Chapter 12 best

True or false: New products must be targeted toward end consumers.

False

The theory that helps marketers understand the product or service adoption rates of consumers is called ______.

diffusion of innovation

The product development process can be diagrammed as a sequential process. Place the stages in order, with the first stage at top.

1. idea generation 2. concept testing 3. product development 4. market testing 5. product launch 6. evaluation of results

The diffusion of innovation curve illustrates the typical rate of adoption for a product or service among consumers. According to the curve shown, when would marketers expect to see highest frequency of purchases for a given product or service?

In the middle of the curve

Along the diffusion of innovation curve, _______ make up the second group of consumers to adopt an innovation; they tend to be leaders in a social setting.

early adopters

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

True pioneer products are products that have never been seen before and literally create new markets. Which of the following products would be considered a pioneer product at the time it was introduced?

- Amana's microwave oven in 1967 - Pampers disposable diapers in the early 1960s

What can marketers learn from the diffusion of innovation theory? (Select all that apply.)

-The rate at which consumers are likely to adopt a new product or service -Which markets are likely to be most receptive to new products or services

Laggards make up roughly ______ of the market.

16%

While late to the party, the late majority category of consumers is still significant, making up roughly ______ of the total consumer market.

34%

Which consumers enjoy taking risks and like to be the first to purchase a new product or service?

Innovators

A firm's __________ and ______ department consists of scientists who work to solve complex problems and develop new ideas. (Do not abbreviate answer)

Internal research and development

Relative ______ deals with perception among consumers that a product is better than its substitutes.

advantage

Product development or product design entails a process of balancing which types of considerations?

engineering, marketing, manufacturing

True or false: Both firms AND consumers can be innovators.

true

While new products can become huge success stories, they have a high failure rate. In many cases imitators capitalize on the _______ of pioneers and subsequently gain advantage in the market.

weakness

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

Using a new smart phone as an example, match each consumer category (on the left) with the most probable action it would take (on the right) with regard to buying the device.

-Innovators:Would line up outside the store to be the first to buy it. -Early Adopters: Will wait a week or two and read several reviews before buying.Will wait a week or two and read several reviews before buying. -Early majority: Will wait till they are sure it works well and that they will be able to use it. -Late Majority: Will buy it after most of their friends have one. -Laggards:May never buy one; if they do, it may not happen until something newer has come along.May never buy one; if they do, it may not happen until something newer has come along.

What objective(s) do firms have in adding new products, services, and processes to their offerings? (Select all that apply.)

-To satisfy the changing needs of consumers -To keep customers from getting bored with existing products

Which of the following industries are most likely to participate in a research consortium? (Select all that apply.)

-high tech -pharmaceuticals

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%

The diffusion of innovation curve shows the time of adoption for different categories of consumers. According to the curve, how many different categories of consumers are there?

5

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

Which of the following is an example of a research and development effort?

A test kitchen at a fast food restaurant

What are the key characteristics of the growth stage of the product life cycle? (Select all that apply.)

Competitors increase Sales rise

Which of the following processes could be considered an acceptable method for generating ideas?

Conducting consumer research Brainstorming within the firm Researching competitors' products and services Communicating with a firm's R&D department

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

After a new product is launched, what is the next step of the product development process?

Evaluation of results

When a firm launches a new product, it needs to review the sales and profit levels of the product to determine if the product is successful. What is this stage called?

Evaluation of results

True or false: Prototypes are never crafted individually.

F

What is a key characteristic of the maturity stage?

Firms defend 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.

Match the stage of the product life cycle (on the left) with the relative level of profitability typically observed (on the right).

Growth -> Rapidly rising Maturity -> Peaking or beginning to decline Decline -> Dropping Introduction -> Low or negative

Which of the following factors influence how rapidly a product will move through the product life cycle? (Select all that apply.)

How valuable the product is to the consumer How different the product is from other offerings in the market

Place each of the following categories of consumers in the order in which they adopt a product, according to the diffusion of innovation curve, beginning with the innovators at the top.

