New Product Development and Product Life-Cycle Strategies (58-100 Answer Key)

58) Briefly describe the steps in the new product development process. Answer: The new product development process generally consists of eight sequential stages. The process starts with idea generation. Idea generation can be done through internal or external sources. Next comes idea screening, which reduces the number of ideas based on the company's own criteria. Idea s that pass the screening stage continue through product concept development, in which a detailed version of the new product idea is stated in meaningful consumer terms. This stage includes concept testing, in which new product concepts are tested with a group of target consumers to determine whether the concepts have strong consumer appeal. Strong concepts proceed to marketing strategy development, in which an initial marketing strategy for the new product is developed from the product concept. In the business-analysis stage, a review of the sales, costs, and profit projections for a new product is conducted to determine whether the new product is likely to satisfy the company's objectives. With positive results here, the ideas become more concrete through product development, where the product concept is developed into a physical product and test marketing, where the product and its proposed marketing program are introduced into realistic market settings. If all goes well, the product gets launched during commercialization. New product development involves more than just going through a set of steps. Companies must take a systematic, holistic approach to managing this process. Successful new product development requires a customer-centered, team-based, systematic effort. Diff: 2 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process. AACSB: Analytical thinking 59) What are the major external sources of new product ideas? What type of information can be gathered from each of these sources? How do firms benefit from such information? Answer: The major external sources of new product ideas include customers, suppliers, distributors, competitors, and research firms. These sources are close to the market and tend to reflect current tastes and preferences. Perhaps the most important sources of new product ideas are customers themselves. Companies observe customers, invite them to submit their ideas and suggestions, or even involve customers in the new product development process. Many companies are now developing crowdsourcing or open-innovation new product idea programs, which invite broad communities of people — customers, employees, independent scientists and researchers, and even the general public — into the new product innovation process. Distributors are also linked to the market and can pass along information about consumer problems and new product possibilities. Suppliers can tell a company about new concepts, techniques, and materials that can be used to develop new products. Consumers often create new products and services on their own. The company can analyze customer questions and complaints to find new products that better solve consumer problems. Or it can invite customers to share suggestions and ideas. Companies can also directly involve customers in the innovation process through customer cocreation. Other idea sources include trade magazines, shows, Web sites, and seminars; government agencies; advertising agencies; marketing research firms; university and commercial laboratories; and inventors. Companies can also watch competitors' ads to get clues about their new products. They buy competing new products, take them apart to see how they work, analyze their sales, and decide whether they should bring out a new product of their own. Companies can better match their product offerings to customer needs and wants when these sources are involved in the new product development process. Diff: 3 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process. AACSB: Analytical thinking 60) What is crowdsourcing? How is crowdsourcing useful in new product development? Answer: Crowdsourcing refers to throwing the innovation doors wide open and inviting broad communities of people — customers, employees, independent scientists and researchers, and even the public at large — into the new product innovation process. Many companies are now developing crowdsourcing or open-innovation new product idea programs. Rather than creating and managing their own crowdsourcing platforms, companies can use third-party crowdsourcing networks, such as InnoCentive, TopCoder, and jovoto. For example, organizations ranging from Audi, Microsoft, and Nestlé to Swiss Army Knife maker Victorinox have tapped into jovoto's network of 50,000 creative professionals for ideas and solutions, offering prizes of $100 to $100,000. Crowdsourcing can produce a flood of innovative ideas. It enables companies to rely not only on one source or another but on extensive innovation networks that capture ideas and inspirations from multiple sources. Diff: 2 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process. AACSB: Analytical thinking 61) Distinguish between a product idea, a product concept, and a product image. Answer: A product idea is an idea for a possible product that a company can see itself offering to the market. A product concept is a detailed version of the product idea stated in meaningful consumer terms. A product image is the way consumers perceive an actual or potential product. Diff: 2 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process. 62) Explain what happens during the concept testing stage of new product development. Answer: Concept testing refers to testing new product concepts with groups of target consumers. The concepts may be presented to consumers symbolically or physically. For some concept tests, a word or picture description might be sufficient. However, concrete and physical presentations usually increase the reliability of the concept test. After being exposed to the concept, consumers are asked questions about it. Their answers will help the company decide which concept has the strongest appeal. Diff: 2 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process. 