Business Strategies and Innovations Quiz

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Questions and Answers

What is the primary objective of a maintenance strategy?

To eliminate unprofitable customer segments

To differentiate products in a competitive market

To maintain the position of the product until market trends are clear (correct)

To expand the product line aggressively

Which of the following actions is not part of a maintenance strategy?

Modifying products to encourage demand

Minimizing marketing communication

Reducing prices to attract customers (correct)

Eliminating small customers requiring excessive service

When is a niche strategy most applicable?

In unprofitable markets with attractive segments and low competition (correct)

In markets where large companies dominate completely

In profitable markets with declining demand

In thriving markets with intense competition

What is a potential outcome of successfully implementing a niche strategy?

Achieving a strong competitive position in the target niche Signup and view all the answers

What should a company focus on when utilizing a niche strategy?

Differentiation in products and services Signup and view all the answers

What type of product innovation involves adding new features to maintain competitive advantage?

Incremental Signup and view all the answers

Which type of product innovation is characterized by high risk and uncertainty while exploring new technologies?

Disruptive Signup and view all the answers

What is the primary goal of radical innovation?

To create substantial change in an industry or society Signup and view all the answers

Which of the following contexts does NOT fall under the classification of innovation?

Public relations Signup and view all the answers

What best describes the process aspect of innovation?

Improving existing production processes Signup and view all the answers

Which example fits the definition of disruptive innovation?

A 3D printing technology that changes manufacturing Signup and view all the answers

What is a common characteristic of incremental innovation?

Continuous improvements in existing products Signup and view all the answers

In the context of process innovation, which statement is true?

It involves significant changes in product design and delivery. Signup and view all the answers

What is a major advantage of product standardization?

Lower costs by economies of scale Signup and view all the answers

Which of the following is a disadvantage of product standardization?

Consumer neglect of specific needs Signup and view all the answers

What does an adaptive strategy primarily focus on?

Differences between target markets Signup and view all the answers

Regarding product adaptation, which factor is often considered?

Cultural differences Signup and view all the answers

Why might a company choose to change a brand's name in an adaptive strategy?

To better resonate with local consumers Signup and view all the answers

Under an adaptive strategy, product changes may be compulsory due to which factor?

Local laws and regulations Signup and view all the answers

Which of the following statements about consumer preferences is accurate in the context of product standardization?

Consumer preferences can be disregarded in favor of cost savings. Signup and view all the answers

What is a characteristic of markets that adopt an adaptive strategy?

Heterogeneous consumer preferences Signup and view all the answers

What is the main goal of creative adaptation?

To imitate existing products for market entry Signup and view all the answers

Which of the following is NOT a factor that allows low price imitation to succeed?

The innovator has a powerful R+D+I program Signup and view all the answers

What defines superior adaptation?

Significant improvement over the original product Signup and view all the answers

What strategy is implemented when imitators aim to make the original product obsolete?

Superior product strategy Signup and view all the answers

In which scenario is the superior marketing strategy most effective?

When barriers to entry are weak against large companies Signup and view all the answers

What is a characteristic of the superior product strategy?

Satisfying existing demand with superior offerings Signup and view all the answers

Which of the following is NOT a type of low price imitation?

Superior adaptation Signup and view all the answers

What is required for a successful implementation of creative adaptations?

Adaptation to satisfy a new market need Signup and view all the answers

What is one benefit of Starbucks entering the Indian market?

Access to a large Indian customer base Signup and view all the answers

How did TATA benefit from its deal with Starbucks?

Provision of all espressos in Starbucks outlets Signup and view all the answers

What is a key factor that triggers imitation processes in international markets?

Growing consumer demand for innovative products Signup and view all the answers

What is NOT an advantage of imitation as mentioned in the content?

High investment in developing unique products Signup and view all the answers

Which of the following best describes 'counterfeit' products?

Imitation goods sold under the original brand name Signup and view all the answers

What defines a 'legal copy' in the context of imitation?

It avoids patent infringement while mimicking product features. Signup and view all the answers

What is a potential negative impact of counterfeits on original brands?

Significant economic losses Signup and view all the answers

Which statement about imitation in markets is true?

Imitation can offer competitive advantages with lower risks. Signup and view all the answers

What is one of the causes that can accelerate the elimination of products?

Change in consumer needs Signup and view all the answers

What effect does horizontally differentiated imitation typically have on demand for the original product?

Increases demand, especially for less-known originals Signup and view all the answers

Which of the following is a hidden cost associated with product elimination?

Management team time consumption Signup and view all the answers

Under which circumstance is the substitution effect likely to be weaker?

When the original product is less well-known Signup and view all the answers

What is a major reason that can delay the elimination of products?

Complementarity with other products Signup and view all the answers

What impact does vertically differentiated imitation have on the original product's demand?

It leads to a decrease in demand Signup and view all the answers

What is a benefit of having a prestigious brand image for companies with market power?

Enhances the ability to launch imitative products Signup and view all the answers

Which of the following is not a cause that accelerates the elimination of products?

Products in an attractive market Signup and view all the answers

Study Notes

Product Innovation & New Product Development Strategies

Innovation is producing, assimilating, and successfully exploiting novelties in economic and/or social contexts. This provides unprecedented solutions to problems and responds to societal needs.
Innovation is both a process and a result.
Innovation can be developed in product, process & logistics, marketing, and organizational/institutional contexts.

