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Chapter 06 Test Bank

Student: ___________________________________________________________________________
1. As defined in your text, a product refers to
A. any good or service that is mass produced and sold in more than one market.
B. marketed items of value that fulfill a need of an individual consumer or business.
C. a tangible good that is received in exchange for money, time, or effort.
D. the specific combination of goods, services, or ideas that a firm offers to its target market.
E. any intangible offering a firm makes to an individual consumer or a business.
2. The specific combination of goods, services, or ideas that a firm offers to its target market is referred to as
A. a product.
B. stock.
C. a load.
D. supply.
E. inventory.
06-1
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
3. In marketing terms, the care you receive when you visit your family doctor is an example of
A. an idea.
B. an action.
C. a good.
D. a concept.
E. a service.
4. When Allstate Insurance advertises You're in Good Hands with Allstate, it is marketing
A. a concept.
B. an action.
C. a service.
D. an idea.
E. a good.
5. According to your text, three factors are responsible for the rapid rise in new product development. They are faster and more
economical transportation, the advent of electronic communication, and
A. mass production.
B. free trade.
C. the requirement of patents and trademarks.
D. lessening of government restrictions.
E. mass marketing.
6. Which of the following is not a way to categorize new products?
A. product-line extensions
B. new-to-the-market products
C. brand development
D. new-category entries
E. revamped products
06-2
7. Which of the following makes up the smallest percentage of new products but carries the most potential (and risk) for the
company introducing them?
A. new-to-the-market products
B. product-line extensions
C. revamped products
D. repositioned products
E. new-category entries
8. A technology that displaces an established technology and shakes up the industry, or a groundbreaking product that creates a
completely new industry is referred to as
A. planned obsolescence.
B. inventive technology.
C. product revamping.
D. creative technology.
E. disruptive technology.
9. Inventions that have never been seen before and create a new market are considered
A. new-to-the-market products.
B. new-category entries.
C. revamped products.
D. repositioned products.
E. product-line extensions.
10. Which of the following accurately describes new-category entries?
A. products that are new to a company but not new to the marketplace
B. products that are reintroduced into the marketplace after having been off the market for a lengthy time
C. inventions that have never been seen before and create a new market
D. products that extend and supplement a company's established product line
E. products that have new packaging, different features, and updated designs and functions
06-3
11. Dell doesn't currently offer an e-reader in its product line. However, if the company decided to enter the market by producing
an e-reader of its own, it would be classified as what type of product?
A. product-line improvement
B. new category entry
C. revamped product
D. product-line extension
E. new-to-the-market
12. A group of related products marketed by the same firm is its
A. product line.
B. product mix.
C. marketing mix.
D. marketing line.
E. product category.
13. The Ford Motor Company produces the Fiesta, Focus, Fusion, and Escape. As a group, these cars represent a
A. product line.
B. marketing line.
C. product mix.
D. marketing class.
E. marketing mix.
14. Read the following statements and select the one that is not an advantage of a product-line extension.
A. Manufacturing of goods may be more efficient.

B. Customers may feel loyalty to the product line.
C. The new product can be advertised alongside existing products.
D. The new product is certain to be accepted by the market.
E. The company and brand may be easily recognized.
15. A product labeled "new and improved" would fall within the category of a
A. revamped product.
B. new-category entry.
C. new-to-the-market product.
D. product-line extension.
E. remanufactured product.
06-4
16. A product that has new packaging, different features and updated designs and functions is a
A. new-to-the-market product.
B. revamped product.
C. remanufactured product.
D. new-category entry.
E. product-line extension.
17. How long can a company advertise a product as "new and improved" after it hits store shelves?
A. three months
B. six months
C. one year
D. two years
E. indefinitely
18. Which of the following is not one of the stages in the new-product development process?
A. business analysis
B. concept testing
C. product development
D. product launch
E. idea screening
19. The new-product strategy development stage accomplishes all of the following except
A. it outlines the costs that will be incurred for the development of new products.
B. it specifies the target markets to be served by new products.
C. it specifies how new products will fit into the company's marketing plan.
D. it provides general guidelines for the new-product development process.
E. it outlines general characteristics of the types of products the firm will develop.
20. In what stage of the new-product development process would a company use a SWOT analysis and environmental scanning
to determine where new products may be able to help strengthen the firm's marketing position?
A. test marketing
B. business analysis
C. idea screening
D. new-product strategy development
E. idea generation
06-5
21. The stage of the new-product development (NPD) process in which a set of product concepts is generated from which to
identify potentially viable new products is called idea
A. analysis.
B. screening.
C. marketing.
D. generation.
E. development.
22. Idea generation is the stage in the new-product development process in which
A. a collection of product concepts is generated for determining potentially viable new products.
B. it is determined if the idea fits into the company's marketing strategy and should be developed.
C. ideas are test-marketed with consumers to determine if they should be developed further.
D. prototypes are developed to test new product ideas.
E. the company determines the direction it will take in developing new products.
23. Which of the following would be considered an internal source of idea generation?
A. an independent inventor
B. a company's customers
C. a company's employees
D. a company's competitors
E. a company's suppliers
24. Firms that generate new-product ideas by gathering both external and internal ideas are using
A. pivoting.
B. diffusion.
C. positioning.
D. disruptive technology.
E. open innovation.
06-6
25. In which stage of the new-product development process do most ideas for new products and services end up getting
rejected for one reason or another?
A. idea screening
C. test marketing
D. product development
E. idea generation
26. Which of the following is a key question that should be asked in the idea screening stage?
A. Is the proposed product within the company's ability to produce?

B. Will the product sell?
C. Can the product be launched in a timely manner?
D. Can the product be developed within the time and budget constraints of the company?
E. Will the product meet the minimum return-on-investment requirements?
27. The procedure in which marketing professionals ask consumers for their reactions to verbal descriptions and rough visual
models of a potential product is called
A. concept marketing.
B. test marketing.
C. prototype evaluation.
D. idea screening.
E. concept testing.
28. A concept test is part of which stage of the new-product development process?
A. product development
B. test marketing
C. idea screening
D. idea generation
E. product launch
06-7
29. In what stage of the new-product development process would organizations use social media to evaluate potential new
products?
A. product launch
B. idea screening
C. business analysis
D. idea generation
E. test marketing
30. Estimating the cost of a product, identifying the price at which a product will be sold, and estimating the demand for a
product all take place in which stage of the new-product development process?
B. test marketing
C. new-product strategy development
D. product launch
E. product development
31. Business analysis refers to the stage of the new-product development process
A. where the direction a company will take in developing a new product is determined.
B. where it is decided if a product can be developed and marketed within the time and budget constraints of the company.
C. where a concept test is performed to determine if the product will sell.
D. where a new product is analyzed to determine its profitability.
E. where a SWOT analysis and environmental scanning are used to determine if a new product will help strengthen the firm's
marketing plan.
32. A mock-up of a good with the materials the firm expects to use in the final product is called a
A. template.
B. sample.
C. model.
D. prototype.
E. blueprint.
06-8
33. If a product idea is deemed to have the potential of being profitable in the business analysis stage, then it moves on to the
A. idea screening stage.

B. concept testing stage.
C. test marketing stage.
D. product launch stage.
E. product development stage.
34. In what stage of the new-product development process would a company make a prototype of the product?
A. product launch
B. idea generation
D. test marketing
E. idea screening
35. When Fisher-Price comes up with an idea for a new toy, it needs to ensure that the children who play with the toy will not
choke on any of its parts and that the toy in general will not be a hazard to the children who will be using it. In what stage of the
new-product development process will these safety checks occur?
A. test marketing
B. product development
C. product launch
D. idea generation
E. idea screening
36. A company that is introducing a new product in its final form to a geographically limited market to see how well the product
sells and to get reactions from potential users is engaged in
B. idea screening.
C. test marketing.
D. concept testing.
E. product screening.
06-9
37. During which stage of the new-product development process would a firm test the marketing strategy related to the new
product?
B. idea screening
C. test marketing
D. product launch
E. business analysis
38. If a firm builds a mock shopping experience for participants to observe their response to marketing stimuli, this is referred to
as a
A. focus group.
B. concept test market.
C. prototype.
D. simulated test market.
E. trial test market.
39. Which stage of the new-product development process is usually the most expensive for new products?
B. test marketing
C. idea screening
E. product launch
40. Read the following list of tasks and select the one that does not take place during the product launch stage.
A. purchase the materials to make and package the good

B. manufacture enough of the good to fill distribution pipelines
C. prepare internal systems for taking service orders
D. hire and train employees
E. make sure the product can be manufactured at a cost low enough to generate profits
06-10
41. The term time to market refers to
A. how long a company spends test-marketing a product.

B. the speed with which a company launches a product.
C. the time a new product spends on the market before becoming accepted by the public.
D. the time it takes the marketing department to develop an advertising campaign.
E. the time it takes to develop a product.
42. Burt's company is in the process of developing what he feels is a complex and risky project. Burt has decided to use a
development sequence in which functional areas consecutively complete their development tasks. That way each set of
activities can be easily tracked. What type of development path is Burt using?
A. sequential
B. parallel
C. concurrent
D. functional
E. departmental
43. The type of development path preferred by most supply chain management professionals is
A. concurrent new-product development.

B. sequential new-product development.
C. departmental new-product development.
D. parallel new-product development.
E. functional new-product development.
44. Which of the following factors most likely drives the decision to use a concurrent approach in the development of high-tech
products?
A. cost
B. risk
C. control
D. speed
E. complexity
06-11
45. When categorizing risk in new-product development, the highest level of risk occurs when
A. competitors copy products and sell them at a lower price.

