Marketing Management, 14e (Kotler/Keller) Chapter 20 Introducing New Market Offerings 1) Which of the following is most closely related with the organic growth of an organization? A) acquiring a product or service brand B) entering new market places C) increasing the operational profitability D) increasing productivity of employees E) developing new products from within Answer: E Page Ref: 569 Objective: Difficulty: Easy 2) New-to-the-world products are A) low-cost products designed to obtain an edge in highly competitive markets B) new product enhancements that supplement established products C) new versions of an existing product that has been less successful D) new products that create an entirely new market E) existing products that are targeted to new geographical markets Answer: D Page Ref: 570 Objective: Difficulty: Easy 3) Which of the following firms is most likely to seek radical innovation? A) a traditional publishing company B) a small scale FMCG company C) a firm that procures and markets wheat D) a high-tech firm in telecommunications E) a firm that sells mineral water Answer: D Page Ref: 570 Objective: Difficulty: Easy 4) Most new-product activities are devoted to A) changing the target markets B) developing new-to-the-world products C) introducing backward integration D) improving existing products E) changing the existing market dynamics Answer: D Page Ref: 570 Objective: Difficulty: Easy Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 5) Which of the following is the best example of a new-to-the-world product? A) Walmart, the retail giant, opens new stores in an underdeveloped African country B) Pestorica, a publishing company, decides to launch a new sports magazine C) Tata Motors, an Indian automobile company, acquires Jaguar to extend its business D) An Asian company licenses a U.S apparel brand name though the brand is not familiar in Asia E) Kids-Med, a company that produces childcare products, launches a non-contact thermometer Answer: E Page Ref: 570 Objective: AACSB: Analytic skills Difficulty: Moderate 6) Most established companies focus on innovation when they aim to enter new markets by tweaking existing products, or they want to stay one step ahead in the market by using variations on a core product A) incremental B) continuous C) spontaneous D) radical E) competitive Answer: A Page Ref: 571 Objective: Difficulty: Easy 7) It has been observed that most new products have shorter product life cycles What is the reason for this? A) Most new products not use technology B) Most new products are not backed by a marketable idea C) New products not get adequate management support D) Social and governmental constraints lead to this failure E) Rivals quickly copy products that are successful Answer: E Page Ref: 572 Objective: Difficulty: Easy Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 8) Which of the following strategies for new-product development incorporates the buyers' preferences in the final design of the product? A) customer-driven engineering B) market leadership C) cost leadership D) incremental innovation E) disruptive technology Answer: A Page Ref: 572 Objective: Difficulty: Easy 9) Pager, a simple personal device for short messages, became famous in the 1990s Troveron Communications launched a pager in the early twenty-first century Due to the introduction of mobile phones and text messaging, the pager industry was on a decline The company's innovations were not well received by the market and the product became a failure Which of the following is the most likely reason for the product's failure in this case? A) poor launch timing of the product B) a small and fragmented target market C) high cost of development D) social and economic constraints E) hasty product development Answer: A Page Ref: 572 Objective: AACSB: Analytic skills Difficulty: Moderate 10) After creating a product prototype, a company tests it within the firm to see how it performs in different applications The company refines the prototype to correct the mistakes found in inhouse testing What should be the next step? A) commercializing the product B) performing concept testing C) conducting beta testing with customers D) creating a marketing strategy for the product E) performing business analysis Answer: C Page Ref: 574 Objective: Difficulty: Easy Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 11) Identify a shortcoming of giving the responsibility of new product development to the product managers of a company A) They would not be familiar with the industry standards B) Product managers would not have an operational focus C) Product managers are often busy managing existing lines D) They will find it difficult to gain support from employees E) Product managers are less likely to use participative management Answer: C Page Ref: 574 Objective: Difficulty: Easy 12) teams are cross-functional groups charged with developing a specific product or business A) Virtual B) Venture C) Fundamental D) Elemental E) Transitory Answer: B Page Ref: 574 Objective: Difficulty: Easy 13) Intercom, Inc together with its subsidiaries, primarily engages in the generation, transmission, and