Chapter 15

________ contribution lists the changes in income to other company products caused by the introduction of a new product. A) Supplementary B) Dragalong C) Gross D) Cumulative E) Net

A) Supplementary

The trade-off approach may be easier to use when there ________. A) are many variables B) are only a few alternatives C) are observers that are biased D) are possible offers that are limited E) is only one highly desirable solution

A) are many variables

Electro Locomotors (EL) Inc. engages in the manufacture, distribution, and marketing of custom vehicles in Brazil. Bono, a hybrid car brand that the company produces, is a market leader in the hybrid vehicles segment. With the increased global focus on nature-friendly vehicles and governmental subsidies for companies that manufacture hybrid vehicles, competition has increased for flex-fuel cars like Bono. The heads of the R&D team at EL are in a creative session to generate ideas for improvements to Bono. They consider each part of the car and discuss the possibilities of improvements in each of them. Identify the creativity technique used here A) attribute listing B) forced relationship analysis C) morphological analysis D) reverse assumption analysis E) mind mapping

A) attribute listing

Adopters of new products move through five stages. These stages begin with ________ and follow with interest, evaluation, trial, and adoption. A) awareness B) investigation C) trial D) innovation E) diffusion

A) awareness

During ________ testing, the company's technical people observe how customers use the product, a practice that often exposes unanticipated problems of safety and servicing and alerts the company to customer training and servicing requirements. A) beta B) research C) sales-wave D) alpha E) simulated

A) beta

The stage in the new product process that occurs first and has a pass ratio of 1:4 is the ________ stage. A) idea screening B) product development C) test marketing D) product soft launch E) concept testing

A) idea screening

Most established companies focus on ________ innovation when they aim to enter new markets by tweaking existing products, or they want to stay one step ahead in the market by using variations on a core product. A) incremental B) continuous C) spontaneous D) radical E) competitive

A) incremental

People who are technology enthusiasts, venturesome, and who enjoy tinkering with new products and mastering their intricacies are called ________. A) innovators B) early adopters C) early majority D) investigators E) experimenters

A) innovators

Robert has heard about the latest cell phone from LG Electronics that features Wi-Fi hotspot technology. Wi-Fi hotspot is a technology that allows users to share mobile internet with other Wi-Fi enabled devices. Robert visits the company's Web site to read more about the phone. Robert is in the ________ stage of consumer-adoption process. A) interest B) awareness C) evaluation D) trial E) adoption

A) interest

Morboro Energy Inc. is a large chain of fuel stations in Europe. The company decided to expand its business by incorporating restaurants and automobile service stations as a part of its fuel outlets. This is an example of ________. A) lateral marketing B) brand extension C) market development D) internal marketing E) brand personification

A) lateral marketing

The ________ creativity technique begins with a thought that is written down, then proceeds to develop other thoughts that are linked to the first thought, and finally a new idea materializes by associating all of the thoughts. A) mind mapping B) contextual analysis C) attribute listing D) reverse assumption analysis E) morphological analysis

A) mind mapping

Pager, a simple personal device for short messages, became famous in the 1990s. Troveron Communications launched a pager in the early twenty-first century. Due to the introduction of mobile phones and text messaging, the pager industry was on a decline. The company's innovations were not well received by the market and the product was a failure. Which of the following is the most likely reason for the product's failure in this case? A) poor launch timing of the product B) a small and fragmented target market C) high cost of development D) social and economic constraints E) hasty product development

A) poor launch timing of the product

The job of translating target customer requirements into a working prototype is helped by a set of methods referred to as ________. A) quality function deployment B) quality control processes C) rapid prototyping D) marketing control E) control system formation

A) quality function deployment

Which of the following strategies for new-product development incorporates buyers' preferences in the final design of the product? A) quality function deployment B) market leadership C) cost leadership D) incremental innovation E) disruptive technology

A) quality function deployment

A team formed at Intercom Inc. to generate ideas for new products conducts frequent meetings and engages in activities such as mind mapping and brainstorming. Most of the meetings are conducted at informal locations away from office. These workplaces are called ________. A) skunkworks B) idea funnels C) research centers D) stage-gate systems E) contextual bases

