CHAPTER 9
NEW-PRODUCT DEVELOPMENT AND PRODUCT
LIFE-CYCLE STRATEGIES
MULTIPLE CHOICE QUESTIONS
1. According to information presented in the text, _____________ is at the heart of
Microsoft’s and Bill Gates’ innovation strategy.
a. R & D
b. the X-box
c. the Internet
d. predatory pricing
Answer: (c) Difficulty: (2) Page: 320
2. The product life cycle presents two major challenges. First, a firm must be good at
developing new products to replace aging ones. Second, a firm must be good at:
a. adapting its marketing strategies in the face of changing tastes, technologies,
and competition as products pass through life-cycle stages.
b. image building to ensure that products sell well.
c. primary demand forecasting so product winners can be chosen rather than
making poor investments with product losers.
d. acquisition of other companies since this is the only real way to ensure new
product success--go with what has worked in the past.
Answer: (a) Difficulty: (2) Page: 322
3. A firm can obtain new products in two ways. First, it can develop them by using its
own research and development department. Second, it can:
a. steal them.
b. get them through acquisition.
c. transfer them between divisions.
d. copy them.
Answer: (b) Difficulty: (1) Page: 322
4. Original products, product improvements, product modifications, and new brands that
a firm develops through its own research and development efforts are called:
a. new products.
b. concept products.
c. altered products.
d. supplemental products.
Answer: (a) Difficulty: (1) Page: 322
192
5. New products continue to fail at a disturbing rate. One study estimated that new
consumer packaged goods (consisting mostly of line extensions) fail at a rate of:
a. 100 percent.
b. 90 percent.
c. 80 percent.
d. 70 percent.
Answer: (c) Difficulty: (3) Page: 322
6. Why do so many new products fail? All of the following are reasons EXCEPT:
(Select the LEAST LIKELY reason.)
a. the size of the market has been overestimated.
b. hostility on the part of the sales force.
c. the product may have been incorrectly positioned.
d. a high-level executive might have pushed a favorite idea.
Answer: (b) Difficulty: (3) Page: 322
7. If a new product has higher quality, new features, and higher value in use than its
competition, then it is called a(n):
a. unique superior product.
b. synergistic product.
c. positioned product.
d. pre-launch product.
Answer: (a) Difficulty: (2) Page: 323
8. Which of the following would be a key success factor in developing new products?
a. a well-defined product concept
b. a product priced well below market or industry standards
c. a product that appeals to the late majority
d. a product that can be sold over the Internet with a minimum of explanation
Answer: (a) Difficulty: (2) Page: 323
9. To create successful new products, a company must understand consumers, markets,
and competitors and:
a. develop a great advertising campaign.
b. have a strong Web site to push the product.
c. adopt a push rather than pull promotional concept.
d. develop products that deliver superior value to consumers.
Answer: (d) Difficulty: (2) Page: 323
193
10. Which of the following best describes the first stage of the new-product development
process?
a. idea screening
b. concept development and testing
c. idea generation
d. business analysis
Answer: (c) Difficulty: (2) Page: 323, Figure 9-1
11. The systematic search for new-product ideas is characteristic of which stage in the
new-product development process?
a. idea screening
b. concept development and testing
c. idea generation
d. business analysis
Answer: (c) Difficulty: (2) Page: 323
12. After idea generation has occurred in the new-product development process, the
next stage is most likely to be:
a. ideation.
b. idea screening.
c. concept development and testing.
d. test marketing.
Answer: (b) Difficulty: (1) Page: 323, Figure 9-1, 328
13. For every 1,000 ideas, only _____ will have enough commercial promise to merit a
small-scale experiment.
a. 10
b. 50
c. 100
d. 300
Answer: (c) Difficulty: (3) Page: 323
14. According to the text, all of the following are thought to be sources of new-product
ideas EXCEPT:
a. internal sources.
b. customers.
c. competitors.
d. the local library.
Answer: (d) Difficulty: (1) Page: 323
194
15. According to “Mr. Failure’s Lessons for Sweet Success,” all of the following would
help to prevent failure on the part of new products EXCEPT:
a. offer real value.
b. cherish thy brand.
c. don’t be too different.
d. always be the lowest priced.
