TEST BANK
Principles of Marketing
01/12/23 1
,Principles of Marketing
Chapter 10
Test Bank Questions
Maintaining a Competitive Edge with New Offerings
Multiple Choice Questions
1. Which of the following statements about new-to-the-world-products is true?
A. New-to-the-world products are products that are new to a company but not to the
world.
B. New-to-the-world products are products that are additions to a company’s current
product mix.
C. New-to-the-world products are new inventions that create new markets.*
D. New-to-the world products are products that companies have made improvements to.
Solution: C. New-to-the-world products are brand-new to the world and thus create brand-new
markets.
Section 10.1 LO1 Moderate 1-2 minutes
2. When ketchup and mustard manufacturers moved from open-mouth bottles to squeeze-top
bottles, consumers had to adjust how they dispensed these condiments. While some changes
in consumer habits were required, the packaging innovation did not disrupt the entire
market. They type of innovation is known as _______.
A. discontinuous innovation
B. continuous innovation
C. dynamically continuous innovation*
D. repositioned products
Solution: C. Dynamically continuous innovation involves a moderate change in consumer
behavior that is neither disruptive nor marginal in the market.
Section 10.1 LO2 Difficult 2-3 minutes
3. When ABC All-Weather Blanket Company launches a lightweight beach blanket before the
summer season, which of the risks associated with developing new products might they
encounter?
A. A decrease in revenue stream
B. A lack of differentiation as there are many competitors in the market marketing beach
blankets*
C. Poor product launch timing as beach gear should be launched in early winter
D. Lack of technical feasibility as the company isn’t equipped to make beach blankets
Solution: B. When a new product is insufficiently differentiated from other competitors in the
market, consumers may not see any value in choosing it over other companies’ products. Lack
of differentiation is a risk factor of developing a new product.
Section 10.1 LO3 Moderate 1-2 minutes
01/12/23 2
,Principles of Marketing
4. In which stage of the new product development process are marketers filtering through
product ideas to determine which ones are most favorable to the company?
A. Idea generation
B. Concept development and testing
C. Market strategy development
D. Idea screening and evaluation*
Solution: D. Idea screening and evaluation occurs after Stage 1, idea generation. In this stage of
the new product development process, marketers examine ideas generated to determine
which ones will generate the most profit or help the company reach other marketing goals.
Section 10.2 LO1 Easy 1-2 minutes
5. During the _______ stage of the new product development process, marketers create a
prototype of the product.
A. product development*
B. idea generation
C. market strategy development
D. idea screening and evaluation
Solution: A. Stage 6 of the new product development process involves turning the product
concept into a physical version of the product, also known as a prototype.
Section 10.2 LO2 Moderate 1-2 minutes
6. During the _______ stage, marketers use internal and external sources to gather as many
ideas as possible for new products.
A. idea generation*
B. concept development and testing
C. market strategy development
D. idea screening and evaluation
Solution: A. Stage 1 of the new product development process involves generating as many ideas
as marketers can for new products. These new ideas can come from internal sources and
external sources.
Section 10.2 LO2 Moderate 1-2 minutes
7. Candymaker Quittles used social media to poll people on which new flavor of candy it should
introduce next. The poll resulted in 13,000 responses. The practice of getting input from a
large group of consumers is known as _______.
A. commercialization
B. crowdsourcing*
C. test-marketing
D. product development
Solution: B. Crowdsourcing can occur in Stage 7 of the new product development process and is
a test-marketing practice that involves gathering input from a large group of people.
Section 10.2 LO2 Moderate 2-3 minutes
01/12/23 3
, Principles of Marketing
8. Which of the following statements best explains why establishing metrics for new products
is important?
A. Companies must establish metrics to make sure they are making the most efficient use
of resources and to ensure they are meeting both short-term and long-term goals.*
B. Establishing metrics for new products ensures that internal and external product
sources are reliable.
C. Companies establish metrics to ensure a new product was test-marketed successfully.
D. Companies rely on metrics to measure how well the new product was developed.
Solution: A. There are costs, risks, time, and money associated with new product development.
Establishing metrics allows marketers to measure performance against these factors to ensure
they are making the most efficient use of resources.
Section 10.3 LO1 Difficult 2-3 minutes
9. Which of the following new product key performance indicators (KPIs) is a quick way to
estimate a product’s future value?
A. R&D spending as a percentage of sales
B. Current year percentage of sales*
C. Time to value (TTV)
D. Product adoption rate
Solution: B. As a new product KPI, the current year percentage of sales calculates the cost of
goods sold, inventory, cash, and other financial line items as a percentage of sales and then
applies that percentage to future sales estimates.
Section 10.3 LO2 Moderate 1-2 minutes
10. Which new product performance metric measures the overall value of an investment in a
new product?
A. R&D spending as a percentage of sales
B. Current year percentage of sales
C. Return on investment (ROI)*
D. Product adoption rate
Solution: C. Return on investment (ROI) evaluates the profitability of an investment in a new
product by subtracting marketing costs from marketing sales, dividing by marketing costs, and
then multiplying by 100.