A) skunkworks

A ________ process recognizes the value of returning to an earlier stage to make improvements before moving forward. A) spiral development B) reactive development C) market testing D) proactive development E) concept testing

A) spiral development

To estimate replacement sales, management must research the product's ________, the number of units that fail in year one, two, three, and so on. A) survival-age distribution B) life-cycle ratio C) obsolescence rate D) business turnover ratio E) product-performance usage

A) survival-age distribution

________ are informal workplaces, sometimes garages, where intrapreneurial teams attempt to develop new products. A) Stage-gate systems B) Skunkworks C) Funnels D) Opportunity spaces E) Research centers

B) Skunkworks

________ teams are cross-functional groups charged with developing a specific product or business. A) Virtual B) Venture C) Fundamental D) Elemental E) Transitory

B) Venture

The degree to which the beneficial results of an innovation's use are observable or describable to others is called ________. A) divisibility B) communicability C) compatibility D) relative advantage E) plainness

B) communicability

Universal Services Inc. provides communication services to residential and business customers in rural and small urban communities primarily in northern England. The company offers services such as local and long distance voice, data, and Internet and broadband product offerings. The company, in an attempt to increase the attractiveness of its offerings, decides to provide special voice and data packages to its customers. The company designs eight different packs that offer varying voice and data benefits to customers. The company then asks a few of its customers to rank the packs in order to choose two best packs. Which of the following testing methods is being used in this scenario? A) virtual reality testing B) conjoint analysis C) perceptual mapping D) product fabrication E) rapid prototyping

B) conjoint analysis

With ________, respondents see different hypothetical offers formed by combining varying levels of the attributes, then rank the various offers. A) gap level analysis B) conjoint analysis C) perceptual mapping D) concept testing E) morphological analysis

B) conjoint analysis

Which of the following products is most likely to undergo alpha and beta testing? A) food products B) industrial goods C) consumer products D) commodities E) FMCG products

B) industrial goods

A(n) ________ is any good, service, or idea that is perceived as new, no matter how long its history. A) commodity B) innovation C) adoption D) invention E) novel product

B) innovation

Increasingly, new-product ideas arise from ________ that combines two product concepts or ideas to create a new offering. A) reverse assumption analysis B) lateral marketing C) attribute listing D) forced relationships E) morphological analysis

B) lateral marketing

Which of the following methodologies takes the list of desired customer attributes (CAs) generated by market research and turns them into a list of engineering attributes (EAs) that engineers can use? A) quality control processes B) quality function deployment C) rapid prototyping D) marketing control E) control system formation

B) quality function deployment

Modern firms use the ________ tool to design products on a computer and then produce rough models to show potential consumers for their reactions. A) morphological analysis B) rapid prototyping C) concept testing D) perceptual mapping E) conjoint analysis

B) rapid prototyping

Five characteristics influence the rate of adoption of an innovation. One of these is ________. A) marketing expertise B) relative advantage C) packaging attractiveness D) government regulations E) place of value exchange

B) relative advantage

Intercom Inc., together with its subsidiaries, primarily engages in the generation, transmission, and distribution of electric power in the United States. The company observes that its growth has stagnated over a period of two years. In an attempt to promote growth, it considers adding new features to the existing products and introducing a few new products. The company forms a committee consisting of three top executives, one of the production mangers, a few operational managers, and a representative of the HR department to generate ideas. This team is called a(n) ________ team. A) virtual B) venture C) fundamental D) elemental E) transitory

B) venture

________ is a "hybrid" data collection technique that combines self-explicated importance ratings with pair-wise trade-off tasks. A) Sales wave analysis B) Simulative data testing C) Adaptive conjoint analysis D) Business analysis E) Exponential data collection

C) Adaptive conjoint analysis

Many people believe that customer focus does not help to create better, or new, products. This belief rests on which of the following ideas? A) Such new product developments decrease the chances of success. B) Customers do not consider the cost of design when making suggestions. C) Customers are at times unaware of what they really want. D) It increases the cost of testing a product or service E) Having too much customer focus leads to a negative brand image.

C) Customers are at times unaware of what they really want.

