Chapter 10 New-Product Development and Product Life-Cycle Strategies

Multiple Choice

1. At the heart of Microsofts innovation strategy is (are) the _____. a. Dot.Net Services b. Internet c. Stinger d. Information Agents (b; Easy) 2. Every product seems to go through a life-cycle. Which of the following is not a major challenge presented by the PLC? a. All products eventually decline. b. A firm must be good at developing new products to replace aging ones. c. The firm must be good at adapting its marketing strategies. d. It is difficult to plot the stages as a product goes through the stages (d; Moderate) A firm can obtain new products through acquisition. One of the following is not a common way to accomplish this. a. buy a whole company b. copy or modify a competitors products c. buy a patent d. buy a license to produce some elses product (b; Easy) 4. A company can obtain new products through new-product development. Which of the following define(s) new products? a. original products b. product improvements c. product modification d. all of the above (d; Moderate) 5. New products fail at a disturbing rate. Research estimates that new consumer packaged goods consisting mostly of line extension fail at a rate of _____. a. 60 percent b. 70 percent c. 80 percent d. 90 percent (c; Easy) 3.

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Your firm added three new products earlier this year to add variety for customers. Two of them failed to reach even minimal sales. What could be a possible cause? a. The market size may have been overestimated. b. The actual products may not have been designed as well as they should have been. c. The products were not positioned correctly in the market d. All of the above. (d; Moderate) 7. Your firm added three new products earlier this year to add variety for customers. Two of them failed to reach even minimal sales. What could possibly not be a cause? a. The products were priced too high. b. The products were advertised incorrectly. c. Competitors fight back harder than expected. d. Research was too extensive. (d; Easy) 8. New-product development starts with _____. a. idea generation b. idea screening c. concept development d. concept testing (a; Easy) 9. Your company decides to use internal sources for developing new-product ideas. Which of the following would not be a common internal source? a. questioning executives and professionals b. company records and data c. encouraging intrapreneurism d. privileged information (d; Moderate) 10. Out of every 1000 new-product ideas, on average, how many will turn out to be a commercial success? a. one b. two c. three d. four (b; Easy)

11. H.J. Heinz Company developed its successful new line of ketchup by observing and listening to its _____. a. employees b. sales force c. customers d. suppliers (c; Easy) 12. Some companies give customers the tools and resources to design their own _____. a. advertising campaigns b. products c. product modifications d. product applications (b; Moderate) 13. At this point your firm wants to use external sources for new-product ideas. After consulting with a friend you learn that all of the following are common sources except _____. a. customers b. suppliers c. competitors d. government agencies (d; Easy) 14. How could you use competitors as a choice of external new-product ideas? a. buy one of their products b. analyze their sales c. dismantle one of their products d. all of the above (d; Easy) 15. Top management can install a(n) _____ to direct the flow of new ideas to a central point where they can be collected, reviewed, and evaluated. a. idea evaluation system b. idea management system c. database d. MIS (b; Moderate) 16. The search for new-product ideas should be _____ rather than haphazard. a. consistent b. systematic c. continual d. strategically planned (b; Moderate)

17. The purpose of idea generation is to create a _____ of ideas. The purpose of succeeding stages is to ____ that number. a. small number; reduce b. small number; increase c. large number; increase d. large number; reduce (d; Moderate) 18. GrayBerry Gifts has just brainstormed a large number of ideas for adding new products and services after visiting several buying fairs. The owners will begin the first idea-reducing stage called _____ to arrive at a realistic number to adopt. a. idea generation b. idea screening c. product concept d. concept development (b; Easy) 19. What do we call a detailed version of a new idea stated in meaningful consumer terms? a. product idea b. product concept c. product image d. product proposal (b; Moderate) 20. JoAnn Fabrics, Inc. has just created a new combination of colors and fabric types. The firm wants to be sure of the way consumers perceive an actual or potential product called product _____. a. idea b. concept c. image d. proposal (c; Moderate) 21. When developing new products, it is important for a firm to distinguish between a product concept, a product image, and a product _____. a. idea b. proposal c. life-cycle d. none of the above (a; Easy)