Types of Product Innovation

Incremental: Adding new features to an existing product, through small changes, continuous improvements, and low risk. Examples include new versions of smartphones or cars.
Disruptive: Addresses target market needs by developing entirely new concepts or significantly improving existing ones. It often involves exploring new technologies and is characterized by a high risk and uncertainty. Examples include streaming services, online distribution, and 3D printing.
Radical: Significant transformative advances in technology, business, models, or processes. This results in substantial change within the industry or society. Examples include electric cars and photovoltaic panels.

Process

Improving existing production methods or developing new ones. This often involves significant changes in product design and delivery methods.
Traditional examples contrasted with innovations in specific industries as depicted in the text.

Marketing

Applying new marketing methods: changing product design/packaging, positioning, communication, or pricing. Innovation can involve alterations to the 4Ps (product, price, place, promotion).

Organization/ Institutions

Developing new management forms, structures, and systems to improve business efficiency.
Creating and improving technical knowledge to enhance the sector's competitiveness. Innovations in this area are commonly driven by cluster companies, universities, and governments.

Core Initiatives

Innovation is crucial for creating new products, with multiple possibilities for product improvement including modulation, price, packaging, design, and complements.

Modulations

Adjustments or variations in fundamental product/service characteristics. This allows better adaptation to market segments and expands market size.

Price, Packaging, Design, Complements

These are potential areas for product innovation, focusing on customer experience improvements and other functional characteristics.

Other Creative Techniques for Innovative Products

Replacement: Replacing existing product components with new ideas, drawing inspiration, and minimizing residue/waste whenever possible. Examples include new coffee capsule designs and natural yogurt advancements.
Combination: Adding new components to existing products or services without significantly modifying the original. Examples are time-tracking devices combined with a healthcare app.
Exaggeration: Exaggerating product features or characteristics to make them more appealing and distinctive.
Elimination: Removing components or features to simplify products, potentially reducing costs or improving focus. Examples include "stripped-down" versions of vehicles for reduced cost or improved fuel economy.
Reordering: Changing the order or sequence of components in a product or service.

New Product Development: International Expansion Strategies

Drivers for internalization include market saturation, falling markets, economic crises, Globalization, and increased demand abroad.
International expansion decisions require careful consideration of standardization versus adaptation.
Potential diversification risks include management, profit, and losses.
Companies can grow by enhancing productivity, improving experiences, and increasing R&D+I.

Standardization vs. Adaptation

Whether to standardize or adapt products to local markets depends on the product type.
Standardization can lower costs and boost speed of international rollout.
Adaptation to local needs is key to success in certain markets.
Important factors to consider are cultural preferences and local regulations.

PESTEL Analysis for Internationalization

PESTEL analysis is crucial for evaluating potential markets, taking into account political, economic, social, technological, environmental, and legal factors related to international markets. Analysis also factors in population growth rates.
There are other factors to consider when entering new markets, including weather, climate policy, discrimination laws, and consumer pressures from pressure groups like non-governmental organizations (NGOs).

Ways to Enter International Markets

Four main stages of entering international markets are indirect export, direct export, trade subsidiaries, and production subsidiaries, along with other possibilities such as joint ventures and licensing agreements.
Each entry method has varying levels of control and risk.

Marketing Plan

Four main stages of marketing plans include indirect export, direct export, trade subsidiaries, and others such as joint ventures and licensing agreements.
Export strategies (indirect and direct) are explored.

Direct Export

The advanced stage of internationalization where companies handle their own export management: licensing, customs, currency, and insurance.

Ways to Enter, Additional Options

Export consortia, license agreements, franchising, and joint ventures are additional methods of international product launch.
Licensing allows companies to utilize existing processes or goods, while franchising provides greater control over processes and operations.
Joint ventures combine resources and expertise for shared ownership/profits.

Trade Subsidiary

Establishing a local subsidiary provides complete control over processes and resources, but also involves significant investment.
Reasons include handling local market expectations, transportation cost concerns, and adapting products.

Product and Business Termination Strategies

Termination strategies for products or businesses include elimination, harvest, maintenance, and niche strategies.
These strategies are employed based on market trends, and are selected in correspondence with company goals.

Imitation Strategies

Studying how rivals react to your business's strategies is crucial.
Copying, adaptation, and innovation are key considerations.
Analyzing the advantages of imitation enables the creation of similar but improved versions of products.
Techniques such as low-cost pricing, product improvements, superior marketing strategies are important considerations.

Superior Product

Product improvement/innovation in response to market needs is a key factor.
Product quality and suitability need to be superior to the original product.

Superior Marketing

Creating marketing strategies that are better than competitors' marketing is crucial. Strategies for building an iconic brand, targeting niche segments, and using effective media channels are all important.

Divestment Strategy

When maintaining a product isn't viable, companies may need to consider divesting.
Revamping products is an option to revitalize or revitalize specific areas or products.
Divestment can involve total removal from the market, partial removal, or selling the product/business to another company.

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Description

Test your knowledge on various business strategies and types of innovation. This quiz covers key concepts including maintenance strategies, niche strategies, and different innovation types. Perfect for students and professionals looking to strengthen their understanding of business dynamics.