Marketing Chapter 9: New Product Development
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Questions and Answers

Which of the following is NOT considered an internal source of new product ideas?

  • Competitors (correct)
  • Management and staff
  • Formal research and development
  • Intrapreneurial programs

    • What is the primary purpose of the R-W-W screening framework in the idea screening stage?

  • To identify and eliminate unpromising ideas (correct)
  • To evaluate the feasibility of production
  • To assess the potential market size
  • To determine the marketing strategy for the product

    • What does the company Google use to encourage continued internal innovation?

  • An in-house innovation incubator (correct)
  • Competitor analysis
  • External design firms
  • Crowdsourcing platforms

    • How does Delfast use technology to generate new product ideas?

    <p>By using high-tech software to evaluate electric bicycle designs (C)</p> Signup and view all the answers

    What is the main idea behind crowdsourcing in the context of new product development?

    <p>To gather ideas for new products from a wide range of individuals (C)</p> Signup and view all the answers

    What company used crowdsourcing to seek ideas for integrating Internet of Things technology into food containers?

    <p>Tupperware (C)</p> Signup and view all the answers

    What percentage of new products introduced every year fail?

    <p>95% (D)</p> Signup and view all the answers

    What is the key takeaway regarding new product development at Google and Alphabet?

    <p>Innovation is a core aspect of their company culture. (C)</p> Signup and view all the answers

    Which of the following is NOT a common source of internal new product ideas?

    <p>Customer feedback (A)</p> Signup and view all the answers

    What does the R in the R-W-W screening framework stand for?

    <p>Realistic (D)</p> Signup and view all the answers

    Which of the following is NOT a way companies obtain new products?

    <p>Adopting existing products from competitors and modifying them. (D)</p> Signup and view all the answers

    What is the term used to describe futuristic, long-shot products that aim to drastically change people's lives?

    <p>Product moonshots. (B)</p> Signup and view all the answers

    What is a significant challenge companies face when introducing new products?

    <p>All of the above. (D)</p> Signup and view all the answers

    Which of the following is NOT a type of new product development?

    <p>Product replicas. (A)</p> Signup and view all the answers

    What is the primary objective of developing new products?

    <p>To increase market share by offering innovative solutions. (C)</p> Signup and view all the answers

    What does the phrase "product moonshot" represent in the context of Google and Alphabet?

    <p>An ambition to create groundbreaking products with the potential to revolutionize the way people live. (B)</p> Signup and view all the answers

    What is a common situation that would likely call for test marketing?

    <p>A new product requires a large investment. (A)</p> Signup and view all the answers

    Which of the following is NOT a characteristic of successful new product development?

    <p>Random exploration (C)</p> Signup and view all the answers

    Which statement best describes team-based new product development?

    <p>It requires close collaboration among various departments. (A)</p> Signup and view all the answers

    What primarily drives customer-centered new product development?

    <p>Solving customer problems (C)</p> Signup and view all the answers

    In what scenario is commercialization most critical?

    <p>When launching a new product (A)</p> Signup and view all the answers

    Which of the following best describes the innovation management system?

    <p>It encourages innovation and generates product ideas. (B)</p> Signup and view all the answers

    What is a reason test marketing may not be required?

    <p>Simple copies of existing competitor products. (C)</p> Signup and view all the answers

    What does systematic new product development involve?

    <p>Adopting a structured approach to innovate. (C)</p> Signup and view all the answers

    What is a primary strategy used during the maturity stage of a product life cycle?

    <p>Modify the product (C)</p> Signup and view all the answers

    Which of the following is NOT a strategy to consider during the decline stage?

    <p>Reinvent the product (C)</p> Signup and view all the answers

    In which stage of the product life cycle do profits typically peak?

    <p>Maturity (C)</p> Signup and view all the answers

    What is a characteristic of the maturity stage in terms of customer base?

    <p>Range of customers from early adopters to lagging adopters (C)</p> Signup and view all the answers

    What happens to sales during the decline stage of the product life cycle?

    <p>Sales begin to decline (B)</p> Signup and view all the answers

    Which marketing objective is most relevant during the growth stage?

    <p>Maximize market share (C)</p> Signup and view all the answers

    What does the strategy of 'harvesting the product' entail during the decline stage?

    <p>Minimize costs and maximize remaining profits (B)</p> Signup and view all the answers

    During which phase of the product life cycle is customer interest primarily from innovators?

    <p>Introduction phase (C)</p> Signup and view all the answers

    What is the primary pricing strategy during the growth stage of the product life cycle?