22. With what groups do firms conduct concept testing for new products? a. suppliers b. employees c. target consumers d. focus groups (c; Challenging) 23. For some concept tests, a simple description consisting of a _____ might be sufficient. a. word b. picture c. word or picture d. narrative (c; Easy) 24. Many firms routinely test new-product concepts with consumers before attempting to _____. a. commercialize them b. turn them into actual new products c. price them d. create advertising and promotion (b; Moderate) 25. After concept testing, a firm would engage in this stage in developing and marketing a new product. a. idea screening b. marketing strategy development c. business analysis d. product development (b; Challenging) 26. The first part of the marketing strategy statement describes the target market, the planned product positioning, the sales, profit goals, and _____. a. market share b. the competition c. the secondary market d. the competitions anticipated reaction (a; Moderate) 27. The second part of the marketing strategy statement outlines the products planned price, distribution, and _____ for the first year. a. advertising b. promotion c. marketing budget d. positioning (c; Challenging)

28. Grant Tours will include all of the following in the third part of the marketing strategy statement except _____. a. long-run sales b. profit goals c. marketing mix strategies d. short-run sales (d; Moderate) 29. Once management of The Grecian Urn has decided on its product concept and marketing strategy, they can evaluate the business attractiveness of the proposal called _____. a. business feasibility b. feasibility study c. business analysis d. product acceptance (c; Challenging) 30. A review of the sales, costs, and profit projections for a new product to find out whether they satisfy the companys objectives is called a _____. a. business feasibility b. feasibility study c. business analysis d. product acceptance (c; Easy) 31. New World Releases is conducting a business analysis to determine which of the many new songs available to management should be released. Sales must be first estimated before costs can be estimated. Which of the following did your text recommend for forecasting sales? a. compare the sales history of similar products b. conduct surveys of market opinions c compare the sales history of similar products and conduct surveys of market opinions d. any of the above (c; Challenging) 32. Once the product or service passes the business analysis test, it moves into what stage? a. concept development b. product development c. market testing d. research and development (b; Moderate)

33. During product development which group or department develops the product into a physical product? a. R & D b. engineering c. production d. either a or b (d; Easy) 34. Wainwright Industries has built a new prototype riding lawnmower especially for women. Joe Wainwright and his staff have incorporated the functional features and must now convey the _____. a. image b. advertising c. safety features d. intended psychological characteristics (d; Challenging) 35. Once Wainwright Industries new riding lawnmower made especially for women passes functional and consumer tests, the next step is _____. a. test marketing b. focus group surveys c. commercialization d. posttesting (a; Easy) 36. What advantage(s) does test marketing offer the marketer? a. provides experience before full introduction b. allows testing of the marketing program c. allows testing of positioning, advertising, distribution, and pricing d. all of the above (d; Moderate) 37. Bonneville Communications is concerned about test marketing and the possible related problems. Choose from the following the one item that is not a disadvantage. a. Test marketing costs can be high. b. It can take much time to test market. c. It allows time for competition to spy and gain advantages. d. People who are surveyed tend to tell less than the truth. (d; Moderate)

38. Under what circumstances might a company do more than the average amount of test marketing? a. when a new product requires a major investment b. when management is not sure of the product c. when management is not sure of the marketing program d. all of the above (d; Easy) 39. Although test marketing costs can be high, they are often small when compared with _____. a. the final results b. making a major mistake c. managements approval and acceptance d. stockholders confidence (b; Moderate) 40. When using test marketing, consumer products companies usually choose one of three approaches standard test markets, controlled test markets, or _____. a. blind tests b. random sample test markets c. simulated test markets d. nonstandard test markets (c; Challenging) 41. When Family CookWare finds a small number of representative test cities and uses the results to forecast national sales and profits, it is engaged in using _____. a. controlled test markets b. simulated test markets c. standard test markets d. random test markets (c; Easy) 42. When using standard test markets, which of the following would not be used to gauge product performance? a. full marketing campaign b. store audits c. consumer and distributor surveys d. sales force composite (d; Challenging)

