MULTIPLE CHOICE.

Choose the one alternative that best completes the statement or

answers the question.
1) What are the two ways that a company can obtain new products?
1) _______
A) market mix modification and research and development
B) service development and product extension
C) line extension and brand management
D) new-product development and acquisition
E) internal development and brand management
2) Product improvements, product modifications, and original products
can all be classified as ________.
A) pioneer products
B) test products
C) product ideas
D) new products
E) product concepts

2) _______

3) Which of the following is NOT a potential reason for a new product to

fail?
A) higher than anticipated costs of product development
B) a poorly designed product
C) ineffective advertising
D) an incorrectly positioned product
E) an underestimated market size

3) _______

4) Which of the following is NOT a challenge presented by the product life

cycle that a firm must face?
A) Changing tastes, technologies, and competition affect the
marketing of the product as it passes through lifecycle stages.
B) It is difficult to plot the stages as a product goes through them.
C) A firm must be good at developing new products to replace aging
ones.
D) A firm must be good at adapting its marketing strategies.
E) All products eventually decline.

4) _______

5) The creation of a successful new product depends on a company's

understanding of its ________ and its ability to deliver ________ to
customers.
A) product, marketing mix, and marketing strategy; functional
features
B) customers, brands, products; product images
C) competitors, distributors, and employees; new styles
D) customers, competitors, and markets; superior value
E) product life cycle, legal responsibilities, and social responsibilities;
innovations

5) _______

6) New product development starts with ________.

A) idea screening
B) concept testing
C) idea generation
D) test marketing

6) _______

E) concept development
7) Executives, manufacturing employees, and salespeople are all examples
of ________.
A) core members of innovation management systems
B) research and development team members
C) internal sources for new-product ideas
D) external sources for new-product ideas
E) new-product committee members

7) _______

8) Your company decides to use internal sources for developing new

product ideas. Which of the following would NOT be consulted?
A) suppliers
B) executives and professionals
C) salespeople
D) company records and data
E) intrapreneurial programs

8) _______

9) Which of the following is perhaps the most important external source of

new-product ideas?
A) customers
B) distributors and suppliers
C) trade magazines, shows, and seminars
D) competitors
E) engineers

9) _______

10) Which of the following is NOT a recommended method for companies

to tap into their customers as sources for new-product ideas?
A) relying heavily on customers to know what types of technical
products they need
B) working alongside customers to get ideas and suggestions
C) analyzing customer complaints and questions
D) turning customers into cocreators
E) putting customer-created products on the market

10) ______

11) Your firm asks you to consult external sources for new product ideas.
All of the following are common external sources EXCEPT ________.
A) trade shows and magazines
B) customers
C) suppliers
D) competitors
E) the firm's executives

11) ______

12) The purpose of idea generation is to create a ________ number of ideas.

The purpose of succeeding stages is to ________ that number.
A) limited number; sustain
B) small number; increase
C) large number; increase
D) large number; reduce
E) small number; reduce

12) ______

13) GrayBerry Gifts has just brainstormed a large number of ideas for

add ing

new
13)
products
and
services
after
visiting
several
buying
fairs. The
owners
will
begin the
first
idea-red
ucing
stage,
called
________,
to arrive
at a
realistic
number
to adopt.
A)
B)
C)
D)
E)

___
___

concept development
concept testing
idea screening
idea generation
business analysis

14) Which of the following is most likely to be included in an executive's

write up of a new-product idea to be presented to a new-product
committee?
A) the marketing strategy
B) the planned marker rollout
C) the product image
D) the proposed customer value proposition
E) the business analysis

14) ______

15) A detailed version of a new idea stated in meaningful customer terms is

called a ________.
A) product proposal
B) product movement
C) product idea
D) product concept
E) product image

15) ______

16) A ________ is the way consumers perceive an actual or potential

product.
A) product idea
B) test market
C) product image
D) concept test

16) ______

E) product concept
17) An attractive idea must be developed into a ________.
A) product concept
B) product image
C) product strategy
D) test market
E) product idea

17) ______

18) ________ calls for testing new-product concepts with groups of target
consumers.
A) Idea generation
B) Idea screening
C) Concept testing
D) Concept development
E) Test marketing

18) ______

19) In the concept testing stage of new-product development, a product

concept in ________ form is presented to groups of target consumers.
A) prototype
B) commercial
C) physical or symbolic
D) final
E) market-tested

19) ______

20) With what groups do firms conduct concept testing for new products?
A) employees
B) target customers
C) competitors
D) manufacturers
E) suppliers

20) ______

21) For some ________, a simple description consisting of a word or picture

might be sufficient.
A) concept tests
B) product developments
C) marketing strategies
D) product concepts
E) business analyses

21) ______

22) After concept testing, a firm would engage in which stage in developing
and marketing a new product?
A) marketing strategy development
B) test marketing
C) product development
D) business analysis
E) idea screening

22) ______

23) The first part of the marketing strategy statement describes the target
market; the planned product positioning; and goals for sales, profits,
and ________.
A) market share

23) ______

B)
C)
D)
E)

secondary market
life-cycle duration
competition
competition's anticipated reaction

24) The second part of the marketing strategy statement outlines the
product's planned price, distribution, and ________ for the first year.
A) positioning
B) advertising
C) target market
D) promotion
E) marketing budget

24) ______

25) Which of the following is described in the third part of the marketing
strategy statement?
A) marketing budget
B) profit goals
C) the target market
D) planned long-run sales
E) planned value proposition