distribution of electric power in the United States The company observes that its growth has stagnated over a period of two years In an attempt to promote growth, it considers adding new features to the existing products and introducing a few new products The company forms a committee consisting of three top executives, one of the production mangers, a few operational managers, and a representative of the HR department to generate ideas This team is called a(n) A) virtual team B) venture team C) fundamental team D) elemental team E) transitory team Answer: B Page Ref: 574 Objective: AACSB: Analytic skills Difficulty: Moderate Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 14) A team formed at Intercom, Inc to generate ideas for new products, conducts frequent meetings and engages in activities such as mind mapping and brainstorming Most of the meetings are conducted at informal locations away from office These workplaces are called A) skunkworks B) idea funnels C) research centers D) stage gate systems E) contextual bases Answer: A Page Ref: 574 Objective: AACSB: Analytic skills Difficulty: Moderate 15) The used by companies divides the innovation process into stages, with a checkpoint at the end of each stage A) reverse assumption analysis technique B) skunkworks system C) stage-gate system D) spiral development process E) new-product department technique Answer: C Page Ref: 574 Objective: Difficulty: Easy 16) are informal workplaces, sometimes garages, where intrapreneurial teams attempt to develop new products A) Stage-gate systems B) Skunkworks C) Funnels D) Opportunity spaces E) Research centers Answer: B Page Ref: 574 Objective: Difficulty: Easy Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 17) Which of the following questions is answered during the business analysis of ideas? A) Will this product meet our profit goals? B) Have we got a technically and commercially sound product? C) Can we find a cost-effective, affordable marketing strategy? D) Can this product meet sales expectations? E) Can we find a good concept consumers say they would try? Answer: D Page Ref: 575 Objective: Difficulty: Easy 18) During which of the following stages in new product development decision making managers analyze if they can find a good thought consumers say they would try? A) idea generation B) idea screening C) business analysis D) concept development and testing E) product development and testing Answer: D Page Ref: 575 Objective: Difficulty: Easy 19) process recognizes the value of returning to an earlier stage to make improvements before moving forward A) Spiral development B) Reactive development C) Market testing D) Proactive development E) Concept testing Answer: A Page Ref: 575 Objective: Difficulty: Easy 20) The uses observational, anthropological, and ethnographic methods or consumer self-reports to map consumer needs, wants, and even beyond A) business analysis B) demand landscape C) opportunity space D) strategic blueprint E) internal design analysis Answer: B Page Ref: 576 Objective: Difficulty: Easy Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 21) Which of the following uses conceptual lens and structured innovative-thinking tools to achieve market perspectives from different angles? A) business analysis B) strategic blueprint C) internal design analysis D) demand landscape E) opportunity space Answer: E Page Ref: 576 Objective: Difficulty: Easy 22) Gordon Apparel, Inc engages in the design, manufacture, and retail of fashion apparel for women, men, children, and pets The company is known for its timely launch of apparels and stylish designer clothing The company believes a new product has to create needs and not just satisfy the existing needs To achieve this goal it engages in controlled idea generation techniques such as brainstorming while creating new designs Which of the following parts of the DIG framework is given prominence here? A) business analysis B) strategic blueprint C) opportunity space D) internal design analysis E) demand landscape Answer: C Page Ref: 576 Objective: AACSB: Analytic skills Difficulty: Moderate 23) Identify the element in the DIG network that considers how a new product can fit into customers lives and how it can be distinguished from the competitors' products A) business analysis B) internal design analysis C) strategic blueprint D) demand landscape E) opportunity space Answer: C Page Ref: 576 Objective: Difficulty: Easy Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 24) means inviting the Internet community to help create content or software, often with prize money or a moment of glory involved A) Stage-gating B) Cocreation C) Microstocking D) Buzzing E) Crowdsourcing Answer: E Page Ref: 577 Objective: Difficulty: Easy 25) Surgeons and ER nurses would be considered for surgical equipment A) venture agents B) internal customers C) buzz agents D) lead users E) connectors Answer: D Page Ref: 577 Objective: Difficulty: Easy 26) Many believe that customer focus does not help to create better or new products This belief rests on which of the following ideas? A) Such new product developments decrease the