1. c. With dynamically continuous innovation, some changes in consumer habits are necessary, but the
changes aren’t as dramatic as with discontinuous innovation and are not as insignificant as in continuous
innovation.
2. b. Remember, new-to-the-firm products aren’t new to the world, but they are a new product venture for
the firm.
3. d. The laundry detergent is supposedly a current product made better.
4. b. With continuous innovation, the existing product undergoes only marginal changes and doesn’t alter
consumer habits.
5. d. Revenue streams are the different sources from which a business earns money from the sale of its
goods or services.

1. c. A prototype is an early model of a new product that R&D develops in order to be able to test the design.
2. b. Concept testing is a research method that involves determining how customers feel about the new
product before actually launching it.
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3. d. Commercialization is where the “rubber hits the road” and the company introduces the product to the
market on a full-scale basis, involving production, marketing, distribution, and customer support.
4. b. In sales-wave research, consumers are initially allowed to try the product at no cost. They are then
reoffered the product (or a competitor’s product) at a reduced price a number of times (i.e., sales waves).
The point of this research is to see how many consumers select the new product and record their reported
levels of satisfaction with the product.
5. d. The first stage in the new product development process is idea generation.

1. d. Product metrics are data measurements that businesses use to evaluate the success of a product.
2. b. Current year percentage of sales is a “quick and dirty” way to estimate the product’s future value.
3. c. Return on investment (ROI) is a performance measure used to evaluate the profitability of new product
development.
4. c. Time to value is a critical metric that measures how long it takes new users to recognize the value of
your product.
5. d. Annual recurring revenue (ARR) is the annual value of revenue generated from subscriptions and
contracts.

1. c. Technological synergy is how much of a match there is between the existing technological skills of the
firm and the technological skills needed to execute the new product initiative.
2. a. The study found that new product failure rates varied among industries, ranging from 35 percent for
health care products to 49 percent for consumer goods.
3. b. The prolonged delay of a new product can have many implications: changing customer needs/wants, an
economic downturn, rising unemployment rates, or even the evolution of different market segments.
4. d. In an effort to bring “something new” to the market, companies often include features that make the
product more costly to produce.
5. a. Products that deliver real and unique benefits to customers are typically more successful than products
that have few positive points of differentiation compared to existing products on the market.

1. d. Innovators typically buy new products as soon as they hit the market.
2. a. Product awareness is the first stage in the consumer adoption process, in which a company creates
awareness that the product is available.
3. d. Communicability is the extent to which the benefits of a new product are likely to be noticed and
discussed by consumers.
4. c. Laggards are more in tune with the past than the future, and they are skeptical of new ideas.
5. d. Consumers in the late majority category are typically slow to catch on to the popularity of new products
or services