B. supplier cost savings are not achieved.
C. the product takes sales away from existing products.
D. the product fails to generate sales.
E. inadequate supply of materials delays production.
46. Compare the following to determine which is not a way that companies can reduce the risk of new product failures.
A. carefully listen to the customer for new product ideas

B. skip steps in the development process to market a product sooner
C. understand current market trends to anticipate demand
D. anticipate changes in the marketplace
E. be willing to fail on occasion
47. The practice in which companies frequently come out with new models of a product that make existing models obsolete is an
ethical issue related to new-product development and is termed
A. time to market.
B. diversion.
C. diffusion.
D. planned obsolescence.
E. bait-and-switch.
48. The most common ethical issue in new-product development involves the Federal Trade Commission's definition of the term
A. healthier.
B. better.
C. guaranteed.
D. new.
E. improved.
49. A product that uses less energy to operate or can be recycled when the consumer is finished using it, it said to have
A. an ethical design.
B. a green design.
C. an environmental design.
D. a sustainable design.
E. an organic design.
06-12
50. The process by which new products are likely to be adopted, the rate at which they will be adopted, and the process through
which the products will spread into markets is referred to as
A. distribution.
B. circulation.
C. time to market.
D. diffusion.
E. planned obsolescence.
51. Which of the following accurately represents the steps in the consumer adoption process?
A. awareness, research, comparison, evaluation, and adoption

B. awareness, evaluation, trial, adoption, and feedback
C. interest, evaluation, comparison, trial, and adoption
D. interest, comparison, evaluation, trial, and adoption
E. awareness, interest, evaluation, trial, and adoption
52. Siobhan wants to join a new health club. Her roommate belongs to a club that Siobhan heard about on the radio. She
decides to use her roommate's free guest passes to try out the club to see if it meets her needs. What stage of the consumer
adoption process does this represent?
A. comparison
B. interest
C. adoption
D. trial
E. awareness
53. Franco is considered to be tech savvy by his friends. He is unafraid to take risks when it comes to trying new products and is
always the first in his group to get the latest gizmo. What type of product adopter is Franco?
A. early adopter
B. late majority
C. laggard
D. early majority
E. innovator
06-13
54. What type of adopter is typically well respected by their peers and sought by marketers because they tend to be opinion
leaders who are willing to talk to other people about their experiences with their purchases?
A. laggard
B. innovator
C. early majority
D. early adopter
E. late majority
55. Nora is in the market for a new HD television. She has spent quite a bit of time gathering information and thinking about the
purchase. She has asked her friends for opinions about the models they own and is happy that there are a lot of models to
choose from. Nora is most likely what type of adopter?
A. late majority
B. innovator
C. laggard
D. early adopter
E. early majority
56. A good or a service will likely fail to be profitable if which of the following adopters does not purchase the product?
A. late majority
B. innovators
C. early adopter
D. early majority
E. laggards
57. Which category of product adopters relies on others for information and buys a product because their friends have already
done so?
A. late majority
B. innovators
C. early majority
D. early adopter
E. laggards
06-14
58. Wilbur does not like change. He thinks the cell phone he currently owns is just fine even though it doesn't have all the
features of new phones on the market. Wilbur hopes that he doesn't lose this phone because the company doesn't make this
style anymore and he doesn't want to get anything different. What type of adopter is Wilbur?
A. early majority
B. laggard
C. early adopter
D. late majority
E. innovator
59. From a marketing standpoint, which group of product adopters should marketers spend the least amount of time and effort in
convincing them to buy a product?
A. early adopter
B. early majority
C. laggards
D. innovators
E. late majority
60. As it pertains to new product characteristics, the superior position a product enjoys over competing products if consumers
believe it has more value than other products in its category is referred to as
A. product preference.
B. compatibility.
C. superiority.
D. observability.
E. competitive advantage.
61. The new product characteristic that refers to how well a new product fits into potential customers' needs, values, product
knowledge, and past behaviors is
A. competitive advantage.
B. observability.
C. trialability.
D. compatibility.
E. complexity.
06-15
62. The marketers at Pantene included a trial size of their new shampoo in the September issue of InStyle Magazine. National
sales increased dramatically within a few weeks, an example of this product's
A. compatibility.
B. observability.
C. complexity.
D. competitive advantage.
E. trialability.
63. The extent to which a country is connect to other cultures is referred to as
A. cosmopolitanism.
B. homiphily.
C. complexity.
D. compatibility.
E. modernity.
64. People who are similar to one another usually have many of the same needs, likes, and dislikes, and this similarity helps
products to be adopted more readily. This refers to which characteristic regarding product adoption?
A. modernity
B. compatibility
C. complexity
D. homiphily
E. cosmopolitanism
65. Which of the following is not a stage in the product life cycle?
A. introduction
B. obsolescence
C. decline
D. growth
E. maturity
06-16
66. Which stage of the product life cycle is characterized by low or negative profits and the possible need of companies to offer
incentives to stores to get them to carry the product?
A. maturity
B. growth
C. decline
D. introduction
67. During which stage of the product life cycle does a company have to promote the differences between its brand and that of
the competition, and attempt to portray its competitive advantage?
A. decline
B. maturity
C. growth
D. introduction
68. Which stage of the product life cycle usually lasts the longest?
A. growth
B. maturity
C. decline
D. introduction
69. During which stage of the product life cycle do customer service and repairs begin to take on significance as a way to
differentiate a firm's products?
A. maturity
B. growth
C. decline
D. introduction
70. In which stage of the product life cycle are promotional strategies geared toward reminding consumers about the product
and its value to them?
A. decline
B. growth
C. beginning
D. maturity
E. introduction
06-17
71. If a company is using coupons or buy-one-get-one-free promotions to reduce the existing inventory of a product, that product
is most likely in what stage of the product life cycle?
A. introduction
B. growth
C. maturity
D. decline
72. Udi's Gluten Free sells bread, bagels, cookies, pizza crust, and other products that are gluten free. The combination of all
the products that Udi's Gluten Free sells is referred to as its
A. name brand.
B. product line.
C. marketing mix.
D. product mix.
E. category line.
73. As firms introduce new products at a faster rate, what tends to happen to existing products in the product mix?
A. The price of existing products tends to go up.