43. Which approach to test marketing is still the most widely used approach for major in-market testing? a. standard test markets b. controlled test markets c. simulated test market d. none of the above (a; Moderate) 44. Test marketing can be sabotaged by competition that may alter accurate results. One of these is not a common way for them to accomplish this. a. cut prices in test cities b. increase their promotion c. run counter ads in the media d. buy up the product being tested (c; Challenging) 45. One of the most devastating strategies a competitor might use during test marketing is to _____. a. introduce an equally good product in the same market b. cut their prices in the test cities c. buy up the product being tested d. run comparative advertising campaigns (a; Challenging) 46. As the marketing manager for Blue Light Dry Cleaners, Shawn Lee wants to use controlled test markets in six cities where they do business. He can expect the testing of their new services to last between _____. a. 3 to 6 months b. 6 to 9 months c. 6 to 12 months d. 9 to 12 months (c; Moderate) 47. Controlled test markets have two advantages over standard test markets in that they cost less and _____. a. are easier to administer b. are easier for respondents to understand c. take less time to conduct d. are easier to gain top managements approval (c; Easy)

48. Controlled test markets have some disadvantages for Micro Sims R&D department. Although they decide to follow through with this approach, they run the risk of encountering all of the following except one. Can you find it? a. Typically, the limited number of small cities may not be representative of their products markets or target consumers. b. The limited number of panel consumers used by the research services may not be representative of their products markets or target consumers. c. There is time for competition to get a look at the new product. d. There is insufficient time for competition to counter or sabotage the new introduction in any meaningful way. (d; Challenging) 49. Companies use simulated test markets to test new products in a simulated _____ environment. a. e-commerce b. shopping c. trial use d. competition-free (b; Moderate) 50. During simulated test markets researchers note how many consumers buy the _____ and _____. a. new product; the companys substitute b. companys old product; the new product c. new product; competing brands d. new product; how much they buy (c; Moderate) 51. Simulated test markets allow researchers the opportunity to ask consumers the reasons for their purchase or nonpurchase. Some weeks later, they interview the consumers by phone to determine attitudes and which of the following? a. usage b. satisfaction c. repurchase intentions d. all of the above (d; Challenging) 52. Using sophisticated computer models, simulated test market researchers project _____ from the results of the simulated test market. a. test costs b. national sales c. regional sales d. statewide sales (b; Easy)

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53. Fairbault Engineering, Inc. has just completed a simulated test market for a new service it intends to offer clients on a regional basis. The owners have used standard and controlled test markets before and prefer the simulated approach. They will enjoy all of the following disadvantages except one. Please locate it. a. The cost is usually less. b. It can be run in eight weeks. c. The new service can be kept out of competitions view. d. They are extremely accurate and reliable. (d; Challenging) 54. Many marketers are concerned about the results obtained with simulated test markets. They would contend that the major disadvantages of this method would include _____. a. being too expensive and requiring complex skills b. being less accurate and reliable c. taking too long and producing questionable results d. requiring managements constant attention (b; Moderate) 55. Lambert Paint Company just conducted an eight-week simulated test market for a new product with poor results. At this point, what would be their best option(s)? a. drop the product b. redesign the product c. retest the product d. Any of the above can be correct. (d; Challenging) 56. Blaine Roberts is a bit confused about what to do next. He just told his supervisor that the results from their recent simulated test market are promising but indefinite. What would you advise him to do? a. test the product further b. also test in a controlled test market c. also test in a standard test market d. All of the above can work. (d; Challenging) 57. The major purpose of test marketing is to provide management with the information needed to make a final decision about _____. a. whether to compete in the market b. which market to compete in c. whether to launch the new product d. how to compete in the market (c; Easy)