    <p>Price high enough to drive profits but low enough to penetrate market (A)</p> Signup and view all the answers

    Which of the following strategies is employed during the introduction stage of a product life cycle?

    <p>Build selective distribution (B)</p> Signup and view all the answers

    What is the focus of advertising during the maturity stage of a product life cycle?

    <p>Stress brand differences and benefits (B)</p> Signup and view all the answers

    During which stage of the product life cycle is distribution typically built to be more intensive?

    <p>Growth (A)</p> Signup and view all the answers

    What is typically reduced during the decline stage of the product life cycle?

    <p>Sales promotions (B)</p> Signup and view all the answers

    What should be the approach to sales promotion during the introduction stage?

    <p>Heavy sales promotion to entice trial (C)</p> Signup and view all the answers

    What happens to pricing strategies when a product reaches the decline stage?

    <p>Cut prices to remain competitive (B)</p> Signup and view all the answers

    What is the recommended approach to the product during the decline stage?

    <p>Phase out weak items (D)</p> Signup and view all the answers

    What is a likely characteristic of a product in the introduction stage of its life cycle?

    <p>High distribution and promotion expenses (D)</p> Signup and view all the answers

    Which of the following stages in the product life cycle is associated with rapid market acceptance and increasing profits?

    <p>Growth (D)</p> Signup and view all the answers

    What is a primary characteristic of the maturity stage in the product life cycle?

    <p>Slowdown in sales and increased competition (B)</p> Signup and view all the answers

    Which of the following best describes a product's sales and profit trajectory in the decline stage?

    <p>Sales decline rapidly, profits decline rapidly (D)</p> Signup and view all the answers

    What is a key reason for increased promotion and R&D efforts in the maturity stage of the product life cycle?

    <p>Introducing new products and features to maintain market share (B)</p> Signup and view all the answers

    Why is the introduction stage of a product's life cycle often associated with higher distribution and promotion expenses?

    <p>The product is new and needs to be introduced to the market and create awareness (B)</p> Signup and view all the answers

    What is a main challenge for companies during the growth stage of their products' life cycles?

    <p>Keeping up with increased competition (C)</p> Signup and view all the answers

    What is the defining characteristic of a fad product?

    <p>It experiences rapid adoption and sales but quickly loses popularity (C)</p> Signup and view all the answers

    Flashcards

    Systematic New Product Development

    A structured process for creating and launching new products.

    Product Life Cycle

    The stages a product goes through from introduction to decline.

    Introduction Stage

    The phase where sales grow slowly, and profits are low or non-existent.

    Growth Stage

    When a product gains market acceptance, leading to rapid sales and increasing profits.

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    Maturity Stage

    Sales growth slows, many competitors enter the market, and profits level off or decline.

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    Decline Stage

    A phase where sales fall off and profits drop significantly.

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    Fads

    Short-lived trends that quickly gain popularity and just as quickly fade away.

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    Consumer Education in Product Growth

    Informing consumers to drive sales during the growth stage.

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    New Product Development

    The process of designing and marketing new products or improvements.

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    Acquisition

    The purchase of a company, patent, or license for products.

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    Innovation at Google

    Google's freedom to innovate, leading to diverse products.

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    Failure Rate of New Products

    95% of new products introduced annually fail.

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    Stages of Product Life Cycle

    Defined phases include introduction, growth, maturity, and decline.

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    Socially Responsible Product Decisions

    Making product choices that consider societal impact.

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    International Product Marketing

    Adapting products and strategies for global markets.

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    Test Marketing

    A stage where a new product is tested to gauge market response before full launch.

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    When to Test Market

    Emerges with new products needing significant investment and when uncertainty exists about marketing strategies.

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    When Not to Test Market

    Typically avoided for simple line extensions or low-cost products with high management confidence.

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    Commercialization

    The process of launching a new product into the market with strategic planning.

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    Customer-Centered Development

    Approach prioritizing customer needs and satisfaction in the product development process.

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    Team-Based Development

    A collaborative approach where various company departments work closely throughout product development.

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    Systematic Development

    An organized method that creates a culture of innovation to generate numerous product ideas.

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    Innovation Management System

    Framework designed to cultivate a culture of innovation within a company.

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    Idea Generation

    The systematic search for new product ideas from various sources.

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    Internal Sources

    Sources within the company, including R&D and employee ideas.

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    External Sources

    Sources outside the company like customers and competitors.