B. Existing products enter the maturity and decline stages more quickly.
C. Product life cycles become much slower.
D. Production costs for existing products tend to go down.
E. Existing products enter the maturity and decline stages more slowly.
74. General Motors offers Chevrolet, GMC, Buick, and Cadillac as product categories. The extent to which a company offers
different product categories refers to its
A. product depth.
B. product width.
C. product-mix consistency.
D. product line.
06-18
75. Products that take longer for consumers to see the benefits of or that do not have a good infrastructure in place for support
are called
A. extended products.
B. complex products.
C. low-learning products.
D. high-learning products.
E. slow-learning products.
76. Which type of product has a product life cycle curve that is a steep up-and-down curve because consumers rapidly adopt
and then abandon the product?
A. high-learning products
B. slow-learning products
C. low-learning products
D. fashion products
E. fad products
77. First introduced in 1935 and highly popular in the early 1980s, Sperry Top-Sider shoes are once again a hit with young adult
consumers. These shoes are an example of a
A. low-learning product.
B. high-learning product.
C. fad product.
D. slow-learning product.
E. fashion product.
78. What stage of the product life cycle is characterized by a full line of products, an intensive effort to maintain distribution, and
a product price equal or below that of competitors?
A. introduction
B. maturity
C. decline
D. growth
06-19
79. At what stage of the product life cycle is price usually the highest?
A. decline
B. growth
C. maturity
D. introduction
80. Several things have led to the rapid rate at which new products are developed. They are faster and more economical
transportation, the advent of electronic communication, and _____ _____.
________________________________________
81. A _______ is the specific combination of goods, services, or ideas that a firm offers to its target market to enrich the lives of
consumers by providing designs, features, and functions that people need and want.
________________________________________
82. There are four classifications of products: new-to-the-market products, new-category entries, product line extensions, and
_______ products.
________________________________________
83. _______ products make up the smallest percentage of new products but carry the most potential (and risk) for the company
introducing them.
________________________________________
84. Because they disrupt the market by providing innovative benefits that offer so much value to customers, ________ products
often render existing products obsolete.
________________________________________
06-20
85. Products that displace an established technology and shake up the industry or create a completely new industry are
examples of _____ technology.
________________________________________
86. Products that are new to a company but not new to the marketplace are classified as _____ _____ entries.
________________________________________
87. When Doritos launched its new Locos Tacos tortilla chips, it was an example of a _____ _____ _____because the Locos
Tacos extended its already-established product line.
________________________________________
88. A product that is marketed as "new and improved" is most likely a _______ product.
________________________________________
89. There are ______ stages in the new-product development process.
________________________________________
90. _____ _____involves coming up with a set of product concepts from which to identify potentially viable new products.
________________________________________
91. A form of open innovation is ______, in which companies ask for opinions from a large and relatively undefined group of
people outside the company.
________________________________________
06-21
92. It is during the _____ _____ stage of new-product development that the company often ends up rejecting most new goods
and services.
________________________________________
93. In a _____ _____, marketing professionals ask consumers for their reactions to verbal descriptions and rough visual models
of a potential product.
________________________________________
94. A _____ _____ entails identifying at what price the product will likely be sold, estimating costs, and estimating demand for
the product.
________________________________________
95. Developing a _______ helps to ensure that a product will not be a hazard to users or their families, that it can be produced in
the company's or supplier's manufacturing facilities, and that it can be manufactured at a cost low enough to generate profits.
________________________________________
96. Introducing a new product in its final form to a geographically limited market to see how well the product sells and to get
reactions from potential users is called _____ _____.
________________________________________
97. During the _____ _____ stage, the firm tests not only the product itself but also the marketing strategy related to it.
________________________________________
06-22
98. A _______ test market is a procedure in which the firm builds a mock shopping experience for participants to observe their
response to marketing stimuli.
________________________________________
99. The final stage of the new-product development process is the _____ _____.
________________________________________
100. The _____ _____ stage of the new-product development process is usually the most expensive stage for new products.
________________________________________
101. A company's time to market is the speed with which it _____ a product.
________________________________________
102. The two paths that a firm can take when developing a new product are sequential or _______.
________________________________________
103. _______ new-product development uses cross-functional teams made up of representatives from various departments to
develop goods and services.
________________________________________
104. Companies have more control over the development of complex products when utilizing a _______ new-product
development approach.
________________________________________
06-23
105. The highest level of risk in new-product development occurs when products prove to be dangerous and defective or when
products fail to generate _____.
________________________________________
106. In order to reduce the risk of new-product failures, idea generation and screening should come from the _____.
________________________________________
107. The most common ethical issue in new-product development involves the Federal Trade Commission's definition of the
term _______.
________________________________________
108. The practice in which companies frequently come out with new models of a product that make existing models obsolete is
referred to as _____ _____.
________________________________________
109. _______ is the process by which new products are likely to be adopted, the rate at which they will be adopted, and the
process through which the products will spread into markets.
________________________________________
110. The stage in the consumer adoption process where the customer thinks about the product's value and whether to try it out
is the _______ stage.
________________________________________
111. The final stage in the consumer adoption process is _______, whereby the consumer actually buys and uses the product.
________________________________________
06-24
112. Belinda cannot wait to be the first of her friends to purchase the latest technology. She immediately purchased an iPhone,
an e-reader, and a Blu-Ray disc player as soon as they hit the market. Belinda would most likely be the type of adopter known
as a(n) ________.
________________________________________
113. Consumers that purchase and use a product soon after it has been introduced, but only after product reviews on the item
have been reviewed, are known as _____ _____.
________________________________________
114. _______ are typically older and less educated than other types of adopters, tend to be tied to tradition, and are not easily
motivated by promotional strategies.
________________________________________
115. The superior position a product enjoys over competing products if consumers believe it has more value than other products
in its class is referred to as _____ _____.
________________________________________
116. The new-product characteristic that refers to how well a new product fits into a potential customer's needs, values, product
knowledge, and past behaviors is _______.
________________________________________
117. The new-product characteristic that refers to the extent to which culture values "progress" is referred to as _____.
________________________________________
06-25
118. Due to the high cost of developing, advertising, manufacturing, and distributing a new product, profits are often low in the
_______ stage of the product life cycle.
________________________________________
119. The main objectives of the _______ stage of the product life cycle are profitability and maintaining the firm's market share
for as long as possible.
________________________________________
120. Because firms are introducing products at a faster rate, one general trend in marketing is that product life cycles are getting
_______.
________________________________________
121. Products that take longer for consumers to see the benefits of or that do not have a good infrastructure in place to support
them are called _____ _____ products.
________________________________________
122. The price of a product is usually higher in the _______ stage of the product life cycle.
________________________________________
123. Services are intangible products that cannot be touched, weighed, or measured.
True False
124. Revamped products make up the smallest percentage of new products but carry the most risk for the company introducing
them.
True False
06-26
125. New-category entries help companies compete better in an already-established market or enter a new market.
True False
126. The recently introduced Sprinkled Donut Crunch is a product-line extension for Quaker Oats' Cap'n Crunch brand.
True False
127. A company can advertise a product as new and improved for only one year after it hits store shelves.
True False
128. Among other things, the first stage in the new-product strategy development process helps to determine if the idea can be
turned into a product that will prove to be profitable.
True False
129. While the idea generation stage of the new-product development process generates a great number of potential ideas, in
reality, very few of these ideas ever become marketed products.
True False
130. Companies with cultures that value all new-product ideas, whatever the source, tend to develop more blockbuster products
than companies that are unwilling to search far and wide for sources of innovation.
True False
131. It is during the idea generation stage of the new-product development process that the company often ends up rejecting
most new goods and services for one reason or another.
True False
06-27
132. Concept tests ensure that the product will not be a hazard to users or their families, that it can be produced in the
company's or supplier's manufacturing facilities, and that it can be manufactured at a cost low enough to generate profits.
True False
133. Test marketing occurs when a new product is introduced in its final form to a geographically limited market to see how well
the product sells and to get reactions from potential users.
True False
134. During the test-marketing stage, the firm tests not only the product itself but also the marketing strategy related to it.
True False
135. Less-expensive forms of test marketing include simulated test markets and online test marketing.
True False
136. The launch stage of the new-product development process is usually the least expensive stage for new products.
True False
137. The new-product development path that utilizes a progressive sequence in which functional areas consecutively complete
their development tasks is referred to as a chronological new-product development path.
True False
138. One of the disadvantages of concurrent new-product development is that it may create tension between functional areas.
True False
06-28
139. Firms that want to maintain or improve their competitive position in the marketplace generally must develop new products.
True False
140. The highest level of risk for new-product development occurs when products fail to generate sales or prove to be
dangerous and defective.
True False
141. Every stage of the NPD process must be followed for the process to work correctly.
True False
term improved.
True False
143. Diffusion gives marketers a way to figure out who will likely buy their product over a period of time, plan an appropriate
marketing mix, and forecast potential sales.
True False
144. The group of adopters that make up the smallest percentage of product adopters is the laggard group.
True False
145. The stage of the product life cycle in which marketing costs rise due to competition as each firm tries to find ways to gain
market share is the maturity stage.
True False
06-29
146. During the decline stage, the firm will likely put forth a lot of effort to change a good's appearance or functionality in order to
generate interest for the product.
True False
147. The combination of all the products a company sells is referred to as its product line.
True False
148. Describe the potential ethical issues in the new-product development process.
149. Why are most consumers characterized as early or late majority adopters?
150. Explain the effects of the various stages of the product life cycle on product/service profitability.
06-30
151. A local ice cream shop has introduced a new signature treat that none of its competitors presently offer. Based on the
tenets of the product life cycle, what pricing strategies should this business use for this new treat through the various stages of
the PLC?
152. Sales and profits of the cleaning business that you own have been flat over the past two to three years. You want to offer
some new services but have been having difficulty coming up with some new ideas. What are some of the sources of new
service ideas that you can seek out?
06-31
153. A local technology firm is developing a new travel app that identifies antique shops and art galleries in the cities that you
plan to visit. How can this tech firm reduce the risks involved in developing this new travel app?
06-32
Chapter 06 Test Bank Key
1. As defined in your text, a product refers to
A. any good or service that is mass produced and sold in more than one market.
B. marketed items of value that fulfill a need of an individual consumer or business.
C. a tangible good that is received in exchange for money, time, or effort.
D. the specific combination of goods, services, or ideas that a firm offers to its target market.
E. any intangible offering a firm makes to an individual consumer or a business.
A product, the specific combination of goods, services, or ideas that a firm offers to its target market, enriches the lives of
consumers by providing designs, features and functions that people need and want.
AACSB: Analytical Thinking

Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-01 Understand the different types of new products, their advantages, and their risks.
Topic: Components and Classifications of Products and Services
2. The specific combination of goods, services, or ideas that a firm offers to its target market is referred to as
A. a product.
B. stock.
C. a load.
D. supply.
E. inventory.
A product is the specific combination of goods, services, or ideas that a firm offers to its target market, which enriches the lives
of consumers by providing designs, features, and functions that people need and want.

Blooms: Remember
Difficulty: 1 Easy
06-33
3. In marketing terms, the care you receive when you visit your family doctor is an example of
A. an idea.
B. an action.
C. a good.
D. a concept.
E. a service.
Services are intangible products, such as a tune-up on the car or a visit to a doctor; they cannot be touched, weighed, or
measured.
AACSB: Knowledge Application

Blooms: Apply
Difficulty: 3 Hard
4. When Allstate Insurance advertises You're in Good Hands with Allstate, it is marketing
A. a concept.
B. an action.
C. a service.
D. an idea.
E. a good.
Ideas are intangible and represent formulated thoughts or opinions.

Blooms: Apply
Difficulty: 3 Hard
5. According to your text, three factors are responsible for the rapid rise in new product development. They are faster and more
economical transportation, the advent of electronic communication, and
A. mass production.
B. free trade.
C. the requirement of patents and trademarks.
D. lessening of government restrictions.
E. mass marketing.
With few exceptions, most modern products can be mass produced, which makes them available to many customers as well as
more affordable.

Blooms: Remember
Difficulty: 1 Easy
Topic: New-product Development
06-34
6. Which of the following is not a way to categorize new products?
A. product-line extensions
B. new-to-the-market products
C. brand development
D. new-category entries
E. revamped products
New products are categorized in four ways: new-to-the-market products, new-category entries, product-line extensions, and
revamped products.

Blooms: Remember
Difficulty: 1 Easy
7. Which of the following makes up the smallest percentage of new products but carries the most potential (and risk) for the
company introducing them?
A. new-to-the-market products
B. product-line extensions
C. revamped products
D. repositioned products
E. new-category entries
New-to-the-market products are inventions that have never been seen before and create a new market. These products carry
the most potential (and risk) for the company introducing them.

Blooms: Understand
Difficulty: 2 Medium
8. A technology that displaces an established technology and shakes up the industry, or a groundbreaking product that creates a
completely new industry is referred to as
A. planned obsolescence.
B. inventive technology.
C. product revamping.
D. creative technology.
E. disruptive technology.
Disruptive technology is one that displaces an established technology and shakes up the industry, or a groundbreaking product
that creates a completely new industry.

Blooms: Remember
Difficulty: 1 Easy
06-35
9. Inventions that have never been seen before and create a new market are considered
A. new-to-the-market products.
B. new-category entries.
C. revamped products.
D. repositioned products.
E. product-line extensions.
New-to-the-market products are inventions that have never been seen before and create a new market. These products carry
the most potential (and risk) for the company introducing them.

Blooms: Remember
Difficulty: 1 Easy
10. Which of the following accurately describes new-category entries?
A. products that are new to a company but not new to the marketplace
B. products that are reintroduced into the marketplace after having been off the market for a lengthy time
C. inventions that have never been seen before and create a new market
D. products that extend and supplement a company's established product line
E. products that have new packaging, different features, and updated designs and functions
New-category entries are products that are new to a company, but not new to the marketplace.

Blooms: Remember
Difficulty: 1 Easy
11. Dell doesn't currently offer an e-reader in its product line. However, if the company decided to enter the market by producing
an e-reader of its own, it would be classified as what type of product?
A. product-line improvement
B. new category entry
C. revamped product
D. product-line extension
E. new-to-the-market
New-category entries are products that are new to a company but not new to the marketplace.

Blooms: Apply
06-36
Difficulty: 3 Hard
12. A group of related products marketed by the same firm is its
A. product line.
B. product mix.
C. marketing mix.
D. marketing line.
E. product category.
A product line is a group of related products marketed by the same firm.

Blooms: Remember
Difficulty: 1 Easy
Topic: Product Line
13. The Ford Motor Company produces the Fiesta, Focus, Fusion, and Escape. As a group, these cars represent a
A. product line.
B. marketing line.
C. product mix.
D. marketing class.
E. marketing mix.
A product line is a group of related products marketed by the same firm.

Blooms: Apply
Difficulty: 3 Hard
Topic: Product Line
14. Read the following statements and select the one that is not an advantage of a product-line extension.
A. Manufacturing of goods may be more efficient.