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58. Anitas DayCare plans to offer third-shift childcare, based upon the opening of two new manufacturing plants in her area. Together the plants will hire 425 employees and run all three shifts. Initial test marketing results look promising. In considering launching this new service, Anita must first decide on _____. a. timing b. expansion costs c. hiring suitable employees d. checking local and state regulations (a; Easy) 59. Following the decision to time the introduction of the new product, a company must decide _____ to launch the new product. a. where b. how c. to what degree d. all of the above (a; Moderate) 60. Atlas Steel Corporation lacks the confidence, capital, and capacity to launch its new steel product into full national or international distribution. Even though test market results look promising, what will be managements next step? a. retest the product in additional markets b. develop a planned market rollout over time c. secure a loan to provide the confidence, capital, and capacity d. seek the help of a nationally known consultant (b; Challenging) 61. Small companies may enter new markets after testing by entering attractive _____. a. cities b. regions c. cities or regions one at a time d. distributors or retailers one at a time (c; Moderate) 62. Companies with international distribution systems may introduce new products through this method. a. global rollouts b. one country at a time c. paired countries with similar markets d. global timing (a; Easy)

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63. All of the following are potential disadvantages of a sequential product development approach except _____. a. product failures b. lost sales and profits c. ease of entering competitive markets d. crumbling market positions (c; Moderate) 64. Layne Imports is faced with the two major pressing concerns that all companies in all industries face when it comes to organizing for new-product development. a. speed to market and development costs b. speed to market and reducing new-product development cycle time c. reducing new-product development cycle time and costs d. rising costs of production and distribution (b; Challenging) 65. In order to get their new products to market more quickly, many companies are adopting a faster, team-oriented approach called _____. a. simulated product development b. sequential product development c. simultaneous product development d. phased-in product development (c; Easy) 66. The simultaneous product development approach is faster because departments work closely together through _____. a. team efforts b. better planning c. the help of a consultant d. cross-functional teams (d; Moderate) 67. The simultaneous product development approach uses cross-functional teams that overlap the steps in the process to achieve what goals? a. save time and reduce errors b. save time and increase effectiveness c. increase effectiveness and employee satisfaction d. speed product to market and reduce costs (b; Easy)

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68. It is typical for top management to give the product development team general strategic directions but no _____ or _____. a. clear-cut product idea; resource limitation b. clear-cut product idea; work plan c. work plan; budget d. freedom limitations; budget restraints (b; Challenging) 69. Top management generally gives the product development team general strategic directions and what stiff, seemingly contradictory goals? a. turn out carefully planned and superior products with little development costs b. turn out carefully planned and superior products and do it quickly c. turn out new products quickly and get them to market faster than the competition d. turn out superior products and get them to market faster than the competition (b; Moderately)

70. The simultaneous team-based approach does have some limitations. Find the item that does not fit the list. a. Superfast product development can be riskier. b. Superfast product development can be more costly. c. Superfast product development can create increased organizational tension and confusion. d. Superfast product development produces equal or better quality. (d; Challenging) 71. Companies that get new and improved products to the market faster than their competitors often gain a dramatic _____. a. first place in the marketplace b. competitive edge c. penetration pricing strategy d. market share (b; Easy) 72. Light Metal Industries has discovered that new-product success is hard work and complex. It actually takes a _____ commitment to succeed. a. total-company b. total-department c. total-management d. total-employee (a; Moderate)

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73. One of the following stages is out of place in a typical consumer product life cycle. Find the first one that is out of place. a. product development b. introduction c. maturity d. growth (c; Easy) 74. This stage in the PLC is characterized by rapid market acceptance, increasing sales, and increasing profits. What is it? a. introduction b. maturity c. growth d. decline (c; Easy) 75. One of the following cannot be described by the PLC concept. It is not so obvious. a. product class b. product form c. product image d. brand (c; Moderate) 76. Sherris Exclusives wants to apply the PLC to the following list. One will not work. a. styles b. fashions c. fads d. formal wear (d; Easy) 77. Sherris Exclusives sells currently accepted and popular clothing items in given fields. What does she stock in her store? a. styles b. fashions c. fads d. exclusives (b; Moderate) 78. The PLC concept can be applied by marketers as a useful framework for describing how _____. a. to forecast product performance b. to develop marketing strategies c. products and markets work d. the PLC curve will shape up (c; Challenging)