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    Crowdsourcing

    Inviting a broad community to contribute to product innovation.

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    Idea Screening

    The process of identifying good ideas and dropping poor ones.

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    R-W-W Screening Framework

    A method to evaluate ideas: Is it real? Can we win? Is it worth doing?

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    Internal Innovation Incubator

    A dedicated space within a company for employees to develop new ideas.

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    Technology in Idea Generation

    Using modern technology to find and evaluate new product ideas.

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    Pricing Strategy

    Setting prices based on market conditions and value delivered.

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    Distribution Strategy

    The approach taken to make products available to consumers.

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    Advertising Focus

    The shift in advertising to match product life-cycle stages.

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    Sales Promotion

    Promotional tactics to boost trial or encourage switching.

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    Modification Strategies

    Techniques to adjust market, product, or marketing mix during the maturity phase.

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    Campbell's Kitchen App

    An app by Campbell Soup Company to enhance engagement with their products.

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    Maintain the Product

    A strategy in the decline stage focused on keeping the product available.

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    Harvesting the Product

    A strategy that involves minimizing costs and extracting remaining profits from a declining product.

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    Marketing Objectives in Decline

    Goals aimed at reducing expenditures and maximizing profitability during the decline stage.

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    Reinvigorating an Iconic Brand

    Efforts to modernize and revitalize legacy brands in changing markets.

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    Study Notes

    Chapter 9: Developing New Products and Managing the Product Life Cycle

    • The chapter covers developing new products and managing the product life cycle.
    • One estimate suggests that 95% of new products introduced each year fail.
    • Companies use various methods to acquire new products, including buying a company, a patent, or a license.
    • Developing new products involves original products, product improvements, modifications, and new brands developed from the firm's research and development.
    • The new product development process has stages for idea generation, screening, concept development & testing, marketing strategy development, business analysis, product development, test marketing, and commercialization.

    Learning Objective 1: Exploring New Product Ideas

    • Companies use various methods to identify new product ideas, including crowdsourcing.
    • Google, for instance, has an in-house innovation incubator (Area 120) to encourage new product ideas.
    • Internal sources of new product ideas include research and development, management insights, staff suggestions, and intrapreneurial programs.
    • External sources include customers, competitors, distributors, suppliers, and outside design firms.
    • Crowdsourcing is another method, involving broad communities of people in the new product innovation process.

    Learning Objective 2: Defining the New Product Development Process

    • Define the steps of a new product development process: idea generation, screening, concept development and testing, marketing strategy development, business analysis, product development, test marketing, and commercialization.
    • Each step in the process helps companies to reduce the number of product ideas and develop only the best ones.

    Learning Objective 3: Describing the Product Life Cycle

    • The product life cycle has stages, including product development, introduction, growth, maturity, and decline.
    • Stages in the life cycle see changing sales, profits, and marketing strategies.
    • At the introduction stage of the product life cycle, slow sales and nonexistent profits are common, along with high marketing expenses.
    • In the growth stage, sales rise rapidly, and profits increase, and economies of scale and consumer education initiatives are important.
    • The maturity stage of the product life cycle shows slowed sales growth and profits often level off or decline. Marketing activities such as modifications to the market, the product mix, or the marketing mix help keep profits during this stage of the cycle.
    • During the decline stage of the product life cycle, sales fall off, and profits drop. Maintenance, harvesting, and dropping products are options to take during this stage.

    Learning Objective 4: Discussing Socially Responsible and International Product Issues

    • Socially responsible decisions are crucial during the development and marketing of products and services.
    • Public policy and regulations regarding product development, patents, quality, safety, and warranties are key considerations.
    • Key elements of international product marketing include identifying suitable products and services for specific countries, standardizing versus customizing products, packaging, labeling, and adhering to customs, laws, and local values.
    • Successful global marketing seeks to adapt products/services to local needs and preferences.

    Additional Discussion Points

    • Successful new product development emphasizes customer-centricity, a team approach, and systematic procedures.
    • Google's Area 120 is an example of an effective approach to fostering employee-driven innovation.
    • The Product Life Cycle can be influenced by styles, fashions, and fads, with temporary popularity affecting sales trajectories.
    • Companies should be aware of the potential difficulties of international marketing due to diverse customer needs, customs, values, and regulations.

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    Description

    This chapter focuses on the process of developing new products and managing their life cycles. It examines the importance of idea generation, testing, and commercialization while acknowledging the high failure rate of new product introductions. Learn about various acquisition methods and the stages involved in bringing new products to market.

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