chances of success B) Customers not consider the cost of design when suggesting C) Customers are at times unaware of what they really want D) It increases the cost of testing a product or service E) Having too much customer focus leads to a negative brand image Answer: C Page Ref: 578 Objective: Difficulty: Moderate 27) The technique for stimulating creativity lists all the characteristics of an object and then modifies each to try to arrive at a new idea A) reverse assumption analysis B) lateral marketing C) attribute listing D) forced relationship E) morphological analysis Answer: C Page Ref: 579 Objective: Difficulty: Easy Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 28) The technique used for stimulating creativity identifies a problem and then considers the dimension, the medium, and the power source A) attribute listing B) reverse assumption analysis C) mind mapping D) lateral marketing E) morphological analysis Answer: E Page Ref: 579 Objective: Difficulty: Easy 29) In an attempt to improve the product, a company that manufactures screwdrivers discusses the modification of each attribute, such as replacing the wooden handle with plastic, providing torque power, adding different screw heads, and so on This creativity technique is called A) attribute listing B) mind mapping C) morphological analysis D) lateral analysis E) reverse analysis Answer: C Page Ref: 579 Objective: Difficulty: Easy 30) Electro Locomotors (EL), Inc engages in the manufacture, distribution, and marketing of custom vehicles in Brazil Bono, a hybrid car brand that the company produces, is a market leader in the hybrid vehicles segment With the increased global focus on nature friendly vehicles and governmental subsidies for companies that manufacture hybrid vehicles, competition has increased for flex-fuel cars like Bono The heads of the R&D team at EL is in a creative session to generate ideas for improvements to Bono They consider each part of the car and discuss the possibilities of improvements in each of them Identify the creativity technique used here A) attribute listing B) forced relationship analysis C) morphological analysis D) reverse assumption analysis E) mind mapping Answer: A Page Ref: 579 Objective: AACSB: Analytic skills Difficulty: Moderate Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 31) works by listing all the normal assumptions about an entity and then turning them around A) Lateral marketing B) Attribute listing C) Reverse assumption analysis D) Forced relationships E) Morphological analysis Answer: C Page Ref: 579 Objective: Difficulty: Easy 32) The creativity technique begins in a thought that is written down, then proceeds to develop other thoughts that are linked to the first thought, and finally materializes a new idea by associating all the thoughts A) mind mapping B) contextual analysis C) attribute listing D) reverse assumption analysis E) morphological analysis Answer: A Page Ref: 580 Objective: Difficulty: Easy 33) Increasingly, new-product ideas arise from that combines two product concepts or ideas to create a new offering A) reverse assumption analysis B) lateral marketing C) attribute listing D) forced relationships E) morphological analysis Answer: B Page Ref: 580 Objective: Difficulty: Easy 10 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 77) Which of the following terms refers to the degree to which the innovation can be tried on a limited basis? A) compatibility B) relative advantage C) divisibility D) communicability E) complexity Answer: C Page Ref: 592 Objective: Difficulty: Easy 78) Organic growth refers to increasing the profitability of the organization by increasing employee productivity Answer: FALSE Page Ref: 569 Objective: Difficulty: Easy 79) Companies typically must create a strong R&D and marketing partnership to pull off a radical innovation Answer: TRUE Page Ref: 570 Objective: Difficulty: Easy 80) High-tech firms that function in a market with high technological uncertainty, high market uncertainty, and high investment costs are not likely to seek radical innovation Answer: FALSE Page Ref: 570 Objective: Difficulty: Easy 81) Companies that fail to develop new products leave their existing offerings vulnerable to increased domestic and foreign competition Answer: TRUE Page Ref: 571 Objective: Difficulty: Easy 82) Most established companies focus on incremental innovation rather than radical innovation Answer: TRUE Page Ref: 571 Objective: Difficulty: Easy 24 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 83) Shorter product life cycles are common in industries characterized by low level of competition Answer: FALSE Page Ref: 572 Objective: Difficulty: Easy 84) Companies should use normal investment criteria to budget for new-product developments Answer: FALSE Page Ref: 573 Objective: Difficulty: Easy 85) Almost all companies use the conventional percentage-of-sales figure while budgeting for new product development Answer: FALSE Page Ref: 573 Objective: Difficulty: Easy 86) Skunkworks are formal workplaces where intrapreneurial teams attempt to develop new products Answer: FALSE Page Ref: 574 Objective: Difficulty: