Chapter 8 Key

1. The process by which ideas are transformed into new products and services that help firms grow is known as:
B - innovation
2. Which of the following is an advantage for product pioneers in new product introductions? B. They become
readily recognizable to consumers.
3. The term "diffusion of innovation" refers to the: C. process by which the use of a new product or a
service spreads throughout a market group over time and over various categories of adopters.
4. Which of the following terms can be best defined as buyers who want to be the first to have a new
product or service? E. Innovators
5. Which of the following groups of the consumer adoption cycle is characterized by buyers who enjoy
taking risks, are regarded as knowledgeable, and are not price sensitive? B. Innovators
6. Firms that invest in the latest technology, either to use in their new products or services or to make the
firm more efficient, are considered: B. innovators.
7. Innovators are crucial to the success of any new product or service because: C. they help the product or
service gain market acceptance.
8. Greg wants to upgrade his personal computer. He consults his friend Vernon because Vernon is highly
knowledgeable in this field and always uses the latest technology. According to the diffusion of innovation
model, to which of the following groups does Vernon belong? A. Innovators
9. Eric is enthusiastic about online video games. He has extensive knowledge of technical aspects of
developing games and usually purchases licensed versions of most games as soon as they are launched.
According to the diffusion of innovation model, to which of the following groups of buyers does Eric belong?
D. Innovators
10. The category of buyers that waits and purchases a product after careful review is called: C. early
adopters.
11. The category of buyers that tends to enjoy novelty and is regarded as opinion leaders for particular
product categories and spreads the word are called: A. early adopters.
12. Jeremy is interested in buying a phone that has a music player and provides access to the Internet. After
doing a detailed analysis of all the phones in the market that offer these features, he decides to buy a recently
released model. Which of the following groups of buyers best represents Jeremy's buying behaviour? B. Early
adopters
13. The group of buyers that acts as opinion leaders and is responsible for bringing the early majority, late
majority, and laggard groups into a market is the: E. early adopters.
14. Early adopters differ from innovators in that early adopters: D. decide whether a product is worth
the cost only after careful review.
15. According to the diffusion of innovation theory, buyers belonging to the early majority group are
considered crucial because: C. they affect the profitability of new products and services.
6. Scott wants to buy a cell phone that operates with the Android operating system (OS), but he decides to
wait until more cell phone companies release models with the Android OS. This way, a lot of user reviews
would be available and the details about the drawbacks of the OS would also be available. From this scenario,
we can say that Scott belongs to the group of buyers called: D. early majority.
17. The group of buyers that enters a new product market when a product has achieved its full market
potential are referred to as: D. late majority.
18. Natalie is a stockbroker who is comfortable using her old phone, which does a little more than making
calls and sending and receiving text messages. Though her work requires her to be updated about the stock
market throughout the day, she decides to wait for the smartphone market to mature and for the prices to
decrease. She decides to invest in a smartphone only after being convinced that the price is just right for her
budget. From this scenario, we can say that Natalie belongs to the group of buyers called: E. late majority.
19. Personal music players that were initially released in the market were expensive and huge, and provided
limited options. Anna and her husband did not buy them at that time and waited for more selection. When they
finally bought the product, the sales had levelled off and the size and prices had reduced significantly. To which
of the following groups of buyers do Anna and her husband belong? C. Late majority
20. Brenda wanted to buy an LCD TV when it was released but decided to wait for more options and better
quality. She bought it at a later stage when companies reduced the prices of LCD TVs due to growing
competition in the market. To which of the following groups of buyers does Brenda belong? D. Early majority
21. The category of buyers that tends to avoid change and relies on traditional products until they are no
longer available is called: E. laggards.
22. Ming, the owner of a fast-food restaurant, continues to accept only cash for transactions, although credit
and debit cards are common practice in neighbouring business establishments. Ming has not adopted the
technology because of her fears concerning the security of these transactions. Hence, she belongs to the group
of buyers called: C. laggards.
23. Professor Edward has authored a wide range of textbooks on statistics. Professor Edward still prefers to
use a typewriter while typing material for his new books as he is not comfortable using a computer. According
to the diffusion of innovation model, to which of the following group of buyers does Professor Edward belong?
B. Laggards
24. The diffusion of innovation theory is useful for firms because it primarily helps them: B. develop
effective promotion, pricing, and other marketing strategies.