63) Explain what happens during the business analysis stage of new product development. Answer: Business analysis involves a review of the sales, costs, and profit projections for a new product to find out whether they satisfy a company's objectives. If they do, the product can move to the product development stage. To estimate sales, the company might look at the sales history of similar products and conduct market surveys. It can then estimate minimum and maximum sales to assess the range of risk. After preparing the sales forecast, management can estimate the expected costs and profits for the product, including marketing, R&D, operations, accounting, and finance costs. The company then uses the sales and costs figures to analyze the new product's financial attractiveness. Diff: 2 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process. 64) What is test marketing? What role does it play in new product development? What factors do firms consider when determining whether or not to conduct test marketing? Answer: Test marketing is the stage at which a product and its proposed marketing program are introduced into realistic market settings. A product reaches this stage only after it passes the concept test and product test stage. Test marketing gives the marketer experience with marketing a product before going to the great expense of full introduction. It lets a company test the product and its entire marketing program — targeting and positioning strategy, advertising, distribution, pricing, branding and packaging, and budget levels. The amount of test marketing needed varies with each new product. Test marketing costs can be high, and testing takes time that may allow market opportunities to slip by or competitors to gain advantages. A company may do little or no test marketing when the costs of developing and introducing a new product are low, or when management is already confident about the new product. Diff: 3 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process. AACSB: Analytical thinking 65) Define commercialization. Explain the two important issues that a company must decide during this stage. Answer: Introducing a new product into a market is called commercialization. A company launching a new product must first decide on introduction timing. If the new product will eat into the sales of other company products, the introduction may be delayed. If the product can be improved further, or if the economy is down, the company may wait until the following year to launch it. However, if competitors are ready to introduce their own competing products, the company may push to introduce its new product sooner. Next, the company must decide where to launch the new product — in a single location, a region, the national market, or the international market. Some companies may quickly introduce new models into the full national market. Companies with international distribution systems may introduce new products through swift global rollouts. Diff: 2 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process. AACSB: Analytical thinking 66) What are the advantages of an innovation management system for developing new products? Answer: The new product development process should be holistic and systematic rather than compartmentalized and haphazard. Otherwise, few new ideas will surface, and many good ideas will sputter and die. To avoid these problems, a company can install an innovation management system to collect, review, evaluate, and manage new product ideas. The innovation management system approach yields two favorable outcomes. First, it helps create an innovation-oriented company culture. It shows that top management supports, encourages, and rewards innovation. Second, it will yield a larger number of new product ideas, among which will be found some especially good ones. The good new ideas will be more systematically developed, producing more new product successes. Good ideas will not suffer from the lack of a sounding board or a senior product advocate. Diff: 2 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process. 67) ________ can describe a product class, a product form, or a brand. A) The product development process B) The product life cycle concept C) Business analysis theory D) Vendor analysis theory E) Portfolio analysis Answer: B Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. 68) Which of the following statements is most likely true about the product life cycle? A) Throughout the product introduction stage, sales are zero. B) The growth stage is the longest stage of the product life cycle. C) Profits are nonexistent in the growth stage. D) Growth is a period of rapid market acceptance and increasing profits. E) Maturity is the period when sales fall off but profits continue to rise. Answer: D Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. 69) A product life cycle has five distinct stages: product development, introduction, growth, maturity, and ________. A) stabilization B) rebranding C) decline D) progression E) segmentation Answer: C Diff: 1 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. 70) Which of the following is true of the product life cycle (PLC)? A) All products generally go through all five stages of the PLC. B) All products pass through the stages of PLC in the same order. C) It is generally difficult to forecast the sales level at each PLC stage. D) The PLC concept can be applied to styles but not to fashions and fads. E) Product forms have longer life cycles than product classes. Answer: C Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. 71) Appliances Galore is continually updating its line of refrigerators to reflect market trends and customer needs. Although the product class is in the maturity stage of the product life cycle, they maintain healthy sales of their line of refrigerators by continually ________. A) concept testing B) modifying the marketing mix C) rebranding D) modifying the product E) modifying the market Answer: D Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. AACSB: Analytical thinking 72) Fads are characterized by their ________. A) enduring nature that spans several generations B) low rates of adoption by consumers C) unusually high sales and rapid decline (google: Fads are objects or behaviors that achieve short-lived popularity but fade away) D) basic and distinctive modes of expression that seldom become unpopular E) non-attainment of the last two stages of the product life cycle Answer: C Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. 