Answer: (d) Difficulty: (2) Page: 324, 325
16. The search for new-product ideas should be systematic rather than haphazard. One
way to ensure that the process is systematic is to install a(n):
a. product planning committee.
b. venture capital team.
c. idea management system.
d. a Delphi idea system.
Answer: (c) Difficulty: (2) Page: 327
17. If an organization wishes to create an innovation-oriented company culture, it should
consider the ____________ approach.
a. product planning approach
b. venture capital team
c. idea manager
d. Delphi idea system
Answer: (c) Difficulty: (2) Page: 327
18. ________________ is screening new-product ideas in order to spot good ideas and
drop poor ones as soon as possible.
a. Idea generation
b. Concept development and testing
c. Idea screening
d. Brainstorming
Answer: (c) Difficulty: (1) Page: 328
19. One reason that idea screening is a critical stage in the new-product development
process is that:
a. product-development costs rise greatly in later stages and the company only wants
those products that can succeed.
b. competitors can quickly steal ideas so the company wants only those ideas that
can be protected with patents.
c. international competition and markets demand that all ideas be culturally sensitive.
d. the Federal government carefully monitors each company’s idea screening process
to make sure no national security matters are at stake.
195
Answer:
(a) Difficulty: (2) Page: 328
20. A _______________ is an idea for a possible product that the company can see
itself offering to the market.
a. product idea
b. product image
c. product concept
d. product feature
Answer: (a) Difficulty: (2) Page: 328
21. A ___________________ is a detailed version of the idea stated in meaningful
consumer terms.
a. product idea
b. product image
c. product concept
d. product feature
Answer: (c) Difficulty: (2) Page: 328
22. A ____________________ is the way consumers perceive an actual or potential
product.
a. product idea
b. product image
c. product concept
d. product feature
Answer: (b) Difficulty: (2) Page: 328
23. If Toyota describes one of its cars of the future as being “a moderately priced
subcompact designed as a second family car to be used around town; the car is ideal
for running errands and visiting friends,” then the company has just stated a potential
new product in terms of a:
a. product idea.
b. product image.
c. product concept.
d. product feature.
Answer: (c) Difficulty: (3) Page: 328
24. Presenting new-product ideas to consumers in symbolic or physical ways to
measure their reactions occurs during which of the following stages?
a. idea generation
b. concept testing
c. marketing strategy
d. screening
196
Answer: (b) Difficulty: (2) Page: 329
25. If a kitchen cabinet designer wished to test design concepts with customers, the
designer might wish to use a _______________ program that would show the
consumer how his or her kitchen would look and work if remodeled with the
company’s products.
a. color chart
b. cartoon figure chart
c. virtual reality
d. descriptive schematic
Answer: (c) Difficulty: (1) Page: 329
26. Designing an initial marketing strategy for a new product based on the product
concept is called:
a. screening.
b. business analysis.
c. product development.
d. marketing strategy development.
Answer: (d) Difficulty: (1) Page: 330
27. The marketing strategy statement consists of three parts. All of the following would
be among those parts EXCEPT:
a. description of the production flow diagrams.
b. description of the target market.
c. the planning product positioning.
d. the sales, market share, and profit goals for the first few years.
Answer: (a) Difficulty: (2) Page: 330, 331
28. The stage in the new-product development process in which the anticipated sales,
market share, and profit goals for the first few years are described is called:
a. idea generation.
b. marketing strategy development.
c. business analysis.
d. product development.
Answer: (b) Difficulty: (2) Page: 330
197
29. Sanyo intends to capture a 5-percent share of the small radio market in three years.
To achieve this, product quality will start high and be improved over time. Price will
begin low but then be raised (competition permitting). An advertising budget of
$300,000 will be rolled out over a three-year period. To successfully accomplish
its long-run goals, Sanyo should construct and then adhere to a(n):
a. image statement.
b. marketing strategy statement.
c. product development theory.
d. demand-curve theorem.