Innovators Early adopters Early majority Late majority Laggards

Hightower Industries wants to be a pioneering firm in the robotics and artificial intelligence industry. Which strategy is the company most likely to pursue?

Invest heavily in research and development.

What will happen to a firm if it continues to produce the same products in a saturated market?

It will eventually decline.

Identify potential impacts to the company when a new product launch is a failure. (Select all that apply.)

Negative financial impacts Company may fail Product may not recover from failure

Some analysts have attributed the success and quick diffusion of the Apple iPod in part to the white earbuds. At the time, earbuds were not seen as often, and most headphones were black, not white. As knowledge of the iPod spread, the white earbuds could be seen even if the iPod itself was out of sight. This is an example of which of the factors that affect speed of diffusion?

Observability

__________ development entails a variety of processes and considerations to determine the form and features of a firm's offerings.

Product

Identify potential impacts to the company when a new product launch is a failure. (Select all that apply.)

Product may not recover from failure Negative financial impacts Company may fail

In distinguishing between firm strategies for developing new products, a pioneer firm will be more likely to rely on its ______, whereas a follower firm will be more likely to ______ for ideas.

R&D department; scan the market

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

True or false: Contributing factors to the increased failure rate for new products are targeting the wrong segment and poor positioning.

True

Some markets demand a higher frequency of new product releases than others. In which of the following markets do sales come from new products?

Video games Movies Books

Products that generate enough revenue to cover the losses from other unsuccessful introductions are known as ______.

blockbusters

________ refers to a group session in which participants work together to generate new ideas.

brainstorming

A newly formed coffee company should not have much trouble finding coffee drinkers in America to purchase a new type of coffee maker. However, a company selling gear for the game of cricket might have a difficult time being successful in the United States. They would probably be more successful in India or Australia. The degree to which one's product is consistent with the needs and habits of target consumers is known as ______.

compatibility

For many Americans, the daily ritual of having a coffee is almost automatic and assumed. The same can be said for the Chinese but with tea. For a firm that is marketing a product, this example serves as a reminder to consider the ______ of your product and its intended target market.

compatibility

Sometimes, firms have difficulty moving through the brainstorming process themselves. When this occurs, they can hire outside firms such as IDEO, which help to create an environment that is conducive to ______.

creativity

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

_____________ of innovation is the process by which the use of an innovation, whether a product or a service, spreads throughout a market group over time and over various categories of adopters.

diffusion

In terms of their place on the diffusion of innovation curve, innovators are the ______ category of consumers.

first

Although there are numerous stages in the product development process, every firm starts to develop new products through ______ and then finishes with an evaluation of ______.

idea generation; results

While the ____ is first to adopt the item, the ______ adopts next.

innovator; early adopter

when the _______ majority of consumers enters the market, the market has already reached its full market potential.

late

In a ______ agreement companies buy the rights to use technologies from another company.

licensing

__________ is an agreement through which one firm buys the rights to use the technology or ideas of another research-intensive firm.

licensing

The early ___________, represents the earlier half of the two largest categories of consumers on the diffusion of innovation curve.

majority

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

When a product such as a "nick-free" razor blade is launched, it may diffuse more slowly than a product like the Apple iPad, which is easily seen and whose benefits or uses are easily communicated to others. This comparison exemplifies a difference in ______, one of the product characteristics that affect the speed of diffusion.

observability

_____________ or breakthrough products are brand new products that establish a completely new market or radically change both the rules of competition and consumer preferences in a market.

pioneer

If a firm has a positive result from the market testing the next step is known as _________ launch

product

The _______ department can be considered an investment into a company's future, in which scientists work to solve problems and develop new ideas.

research and development

One advantage of product innovation is that a firm can expand into different product categories. The point of the ______ strategy is that if some products in one category are competing poorly, others in another category could be doing very well.

risk diversification

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