Identify a shortcoming of giving the responsibility to develop new products to the product managers of a company. A) They would not be familiar with the industry standards. B) Product managers would not have an operational focus. C) Product managers are often busy managing existing lines. D) They will find it difficult to gain support from employees. E) Product managers are less likely to use participative management.

C) Product managers are often busy managing existing lines.

________ works by listing all the normal assumptions about an entity and then turning them around. A) Lateral marketing B) Attribute listing C) Reverse assumption analysis D) Forced relationships E) Morphological analysis

C) Reverse assumption analysis

100) Which of the following is usually referred to as a full-blown test market? A) an internal focus group B) a discussion group C) a country D) a city or a few cities E) a laboratory

C) a country

The ________ technique for stimulating creativity lists all the characteristics of an object and then modifies each to try to arrive at a new idea. A) reverse assumption analysis B) lateral marketing C) attribute listing D) forced relationship E) morphological analysis

C) attribute listing

After creating a product prototype, a company tests it within the firm to see how it performs in different applications. The company refines the prototype to correct the mistakes found in in-house testing. What should be the next step? A) commercializing the product B) performing concept testing C) conducting beta testing with customers D) creating a marketing strategy for the product E) performing business analysis

C) conducting beta testing with customers

hich of the following terms refers to the degree to which the innovation can be tried on a limited basis? A) compatibility B) relative advantage C) divisibility D) communicability E) complexity

C) divisibility

Armordo is a famous vacuum cleaner brand in Africa. Clara has heard of Armordo and she knows that the product is a success. She has started considering whether or not to buy the vacuum cleaner. What stage of the consumer-adoption process is Clara in? A) awareness B) adoption C) evaluation D) trial E) interest

C) evaluation

Identify the stage in the consumer adoption process in which the customer is stimulated to seek information about the innovation. A) awareness B) adoption C) interest D) evaluation E) trial

C) interest

The highest loss a project can create is called ________. A) rapid prototyping income B) payback income C) maximum investment exposure D) incremental yearly exposure E) cannibalized income

C) maximum investment exposure

In an attempt to improve the product, a company that manufactures screwdrivers discusses the modification of each attribute, such as replacing the wooden handle with plastic, providing torque power, adding different screw heads, and so on. This creativity technique is called ________. A) attribute listing B) mind mapping C) morphological analysis D) lateral analysis E) reverse analysis

C) morphological analysis

Poga International, a multinational beverage corporation identifies that one of its competitors is launching an apple flavored drink. The company decides to launch an apple flavor brand along with its competitor. What timing strategy is used here? A) first entry B) blunt entry C) parallel entry D) late entry E) exchange entry

C) parallel entry

In consumer-goods market testing, the company seeks to estimate four variables. These four variables are: trial, first repeat, adoption, and ________. A) guaranteed response B) price sensitivity C) purchase frequency D) usage convenience E) preferential treatment

C) purchase frequency

A ________ divides the innovation process into stages with a checkpoint at the end of each stage. A) reverse assumption analysis technique B) skunkworks system C) stage-gate system D) spiral development process E) new-product department technique

C) stage-gate system

________ testing is a customer test that involves placing the product within the firm to see how it performs in different applications. A) Beta B) Research C) Sales-wave D) Alpha E) Simulated

D) Alpha

Which of the following questions is answered during the business analysis of ideas? A) Will this product meet our profit goals? B) Have we got a technically and commercially sound product? C) Can we find a cost-effective, affordable marketing strategy? E) Can we find a good concept consumers say they would try?

D) Can this product meet sales expectations?

A ________ error occurs when the company dismisses a good idea. A) probability B) performance C) double counting D) DROP E) GO

D) DROP

Which of the following is an advantage of sales-wave research? A) It gives surprisingly accurate results on advertising effectiveness. B) It allows the brand to gain favorable shelf position. C) It guarantees immediate brand recognition and high sales volume. D) It can be implemented quickly with a fair amount of security. E) It easily creates a buzz in the minds of customers.

D) It can be implemented quickly with a fair amount of security.

