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MKT 300 Chapter 12
Developing New Products
| Question | Answer |
|---|---|
| Why do firms create new products? | Regardless of where on the continuum a new product lies, firms have to Innovate. Changing customer needs, Market Saturation, Managing Risk through Diversity, Fashion Cycles, and Improving Business Relationships. |
| Innovation | The process by which ideas are transformed into new products and services that will help firms grow. |
| Diffusion of Innovation | The process by which the use of an innovation, whether a product or a service, spreads throughout a market group over time and various categories of adopters. |
| Pioneers (Breakthroughs) | New product introductions that establish a completely new market or radically change both the rules of competition and consumer preferences in a market |
| First Movers | Product pioneers that are the first to create a market or product category, making them readily recognizable to consumers and thus establishing a commanding and early market share lead. |
| Innovators | Those buyers who want to be the first to have the new product of service. |
| Early Adopters | The second group of consumers in the diffusion of innovation model, after innovators, to use a product or service innovation; generally don't like to take as much risk as innovators but instead wait and purchase the product after careful review. |
| Early Majority | A group of consumers in the diffusion of innovation model that rep approx 34% of the population; members don't like to take much risk and therefore tend to wait until bugs are worked out of a particular product or service. |
| Late Majority | The last group of buyers to enter a new product market; when they do the product has achieved its full market potential. |
| Laggards | Consumers who like to avoid change and rely on traditional products until they are no longer available. |
| Five groups of the diffusion of innovation curve? | Innovators, Early Adopters, Early Majority, Late Majority, and Laggards. |
| What factors enhance the diffusion of a good or service? | Relative Advantage, Compatibility, Observability, and Complexity and Trialability. |
| How firms develop new products | Internal Research and Development, R&D Consortia, Licensing, Brainstorming, Outsourcing, Competitors' Products, and Customer Input. |
| Reverse Engineering | Involves taking apart a competitors product, analyzing it, and creating an improved product that does not infringe on the competitor's patents, if any exist. |
| Lead Users | Innovative product users who modify existing products according to their own ideas to suit their specific needs. |
| Concepts | Brief written descriptions of a product or service; its technology, working principles, and forms; and what customer needs it would satisfy. |
| Concept Testing | The process in which a concept statement that describes a product or a service is presented to potential buyers or users to obtain their reactions. |
| What are the steps in new product development process? | Idea Generation, Concept Testing, Product Development, Market Testing, Product Launch, & Evaluation of Results. |
| Product Development (Product Design) | Entails process of balancing various engineering, manufacturing, marketing and economic considerations to develop a products form and features or a service's features. |
| Prototype | The first physical form or service description of a new product still in rough or tentative form that has the same properties as a new product but is produced through different manufacturing processes, sometime crafted individually. |
| Alpha Testing | An attempt by the firm to determine whether the product will perform according to its design and whether is satisfies the need for which it was intended; occurs in the firm's research and development department (R&D). |
| Beta Testing | Having potential consumers examine a prototype in a real-use setting to determine its functionality, performance, potential problems, and other issues specific to its use. |
| Premarket Test | Conducted before a product or service is brought to market to determine how many customers will try and then continue to use it. |
| Test Marketing | Introduces a new product or service to a limited geographical area (usually a few cities) prior to a national launch. |
| Trade Promotions | Advertising to wholesalers or retailers to get them to purchase new products, often thru special pricing incentives. |
| Introductory Price Promotions | Short-term price discounts designed to encourage trials. |
| Trade Show | Major events attended by buyers who choose to be exposed to products and services offered by potential suppliers in an industry. |
| Manufacturers Suggested Retail Price (MSRP) | The price that manufacturers suggest retailers use to sell their merchandise. |
| Slotting Allowance | Fees firms pay to retailers simply to get new products into stores or to gain more or better shelf space for their products. |
| Product Life Cycle (4 Stages) | Defines the stages that new products move through as they enter, get established in, and ultimately leave the marketplace and thereby offers marketers a starting point for their strategy planning. |
| Introduction Stage | Stage of the product life cycle when innovators start buying the product. |
| Growth Stage | Stage of the product life cycle when the product gains acceptance, demand, and sales increase, and competitors emerge in the product category. |
| Maturity Stage | Stage of the production life cycle when industry sales reach their peak, so firms try to rejuvenate their products by adding new features or re-positioning them. |
| Decline | Stage of the product life cycle when sales decline and the product eventually exists in the market. |
Created by:
towilliamsjr
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