Marketing Chapter 12: Developing New Products

refers to the process by which ideas get transformed into new offerings, including products, services, processes, and branding concepts that will help firms grow

changing customer needs market saturation (no new demand,,,w/o new products, value of firm declines. ex- car company, ppl want new cars) manage risk through diversity (protect against external shock) fashion cycles improving business relationships

process by which the use of an innovation spreads throughout a market group, over time and across categories of adopters

new products (establish a completely new market or radically change rules of comp and consumer prefs) that can add tremendous value to firms, establish a completely new market

first to create the market or product category easily recognized establishes commanding and early market share lead

buyers who want to be the first on the block to have the new product or service, 2.5%

generally don't take as much risk as innovators do but wait and purchase the product after a careful review, 13.5%

*few new products can be profitable until this large group buys them, don't like to take much risk and tend to wait until the bugs are worked out, 34%

last group of buyers to enter the new product market, product has achieved full market potential already 34%

consumers like to avoid change and rely on traditional products until they are no longer available, 16%

Innovators 2.5% Early adopters 13.5% Early majority 34% Late majority 34% Laggards 16%

Relative advantage (better) compatibility observability complexity and trial-ability (apple- stores to try out) ACOC

Idea generation -> Concept Testing -> Product Development -> Market Testing -> Product Launch -> Evaluation of Results

research and development R&D by a group who shares info to whole community

firms buy rights to use technology or ideas from other firms through a licensing agreement

groups work together to generate ideas, no idea can be immediately accepted or rejected

enlisting help of outside firms like IDEO, helps clients generate new product and services ideas in certain industries

Taking apart a product, analyzing it, and creating an improved product that does not infringe on the competitor's patents

internal R&D, R&D consortia, licensing, brainstorming, outsourcing, competitors' products, consumer input

focus groups, interviews, surveys, looking at consumer behavior, social media

innovative product users who modify existing products according to their own ideas to suit their specific needs

brief written descriptions of the product, its technology, working principles, other forms, and what customer needs it would satisfy

process in which a concept statement is presented to potential buyers or users to obtain their reactions

process of balancing various engineering, manufacturing, marketing, and economic considerations to develop a product's form and features or a service's features

first physical form or service description of a new product

firm attempts to determine whether the product will perform according to its design and whether it satisfies the need for which it was intended (inside R&D Department)

uses potential customers, examine the product prototype in a real use setting to determine its functionality, performance, and potential problems (real world test)

conducted by firms to determine how many customers will try and then continue to use the product or service according to a small group of potential consumers

introduces the offering to a limited geographical area prior to a national launch, strong predictor for product success because they can study actual purchase behavior

4 ps and timing

Promotions to wholesalers or retailers to get them to purchase the new products, often combine introductory price promotions, special events

limited-duration, lower-than-normal prices designed to provide retailers with an incentive to try the products

temporary concentration of manufacturers that provide retailers the opportunity to view what is available and new in the marketplace

encouraged price for retailers to sell at

fee paid simply to get new products into stores or gain more and better shelf space for their products

1) satisfaction with performance 2) customer acceptance 3) satisfaction with firm's sales and profits

defines the stages that products move through as they enter, get established in, and ultimately leave the marketplace

product category first launches (innovators start buying product)

product gains acceptance, demand and sales increase, more competitors emerge

Industry sales reach their peak, firms try to rejuvenate their products by adding new features or repositioning them

when the product eventually exits the market

bell shaped

predict which types of customers will buy their product immediately and later

The early majority is the first large group to adopt the product. Without this group, profits are unlikely to materialize. early majority

Some firms do not believe in conducting any animal testing at all, and a few consider animal testing appropriate in any situation. Many firms, though, find a middle ground, considering the benefit to humans of the research. The correct answer is: should be done when the new product does not contribute to the health and well-being of human users.

Since customers crave the latest and greatest, this indicates that most sales come from new products, requiring game manufacturers to keep up with that trend. The correct answer is: keeping up in a market where sales come mostly from new products.

The consumer panel data is collected by panelists scanning in their receipts using a home scanning device. The correct answer is: Panelists scan their receipts on a home scanning device.

Early adopters, who are not the very first buyers of a new product (those are the innovators) but who still buy very early in the product's life, are important to the diffusion of the products because they are often opinion leaders. The correct answer is: opinion leaders.

Early adopters, who are not the very first buyers of a new product (those are the innovators) but who still buy very early in the product's life, are important to the diffusion of the products because they are often opinion leaders. If there are relatively few early adopters to serve as opinion leaders, the market for the product is likely to be small. The correct answer is: early adopter