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79. Using the PLC concept to develop marketing strategy can be difficult because strategy is both a _____ and a (n) _____ of the products life cycle. a. mirror image; cause b. cause; result c. result; mirror image d. beginning; end (b; Challenging) 80. During the introduction stage in the PLC a firm will incur high costs in all of the following areas except one. Please locate the area. a. distribution b. promotion c. product development d. reminder advertising (d; Easy) 81. Big Moose Toys is a market pioneer in introducing a modern version of Bullwinkle the Moose. Their version of Rocky the Flying Squirrel targeted to Baby Boomers was a strong success. The new launch strategy for Bullwinkle must be consistent with the intended _____. a. promotion campaign b. product positioning c. company image d. target market (b; Challenging) 82. Why do profits increase during the growth stage of the consumer PLC? a. Promotion costs are spread over a large volume. b. Unit manufacturing costs fall. c. Competition has not yet taken sales away. d. All of the above (d; Moderate) 83. Which stage in the PLC normally lasts longer and poses strong challenges to the marketing managers? a. introduction b. growth c. maturity d. phase-in (c; Easy)

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84. What actually leads to greater competition in the maturity stage of the PLC? a. overcapacity b. many competitors c. poor management d. inadequate promotion (a; Easy) 85. At some point between maturity and decline, a company or business can attempt to raise the PLC curve or give it new life by using one of the following techniques. a. find new global markets b. increase the advertising budget c. increase free samples as incentives to buy d. find new uses and users (d; Moderate) 86. At some point between maturity and decline, a company or store may lift the PLC by doing the following. a. expand the products usefulness b. expand the products safety c. expand the products convenience d. all of the above (d; Easy) 87. When a firm attempts to increase sales during the maturity stage of the PLC by changing one or more marketing mix elements it is _____. a. modifying the marketing mix b. changing promotion c. improving advertising d. increasing the promotion budget (a; Easy) 88. Sales decline in the decline stage of the PLC because of technological advances, increased competition, and _____. a. shifts in the economy b. shifts in unemployment c. shifts in consumer tastes and preferences d. foreign imports (c; Moderate)

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89. Its Whats Hip, a chain of 18 music and CD stores, has discovered that carrying a weak product during the decline stage of the PLC can be very costly to a firm, and not just in profit terms. Which one of these is not likely to be one of those costs? a. take up much of managements time b. frequent price and inventory adjustments c. requires advertising and sales force attention d. few concerns about company image and other products (d; Challenging) 90. Superior Luggage Company has undertaken the task of identifying its products in the decline stage of the PLC by using all of these areas but one. Find it. a. regularly reviewing sales b. regularly reviewing market shares c. regularly reviewing costs and profit trends d. regularly reviewing managements pet projects (d; Easy) 91. In general, which choice would a company make toward declining products? a. maintain or harvest them b. harvest or drop them c. maintain, harvest, or drop them d. maintain or drop them (c; Moderate)

True False

92. Given the rapid changes in consumer tastes, technology, and competition, companies must develop a steady stream of new products and services. (True; Easy) 93. Common reasons why so many new products fail in the marketplace include the market size may have been overestimated, the product was not well-designed, it was incorrectly positioned in the market, priced too low, or advertised poorly. (False; Challenging) 94. New-product development begins with a systematic search for new-product ideas through idea generation. (True; Easy) 95. Malibu Beach Parties finds that the tastes and preferences of its customers changes more rapidly than in the past. The manager is constantly looking for external ideas from customers, suppliers, competition, and the sales force. (False; Easy)