Easy 87) Venture teams are cross-functional groups charged with developing a specific product or business Answer: TRUE Page Ref: 574 Objective: Difficulty: Easy 88) A business analysis is performed mainly to identify if a company has got a technically and commercially sound product Answer: FALSE Page Ref: 575 Objective: Difficulty: Easy 89) A spiral development process recognizes the value of returning to an earlier stage to make improvements before moving forward Answer: TRUE Page Ref: 575 Objective: Difficulty: Easy 25 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 90) The demand landscape uses conceptual lens and structured innovative-thinking tools to achieve market perspectives from different angles Answer: FALSE Page Ref: 576 Objective: Difficulty: Easy 91) The strategic blueprint thinks about how the new product can fit into customers' lives and how it can be distinguished from competitors Answer: TRUE Page Ref: 576 Objective: Difficulty: Easy 92) Crowdsourcing means inviting the Internet community to help create content or software, often with prize money or a moment of glory as an incentive Answer: FALSE Page Ref: 577 Objective: Difficulty: Easy 93) Cocreation can help a company create favorable word of mouth Answer: TRUE Page Ref: 577 Objective: Difficulty: Easy 94) Employees can be a source of ideas for improving production, products, and services Answer: TRUE Page Ref: 578 Objective: Difficulty: Easy 95) Attribute listing lists several ideas and considers each in relationship to the others Answer: FALSE Page Ref: 579 Objective: Difficulty: Easy 96) Reverse assumption analysis lists all the normal assumptions about an entity and then turns them around Answer: TRUE Page Ref: 579 Objective: Difficulty: Easy 26 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 97) Morphological analysis starts by forming a new dimension and then thinks about the possible problems of the dimension Answer: FALSE Page Ref: 579 Objective: Difficulty: Easy 98) A DROP-error occurs when the company accepts a bad idea Answer: FALSE Page Ref: 580 Objective: Difficulty: Easy 99) A category concept defines the product's attributes and features Answer: FALSE Page Ref: 581 Objective: Difficulty: Easy 100) Concept testing means validating the product concept by discussing within the design group Answer: FALSE Page Ref: 582 Objective: Difficulty: Easy 101) Rapid prototyping refers to designing products on a computer and then producing rough models to show potential consumers for their reactions Answer: TRUE Page Ref: 582 Objective: Difficulty: Easy 102) Perceived value refers to the gap between actual needs and satisfied needs of a customer Answer: FALSE Page Ref: 582 Objective: Difficulty: Easy 103) Consumer preferences for alternative product concepts can be measured with conjoint analysis Answer: TRUE Page Ref: 583 Objective: Difficulty: Easy 27 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 104) A major drawback of conjoint analysis is that it cannot be used to measure objective attributes such as estimated market share and profit Answer: FALSE Page Ref: 583 Objective: Difficulty: Easy 105) The trade-off approach may be easier to use when there are only a few variables and alternatives Answer: FALSE Page Ref: 584 Objective: Difficulty: Easy 106) After a test, the most customer-appealing offer will be the most profitable offer to make Answer: FALSE Page Ref: 584 Objective: Difficulty: Easy 107) A business analysis is typically performed after the management has developed the product concept and marketing strategy Answer: TRUE Page Ref: 585 Objective: Difficulty: Easy 108) Survival-age distribution refers to the number of customers that the product has in year one, two, three, and so on Answer: FALSE Page Ref: 585 Objective: Difficulty: Easy 109) Dragalong income refers to additional income whereas cannibalized income refers to reduced income Answer: TRUE Page Ref: 586 Objective: Difficulty: Easy 28 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 110) Modular function deployment methodology takes the list of desired customer attributes generated by market research and turns them into a list of engineering attributes that engineers can use Answer: FALSE Page Ref: 587 Objective: Difficulty: Easy 111) Beta testing tests the product within the firm to see how it performs in different applications Answer: FALSE Page Ref: 587 Objective: Difficulty: Easy 112) Sales-wave research can be implemented quickly and carried out without final packaging and advertising Answer: TRUE Page Ref: 588 Objective: Difficulty: Easy 113) Expensive industrial goods and new technologies will normally undergo alpha and beta testing Answer: TRUE Page Ref: 589 Objective: Difficulty: Easy 114) Some firms might delay new product launch until after the competitor has borne the cost of educating the market and its product may reveal flaws the late entrant can avoid This can be classified as a parallel entry Answer: FALSE Page Ref: 590 Objective: Difficulty: Easy 115) At the interest stage of consumer-adoption process, the consumer becomes aware of the innovation but lacks information about it Answer: FALSE Page