Unit V: Developing New Products
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Questions and Answers

What is the primary purpose of generating new product ideas?

  • To cater to consumer needs and solve problems (correct)
  • To increase production speed
  • To lower competition in the market
  • To reduce marketing costs

    • Which of the following is NOT mentioned as a source of new product ideas?

  • Social media feedback (correct)
  • Market-research firms
  • Competitors
  • Company employees

    • What should be considered when testing new product ideas?

  • The number of employees available
  • The popularity of the product in other markets
  • Whether the idea aligns with company strategy (correct)
  • The color of the product

    • How can companies gather feedback on a new product idea?

    <p>By presenting it to target consumers via focus groups or questionnaires (D)</p> Signup and view all the answers

    What is the main goal of test-marketing a new product?

    <p>To validate technical and commercial viability (C)</p> Signup and view all the answers

    Which method is commonly used to test consumer goods?

    <p>Conducting focus groups or questionnaires (C)</p> Signup and view all the answers

    What question should a company ask regarding a new product idea that falls outside its expertise?

    <p>How strongly does this support our current strategy? (B)</p> Signup and view all the answers

    Why might customer feedback not always yield good product ideas?

    <p>Customers can be unaware of available options (A)</p> Signup and view all the answers

    What is the primary goal of alpha testing in the product development process?

    <p>To collect extensive feedback for improving the product (B)</p> Signup and view all the answers

    Which method involves providing consumers with a product at no cost to evaluate their satisfaction?

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

    In controlled test marketing, what is primarily measured to evaluate product performance?

    <p>Sales through electronic inventory control systems (C)</p> Signup and view all the answers

    What distinguishes beta testing from alpha testing?

    <p>Beta testing typically involves more units and customers. (B)</p> Signup and view all the answers

    Which of the following is NOT a method of test marketing mentioned?

    <p>Community test marketing (C)</p> Signup and view all the answers

    What is the main focus of simulated test marketing?

    <p>To assess consumer preferences through advertising exposure (C)</p> Signup and view all the answers

    Which test marketing method involves a selective group of consumers trying the product in authentic settings?

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

    What is the primary purpose of test-marketing business products?

    <p>To evaluate product quality and customer feedback (B)</p> Signup and view all the answers

    What phase in the product life cycle is indicated if the product is experiencing increased sales and market penetration?

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

    Which aspect of the product profile focuses on the unique aspects that distinguish the product from competitors?

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

    What is the primary purpose of having a breakeven selling point in the product profile?

    <p>To assess the minimum sales needed to cover costs (D)</p> Signup and view all the answers

    Which strategy involves calculating costs, competition, and customer demand to set the product's price?

    <p>Pricing Strategy (B)</p> Signup and view all the answers

    What role does the publicity manager play in the product profile?

    <p>Coordinates public relations efforts (C)</p> Signup and view all the answers

    What is a primary reason for observing interest during trade shows?

    <p>To gauge potential customer interest in the product (C)</p> Signup and view all the answers

    What should firms do if the test-market results are positive?

    <p>Feel confident in commercializing the product (C)</p> Signup and view all the answers

    What is suggested if the concept of the product fails to have a good strategic fit?

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

    During which stage should a firm decide whether to manufacture and distribute the product?

    <p>After Market Testing (D)</p> Signup and view all the answers

    What action should be taken if profitability remains poor at the final stage?

    <p>Rework or drop the product (D)</p> Signup and view all the answers

    What might a company offer to testers during product trials?

    <p>The product at a significant discount (B)</p> Signup and view all the answers

    What is the first step in the decision process to develop and test new products?

    <p>Idea Generation (B)</p> Signup and view all the answers

    Which outcome indicates that the product should be dropped during the development process?

    <p>Poor strategic fit within the company (A)</p> Signup and view all the answers

    What is a primary reason companies need to develop new products or services?

    <p>To meet consumer demand for variety and innovation (D)</p> Signup and view all the answers

    What percentage of recently launched products are no longer available in the market?

    <p>80% (D)</p> Signup and view all the answers

    Which step is essential before introducing a new product to the market?

    <p>Test-marketing the product idea (D)</p> Signup and view all the answers

    Why are companies under pressure to constantly innovate?

    <p>To keep up with changing consumer preferences and competition (D)</p> Signup and view all the answers

    What is one of the key components of the business decision-making process in product development?

    <p>Generating and testing product ideas (D)</p> Signup and view all the answers

    What can lead to the failure of new products aside from high development costs?

    <p>Competitors responding more aggressively (A)</p> Signup and view all the answers

    How important is consumer choice in the context of developing new products?

    <p>Crucial, as consumers often seek fresh offerings (D)</p> Signup and view all the answers

    What aspect of product life is important for companies to consider?

    <p>Most products undergo a natural life cycle (B)</p> Signup and view all the answers

    Flashcards

    New Product Development

    The process of creating new products or services to satisfy consumer desires and build sales.

    Test Marketing

    The process of trying out a new product or service on a small group of potential consumers before a wider release.

    Product Failure Rate

    High percentage of new product introductions that fail in the market. A significant portion do not survive in the market.

    Product Life Cycle

    The stages a product goes through from its introduction to its decline in the market.

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    Consumer Fickleness

    The tendency of consumers to change their preferences and attitudes unexpectedly.

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    Competitive Pressure

    The pressure on businesses to offer better products or deals to stay competitive with others.

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    Product Development Costs

    The expenses associated with creating a new product or service.

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    Generating New Product Ideas

    The process of coming up with new product concepts.

