02 - New Product Decisions

Question 1

Types of New Products (5)

Answer 1

1) New-to-the-world (Innovations)
2) Replacement - replacing old technology for example
3) Variant
4) Me-too
5) Re-launched

Question 2

New Product Options (5)

Answer 2

1) Buy other companies
2) Buy patents from other companies
3) Buy a license or franchise from another company
4) New-to-the-world items
5) Improve upon existing products

Question 3

Reasons for failures of new products (8)

Answer 3

1) Fragmented markets
2) Social, economic, and governmental barriers
3) Development costs
4) Capital shortages
5) Shorter development time
6) Poor launch timing
7) Shorter PLCs
8) Lack of organizational support

Question 4

New product development stages (5)

Answer 4

1) Idea Generation
2) Idea screening
3) Business Analysis
4) Market Testing
5) Commercialization

Question 5

Means of generating ideas for new products (8)

Answer 5

1) Interacting with employees
2) Interacting with outsiders
3) Studying competitors
4) Adopting creativity techniques
5) Customer brainstorming
6) Informal customer sessions
7) “fly on the wall” research
8) Treat trade shows as intelligence missions

Question 6

Ways to draw new ideas from customers (5)

Answer 6

1) Observe customers using product
2) Ask customers about product problems
3) Use customer advisory board
4) Form brand community of enthusiasts
5) Challenge customers to improve product

Question 7

Product success requirements (4)

Answer 7

1) Unique or superior product
2) High performance-to-cost ratio
3) High marketing dollar support
4) Lack of strong competition

Question 8

New product success probability formula

Answer 8

P(technical completion) * P( commercialization given technical completion) * P(economic success given commercialization)

Question 9

Concept testing responses (6)

Answer 9

1) Communicability and believability
2) Percieved value
3) Need level
4) Purchase intention
5) Gap level
6) User targets, purchase occasions and frequency

Question 10

Product Development Methods (2)

Answer 10

1) Physical Prototypes

2) Customer tests (alpha & beta testing)

Question 11

Market Testing Methods (2)

Answer 11

1) Consumer-goods market testing

2) Business-goods market testing

Question 12

Methods of Consumer-Goods Market Testing (3)

Answer 12

1) Simulated test marketing
2) Controlled test marketing
3) Test markets

Question 13

Approaches to Commercialization (3)

Answer 13

1) First entry
2) Parallel entry with competitor
3) Late entry

Question 14

Factors to consider when Commercializing (3)

Answer 14

1) Where (Geographic Strategy)
2) To Whom (Target-Market Prospects)
3) How (Introductory Market Strategy)

Question 15

Definition: Adoption

Answer 15

An individual’s decision to become a regular user of a product

Question 16

Stages in the Adoption Process (5)

Answer 16

1) Awareness
2) Interest
3) Evaluation
4) Trial
5) Adoption

Question 17

Factors Influencing the Adoption Process (5)

Answer 17

1) Readiness to try new products and personal influence
2) Relative advantage
3) Product complexity
4) Divisibility
5) Communicability

Question 18

Definition: Product Life Cycle (PLC)

Answer 18

A life cycle plots the sales curve of a product or a product class over a period of time

Question 19

PLC Stages (4)

Answer 19

1) Introduction
2) Growth
3) Maturity-Saturation
4) Decline

Question 20

Introduction Phase Features (6)

Answer 20

1) Product design and development critical
2) Frequent product and process design changes
3) Short production runs
4) High production costs
5) Limited models
6) Attention to quality

Question 21

Growth Phase Features (6)

Answer 21

1) Forecasting critical
2) Product and process reliability
3) Competitive product improvements and options
4) Increase capacity
5) Shift towards product focus
6) Enhance distribution

Question 22

Maturity Phase Features (6)

Answer 22

1) Standardization
2) Less rapid product changes - more minor changes
3) Optimum capacity
4) Increasing stability of process
5) Long production runs
6) Product improvement and cost cutting

Question 23

Decline Phase Features (5)

Answer 23

1) Little product differentiation
2) Cost minimization
3) Overcapacity in the industry
4) Prune line to eliminate items not returning good margin
5) Reduce capacity