Marketing Management, 14e (Kotler/Keller)
Chapter 19 Introducing New Market Offerings
QUESTION BANK (Unit 1 NPD) (Total 146 Questions)
MCQ’s (Q1 to Q77) – without answers
TRUE or FALSE? (Q78 to Q116) – with answers
Short & Long Answer (Q117 to Q146) – with answers
Multiple Choice Questions (MCQ’s) (Q1 to Q77)
(Students are expected to choose most appropriate answers).
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
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
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
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
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.
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
7) It has been observed that most new products have shorter
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product life cycles. What is the reason for this?
A) Most new products do not use technology.
B) Most new products are not backed by a marketable idea.
C) New products do not get adequate management support.
D) Social and governmental constraints lead to this failure.
E) Rivals quickly copy products that are successful.
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
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
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 in-
house 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
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.
12) ________ teams are cross-functional groups charged with
developing a specific product or business.
A) Virtual
B) Venture
C) Fundamental
D) Elemental
E) Transitory
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 20) The ________ uses observational, anthropological, and
stagnated over a period of two years. In an attempt to promote ethnographic methods or consumer self-reports to map consumer
growth, it considers adding new features to the existing products needs, wants, and even beyond.
and introducing a few new products. The company forms a A) business analysis
committee consisting of three top executives, one of the B) demand landscape
production mangers, a few operational managers, and a C) opportunity space
representative of the HR department to generate ideas. This team D) strategic blueprint
is called a(n) ________. E) internal design analysis
A) virtual team
B) venture team 21) Which of the following uses conceptual lens and structured
C) fundamental team innovative-thinking tools to achieve market perspectives from
D) elemental team different angles?
E) transitory team A) business analysis
B) strategic blueprint
14) A team formed at Intercom, Inc. to generate ideas for new C) internal design analysis
products, conducts frequent meetings and engages in activities D) demand landscape
such as mind mapping and brainstorming. Most of the meetings are E) opportunity space
conducted at informal locations away from office. These
workplaces are called ________. 22) Gordon Apparel, Inc. engages in the design, manufacture, and
A) skunkworks retail of fashion apparel for women, men, children, and pets. The
B) idea funnels company is known for its timely launch of apparels and stylish
C) research centers designer clothing. The company believes a new product has to
D) stage gate systems create needs and not just satisfy the existing needs. To achieve this
E) contextual bases goal it engages in controlled idea generation techniques such as
brainstorming while creating new designs. Which of the following
15) The ________ used by companies divides the innovation parts of the DIG framework is given prominence here?
process into stages, with a checkpoint at the end of each stage. A) business analysis
A) reverse assumption analysis technique B) strategic blueprint
B) skunkworks system C) opportunity space
C) stage-gate system D) internal design analysis
D) spiral development process E) demand landscape
E) new-product department technique
23) Identify the element in the DIG network that considers how a
16) ________ are informal workplaces, sometimes garages, where new product can fit into customers lives and how it can be
intrapreneurial teams attempt to develop new products. distinguished from the competitors' products.
A) Stage-gate systems A) business analysis
B) Skunkworks B) internal design analysis
C) Funnels C) strategic blueprint
D) Opportunity spaces D) demand landscape
E) Research centers E) opportunity space

17) Which of the following questions is answered during the 24) ________ means inviting the Internet community to help create
business analysis of ideas? content or software, often with prize money or a moment of glory
A) Will this product meet our profit goals? involved.
B) Have we got a technically and commercially sound product? A) Stage-gating
C) Can we find a cost-effective, affordable marketing strategy? B) Cocreation
D) Can this product meet sales expectations? C) Microstocking
E) Can we find a good concept consumers say they would try? D) Buzzing
E) Crowdsourcing
18) During which of the following stages in new product
development decision making do managers analyze if they can find 25) Surgeons and ER nurses would be considered ________ for
a good thought consumers say they would try? surgical equipment.
A) idea generation A) venture agents
B) idea screening B) internal customers
C) business analysis C) buzz agents
D) concept development and testing D) lead users
E) product development and testing E) connectors

19) ________ process recognizes the value of returning to an 26) Many believe that customer focus does not help to create
earlier stage to make improvements before moving forward. better or new products. This belief rests on which of the following
A) Spiral development ideas?
B) Reactive development A) Such new product developments decrease the chances of
C) Market testing success.
D) Proactive development B) Customers do not consider the cost of design when suggesting.
E) Concept testing C) Customers are at times unaware of what they really want.
D) It increases the cost of testing a product or service.