25) ______

26) A review of the sales, costs, and profit projections for a new product to
find out whether they satisfy the company's objectives is called a
________.
A) business feasibility plan
B) proposal
C) product acceptance
D) marketing strategy development
E) business analysis

26) ______

27) During which stage of new-product development will management

most likely estimate minimum and maximum sales to assess the range
of risk in launching a new product?
A) marketing strategy development
B) test marketing
C) product development
D) business analysis
E) concept testing

27) ______

28) Once managers of The Grecian Urn have decided on their product
concept and marketing strategy, they can evaluate the business
attractiveness of the proposal in the ________ stage of the new-product
development process.
A) product acceptance
B) business feasibility
C) concept testing
D) feasibility study
E) business analysis

28) ______

29) New World Releases is conducting a business analysis to determine

which of the many new songs available to management should be
released. Sales must be estimated before costs can be estimated. Which

of owing
the did
foll your

text
29)
recomme
nd for
forecasti
ng sales?
A)
B)
C)
D)
E)

___
___

considering the history of market opinions

applying the PLC concept
conducting surveys of competitors
test marketing and commercialization
considering the sales history of similar products and conducting
surveys of market opinions

30) Once the product or service passes the business analysis test, it moves
into what stage?
A) concept development
B) product proposal
C) market testing
D) strategy development
E) product development

30) ______

31) In the ________ stage of new-product development, products undergo

rigorous tests to make sure that they perform safely and effectively or
that consumers will find value in them.
A) idea generation
B) concept development and testing
C) product development
D) business analysis
E) marketing mix

31) ______

32) Once the prototype of Wainwright Industries' new riding lawnmower,

made especially for women, passes product tests, the next step is
________.
A) business analysis
B) commercialization
C) focus group surveys
D) post-testing
E) test marketing

32) ______

33) Bonneville Communications is concerned about test marketing its new

device. Which of the following is NOT a disadvantage of test marketing
that would likely concern Bonneville Communications?
A) It can take a lot of time to test market.
B) Test marketing costs can be high.
C) Test marketing allows time for competitors to spy and gain
advantages.
D) Test marketing does not guarantee success.
E) People who are surveyed tend to tell less than the truth.

33) ______

34) Under what circumstances might it be wise for a company to do little or

no test marketing?
A) when management is not sure of the marketing program
B) when the costs of developing and introducing the product are low

34) ______

C) when management is not sure of the product

D) when a new product requires a major investment
E) when the product has no substitutes and is new in its category
35) Although test marketing costs can be high, they are often small when
compared with ________.
A) stockholders' confidence
B) research and development costs
C) the final results
D) management's approval and acceptance
E) the costs of a major mistake

35) ______

36) Many marketers are now using new interactive technologies, such as
Frito-Lay's online virtual convenience store, to reduce the cost of
________.
A) marketing strategy development
B) product development
C) test marketing
D) concept testing
E) concept development

36) ______

37) The major purpose of test marketing is to provide management with the
information needed to make a final decision about ________.
A) how to develop a market strategy
B) how long to compete in the market
C) how to compete in the market
D) which market to compete in
E) whether to launch the new product

37) ______

38) Introducing a new product into the market is called ________.

A) test marketing
B) new product development
C) commercialization
D) marketing development
E) experimenting

38) ______

39) Which of the following costs is most likely associated with the
commercialization stage of new-product development?
A) paying groups of target customers for product feedback
B) determining the product's planned price, distribution, and
marketing budget
C) developing a prototype of the product
D) identifying target markets
E) building or renting a manufacturing facility

39) ______

40) A company getting ready to launch a new product must make several
decisions. The company must first decide on ________.
A) whether to launch the product in a single location
B) when to develop a planned market rollout
C) when to time the new product introduction
D) whether to launch the product in a region
E) whether to launch the product into full national distribution

40) ______

41) Following the decision to "time" the introduction of the new product, a
company must decide ________ to launch the new product.
A) when
B) how
C) why
D) where
E) to what degree

41) ______

42) Which of the following is necessary for successful new-product

development?
A) a market pioneer mindset and a holistic approach
B) a holistic and sequential product development approach
C) an innovation management system and sequential product
development
D) a customer-centred, team-based, systematic approach
E) a team-based, innovation-management approach

42) ______

43) Which stage of the new-product development process focuses on

finding new ways to solve customer problems and create more
customer-satisfying experiences?
A) customer-centered new-product development
B) concept testing
C) team-based new-product development
D) new-product development
E) sequential product development

43) ______

44) ________ is a new-product development approach in which one

company department works to complete its stage of the process before
passing the new product along to the next department and stage.
A) Product life-cycle analysis
B) Team-based product development
C) Micromarketing
D) Simultaneous product development
E) Sequential product development

44) ______

45) In order to get their new products to market more quickly, many
companies are adopting a faster, team-oriented approach called
________.
A) phased-in new-product development
B) sequential product development
C) market development
D) simulated new-product development
E) team-based new-product development

45) ______

46) The team-based new-product development approach is faster because

departments work closely together through ________.
A) the help of a consultant
B) departmentalization
C) a step-by-step process
D) team efforts
E) cross-functional teams

46) ______

47) The team-based new-product development approach uses

cross-functional teams that overlap the steps in the process to achieve
which of the following goals?
A) save time and increase effectiveness
B) speed product to market and reduce costs
C) buy-in from individual departments
D) save time and reduce errors
E) increase effectiveness and employee satisfaction

47) ______

48) Which of the following is a disadvantage of a team-based approach to

new-product development?
A) It takes longer to get the right products to market.
B) The development effort is not as effective because of team
members' lack of expertise.
C) Organizational confusion and tension can affect the process.
D) The process does not work with the shorter life cycles of many of
today's products.
E) Levels of risk can be more easily controlled.