Ref: 591 Objective: Difficulty: Easy 29 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 116) Compatibility refers to the degree to which the innovation matches the values and experiences of the individuals Answer: FALSE Page Ref: 592 Objective: Difficulty: Easy 117) What are the types of new products that a firm can introduce? What are the problems associated with introducing a truly innovative product? What are the necessary conditions to create a radically innovative product? Answer: New products range from new-to-the-world products that create an entirely new market to minor improvements or revisions of existing products Most new-product activity is devoted to improving existing products Truly innovative and new to the world products incur the greatest cost and risk Although radical innovations can hurt the company's bottom line in the short run, if they succeed they can create a greater sustainable competitive advantage than ordinary products and produce significant financial rewards as a result Companies typically must create a strong R&D and marketing partnership to pull off a radical innovation The right corporate culture is another crucial determinant; the firm must prepare to cannibalize existing products, tolerate risk, and maintain a future market orientation Few reliable techniques exist for estimating demand for radical innovations Page Ref: 570 Objective: Difficulty: Easy 118) Identify the major reasons why new product failures occur Answer: The following are some of the possible reasons for the failure of new products (1) Shortage of important ideas in certain areas, (2) fragmented markets, (3) social, economic, and governmental constraints, (4) high cost of development, (4) capital shortages, (5) shorter required development time, (6) poor launch timing, shorter product life cycles, and (7) organizational support Page Ref: 572 Objective: Difficulty: Easy 119) How companies organize new product development? Answer: Companies handle the organizational aspect of new-product development in several ways Many assign responsibility to product managers Some employ new-product managers who report to category managers A few companies have growth leaders, a full-time job for its most creative and successful managers Some companies have a high-level management committee charged with reviewing and approving proposals Large companies often establish a new-product department headed by a manager with substantial authority and access to top management whose responsibilities include generating and screening new ideas, working with the R&D department, and carrying out field testing and commercialization Page Ref: 574 Objective: Difficulty: Easy 30 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 120) Explain how stage-gate systems are used by companies to manage innovation and new product launches Answer: Many top companies use the stage-gate system to divide the innovation process into stages, with a gate or checkpoint at the end of each The project leader, working with a crossfunctional team, must bring a set of known deliverables to each gate before the project can pass to the next stage To move from the business plan stage into product development requires a convincing market research study of consumer needs and interest, a competitive analysis, and a technical appraisal Senior managers review the criteria at each gate to make one of four decisions: go, kill, hold, or recycle Stage-gate systems make the innovation process visible to all and clarify the project leaders and team's responsibilities at each stage The gates or controls should not be so rigid, however, that they inhibit learning and the development of novel products Many firms have parallel sets of projects working through the process, each at a different stage Some firms use a spiral development process that recognizes the value of returning to an earlier stage to make improvements before moving forward Page Ref: 574-575 Objective: Difficulty: Easy 121) Briefly explain the three parts of the demand-first innovation and growth (DIG) framework Answer: The three parts of the DIG framework are the following (1) The demand landscape: Use observational, anthropological, and ethnographic methods or consumer self-reports to map consumer needs, wants, and even beyond (2) The opportunity space: Use conceptual lens and structured innovative-thinking tools to achieve market perspectives from different angles (3) The strategic blueprint: Think about how the new product can fit into customers' lives and how it can be distinguished from competitors Page Ref: 575-576 Objective: Difficulty: Easy 31 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 122) Explain three techniques for stimulating creativity to generate better ideas Answer: The following are some of the techniques (1) Attribute listing: List the attributes of an object, such as a screwdriver Then modify each attribute, such as replacing the wooden handle with plastic, providing torque power, adding different screw heads, and so on (2) Forced relationships: List several ideas and consider each in relationship to each of the others (3) Morphological