B. Customers may feel loyalty to the product line.
C. The new product can be advertised alongside existing products.
D. The new product is certain to be accepted by the market.
E. The company and brand may be easily recognized.
A of a product-line extension is that there is uncertainty about how well the new products will be accepted by the market.
AACSB: Reflective Thinking

Blooms: Analyze
Difficulty: 3 Hard
06-37
Topic: Line Extensions and Product Modifications
15. A product labeled "new and improved" would fall within the category of a
A. revamped product.
B. new-category entry.
C. new-to-the-market product.
D. product-line extension.
E. remanufactured product.
A product that has a new packaging, different features, and updated designs and functions is a revamped product. Products
labeled "new and improved" fall within the category of revamped products.

Blooms: Understand
16. A product that has new packaging, different features and updated designs and functions is a
A. new-to-the-market product.
B. revamped product.
C. remanufactured product.
D. new-category entry.
E. product-line extension.
A product that has new packaging, different features, and updated designs and functions is a revamped product.

Blooms: Remember
Difficulty: 1 Easy
17. How long can a company advertise a product as "new and improved" after it hits store shelves?
A. three months
B. six months
C. one year
D. two years
E. indefinitely
A company can only advertise a product as "new and improved" for six months after it hits store shelves.

Blooms: Remember
Difficulty: 1 Easy
06-38
18. Which of the following is not one of the stages in the new-product development process?
B. concept testing
D. product launch
E. idea screening
The stages in the new-product development process are: (1) new-product strategy development, (2) idea generation, (3) idea
screening, (4) business analysis, (5) product development, (6) test marketing, and (7) product launch. Concept testing is an
element that takes place in the idea screening stage.

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-02 Describe the various stages of new-product development.
19. The new-product strategy development stage accomplishes all of the following except
A. it outlines the costs that will be incurred for the development of new products.
B. it specifies the target markets to be served by new products.
C. it specifies how new products will fit into the company's marketing plan.
D. it provides general guidelines for the new-product development process.
E. it outlines general characteristics of the types of products the firm will develop.
The fourth stage of the new-product development process, the business analysis stage, is where costs of developing new
products are estimated.

Blooms: Understand
06-39
20. In what stage of the new-product development process would a company use a SWOT analysis and environmental scanning
to determine where new products may be able to help strengthen the firm's marketing position?
A. test marketing
C. idea screening
D. new-product strategy development
E. idea generation
In the first stage of the new-product development process, new-product strategy development, some companies will use a
SWOT analysis and environmental scanning to determine where new products may be able to help strengthen the firm's
marketing position.

Blooms: Understand
21. The stage of the new-product development (NPD) process in which a set of product concepts is generated from which to
identify potentially viable new products is called idea
A. analysis.
B. screening.
C. marketing.
D. generation.
E. development.
Once the firm establishes a new-product development strategy, it moves to the second stage of the NPD process, idea
generation.

Blooms: Remember
Difficulty: 1 Easy
22. Idea generation is the stage in the new-product development process in which
A. a collection of product concepts is generated for determining potentially viable new products.
B. it is determined if the idea fits into the company's marketing strategy and should be developed.
C. ideas are test-marketed with consumers to determine if they should be developed further.
D. prototypes are developed to test new product ideas.
E. the company determines the direction it will take in developing new products.
Idea generation involves coming up with a set of product concepts from which to identify potentially viable new products.

Blooms: Understand
06-40
23. Which of the following would be considered an internal source of idea generation?
A. an independent inventor
B. a company's customers
C. a company's employees
D. a company's competitors
E. a company's suppliers
Internal sources of idea generation come from inside the company itself, such as from company employees. Customers,
competitors, suppliers, and independent inventors are all sources of external idea generation.

Blooms: Understand
24. Firms that generate new-product ideas by gathering both external and internal ideas are using
A. pivoting.
B. diffusion.
C. positioning.
D. disruptive technology.
E. open innovation.
Open innovation is a way of generating new-product ideas by gathering both external ideas and internal ideas.

Blooms: Remember
Difficulty: 1 Easy
25. In which stage of the new-product development process do most ideas for new products and services end up getting
rejected for one reason or another?
A. idea screening
C. test marketing
E. idea generation
Once an idea has been suggested, the firm evaluates the idea to determine whether it fits into the new-product strategy. This
takes place in the idea screening stage, and it is here that most new ideas for goods and services get rejected for one reason or
another.

06-41
Blooms: Understand
26. Which of the following is a key question that should be asked in the idea screening stage?
A. Is the proposed product within the company's ability to produce?

B. Will the product sell?
C. Can the product be launched in a timely manner?
D. Can the product be developed within the time and budget constraints of the company?
E. Will the product meet the minimum return-on-investment requirements?
Questions regarding the launching of a product do not take place in the idea screening stage; they would take place in the last
stage of the new-product development process, the product launch stage.

Blooms: Understand
27. The procedure in which marketing professionals ask consumers for their reactions to verbal descriptions and rough visual
models of a potential product is called
B. test marketing.
C. prototype evaluation.
D. idea screening.
E. concept testing.
In a concept test, marketing professionals ask consumers for their reactions to verbal descriptions and rough visual models of a
potential product.

Blooms: Remember
Difficulty: 1 Easy
06-42
28. A concept test is part of which stage of the new-product development process?
B. test marketing
C. idea screening
D. idea generation
E. product launch
In a concept test, marketing professionals ask consumers for their reactions to verbal descriptions and rough visual models of a
potential product. This happens in the idea screening stage.

Blooms: Understand
29. In what stage of the new-product development process would organizations use social media to evaluate potential new
products?
A. product launch
B. idea screening
C. business analysis
D. idea generation
E. test marketing
By using social media in the idea screening stage, marketers can engage consumers in helping them screen potential ideas and
ensure only those new products that will be best received in the market move ahead in the process.

Blooms: Understand
30. Estimating the cost of a product, identifying the price at which a product will be sold, and estimating the demand for a
product all take place in which stage of the new-product development process?
B. test marketing
C. new-product strategy development
D. product launch
E. product development
To determine profitability, a company must undertake a business analysis, which includes estimating costs, identifying at what
price the product will likely be sold, and estimating demand for the product.

Blooms: Understand
06-43
31. Business analysis refers to the stage of the new-product development process
A. where the direction a company will take in developing a new product is determined.
B. where it is decided if a product can be developed and marketed within the time and budget constraints of the company.
C. where a concept test is performed to determine if the product will sell.
D. where a new product is analyzed to determine its profitability.
E. where a SWOT analysis and environmental scanning are used to determine if a new product will help strengthen the firm's
marketing plan.
Even if a good or service passes the idea screening step, the firm cannot guarantee that it will be profitable. During the business
analysis stage, a firm will determine a product's profitability by estimating costs and demand for the product, as well as
identifying at what price the product will likely be sold.

Blooms: Analyze
Difficulty: 3 Hard
32. A mock-up of a good with the materials the firm expects to use in the final product is called a
A. template.
B. sample.
C. model.
D. prototype.
E. blueprint.
Prototype tests ensure that the product will not be a hazard to users or their families, that it can be produced in the company's or
supplier's manufacturing facilities, and that it can be manufactured at a cost low enough to generate profits.

Blooms: Remember
Difficulty: 1 Easy
33. If a product idea is deemed to have the potential of being profitable in the business analysis stage, then it moves on to the
A. idea screening stage.

B. concept testing stage.
C. test marketing stage.
D. product launch stage.
E. product development stage.
The stage of new-product development after business analysis is the product development stage.

06-44
Blooms: Understand
34. In what stage of the new-product development process would a company make a prototype of the product?
A. product launch
B. idea generation
D. test marketing
E. idea screening
In the product development stage, a prototype of the good may be made to ensure the product will not be a hazard to users or
their families, that it can be produced in the company's or supplier's manufacturing facilities, and that it can be manufactured at a
cost low enough to generate profits.

Blooms: Understand
35. When Fisher-Price comes up with an idea for a new toy, it needs to ensure that the children who play with the toy will not
choke on any of its parts and that the toy in general will not be a hazard to the children who will be using it. In what stage of the
new-product development process will these safety checks occur?
A. test marketing
B. product development
C. product launch
D. idea generation
E. idea screening
In the product development stage, a prototype of the good may be made to ensure the product will not be a hazard to users or
their families, that it can be produced in the company's or supplier's manufacturing facilities, and that it can be manufactured at a
cost low enough to generate profits.

Blooms: Apply
Difficulty: 3 Hard
06-45
36. A company that is introducing a new product in its final form to a geographically limited market to see how well the product
sells and to get reactions from potential users is engaged in
B. idea screening.
C. test marketing.
D. concept testing.
E. product screening.
Test marketing involves introducing a new product in its final form to a geographically limited market to see how well the product
sells and to get reactions from potential users.

Blooms: Remember
Difficulty: 1 Easy
37. During which stage of the new-product development process would a firm test the marketing strategy related to the new
product?
B. idea screening
C. test marketing
D. product launch
E. business analysis
During the test marketing stage, the firm tests not only the product itself but also the marketing strategy related to it. The
marketing department may simultaneously try different approaches in different test markets to see which marketing mix
approach works best.

Blooms: Understand
38. If a firm builds a mock shopping experience for participants to observe their response to marketing stimuli, this is referred to
as a
A. focus group.
B. concept test market.
C. prototype.
D. simulated test market.
E. trial test market.
In a simulated test market, a firm builds a mock shopping experience for participants to observe their response to marketing
stimuli.
06-46
Blooms: Remember
Difficulty: 1 Easy
39. Which stage of the new-product development process is usually the most expensive for new products?
B. test marketing
C. idea screening
E. product launch
During the product launch stage, the final preparations for making the fully tested product available to the market are completed.
This part of the process is usually the most expensive stage for new products.

Blooms: Remember
Difficulty: 1 Easy
40. Read the following list of tasks and select the one that does not take place during the product launch stage.
A. purchase the materials to make and package the good

B. manufacture enough of the good to fill distribution pipelines
C. prepare internal systems for taking service orders
D. hire and train employees
E. make sure the product can be manufactured at a cost low enough to generate profits
Making sure the product can be manufactured at a cost low enough to generate profits is a task that takes place during the
product development stage.

