Refer to the scenario below to answer the following questions.

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       Most people laughed when Evelyn Ringler explained her product idea: a solar-powered vacuum cleaner. But the concept was practical and the technology used in the vacuum was the same as that used in many children's toys. After setting up a demonstration booth in a mall in a Chicago suburb, Evelyn felt more assured than ever that her idea would be a hit. Consumers seemed receptive and offered helpful pieces of advice, such as how much they would pay for the vacuum, what colors they would prefer, and why they would not buy the vacuum.

       The vacuum itself was dome-shaped, something like a small saucer, with a filter bag on top and sensory nodes along the edges. After being charged in the sunlight, the vacuum could run for 10 hours, covering a floor area of 600 square feet. As the apparatus lightly bumped into table legs, chairs, and so on, the sensory nodes allowed the vacuum to move around the objects in various directions. This is the same type of technology used in the manufacture of children's race cars and walking dolls.

       Evelyn knew that the solar-powered vacuum would be especially helpful to both elderly consumers, who may have a more difficult time with vacuuming, and on-the-go consumers who lead busy lives. The price would be above average but would likely reduce after Evelyn recouped some of her costs.

After a 500-unit production run and a substantial financial investment, Evelyn Ringler set up a multiple-city test market, in a Chicago mall and in an appliance store in New Jersey. "It's such a novel idea," Evelyn added. "People will notice it, even if they don't buy it right away."

98) Evelyn's ________ is the practical use of solar power in a vacuum cleaner that is designed to effortlessly sweep the floors of on-the-go and elderly consumers.

A) product idea

B) product concept

C) product image

D) prototype

E) promotional product

Answer: B

Diff: 2        Page Ref: 262

AACSB: Reflective Thinking

Skill: Application

Objective: 9-2

99) When Evelyn set up a demonstration booth to learn about consumers' feelings toward her vacuum cleaner, she was doing which of the following?

A) concept testing

B) marketing strategy development

C) idea screening

D) product development

E) test marketing

Answer: A

Diff: 2        Page Ref: 263

AACSB: Reflective Thinking

Skill: Application

Objective: 9-2

100) Evelyn's vacuum is at the ________ stage of the product life cycle.

A) product development

B) introduction

C) growth

D) adoption

E) incubation

Answer: A

Diff: 1        Page Ref: 273

AACSB: Reflective Thinking

Skill: Application

Objective: 9-3

101) A firm can obtain new products in two ways: acquisition or new-product development.

Answer: TRUE

Diff: 2        Page Ref: 258

Skill: Concept

Objective: 9-1

102) Up to 90 percent of all new consumer products fail.

Answer: TRUE

Diff: 2        Page Ref: 258

Skill: Concept

Objective: 9-1

103) New product development begins with a systematic search for new product ideas through idea generation.

Answer: TRUE

Diff: 1        Page Ref: 259

Skill: Concept

Objective: 9-2

104) Malibu Beach Parties finds that the tastes and preferences of its customers change more rapidly than in the past. The manager should constantly look for external ideas from customers, suppliers, and the competition.

Answer: TRUE

Diff: 1        Page Ref: 260

AACSB: Reflective Thinking

Skill: Application

Objective: 9-2

105) Companies rarely solicit ideas from customers during the idea generation stage of product development.

Answer: FALSE

Diff: 1        Page Ref: 261

AACSB: Communication

Skill: Concept

Objective: 9-2

106) Blair Housewares wants to add new lines of products to its 46-store chain. Managers are correct in believing that the purpose of idea generation is to create a few ideas, and the purpose of succeeding stages is to increase that number.

Answer: FALSE

Diff: 2        Page Ref: 262

AACSB: Analytic Skills

Skill: Application

Objective: 9-2

107) A product idea is an idea for a possible product a company can offer the market, while a product concept is a detailed version of the idea stated in meaningful consumer terms.

Answer: TRUE

Diff: 3        Page Ref: 262

Skill: Concept

Objective: 9-2

108) Concept testing works best with people who are familiar with the new idea and the new product's purpose. This generally includes top management, the sales force, and research and development.

Answer: FALSE

Diff: 3        Page Ref: 263

Skill: Concept

Objective: 9-2

109) GreenTree Lawn and Garden Products is engaged in marketing strategy development. Management should first create a statement outlining the product's planned price, distribution, and marketing budget for the first year.