48) ______

49) The innovation management system approach yields two favourable

outcomes: it helps create an innovation-oriented company culture, and
it ________.
A) guarantees successful products
B) requires less budget support
C) yields a larger number of new-product ideas
D) frees up senior management time
E) clearly assigns responsibility for the process

49) ______

50) The search for new-product ideas should be ________ rather than
haphazard.
A) systematic
B) intermittent
C) segmented
D) strategically planned
E) rare

50) ______

51) ________ is the product life cycle period when sales fall off and profits
drop.
A) Growth
B) Introduction
C) Development
D) Decline
E) Maturity

51) ______

52) Increasing profits will most likely occur at which stage of the PLC?
A) introduction
B) growth
C) maturity
D) product development
E) decline

52) ______

53) Which stage in the PLC is characterized by rapid market acceptance and
increasing sales?
A) introduction
B) decline
C) maturity
D) development
E) growth

53) ______

54) Some products that have entered the decline stage have been cycled
back to the growth stage through ________.
A) business analysis
B) innovation management
C) customer-centered product development
D) promotion or repositioning
E) concept testing

54) ______

55) All of the following are stages in the PLC EXCEPT ________.
A) decline
B) introduction
C) maturity
D) adoption
E) growth

55) ______

56) Which stage of the typical consumer product life cycle is out of order
below?
A) introduction
B) product development
C) maturity
D) growth
E) decline

56) ______

57) Which of the following CANNOT be described using the PLC concept?
A) styles
B) product form
C) product image
D) brand
E) product class

57) ______

58) The PLC concept can be applied by marketers as a useful framework for
describing how ________.
A) product ideas are developed
B) to forecast product performance
C) concept testing is conducted
D) products and markets work
E) brand equity is measured

58) ______

59) Using the PLC concept to develop marketing strategy can be difficult
because strategy is both a ________ and a(n) ________ of the product's
life cycle.
A) result; mirror image
B) cause; result
C) mirror image; cause

59) ______

D) purpose; effect
E) beginning; end
60) In which stage of the PLC will promotional expenditures be especially
high in an attempt to create consumer awareness?
A) introduction
B) growth
C) product development
D) maturity
E) adoption

60) ______

61) In the ________ stage, the firm faces a trade-off between high market
share and high current profit.
A) introduction
B) decline
C) growth
D) maturity
E) adoption

61) ______

62) In which stage of the PLC will promotional expenditures be high in an

attempt to respond to increasing competition?
A) adoption
B) growth
C) product development
D) decline
E) maturity

62) ______

63) Which stage in the PLC normally lasts longer and poses strong
challenges to the marketing managers?
A) adoption
B) growth
C) maturity
D) decline
E) phase-in

63) ______

64) Which of the following would lead to greater competition in the

maturity stage of the PLC?
A) poor management
B) overcapacity
C) inadequate promotion
D) diminishing budgets
E) market pioneers

64) ______

65) Most products in the marketplace are in the ________ stage of the
product life cycle.
A) development
B) introduction
C) decline
D) maturity
E) growth

65) ______

66) When a product enters the maturity stage, the company should consider

___ _____.

66)

______
A) maintaining the product
B) harvesting the product
C) modifying the product, market, or marketing mix
D) divesting the product
E) dropping the product
67) Sales decrease in the decline stage of the PLC because of technological
advances, increased competition, and ________.
A) new market pioneers
B) shifts in unemployment
C) shifts in the economy
D) inventory costs
E) shifts in consumer tastes and preferences

67) ______

68) Which of the following best represents the options a company has when
a product is declining?
A) harvest or drop the product
B) pioneer, harvest, or maintain the product
C) maintain, harvest, or drop the product
D) maintain or pioneer the product
E) maintain or harvest the product

68) ______

69) A manufacturer with a product in the decline stage of the product life
cycle might decide to ________ if it has reason to hope that competitors
will leave the industry.
A) harvest the product
B) maintain the product without change
C) delay planning
D) drop the product
E) search for replacements

69) ______

70) Manufacturers must comply with specific laws regarding ________.

A) product placement
B) price structures
C) product life cycles
D) distribution channels
E) product quality and safety

70) ______

71) Because of ________, a company cannot make its product illegally

similar to a competitor's already established product.
A) anti-monopoly laws
B) product liability
C) the Consumer Product Safety Act
D) product warranties
E) patent laws

71) ______

72) Which of the following best describes the role of a product steward?
A) to protect the product image
B) to form and lead product development teams
C) to evaluate new-product ideas against a set of general criteria
D) to develop a new-product concept into a physical product

72) ______

E) to protect the company from liability by identifying and solving

potential product problems
73) The advantages of standardizing an international product include all of
the following EXCEPT ________.
A) the adaptation of products to different markets
B) lower marketing costs
C) decreased manufacturing costs
D) lower product design costs
E) the development of a consistent image

73) ______

74) Because names, labels, and colours may not easily translate from one
country to another, international marketers must carefully assess
________.
A) packaging
B) market rollout
C) product standardization
D) styles
E) the product life cycle

74) ______

75) Your firm added three new products earlier this year to increase variety
for customers. Two of them failed to reach even minimal sales. Which of
the following is LEAST likely to have been the cause of their failure?
A) The products were advertised incorrectly.
B) Research was too extensive.
C) Competitors fought back harder than expected.
D) The products were priced too high.
E) The product launch was ill-timed.