Blooms: Analyze
Difficulty: 3 Hard
06-47
41. The term time to market refers to
A. how long a company spends test-marketing a product.

B. the speed with which a company launches a product.
C. the time a new product spends on the market before becoming accepted by the public.
D. the time it takes the marketing department to develop an advertising campaign.
E. the time it takes to develop a product.
The speed with which a company launches a product is the product's time to market. This can be extremely important because
being the first company to market a new product can mean the difference between success and failure.

Blooms: Remember
Difficulty: 1 Easy
42. Burt's company is in the process of developing what he feels is a complex and risky project. Burt has decided to use a
development sequence in which functional areas consecutively complete their development tasks. That way each set of
activities can be easily tracked. What type of development path is Burt using?
A. sequential
B. parallel
C. concurrent
D. functional
E. departmental
A sequential new-product development path that utilizes a progressive sequence in which functional areas consecutively
complete their development tasks is a sequential new-product development path.

Blooms: Apply
Difficulty: 3 Hard
43. The type of development path preferred by most supply chain management professionals is
A. concurrent new-product development.

B. sequential new-product development.
C. departmental new-product development.
D. parallel new-product development.
E. functional new-product development.
Concurrent new-product development uses cross-functional teams made up of representatives from various departments to
develop goods and services. This is the approach most supply chain management professionals prefer.

Blooms: Understand
06-48
44. Which of the following factors most likely drives the decision to use a concurrent approach in the development of high-tech
products?
A. cost
B. risk
C. control
D. speed
E. complexity
Sequential new-product development can be time consuming. For goods such as high-tech electronics, the speed of a
concurrent new-product development process will likely outweigh any disadvantages of the approach.

Blooms: Understand
45. When categorizing risk in new-product development, the highest level of risk occurs when
A. competitors copy products and sell them at a lower price.

B. supplier cost savings are not achieved.
C. the product takes sales away from existing products.
D. the product fails to generate sales.
E. inadequate supply of materials delays production.
The highest level of risk occurs when products fail to generate sales or prove to be dangerous and defective.

Blooms: Understand
Learning Objective: 06-03 Discuss the major risks in new-product development and how to reduce those risks.
Topic: Risks in New-Product Development
46. Compare the following to determine which is not a way that companies can reduce the risk of new product failures.
A. carefully listen to the customer for new product ideas

B. skip steps in the development process to market a product sooner
C. understand current market trends to anticipate demand
D. anticipate changes in the marketplace
E. be willing to fail on occasion
Every stage of the new-product development process must be followed for the process to work correctly. Companies trying to
launch a poorly conceived or executed product just to get a jump on the market or to generate quick profits are likely to damage
their brand image as well as lose money.
06-49
Blooms: Analyze
Difficulty: 3 Hard
47. The practice in which companies frequently come out with new models of a product that make existing models obsolete is an
ethical issue related to new-product development and is termed
A. time to market.
B. diversion.
C. diffusion.
D. planned obsolescence.
E. bait-and-switch.
Planned obsolescence occurs when companies frequently come out with new models of a product that make existing models
obsolete. Ethical issues aside, such behavior may damage a company's relationships with its business customers and
potentially with individual consumers as well.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-04 Summarize the ethical and sustainability issues in new-product development.
Topic: Ethical Issues in New-Product Development
48. The most common ethical issue in new-product development involves the Federal Trade Commission's definition of the term
A. healthier.
B. better.
C. guaranteed.
D. new.
E. improved.
The most common ethical issue involves the FTC's definition of the term new. Firms can make only minor changes to a product
and then claim that it is changed in a "functionally significant or substantial respect." Such actions result not only in ethical
issues but also in legal issues if the FTC disagrees with the company's viewpoint.
AACSB: Ethics
Blooms: Understand
06-50
49. A product that uses less energy to operate or can be recycled when the consumer is finished using it, it said to have
A. an ethical design.
B. a green design.
C. an environmental design.
D. a sustainable design.
E. an organic design.
A sustainable design is the philosophy of building products and services in a way that eliminates negative environmental
impacts. A product designed for sustainability might use less energy to operate or have the ability to be recycled.
AACSB: Ethics
Blooms: Understand
50. The process by which new products are likely to be adopted, the rate at which they will be adopted, and the process through
which the products will spread into markets is referred to as
A. distribution.
B. circulation.
C. time to market.
D. diffusion.
E. planned obsolescence.
Diffusion gives marketers a way to figure out who will likely buy their product over a period of time, plan an appropriate

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-05 Describe the categories of new-product adopters and the implications of adoption to marketers.
Topic: Consumer Adoption Process
51. Which of the following accurately represents the steps in the consumer adoption process?
A. awareness, research, comparison, evaluation, and adoption

B. awareness, evaluation, trial, adoption, and feedback
C. interest, evaluation, comparison, trial, and adoption
D. interest, comparison, evaluation, trial, and adoption
E. awareness, interest, evaluation, trial, and adoption
The five steps in the consumer adoption process are: awareness, interest, evaluation, trial, and adoption.

Blooms: Remember
Difficulty: 1 Easy
06-51
52. Siobhan wants to join a new health club. Her roommate belongs to a club that Siobhan heard about on the radio. She
decides to use her roommate's free guest passes to try out the club to see if it meets her needs. What stage of the consumer
adoption process does this represent?
A. comparison
B. interest
C. adoption
D. trial
E. awareness
In the trial stage, the consumer tests or uses the product to see if it meets requirements. Trials include things like test driving an
automobile, borrowing a new shampoo from a friend, or signing up for 30-day access to online streaming services.

Blooms: Apply
Difficulty: 3 Hard
53. Franco is considered to be tech savvy by his friends. He is unafraid to take risks when it comes to trying new products and is
always the first in his group to get the latest gizmo. What type of product adopter is Franco?
A. early adopter
B. late majority
C. laggard
D. early majority
E. innovator
An innovator is a category of consumer that adopts a product almost immediately after it is launched.

Blooms: Apply
Difficulty: 3 Hard
54. What type of adopter is typically well respected by their peers and sought by marketers because they tend to be opinion
leaders who are willing to talk to other people about their experiences with their purchases?
A. laggard
B. innovator
C. early majority
D. early adopter
E. late majority
Early adopters purchase and use a product soon after it has been introduced, but not as quickly as innovators. This group of
adopters is well respected by their peers and sought out by marketers because they tend to be opinion leaders.

Blooms: Remember
06-52
Difficulty: 1 Easy
55. Nora is in the market for a new HD television. She has spent quite a bit of time gathering information and thinking about the
purchase. She has asked her friends for opinions about the models they own and is happy that there are a lot of models to
choose from. Nora is most likely what type of adopter?
A. late majority
B. innovator
C. laggard
D. early adopter
E. early majority
The early majority category of adopters gathers more information and spends more time deciding to make a purchase than
innovators and early adopters.

Blooms: Apply
Difficulty: 3 Hard
56. A good or a service will likely fail to be profitable if which of the following adopters does not purchase the product?
A. late majority
B. innovators
C. early adopter
D. early majority
E. laggards
The early majority category of adopters comprises approximately 34 percent of the adopters of a new product. If this group fails
to purchase the product, the good or service will likely fail to be profitable.

Blooms: Understand
06-53
57. Which category of product adopters relies on others for information and buys a product because their friends have already
done so?
A. late majority
B. innovators
C. early majority
D. early adopter
E. laggards
The late majority category of adopters tends to be below average in income and education. They often rely on others for
information, buying a good or service because their friends have already done so.

Blooms: Remember
Difficulty: 1 Easy
58. Wilbur does not like change. He thinks the cell phone he currently owns is just fine even though it doesn't have all the
features of new phones on the market. Wilbur hopes that he doesn't lose this phone because the company doesn't make this
style anymore and he doesn't want to get anything different. What type of adopter is Wilbur?
A. early majority
B. laggard
C. early adopter
D. late majority
E. innovator
Laggards are a group of consumers that do not like change and may remain loyal to a product until it is no longer available for
sale.

Blooms: Apply
Difficulty: 3 Hard
06-54
59. From a marketing standpoint, which group of product adopters should marketers spend the least amount of time and effort in
convincing them to buy a product?
A. early adopter
B. early majority
C. laggards
D. innovators
E. late majority
Laggards tend to be tied to tradition and are not easily motivated by promotional strategies. In fact, marketers may never
convince laggards to buy their good or service, making them a group on which marketers should not expend a great deal of time
or effort.

Blooms: Understand
60. As it pertains to new product characteristics, the superior position a product enjoys over competing products if consumers
believe it has more value than other products in its category is referred to as
A. product preference.
B. compatibility.
C. superiority.
D. observability.
E. competitive advantage.
A product obtains a competitive advantage over competing products if consumers believe it has more value than other products
in its category. If a product has a competitive advantage, it will be adopted quickly.

Blooms: Remember
Difficulty: 1 Easy
Topic: Developing a Sustainable Competitive Advantage
06-55
61. The new product characteristic that refers to how well a new product fits into potential customers' needs, values, product
knowledge, and past behaviors is
A. competitive advantage.
B. observability.
C. trialability.
D. compatibility.
E. complexity.
Compatibility refers to how well a new product fits into potential customers' needs, values, product knowledge, and past
behaviors. For example, a new beer will not be a compatible product in countries that frown on alcoholic beverages due to
religious taboos.

Blooms: Remember
Difficulty: 1 Easy
Topic: Product Adoption
62. The marketers at Pantene included a trial size of their new shampoo in the September issue of InStyle Magazine. National
sales increased dramatically within a few weeks, an example of this product's
A. compatibility.
B. observability.
C. complexity.
D. competitive advantage.
E. trialability.
Products that consumers can try without significant expense will diffuse more quickly than others.

Blooms: Apply
Difficulty: 3 Hard
63. The extent to which a country is connect to other cultures is referred to as
A. cosmopolitanism.
B. homiphily.
C. complexity.
D. compatibility.
E. modernity.
The more cosmopolitan a country, the more potential customers are exposed to the adoption of a new product or service
elsewhere in the world, and the easier it is for the product to be adopted.