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96. Companies rarely ever give their customers the tools and resources to design their own products. (False; Easy) 97. To avoid too few new-product ideas and the failure of many good ideas, top management should install an idea management system. This system directs the flow of new ideas to each department where they can be collected, reviewed, and evaluated. (False; Challenging) 98. Blair Housewares wants to add new lines of products to its 46-store chain. Managers believe the purpose of idea generation is to create a few ideas and the purpose of succeeding stages is to increase that number. (False; Easy) 99. A product idea is a possible product a company can offer the market. A product concept is a detailed version of the idea stated in meaningful consumer terms. A product image is the way consumers perceive an actual or potential product. (True; Moderate) 100. Concept testing works best with people who are familiar with the new idea and the new products purpose. This generally includes top management, the sales force, and R & D. (False; Moderate) 101. GreenTree Lawn and Garden Products is engaged in marketing strategy development. Management must first create a statement outlining the products planned price, distribution, and marketing budget for the first year. (False; Challenging) 102. GreenTree Lawn and Garden Products is engaged in a review of the sales, costs, and profit projections for some new products to find out whether they satisfy the companys objectives. This activity is called business product development. (False; Easy) 103. To test the product concept of a new idea, a firm will develop a prototype that will satisfy and excite consumers and be produced quickly at budgeted costs. (True; Easy) 104. The stage at which new product and marketing programs are introduced into more realistic market settings is called concept test marketing. (False; Moderate)

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105. When a company determines that test marketing costs will become high, it is generally better to reconsider the proposal than make the mistake of spending too much. (False; Easy) 106. Standard test markets can be a very useful way to project sales results of new products. There are some limitations with using this method including potential high costs, time consuming activities, and competition monitoring. (True; Moderate;) 107. Controlled test markets have advantages for some companies. The typical length of time to conduct this type of test is 6 to 12 months. (True; Easy) 108. Simulated test markets overcome some of the disadvantages of standard and controlled test markets by usually costing much less, can be run in four to six weeks, and can keep the new product out of competitors view. (False; Moderate) 109. JumBo Games is launching a new set of game toys in the commercialization stage. The first decision to make is introduction timing and the second is where to launch the new product. (True; Moderate) 110. Sequential product development has the advantage of not only being a teamoriented approach but it is faster in bringing products to market. (False; Easy) 111. In choosing a method of test marketing, Best Bargain finds that superfast product development can be riskier and more costly than the other methods. It often creates increased organizational tension and confusion. Best Bargain must be thinking about the simultaneous team-based approach. (True; Challenging) 112. The highest profits earned by a consumer product usually occur during the maturity stage. (False; Easy) 113. Although the PLC concept is applied to consumer products, it is rarely applied to styles, fashions, and fads. (False; Moderate) 114. Using the PLC concept to develop marketing strategy can be difficult because strategy is both a cause and a result of the products life cycle. (True; Challenging)

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115. During the introduction stage a company that acts as the market planner must choose a launch strategy that is consistent with the intended product and company image. (False; Moderate) 116. Why do profits rise during the growth stage of the PLC? It is because promotion costs are spread over a large volume and unit manufacturing costs fall. (True; Easy) 117. When products remain in the maturity stage of the PLC for long periods they seem to remain unchanged. However, most successful ones actually evolve to meet changing consumer needs. (True; Moderate) 118. When sales of a product falter during the PLC, a company can take several approaches. The more common ones are to modify the marketing mix, modify the product, modify the market, or add new features that expand the products safety, usefulness, or convenience. (True; Moderate) 119. Sales for the time-tried household cleansers made by Brite and New, Inc. have been declining for some time. If these products are typical, sales are declining because of technological advances, shifts in consumer tastes, or lack of raw materials from foreign suppliers. (False; Challenging) 120. Companies need to pay more attention to their aging products. Management must regularly review sales, market shares, costs, and profit trends. The next step is to decide whether to harvest or drop these declining products. (False; Moderate) 121. When a company decides to harvest a product in the decline stage, it will reduce costs and hope that sales hold up to increase the profits in the short run. (True; Moderate) 122. When a company decides to maintain its brand without change in the decline stage, management will count on competitors reducing promotional efforts, and thus lose sales. (False; Challenging)