Answer: (b) Difficulty: (2) Page: 331
30. When a company reviews sales, costs, and profit projections for a new product to find
out whether these factors satisfy the company’s objectives, they are in which of the
following new-product development stages?
a. concept development and testing
b. commercialization
c. business analysis
d. marketing strategy development
Answer: (c) Difficulty: (2) Page: 331
31. Looking at the sales history of similar products and surveying market opinion are
tools used at which stage in the new-product development process?
a. concept development and testing
b. commercialization
c. business analysis
d. marketing strategy development
Answer: (c) Difficulty: (2) Page: 331
32. A company is in the ______________ stage of the new-product development process
when the company develops the product concept into a physical product in order to
assure that the product idea can be turned into a workable product.
a. product development
b. commercialization
c. marketing strategy
d. business analysis
Answer: (a) Difficulty: (2) Page: 331
198
33. R&D and engineering first produce the product concept into a physical product
during which of the following stages of the new-product development process?
a. concept development and testing
b. marketing strategy
c. business analysis
d. product development
Answer: (d) Difficulty: (1) Page: 331
34. One of the unique considerations during the product development phase of the new
product development process is that the _______________ developed during this
phase should have the required functional features and also convey the intended
psychological characteristics so consumer testing can be beneficial and meaningful.
a. program
b. placebo
c. prototype
d. process
Answer: (c) Difficulty: (2) Page: 332
35. Introducing a new product and marketing program to more realistic market settings
following functional and consumer approval is carried out at which new-product
development stage?
a. idea generation
b. screening
c. marketing strategy
d. test marketing
Answer: (d) Difficulty: (2) Page: 332
36. If a company wishes to test its positioning strategy, advertising, distribution, pricing,
branding and packaging, and budget levels, it can do so during which of the following
stages of the new-product development process?
a. commercialization
b. test marketing
c. product development
d. marketing strategy development
Answer: (b) Difficulty: (2) Page: 332
199
37. James Manufacturing would like to do test marketing on a new bicycle that it has
just developed, however, cost is a serious consideration. James Manufacturing has
just been approached by a firm called Simul-Shop that has offered to study the
bicycle market using a unique approach that will only cost about $25,000. Which of
the following innovative test marketing methods is James Manufacturing probably
considering?
a. virtual reality research
b. sequential research
c. simultaneous research
d. starch testing
Answer: (a) Difficulty: (2) Page: 334-335, Marketing at Work 9-2
38. Introducing the new product into the market takes place in which stage of the new
product development process?
a. commercialization
b. test marketing
c. marketing strategy
d. product development
Answer: (a) Difficulty: (1) Page: 333
39. The FIRST decision that must be reached by the company that is introducing a new
product is:
a. where to introduce.
b. the distribution process.
c. the timing of the introduction.
d. the number of outlets to be included in the rollout.
Answer: (c) Difficulty: (3) Page: 333
40. With respect to developing new products, if a company chooses to introduce its
new products city-by-city and region-by-region, then the company is probably using
which of the following methods for launching new products?
a. blitz
b. blanket
c. market rollout
d. market blister
Answer: (c) Difficulty: (1) Page: 333
200
41. When Colgate-Palmolive uses a ________________ strategy, they pick certain
countries for new-product introductions before general introduction to entire regions
or continents.
a. gray market
b. primo country
c. demand-based
d. lead-country
Answer: (d) Difficulty: (2) Page: 333
42. 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 is called:
a. sequential product development.
b. retrograde product development.
c. simultaneous product development.
d. reactive product development.
Answer: (a) Difficulty: (3) Page: 336
43. Overlapping steps in the new-product development process to save time and
increase effectiveness across the various departments involved is called:
a. sequential product development.
b. retrograde product development.
c. simultaneous product development.
d. reactive product development.
Answer: (c) Difficulty: (3) Page: 336
44. The simultaneous approach to new-product introduction does have several
limitations. All of the following would be considered to be among those limitations
EXCEPT:
a. it is riskier than other forms of introduction.
b. it is more costly in many instances.
c. it is too slow for many marketers.
d. it has increased organizational tension and confusion.
Answer: (c) Difficulty: (3) Page: 336
45. The course of a product’s sales and profits over its lifetime is called:
a. the sales chart.
b. the dynamic growth curve.
c. the adoption cycle.
d. the product life cycle.