Section 10.3 LO2 Easy 1-2 minutes
01/12/23 4
Principles of Marketing
01/12/23 1
,Principles of Marketing
Chapter 10
Test Bank Questions
Maintaining a Competitive Edge with New Offerings
Multiple Choice Questions
1. Which of the following statements about new-to-the-world-products is true?
A. New-to-the-world products are products that are new to a company but not to the
world.
B. New-to-the-world products are products that are additions to a company’s current
product mix.
C. New-to-the-world products are new inventions that create new markets.*
D. New-to-the world products are products that companies have made improvements to.
Solution: C. New-to-the-world products are brand-new to the world and thus create brand-new
markets.
Section 10.1 LO1 Moderate 1-2 minutes
2. When ketchup and mustard manufacturers moved from open-mouth bottles to squeeze-top
bottles, consumers had to adjust how they dispensed these condiments. While some changes
in consumer habits were required, the packaging innovation did not disrupt the entire
market. They type of innovation is known as _______.
A. discontinuous innovation
B. continuous innovation
C. dynamically continuous innovation*
D. repositioned products
Solution: C. Dynamically continuous innovation involves a moderate change in consumer
behavior that is neither disruptive nor marginal in the market.
Section 10.1 LO2 Difficult 2-3 minutes
3. When ABC All-Weather Blanket Company launches a lightweight beach blanket before the
summer season, which of the risks associated with developing new products might they
encounter?
A. A decrease in revenue stream
B. A lack of differentiation as there are many competitors in the market marketing beach
blankets*
C. Poor product launch timing as beach gear should be launched in early winter
D. Lack of technical feasibility as the company isn’t equipped to make beach blankets
Solution: B. When a new product is insufficiently differentiated from other competitors in the
market, consumers may not see any value in choosing it over other companies’ products. Lack
of differentiation is a risk factor of developing a new product.
Section 10.1 LO3 Moderate 1-2 minutes
01/12/23 2
,Principles of Marketing
4. In which stage of the new product development process are marketers filtering through
product ideas to determine which ones are most favorable to the company?
A. Idea generation
B. Concept development and testing
C. Market strategy development
D. Idea screening and evaluation*
Solution: D. Idea screening and evaluation occurs after Stage 1, idea generation. In this stage of
the new product development process, marketers examine ideas generated to determine
which ones will generate the most profit or help the company reach other marketing goals.
Section 10.2 LO1 Easy 1-2 minutes
5. During the _______ stage of the new product development process, marketers create a
prototype of the product.
A. product development*
B. idea generation
C. market strategy development
D. idea screening and evaluation
Solution: A. Stage 6 of the new product development process involves turning the product
concept into a physical version of the product, also known as a prototype.
Section 10.2 LO2 Moderate 1-2 minutes
6. During the _______ stage, marketers use internal and external sources to gather as many
ideas as possible for new products.
A. idea generation*
B. concept development and testing
C. market strategy development
D. idea screening and evaluation
Solution: A. Stage 1 of the new product development process involves generating as many ideas
as marketers can for new products. These new ideas can come from internal sources and
external sources.
Section 10.2 LO2 Moderate 1-2 minutes
7. Candymaker Quittles used social media to poll people on which new flavor of candy it should
introduce next. The poll resulted in 13,000 responses. The practice of getting input from a
large group of consumers is known as _______.
A. commercialization
B. crowdsourcing*
C. test-marketing
D. product development
Solution: B. Crowdsourcing can occur in Stage 7 of the new product development process and is
a test-marketing practice that involves gathering input from a large group of people.
Section 10.2 LO2 Moderate 2-3 minutes
01/12/23 3
, Principles of Marketing
8. Which of the following statements best explains why establishing metrics for new products
is important?
A. Companies must establish metrics to make sure they are making the most efficient use
of resources and to ensure they are meeting both short-term and long-term goals.*
B. Establishing metrics for new products ensures that internal and external product
sources are reliable.
C. Companies establish metrics to ensure a new product was test-marketed successfully.
D. Companies rely on metrics to measure how well the new product was developed.
Solution: A. There are costs, risks, time, and money associated with new product development.
Establishing metrics allows marketers to measure performance against these factors to ensure
they are making the most efficient use of resources.
Section 10.3 LO1 Difficult 2-3 minutes
9. Which of the following new product key performance indicators (KPIs) is a quick way to
estimate a product’s future value?
A. R&D spending as a percentage of sales
B. Current year percentage of sales*
C. Time to value (TTV)
D. Product adoption rate
Solution: B. As a new product KPI, the current year percentage of sales calculates the cost of
goods sold, inventory, cash, and other financial line items as a percentage of sales and then
applies that percentage to future sales estimates.
Section 10.3 LO2 Moderate 1-2 minutes
10. Which new product performance metric measures the overall value of an investment in a
new product?
A. R&D spending as a percentage of sales
B. Current year percentage of sales
C. Return on investment (ROI)*
D. Product adoption rate
Solution: C. Return on investment (ROI) evaluates the profitability of an investment in a new
product by subtracting marketing costs from marketing sales, dividing by marketing costs, and
then multiplying by 100.
Section 10.3 LO2 Easy 1-2 minutes
01/12/23 4