Which of the following firms is most likely to seek radical innovation? A) a traditional publishing company B) a small scale FMCG company C) a firm that procures and markets wheat D) a high-tech firm in telecommunications E) a firm that sells mineral water

D) a high-tech firm in telecommunications

During which of the following stages in new product development decision making do managers analyze if they can find a good thought consumers say they would try? A) idea generation B) idea screening C) business analysis D) concept development and testing E) product development and testing

D) concept development and testing

Consumer preferences for alternative product concepts can be measured through ________, a method for deriving the utility values that consumers attach to varying levels of a product's attributes. A) concept testing B) perceptual mapping C) gap level analysis D) conjoint analysis E) morphological analysis

D) conjoint analysis

Which of the following is the mental step in the consumer-adoption process where the customer starts considering whether to try an innovation? A) adoption B) trial C) awareness D) evaluation E) interest

D) evaluation

Most new-product activities are devoted to ________. A) changing the target markets B) developing new-to-the-world products C) introducing backward integration D) improving existing products E) changing the existing market dynamics

D) improving existing products

Jason is a technology enthusiast who is happy to conduct alpha and beta testing and report on early weaknesses of consumer electronics products. He is most likely to fall in the ________ adopter category. A) late majority B) early C) early majority D) innovator E) laggard

D) innovator

Relative advantage of an innovation refers to the degree to which ________. A) it matches the values and experiences of the individuals B) it is difficult to understand or use C) it can be tried on a limited basis D) it appears superior to existing products E) the benefits of use are observable or describable to others

D) it appears superior to existing products

Troma Inc. is a famous manufacturer of cookware that follows a traditional distributor-retailer system to distribute its products. The company abstains from the use of automated supply chain management (SCM) systems mainly due to the fear of unknown. However, rapidly escalating operational costs and inefficiencies have made it necessary for the company to implement an SCM system. The company goes for a big-bang installation of SCM system to become more competitive and cost effective. Identify the adopter group to which Troma belongs. A) innovator B) early adopter C) early majority D) laggard E) late majority

D) laggard

Some firms might delay the launch of their products until after the competitor has borne the cost of educating the market. Such an entry is called ________ entry. A) strategic payoff B) parallel C) balancing D) late E) compensating

D) late

Surgeons and ER nurses would be considered ________ for surgical equipment. A) venture agents B) internal customers C) buzz agents D) lead users E) connectors

D) lead users

New-to-the-world products are ________. A) low-cost products designed to obtain an edge in highly competitive markets B) new product enhancements that supplement established products C) new versions of an existing product that has been less successful D) new products that create an entirely new market E) existing products that are targeted to new geographical markets

D) new products that create an entirely new market

A(n) ________ is a possible product the company might offer to the market. A) test brand B) alpha product C) beta version product D) product idea E) product concept

D) product idea

Brown & Smith Inc. engages in the design, development, making, and retail selling of designer jewelry in North America. Before approving a new design, the company draws it on a computer and then produces models to show potential consumers and get their reactions. This allows the company to analyze the possible customer reaction. Identify the concept testing method used here. A) conjoint analysis B) perceptual mapping C) virtual reality testing D) rapid prototyping E) digital fabrication

D) rapid prototyping

The least costly way of consumer-goods market testing is ________. A) simulated test marketing B) controlled test marketing C) a few test markets D) sales-wave research E) test marketing in 25 percent of the country

D) sales-wave research

________ means presenting the product concept to target consumers, symbolically or physically, and getting their reactions. A) Perceptual mapping B) Brand-positioning mapping C) Brand attribute mapping D) Concept development E) Concept testing

E) Concept testing

________ means inviting the Internet community to help create content or software, often with prize money or a moment of glory involved. A) Stage-gating B) Cocreation C) Microstocking D) Buzzing E) Crowdsourcing

E) Crowdsourcing

________ exhibit replacement cycles dictated by physical wear or obsolescence associated with changing style, features, and performance. A) Frequently purchased products B) High-moving goods C) Inexpensive products D) Commodity products E) Infrequently purchased products

E) Infrequently purchased products

Which of the following is the best example of a new-to-the-world product? A) Walmart, the retail giant, opens new stores in an underdeveloped African country. B) Pestorica, a publishing company, decides to launch a new sports magazine. C) Tata Motors, an Indian automobile company, acquires Jaguar to extend its business. D) An Asian company licenses a US apparel brand name though the brand is not familiar in Asia. E) Kids-Med, a company that produces childcare products, launches a non-contact thermometer.