Answer: (d) Difficulty: (1) Page: 337
201
46. The ______________ is characterized by five distinct stages: product development,
introduction, growth, maturity, and decline.
a. adoption cycle
b. fashion process
c. product life cycle
d. style curve
Answer: (c) Difficulty: (1) Page: 337, 338
47. With respect to the product life cycle, the _____________ begins when the
company finds and develops a new-product idea.
a. product development stage
b. introduction stage
c. growth stage
d. maturity stage
Answer: (a) Difficulty: (1) Page: 337, Figure 9-2
48. With respect to the product life cycle, the ______________ is a period of slow
sales growth as the product is introduced in the market.
a. product development stage
b. introduction stage
c. growth stage
d. maturity stage
Answer: (b) Difficulty: (1) Page: 337, Figure 9-2
49. With respect to the product life cycle, the _______________ is a period of rapid
market acceptance and increasing profits.
a. product development stage
b. introduction stage
c. growth stage
d. maturity stage
Answer: (c) Difficulty: (1) Page: 337, Figure 9-2
50. With respect to the product life cycle, the ________________ is a period of
slowdown in sales growth because the product has achieved acceptance by most
potential buyers.
a. product development stage
b. introduction stage
c. growth stage
d. maturity stage
Answer: (d) Difficulty: (1) Page: 337, Figure 9-2
202
51. With respect to the product life cycle, the __________________ is the period when
sales fall off and profits drop.
a. decline stage
b. introduction stage
c. growth stage
d. maturity stage
Answer: (a) Difficulty: (1) Page: 337, Figure 9-2
52. The product life cycle concept has many varied uses. The PLC can describe all of
the following EXCEPT:
a. a product class.
b. a product form.
c. a product shape.
d. a product brand.
Answer: (c) Difficulty: (2) Page: 338
53. ______________ have the longest product life cycles.
a. Product forms
b. Product brands
c. Product genres
d. Product classes
Answer: (d) Difficulty: (2) Page: 338
54. In terms of special product life cycles, a _____________ is a basic and distinctive
mode of expression.
a. genre
b. style
c. fashion
d. fad
Answer: (b) Difficulty: (2) Page: 338
55. In terms of special product life cycles, a _______________ would be exemplified by
the “preppie look” in the clothing of the late 1970s and early 1980s.
a. genre
b. style
c. fashion
d. fad
Answer: (c) Difficulty: (2) Page: 338
203
56. In terms of special product life cycles, a _________________ only lasts for a short
time, is adopted with a great deal of zeal, peaks early, and declines very fast.
a. genre
b. style
c. fashion
d. fad
Answer: (d) Difficulty: (1) Page: 338
57. “Pet rocks” are a classic example of which of the following?
a. a genre
b. a style
c. a fashion
d. a fad
Answer: (d) Difficulty: (2) Page: 338, 339
58. Which of the following is characterized by a extremely peaked demand curve that
rises rapidly and declines rapidly in a short period of time?
a. a genre
b. a style
c. a fashion
d. a fad
Answer: (d) Difficulty: (2) Page: 339, Figure 9-3
59. A concentration on producing a basic version of a product by a firm and its
competitors is typical of which stage in the product life cycle?
a. product development stage
b. introduction stage
c. growth stage
d. maturity stage
Answer: (b) Difficulty: (2) Page: 339, 345, Table 9-2
60. An increase in competition, attracted by the opportunities for profit, is typical of
which stage of the product life cycle?
a. decline stage
b. introduction stage
c. growth stage
d. maturity stage
Answer: (c) Difficulty: (2) Page: 340, 345, Table 9-2
204
61. In the ___________ , a firm faces a trade-off between high market share and high
current profit.
a. decline stage
b. introduction stage
c. growth stage
d. maturity stage
Answer: (c) Difficulty: (2) Page: 340, 345, Table 9-2
62. The stage of the PLC characterized by overcapacity, greater competition, and the
eventual elimination of weaker competitors is called the:
a. decline stage.
b. introduction stage.
c. growth stage.
d. maturity stage.
Answer: (d) Difficulty: (2) Page: 340, 345, Table 9-2
63. In the maturity phase of the PLC, a marketing manager should consider:
a. dropping the product and moving on to the next product winner.
b. modifying the market, product, and marketing mix.
c. expanding R & D.
d. pricing to penetrate the market.