Blooms: Remember
Difficulty: 1 Easy
06-56
64. People who are similar to one another usually have many of the same needs, likes, and dislikes, and this similarity helps
products to be adopted more readily. This refers to which characteristic regarding product adoption?
A. modernity
B. compatibility
C. complexity
D. homiphily
E. cosmopolitanism
Homiphily, the extent to which consumers in a society are relatively similar to each other, can help the adoption of a new product
or service if it fits well with the society's culture.

Blooms: Understand
65. Which of the following is not a stage in the product life cycle?
A. introduction
B. obsolescence
C. decline
D. growth
E. maturity
The stages of the product life cycle are: new-product development, introduction, growth, maturity, and decline.

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-06 Describe the stages and aspects of the product life cycle and how they affect the marketing mix.
Topic: Product Life Cycle
66. Which stage of the product life cycle is characterized by low or negative profits and the possible need of companies to offer
incentives to stores to get them to carry the product?
A. maturity
B. growth
C. decline
D. introduction
During the introduction stage, there are few or no competitors if the product is new to the market, but sales are typically slow
because customers are not yet accustomed to the product. Due to the high cost of developing, advertising, manufacturing, and
distributing a new product, profits are often low or negative at this point in the product life cycle.
06-57
Blooms: Understand
67. During which stage of the product life cycle does a company have to promote the differences between its brand and that of
the competition, and attempt to portray its competitive advantage?
A. decline
B. maturity
C. growth
D. introduction
The growth stage of the product life cycle is characterized by increased sales, profits, and competition. During this phase, a
company typically tries to focus its marketing efforts on showcasing the competitive advantage of its product over others.

Blooms: Understand
68. Which stage of the product life cycle usually lasts the longest?
A. growth
B. maturity
C. decline
D. introduction
In the maturity stage of the product life cycle, the firm focuses on profitability and maintaining the firm's market share for as long
as possible.

Blooms: Understand
06-58
69. During which stage of the product life cycle do customer service and repairs begin to take on significance as a way to
differentiate a firm's products?
A. maturity
B. growth
C. decline
D. introduction
In the maturity stage, customer service and repairs begin to take on significance and can serve as a source of differentiation
from competing products.

Blooms: Understand
70. In which stage of the product life cycle are promotional strategies geared toward reminding consumers about the product
and its value to them?
A. decline
B. growth
C. beginning
D. maturity
E. introduction
Promotional strategies in the introductory stage usually involve making customers aware of the product and its attributes.
Intensive advertising that stresses how the product differs from the competition appears in the growth stage. Minimal promotion,
or none at all, takes place in the decline stage.

Blooms: Understand
71. If a company is using coupons or buy-one-get-one-free promotions to reduce the existing inventory of a product, that product
is most likely in what stage of the product life cycle?
A. introduction
B. growth
C. maturity
D. decline
In the decline stage, the product usually becomes obsolete. Little or no effort is put into changing a good's appearance or
functionality as consumers have moved on to other types of products. At this point, the firm will look to reduce its existing
inventory of the product.
Blooms: Understand
06-59
72. Udi's Gluten Free sells bread, bagels, cookies, pizza crust, and other products that are gluten free. The combination of all
the products that Udi's Gluten Free sells is referred to as its
A. name brand.
B. product line.
C. marketing mix.
D. product mix.
E. category line.
A firm's product mix is the combination of all the products a company sells.

Blooms: Apply
Difficulty: 3 Hard
Topic: Product Mix
73. As firms introduce new products at a faster rate, what tends to happen to existing products in the product mix?
A. The price of existing products tends to go up.

B. Existing products enter the maturity and decline stages more quickly.
C. Product life cycles become much slower.
D. Production costs for existing products tend to go down.
E. Existing products enter the maturity and decline stages more slowly.
A firm's product mix is the combination of all the products a company sells. One general trend in marketing is that product life
cycles are getting shorter, pushing existing products into the mature and decline stage faster.

Blooms: Understand
74. General Motors offers Chevrolet, GMC, Buick, and Cadillac as product categories. The extent to which a company offers
different product categories refers to its
A. product depth.
B. product width.
C. product-mix consistency.
D. product line.
Product width is determined by the extent to which a company offers different product categories.

Blooms: Apply
06-60
Difficulty: 3 Hard
Topic: Product Mix
75. Products that take longer for consumers to see the benefits of or that do not have a good infrastructure in place for support
are called
A. extended products.
B. complex products.
C. low-learning products.
D. high-learning products.
E. slow-learning products.
Products that take longer for consumers to see the benefits of or that do not have a good infrastructure in place to support them
are called high-learning products.

Blooms: Remember
Difficulty: 1 Easy
76. Which type of product has a product life cycle curve that is a steep up-and-down curve because consumers rapidly adopt
and then abandon the product?
A. high-learning products
B. slow-learning products
C. low-learning products
D. fashion products
E. fad products
A fad product is very popular for a relatively short amount of time and therefore has a steep up-and-down product life cycle
curve.

Blooms: Understand
06-61
77. First introduced in 1935 and highly popular in the early 1980s, Sperry Top-Sider shoes are once again a hit with young adult
consumers. These shoes are an example of a
A. low-learning product.
B. high-learning product.
C. fad product.
D. slow-learning product.
E. fashion product.
A fashion product comes in and out of favor with consumers. Men's hats were fashionable for decades but lost their appeal in
the 1960s, only to recently start becoming fashionable again. Fashion life cycles typically last longer than fad products, but are
short compared to high-learning and low-learning product curves.

Blooms: Apply
Difficulty: 3 Hard
78. What stage of the product life cycle is characterized by a full line of products, an intensive effort to maintain distribution, and
a product price equal or below that of competitors?
A. introduction
B. maturity
C. decline
D. growth
During the maturity stage of the product life cycle, a full line of products is offered, an intensive effort is made to maintain
distribution, and the product price is equal or below that of competitors.

Blooms: Understand
79. At what stage of the product life cycle is price usually the highest?
A. decline
B. growth
C. maturity
D. introduction
Due to lack of competition and high launch costs, the price of a product is usually higher in the introduction stage.

Blooms: Understand
06-62
80. Several things have led to the rapid rate at which new products are developed. They are faster and more economical
transportation, the advent of electronic communication, and _____ _____.
mass production
Several things have led to the rapid rate at which new products are developed. They are faster and more economical
transportation, the advent of electronic communication, and mass production.

Blooms: Remember
Difficulty: 1 Easy
81. A _______ is the specific combination of goods, services, or ideas that a firm offers to its target market to enrich the lives of
product
A product is the specific combination of goods, services, or ideas that a firm offers to its target market to enrich the lives of

Blooms: Remember
Difficulty: 1 Easy
82. There are four classifications of products: new-to-the-market products, new-category entries, product line extensions, and
_______ products.
revamped
There are four classifications of products: new-to-the-market products, new category products, product line extensions, and
revamped products.

Blooms: Remember
Difficulty: 1 Easy
06-63
83. _______ products make up the smallest percentage of new products but carry the most potential (and risk) for the company
introducing them.
New-to-the-market
New-to-the-market products are inventions that have never been seen before and create a new market.

Blooms: Understand
84. Because they disrupt the market by providing innovative benefits that offer so much value to customers, ________ products
often render existing products obsolete.
new-to-the-market
New-to-the-market products are inventions that have never been seen before and create a new market.

Blooms: Understand
85. Products that displace an established technology and shake up the industry or create a completely new industry are
examples of _____ technology.
disruptive
New-to-the-market products often are examples of a disruptive technology: one that displaces an established technology and
shakes up the industry, or a groundbreaking product that creates a completely new industry.

Blooms: Remember
Difficulty: 1 Easy
06-64
86. Products that are new to a company but not new to the marketplace are classified as _____ _____ entries.
new-category
New-category entries help companies compete better in an already-established market or enter a new market.

Blooms: Remember
Difficulty: 1 Easy
87. When Doritos launched its new Locos Tacos tortilla chips, it was an example of a _____ _____ _____because the Locos
Tacos extended its already-established product line.
product-line extension or
product-line extensions
Product-line extensions are products that extend and supplement a company's established product line.

Blooms: Apply
Difficulty: 3 Hard
88. A product that is marketed as "new and improved" is most likely a _______ product.
revamped
Revamped products are products that have new packaging, different features, and updated designs and functions.

Blooms: Understand
06-65
89. There are ______ stages in the new-product development process.
seven or
7
Whatever new product type a firm plans to develop, it will likely follow a formal seven-step new-product development (NPD)
process.

Blooms: Remember
Difficulty: 1 Easy
90. _____ _____involves coming up with a set of product concepts from which to identify potentially viable new products.
Idea generation
Once a firm establishes a new-product development strategy, it moves to the second stage of the NPD process: idea
generation. It is in this stage that product concepts are generated from which to identify potentially viable new products.

Blooms: Remember
Difficulty: 1 Easy
91. A form of open innovation is ______, in which companies ask for opinions from a large and relatively undefined group of
crowdsourcing
Crowdsourcing is a form of open innovation in which companies ask for opinions from a large and relatively undefined group of

Blooms: Remember
Difficulty: 1 Easy
06-66
92. It is during the _____ _____ stage of new-product development that the company often ends up rejecting most new goods
and services.
idea screening
Idea screening is the stage of NPD in which the firm evaluates an idea to determine whether it fits into the new-product strategy.

Blooms: Understand
93. In a _____ _____, marketing professionals ask consumers for their reactions to verbal descriptions and rough visual models
of a potential product.
concept test
Companies can often confirm an idea's sales potential through a concept test by asking consumers for their reactions to a
potential product.

Blooms: Remember
Difficulty: 1 Easy
94. A _____ _____ entails identifying at what price the product will likely be sold, estimating costs, and estimating demand for
the product.
business analysis
A business analysis is the process of analyzing a new product to determine its profitability and includes identifying at what price
the product will likely be sold, estimating costs, and estimating demand for the product.

Blooms: Remember
Difficulty: 1 Easy
06-67
95. Developing a _______ helps to ensure that a product will not be a hazard to users or their families, that it can be produced in
the company's or supplier's manufacturing facilities, and that it can be manufactured at a cost low enough to generate profits.
prototype
A prototype is a mock-up of a good, often created individually with the materials the firm expects to use in the final product.

Blooms: Understand
96. Introducing a new product in its final form to a geographically limited market to see how well the product sells and to get
reactions from potential users is called _____ _____.
test marketing
Test marketing involves introducing a new product in its final form to a geographically limited market to see how well the product
sells and to get reactions from potential users.