Answer: FALSE

Diff: 3        Page Ref: 263

AACSB: Analytic Skills

Skill: Application

Objective: 9-2

110) 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 company's objectives. This activity is called business product development.

Answer: FALSE

Diff: 2        Page Ref: 264

AACSB: Reflective Thinking

Skill: Application

Objective: 9-2

111) The business analysis stage represents the first large jump in financial investment in the new-product development process.

Answer: FALSE

Diff: 2        Page Ref: 264

Skill: Concept

Objective: 9-2

112) The stage at which new product and marketing programs are introduced into realistic market settings is called concept testing.

Answer: FALSE

Diff: 1        Page Ref: 265

Skill: Concept

Objective: 9-2

113) A company launching a new product into the market must first decide on when to launch the product.

Answer: TRUE

Diff: 2        Page Ref: 268

Skill: Concept

Objective: 9-2

114) 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.

Answer: TRUE

Diff: 2        Page Ref: 268

Skill: Concept

Objective: 9-2

115) Sequential product development has the advantage of not only being a team-oriented approach, but it is also faster in bringing products to market.

Answer: FALSE

Diff: 1        Page Ref: 269

Skill: Concept

Objective: 9-2

116) To avoid too few new product ideas and the failure of many good ideas, management should install an innovation management system that collects, reviews, evaluates, and manages new-product ideas.

Answer: TRUE

Diff: 1        Page Ref: 271

AACSB: Communication

Skill: Concept

Objective: 9-2

117) Using the PLC concept to develop marketing strategy can be problematic because strategy is both a cause and a result of the product's life cycle.

Answer: TRUE

Diff: 3        Page Ref: 274

Skill: Concept

Objective: 9-3

118) Profits rise during the growth stage of the PLC because promotion costs are spread over a large volume and unit manufacturing costs fall.

Answer: TRUE

Diff: 2        Page Ref: 277

Skill: Concept

Objective: 9-3

119) Although products that remain in the maturity stage of the PLC seem unchanged, the most successful ones actually evolve to meet changing consumer needs.

Answer: TRUE

Diff: 2        Page Ref: 277

Skill: Concept

Objective: 9-3

120) 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, or modify the market.

Answer: TRUE

Diff: 2        Page Ref: 277

Skill: Concept

Objective: 9-3

121) 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, and lack of raw materials from foreign suppliers.

Answer: FALSE

Diff: 3        Page Ref: 278

AACSB: Analytic Skills

Skill: Application

Objective: 9-3

122) Companies need to pay attention to their aging products. Management should regularly review sales, market shares, costs, and profit trends, and then decide whether to maintain, harvest, or drop these declining products.

Answer: TRUE

Diff: 2        Page Ref: 278

Skill: Concept

Objective: 9-3

123) When a company decides to maintain a product in the decline stage, it will reduce costs and hope that sales hold up to increase the profits in the short run.

Answer: FALSE

Diff: 2        Page Ref: 279

Skill: Concept

Objective: 9-3

124) The federal government may prevent a company from adding products through acquisitions if acquisition threatens to lessen competition.

Answer: TRUE

Diff: 2        Page Ref: 280

AACSB: Ethical Reasoning

Skill: Concept

Objective: 9-4

125) The international growth of many professional and business services such as accounting, consulting, and advertising led to the globalization of the client companies they serve.

Answer: FALSE

Diff: 3        Page Ref: 282

AACSB: Multicultural and Diversity

Skill: Concept

Objective: 9-4

126) Explain why so many new products fail and how a company can improve its odds of new product success.

Answer: Although an idea may be good, the market size may have been overestimated. Other possible reasons for failure include the following: the actual product was not designed as well as it should have been; the product may have been incorrectly positioned in the market, priced too high, or advertised poorly; a high-level executive might have pushed a favorite idea despite poor marketing research findings; the costs of product development were higher than expected; or competitors fought 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 deliver superior value to customers.

Diff: 3        Page Ref: 258

AACSB: Analytic Skills

Skill: Application

Objective: 9-1

127) Briefly describe the steps in the new-product development process.

Answer: 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 company's objectives. A prototype will next be created in the product development stage. Test marketing will follow, introducing the new product and its marketing program 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.

Diff: 3        Page Ref: 259-268

AACSB: Analytic Skills

Skill: Application

Objective: 9-2

128) Provide the major sources of external new product ideas and explain why these sources offer advantages over internal sources.