73) Colonial furniture has been in existence since the 1600s and continues to adorn homes today. According to the product life cycle concept, it would be described as a ________. A) style B) fashion C) fad D) trend E) drift Answer: A Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. AACSB: Analytical thinking 74) Flurrbies, a line of winter accessories by a leading fashion label, quickly fell in and out of favor with customers. Flurrbies represents an example of a ________. A) form B) fashion C) fad D) style E) drift Answer: C Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. 75) When a product is in the ________ stage, profits level off or decline because of increased marketing outlays to defend the product against competition. (outlay = expense) A) production B) decline C) maturity D) test marketing E) conception Answer: C Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. 76) In which stage of the product life cycle will promotional expenditures be significantly high in an attempt to create consumer awareness of a product and its features? A) product development B) introduction C) growth D) maturity E) adoption Answer: B Diff: 1 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. 77) Which of the following is true about the introduction stage of a new product? A) Profits are typically high. B) Promotion spending is relatively low. C) Less money is needed to attract distributors. D) Companies tend to avoid basic versions of the product. E) Sales growth tends to be slow. Answer: E Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. AACSB: Analytical thinking 78) In the ________ stage, a firm most likely faces a trade-off between high market share and high current profit. A) growth B) decline C) maturity D) introduction E) commercialization Answer: A Diff: 1 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. 79) Which of the following is true of the growth stage of the product life cycle? A) New competitors avoid the market. B) Prices tend to increase significantly. C) Early adopters stop buying the product. D) Profits are nonexistent at this stage. E) Sales start climbing quickly. Answer: E Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. 80) Craft Inc.'s Krayons is a multi-color chalk material that was released in the market over a century ago. Since the release, the company has had remarkable sales and Krayons has remained unchanged. However, over the last few years, sales of Krayons have been stagnant. Competitors have begun marking prices down, and increasing their advertising and sales promotions. Craft's Krayons is most likely in the ________ stage of the product life cycle. A) introduction B) maturity C) growth D) decline E) incubation Answer: B Diff: 3 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. AACSB: Analytical thinking 81) Electronics International has experienced a significant decline in sales for SweetTunes, its MP3 player, during the past two years. In response, the company has reduced its advertising and sales expenditures for SweetTunes in an attempt to improve short-run profits. Which term best describes Electronics International's strategy for SweetTunes? A) sales outsourcing B) product modification C) industry repositioning D) product harvesting E) marketing mix modification Answer: D Diff: 3 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. AACSB: Analytical thinking 82) Parvon, a cleaning product, is in the maturity stage of the product life cycle, and Parvon managers have decided to modify the market. Which of the following steps should Parvon managers most likely take to achieve this goal? A) find new market segments for the brand B) improve the overall quality of the product C) reduce mass media advertising expenses D) offer improved services to new buyers E) conduct controlled test marketing activities Answer: A Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. AACSB: Analytical thinking 83) Gershwin, a musical toy for toddlers, is in the maturity stage of the product life cycle, and Gershwin managers have decided to modify the product. What will Gershwin managers most likely do to achieve this goal? A) change distributors B) offer coupons for the toy C) change the packaging of the toy D) launch an online advertising campaign E) cut prices of the toy to attract new customers Answer: C Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. AACSB: Analytical thinking 84) A product is in the maturity stage of the product life cycle, and the company decides to modify the marketing mix. Which of the following steps is the company most likely to take? A) use aggressive sales promotions B) change features of the product C) improve product quality D) find new uses for the product E) explore new market segments Answer: A Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. AACSB: Analytical thinking 85) Which of the following is most likely true of a product in the maturity stage of the product life cycle? A) Sales are zero, and the company's investment costs mount. B) New competitors enter the market. C) A slowdown occurs in sales growth. D) Sales increase with decreasing competition. E) New distribution channels are acquired. Answer: C Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. AACSB: Analytical thinking 86) During the ________ stage of the product life cycle, product sales may plunge to zero, or drop to a low level where they continue for many years. A) decline B) growth C) maturity D) ideation E) analysis Answer: A Diff: 1 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. 87) The maturity stage of the product life cycle is characterized by a slowdown in sales growth. Answer: TRUE Diff: 1 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. 88) Modifying a product is an ineffective strategy in the maturity period of the product life cycle because the product's decline is irreversible at this stage. Answer: FALSE Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. 89) During the decline stage of the product life cycle, product sales may plunge to zero, or they may drop to a low level where they continue for many years. Answer: TRUE Diff: 1 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. 90) The moral of the product life cycle is that companies must continually innovate; otherwise, they risk extinction. Answer: TRUE Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. AACSB: Analytical thinking 91) Briefly explain each step in a typical product life cycle. Answer: Product development begins when a company finds and develops a new product idea. During this stage, 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. At this stage, a company may decide to maintain, harvest, or drop a product. Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. 