25. Alttaire automobiles developed new hybrid cars that were highly fuel efficient and less polluting
compared to all its competitors' cars in the current market. The cars developed by Alttaire automobiles achieved
instant success in the market because of their unique features. Which of the following factors primarily
influenced the high adoption rate of the cars developed by Alttaire automobiles? D. Relative advantage
26. YumBurgerz, a fast-food outlet, introduced new burgers made with cheese that had low fat
content without compromising their taste. This ingredient brought down the price of the burgers and the burgers
were an instant success in the market. Which of the following factors was responsible for the quick diffusion of
these burgers? E. Relative advantage
27. VelTech Corp., an electronics company, manufactures LCD TVs that are in high demand compared to
its competitors' products. Competitors find it difficult to provide the same reliability and after-sales service that
this company provides, which lead to high consumer acceptability. Which of the following factors is
contributing to the high adoptability of these LCD TVs? D. Relative advantage
28. Baked Treats, a confectionary company, introduced maple syrup cookies that became an instant hit in
the country of Argonia because Argonians are accustomed to eating cookies. The same product received a
lukewarm response in other countries, where traditional snacks have been very different in nature. Which of the
following factors contributed to the success of these cookies in Argonia? A. Compatibility
29. Fiery Inc. is a manufacturer of hockey accessories that are lightweight as well as aerodynamic. As a first
mover, Fiery was able to fulfill the high demand for these accessories in Arahonia where hockey is a popular
sport. The high diffusion of Fiery products in Arahonia was successful because of their: C. compatibility.
30.Vintage Corp, a leather company, manufactures high-quality handbags for women. All its bags carry a
prominent logo of the company and consumers associate this logo with excellent quality. Despite their high
price, Vintage handbags are extremely popular. Which of the following factors is influencing the quick
diffusion of these handbags? E. Observability
31. Snackie, a cookie company, manufactures unique fish-shaped biscuits that are popular with kids. Kids
love the distinct shape and novel taste of these biscuits. Which of the following factors is primarily contributing
to the popularity of these biscuits? B. Observability
32. Music Xpress Corp., a company that manufactures music systems, introduced its new range of
jukeboxes in a few malls. These jukeboxes were an instant success because of touchscreen operated menus that
provided easy access to songs. To which of the following factors can the success of these jukeboxes be
primarily attributed? B. Complexity
33. Scorpion Homes Inc. is a company that provides security-related products to its consumers. However,
the burglar alarm system introduced by Scorpion Homes failed because consumers had to possess a certain level
of technical skill to use the product effectively. Which of the following factors is affecting the adoption rate of
these alarm systems? A. Complexity
34. Zapper Products Corp., a system integration services company, provides a pay-per-use option for its
business customers that allows them to understand its product's capabilities before they order licensed versions
on a large scale. This option has made Zapper Products Corp. extremely popular with smaller firms that plan to
invest on information technology infrastructure but have limited funds. The factor that is contributing to the
success of Techno Products Corp. is: E. trialability.
35. The first step in the development of new products is to: D. develop new ideas by either internal
research or market survey.
36. Which of the following would a firm that wants to be the pioneer in creating new products most likely
use to generate ideas for products? D. Internal research and development
37. A group of scientists at a biotechnology firm conducted extensive trials in a laboratory for over a decade
before creating a formula that could be used to develop a drug to treat cancer. The firm invested a lot of money
in these trials with the idea of generating revenue through sales. The method used by the company to develop
the new product is best termed as: C. internal research and development.
38. Ronen, a chef working for a prestigious restaurant, has come up with an idea for a new dish. The owner
of the restaurant, Jean, is impressed with the new recipe and asks all the other chefs of the restaurant to practise
making the new dish for three months until they can reproduce the recipe with the exact taste the owner is
looking for. The chefs also test the dish on other restaurant staff before introducing it to customers. The source
of idea generation used by Jean is: B. internal research and development.
 39. An advertising agency needs to develop an advertisement for a new product for a client. Salima, a
manager of the agency, asks her staff to assemble in groups in the presence of a moderator and generate ideas
for the advertisement. The source of idea generation used by Salima is: E. brainstorming.
40. The manager of a product design company has brought together a group of technical engineers to
generate ideas for potential new products. These engineers will arrive at a final decision through a vote on the
best ideas or combinations of ideas. This group is engaging in: D. brainstorming.
41. A cosmetics company, which mainly produces soaps, shampoos, and other skin care solutions for adults,
wants to introduce a line of baby products in the market. Since it has no prior experience with baby products, it
decides to buy the rights to use a necessary technology from a small research firm. The source of idea
generation used by the cosmetics company is: D. licensing.