Answer: The major sources of new product ideas from external sources include customers, suppliers/distributors, competitors, and research firms. These sources are close to the market and tend to reflect current tastes and preferences. Firms can better match their product offerings to customer needs and wants. Consumers may also create new products and services on their own.

Diff: 2        Page Ref: 260

AACSB: Analytic Skills

Skill: Application

Objective: 9-2

129) Distinguish among a product idea, a product concept, and a product image.

Answer: A product idea is an idea for a product that a company can imagine itself offering to the market. A product concept takes the idea several steps further, with a detailed version of the idea stated in meaningful consumer terms. Finally, a product image is the way consumers perceive an actual or potential product.

Diff: 1        Page Ref: 262

AACSB: Analytic Skills

Skill: Application

Objective: 9-2

130) Explain concept testing.

Answer: Concept testing calls for testing new product concepts with groups of target consumers. The concepts may be presented physically or symbolically. A more concrete and physical presentation, however, will increase the reliability of the concept test. After being exposed to the concept, consumers are asked questions about it; their answers reveal to the marketer whether the concept needs to be altered in any way.

Diff: 1        Page Ref: 263

AACSB: Analytic Skills

Skill: Application

Objective: 9-2

131) Define commercialization. Explain the two important issues on which the company must decide during this stage.

Answer: Introducing a new product into the market is called commercialization. The company launching a new product must first decide on introduction timing. Next, the company must decide where to launch the new product–in a single location, a region, the national market, or the international market. Confidence, capital, and capacity are required to launch new products on a large-scale basis. Hence, firms plan a market rollout over time.

Diff: 1        Page Ref: 268

AACSB: Analytic Skills

Skill: Application

Objective: 9-2

132) What are the two advantages of an innovation management system for developing new products? Provide four ideas for a company to use to establish a successful system.   

Answer: The first advantage of an innovation management system is that it helps create an innovation-oriented company culture. It shows that top management supports, encourages, and rewards innovation. The second advantage is that 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. To establish a successful system a company can do the following: (1) Appoint a respected senior person to be the company's idea manager; (2) create a cross-functional innovation management committee with people from each department; (3) set up a Web site for anyone who wants to become involved in finding and developing new products; (4) encourage all company stakeholders to send their ideas to the idea manager; and (5) set up formal recognition programs to reward those who contribute the best new ideas.

Diff: 3        Page Ref: 272

AACSB: Analytic Skills

Skill: Application

Objective: 9-2

133) 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.

Answer: Product development begins when the company finds and develops a new product idea. Sales are zero and the company's 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. A company may seek to reinvigorate a product in decline or maintain it hoping competition will diminish or harvest it or drop it.

Diff: 2        Page Ref: 273

AACSB: Analytic Skills

Skill: Application

Objective: 9-3

134) PLC can be applied to more than just brands. Your assignment is to prepare a presentation about the application of the PLC to as many of your company's operations as possible. What would you include?

Answer: The PLC can be applied to new product and services. It can also be applied to 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 for each stage of the product life cycle. Managers may have difficulties using the PLC concept to forecast product performance or develop general marketing strategies.

Diff: 2        Page Ref: 274

AACSB: Analytic Skills

Skill: Application

Objective: 9-3

135) Describe three public policy issues or regulations that marketers should carefully consider as they make decisions about adding or dropping products.

Answer: The government may prevent companies from adding products through acquisitions if the effect threatens to lessen competition. On the other hand, companies dropping products must be aware that they have legal obligations to their suppliers, dealers, and customers who have a stake in the dropped product. Companies must also obey U.S. patent laws when developing new products, meaning that a company cannot make its product illegally similar to another company's established product. Manufacturers must also comply with specific laws regarding product quality and safety. The Federal Food, Drug, and Cosmetic Act and the Consumer Product Safety Act are just two of many laws that protect consumers from potentially harmful products. If consumers have been injured by a product that has a defective design, they can sue manufacturers or dealers.

Diff: 2        Page Ref: 280

AACSB: Ethical Reasoning

Skill: Application

Objective: 9-4

136) How might a firm benefit from implementing an "intrapreneurial" program?

Answer: Such programs encourage employees to be innovative and to develop new-product ideas.

Diff: 2        Page Ref: 260

AACSB: Analytic Skills

Skill: Application

Objective: 9-2

137) How might competitors be a good external idea source?