92) Differentiate between styles, fashions, and fads. Illustrate your response with examples of each. Answer: A style is a basic and distinctive mode of expression. For example, styles appear in homes (colonial, ranch, transitional), clothing (formal, casual), and art (realist, surrealist, abstract). Once a style is invented, it may last for generations, passing in and out of vogue (vogue - 流行，时髦). A style has a cycle showing several periods of renewed interest. A fashion is a currently accepted or popular style in a given field. For example, the more formal "business attire" look of corporate dress of the 1980s and 1990s gave way to the "business casual" look of the 2000s and 2010s. Fashions tend to grow slowly, remain popular for a while, and then decline slowly. Fads are temporary periods of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity. A fad may be part of an otherwise normal life cycle, as in the case of recent surges in the sales of poker chips and accessories. Or the fad may comprise a brand or product's entire life cycle. Diff: 3 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. AACSB: Analytical thinking 93) Briefly describe the maturity stage of the product life cycle. Answer: At some point, a product's sales growth will slow down, and it will enter the maturity stage. This maturity stage normally lasts longer than the previous stages, and it poses strong challenges to marketing management. Most products are in the maturity stage of the life cycle, and therefore most of marketing management deals with the mature product. The slowdown in sales growth results in many producers with many products to sell. In turn, this overcapacity leads to greater competition. Competitors begin marking down prices, increasing their advertising and sales promotions, and upping their product development budgets to find better versions of the product. These steps lead to a drop in profit. Some of the weaker competitors start dropping out, and the industry eventually contains only well-established competitors. Although many products in the mature stage appear to remain unchanged for long periods, most successful ones are actually evolving to meet changing consumer needs. Product managers should do more than simply ride along with or defend their mature products — a good offense is the best defense. They should consider modifying the market, product offering, and marketing mix. Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. 94) What options are available to a firm that has a product in the decline stage of the product life cycle? Briefly discuss each option. Answer: A firm has many options with regard to a failing product. It may decide to maintain its brand, repositioning or reinvigorating it in hopes of moving it back into the growth stage of the product life cycle. Management may decide to harvest the product, which means reducing various costs (plant and equipment, maintenance, R&D, advertising, sales force), hoping that sales hold up. If successful, harvesting will increase the company's profits in the short run. Finally, management may decide to drop the product from its line. The company can sell the product to another firm or simply liquidate it at salvage value. If the company plans to find a buyer, it will not want to run down the product through harvesting. Diff: 2 LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. AACSB: Analytical thinking 95) As a result of ________, a company cannot make its product illegally similar to a competitor's already established product. A) anti-monopoly laws B) patent laws C) antitrust laws D) product warranties E) product liability Answer: B Diff: 2 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. AACSB: Ethical understanding and reasoning 96) Some companies are now appointing ________, whose job is to protect consumers from harm and the company from liability by proactively ferreting out (查获) potential product problems. A) intradepartmental teams B) idea generation teams C) product audit committees D) product stewards (财产等的)管理员，主管 E) listening officers Answer: D Diff: 1 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. AACSB: Ethical understanding and reasoning 97) The federal government has the legal authority to prevent a company from adding products through acquisitions if the acquisition threatens to lessen competition. Answer: TRUE Diff: 1 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. AACSB: Ethical understanding and reasoning 98) The Consumer Product Safety Act of 1972 established the Consumer Product Safety Commission, which has the authority to ban or seize potentially harmful products and set severe penalties for violation of the law. Answer: TRUE Diff: 1 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. AACSB: Ethical understanding and reasoning 99) When a company decides to go international with a product, it must first figure out what products and services to introduce and in which countries. Answer: TRUE Diff: 1 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. 100) Discuss public policy issues, government regulations, and laws that affect new product development. Answer: Marketers should carefully consider public policy issues and regulations regarding acquiring or dropping products, patent protection, product quality and safety, and product warranties. Regarding new products, the government may prevent companies from adding products through acquisitions if the effect threatens to lessen competition. Companies dropping products must be aware that they have legal obligations, written or implied, to their suppliers, dealers, and customers who have a stake in the dropped product. Companies must also obey U.S. patent laws when developing new products. A company cannot make its product illegally similar to another company's established product. Manufacturers must comply with specific laws regarding product quality and safety. The Federal Food, Drug, and Cosmetic Act protects consumers from unsafe and adulterated food, drugs, and cosmetics. Various acts provide for the inspection of sanitary conditions in the meat- and poultryprocessing industries. Safety legislation has been passed to regulate fabrics, chemical substances, automobiles, toys, and drugs and poisons. The Consumer Product Safety Act of 1972 established the Consumer Product Safety Commission, which has the authority to ban or seize potentially harmful products and set severe penalties for violation of the law. Diff: 2 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. AACSB: Analytical thinking; Ethical understanding and reasoning