126) Explain why so many new products fail and how a company can improve its odds of new-product success.
Answer: Although an idea may be good, the market size may have been overestimated. Other possible reasons for failure include the following: the actual product was not designed as well as it should have been; the product may have been incorrectly positioned in the market, priced too high, or advertised poorly; a high-level executive might have pushed a favorite idea despite poor marketing research findings; the costs of product development were higher than expected; or competitors fought back harder than expected. One way to improve the odds is to identify successful new products and find out what they have in common. Another is to study new-product features to see what lessons can be learned. A company must understand its customers, markets, and competitors and deliver superior value to customers.
Diff: 3 Page Ref: 260
AACSB: Reflective Thinking Skills
Skill: Critical Thinking
Objective: 9-1
127) Briefly describe the steps in the new-product development process.
Answer: New-product development starts with idea generation from internal and/or external sources. Next, the ideas must be reduced through idea screening. Once the new ideas are decided upon, the product concept must be developed and tested. A marketing strategy must be developed to introduce the product to the market. Once the product concept and marketing strategy are chosen, a business analysis is conducted to review the sales, costs, and profit projections to see if they will satisfy the company's objectives. A prototype will next be created in the product development stage. Test marketing will follow, introducing the new product and its marketing program into more realistic market settings. The last step is to launch or not launch the new product. If the company decides to launch the product, it will go ahead with the commercialization stage and later test its sales and profit results.
Diff: 3 Page Ref: 261-269
AACSB: Reflective Thinking Skills
Skill: Application
Objective: 9-2
128) Provide the major sources of external new-product ideas and explain why these sources offer advantages over internal sources.
Answer: The major sources of new-product ideas from external sources include customers, suppliers/distributors, competitors, and research firms. These sources are close to the market and tend to reflect current tastes and preferences. Firms can better match their product offerings to customer needs and wants. Consumers may also create new products and services on their own.
Diff: 2 Page Ref: 262
AACSB: Reflective Thinking Skills
Skill: Application
Objective: 9-2
129) Distinguish among a product idea, a product concept, and a product image.
Answer: A product idea is an idea for a product that a company can imagine itself offering to the market. A product concept takes the idea several steps further, with a detailed version of the idea stated in meaningful consumer terms. Finally, a product image is the way consumers perceive an actual or potential product.
Diff: 2 Page Ref: 264
AACSB: Reflective Thinking Skills
Skill: Critical Thinking
Objective: 9-2
130) Explain concept testing.
Answer: Concept testing calls for testing new-product concepts with groups of target consumers. The concepts may be presented physically or symbolically. A more concrete and physical presentation, however, will increase the reliability of the concept test. After being exposed to the concept, consumers are asked questions about it; their answers reveal to the marketer whether the concept needs to be altered in any way.
Diff: 2 Page Ref: 265
AACSB: Reflective Thinking Skills
Skill: Application
Objective: 9-2
131) Define commercialization. Explain two important decisions the company must make during this stage.
Answer: Introducing a new product into the market is called commercialization. The company launching a new product must first decide on introduction timing. Next, the company must decide where to launch the new productin a single location, a region, the national market, or the international market. Confidence, capital, and capacity are required to launch new products on a large-scale basis. Hence, many firms plan a market rollout over time.
Diff: 2 Page Ref: 268
AACSB: Reflective Thinking Skills
Skill: Application
Objective: 9-2
132) What are the two advantages of an innovation management system for developing new products? Provide four strategies for a company to use to establish a successful system.
Answer: The first advantage of an innovation management system is that it helps create an innovation-oriented company culture. It shows that top management supports, encourages, and rewards innovation. The second advantage is that it will yield a larger number of ideas, among which will be found some especially good ones. As the system matures, ideas will flow more freely. To establish a successful system a company can do the following: (1) Appoint a respected senior person to be the company's idea manager; (2) create a cross-functional innovation management committee with people from each department; (3) set up a Web site for anyone who wants to become involved in finding and developing new products; (4) encourage all company stakeholders to send their ideas to the idea manager; and (5) set up formal recognition programs to reward those who contribute the best new ideas.
Diff: 3 Page Ref: 270-273
AACSB: Reflective Thinking Skills
Skill: Critical Thinking
Objective: 9-2
133) Each product will have a life cycle, although its exact shape and length is not known in advance. Briefly explain each step in the PLC.
Answer: Product development begins when the company finds and develops a new-product idea. Sales are zero and the company's investment costs mount. Introduction is a period of slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage because of the heavy expenses of product introduction. Growth is a period of rapid market acceptance and increasing profits. Maturity is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing outlays to defend the product against competition. Decline is the period when sales fall off and profits drop. A company may seek to reinvigorate a product in decline or maintain it hoping competition will diminish or harvest it or drop it.
Diff: 2 Page Ref: 273
AACSB: Reflective Thinking Skills
Skill: Application
Objective: 9-3
134) The PLC can be applied to more than just brands. Your assignment is to prepare a presentation about the application of the PLC to as many of your company's operations as possible. What would you include? What wouldn't you include?
Answer: The PLC can be applied to new products and services. It can also be applied to product class, a product form, or a brand. The PLC concept lends itself to styles, fashions, and fads. The concept can be used as a useful framework for describing how products and markets work, as well as developing marketing strategy for each stage of the product life cycle. Managers may have difficulties using the PLC concept to forecast product performance or develop general marketing strategies.
Diff: 3 Page Ref: 274
AACSB: Reflective Thinking Skills
Skill: Synthesis
Objective: 9-3
135) Describe three public policy issues or regulations that marketers should carefully consider as they make decisions about adding or dropping products.