Blooms: Understand
97. During the _____ _____ stage, the firm tests not only the product itself but also the marketing strategy related to it.
test-marketing
The marketing department may simultaneously try different approaches in different test markets to see which marketing mix

Blooms: Understand
06-68
98. A _______ test market is a procedure in which the firm builds a mock shopping experience for participants to observe their
response to marketing stimuli.
simulated
A simulated test market is a less costly means for test marketing.

Blooms: Remember
Difficulty: 1 Easy
99. The final stage of the new-product development process is the _____ _____.
product launch
Once the firm feels the product is ready for the market, it enters the final stage of the NPD process, which is the product launch.

Blooms: Remember
Difficulty: 1 Easy
100. The _____ _____ stage of the new-product development process is usually the most expensive stage for new products.
product launch
The launch stage is usually the most expensive stage for new products, and delayed product launches often cost companies a
great deal of money in overtime labor and shipping charges.

Blooms: Remember
Difficulty: 1 Easy
06-69
101. A company's time to market is the speed with which it _____ a product.
launches
The speed with which a company launches a product, or the product's time to market, can be extremely important, especially
when it comes to high-tech products. Being the first company to market a new product can mean the difference between
success and failure.

Blooms: Remember
Difficulty: 1 Easy
102. The two paths that a firm can take when developing a new product are sequential or _______.
concurrent
The advantage a firm gains by being first to the market with a new product often depends on whether it follows a sequential or
concurrent path when developing the product.

Blooms: Remember
Difficulty: 1 Easy
103. _______ new-product development uses cross-functional teams made up of representatives from various departments to
develop goods and services.
Concurrent
A concurrent new-product development approach is preferred by most supply chain management professionals.

Blooms: Remember
Difficulty: 1 Easy
06-70
104. Companies have more control over the development of complex products when utilizing a _______ new-product
development approach.
sequential
In a sequential new-product development approach, companies have more control over the development of complex products
and they can track project progress more easily.

Blooms: Understand
105. The highest level of risk in new-product development occurs when products prove to be dangerous and defective or when
products fail to generate _____.
sales
The highest level of risk in new-product development occurs when products prove to be dangerous and defective or when
products fail to generate sales. These risks can be devastating to a company if they permanently damage the firm's image or
create legal liabilities.

Blooms: Understand
106. In order to reduce the risk of new-product failures, idea generation and screening should come from the _____.
customer
The voice of the customer should always help guide idea generation and screenings in a company because customer needs and
wants drive purchasing.

Blooms: Understand
06-71
term _______.
new
Firms can make only minor changes to a product and then claim that it is changed in a "functionally significant or substantial
respect." Such actions result not only in ethical issues but also in legal issues if the FTC disagrees with the company's
viewpoint.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
108. The practice in which companies frequently come out with new models of a product that make existing models obsolete is
referred to as _____ _____.
planned obsolescence
Planned obsolescence occurs when companies frequently come out with new models of a product that make existing models
obsolete. An example is the projection TV.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
109. _______ is the process by which new products are likely to be adopted, the rate at which they will be adopted, and the
process through which the products will spread into markets.
Diffusion
When a consumer purchases and uses a product, the product has been adopted. The process through which a product is
adopted and spreads across various types of adopters is called diffusion.

Blooms: Remember
Difficulty: 1 Easy
06-72
110. The stage in the consumer adoption process where the customer thinks about the product's value and whether to try it out
is the _______ stage.
evaluation
Evaluation is the third stage of the consumer adoption process. In this stage, the customer evaluates competing products as well
to determine which product best satisfies his or her needs and wants.

Blooms: Remember
Difficulty: 1 Easy
111. The final stage in the consumer adoption process is _______, whereby the consumer actually buys and uses the product.
adoption
Adoption is the final stage in the consumer adoption process. In this stage, the consumer buys and uses the product. Adoption
happens at different times depending on the type of adopter.

Blooms: Remember
Difficulty: 1 Easy
112. Belinda cannot wait to be the first of her friends to purchase the latest technology. She immediately purchased an iPhone,
an e-reader, and a Blu-Ray disc player as soon as they hit the market. Belinda would most likely be the type of adopter known
as a(n) ________.
innovator
Innovators are consumers that adopt a product almost immediately after it is launched.

Blooms: Apply
Difficulty: 3 Hard
06-73
113. Consumers that purchase and use a product soon after it has been introduced, but only after product reviews on the item
have been reviewed, are known as _____ _____.
early adopters
Early adopters purchase and use a product soon after it has been introduced, but wait for product reviews and further
information concerning new products before purchasing them.

Blooms: Remember
Difficulty: 1 Easy
114. _______ are typically older and less educated than other types of adopters, tend to be tied to tradition, and are not easily
motivated by promotional strategies.
Laggards
Laggards are consumers that do not like change and may remain loyal to a product until it is no longer available for sale.

Blooms: Understand
115. The superior position a product enjoys over competing products if consumers believe it has more value than other products
in its class is referred to as _____ _____.
competitive advantage
If a product has a competitive advantage, it will be adopted quickly because consumers believe it has more value than other
products in its class.

Blooms: Remember
Difficulty: 1 Easy
Topic: Developing a Sustainable Competitive Advantage
06-74
116. The new-product characteristic that refers to how well a new product fits into a potential customer's needs, values, product
knowledge, and past behaviors is _______.
compatibility
Compatibility refers to how well a new product fits into a potential customer's needs, values, product knowledge, and past
behaviors.

Blooms: Understand
117. The new-product characteristic that refers to the extent to which culture values "progress" is referred to as _____.
modernity
Modernity refers to the extent to which a culture values “progress.”

Blooms: Understand
118. Due to the high cost of developing, advertising, manufacturing, and distributing a new product, profits are often low in the
_______ stage of the product life cycle.
introduction
The introduction stage of the product life cycle that occurs after the firm launches the product into the marketplace and
innovators begin to buy it.

Blooms: Understand
06-75
119. The main objectives of the _______ stage of the product life cycle are profitability and maintaining the firm's market share
for as long as possible.
maturity
In the maturity stage of the product life cycle, firms focus on profitability and maintaining the firm's market share for as long as
possible.

Blooms: Understand
120. Because firms are introducing products at a faster rate, one general trend in marketing is that product life cycles are getting
_______.
shorter
One general trend in marketing is that product life cycles are getting shorter. In addition to technology changes, which rapidly
make products obsolete, firms now introduce new products at a faster rate, which is pushing existing products into the mature
and decline stage faster.

Blooms: Understand
121. Products that take longer for consumers to see the benefits of or that do not have a good infrastructure in place to support
them are called _____ _____ products.
high learning or
high-learning
Products that take longer for consumers to see the benefits of or that do not have a good infrastructure in place to support them
will have a curve with a long, flat-shaped introductory and growth phase. These are called high-learning products.

Blooms: Remember
Difficulty: 1 Easy
06-76
122. The price of a product is usually higher in the _______ stage of the product life cycle.
introductory or
introduction
Price is usually higher in the introductory phase due to lack of competition and high launch costs, then starts to fall in the growth
stage as competition becomes more intense. The price continues to fall through the maturity stage, when a firm must defend its
market share, then levels out in the decline stage.

Blooms: Remember
Difficulty: 1 Easy
123. Services are intangible products that cannot be touched, weighed, or measured.
TRUE
A product is the specific combination of goods, services, or ideas that a firm offers to its target market. Services are intangible
products; they cannot be touched, weighed, or measured.

Blooms: Remember
Difficulty: 1 Easy
124. Revamped products make up the smallest percentage of new products but carry the most risk for the company introducing
them.
FALSE
New-to-the-market products make up the smallest percentage of new products but carry the most risk for the company
introducing them.

Blooms: Understand
06-77
125. New-category entries help companies compete better in an already-established market or enter a new market.
TRUE
Entering new markets is very important to businesses because it opens up a whole new set of customers and potentially a great
deal more revenue and profits. New-category entries help companies compete better in an already-established market or enter a
new market.
Blooms: Understand
126. The recently introduced Sprinkled Donut Crunch is a product-line extension for Quaker Oats' Cap'n Crunch brand.
TRUE
A product-line extension takes place when a product extends and supplements a company's established product line.

Blooms: Apply
Difficulty: 3 Hard
127. A company can advertise a product as new and improved for only one year after it hits store shelves.
FALSE
A company can advertise a product as new and improved for only six months after it hits store shelves.

Blooms: Remember
Difficulty: 1 Easy
128. Among other things, the first stage in the new-product strategy development process helps to determine if the idea can be
turned into a product that will prove to be profitable.
FALSE
The business analysis stage (stage 4) is the stage in which the firm determines if the idea can be turned into a product that will
prove to be profitable.

Blooms: Understand
06-78
129. While the idea generation stage of the new-product development process generates a great number of potential ideas, in
reality, very few of these ideas ever become marketed products.
TRUE
Few of the ideas produced in the idea generation stage ever become marketed products. In fact, a firm must generate as many
as one hundred ideas to find one product that will actually make it to the marketplace.

Blooms: Understand
130. Companies with cultures that value all new-product ideas, whatever the source, tend to develop more blockbuster products
than companies that are unwilling to search far and wide for sources of innovation.
TRUE
Many ideas for new products originate from external sources such as customer ideas or competitor's products. Companies with
cultures that value all new-product ideas, whatever the source, tend to develop more blockbuster products than companies that
are unwilling to search far and wide for sources of innovation.

Blooms: Understand
131. It is during the idea generation stage of the new-product development process that the company often ends up rejecting
most new goods and services for one reason or another.
FALSE
The idea screening stage is where a firm evaluates an idea to determine whether it fits into the new-product strategy.

Blooms: Remember
Difficulty: 1 Easy
06-79
132. Concept tests ensure that the product will not be a hazard to users or their families, that it can be produced in the
company's or supplier's manufacturing facilities, and that it can be manufactured at a cost low enough to generate profits.
FALSE
Prototype tests ensure that the product will not be a hazard to users or their families, that it can be produced in the company's or
supplier's manufacturing facilities, and that it can be manufactured at a cost low enough to generate profits.

Blooms: Understand
133. Test marketing occurs when a new product is introduced in its final form to a geographically limited market to see how well
the product sells and to get reactions from potential users.
TRUE
In the test-marketing stage, a product that makes it past the product development stage is ready to be tested more fully with
potential customers.