42. An automobile firm wants to introduce its cars into new international markets to increase its customer
base. Since it does not know about customer needs in these markets, it associates itself with local firms that
have developed prototypes based on the customer needs of these markets. The method of idea generation used
by the automobile firm is: A. licensing.
43. TransInfo Inc., an information technology firm, is trying to develop new software that will facilitate the
transfer of documents in a secure and fast manner. The team of engineers at TransInfo has a detailed discussion
and come up with several ideas, out of which they accept only the best possible option. This type of idea
generation is called: C. brainstorming
44. A key characteristic of brainstorming sessions that are used to generate new ideas is that: D. no idea can
be immediately accepted or rejected.
45. Which of the following idea generation methods saves the high costs of in-house research and
development for a firm? B. Licensing
46. Taking apart a competitor's product, analyzing it, and creating an improved product that does not
infringe on the competitor's patents, if any exist, most accurately defines the term: B. reverse engineering.
47. Willfred Inc. is struggling to improve its sales. The sales of Branson Inc., a major competitor, are
soaring because of the company's well-designed and innovative products. Willfred decides to study Branson's
product designs in an attempt to understand how it is doing so well. Finally, Willfred creates an improved
product that does not infringe on Branson's patents. This type of idea generation is known as: C. reverse
engineering.
48. Garcia Stephens Co., a clothing company, is unable to improve sales after its designer failed to create
designs that satisfied current trends in the market. Another clothing company called Rigby Inc., on the other
hand, is having a successful season and its designs are the current rage in the market. The designers of Garcia
Stephens careful studied the designs of Rigby, analyzed them, improved upon them, and then created a whole
new range of designs for their own company. Which of the following sources of idea generation has been used
by Garcia Stephens Co.? E. Reverse engineering
49. Rudo, the owner of an ice cream parlour, is planning to introduce new flavours into the product line. He
decides to take feedback and suggestions from buyers as part of the process to develop innovative and
interesting new ice cream flavours. What is Rudo's source of idea generation? D. Customer input
50. Innovative product users who modify existing products according to their own ideas to suit their specific
needs are called: B. lead users.
5 1. Annie is a designer at a popular clothing brand. She observes people on the streets who modify the
clothing according to their needs and styles. Annie uses this input while designing new collections. What is the
method of idea generation used by Annie in developing new products? E. Customer input
52. When the product design team of a firm takes ideas with potential, develops them into visual images,
and presents them to potential buyers to get their reactions, they are engaging in: C. concept testing.
53. A brief written description of a product or service; its technology, working principles, and forms; and
what customer needs it satisfies most accurately defines the term: D. concept.
54. The process by which an idea that describes a product or a service is presented to potential buyers to
obtain their reactions can be best termed as: C. concept testing.
55. The process that entails the balancing of various engineering, manufacturing, marketing, and economic
considerations to develop a product most accurately defines the term: E. product design.
56. The first physical tentative form of a new product that has the same properties as a new product but is
produced through different manufacturing processes is called a(n): D. prototype.
57. Which of the following processes is used to test the performance of a product prototype and is carried
out in the research and development unit of a firm? A. Alpha testing
58. The method of testing that requires potential consumers to examine a product prototype in a real-use
setting is known as: . beta testing.
59. A group of scientists in a pharmaceutical firm are conducting trials of a new formula they have
developed to be used in a drug in the research and development unit of the firm. This method of testing a
product prototype is best categorized as: E. alpha testing.
60. Alice asks a group of people to test the skateboards she has manufactured. She needs to determine
whether they are functioning as intended and if they require any changes before they are released. What is the
type of test being conducted by Alice called? D. Beta testing
61. The form of market testing conducted by firms before a newly developed product or service is brought
to the market to determine how many customers will try it and then continue to use it is known as: A.
premarket testing.
62. The method of determining the potential success of a new product by introducing the product to a
limited geographical area prior to a national launch is called: D. test marketing.
63. Which of the following steps involved in new product introduction is regarded as the most crucial
because it requires huge financial resources and extensive co-ordination of all aspects of the marketing mix? C.
Product launch
64. Which of the following is a stage of the product life cycle in which sales are low and profits small or
negative? A. Introduction
65. Which of the following statements is true regarding the introduction stage of the product life cycle? C.
It usually starts with a single firm, and innovators form the main category of buyers.
