Chapter 9 Flashcards
(43 cards)
Q: Who on the new-product team is chiefly responsible for the sales forecast?
The marketing member.
- Q: Why is sales forecasting one of the hardest challenges in new-product financial analysis?
A: Because it depends on many uncertain factors: marketing effort, customer adoption, and competitor reaction.
Q: Name two reasons a product with huge potential might still miss its sales forecast.
(1) Insufficient marketing effort; (2) Strong competitive moves
What does A-T-A-R stand for?
Awareness, Trial, Availability, Repeat.
In ATAR, what input often comes from post-trial data?
Repeat (R) percentages.
Q: Formula for long-run market share (MS) in ATAR?
MS=A×T×Av×R.
Q: Name two reasons a product with huge potential might still miss its sales forecast.
(1) Insufficient marketing effort; (2) Strong competitive moves.
What two things drive long-term sales growth after trial?
Repeat purchase and favorable word of mouth.
Q: Besides time and cost, what major factor guides the choice of a forecasting model?
A: Product/market newness.
- Q: Define Rs in the switching model.
A: Proportion of customers who switch to the new product when it launches.
- Q: Define Rr in the switching model.
A: Proportion of repeat purchasers of the new product.
- Q: Switching-model formula for repeat rate
𝑅
R?
R = R_s/(1+R_s - R_r)
- Q: List the five adopter categories in order.
A: Innovators → Early adopters → Early majority → Late majority → Laggards.
- Q: Why are early adopters critical?
A: Their behavior influences later segments.
Bass sales functions: s(t) = … depends on which two parameters?
p (coefficient of innovation)
q (coefficient of imitation)
Base sales functions mathematical expression that predicts the number of units sold over time before you layer on special marketing events or promotions.
- Q: Give two common problems with new-product sales forecasts.
A: (1) Users don’t fully grasp the product; (2) Competitors change strategies.
- Q: What-if analysis helps when data are _____?
A: Not very accurate (high uncertainty).
- Q: One way managers can reduce dependence on poor forecasts?
A: “Forecast what you know” or approve situations, not numbers.
- Q: Why defer detailed financial analysis until later stages?
A: Early numbers are highly uncertain; waiting reduces wasted effort
- Q: General rule: the riskier a project, the _____ the required rate of return.
A: Higher.
Rate of return (RoR) is the percentage of profit or loss made on an investment over a specific period of time.
- Q: What is real-options analysis in product development?
A: Valuing a new concept like a financial option to estimate NPV under uncertainty.
- Q: Top-down portfolio approach—explain in one line.
Starts with its overall business strategy and then allocates resources across different types of innovation projects that align with that strategy.
- Sales analysis
Straightforward forecast using historical/purchase-intention data.
- Q: Bottom-up approach—explain in one line.
Individual project ideas emerge first — often from employees, R&D, or market feedback — and the company then builds its innovation strategy around the most promising opportunities.
