Chapter 7 - Developing and Managing Offerings

Question 1

What are the 7 steps in the ‘New Offering Development Process’

Answer 1

1. Idea Generation
2. Idea Screening
3. Feature Specification
4. Development
5. Testing
6. Launch (Commercialization)
7. Evaluation

Question 2

What happens at the ‘Idea Generation’ Step in the ‘New Offering Development Process’

Answer 2

Basic idea created and described

Question 3

What What happens at the ‘Idea Screening’ Step in the ‘New Offering Development Process’

Answer 3

Cost, profits, and potential sales of the offering are calculated at different price levels

Question 4

What What happens at the ‘Feature Specification’ Step in the ‘New Offering Development Process’

Answer 4

• Detailed specification for the product are developed

- Featured and pricing are established

Question 5

What What happens at the ‘Development’ Step in the ‘New Offering Development Process’

Answer 5

• The actual offering is designed
• Prototypes of it are developed
• Firm considers the product’s Manufacturing process

Question 6

What What happens at the ‘Testing’ Step in the ‘New Offering Development Process’

Answer 6

The offering is tested, first in the lab and then with real customers

Question 7

What What happens at the ‘Launch (Commercialization)’ Step in the ‘New Offering Development Process’

Answer 7

The offering is made available to customers

Question 8

What happens at the ‘Evaluation’ Step in the ‘New Offering Development Process’

Answer 8

The offering is evaluated as to whether it is delivering the appropriate value to consumers, as well as meeting the firms business goals

Question 9

As you move through the product development process, each step is usually more ____

Answer 9

expensive than the last

Question 10

What is ‘Line Extension’?

Answer 10

Occurs when a company comes out with another model (related product) based on the same platform and brand as one of its other products

Question 11

What are ‘Lead Users’?

Answer 11

Customers who are good at generating new product ideas or applications of products (Exist in consumer markets, too)

Question 12

What are the 4 sources of new offering ideas

Answer 12

• Customers
• Employees
• Suppilers
• Competitors

Question 13

What is ‘Concept Testing’?

Answer 13

Involves running the idea of the offering by potential consumers

Question 14

What are ‘Focus Groups’?

Answer 14

Groups of eight to twelve consumers gather and react to the concept

Question 15

What are ‘Depth Interviews’?

Answer 15

Individuals are presented with the concept and can react to it individually

Question 16

What are the 2 types of risks?

Answer 16

• Investment Risk

- Opportunity Risk

Question 17

What are ‘Investment Risks’

Answer 17

The possibility that the company will fail to earn the appropriate return on the money and effort it puts into the new product.

Question 18

What are ‘Opportunity Risks’

Answer 18

The risk that there is a better idea that gets ignored because the firm has invested in the idea at hand

Question 19

What is ‘Quality Function Deployment (QFD)’?

Answer 19

A process whereby a company begins with the customer’s desired benefits and then designs an offering that delivers those benefits

Question 20

What are the types of testing that occur in the testing phase?

Answer 20

• Alpha Testing

- Beta Testing

Question 21

What is ‘Alpha Testing’?

Answer 21

Ensures that the offering works like it’s supposed to in a variety of different environments that it meets its specifications

Question 22

What is ‘Beta Testing’?

Answer 22

Actual customers make sure the offering works under real world conditions

Question 23

In B2B settings, beta tests are usually conducted with ___ and ____

Answer 23

• Lead users

- Preferred customers

Question 24

What are the 3 strategies companies may use at launch?

Answer 24

• Launch an offering to all of its markets at once
• Rolling Launch - The offering is made available to certain markets first and other markets later
• Market Test - Test the complete launch of a products marketing plan to ensure it reaches buyers, gets positive feedback and generates sales of the product or service

Question 25

What are the 4 stages in the ‘Product Life Cycle’?

Answer 25

1. Introduction
2. Growth
3. Maturity
4. Decline

Question 26

In which stage of the ‘Product Life Cycle’ are marketing costs are typically higher in this stage

Answer 26

Introduction phase

Question 27

In which stage of the ‘Product Life Cycle’ are profits often low?

Answer 27

Introduction phase

Question 28

What are the organizations objectives during the introduction phase?

Answer 28

• Educating potential customers about its value and benefits

- Creating awareness, and getting potential customers to try the product or service

Question 29

What are the 2 strategies widely used in the introduction stage?

Answer 29

• Penetration Pricing Strategy

- Skimming Pricing Strategy

Question 30

What is the ‘Penetration Pricing Strategy’

Answer 30

involves using a low initial price to encourage many customers to try a product.

Question 31

What is the ‘Skimming Pricing Strategy’

Answer 31

Involves setting a high initial price for a product, to more quickly recoup the investment related to its development and marketing

Question 32

What is the growth stage characterized by?

Answer 32

• Increasing sales
• More competitors
• Higher profits

Question 33

In which stage of the ‘Product Life Cycle’ are competitors attracted to the market?

Answer 33

Growth phase

Question 34

In which stage of the ‘Product Life Cycle’ does the products cost remain high?

Answer 34

Growth phase

Question 35

Sometimes companies increase their promotional spending during the growth phase.

What do they focus on?

Answer 35

The specific benefits the product offers and its value relative to competitive offerings