Ch. 12: Developing New Products

While early adopters are crucial to the success of a new product, they still only make up a relatively small percentage of the total consumers in a given product market. This percentage is approximately how big?

13.5%

When Ben & Jerry's Ice Cream tests all of its new flavors on its own employees at its corporate headquarters in Vermont, it is engaging in what kind of testing?

Alpha testing

True pioneer products are products that have never been seen before and literally create new markets. Which of the following products would be considered a pioneer product at the time it was introduced?

Apple iPod in 2001

If you are a customer of a company and are asked to use a product prototype, you would be engaging in what type of testing?

Beta testing

____________ refers to a group session in which participants work together to generate new ideas.

Brainstorming

Depending on the product category, the time element of the diffusion curve varies. For some product categories, the time it takes to get from innovators to laggards to purchase a product is shorter. Which of the following would be expected to have the shortest time frame for full diffusion?

Children's toys

Identify potential impacts to the company when a new product launch is a failure.

Company may fall Negative financial impacts Product may not recover from failure

A newly formed coffee company should not have much trouble finding coffee drinkers in America to purchase a new type of coffee maker. However, a company selling gear for the game of cricket might have a difficult time being successful in the United Sates. They would probably be more successful in India or Australia. The degree to which one's product is consistent with the needs and habits or target consumers is known as ____________.

Compatibility

Innovators are those who must be first on the block to have a new product or service. Identify who can be considered an innovator.

Consumers

During test marketing, the potential elements of the marketing mix that may be used include which of the following?

Coupons Advertising

Concept testing can be as simple as a brief written description of the product that might also include ____________.

Customer needs it satisfies Visual images

Which of the following questions are likely to be asked of customers during concept testing?

Does the proposed price seem like a good value? How often and in what quantities would the customer buy the product? Would the customer buy the product as a gift?

Joanna is interested in new electronics products, but she prefers to wait a few weeks to buy them until technology bloggers post their initial opinions. Joanna probably belongs to which of the adopter groups?

Early adopters

____________ ____________ are the category of consumers who begin to use a product or service immediately following the innovators.

Early adopters

Lance enjoys owning new gadgets that make his life easier, but he is cautious. He doesn't want the hassle of working through all the initial problems with the new technology, so he waits until those problems have been solved. Lance probably belongs to which of the adopter groups in the first half of adopters?

Early majority

What are some advantages experienced by pioneer firms over later entrants?

Establish an early market share lead More readily recognizable to consumers More likely to develop brand loyalists

Sequential steps are involved in a new product launch. Match each task with the step. Firm confirms its target market. Firm decides how the product will be positioned. Firm finalizes the remaining marketing mix variables for the new product.

Firm confirms its target market: STEP 1 Firm decides how the product will be positioned: STEP 2 Firm finalizes the remaining marketing mix variables for the new product: STEP 3

What is a key characteristic of the maturity stage?

Firms defend market share

____________ are buyers of a product or service who are the first ones to adopt it.

Innovators

Place each of the following categories of consumers in the order in which they adopt a product, beginning with the innovators at the top. Late majority Early majority Laggards Innovators Early adopters

Innovators Early adopters Early majority Late majority Laggards

Using a new smart phone as an example, match each consumer category with the most probable action it would take with regard to buying the device. Innovators Early adopters Early majority Late majority Laggards

Innovators- Would line up outside the store to be the first to buy it. Early adopters- Will wait a week or two and read several reviews before buying. Early majority- Will wait till they are sure it works well and that they will be able to use it. Late majority- Will buy it after most of their friends have one. Laggards- Will not buy one until something newer has come along.

____________ are consumers who like to avoid changes and rely on traditional products until they are no longer available.

Laggards

Match the relative level of sales with the stage of the product life cycle at which this level of sales is typically observed. Low Rising Peak Dropping

Low- Introduction Rising- Growth Peak- Maturity Dropping- Decline

Some analysts have attributed the success and quick diffusion of the Apple iPod in part to the white earbuds. At the time, earbuds were not seen as often, and most headphones were black, not white. As knowledge of the iPod spread, the white earbuds could be seen even if the iPod itself was out of sight. This is an example of which of the factors that affect speed of diffusion?

Observability

____________ development entails a variety of processes and considerations to determine the form and features of a firm's offerings.

Product

Key characteristics of the introduction stage are that ____________.

Profits are low Start-up costs are high

____________ engineering refers to taking apart a competitor's product, analyzing it, and creating an improved product that does not infringe on the competitor's patents (if any exist).

Reverse

Without innovation, what option would be available to firms?

Take current products to new markets. Continue to market current products to current customers.

Which of the following are major reasons for product failures in the market?

Targeting the wrong market segment Poor positioning of the product Neglecting to do appropriate product testing

Which of the following are disadvantages of test marketing in comparison to premarket tests?