Answer: (b) Difficulty: (3) Page: 340, 345, Table 9-2
64. The strategy used during maturity to attempt to increase the consumption of the
current product is called:
a. customer modification.
b. market modification.
c. product modification.
d. marketing mix modification.
Answer: (b) Difficulty: (2) Page: 340
65. All of the following are examples of products that have had very long and successful
product life cycles EXCEPT:
a. Beanie Babies.
b. Barbie.
c. the Plymouth Prowler.
d. Crayola Crayons.
Answer: (c) Difficulty: (1) Page: 341, 342, Marketing at Work 9-3
205
66. Cutting prices, using aggressive sales promotion, or launching a better advertising
campaign, are all typical elements of which strategy used during the maturity stages
of the PLC?
a. customer modification
b. market modification
c. product modification
d. marketing mix modification
Answer: (d) Difficulty: (2) Page: 343
67. Technological advances, shifts in consumer tastes, and increased competition, all
of which reduce demand for a product, are typical of which stage in the PLC?
a. decline stage
b. introduction stage
c. growth stage
d. maturity stage
Answer: (a) Difficulty: (2) Page: 343, 345, Table 9-2
68. As a product reaches its decline stage of the PLC, management may decide to
__________ the product, which means reducing various costs and hoping that sales
hold up.
a. disengage
b. drop
c. harvest
d. cultivate
Answer: (c) Difficulty: (1) Page: 344
69. The stage in the product life cycle that focuses on using a cost-plus formula and
creating product awareness and trial is the:
a. decline stage.
b. introduction stage.
c. growth stage.
d. maturity stage.
Answer: (b) Difficulty: (2) Page: 345, Table 9-2
70. The stage in the product life cycle where the strategic focus is on market penetration
and building intensive distribution is the:
a. decline stage.
b. introduction stage.
c. growth stage.
d. maturity stage.
Answer: (c) Difficulty: (2) Page: 345, Table 9-2
206
71. The stage in the product life cycle where the strategic focus is on maximizing profit
while defending market share and pricing to match or best the competition is called
the:
a. decline stage.
b. introduction stage.
c. growth stage.
d. maturity stage.
Answer: (d) Difficulty: (2) Page: 345, Table 9-2
72. The stage in the product life cycle where the strategic focus is on reducing
expenditures and milking the brand while cutting prices is called the:
a. decline stage.
b. introduction stage.
c. growth stage.
d. maturity stage.
Answer: (a) Difficulty: (2) Page: 345, Table 9-2
TRUE/FALSE QUESTIONS
73. One of the challenges presented by the product life cycle for a product is that of
new-product development.
Answer: (True) Difficulty: (1) Page: 322
74. Today, innovation can be very risky.
Answer: (True) Difficulty: (1) Page: 322
75. One study has estimated that a much as 80 percent of new consumer goods and new
products fail.
Answer: (True) Difficulty: (2) Page: 322
76. Most new products that fail in the consumer goods category are called line
extensions.
Answer: (True) Difficulty: (1) Page: 322
77. One study found that the number one success factor for new-product introduction is
a unique, superior product.
Answer: (True) Difficulty: (2) Page: 323
207
78. Idea screening is generally recognized to be the first step in the new-product
development process.
Answer: (False) Difficulty: (2) Page: 323, Figure 9-1
79. 3M’s well-known “15-percent rule” states that all employees receive a 15-percent
bonus (no matter their salary) for every new-product idea they produce.
Answer: (False) Difficulty: (2) Page: 323
80. The purpose of idea screening is to generate a large number of ideas from which
new products will be drawn.
Answer: (False) Difficulty: (1) Page: 323, 330
81. According to Mr. Failure’s Lessons for Sweet Success, cherish thy brand is a secret
to success.
Answer: (True) Difficulty: (2) Page: 324, 325
82. The search for new-product ideas works best if it is haphazard because of the unique
ways in which crazy ideas often produce the best new products.
Answer: (False) Difficulty: (1) Page: 327
83. A product concept is the way that consumers perceive an actual or potential product.
Answer: (False) Difficulty: (2) Page: 328
84. Virtual reality is now being used to test product concepts.
Answer: (True) Difficulty: (1) Page: 329
85. The marketing strategy statement consists of three parts: a description of the target
market; the planned product positioning; and the sales, market share, and profit
goals for the first few years.