75) ______

76) Which of the following is the most likely reason that employees at your
firm regularly attend trade shows and seminars?
A) to get new-product ideas
B) to test market new products
C) to test new-product concepts
D) to implement a team-based new-product development approach
E) to analyze the product life cycle

76) ______

77) Which of the following statements best explains why idea screening
may be the most import step of new product development?
A) It gives research and development team members an opportunity
to gather consumer feedback.
B) It increases the number of ideas generated.
C) Some ideas that will become market disasters may be originally
viewed favourably by the idea screeners.
D) It saves the company money in product development costs by
giving the green light to only the product ideas that are likely to
be profitable.
E) Some potentially profitable ideas may be ill perceived by the idea
screeners.

77) ______

78) JoAnn Fabrics, Inc., has just created a new combination of colours and
fabric types. The firm wants to be sure of the way consumers perceive

its produc
new t. The

firm is
78)
concerne
d with
the
product
________.
A)
B)
C)
D)
E)

___
___

proposal
image
concept
idea
presentation

79) Which of the following is a product concept?

A) a pocket-size digital music player
B) a high-tech, stylish running shoe with built-in sensors to record
the distance the wearer has walked or run
C) a thin, lightweight laptop with extended battery life appealing to
students and young professionals who want access to their
computer anywhere, anytime
D) a battery-powered all-electric car
E) an energy efficient humidifier

79) ______

80) Wainwright Industries will build a new prototype riding lawnmower

especially for women. In the product development stage, Joe
Wainwright and his staff will incorporate the functional features and
convey the ________.
A) visual characteristics
B) brand image
C) advertising
D) intended psychological characteristics
E) safety features

80) ______

81) Skippy Peanut Butter has a new peanut butter and bacon product and
finds a small number of representative test cities. They plan to use the
results to forecast national sales and profits. Skippy is using ________.
A) random test markets
B) simulated test markets
C) single-city test markets
D) controlled test markets
E) standard test markets

81) ______

82) Anita's DayCare plans to offer third-shift childcare, based upon the
opening of two new manufacturing plants in her area. Together the
plants will hire 423 employees and run all three shifts. Initial test
marketing results look promising. In considering launching this new
service, Anita must first decide on ________.
A) expansion costs
B) food costs
C) hiring suitable employees
D) checking local and state regulations
E) timing

82) ______

83) Atlas Steel Corporation lacks the confidence, capital, and capacity to
launch its new steel product into full national or international
distribution. Even though test market results look promising, what will
be management's next step?
A) develop a planned market rollout over time
B) secure a loan to provide confidence, capital, and capacity
C) retest the product in additional markets
D) develop a prototype
E) seek the help of a nationally known consultant

83) ______

84) At Fantastic Flavors, a large regional chain of candy stores, employees

from marketing, design, production, and finance work in a
cross-functional group to save time and money in the new-product
development process. Fantastic Flavors uses a(n) ________ approach.
A) sequential new-product development
B) consumer composite
C) team-based new-product development
D) customer-centered new-product development
E) innovation management system

84) ______

85) Google is known for its product innovation. A company, like Google,
has likely installed an ________ to collect, review, evaluate, and manage
new-product ideas.
A) test market
B) product concept
C) PLC market strategy
D) customer-centred new-product department
E) innovation management system

85) ______

86) Big Moose Toys is a market pioneer introducing a modern version of

Bullwinkle the Moose, a character from an animated television series
originally broadcast in the 50s and 60s. Their version of Rocky the
Flying Squirrel, another character from the show, targeted to baby
boomers was a strong success. They need to make the new launch
strategy for Bullwinkle consistent with the intended ________.
A) company image
B) target market
C) product positioning
D) use
E) promotion campaign

86) ______

87) Apple's iPod has been called "one of the greatest consumer electronics
hits of all time." More than 120 million iPods have been sold, and the
iPod captures more than 70 percent of the music player market. This
success has attracted many large, resourceful competitors. The iPod is in
the ________ stage of the product life cycle.
A) adoption
B) product development
C) introduction
D) maturity
E) decline

87) ______

88) Mattel's Barbie is an example of an age-defying product. Barbie,

simultaneously timeless and trendy, is in the ________ stage of the PLC.
A) growth
B) introduction
C) maturity
D) adoption
E) decline

88) ______

89) Over the past 100 years or so, Binney and Smith's Crayola crayons have
become a household staple in more than 80 countries around the world.
Crayola crayons are in the ________ stage of the PLC.
A) growth
B) introduction
C) maturity
D) incubation
E) decline

89) ______

90) When Heinz introduced EZ Squirt packaging and new colours such as
Blastin' Green and Awesome Orange to revitalize consumer buying, the
company was ________.
A) modifying the distribution
B) modifying the market
C) dropping the product
D) modifying the pricing strategy
E) modifying the product

90) ______

91) It's What's Hip, a chain of 18 music and CD stores, has discovered that
carrying a weak product during the decline stage of the PLC can be very
costly to a firm, and not just in profit terms. Which one of these is one of
those additional costs?
A) product testing costs
B) requires advertising and sales force attention
C) customer inquiry costs
D) product development costs
E) shipping and handling costs

91) ______

92) Superior Luggage Company has undertaken the task of identifying its
products in the decline stage of the PLC. Which of the following should
be done in the identification process?
A) regularly reviewing market share
B) regularly replacing brand mangers
C) regularly reviewing management's pet projects
D) regularly conducting focus groups
E) regularly reducing the promotional budget

92) ______

93) Proctor & Gamble has sold off a number of lesser or declining brands
such as Oxydol detergent and Jif peanut butter. In these examples,
management decided to ________ the products.
A) drop
B) ignore the test market results of
C) harvest
D) maintain

93) ______

E) further test
94) When Kraft focused on cost-cutting with its older and established
brands, leaving them to wither without much investment or
modification, Kraft had decided to ________ the older products.
A) maintain
B) drop
C) review
D) harvest
E) extend

94) ______

95) CellTones, a new company selling several lines of cellular phones, has
closely modeled its products after successful products that are already
in the marketplace. As it prepares to enter the market with its new
products and services, which of the following should concern CellTones
the most?
A) limited warranties
B) legal obligations to suppliers and dealers
C) the Federal Food, Drug, and Cosmetic Act
D) product liability suits
E) patent laws

95) ______

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
96) A firm can obtain new products in two ways: acquisition or
new-product development.