Blooms: Remember
Difficulty: 1 Easy
134. During the test-marketing stage, the firm tests not only the product itself but also the marketing strategy related to it.
TRUE
During the test-marketing stage, the firm tests not only the product itself but also the marketing strategy related to it. The
marketing department may simultaneously try different approaches in different test markets to see which marketing mix

Blooms: Understand
06-80
135. Less-expensive forms of test marketing include simulated test markets and online test marketing.
TRUE
Some companies use less-costly means for test marketing. Simulated test markets, in which the firm builds a mock shopping
experience for participants to observe their response to marketing stimuli, can be used to introduce a new product, as can online
test-marketing strategies.

Blooms: Remember
Difficulty: 1 Easy
136. The launch stage of the new-product development process is usually the least expensive stage for new products.
FALSE
The product launch involves completing all the final preparations for making the fully tested product available to the market. This
stage is usually the most expensive stage for new products.

Blooms: Understand
137. The new-product development path that utilizes a progressive sequence in which functional areas consecutively complete
their development tasks is referred to as a chronological new-product development path.
FALSE
Sequential new-product development utilizes a progressive sequence in which functional areas consecutively complete their
development tasks.
Blooms: Remember
Difficulty: 1 Easy
06-81
138. One of the disadvantages of concurrent new-product development is that it may create tension between functional areas.
TRUE
Because the concurrent new-product development path uses cross-functional teams made up of representatives from various
departments to develop goods and services, it has the potential to create tension among functional areas.

Blooms: Understand
139. Firms that want to maintain or improve their competitive position in the marketplace generally must develop new products.
TRUE
Firms that want to maintain or improve their competitive position in the marketplace generally must develop new products.
Failure to do so carries tremendous risk, particularly for companies that develop products that quickly become obsolete.
Blooms: Remember
Difficulty: 1 Easy
140. The highest level of risk for new-product development occurs when products fail to generate sales or prove to be
dangerous and defective.
TRUE
The highest level of risk for new-product development occurs when products fail to generate sales or prove to be dangerous and
defective. These risks can be devastating to a company if they permanently damage the firm's image or create legal liabilities.
Blooms: Understand
141. Every stage of the NPD process must be followed for the process to work correctly.
TRUE
Companies trying to launch a poorly conceived or executed product just to get a jump on the market or to generate quick profits
are likely to damage their brand image as well as lose money.

Blooms: Understand
06-82
term improved.
FALSE
The most common ethical issue in new-product development involves the Federal Trade Commission's definition of the term
new.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
143. Diffusion gives marketers a way to figure out who will likely buy their product over a period of time, plan an appropriate
TRUE
Diffusion is the process by which new products are likely to be adopted, the rate at which they will be adopted, and the process
through which the products will spread into markets.

Blooms: Understand
144. The group of adopters that make up the smallest percentage of product adopters is the laggard group.
FALSE
Innovators make up approximately 2.5 percent of those who adopt products, making this group the smallest.

Blooms: Remember
Difficulty: 1 Easy
06-83
145. The stage of the product life cycle in which marketing costs rise due to competition as each firm tries to find ways to gain
market share is the maturity stage.
TRUE
In the maturity stage of the product life cycle, a firm focuses on profitability and maintaining the firm's market share for as long as
possible.
Blooms: Understand
146. During the decline stage, the firm will likely put forth a lot of effort to change a good's appearance or functionality in order to
generate interest for the product.
FALSE
During the decline stage, the firm will likely cut prices to generate sales, curtail advertising, eliminate unprofitable items from the
product line, and reduce or eliminate promotion to individual consumers and resellers.

Blooms: Understand
147. The combination of all the products a company sells is referred to as its product line.
FALSE
The combination of all the products a company sells is referred to as its product mix.
Blooms: Remember
Difficulty: 1 Easy
Topic: Product Mix
148. Describe the potential ethical issues in the new-product development process.
Companies must follow the Fair Trade Commission's (FTC) definition of a new product. A company cannot make small changes
to a product and then advertise the product as substantially changed or different. There are also ethical issues with a business
that chooses not to develop new and possibly better products until a present product becomes obsolete or a patent expires.
Also, companies may use the new-product development process to make existing products obsolete, which is referred to as
planned obsolescence.
06-84
Blooms: Remember
Difficulty: 1 Easy
149. Why are most consumers characterized as early or late majority adopters?
Approximately 68 percent of consumers are early or late majority adopters. Early majority consumers take more time making a
decision on purchasing a new product and collect more information than innovators and early adopters when making their
decision. Late majority adopters rely on others (innovators and early adopters) for information when making their decision. Both
of these adopter types have a longer consumer decision-making process, and acquire more information, especially seeing
others purchase and use a new product, before making the purchase decision.

Blooms: Apply
150. Explain the effects of the various stages of the product life cycle on product/service profitability.
In the introductory stage of the product life cycle (PLC), costs are high (especially marketing costs) and sales are low, so the
product is generating a loss. During the growth stage, costs are decreasing (due to economies of scale and lower marketing
costs) and revenues are rising quickly as more consumers purchase more of the product and competitors have not yet entered
the market. The maturity stage is characterized by leveling profits as competitors enter the market, sales level off, and marketing
costs increase to ward off competitors. In the decline stage, sales start to decrease, new products create additional competition,
and consumers get tired of the present product.

Blooms: Understand
151. A local ice cream shop has introduced a new signature treat that none of its competitors presently offer. Based on the
tenets of the product life cycle, what pricing strategies should this business use for this new treat through the various stages of
the PLC?
In the introductory stage of the product life cycle (PLC), the ice cream store should place a high price on the new treat due to its
uniqueness, but should begin to lower the price during the growth stage as the competition catches up to the new product. The
maturity stage is characterized by a price that is equal to or lower than competitors, and then the ice cream shop can maintain
the price in the declining stage or raise the price if the produce turns out to be a niche product.

Blooms: Apply
Topic: Pricing Tactics
06-85
152. Sales and profits of the cleaning business that you own have been flat over the past two to three years. You want to offer
some new services but have been having difficulty coming up with some new ideas. What are some of the sources of new
service ideas that you can seek out?
You can get some ideas for additional services from internal sources like your employees, sales force, or internal R&D (research
and development). There are also many external sources for research, the best being your customers as well as competitors
that provide some services you might be interested in.

Blooms: Understand
153. A local technology firm is developing a new travel app that identifies antique shops and art galleries in the cities that you
plan to visit. How can this tech firm reduce the risks involved in developing this new travel app?
One of the key elements in decreasing the risk of developing a new product is to listen to present and/or potential customers
carefully. You need to ensure that potential customers need or want your product and can afford it. Your company should also
fully commit to the new-product development process for the exercise to work correctly. Using market research, you need to
understand current market trends and anticipate marketplace changes. In your research, you should ask the right questions that
deal with demand, costs, quality, and other issues that are important to the customer. Also, failing should not be looked upon as
totally negative, as firms can learn from these failures.

Blooms: Analyze
Difficulty: 3 Hard
06-86
Chapter 06 Test Bank Summary
Category # of Questions
AACSB: Analytical Thinking 73

AACSB: Ethics 6
AACSB: Knowledge Application 18
AACSB: Reflective Thinking 56
Accessibility: Keyboard Navigation 147
Blooms: Analyze 5
Blooms: Apply 19
Blooms: Remember 65
Blooms: Understand 64
Difficulty: 1 Easy 65
Difficulty: 2 Medium 66
Difficulty: 3 Hard 22
Learning Objective: 06-01 Understand the different types of new products, their advantages, and their risks. 31
Learning Objective: 06-02 Describe the various stages of new-product development. 55
Learning Objective: 06-03 Discuss the major risks in new-product development and how to reduce those risks. 8
Learning Objective: 06-04 Summarize the ethical and sustainability issues in new-product development. 7
Learning Objective: 06-05 Describe the categories of new-product adopters and the implications of adoption to marketers. 27
Learning Objective: 06-06 Describe the stages and aspects of the product life cycle and how they affect the marketing mix. 25
Topic: Components and Classifications of Products and Services 27
Topic: Consumer Adoption Process 11
Topic: Developing a Sustainable Competitive Advantage 2
Topic: Ethical Issues in New-Product Development 7
Topic: Line Extensions and Product Modifications 1
Topic: New-product Development 56
Topic: Pricing Tactics 1
Topic: Product Adoption 14
Topic: Product Life Cycle 21
Topic: Product Line 2
Topic: Product Mix 3
Topic: Risks in New-Product Development 8
06-87

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Chapter 06 Test Bank

1. As defined in your text, a product refers to

6. Which of the following is not a way to categorize new products?

10. Which of the following accurately describes new-category entries?

12. A group of related products marketed by the same firm is its

A. Manufacturing of goods may be more efficient.

A. Is the proposed product within the company's ability to produce?

A. idea screening stage.

A. purchase the materials to make and package the good

A. how long a company spends test-marketing a product.

A. concurrent new-product development.

A. competitors copy products and sell them at a lower price.

A. carefully listen to the customer for new product ideas

A. awareness, research, comparison, evaluation, and adoption

63. The extent to which a country is connect to other cultures is referred to as

A. The price of existing products tends to go up.

89. There are ______ stages in the new-product development process.

1. As defined in your text, a product refers to

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Knowledge Application

Ideas are intangible and represent formulated thoughts or opinions.

AACSB: Knowledge Application

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

10. Which of the following accurately describes new-category entries?

AACSB: Analytical Thinking

AACSB: Knowledge Application

12. A group of related products marketed by the same firm is its

A product line is a group of related products marketed by the same firm.

AACSB: Analytical Thinking

A product line is a group of related products marketed by the same firm.

AACSB: Knowledge Application

A. Manufacturing of goods may be more efficient.

AACSB: Reflective Thinking

AACSB: Reflective Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Reflective Thinking

AACSB: Reflective Thinking

AACSB: Analytical Thinking

AACSB: Reflective Thinking

A. Is the proposed product within the company's ability to produce?

AACSB: Reflective Thinking

AACSB: Analytical Thinking

AACSB: Reflective Thinking

AACSB: Reflective Thinking

AACSB: Reflective Thinking

AACSB: Reflective Thinking