Answer: (True) Difficulty: (2) Page: 330, 331
86. All products should be test marketed.
Answer: (False) Difficulty: (2) Page: 332
208
87. The amount of test marketing needed for new products remains constant and varies
little between product styles, fashions, and fads.
Answer: (False) Difficulty: (1) Page: 332
88. A company launching a new product must first decide on introduction budget.
Answer: (False) Difficulty: (2) Page: 333
89. Under a sequential product development approach, one company department
works individually to complete its stage of the development process before passing
the new product along to the next department and stage.
Answer: (True) Difficulty: (2) Page: 335, 336
90. Under a simultaneous product development approach, one company department
works individually to complete its stage of the development process before passing
the new product along to the next department and stage.
Answer: (False) Difficulty: (2) Page: 335, 336
91. In terms of the PLC, the growth stage is a period of rapid market acceptance and
increasing profits.
Answer: (True) Difficulty: (1) Page: 337
92. A minivan would be a good example of a product form.
Answer: (True) Difficulty: (2) Page: 338
93. Fads tend to grow slowly, remain popular for a while, and then decline slowly.
Answer: (False) Difficulty: (2) Page: 338
94. If a company were to change characteristics of the product such as quality, features,
or style, it would most likely do this in the maturity phase of the product life cycle.
Answer: (True) Difficulty: (2) Page: 340
95. If a company chose to harvest from its product life cycle, this would most likely
occur in the growth phase of the product life cycle.
Answer: (False) Difficulty: (2) Page: 344
209
96. In the growth stage of the PLC, cost-plus pricing is used.
Answer: (False) Difficulty: (3) Page: 345, Table 9-2
97. Selective distribution is a characteristic of the introduction stage of the PLC.
Answer: (True) Difficulty: (2) Page: 345, Table 9-2
98. Reducing the expenditures and milking the brand become marketing objectives
during the maturity stage of the product life cycle.
Answer: (False) Difficulty: (2) Page: 345, Table 9-2
99. Middle majority customers buy during the maturity stage of the product life
cycle.
Answer: (True) Difficulty: (2) Page: 345, Table 9-2
ESSAY QUESTIONS
100. No matter what brand of computer you’re using or what you’re doing on it, you’re
almost certain to be using some type of Microsoft product or service. Is Microsoft known
as an innovator? Explain. What is at the heart of Microsoft’s innovation strategy? List
and briefly discuss three of Microsoft’s new innovations as described in the text.
Answer:
According to information provided by the chapter, new-product success at Microsoft
starts with a companywide culture that supports innovation. Whereas many companies
try to protect their successful current products, Microsoft encourages innovations.
Microsoft has not always been viewed as an innovator. In the past they have been
accused of being a copycat or actually stealing technology. Thanks to a large cash fund
Microsoft can now innovate on its own. At the heart of its new innovation strategy is the
Internet. Gates wants to be wherever the consumer is and currently that is on the Web.
To complete this question, students can discuss any of the seven new products that
Microsoft plans to introduce in the next several years. Some of these, such as the X-box,
are already on the market.
Difficulty: (2) Page: 319-322
210
101. Why do so many new products fail? What can be done to increase the likelihood
that the new product will be successful?
Answer:
New products continue to fail at an alarming rate. There are several reasons for high
failure rates. Although an idea may be good, the market size may have been
overestimated. Perhaps the actual product was not designed as well as it should have
been. Or maybe it was incorrectly positioned in the market, priced too high, or advertised
poorly. A high-level executive might push a favorite idea despite poor marketing
research findings. Sometimes the costs of product development are higher than expected
and sometimes competitors fight back harder than expected.
Success chances can be enhanced if the new product is a unique, superior product; has a
well-defined product concept; if the company understands its customers, markets, and
competitors; and develops products that delivery superior value to consumers.
Difficulty: (2) Page: 322, 323
102. List and briefly define the stages of the new-product development process.
Answer:
The new-product development process has eight stages:
(a) Idea generation--the systematic search for new ideas.
(b) Idea screening--screening new-product ideas in order to spot good ideas and drop
poor ones as soon as possible.
(c) Concept development and testing--a product idea, product concept, and product image
are developed and then tested.
(d) Marketing strategy development--designing initial marketing strategy for a new
product based on the product concept.