96) ______

97) Up to 90 percent of all new consumer products fail.

97) ______

98) New product development begins with a systematic search for new
product ideas through idea generation.

98) ______

99) Malibu Beach Parties finds that the tastes and preferences of its
customers change more rapidly than in the past. The manager should
constantly look for external ideas from customers, suppliers, and the
competition.

99) ______

100) Companies rarely solicit ideas from customers during the idea
generation stage of product development.

100) _____

101) Blair Housewares wants to add new lines of products to its 46-store
chain. Managers are correct in believing that the purpose of idea
generation is to create a few ideas, and the purpose of succeeding stages
is to increase that number.

101) _____

102) A product idea is an idea for a possible product a company can offer the
market, while a product concept is a detailed version of the idea stated
in meaningful consumer terms.

102) _____

103) Concept testing works best with people who are familiar with the new
idea and the new product's purpose. This generally includes top
management, the sales force, and research and development.

103) _____

104) GreenTree Lawn and Garden Products is engaged in marketing strategy

development. Management should first create a statement outlining the
product's planned price, distribution, and marketing budget for the first
year.

104) _____

105) GreenTree Lawn and Garden Products is engaged in a review of the

sales, costs, and profit projections for some new products to find out
whether they satisfy the company's objectives. This activity is called
business product development.

105) _____

106) The business analysis stage represents the first large jump in financial
investment in the new-product development process.

106) _____

107) The stage at which new product and marketing programs are
introduced into realistic market settings is called concept testing.

107) _____

108) Controlled test markets are still the most widely used approach for
major in-market testing.

108) _____

109) Many marketers are now using new simulated test marketing
technologies to reduce the costs of test marketing and to speed up the
process.

109) _____

110) A company launching a new product into the market must first decide
on when to launch the product.

110) _____

111) JumBo Games is launching a new set of game toys in the

commercialization stage. The first decision to make is introduction
timing and the second is where to launch the new product.

111) _____

112) Sequential product development has the advantage of not only being a
team-oriented approach, but it is also faster in bringing products to
market.

112) _____

113) IDEO doesnt just design products, it designs customer product

experiences.

113) _____

114) To avoid too few new product ideas and the failure of many good ideas,
management should install an innovation management system that
collects, reviews, evaluates, and manages new-product ideas.

114) _____

115) Each product will have a life cycle its exact shape and length are
known in advance.

115) _____

116) Product classes have the longest life cyclesthe sales of many product
classes stay in the mature stage for a long time.

116) _____

117) Until just recently, Kraft has done a poor job of managing the product
life cycle.

117) _____

118) Profits rise during the growth stage of the PLC because promotion costs
are spread over a large volume and unit manufacturing costs fall.

118) _____

119) Although products that remain in the maturity stage of the PLC seem
unchanged, the most successful ones actually evolve to meet changing
consumer needs.

119) _____

120) When sales of a product falter during the PLC, a company can take
several approaches. The more common ones are to modify the
marketing mix, modify the product, or modify the market.

120) _____

121) Sales for the time-tried household cleansers made by Brite and New,
Inc., have been declining for some time. If these products are typical,
sales are declining because of technological advances, shifts in
consumer tastes, and lack of raw materials from foreign suppliers.

121) _____

122) Companies need to pay attention to their aging products. Management

should regularly review sales, market shares, costs, and profit trends,
and then decide whether to maintain, harvest, or drop these declining
products.

122) _____

123) When a company decides to maintain a product in the decline stage, it

will reduce costs and hope that sales hold up to increase the profits in
the short run.

123) _____

124) The federal government may prevent a company from adding products
through acquisitions if acquisition threatens to lessen competition.

124) _____

125) The international growth of many professional and business services

such as accounting, consulting, and advertising led to the globalization
of the client companies they serve.

125) _____

ESSAY. Write your answer in the space provided or on a separate sheet of paper.
126) Explain why so many new products fail and how a company can improve its odds
of new product success.
127) Briefly describe the steps in the new-product development process.
128) Provide the major sources of external new product ideas and explain why these
sources offer advantages over internal sources.
129) Distinguish among a product idea, a product concept, and a product image.
130) Explain concept testing.
131) What is the most widely used approach for major in-market testing? What
disadvantages to this method may be causing many companies to shift toward
quicker and cheaper test marketing methods?
132) Define commercialization. Explain the two important issues on which the company
must decide during this stage.
133) What are the two advantages of an innovation management system for developing
new products? Provide four ideas for a company to use to establish a successful

system.
134) Each product will have a life cycle, although its exact shape and length is not known
in advance. Briefly explain each step in the PLC.
135) PLC can be applied to more than just brands. Your assignment is to prepare a
presentation about the application of the PLC to as many of your company's
operations as possible. What would you include?
136) Describe three public policy issues or regulations that marketers should carefully
consider as they make decisions about adding or dropping products.
SHORT ANSWER. Write the word or phrase that best completes each statement or answers
the question.
137) How might a firm benefit from implementing an
137) ____________
"intrapreneurial" program?
138) How might competitors be a good external idea source?