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Essay

123. Given the rapid changes in consumer tastes, technology, and competition, companies must develop a steady stream of new products and services. Briefly explain the common ways of accomplishing this. One way to develop new products and services is through acquisition by buying a whole company, a patent, or a license to produce someone elses product. The other way is through new-product development in the companys own research and development department. (Easy; p.255) 124. Explain why so many new products fail and provide some ideas for a company to improve its odds of new-product success. Although an idea may be good, the market size may have been overestimated. The actual product was not designed as well as it should have been. It may have been incorrectly positioned in the market, priced too high, or advertised poorly. A highlevel executive may push a favorite idea despite poor marketing research findings. Sometimes the costs of product development are higher than expected and sometimes competitors fight back harder than expected. One way to improve the odds is to identify successful new products and find out what they have in common. Another is to study new-product features to see what lessons can be learned. A company must understand its customers, markets, and competitors, and develop superior value to customers. (Challenging; p. 255) 125. Briefly describe the steps in the new-product development process. New-product development starts with idea generation from internal and/or external sources. Next, the ideas must be reduced through idea screening. Once the new ideas are decided upon, the product concept must be developed and tested. A marketing strategy must be developed to introduce the product to the market. Once the product concept and marketing strategy are chosen, a business analysis is conducted to review the sales, costs, and profit projections to see if they will satisfy the companys objectives. A prototype, or working model, will next be created in the product development stage. Test marketing will follow where the new product and its marketing program will be introduced into more realistic market settings. The last step is to launch or not launch the new product. If the company decides to launch the product, it will go ahead with the commercialization stage and later test its sales and profit results. (Challenging; p. 255-263)

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126. Provide the major sources of external new-product ideas and explain why these sources offer advantages over internal sources. The major sources of new-product ideas from external sources include customers, suppliers/distributors, competitors, and research firms. These sources are closer to the market and tend to reflect current tastes and preferences. Firms can better match their product offerings to customer needs and wants. Consumers often create new products and services on their own. Some companies even give customers the tools and resources to design their own products. (Moderate; p. 256-257) 127. What are the two advantages of an idea management system for developing new products? Provide five ideas for a company to use to accomplish a successful system. An idea management system helps create an innovation-oriented company culture. It shows that top management supports, encourages, and rewards innovation. It will yield a larger number of ideas among which will be found some especially good ones. As the system matures, ideas will flow more freely. The company can do the following: Appoint a respected senior person to be the companys idea manager. Create a cross-functional idea management committee with people from each department. Set up a toll-free number or Web site for anyone who wants to send a new idea to the idea manager. Encourage all company stakeholders to send their ideas to the idea manager. Set up formal recognition programs to reward those who contribute the best new ideas. (Challenging; p. 257) 128. When a new product passes functional and consumer tests, the next step is test marketing. The amount of test marketing needed varies with each new product. Provide the advantages for each of the three test market methods. Standard test markets are the most widely used approach for major in-market testing. They have been proved over time to be basically reliable. Controlled test markets usually cost less than standard test markets and take less time to conduct. Simulated test markets usually cost much less, can be run in eight weeks, and keep the product out of the competitors view. (Easy; p. 261-262)

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129. Each product will have a life cycle, although its exact shape and length is not known in advance. Briefly explain each step in the PLC. Product development begins when the company finds and develops a new-product idea. Sales are zero and the companys investment costs mount. Introduction is a period of slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage because of the heavy expenses of product introduction. Growth is a period of rapid market acceptance and increasing profits. Maturity is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing outlays to defend the product against competition. Decline is the period when sales fall off and profits drop. (Challenging; p.264-266) 130. Your assignment is to prepare a presentation about the applications of the PLC to as many of your companys operations as possible. What would you include? The PLC can be applied to new products and services. It also applies to a product class, a product form, or a brand. The PLC concept lends itself to styles, fashions, and fads. The concept can be used as a useful framework for describing how products and markets work, as well as developing marketing strategy. (Moderate; p.266)

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