(e) Business analysis--a review of the sales, costs, and profits projections for a new
product to find out whether these factors satisfy the company’s objectives.
(f) Product development--a strategy for company growth by offering modified or new
products to current market segments.
(g) Test marketing--the product and marketing program are tested in more realistic
market settings.
(h) Commercialization--introducing a new product into the market.
Difficulty: (3) Page: 323-337, Figure 9-1
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103. List and briefly discuss the sources of new-product ideas.
Answer:
The major sources of new-product ideas include internal sources, customers, competitors,
distributors and suppliers, and others.
(a) Many new-product ideas come from internal sources. The company can find new
ideas through formal research and development. It can pick the brains of its executives,
scientists, engineers, and manufacturing people. It can also use its sales force (who are in
daily contact with customers).
(b) Good new-product ideas come from watching and listening to customers. The
company can analyze customer questions and complaints to find new products that better
solve consumer problems. The company can meet with customers to get suggestions and
to learn about needs and wants. Often, customers create their own unique products to
solve their problems--companies can benefit by learning about these.
(c) Competitors are another good source of new-product ideas. Watch ads and
commercials to get clues about new-product entries. The company can also reverse
engineer a competitor’s products to learn about how they are made and about strengths
and weaknesses.
(d) Distributors and suppliers contribute many good new-product ideas. These resellers
often see consumer needs first hand and ask their suppliers to make products for
customers. Suppliers can tell the company about new concepts, techniques, and materials
that can be used to develop new products.
(e) Other sources include: trade magazines, shows, and seminars; government agencies;
new-product consultants; advertising agencies; marketing research firms; university and
commercial laboratories; and inventors.
Difficulty: (2) Page: 323-327
104. According to Mr. Failure’s Lessons for Sweet Success, what lessons should a
marketer learn to avoid failure. List and briefly discuss each of the lessons.
Answer:
Lessons include:
(a) Offer real value--many classic flops failed to deliver what customers really wanted.
(b) Cherish thy brand--the value of a brand is its good name, which it earns over time.
(c) Be different--me-too marketing is the number-one killer of new products.
(d) But don’t be too different--products often fail because customers don’t or can’t relate
to them.
(e) Accentuate the positive--people don’t buy products that remind them of their
shortcomings.
Difficulty: (2) Page: 324, 325, Marketing at Work 9-1
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105. Distinguish among a product idea, concept, and image.
Answer:
(a) A product idea is an idea for a possible product that the company can see itself
offering to the market.
(b) A product concept is a detailed version of the idea stated in meaningful consumer
terms.
(c) A product image is the way consumers perceive an actual or potential product.
Difficulty: (1) Page: 328
106. The marketing strategy statement consists of three parts. What are they? Briefly,
illustrate each.
Answer:
The three parts are:
(a) Description of the target market.
(b) The planned product positioning.
(c) The sales, market share, and profit goals for the first few years.
See the chapter material for illustrations of each part.
Difficulty: (1) Page: 330, 331
107. Distinguish between sequential product development and simultaneous product
development. Relate the advantages and disadvantages of each form.
Answer:
Sequential product development--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.
Known to be orderly but slow. Poor in a rapidly changing market where speed is
important.
Simultaneous (or team-based) product development--an approach to developing new
products in which various company departments work closely together, overlapping the
steps in the product-development process to save time and increase effectiveness.
Good for speed, however, it can be riskier and more costly. It also creates organization
tension and confusion.
Difficulty: (2) Page: 335, 336
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108. Identify and briefly characterize the five stages of the product life cycle.
Answer:
(a) Product development--begins when the company finds and develops a new-product
idea. During product development, sales are zero and the company’s investment costs
mount.
(b) Introduction--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.
(c) Growth--a period of rapid market acceptance and increasing profits.
(d) Maturity--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.
(e) Decline--the period when sales fall off and profits drop.
Difficulty: (3) Page: 337-345, Figure 9-2, Table 9-2
109. Characterize the differences between styles, fashions, and fads with respect to the
PLC concept.
Answer:
A style is a basic and distinctive mode of expression. It may last for several generations.
A fashion is a currently accepted or popular style in a given field. Fashions tend to grow
slowly, remain popular for a while, and then slowly decline.