138) ____________

139) How does Bioniche, a Canadian biotech company, source its

external ideas?

139) ____________

140) Samsung has developed a successful intrapreneurial program

that encourages its employees to think up and develop
new-product ideas. Will these ideas be reduced or increased
during the next stage idea screening?

140) ____________

141) Explain the differences between product idea, product concept,

and product image.

141) ____________

142) The potential market strengths and weaknesses are being

determined for a new-product idea at Art for Kids. In what
stage of the new-product development process does this occur?

142) ____________

143) What may be learned in a test market?

143) ____________

144) Why did KFC do a lot of testing before it introduced a major

new productKentucky Grilled Chicken to Canadian
consumers?

144) ____________

145) How does the use of controlled test markets differ from the use
of standard test markets?

145) ____________

146) How did Frito Lay use new simulated test marketing
technologies to reduce the costs of test marketing and to speed
up the process.

146) ____________

147) Why might a company choose to develop a planned market

rollout?

147) ____________

148) Why might individual departments prefer sequential product

development?

148) ____________

149) IDEO brings new meaning to customer-centred product

development. How is this so?

149) ____________

150) Explain how the PLC applies differently to a product class than
to a product form.

150) ____________

151) How did Kraft Canada modify its Delissio pizza product and
why?

151) ____________

152) Why might ad expenditures be high for products in the

introduction stage of the PLC?

152) ____________

153) Why might ad expenditures remain high in the growth stage of

the PLC?

153) ____________

154) Marketers can prolong the lives of many products in the

154) ____________
maturity or decline stages of the PLC, sometimes even moving
these products back into the growth stage. How can this happen?
155) Why has the cost of product liability insurance risen so
dramatically?

155) ____________

156) How does packaging present new challenges for international

marketers?

156) ____________

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or
answers the question.
Refer to the scenario below to answer the following questions.
Most people laughed when Evelyn Ringler explained her product idea: a solar-powered
vacuum cleaner. But the concept was practical and the technology used in the vacuum was the
same as that used in many children's toys. After setting up a demonstration booth in a mall in a
Chicago suburb, Evelyn felt more assured than ever that her idea would be a hit. Consumers
seemed receptive and offered helpful pieces of advice, such as how much they would pay for the
vacuum, what colours they would prefer, and why they would not buy the vacuum.
The vacuum itself was dome-shaped, something like a small saucer, with a filter bag on
top and sensory nodes along the edges. After being charged in the sunlight, the vacuum could
run for 10 hours, covering a floor area of 600 square feet. As the apparatus lightly bumped into
table legs, chairs, and so on, the sensory nodes allowed the vacuum to move around the objects in
various directions. This is the same type of technology used in the manufacture of children's race
cars and walking dolls.
Evelyn knew that the solar-powered vacuum would be especially helpful to both elderly
consumers, who may have a more difficult time with vacuuming, and on-the-go consumers who
lead busy lives. The price would be above average but would likely reduce after Evelyn recouped
some of her costs.
After a 500-unit production run and a substantial financial investment, Evelyn Ringler set up a
multiple-city test market, in a Chicago mall and in an appliance store in New Jersey. "It's such a
novel idea," Evelyn added. "People will notice it, even if they don't buy it right away."
157) Evelyn's ________ is the practical use of solar power in a vacuum
cleaner that is designed to effortlessly sweep the floors of on-the-go and
elderly consumers.

157) _____

A)
B)
C)
D)
E)

promotional product
product image
prototype
product concept
product idea

158) When Evelyn set up a demonstration booth to learn about consumers'

feelings toward her vacuum cleaner, she was doing which of the
following?
A) concept testing
B) product development
C) marketing strategy development
D) test marketing
E) idea screening

158) _____

159) Suppose that Evelyn finds that consumers feel very positive about her
vacuum cleaner concept. The next step is _______, designing an initial
marketing strategy for introducing this car to the market.
A) new product development
B) test marketing
C) commercialization
D) marketing strategy development
E) idea screening

159) _____

160) If Evelyn's product concept for a new vacuum cleaner passes the
business test, it moves into product development. What happens in this
stage?
A) The product and marketing program are introduced into realistic
market settings.
B) New-product concepts are tested with groups of target consumers.
C) An initial marketing strategy for introducing this car to the market
is designed.
D) R&D or engineering develops the product concept into a physical
product.
E) Evelyn conducts a review of the sales, costs, and profit projections
for a new product.

160) _____

161) Evelyn found a small number of representative test cities, conducted a

full marketing campaign in those cities, and used store audits, consumer
and distributor surveys, and other measures to gauge product
performance. This is known as using _______.
A) rollout test markets
B) simulated test markets
C) commercial test markets
D) standard test markets
E) controlled test markets

161) _____

162) Conversely, Evelyn could consider ________ which usually cost much
less, can be run in eight weeks, and keep the new product out of
competitors view.
A) commercial test markets
B) rollout test markets

162) _____

C) simulated test markets

D) controlled test markets
E) standard test markets
163) Evelyn must decide on the timing of her product introduction. Which of
the factors below would suggest that Evelyn should launch her vacuum
cleaner sooner than later?
A) if the economy is down
B) if the vacuum cleaner can be improved further
C) if consumers are curbing their spending
D) if competitors are ready to introduce their own solar-powered
models
E) if more money must be raised for promotion