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    Customer feedback

    Information obtained from customers to understand their needs, preferences, and dissatisfaction.

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    Testing product ideas

    Evaluating new product ideas to ensure compatibility with company strategies and resources, and gathering feedback from target consumers.

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    Company's strategic plan

    A roadmap outlining the company's long-term goals and objectives.

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    Focus group

    A small group of target consumers who are interviewed to gather their feedback on a new product idea.

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    Prototype

    A physical model of a new product that helps consumers visualize and interact with the product.

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    Test-marketing Consumer Products

    Applying various methodologies to gauge consumer acceptance of new consumer goods in the market.

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    Trade Show Exhibits

    Events where companies showcase their products to potential buyers and industry professionals.

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    Test Market Results

    Feedback collected from a limited group of consumers to assess a product's viability before a full launch.

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    Market Testing Purpose

    To gauge consumer interest and identify any potential issues before full-scale commercialization.

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    Product Compatibility

    Evaluating if a product aligns with a company's overall strategies and resources.

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    Decision Process of New Product Development

    A systematic approach involving several stages, from idea generation to market launch, to assess a product's potential.

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    Positive Test Market Response

    Strong consumer interest and positive feedback indicating a product's potential for commercialization.

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    Commercialization

    Bringing a product to market by manufacturing, distributing, and promoting it to consumers.

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    Product Profile

    A comprehensive document outlining essential information about a new product or service for planning and control.

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    Simulated Test Marketing

    A test where potential buyers answer questions about product preferences, view marketing materials, and then shop for a product. Their purchasing behavior is observed.

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    Controlled Test Marketing

    Product is placed in a limited number of stores and locations, with variations in shelf positioning, displays, and pricing. Sales are tracked through technology.

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    Test-market

    Product is launched in a few representative cities with full advertising and promotion. The product's success is measured through real-world sales.

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    Alpha Testing

    Early stage testing with a few select customers. Focus is on gathering feedback on functionality, features, and problems.

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    Beta Testing

    Later stage testing with more customers, after the product is closer to its final form. Feedback is gathered for improvements before official release.

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    Sales Wave

    A test where customers are given a free trial of the product and then offered the product again at a discounted price. This evaluates repeat purchasing and satisfaction.

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    Product Samples

    Developing actual product samples with branding and packaging for testing in real-world settings with real customers.

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    Test-Marketing Business Products

    Strategies for testing business goods, such as alpha testing and beta testing, with select customers.

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    Product Name

    The name given to a product, essential for branding and marketing.

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    Target Market

    The specific group of consumers a product is intended for.

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    Key Product Features

    The specific characteristics or attributes that make a product stand out.

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    Pricing Strategy

    The method used to determine the price of a product, considering cost, competition, and customer value.

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    Distribution Channel

    The path a product takes from the manufacturer to the consumer, like stores or online platforms.

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    Study Notes

    Unit V: Developing New Products

    • General Objective: Learners will understand the business decision-making process for developing and testing products/services for the target market.
    • Specific Objectives: Students should be able to generate new product ideas, and understand the test-marketing process for new product introductions.

    Overview

    • Companies frequently develop new products and services to meet evolving consumer needs, increase sales, and compete effectively.
    • Consumer preferences, product lifecycles (which eventually become outdated), and competitor actions all encourage new offerings.
    • New product launches face high failure rates (approximately 80%). Factors impacting success include development costs exceeding projections, intensified competition, and unforeseen challenges.

    Generating New Product Ideas

    • To generate ideas, companies should ask customers about needs and desires, including areas of dissatisfaction.
    • Customer input is not always sufficient since consumers may not be aware of all product/services possibilities or have difficulty articulating their needs.
    • Companies should also consider their employees, industry consultants, and market research for new product ideas.

    Testing New Product Ideas

    • Firms should ensure new product ideas align with company strategy and resources before proceeding.
    • Product ideas should be tested with target consumers, often through focus groups, questionnaires, or prototypes.
    • Physical models or computer-aided design tools can illustrate new products.

    Test-Marketing New Products

    • Test-marketing involves evaluating a product's technical and commercial viability before its full launch.
    • Testing is performed on both consumer and business goods.
    • Test-marketing methods range from least to most costly, including identifying and testing the product with sample consumers.

    Test-Marketing Consumer Products

    • Sales Wave: Offering a product at varying prices to assess consumer interest/demand.
    • Simulated Test Marketing: Showing potential consumers ads/commercials including product options and assessing purchasing decisions under simulated store settings.
    • Controlled Test Marketing: Deploying products in selected stores and locations to measure sales performance in specific markets.
    • Full-Scale Test Marketing: Utilizing complete advertising and marketing campaigns to assess product sales performance across a wider geographical area (e.g., multiple cities).

    Test-Marketing Business Products

    • Alpha Testing: Initial testing of product units with key customers (often accompanied by a company representative) to gather insights into product functionality and features.
    • Beta Testing: Further testing of product units with a broader group of customers (more so than alpha testing), specifically as the product nears its final form.

    Product Development Process

    • A flowchart/figure demonstrates a typical product development process, beginning with the generation of ideas, followed by concept development, a marketing plan, and concluding with market testing to gauge success.
    • The figure emphasizes the critical factors between each step (Idea Generation, Concept Development, Product Marketing Plan, Market Testing, Rollout, Profitability).

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    UNIT V. Developing New Products PDF

    Description

    This quiz explores the key concepts of product development in a business context. Students will learn how to generate new product ideas and understand the importance of the test-marketing process. With a focus on consumer needs and competitive strategies, this quiz is essential for anyone studying business or marketing.

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