E) Kids-Med, a company that produces childcare products, launches a non-contact thermometer.

________ is the effect one person has on another's attitude or purchase probability. A) Sharing power B) Collaborative power C) Market influence D) Brand power E) Personal influence

E) Personal influence

It has been observed that most new products have shorter product life cycles. What is the reason for this? A) Most new products do not use technology. B) Most new products are not backed by a marketable idea. C) New products do not get adequate management support. D) Social and governmental constraints lead to this failure. E) Rivals quickly copy products that are successful.

E) Rivals quickly copy products that are successful.

For a frequently purchased new product, the seller estimates repeat sales as well as first-time sales. A high rate of repeat purchasing means customers ________. A) value price more than differentiation B) do not support innovation on brands C) value differentiation more than price D) prefer personalized products rather than standard ones E) are satisfied with the product

E) are satisfied with the product

Companies such as Edison Nation and the Big Idea Group have sprung up to tap into ________ possibilities, often combining its own design, branding, engineering, and sales teams with online participants, forming a community for devising new products. A) stage-gating B) cocreation C) microstocking D) buzzing E) crowdsourcing

E) crowdsourcing

1) Which of the following is most closely related with the organic growth of an organization? A) acquiring a product or service brand B) entering new marketplaces C) increasing the operational profitability D) increasing productivity of employees E) developing new products from within

E) developing new products from within

Joseph, a student of Columbia University, finds many of his classmates have purchased an iPad tablet from Apple. The iPad, launched a few months before has been identified as a very useful product and many students in the US have rated it highly. Considering all these, Joseph also decides to purchase an iPad. Which of the following is the adopter group to which Joseph belongs? A) early adopter B) innovator C) late majority D) laggard E) early majority

E) early majority

Which of the following characteristics is closely associated with late majority adopter groups? A) superior technological knowledge B) low price sensitiveness C) opinion leadership D) deliberate pragmatism E) high risk aversion

E) high risk aversion

A group of college graduates decides to start a business. Though they are knowledgeable in various business domains, they are unable to arrive at a valuable business idea. They decide to search for ideas in a structured manner. They meet and start discussing everyone's ideas. Each idea is recorded and then the thoughts that come up in relation to the ideas are written down and discussed. This process helps them to finalize a business plan. What technique is used here? A) morphological analysis B) forced relationship analysis C) reverse assumption analysis D) attribute listing E) mind mapping

E) mind mapping

The ________ technique used for stimulating creativity identifies a problem and then considers the dimension, the medium, and the power source. A) attribute listing B) reverse assumption analysis C) mind mapping D) lateral marketing E) morphological analysis

E) morphological analysis

A(n) ________ is an elaborated version of a product idea expressed in consumer terms. A) test brand B) alpha product C) beta product D) business schedule E) product concept

E) product concept

Jordan's firm enters new markets by tweaking products for new customers, uses variations on a core product to stay one step ahead of the market, and creates interim solutions for industry-wide products. In other words, it uses ________. A) disruptive technologies B) incremental innovation C) complex innovations D) discontinuous innovations E) radical innovations

E) radical innovations

A large FMCG company decides to test market Kora, a new brand of face cleanser, to be launched soon. The company initially distributes a few free samples to some prospective consumers. Later it offers the product to the customers at a discounted price and observes that not only more than seventy percent of the customers are purchasing it but the same number are also satisfied using it. The company keeps using this process 3-4 times to obtain a correct count of the number of people purchasing the product repeatedly. Which of the following testing methods is being used here? A) simulated testing B) controlled testing C) full test marketing D) parallel testing E) sales-wave research

E) sales-wave research

115) Customers of a proposed truck may want a certain acceleration rate, which is a desired customer attribute. Engineers can turn this into the required horsepower and other engineering attributes through a process known as alpha testing.