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E) Having too much customer focus leads to a negative brand
image. 33) Increasingly, new-product ideas arise from ________ that
combines two product concepts or ideas to create a new offering.
27) The ________ technique for stimulating creativity lists all the A) reverse assumption analysis
characteristics of an object and then modifies each to try to arrive B) lateral marketing
at a new idea. C) attribute listing
A) reverse assumption analysis D) forced relationships
B) lateral marketing E) morphological analysis
C) attribute listing
D) forced relationship 34) A group of college graduates decide to start a business. Though
E) morphological analysis they are knowledgeable in various business domains, they are
unable to arrive at a valuable business idea. They decide to search
28) The ________ technique used for stimulating creativity for ideas in a structured manner. They meet together and start
identifies a problem and then considers the dimension, the discussing everyone's ideas. Each idea is recorded and then the
medium, and the power source. thoughts that come up in relation to the ideas are written down
A) attribute listing and discussed. This process helps them to finalize a business plan.
B) reverse assumption analysis What technique is used here?
C) mind mapping A) morphological analysis
D) lateral marketing B) forced relationship analysis
E) morphological analysis C) reverse assumption analysis
D) attribute listing
29) In an attempt to improve the product, a company that E) mind mapping
manufactures screwdrivers discusses the modification of each
attribute, such as replacing the wooden handle with plastic, 35) Morboro Energy, Inc. is a large chain of fuel stations in Europe.
providing torque power, adding different screw heads, and so on. The company decided to expand its business by incorporating
This creativity technique is called ________. restaurants and automobile service stations as a part of its fuel
A) attribute listing outlets. This is an example of ________.
B) mind mapping A) lateral marketing
C) morphological analysis B) brand extension
D) lateral analysis C) market development
E) reverse analysis D) internal marketing
E) brand personification
30) Electro Locomotors (EL), Inc. engages in the manufacture,
distribution, and marketing of custom vehicles in Brazil. Bono, a 36) A ________ error occurs when the company dismisses a good
hybrid car brand that the company produces, is a market leader in idea.
the hybrid vehicles segment. With the increased global focus on A) probability
nature friendly vehicles and governmental subsidies for companies B) performance
that manufacture hybrid vehicles, competition has increased for C) double counting
flex-fuel cars like Bono. The heads of the R&D team at EL is in a D) DROP
creative session to generate ideas for improvements to Bono. They E) GO
consider each part of the car and discuss the possibilities of
improvements in each of them. Identify the creativity technique 37) A(n) ________ is a possible product the company might offer to
used here. the market.
A) attribute listing A) test brand
B) forced relationship analysis B) alpha product
C) morphological analysis C) beta version product
D) reverse assumption analysis D) product idea
E) mind mapping E) product concept

31) ________ works by listing all the normal assumptions about an 38) A(n) ________ is an elaborated version of a product idea
entity and then turning them around. expressed in consumer terms.
A) Lateral marketing A) test brand
B) Attribute listing B) alpha product
C) Reverse assumption analysis C) beta product
D) Forced relationships D) business schedule
E) Morphological analysis E) product concept

32) The ________ creativity technique begins in a thought that is 39) ________ means presenting the product concept to target
written down, then proceeds to develop other thoughts that are consumers, symbolically of physically, and getting their reactions.
linked to the first thought, and finally materializes a new idea by A) Perceptual mapping
associating all the thoughts. B) Brand-positioning mapping
A) mind mapping C) Brand attribute mapping
B) contextual analysis D) Concept development
C) attribute listing E) Concept testing
D) reverse assumption analysis
E) morphological analysis 40) Modern firms use the ________ concept testing tool to design

