P 229 new product development adds value to a firms

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(p. 229) New product development adds value to a firm's products and services through innovation. TRUE Without innovation, firms would have only two choices--to continue to market current products to current customers, or to take the same products to other markets. New product development opens up greater opportunities. AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 11-01 Identify the reasons firms innovate. Topic: Why Do Firms Create New Products? 2. (p. 229) Although innovation strategies may not work in the long run, overriding short-term reasons compel firms to introduce new products and services. FALSE The statement is backwards. Innovation strategies focus on long-term objectives, which sometimes do not work in the short run. AACSB: Analytic Blooms: Understand Difficulty: 2 Medium Learning Objective: 11-01 Identify the reasons firms innovate. Topic: Why Do Firms Create New Products? 3. (p. 232) New-to-the-world products that create new markets can add tremendous value to firms. TRUE Although new-to-the-world products can carry with them significant risk, they also offer tremendous opportunities to add value. AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 11-01 Identify the reasons firms innovate. Topic: Diffusion of Innovation 4. (p. 229) The majority of new products are failures. TRUE
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As many as 95% of all new consumer goods fail, and products across all markets and industries suffer failure rates of 50-80%. AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 11-01 Identify the reasons firms innovate. Topic: Diffusion of Innovation 5. (p. 231) Even if they succeed, all consumers do not adopt new-to-the-world products at the same time. TRUE The adoption of an innovative product or service spreads through the population over a period of time and generally follows a bell-shaped curve (called the Diffusion of Innovation curve). AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 11-02 Describe the different groups of adopters articulated by the diffusion of innovation theory. Topic: Diffusion of Innovation 6. (p. 234) Compatibility is important for rapid diffusion of new products because products that are consistent with consumers' past behavior will be more readily accepted. TRUE Compatibility is one of the factors that influences consumer acceptance of innovations. It refers to the degree to which an innovation is consistent with consumers' behavior and values. AACSB: Analytic Blooms: Understand Difficulty: 2 Medium Learning Objective: 11-03 Identify the factors that determine how fast innovation diffuses. Topic: Diffusion of Innovation 7. (p. 236) One of the key characteristics of brainstorming sessions is that bad ideas should be immediately rejected so the group can focus its attention on good ideas.
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