analysis: Start with a problem, such as "getting something from one place to another via a powered vehicle." Now think of dimensions, such as the type of platform (cart, chair, sling, bed), the medium (air, water, oil, rails), and the power source (compressed air, electric motor, magnetic fields) By listing every possible combination, you can generate many new solutions (4) Reverse assumption analysis: List all the normal assumptions about an entity and then reverse them Instead of assuming that a restaurant has menus, charges for food, and serves food, reverse each assumption (5) New contexts: Take familiar processes, such as people-helping services, and put them into a new context (6) Mind mapping: Start with a thought, such as a car, write it on a piece of paper, then think of the next thought that comes up (say Mercedes), link it to car, then think of the next association (Germany), and this with all associations that come up with each new word Perhaps a whole new idea will materialize Students may explain any three of these techniques Page Ref: 579-580 Objective: Difficulty: Easy 123) What is concept testing? What is its importance? Explain two modern techniques used for concept testing Answer: Concept testing means presenting the product concept to target consumers, physically or symbolically, and getting their reactions The more the tested concepts resemble the final product or experience, the more dependable concept testing is Concept testing of prototypes can help avoid costly mistakes, but it may be especially challenging with radically different, new-tothe-world products Rapid prototyping can be used to design products on a computer and then produce rough models to show potential consumers for their reactions Companies are also using virtual reality to test product concepts Virtual reality programs use computers and sensory devices (such as gloves or goggles) to simulate reality Page Ref: 582 Objective: Difficulty: Easy 32 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 124) Explain the concepts of sales-wave research and simulated test marketing Answer: In sales-wave research, consumers who initially try the product at no cost are reoffered it, or a competitor's product, at slightly reduced prices The offer may be made as many as five times (sales waves), while the company notes how many customers select it again and their reported level of satisfaction During simulated test marketing, thirty to forty qualified shoppers are asked about brand familiarity and preferences in a specific product category and attend a brief screening of both well-known and new TV commercials and print ads One ad advertises the new product but is not singled out for attention Consumers receive a small amount of money and are invited into a store where they may buy any items Page Ref: 588 Objective: Difficulty: Easy 125) Briefly explain the three choices available to companies when deciding the timing of market entry Answer: Companies face three choices when deciding the timing (1) First entry: The first firm entering a market usually enjoys the "first mover advantages" of locking up key distributors and customers and gaining leadership But if rushed to market before it has been thoroughly debugged, the first entry can backfire (2) Parallel entry: The firm might time its entry to coincide with the competitor's entry The market may pay more attention when two companies are advertising the new product (3) Late entry: The firm might delay its launch until after the competitor has borne the cost of educating the market, and its product may reveal flaws the late entrant can avoid The late entrant can also learn the size of the market Page Ref: 590 Objective: Difficulty: Easy 126) What is the consumer-adoption process? What are the various steps in the process? Answer: The consumer-adoption process is the mental steps through which an individual passes from first hearing about an innovation to final adoption The steps are the following: (1) Awareness: The consumer becomes aware of the innovation but lacks information about it (2) Interest: The consumer is stimulated to seek information about the innovation (3) Evaluation: The consumer considers whether to try the innovation (4)Trial: The consumer tries the innovation to improve his or her estimate of its value (5)Adoption: The consumer decides to make full and regular use of the innovation Page Ref: 591 Objective: Difficulty: Easy 127) What does the term organic growth mean? Answer: Organic growth refers to the development of new products from within Page Ref: 569 Objective: Difficulty: Easy 33 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 128) I-ball, a cell phone manufacturer introduces a cell phone targeted at customers aged above 70 It has features such as loud volume, large keys, and so forth How you classify this product innovation? What could be a possible disadvantage of this product? Answer: This can be considered a new-to-the-world product New-to-the-world products are products that create an entirely new market The product has the greatest cost and risk of all product types Page Ref: 570 Objective: AACSB: Analytic skills