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products on a computer and then produce rough models to show self-explicated importance ratings with pair-wise trade-off tasks.
potential consumers for their reactions. A) Sales wave analysis
A) morphological analysis B) Simulative data testing
B) rapid prototyping C) Adaptive conjoint analysis
C) concept testing D) Business analysis
D) perceptual mapping E) Exponential data collection
E) conjoint analysis
47) ________ exhibit replacement cycles dictated by physical wear
41) Brown & Smith, Inc. engages in the design, development, or obsolescence associated with changing style, features, and
making, and retail of designer jewelry in North America. Before performance.
approving a new design of jewelry the company draws it on a A) Frequently purchased products
computer and then produces models to show potential consumers B) High-moving goods
for their reactions. This allows the company to analyze the possible C) Inexpensive products
customer reaction. Identify the concept testing method used here. D) Commodity products
A) conjoint analysis E) Infrequently purchased products
B) perceptual mapping
C) virtual reality testing 48) To estimate replacement sales, management must research the
D) rapid prototyping product's ________, the number of units that fail in year one, two,
E) digital fabrication three, and so on.
A) survival-age distribution
42) Consumer preferences for alternative product concepts can be B) lifecycle ratio
measured through ________, a method for deriving the utility C) obsolescence rate
values that consumers attach to varying levels of a product's D) business turnover ratio
attributes. E) product-performance usage
A) concept testing
B) perceptual mapping 49) For a frequently purchased new product, the seller estimates
C) gap level analysis repeat sales as well as first-time sales. A high rate of repeat
D) conjoint analysis purchasing means customers ________.
E) morphological analysis A) value price more than differentiation
B) do not support innovation on brands
43) With ________, respondents see different hypothetical offers C) value differentiation more than price
formed by combining varying levels of the attributes, then rank the D) prefer personalized products rather than standard ones
various offers. E) are satisfied with the product
A) gap level analysis
B) conjoint analysis 50) ________ contribution lists the changes in income to other
C) perceptual mapping company products caused by the introduction of a new product.
D) concept testing A) Supplementary
E) morphological analysis B) Dragalong
C) Gross
44) Universal Services, Inc. provides communication services to D) Cumulative
residential and business customers in rural and small urban E) Net
communities primarily in northern England. The company offers
services such as local and long distance voice, data, and Internet 51) The highest loss a project can create is called ________.
and broadband product offerings. The company, in an attempt to A) rapid prototyping income
increase the attractiveness of its offerings, decides to provide B) payback income
special voice and data packages to its customers. The company C) maximum investment exposure
designs eight different packs that offer varying voice and data D) incremental yearly exposure
benefits to customers. The company then asks a few of its E) cannibalized income
customers to rank the packs in order to choose two best packs.
Which of the following testing methods is being used in the above 52) The job of translating target customer requirements into a
scenario? working prototype is helped by a set of methods referred to as
A) virtual reality testing ________.
B) conjoint analysis A) quality function deployment
C) perceptual mapping B) quality control processes
D) product fabrication C) rapid prototyping
E) rapid prototyping D) marketing control
E) control system formation
45) The trade-off approach may be easier to use when there are/is
________. 53) Which of the following methodologies takes the list of desired
A) many variables customer attributes (CAs) generated by market research and turns
B) only a few alternatives them into a list of engineering attributes (EAs) that engineers can
C) observers that are biased use?
D) possible offers that are limited A) quality control processes
E) only one highly desirable solution B) quality function deployment
C) rapid prototyping
46) ________ is a "hybrid" data collection technique that combines D) marketing control

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E) control system formation D) alpha testing
E) simulated testing
54) ________ is a customer test that involves placing the product
within the firm to see how it performs in different applications. 61) Poga International, a multinational beverage corporation
A) Beta testing identifies that one of its competitors is launching an apple flavored
B) Research testing drink. The company decides to launch an apple flavor brand along
C) Sales-wave testing with its competitor. What timing strategy is used here?
D) Alpha testing A) first entry
E) Simulated testing B) blunt entry
C) parallel entry
55) In consumer-goods market testing, the company seeks to D) late entry
estimate four variables. These four variables are: trial, first repeat, E) exchange entry
adoption, and ________.
A) guaranteed response 62) Some firms might delay the launch of their products until after
B) price sensitivity the competitor has borne the cost of educating the market. Such an
C) purchase frequency entry is called ________ entry.
D) usage convenience A) strategic pay off
E) preferential treatment B) parallel
C) balancing
56) A large FMCG company decides to test market Kora, a new D) late
brand of face cleanser, to be launched soon. The company initially E) compensating
distributes a few free samples to some prospective consumers.
Later it offers the product to the customers at a discounted price 63) A(n) ________ is any good, service, or idea that is perceived as
and observes that not only more than seventy percent of the new, no matter how long its history.
customers are purchasing it but the same number are also satisfied A) commodity
using it. The company keeps using this process 3-4 times to obtain a B) innovation
correct count of the number of people purchasing the product C) adoption
repeatedly. Which of the following testing methods is being used D) invention
here? E) novel product
A) simulated testing
B) controlled testing 64) Adopters of new products move through five stages. These
C) full test marketing stages begin with ________ and follow with interest, evaluation,
D) parallel testing trial, and adoption.
E) sales-wave research A) awareness
B) investigation
57) Which of the following is an advantage of sales-wave research? C) trial
A) It gives surprisingly accurate results on advertising effectiveness. D) innovation
B) It allows the brand to gain favorable shelf position. E) diffusion
C) It guarantees immediate brand recognition and high sales
volume. 65) Identify the stage in the consumer adoption process in which
D) It can be implemented quickly with a fair amount of security. the customer is stimulated to seek information about the
E) It easily creates a buzz in the minds of customers. innovation.
A) awareness
58) Which of the following is usually referred to as a full-blown test B) adoption
market? C) interest
A) an internal focus group D) evaluation
B) a discussion group E) trial
C) a country
D) a city or a few cities 66) Robert has heard about the latest cell phone from LG
E) a laboratory electronics that features Wi-Fi hotspot technology. Wi-Fi hotspot is
a technology that allows users to share mobile internet with other
59) Which of the following products is most likely to undergo alpha Wi-Fi enabled devices. Robert visits the company's Web site to read
and beta testing? more about the phone. Robert is in the ________ stage of
A) food products consumer-adoption process.
B) industrial goods A) interest
C) consumer products B) awareness
D) commodities C) evaluation
E) FMCG products D) trial
E) adoption
60) During ________, the company's technical people observe how
customers use the product, a practice that often exposes 67) Armordo is a famous vacuum cleaner brand in Africa. Clara has
unanticipated problems of safety and servicing and alerts the heard of Armordo and she knows that the product is a success. She
company to customer training and servicing requirements. has started considering whether or not to buy the vacuum cleaner.
A) beta testing What stage of the consumer-adoption process is Clara in?
B) research testing A) awareness
C) sales-wave testing B) adoption