Answer: The government may prevent companies from adding products through acquisitions if the effect threatens to lessen competition. On the other hand, companies dropping products must be aware that they have legal obligations to their suppliers, dealers, and customers who have a stake in the dropped product. Companies must also obey U.S. patent laws when developing new products, meaning that a company cannot make its product illegally similar to another company's established product. Manufacturers must also comply with specific laws regarding product quality and safety. The Federal Food, Drug, and Cosmetic Act and the Consumer Product Safety Act are just two of many laws that protect consumers from potentially harmful products. If consumers have been injured by a product that has a defective design, they can sue manufacturers or dealers.
Diff: 2 Page Ref: 280
AACSB: Ethical Understanding and Reasoning Abilities
Skill: Application
Objective: 9-4
136) How might a firm benefit from implementing an "intrapreneurial" program?
Answer: Such programs encourage employees to be innovative and to develop new-product ideas.
Diff: 2 Page Ref: 262
AACSB: Reflective Thinking Skills
Skill: Critical Thinking
Objective: 9-2
137) How might competitors be a good external idea source?
Answer: Marketers can pay particular attention to competitors' ads to get clues about their new products. In addition, salespeople in the field can learn about competitors' plans if prospects purposefully, or even inadvertently, reveal them.
Diff: 2 Page Ref: 262
AACSB: Reflective Thinking Skills
Skill: Critical Thinking
Objective: 9-2
138) You have recently sent a proposal for a novel to an editor at a major publishing firm. The editor, alone, will carry out the idea screening. Why might you feel this process is unfair?
Answer: The success of your proposal, or at least the likelihood that your novel will be published, is at the mercy of that one individual. A screening committee might give the proposal a more accurate and fair assessment.
Diff: 3 Page Ref: 264
AACSB: Reflective Thinking Skills
Skill: Critical Thinking
Objective: 9-2
139) What elements may help to create a product image?
Answer: Any number of product attributes, as well as packaging and intended use, create product image; the promotional campaign also affects product image.
Diff: 2 Page Ref: 264
AACSB: Communication Abilities
Skill: Critical Thinking
Objective: 9-2
140) The potential market strengths and weaknesses are being determined for a new-product idea at Art for Kids. In what stage of the new-product development process does this occur?
Answer: It occurs in the business analysis stage of the new-product development process.
Diff: 2 Page Ref: 266
AACSB: Analytic Skills
Skill: Application
Objective: 9-2
141) What may be learned in a test market?
Answer: Test marketing lets a company assess customer response to its product and the effectiveness of its positioning strategy, advertising, distribution, pricing, branding, and packaging.
Diff: 2 Page Ref: 267
AACSB: Reflective Thinking Skills
Skill: Critical Thinking
Objective: 9-2
142) A marketer has selected a single city in which to conduct a test market. What might we conclude from this choice of a single-city test market?
Answer: The marketer may be confident that consumers in that city are representative of the overall market.
Diff: 3 Page Ref: 267
AACSB: Reflective Thinking Skills
Skill: Synthesis
Objective: 9-2
143) A marketer has chosen a multiple-city test market. What might we conclude from this choice of a multiple-city test market?
Answer: The marketer likely understands that the product being tested will be perceived differently in different geographic regions.
Diff: 3 Page Ref: 267
AACSB: Reflective Thinking Skills
Skill: Synthesis
Objective: 9-2
144) Why might a company choose to develop a planned market rollout?
Answer: A company without the confidence, capacity, or capital to introduce its product in several regions or the full national market may find it less risky and more manageable to enter attractive cities or regions one at a time, using success in regional markets to build up to a larger market rollout.
Diff: 2 Page Ref: 269
AACSB: Reflective Thinking Skills
Skill: Critical Thinking
Objective: 9-2
145) Why might individual departments prefer sequential product development?
Answer: This process allows each individual department to work with a new idea, completing its stage of development before passing the product on; other departments are less likely to interfere.
Diff: 2 Page Ref: 270
AACSB: Reflective Thinking Skills
Skill: Critical Thinking
Objective: 9-2
146) Explain how the PLC applies differently to a product class than to a product form.
Answer: Product classes have longer life cycles, while product forms tend to have the standard PLC shape.
Diff: 3 Page Ref: 274
AACSB: Reflective Thinking Skills
Skill: Synthesis
Objective: 9-3
147) Why might ad expenditures be high for products in the introduction stage of the PLC?
Answer: Consumers have very little awareness about such products; promotional spending can enhance customer awareness.
Diff: 2 Page Ref: 275
AACSB: Reflective Thinking Skills
Skill: Application
Objective: 9-3
148) Why might ad expenditures remain high in the growth stage of the PLC?
Answer: Though sales are increasing for such products, competition becomes fierce as competitors attempt to enter the market; therefore, ad dollars remain high in an effort to offset competitive threats.
Diff: 2 Page Ref: 275
AACSB: Reflective Thinking Skills
Skill: Application
Objective: 9-3
149) Marketers can prolong the lives of many products in the maturity or decline stages of the PLC, sometimes even moving these products back into the growth stage. How can this happen?
Answer: Marketers can change any element of the marketing mix, change the number of uses or the number of users, or even change the frequency of product use.
Diff: 2 Page Ref: 277-278
AACSB: Reflective Thinking Skills
Skill: Critical Thinking
Objective: 9-3
150) Why has the cost of product liability insurance risen so dramatically?
Answer: Consumers who have been injured by a product with a defective design can sue manufacturers or dealers of the product; though manufacturers are only found to be at fault in a small percentage of cases, the average jury award is $1.5 million.
Diff: 2 Page Ref: 280
AACSB: Ethical Understanding and Reasoning Abilities
Skill: Application
Objective: 9-4
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