163) _____

164) Evelyn's solar-powered vacuum cleaner is clearly differentiated, solves

major customer problems, and offers a compelling customer value
proposition. One could say it is an example of ________ product
development.
A) systematic
B) value-driven
C) competitive
D) customer-centred
E) team-based

164) _____

165) Eveyn hopes her product will have a long and happy life but is aware
that it is subject to the stages of the product life cycle. In which stage
should Evelyn prepare for profits levelling off or declining because of
increased marketing outlays to defend the product against competition.
A) decline
B) growth
C) introduction
D) product development
E) maturity

165) _____

166) Evelyn's vacuum is at the ________ stage of the product life cycle.
A) product development
B) introduction
C) growth
D) incubation
E) adoption

166) _____

1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
13)
14)
15)
16)
17)
18)
19)
20)
21)
22)
23)
24)
25)
26)
27)
28)
29)
30)
31)
32)
33)
34)
35)
36)
37)
38)
39)
40)
41)
42)
43)
44)
45)
46)
47)
48)
49)
50)
51)

D
D
E
B
D
C
C
A
A
A
E
D
C
D
D
C
A
C
C
B
A
A
A
E
D
E
D
E
E
E
C
E
E
B
E
C
E
C
E
C
D
D
A
E
E
E
A
C
C
A
D

52) B
53) E
54) D
55) D
56) C
57) C
58) D
59) B
60) A
61) C
62) B
63) C
64) B
65) D
66) C
67) E
68) C
69) B
70) E
71) E
72) E
73) A
74) A
75) B
76) A
77) D
78) B
79) C
80) D
81) E
82) E
83) A
84) C
85) E
86) C
87) D
88) C
89) C
90) E
91) B
92) A
93) A
94) D
95) E
96) TRUE
97) TRUE
98) TRUE
99) TRUE
100) FALSE
101) FALSE
102) TRUE
103) FALSE

104) FALSE
105) FALSE
106) FALSE
107) FALSE
108) FALSE
109) TRUE
110) TRUE
111) TRUE
112) FALSE
113) TRUE
114) TRUE
115) FALSE
116) TRUE
117) TRUE
118) TRUE
119) TRUE
120) TRUE
121) FALSE
122) TRUE
123) FALSE
124) TRUE
125) FALSE
126) Although an idea may be good, the market size may have been overestimated. Other
possible reasons for failure include the following: the actual product was not designed as
well as it should have been; the product may have been incorrectly positioned in the
market, priced too high, or advertised poorly; a high-level executive might have pushed a
favourite idea despite poor marketing research findings; the costs of product development
were higher than expected; or competitors fought back harder than expected. One way to
improve the odds is to identify successful new products and find out what they have in
common. Another is to study new product features to see what lessons can be learned. A
company must understand its customers, markets, and competitors and deliver superior
value to customers.
127) New-product development starts with idea generation from internal and/or external
sources. Next, the ideas must be reduced through idea screening. Once the new ideas are
decided upon, the product concept must be developed and tested. A marketing strategy
must be developed to introduce the product to the market. Once the product concept and
marketing strategy are chosen, a business analysis is conducted to review the sales, costs,
and profit projections to see if they will satisfy the company's objectives. A prototype will
next be created in the product development stage. Test marketing will follow, introducing
the new product and its marketing program into more realistic market settings. The last
step is to launch or not launch the new product. If the company decides to launch the
product, it will go ahead with the commercialization stage and later test its sales and profit
results.
128) The major sources of new product ideas from external sources include customers,
suppliers/distributors, competitors, and research firms. These sources are close to the
market and tend to reflect current tastes and preferences. Firms can better match their
product offerings to customer needs and wants. Consumers may also create new products
and services on their own.
129) A product idea is an idea for a product that a company can imagine itself offering to the
market. A product concept takes the idea several steps further, with a detailed version of
the idea stated in meaningful consumer terms. Finally, a product image is the way
consumers perceive an actual or potential product.

130) Concept testing calls for testing new product concepts with groups of target consumers.
The concepts may be presented physically or symbolically. A more concrete and physical
presentation, however, will increase the reliability of the concept test. After being exposed
to the concept, consumers are asked questions about it; their answers reveal to the
marketer whether the concept needs to be altered in any way.
131) Standard test markets is the most widely used approach. They have some drawbacks.
They can be very costly and they may take a long time. Moreover, competitors can monitor
test market results or interfere with them by cutting their prices in test cities, by increasing
their promotion, or even by buying up the product being tested. Finally, test markets give
competitors a look at the companys new product well before it is introduced nationally.
Thus, competitors may have time to develop defensive strategies, and may even beat the
companys product to the market.
132) Introducing a new product into the market is called commercialization. The company
launching a new product must first decide on introduction timing. Next, the company
must decide where to launch the new productin a single location, a region, the national
market, or the international market. Confidence, capital, and capacity are required to
launch new products on a large-scale basis. Hence, firms plan a market rollout over time.
133) The first advantage of an innovation management system is that it helps create an
innovation-oriented company culture. It shows that top management supports, encourages,
and rewards innovation. The second advantage is that it will yield a larger number of ideas,
among which will be found some especially good ones. As the system matures, ideas will
flow more freely. To establish a successful system a company can do the following: (1)
Appoint a respected senior person to be the company's idea manager; (2) create a
cross-functional innovation management committee with people from each department; (3)
set up a Web site for anyone who wants to become involved in finding and developing
new products; (4) encourage all company stakeholders to send their ideas to the idea
manager; and (5) set up formal recognition programs to reward those who contribute the
best new ideas.
134) Product development begins when the company finds and develops a new product idea.
Sales are zero and the company's investment costs mount. Introduction is a period of slow
sales growth as the product is introduced in the market. Profits are nonexistent in this stage
because of the heavy expenses of product introduction. Growth is a period of rapid market
acceptance and increasing profits. Maturity is a period of slowdown in sales growth
because the product has achieved acceptance by most potential buyers. Profits level off or
decline because of increased marketing outlays to defend the product against competition.
Decline is the period when sales fall off and profits drop. A company may seek to
reinvigorate a product in decline or maintain it hoping competition will diminish or
harvest it or drop it.
135) The PLC can be applied to new product and services. It can also be applied to product class,
a product form, or a brand. The PLC concept lends itself to styles, fashions, and fads. The
concept can be used as a useful framework for describing how products and markets work,
as well as developing marketing strategy for each stage of the product life cycle. Managers
may have difficulties using the PLC concept to forecast product performance or develop
general marketing strategies.
136) The government may prevent companies from adding products through acquisitions if the
effect threatens to lessen competition. On the other hand, companies dropping products
must be aware that they have legal obligations to their suppliers, dealers, and customers
who have a stake in the dropped product. Companies must also obey patent laws when
developing new products, meaning that a company cannot make its product illegally
similar to another company's established product. Manufacturers must also comply with
specific laws regarding product quality and safety. Various acts provide for the
inspection of sanitary conditions in the meat- and poultry-processing industries. Safety