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C) evaluation 74) ________ is the effect one person has on another's attitude or
D) trial purchase probability.
E) interest A) Sharing power
B) Collaborative power
68) Which of the following is the mental step in consumer-adoption C) Market influence
process where the customer starts considering whether to try the D) Brand power
innovation? E) Personal influence
A) adoption
B) trial 75) Relative advantage of an innovation refers to the degree to
C) awareness which ________.
D) evaluation A) it matches the values and experiences of the individuals
E) interest B) it is difficult to understand or use
C) it can be tried on a limited basis
69) People who are technology enthusiasts, venturesome, and who D) it appears superior to existing products
enjoy tinkering with new products and mastering their intricacies E) the benefits of use are observable or describable to others
are called ________.
A) innovators 76) The degree to which the beneficial results of an innovation's
B) early adopters use are observable or describable to others is called ________.
C) early majority A) divisibility
D) investigators B) communicability
E) experimenters C) compatibility
D) relative advantage
70) Troma Inc., is a famous manufacturer of cookware, that follows E) plainness
a traditional distributor-retailer system to distribute its products.
The company abstains from the use of automated supply chain 77) Which of the following terms refers to the degree to which the
management (SCM) system mainly due to the fear of unknown. innovation can be tried on a limited basis?
However, rapidly escalating operational costs and inefficiencies A) compatibility
have made it absolutely necessary for the company to implement B) relative advantage
an SCM system. The company goes for a big-bang installation of C) divisibility
SCM system to become more competitive and cost effective. D) communicability
Identify the adopter group to which Troma belongs. E) complexity
A) innovator
B) early adopter TRUE or FALSE? (Q78 to Q116)
C) early majority 78) Organic growth refers to increasing the profitability of the
D) laggard organization by increasing employee productivity.
E) late majority Answer: FALSE

71) Which of the following characteristics is closely associated with 79) Companies typically must create a strong R&D and marketing
late majority adopter groups? partnership to pull off a radical innovation.
A) superior technological knowledge Answer: TRUE
B) low price sensitiveness
C) opinion leadership 80) High-tech firms that function in a market with high
D) deliberate pragmatism technological uncertainty, high market uncertainty, and high
E) high risk aversion investment costs are not likely to seek radical innovation.
Answer: FALSE
72) Joseph, a student of the Columbia University, finds many of his
classmates have purchased the I-pad tablet PC from Apple 81) Companies that fail to develop new products leave their
Computers. I-pad, launched a few months before has been existing offerings vulnerable to increased domestic and foreign
identified as a very useful product and many students in the U.S. competition.
have rated it highly. Considering all these, Joseph also decides to Answer: TRUE
purchase an I-pad. Which of the following is the adopter group to
which Joseph belongs? 82) Most established companies focus on incremental innovation
A) early adopter rather than radical innovation.
B) innovator Answer: TRUE
C) late majority
D) laggard 83) Shorter product life cycles are common in industries
E) early majority characterized by low level of competition.
Answer: FALSE
73) Five characteristics influence the rate of adoption of an
innovation. One of these is ________. 84) Companies should use normal investment criteria to budget for
A) marketing expertise new-product developments.
B) relative advantage Answer: FALSE
C) packaging attractiveness
D) government regulations 85) Almost all companies use the conventional percentage-of-sales
E) place of value exchange figure while budgeting for new product development.
Answer: FALSE

