Developing New Products
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| 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.
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| Innovation | The process by which ideas are transformed into new products and services that will help firms grow.
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| 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.
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| 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
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| 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.
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| Innovators | Those buyers who want to be the first to have the new product of service.
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| 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.
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| 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.
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| Late Majority | The last group of buyers to enter a new product market; when they do the product has achieved its full market potential.
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| Laggards | Consumers who like to avoid change and rely on traditional products until they are no longer available.
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| Five groups of the diffusion of innovation curve? | Innovators, Early Adopters, Early Majority, Late Majority, and Laggards.
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| What factors enhance the diffusion of a good or service? | Relative Advantage, Compatibility, Observability, and Complexity and Trialability.
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| How firms develop new products | Internal Research and Development, R&D Consortia, Licensing, Brainstorming, Outsourcing, Competitors' Products, and Customer Input.
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| 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.
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| Lead Users | Innovative product users who modify existing products according to their own ideas to suit their specific needs.
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| Concepts | Brief written descriptions of a product or service; its technology, working principles, and forms; and what customer needs it would satisfy.
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| 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.
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| What are the steps in new product development process? | Idea Generation, Concept Testing, Product Development, Market Testing, Product Launch, & Evaluation of Results.
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| 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.
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| 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.
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| 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).
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| 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.
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| 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.
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| Test Marketing | Introduces a new product or service to a limited geographical area (usually a few cities) prior to a national launch.
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| Trade Promotions | Advertising to wholesalers or retailers to get them to purchase new products, often thru special pricing incentives.
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| Introductory Price Promotions | Short-term price discounts designed to encourage trials.
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| Trade Show | Major events attended by buyers who choose to be exposed to products and services offered by potential suppliers in an industry.
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| Manufacturers Suggested Retail Price (MSRP) | The price that manufacturers suggest retailers use to sell their merchandise.
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| 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.
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| 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.
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| Introduction Stage | Stage of the product life cycle when innovators start buying the product.
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| Growth Stage | Stage of the product life cycle when the product gains acceptance, demand, and sales increase, and competitors emerge in the product category.
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| 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.
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| Decline | Stage of the product life cycle when sales decline and the product eventually exists in the market.
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