Test marketing costs more. Test marketing takes longer to carry out.

What does a postlaunch review help determine?

Whether changes to the marketing mix are needed. Whether additional resources are needed. Whether the launch was a success or failure.

Crucial to the success of new products are early ____________, who are responsible for influencing the final three categories of consumers to purchase the product.

adopters

Relative ____________ deals with perception among consumers that a product is better than its substitutes.

advantage

Innovators are as important to firms as they are to other consumers in that they ____________.

are essentially the testers for a product or service

Firms must continually introduce new products with improved features and find new uses for existing products in order to defend its current market share amid intense ____________.

competition

Companies use different techniques to understand the wants and needs of their customers. One such technique used is ____________ testing, which is used to obtain consumer's reactions to new product ideas BEFORE a prototype is actually developed.

concept

Through the effective use of ____________ testing, firms may be able to avoid the high costs of product development for product ideas that do not meet customers' expectations.

concept

When a product goes into the ____________ stage of the product life cycle, it eventually exits the market.

decline

When a product is in the last, or ____________ stage of the product life cycle, its firm will often choose between targeting a niche segment or exiting the market.

decline

A firm's research and ____________ department consists of scientist who work to solve complex problems and develop new ideas.

developtment

The process by which the use of an innovation, whether it be a product or service, is spread throughout a market group over time and over various categories of adopters, is known as ____________.

diffusion of innovation

Using the ____________ theory, a firm can predict which types of consumers will buy a new product or service immediately after its introduction and which consumers will buy it later, once the product is more widely accepted by the market.

diffusion of innovation

When products reach the growth stage of the product life cycle, the market manager must study the customers and know their preferences in factors such as:

features styles

During the ____________ stage of the product life cycle, firms attempt to reach new consumers by studying their preferences and producing many competing and different product variations.

growth

While pioneers capture an early and commanding market share, ____________ often enter the market, capitalize on the pioneer brand's weaknesses, and subsequently gain advantage in the market.

imitators

During the ____________ stage of the product life cycle, the product category first launches and innovators start buying products.

introduction

If a company invests all its time and effort into a new product and the product fails, ____________.

it will be extremely difficult for the firm to recover

During the decline stage of the product life cycle, ____________ who have not yet tried the product or service will be entering the market for the first time.

laggards

When the ____________ majority of consumers enters the market, the market has already reached its full market potential.

late

Purchasing a coffee from a coffee shop, for example, is a ____________ purchase decision than purchasing a cell phone from a large retail store.

less complex

The four stages that a product passes through as it enters, gets established in, and ultimately leaves the marketplace is called the product ____________ ____________.

life cycle

Whenever a product has a ____________ level of complexity, it will consequently be ____________ to try.

low; easy

The early ____________ represents the earlier half of the two largest categories of consumers on the diffusion of innovation curve.

majority

During the ____________ stage of the product life cycle, industry sales reach the peak, so firms try to rejuvenate their products by adding new features or repositioning them.

maturity

Not every product makes it through the life cycle to the last two stages of the PLC to reach stage three (____________) or stage four (decline).

maturity

Firms measure the success of a new product by its sales ____________, customer acceptance and its satisfaction of the firm's financial requirements.

performance

During concept testing it is important to present a brief written description to ____________ to obtain their reactions to the idea(s) presented.

potential buyers or users

A(n) ____________ test is when a company shows potential customers the marketing mix variables and then are surveyed if they would buy or use the product again.

premarket

If a firm has a positive result from the market testing the next step is known as ____________ launch.

product

A good or service may pass through many stages as it establishes itself in the marketplace. Marketing managers refer to this as the ____________ ____________ cycle.

product life

A(n) ____________ is the first physical form or service description of a new product, still in rough form, that has the same properties as the product.

prototype

As industry sales increase, profits in the growth stage will ____________ because of the economies of scale associated with manufacturing and marketing costs.

rise

Licensing typically occurs most frequently with products that are ____________ and ____________ and have complex patents and copyrights.

scientific; technological

When firms decide to develop new products, it is typically a long process that is broken into ____________ stages.

six

By the time the late majority enter the market, sales tend to ____________.

stabilize or decline slightly

On the basis of research gathered on consumer perceptions, the tests it has conducted, and competitive considerations, the firm confirms its ____________ market and decides how the product will be positioned.

target

When Burger King introduced the new Whopper Bar to a limited geographical area prior to a national launch, it was engaging in ____________.

test marketing

One of the most critical elements of success in new product launches is ____________ the introduction, such as scheduling the release of a movie to match school holidays.

timing

Which of the following sources is likely to be the most expensive? Internal R&D R&D consortia Licensing Brainstorming Competitor's products Customer input

Internal R&D