legisl has been passed to regulate fabrics, chemical substances, automobiles, toys, and drugs and
ation poisons.
137) Such programs encourage employees to be innovative and to develop new-product ideas.
138) Marketers can pay particular attention to competitors' ads to get clues about their new
products. In addition, salespeople in the field can learn about competitors' plans if
prospects purposefully, or even inadvertently, reveal them.
139) Bioniche sponsors research by university professors to help it generate ideas for new drugs
and cancer treatments.
140) The purpose of the succeeding stages is to reduce the number of ideas. The first
idea-reducing stage is idea screening, which helps spot good ideas and drop poor ones as
soon as possible. Product-development costs rise greatly in later stages, so the company
wants to go ahead only with the product ideas that will turn into profitable products.
141) A product idea is an idea for a possible product that the company can see itself offering to
the market. A product concept is a detailed version of the idea stated in meaningful
consumer terms. A product image is the way consumers perceive an actual or potential
product.
142) It occurs in the business analysis stage of the new product development process.
143) Test marketing lets a company assess customer response to its product and the
effectiveness of its positioning strategy, advertising, distribution, pricing, branding, and
packaging.
144) When introducing a new product requires a big investment, when the risks are high, or
when management is not sure of the product or marketing program, a company may do a
lot of test marketing. Given the importance of the decision, KFC conducted more than three
years of product and market testing before rolling Kentucky Grilled Chicken out. Test
marketing in Quebec and Ontario began in the summer of 2009, and the product rolled out
across the country later that year.
145) Controlled test markets, such as behaviourScan, usually cost less than standard test
markets.
Also, because retail distribution is forced in the first week of the test, controlled test
markets can be completed much more quickly than standard test markets. As in standard
test markets, controlled test markets allow competitors to get a look at the companys new
product. And some companies are concerned that the limited number of controlled test
markets used by the research services may not be representative of their products markets
or
target consumers.
146) Frito Lay worked with research firm Decision Insight to create an online virtual
convenience store in which to test new products and marketing ideas. Decision Insights
SimuShop online shopping environment lets Frito Lays marketers test shopper reactions
to different extensions, shelf placements, pricing, and packaging of its brands in a variety
of store setups without investing huge amounts of time and money on actual in-store
research in different locations.
147) A company without the confidence, capacity, or capital to introduce its product in several
regions or the full national market may find it less risky and more manageable to enter
attractive cities or regions one at a time, using success in regional markets to build up to a
larger market rollout.
148) This process allows individual departments to work individually with a new idea,
completing its stage of development before passing the product on; other departments are
less likely to interfere.
149) Customer-centred new-product development focuses on finding new ways to solve
customer problems and create more customer-satisfying experiences. In designing new
products, IDEO doesnt start with engineers working in design labs. It starts with
customers. And it doesnt just design products, it designs customer product experiences.

150) Product classes have longer life cycles, while product forms tend to have the standard PLC
shape.
151) In a product's maturity stage, a company might try modifying the productchanging
characteristics such as quality, features, style, or packaging to attract new users and to
inspire more usage. Kraft introduced Delissio Ultimate, its best-yet alternative to delivery
pizza, featuring premium vine-ripened tomatoes, whole-milk mozzarella cheese, specialty
meats, and julienne vegetables.
152) Consumers have very little awareness about such products; promotional spending can
enhance customer awareness.
153) Though sales are increasing for such products, competition becomes fierce as competitors
attempt to enter the market; therefore, ad dollars remain high in an effort to offset
competitive threats.
154) Marketers can change any element of the marketing mix, change the number of uses or the
number of users, or even change the frequency of product use.
155) Consumers who have been injured by a product with a defective design can sue
manufacturers or dealers of the product. A recent survey of manufacturing companies
found that product liability was the second-largest litigation concern, behind only labour
and employment matters. Product liability suits in the United States are now occurring in
federal courts at the rate of almost 24 000 per year.
156) Packaging issues can be subtle. For example, names, labels, and colours may not translate
easily from one country to another. Although product and package standardization can
produce benefits, companies must usually adapt their offerings to the unique needs of
specific international markets.
157) D
158) A
159) D
160) D
161) D
162) C
163) D
164) D
165) E
166) A