Chapter 12: Developing New Products

Laggards make up roughly ______ of the market.

16%

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

When Burger King introduced the new Whopper Bar to a limited geographical area prior to a national launch, it was engaging in ______.

test marketing

What are the key characteristics of the growth stage of the product life cycle? (Choose every correct answer.)

Competitors increase Sales rise

Without innovation, what options would be available to firms? (Choose every correct answer.)

Continue to market current products to current customers Take current products to new markets

Product development entails a variety of processes and considerations to determine which aspects of a product or service?

Form and features

Which of the following industries are most likely to participate in a research consortium? (Choose every correct answer.)

High-tech Pharmaceuticals

Which of the following processes could be considered an acceptable method for generating ideas? (Choose every correct answer.)

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

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

False

_______ are those buyers who want to be the first on the block to have a new product or service.

Innovators

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

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 objectives do firms have in adding new products, services, and processes to their offerings? (Choose every correct answer.)

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

Adding new products is MOST likely to prompt consumers to purchase in which of the following industries?

Video games

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

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 of the following is a way by which risk can be diversified?

By creating a broader portfolio of products through innovation

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

Evaluation of results

What are key characteristics of the introduction stage? (Choose every correct answer.)

Profits are low Start-up costs are high

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

Early ___________ are the category of consumers who begin to use a product or service immediately following innovators. (Remember to type only one word in each blank.)

adopters

When Subway introduced a new Southwestern Club sandwich in South Florida before launching it nationwide, it was engaging in ______.

test marketing

Product development or product design entails a process of balancing which types of considerations? (Choose every correct answer.)

Manufacturing Marketing Engineering

______ defines the stages products move through as they enter, get established in, and ultimately leave the marketplace.

The product life cycle

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

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

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.

postlaunch

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

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

When a product is first launched during the introduction stage, sales are usually ______ and there are ______ competitors.

very low; essentially no

______ are consumers who like to avoid changes and rely on traditional products until they are no longer available.

Laggards

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

Licensing

Some markets demand a higher frequency of new product releases than others. In which of the following markets do sales come from new products? (Choose every correct answer.)

Movies Video games Books

Firms need to continue to innovate because customer needs ______.

are constantly changing

Which of the following factors influence how rapidly a product will move through the product life cycle? (Choose every correct answer.)

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

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

New products and services that consumers accept quickly will have a high ______ rate early in their product life cycles, which will accelerate the diffusion process across the various stages.

adoption

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

The ______ ___________of users representing approximately 34 percent of the population on the diffusion of innovation curve is crucial because few new products and services can be profitable until this large group buys them. (Enter one word in each blank.)

early majority

Usually, during the _______ stage of the product life cycle, the typical consumers are early adopters, and there are increases in the number of competitors.

growth

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

innovator; early adopter

Those consumers who enter the market for the first time during the decline stage are known as ______.

laggards

When the ________ majority of consumers enters the market, the market has already reached its full market potential.

late

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, Even though the product life cycle model cannot identify exactly where a given product is in its life cycle, the model is fairly predictive of consumer needs and behaviors.

What might a concept include along with a brief written description of the product? (Choose every correct answer.)

Firms expect that a few highly successful products will cover the costs of the entire R&D effort.

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

Idea generation, concept testing, product development, market testing, product launch, evaluation of results

_________________ is the process by which ideas are transformed into new products and services that will help firms grow.

Innovation

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

It will eventually decline.

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

A ______________ is a written description of a product and its technology and is presented to potential buyers or users to obtain their reactions.

concept

___________ ________________ ___________ 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. (Enter one word in each blank.)

diffusion of innovation

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

first

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

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

A good or service may pass through many stages as it establishes itself in the marketplace. Marketing managers refer to this as the product _________ cycle.

life

During the ______ stage of the product life cycle, the market for the product usually becomes saturated.

maturity

The ____________ stage of the product life cycle is characterized by the adoption of the product by the late majority and good profitability. (Remember to type only one word in the blank.)

maturity

If a firm has positive results from market testing, the next step will be the __________ ___________

product launch

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

The Apple iPod was readily accepted by consumers in part because it was an easy way to listen to music anywhere, with substantial improvements over portable CD players. This is an example of a relative ___________ within the diffusion process.

advantage

___________ generation refers to the first stage in the process by which firms develop a new product.

Idea