66. A manufacturing firm has recently launched a new product and has no competitors in the market.
Innovators have started buying the product. In the context of the product life cycle, the product is in the: C.
introduction stage
 67. Which of the following is a stage in the product life cycle that is characterized by an increase in sales,
rapid increase in profits, and few but increasing number of competitors? A. The growth stage
68. During the growth stage of a product life cycle, firms attempt to: B. reach new consumers by studying
their preferences and producing different product variations.
69. A new product launched by a company is showing a rise in sales and a rapid rise in profits, and is being
purchased by a group of early adopters and early majority buyers. In the context of the product life cycle, the
product is in the: B. growth stage.
70. Which of the following is the stage of the product life cycle that is characterized by a peak in sales and a
high number of competitors and competitive products but a gradual decline in profits? C. Maturity
71. A cosmetics company had launched a product that earned good revenues for the company. A recent
market analysis shows intense competition for market share from a large number of competitors. The company
decides to spend more on marketing the product to help it to retain its market share. In the context of the
product life cycle, the product is currently in the: A. maturity stage.
72. The later phases of the maturity stage of a product is characterized by: B. market saturation.
73. Which of the following statements is true regarding the maturity stage of the product life cycle? E.
It is characterized by increased marketing costs, low profits, and market saturation.
75. Firms either position themselves for a niche market of loyal consumers or they exit the market during
the: E. decline stage of the product life cycle.
76.BG-Mobile Corporation wants to introduce a new product model. The head of the research team at the firm
brings together all her team members. She informs them about the new product's specific features and attributes
as well as the firm's performance expectations for the new model, and then she asks the team members for their
input. After the discussion, the final accepted idea is given to its team of engineers who develop a prototype of
the product and distributes the prototype models to the managers at corporate headquarters of BG-Mobile. The
managers use the prototype to determine if the product performs well and satisfies the need for which it was
developed. After a detailed analysis, the company will decide whether to introduce the product in the market as
it is or to modify it further before the release.
76. What is the source for idea generation employed by the research team at BG-Mobile Corporation called?
B. Brainstorming
77. The method used by the team of engineers at BG-Mobile Corporation to test the product prototype is
known as: E. alpha testing.
78. After the new product of BG-Mobile Corporation is released in the market, the category of buyers who
will play a crucial role in the initial marketing of this product are the: B. innovators.
79. The method of testing employed by Mirka Beauty Products to test its product in the above scenario is
best categorized as: B. test marketing.
80. Mirka Beauty Products marketed its product by educating consumers about the benefits of the additional
feature it provided in its product. The marketing mix variable that benefited from the results of the tests is: B.
promotion.
81. Which of the following statements is correct about the test marketing carried out by Mirka Beauty
Products? B. It uses all the elements of the marketing mix.
 82. George is curious about a new tablet that will be released in the market in the next few days. Although
he owns a similar product from a rival company, he is interested in the additional features that the new product
offers and decides to buy it. To which of the following categories of buyers does George belong? D.
Innovators
83. Nancy is a professional photographer and has been looking to buy a new digital camera that improves
picture quality. After extensive research about a new camera that was released in the market two weeks ago, she
decides to buy it because she is convinced that it will produce the picture quality she has been looking for. This
shows that Nancy belongs to the group of: B. early adopters.
84. Dean McShane is the chief technology officer of a company that offers online education. Dean is
interested in buying a new 3D technology product but decides to wait until two versions of the product are
released to be sure of its maturity. According to the diffusion of innovation model, to which of the following
groups of buyers does Dean belong? A. Early majority
85. Tina had been watching cable TV even though 50 percent of the country had moved to satellite TV.
Though she was aware of the benefits of satellite television, she did not make the move to adopt the new
technology until after her friend explained that Tina could receive good benefits at low costs. According to the
diffusion of innovation model, to which of the following groups of buyers does Tina belong? E. Late majority
86. Who among the following can be regarded as a laggard according to the diffusion of innovation theory?
C. Emily, who still listens to songs on cassette tapes despite the advent of CDs and MP3s
87. The stage in a product life cycle in which innovators are the main consumers is called the: D.
introduction stage.
88. Based on the graph, which of the following stages in a product's life cycle is characterized by increasing
competitors and a rapid rise in industrial sales? B. Growth stage
89. If a firm is facing intense competition on the prices of its product and in turn it is leading to a decrease in
the firm's profit margins, then the product is said to be in which stage of its life cycle? C. Maturity
90. LuxSpeed Inc. is a car manufacturing firm. It is experiencing a decline in the sales of a model released
in the 1990s. At this stage, LuxSpeed Inc. should focus all its marketing efforts toward: E. targeting a
particular segment of brand loyalists interested in the model.