Answer: Marketers can pay particular attention to competitors' ads to get clues about their new products. In addition, salespeople in the field can learn about competitors' plans if prospects purposefully, or even inadvertently, reveal them.

Diff: 1        Page Ref: 260

AACSB: Analytic Skills

Skill: Application

Objective: 9-2

138) You have recently sent a proposal for a fictional novel to an editor at a major publishing firm. The editor, alone, will carry out the idea screening. Why might you feel this process is unfair?

Answer: The success of your proposal, or at least the likelihood that your novel will be published, is at the mercy of that one individual. A screening committee might give the proposal a more accurate and fair assessment.

Diff: 3        Page Ref: 262

AACSB: Analytic Skills

Skill: Application

Objective: 9-2

139) What elements may help to create a product image?

Answer: Any number of product attributes, as well as packaging and intended use, create product image; the promotional campaign also affects product image.   

Diff: 1        Page Ref: 262

AACSB: Communication

Skill: Application

Objective: 9-2

140) The potential market strengths and weaknesses are being determined for a new-product idea at Art for Kids. In what stage of the new-product development process does this occur?

Answer: It occurs in the business analysis stage of the new product development process.

Diff: 2        Page Ref: 264

AACSB: Reflective Thinking

Skill: Application

Objective: 9-2

141) What may be learned in a test market?

Answer: Test marketing lets a company assess customer response to its product and the effectiveness of its positioning strategy, advertising, distribution, pricing, branding, and packaging.

Diff: 2        Page Ref: 265

AACSB: Analytic Skills

Skill: Application

Objective: 9-2

142) A marketer has selected a single city in which to conduct a test market. What might we conclude from this choice of a single-city test market?

Answer: The marketer may feel assured that consumers in that city are typical of the overall market.

Diff: 3        Page Ref: 266

AACSB: Analytic Skills

Skill: Application

Objective: 9-2

143) A marketer has chosen a multiple-city test market. What might we conclude from this choice of a multiple-city test market?

Answer: The marketer likely understands that the product being tested will be perceived differently in different geographic regions.

Diff: 3        Page Ref: 266

AACSB: Analytic Skills

Skill: Application

Objective: 9-2

144) Why might a company choose to develop a planned market rollout?

Answer: A company without the confidence, capacity, or capital to introduce its product in several regions or the full national market may find it less risky and more manageable to enter attractive cities or regions one at a time, using success in regional markets to build up to a larger market rollout.

Diff: 2        Page Ref: 268

AACSB: Analytic Skills

Skill: Application

Objective: 9-2

145) Why might individual departments prefer sequential product development?

Answer: This process allows individual departments to work individually with a new idea, completing its stage of development before passing the product on; other departments are less likely to interfere.

Diff: 2        Page Ref: 269

AACSB: Analytic Skills

Skill: Application

Objective: 9-2

146) Explain how the PLC applies differently to a product class than to a product form.

Answer: Product classes have longer life cycles, while product forms tend to have the standard PLC shape.

Diff: 3        Page Ref: 273

AACSB: Analytic Skills

Skill: Application

Objective: 9-3

147) Why might ad expenditures be high for products in the introduction stage of the PLC?

Answer: Consumers have very little awareness about such products; promotional spending can enhance customer awareness.

Diff: 1        Page Ref: 276

AACSB: Analytic Skills

Skill: Application

Objective: 9-3

148) Why might ad expenditures remain high in the growth stage of the PLC?

Answer: Though sales are increasing for such products, competition becomes fierce as competitors attempt to enter the market; therefore, ad dollars remain high in an effort to offset competitive threats.

Diff: 2        Page Ref: 277

AACSB: Analytic Skills

Skill: Application

Objective: 9-3

149) Marketers can prolong the lives of many products in the maturity or decline stages of the PLC, sometimes even moving these products back into the growth stage. How can this happen?

Answer: Marketers can change any element of the marketing mix, change the number of uses or the number of users, or even change the frequency of product use.

Diff: 2        Page Ref: 277

AACSB: Analytic Skills

Skill: Application

Objective: 9-3

150) Why has the cost of product liability insurance risen so dramatically?

Answer: Consumers who have been injured by a product with a defective design can sue manufacturers or dealers of the product; though manufacturers are only found to be at fault in a small percentage of cases, the average jury award is $1.5 million.

Diff: 2        Page Ref: 280

AACSB: Analytic Skills

Skill: Application

Objective: 9-4

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