Difficulty: Moderate 129) What is incremental innovation? Give an example of incremental innovation Answer: Student answers may vary Incremental innovation refers to entering new markets by tweaking products for new customers, using variations on a core product to stay one step ahead of the market, and creating interim solutions for industry-wide problems When Scott Paper couldn't compete with Fort Howard Paper Co on price for the lucrative institutional toilet tissue market, it borrowed a solution from European companies: a dispenser that held bigger rolls Scott made the larger rolls of paper and provided institutional customers with free dispensers, later doing the same thing with paper towels Scott not only won over customers in a new market; it became less vulnerable to competitors, such as Fort Howard, which could lower prices but weren't offering the larger rolls or tailor-made dispensers Page Ref: 571 Objective: AACSB: Analytic skills Difficulty: Moderate 130) Tosho Electronics, a leading Japanese, electronic manufacturer believes shorter product life cycles of new products reduces the scope for R&D and innovation Offer a possible reason for shorter lifecycles Answer: Student answers may vary Rivals are quick to copy success of an innovation An innovative product is copied even before the company recovers the cost of R&D This leads to shorter product life cycles for products Page Ref: 572 Objective: AACSB: Analytic skills Difficulty: Moderate 34 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 131) Dormentor, Inc produces converts and markets packaging products including boxboard, container board and numerous other specialty packaging products In an attempt to increase its organic growth, the company decides to introduce new products It asks the managers and employees to send in ideas for new products Before launching products based on any of these ideas, what are the stages that it has to go through? Answer: The following are the steps that Dormentor has to go through before launching: (1) It must screen the ideas that are obtained (2) The ideas that pass the screening should be concept tested (3) After concept testing a few are screened out and the remaining should be placed for product development (4) After developing the product, product has to be test marketed Ideas that are successfully test marketed can be launched Page Ref: 573 Objective: AACSB: Analytic skills Difficulty: Moderate 132) Interno Computers Inc., together with subsidiaries, designs, manufactures, and markets personal computers and mobile communication and media devices, as well as selling related software, services, peripherals, networking solutions, and applications worldwide The company is planning to launch a high-end portable digital music player worldwide What is the best way to organize this product launch? Answer: Large companies, like Interno, often establish a new-product department headed by a manager with substantial authority and access to top management whose responsibilities include generating and screening new ideas, working with the R&D department, and carrying out field testing and commercialization This model is necessary here as the product is going to be launched worldwide Page Ref: 574 Objective: AACSB: Analytic skills Difficulty: Moderate 133) What is a spiral development process? Answer: A spiral development process recognizes the value of returning to an earlier stage to make improvements before moving forward Page Ref: 575 Objective: Difficulty: Easy 35 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 134) Andersen, the CEO of a home appliance manufacturer, believes in controlled idea generation techniques such as brainstorming when creating new designs and ideas for product revisions He does not engage in observational methods What part of DIG framework is eminently used here? Answer: The opportunity space is used here It uses conceptual lens and structured innovativethinking tools to achieve market perspectives from different angles Page Ref: 576 Objective: AACSB: Analytic skills Difficulty: Moderate 135) What is crowdsourcing? Answer: Crowdsourcing means inviting the Internet community to help create content or software, often with prize money or a moment of glory as an incentive Page Ref: 577 Objective: Difficulty: Easy 136) What is the purpose of appointing an idea manager? Answer: A company can motivate its employees to submit new ideas to an idea manager whose name and contact information are widely circulated Page Ref: 578 Objective: Difficulty: Easy 137) Horon Furniture is a manufacturer of office furniture The company is known for its innovative multi-purpose furniture When designing a new product, the designers list several ideas and consider each in relationship to others For example, The company considers various options such as an office table, foldable chairs, and filing cabinet, etc Finally the company may come up with a foldable office table with chairs attached and with a filing cabinet Describe the creativity technique used at Horon Furniture Answer: The company uses forced relationship techniques This method lists several ideas and considers each