition in the product category?
Growth
Identify one of the disadvantages of being the first mover.
Having to establish the market all alone
Which of the following industries are most likely to participate in a research consortium?
High-tech Pharmaceuticals
According to the diffusion of innovation curve, when would marketers expect to see the highest frequency of purchases for a given product or service?
In the middle of the curve
Firms solicit customer input through which methods?
Informal discussions Surveys Focus groups
What are the four stages that a product passes through as it enters, gets established in, and ultimately leaves the marketplace?
Introduction Growth Maturity Decline
Firms can highlight a product's relative advantage, which refers to which perception among consumers about the product?
It is better than its substitutes.
What influence has the Internet had on the recruitment of beta testers?
It is easier to recruit testers than before.
What will happen to a firm if it continues to produce the same products in a saturated market?
It will eventually decline.
______ are innovative consumers who modify existing products according to their own ideas to suit their specific needs.
Lead users
[...] is an agreement through which one firm buys the rights to use the technology or ideas of another research-intensive firm.
Licensing
Product development or product design entails a process of balancing which types of considerations?
Manufacturing Engineering Marketing
Some markets demand a higher frequency of new product releases than others. In which of the following markets do sales come from new products?
Movies Books Video games
How does a brainstorming session operate?
No idea can be approved immediately. Participants vote on the best ideas. Group cooperation is encouraged.
How has technology influenced beta testing in recent years?
Ordinary people have the opportunity to be beta testers. The process is more highly automated than in the past. Participant reactions can be tracked through a webcam.
In the context of how firms develop new products, what is the next step if a firm has positive results from market testing?
Product launch
Which of the following is a firm with products in mature markets likely to do to seek new market segments?
Reducing prices on older versions of a product Entering new geographic markets
What are the three interrelated factors firms use to measure the success of a new product?
Satisfaction of technical requirements such as performance The extent of customer acceptance Satisfaction of firm's financial requirements
What are key characteristics of the introduction stage?
Start-up costs are high Profits are low
When products reach the growth stage of the product life cycle, firms typically attempt to reach new customers by adjusting which product aspects?
Styles Features Colors
Through the effective use of concept testing, firms may be able to avoid which issue?
The high costs of unnecessary product development
Why might it be an advantage for a company to launch a product without test marketing it?
They could get the product to market before the competition.
What objectives do firms have in adding new products, services, and processes to their offerings?
To satisfy the changing needs of consumers To keep customers from getting bored with existing products
True or False: Both firms AND consumers can be innovators.
True
True or False: If market testing returns with positive results, the firm is then ready to introduce the product to the entire market, which is called a product launch.
True
True or False: Managers can use the product life cycle model to help predict what pricing, product, promotional, and placement strategies they should employ at each of the four stages.
True
True or false: Since test marketing costs are high, a company may choose to launch a new product without extensive test marketing and instead rely on instinct.
True
What does a postlaunch review help determine?
Whether the launch was a success or failure Whether changes to the marketing mix are needed Whether additional resources are needed
Using the diffusion of innovation theory, what can a firm predict?
Which consumers will buy a new product immediately and which will buy it later
What can marketers learn from the diffusion of innovation theory?
Which markets are likely to be most receptive to new products or services The rate at which consumers are likely to adopt a new product or service
The diffusion of innovation curve refers to the rate in which consumers ______ a given product or service.
adopt
Using in-house [...] testing, the company attempts to determine whether the product prototype will perform according to its design and whether it satisfies the need for which it was intended, by performing tests in the R&D department.
alpha
During the product development process a firm uses [...] testing, in which potential consumers examine the product prototype in a "real use" setting to determine its functionality, performance, potential problems, and other issues specific to its use.
beta
Products that generate enough revenue to cover the losses from other unsuccessful introductions are known as [...]
blockbusters
Firms must continually introduce new products with improved features and find new uses for existing products to defend market share from ______.
competition
Trialability and ,[...] refer to how complicated a product is and how easy or hard it is to try.
complexity
During intense competition, a firm needs ______ to defend its market share from competition.
constant innovation
Laggards
consumers who like to avoid change and rely on traditional products until they are no longer available. Will not buy one until something newer has come along
The process by which the use of an innovation, whether it be a product or service, is spread throughout a market group over time and over various categories of adopters, is known as ______.
diffusion of innovation
The theory that helps marketers understand the product or service adoption rates of consumers is called ______.
diffusion of innovation
One advantage of product innovation is that a firm can expand into different product categories. The point of the risk ______ strategy is that if some products in one category are competing poorly, others in another category could be doing very well.
diversification
After product development, firms conduct premarket tests, which help determine ______.
how many customers will try and then continue to use it
[...] generation refers to the first stage in the process by which firms develop a new product.
idea
A company that develops a new merchandise tracking technology that automatically notifies suppliers when a new shipment is needed is using its new product to:
improve business relationships.
During the decline stage of the product life cycle, ______ who have not yet tried the product or service will be entering the market for the first time.
laggards
Whenever a product has a ______ level of complexity, it will consequently be ______ to try.
low; easy
Licensing is a trade-off in that it can save a firm from the high costs of in-house R&D, but instead the firm is counting on a solution (product) that already exists but has not been ______.
marketed
During the [...] stage of the product life cycle, industry sales reach the peak, so firms try to rejuvenate their products by adding new features or repositioning them.
maturity
During the ______ stage firms may pursue several strategies to increase their customer base or defend their market share. One such strategy may be to develop new features or reposition them.
maturity
During the ______ stage of the product life cycle, the market for the product usually becomes saturated.
maturity
In the [...] stage of the product life cycle, a firm may want to start looking for new market segments in order to find new opportunities.
maturity
The [...] stage of the product life cycle is characterized by the adoption of the product by the late majority and good profitability.
maturity
In order to accurately evaluate the new product launch, marketers must undertake a critical ______ review to determine whether the product and its launch were a success or failure.
post launch
In order for a firm to successfully make a new product out of a competitor's product, that firm must engage in ______ to figure out how to bring an improved version to the market.
reverse engineering
Emerging new trends or changes in consumer tastes can fragment ______ markets, which would open new market opportunities.
saturated
New product and service innovation is important because the longer a product or service exists in a given marketplace, the more likely that the market will become _____.
saturated
By the time the late majority enters the market, sales tend to ______.
stabilize or decline slightly
On the basis of the research gathered on consumer perceptions, the tests it has conducted, and competitive considerations, the firm confirms its [...] market and decides how the product will be positioned.
target
Late majority
the last group of buyers to enter a new product market; when they do, the product has achieved its full market potential. Will buy it after most of their friends have one
Early adopters
the second group of consumers in the diffusion of innovation model to use a product or service innovation; will wait a week or two and purchase the product after careful review
Early majority
third group of consumers in the diffusion of innovation model. members don't like to take much risk and therefore tend to wait until bugs are worked out of a particular product or service; few new products and services can be profitable until this large group buys them.
One of the most critical elements of success in new product launches is ______ the introduction, such as scheduling the release of a movie to match school holidays.
timing
When a product is first launched during the introduction stage, sales are usually ______ and there are ______ competitors.
very low; essentially no