A fad is a fashion that enters quickly, is adopted with great zeal, peaks early, and declines
very rapidly.
Difficulty: (2) Page: 338, 339, Figure 9-3
110. Characterize the strategies that are available for marketers in the maturity phase of
the PLC. Give an illustration along with your characterization.
Answer:
There are three possible strategy scenarios.
(a) Modifying the market--the company tries to increase the consumption of the current
product by finding new users, new market segments, and increased usage among existing
customers. The company can also reposition the product.
(b) Modifying the product--changing the characteristics of the product such as features,
quality, style to attract new users and to inspire more usage.
(c) Modifying the marketing mix--improving sales by changing one or more marketing
mix elements. Cutting prices, changing distributors, or modifying promotion are
common techniques.
Difficulty: (2) Page: 340, 342, 343
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111. Taking the stages of introduction, growth, maturity, and decline found in the product
life cycle, briefly discuss the strategies that might be used in product, price, distribution,
and advertising to guide the product through the life cycle.
Answer:
(a) In the introduction stage, offer a basic product, use cost-plus pricing, build selective
distribution, and build product awareness among early adopters and dealers.
(b) In the growth stage, offer product extensions, service, and warranty; price to penetrate
the market; build intensive distribution; and build awareness and interest in the mass
market.
(c) In the maturity stage, diversify the brand and models, price to match or best
competition, build more intensive distribution, and stress brand differences and benefits
in advertising.
(d) In the decline stage, phase out weak products, cut price, go selective in distribution
outlets and phase out unprofitable outlets, and reduce the level needed to retain hardcore
loyal consumers.
Difficulty: (3) Page: 345, Table 9-2
APPLICATION QUESTION
112. Gibson Guitar company was in trouble. Gibson, perceived to be a high-quality but
expensive electric guitar company (with models from $1,300 to $4,400), was losing
market share to rival Fender Guitar company. Fender had expensive models in its
prestigious Stratocaster line but had recently established a budget line (models for the
beginning guitar player) under the brand name Squire by Fender. The Squire models
began at $150 and ranged to $350. Research showed that players who began with Squire
often upgraded to Stratocasters as they gained experience and interest. Gibson now has
the opportunity to purchase Epiphone Guitar company and use their line of low- to midprice guitars ($300-$700) to counter Fender’s strategy for first-time guitar players. Your
job as marketing executive for Gibson is to recommend a new-product strategy for
Gibson. Consider which phases of the new-product development process would apply
and suggest a course of action for Gibson. Be sure to explain your decision.
Answer:
As indicated in the text, a company can often grow by developing new products.
Sometimes this occurs through acquisition rather than development. In this case, Gibson
would be faced with the decision as to whether to acquire the Epiphone line or develop a
line of lower priced guitars to meet Fender’s challenge and seeming strength with the
first-time guitar buyer. Gibson should realize that brand loyalty begins early with the
guitar player. The company should also realize that its high-quality but expensive line is
not for the first-time user. Students can approach this creative situation from several
directions. First, they can agree to buy Epiphone. If they do, they should then propose a
method for integrating the line into Gibson’s line. The student should then address
distribution, pricing, and advertising issues. Table 9-2 will give some indication of what
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these strategies might be since the Epiphone line should be considered to be in its
maturity phase. Second, the student can reject Epiphone and consider developing a
Gibson line of inexpensive guitars. If this direction is chosen, then the student should go
through a simulation of the new-product development process as suggested in the
chapter. Attention should be paid to any problem of potential cannibalization. Lastly,
the student could decide to reject entry into the budget market by Gibson. If this
alternative is chosen, the student should justify their suggestion that the budget market is
not for Gibson.
The instructor may wish to give additional instructions with this short mini-case
application question, give it as an in-home assignment, or ask the students to do
additional research to answer the question. The company eventually decided to acquire
the Epiphone line. However, a good case could be made for developing an independent
budget line themselves. The only poor answer would be to ignore the situation. The
instructor should grade this question based on a student’s ability to creatively think and
use chapter information rather than usage of specific lists or definitions. Try it, you will
be surprised how creative some students can be with this issue.
Difficulty: (3) Page: 323, Figure 9-1, 345, Table 9-2
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