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 Answer: TRUE
86) Skunkworks are formal workplaces where intrapreneurial teams
attempt to develop new products. 102) Perceived value refers to the gap between actual needs and
Answer: FALSE satisfied needs of a customer.
Answer: FALSE
87) Venture teams are cross-functional groups charged with
developing a specific product or business. 103) Consumer preferences for alternative product concepts can be
Answer: TRUE measured with conjoint analysis.
Answer: TRUE
88) A business analysis is performed mainly to identify if a company
has got a technically and commercially sound product. 104) A major drawback of conjoint analysis is that it cannot be used
Answer: FALSE to measure objective attributes such as estimated market share
and profit.
89) A spiral development process recognizes the value of returning Answer: FALSE
to an earlier stage to make improvements before moving forward.
Answer: TRUE 105) The trade-off approach may be easier to use when there are
only a few variables and alternatives.
90) The demand landscape uses conceptual lens and structured Answer: FALSE
innovative-thinking tools to achieve market perspectives from
different angles. 106) After a test, the most customer-appealing offer will be the
Answer: FALSE most profitable offer to make.
Answer: FALSE
91) The strategic blueprint thinks about how the new product can
fit into customers' lives and how it can be distinguished from 107) A business analysis is typically performed after the
competitors. management has developed the product concept and marketing
Answer: TRUE strategy.
Answer: TRUE
92) Crowdsourcing means inviting the Internet community to help
create content or software, often with prize money or a moment of 108) Survival-age distribution refers to the number of customers
glory as an incentive. that the product has in year one, two, three, and so on.
Answer: FALSE Answer: FALSE

93) Cocreation can help a company create favorable word of 109) Dragalong income refers to additional income whereas
mouth. cannibalized income refers to reduced income.
Answer: TRUE Answer: TRUE

94) Employees can be a source of ideas for improving production, 110) Modular function deployment methodology takes the list of
products, and services. desired customer attributes generated by market research and
Answer: TRUE turns them into a list of engineering attributes that engineers can
use.
95) Attribute listing lists several ideas and considers each in Answer: FALSE
relationship to the others.
Answer: FALSE 111) Beta testing tests the product within the firm to see how it
performs in different applications.
96) Reverse assumption analysis lists all the normal assumptions Answer: FALSE
about an entity and then turns them around.
Answer: TRUE 112) Sales-wave research can be implemented quickly and carried
out without final packaging and advertising.
97) Morphological analysis starts by forming a new dimension and Answer: TRUE
then thinks about the possible problems of the dimension.
Answer: FALSE 113) Expensive industrial goods and new technologies will normally
undergo alpha and beta testing.
98) A DROP-error occurs when the company accepts a bad idea. Answer: TRUE
Answer: FALSE
114) Some firms might delay new product launch until after the
99) A category concept defines the product's attributes and competitor has borne the cost of educating the market and its
features. product may reveal flaws the late entrant can avoid. This can be
Answer: FALSE classified as a parallel entry.
Answer: FALSE
100) Concept testing means validating the product concept by
discussing within the design group. 115) At the interest stage of consumer-adoption process, the
Answer: FALSE consumer becomes aware of the innovation but lacks information
about it.
101) Rapid prototyping refers to designing products on a computer Answer: FALSE
and then producing rough models to show potential consumers for
their reactions. 116) Compatibility refers to the degree to which the innovation

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matches the values and experiences of the individuals. Answer: FALSE

Short & Long Answer (Q117 to Q146)

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.

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.

119) How do 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.

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 cross-functional 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.

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.

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 do 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.

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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-
to-the-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.

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.

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.

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.

127) What does the term organic growth mean?

Answer: Organic growth refers to the development of new products from within.

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 do 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.

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.

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.

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?
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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.

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.
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.

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 innovative-thinking tools to achieve market
perspectives from different angles.

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.

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.

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.

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.

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.

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.

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.

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.

143) GameTech International Inc. engages in the design, development, and marketing of interactive electronic bingo systems
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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.

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.

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.

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.

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