in relationship to each of the others Page Ref: 579 Objective: AACSB: Analytic skills Difficulty: Moderate 138) Use reverse assumption analysis to analyze a school Answer: Student answers may vary Instead of assuming that a school is a place where teachers teach according to a set syllabus and timetable, you could assume that a school is a place where students choose what they want to learn and how they want to learn it Students could choose people to teach them, depending on what they want to study Page Ref: 579 Objective: Difficulty: Easy 36 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 139) A group of young students run an Internet center In an attempt to increase their profitability they start a cafe alongside the existing business Explain the type of marketing used here Answer: Lateral marketing is used here It combines two product concepts or ideas to create a new offering Page Ref: 580 Objective: AACSB: Analytic skills Difficulty: Moderate 140) What is a brand-positioning map? Answer: A brand-positioning map is a perceptual map showing the current positions of various existing brands competing with each other Page Ref: 582 Objective: Difficulty: Easy 141) Caribou Coffee Company, Inc operates coffeehouses primarily in the United States The company wants to launch a new brand of specialty coffee and it has created a few hypothetical combinations The company wants to select two of the combinations after obtaining a ranking by customers based on their preference What concept testing method is suited here? Answer: The company can use conjoint analysis, a method for deriving the utility values that consumers attach to varying levels of a product's attributes Page Ref: 583 Objective: AACSB: Analytic skills Difficulty: Moderate 142) What is the significance of performing business analysis? Answer: Business analysis is performed to study a proposal's business attractiveness Management prepares sales, cost, and profit projections to determine whether they satisfy company objectives Page Ref: 585 Objective: Difficulty: Easy 37 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 143) GameTech International Inc engages in the design, development, and marketing of interactive electronic bingo systems primarily in the United States Some top managers want to collect sales-wave research, but others disagree, offering several disadvantages List these disadvantages Answer: Sales-wave research can be implemented quickly, conducted with a fair amount of security, and carried out without final packaging and advertising However, because customers are preselected, it does not indicate trial rates the product would achieve with different sales incentives, nor does it indicate the brand's power to gain distribution and favorable shelf position Page Ref: 588 Objective: Difficulty: Easy 144) Mobile phone company HCF delayed the introduction of a new cellphone model with innovative features so that the launch could coincide with that of its competitor, LCM, which was introducing a phone with similar features What kind of entry did HCF use? How can this benefit the company? Answer: HCF used a parallel entry strategy The market may pay more attention when two companies are advertising the new product Page Ref: 590 Objective: AACSB: Analytic skills Difficulty: Moderate 145) GameTech International Inc engages in the design, development, and marketing of interactive electronic bingo systems primarily in the United States The company has plans to enter developing markets such as Brazil and India TechToys, GameTech's major competitor has already started operations in India GameTech decides to delay its entry to India and to closely observe Techtoy's operations in India What is the possible rationale behind this delaying decision? Answer: GameTech is using the late entry strategy The firm will delay its launch until after the competitor has borne the cost of educating the market It can also avoid the mistakes that TechToys make The company can also learn the size of the market Page Ref: 590 Objective: AACSB: Analytic skills Difficulty: Moderate 146) A customer survey at a mall revealed that Zoe is considered to be an early adopter What does this mean? Answer: Early adopters are opinion leaders who carefully search for new technologies that might give them a dramatic competitive advantage They are less price sensitive and willing to adopt the product if given personalized solutions and good service support Page Ref: 591 Objective: Difficulty: Easy 38 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall ... a part of its fuel outlets This is an example of A) lateral marketing B) brand extension C) market development D) internal marketing E) brand personification Answer: A Page Ref: 580 Objective:... we got a technically and commercially sound product? C) Can we find a cost-effective, affordable marketing strategy? D) Can this product meet sales expectations? E) Can we find a good concept consumers... and then modifies each to try to arrive at a new idea A) reverse assumption analysis B) lateral marketing C) attribute listing D) forced relationship E) morphological analysis Answer: C Page Ref: