PCM Product Development & Launch 2 — Questions and Answers
Question 1: A company uses a 'stage-gate' product development process. What is the PRIMARY purpose of each 'gate' in this system?
- To assign budget to development teams
- To review progress and decide whether to continue, modify, or kill the project (Correct answer)
- To schedule product launch dates
- To gather customer feedback on prototypes
Correct answer: To review progress and decide whether to continue, modify, or kill the project
Stage-gates are decision checkpoints where management evaluates whether a project meets predefined criteria before allowing it to proceed to the next stage.
Question 2: Which concept describes the phenomenon where early adopters of a new technology product are enthusiastic, but mainstream customers fail to adopt it at the same rate?
- Product life cycle decline
- The chasm (crossing the chasm) (Correct answer)
- Market saturation
- Diffusion lag
Correct answer: The chasm (crossing the chasm)
Geoffrey Moore's 'crossing the chasm' describes the gap between early adopters and the early majority that many high-tech products fail to bridge.
Question 3: During new product development, a company creates a basic working version with only core features to test assumptions with real users. This is called a:
- Prototype
- Minimum Viable Product (MVP) (Correct answer)
- Alpha release
- Concept test
Correct answer: Minimum Viable Product (MVP)
An MVP is a product with just enough features to satisfy early customers and gather validated learning for future development.
Question 4: A marketer calculates that a new product's development cost is $500,000 and each unit costs $20 to produce. At a price of $70, how many units must be sold to break even?
- 7,143 units
- 10,000 units (Correct answer)
- 25,000 units
- 5,000 units
Correct answer: 10,000 units
Break-even = Fixed Costs ÷ (Price − Variable Cost) = $500,000 ÷ ($70 − $20) = $500,000 ÷ $50 = 10,000 units.
Question 5: In the context of product development, 'voice of the customer' (VOC) research is BEST used to:
- Determine production schedules and capacity
- Translate customer needs into specific product requirements (Correct answer)
- Set promotional budgets for launch
- Evaluate competitive pricing strategies
Correct answer: Translate customer needs into specific product requirements
VOC research captures customer needs, preferences, and requirements that are then translated into product specifications via tools like Quality Function Deployment (QFD).
Question 6: A product manager is deciding between a 'skimming' and 'penetration' pricing strategy for a new product launch. Which condition MOST favors a penetration pricing strategy?
- The market is price-insensitive and willing to pay a premium
- The product has no close substitutes
- Strong economies of scale exist and the market is price-sensitive (Correct answer)
- The company wants to recover R&D costs quickly
Correct answer: Strong economies of scale exist and the market is price-sensitive
Penetration pricing works best when demand is price-elastic and cost efficiencies from high volume can be achieved, making low prices sustainable.
Question 7: Which of the following BEST describes the role of a 'product champion' in new product development?
- A customer who publicly endorses the product after launch
- An executive who formally approves the product budget
- An internal advocate who promotes the project and overcomes organizational resistance (Correct answer)
- A quality assurance manager who validates product specifications
Correct answer: An internal advocate who promotes the project and overcomes organizational resistance
A product champion is typically a passionate internal advocate who pushes the project through organizational barriers and keeps stakeholders aligned.
PCM Product Development & Launch 2
A company uses a 'stage-gate' product development process.
What is the PRIMARY purpose of each 'gate' in this system?