False

151) Compatibility refers to the degree to which the innovation matches the values and experiences of the individuals.

False

20) High-tech firms that function in a market with high technological uncertainty, high market uncertainty, and high investment costs are not likely to seek radical innovation.

False

40) A business analysis is performed mainly to identify if a company has got a technically and commercially sound product.

False

69) Morphological analysis starts by forming a new dimension and then thinks about the possible problems of the dimension.

False

104) Concept testing means validating the product concept by discussing within the design group.

False

106) Perceived value refers to the gap between actual needs and satisfied needs of a customer.

False

108) A major drawback of conjoint analysis is that it cannot be used to measure objective attributes such as estimated market share and profit.

False

109) The trade-off approach may be easier to use when there are only a few variables and alternatives.

False

110) Beta testing tests the product within the firm to see how it performs in different applications.

False

114) Cannibalized income is additional income to a company as a result of a new product.

False

123) After a test, the most customer-appealing offer will be the most profitable offer to make.

False

125) Survival-age distribution refers to the number of customers that the product has in year one, two, three, and so on.

False

127) Modular function deployment methodology takes the list of desired customer attributes generated by market research and turns them into a list of engineering attributes that engineers can use.

False

128) Some firms might delay a new product launch until after the competitor has borne the cost of educating the market and its product may reveal flaws the late entrant can avoid. This can be classified as a parallel entry.

False

149) At the interest stage of the consumer-adoption process, the consumer becomes aware of the innovation but lacks information about it.

False

150) The step in the consumer-adoption process where a consumer considers whether to try the innovation is interest.

False

18) Organic growth refers to increasing the profitability of the organization by increasing employee productivity.

False

23) Shorter product life cycles are common in industries characterized by low level of competition.

False

36) Companies should use normal investment criteria to budget for new-product developments.

False

37) Almost all companies use the conventional percentage-of-sales figure while budgeting for new product development.

False

38) Skunkworks are formal workplaces where intrapreneurial teams attempt to develop new products.

False

42) Angell Healthcare, the world's largest manufacturer of protective gloves and clothing, adopted a spiral development process, which divided the innovation process into stages with checkpoints at the end of each stage, to develop products that increased overall sales from 4.6 percent to 13 percent in a little over two years.

False

67) Attribute listing lists several ideas and considers each in relationship to the others.

False

70) A DROP-error occurs when the company accepts a bad idea.

False

78) A category concept defines the product's attributes and features.

False

79) When a company combines two product concepts or ideas to create a new offering, it is called reverse assumption analysis.

False

105) Rapid prototyping refers to designing products on a computer and then producing rough models to show potential consumers for their reactions.

True

107) Consumer preferences for alternative product concepts can be measured with conjoint analysis.

True

111) Sales-wave research can be implemented quickly and carried out without final packaging and advertising.

True

112) Expensive industrial goods and new technologies will normally undergo alpha and beta testing.

True

113) In response to a short-term oversupply of wine in the marketplace, the makers of Kendall-Jackson developed two new brands by using rapid prototyping — designing products on a computer and producing rough models to show potential consumers for their reactions — to quickly bring its ideas to life.

True

124) A business analysis is typically performed after management has developed the product concept and marketing strategy.

True

126) Dragalong income refers to additional income whereas cannibalized income refers to reduced income.

True

19) Companies typically must create a strong R&D and marketing partnership to pull off a radical innovation.

True

21) Companies that fail to develop new products leave their existing offerings vulnerable to increased domestic and foreign competition.

True

22) Most established companies focus on incremental innovation rather than radical innovation.

True

39) Venture teams are cross-functional groups charged with developing a specific product or business.

True

41) A spiral development process recognizes the value of returning to an earlier stage to make improvements before moving forward.

True

64) Crowdsourcing means inviting an Internet community to help create content or software, often with prize money or a moment of glory as an incentive.

True

65) Cocreation can help a company create favorable word of mouth.

True

66) Employees can be a source of ideas for improving production, products, and services.

True

68) Reverse assumption analysis lists all the normal assumptions about an entity and then turns them around.

True

8) Fewer than 10 percent of all new products are truly innovative and new to the world.

True