Chapter 12

Firm attempts to determine whether the product will perform according to its design and if it satisfies the need for which it was intended. Rather than use potential consumers ____ occurs in firm's R&D department. Ex: Ben&Jerry's Ice Cream ____ its news flavors on employees LUUCCKKKYY BAHAHAHAH. Worried about tests involving animals like pharmaceuticals and cosmetics

Alpha Testing (Step 3 of Product Development Process)

Contrast to alpha testing, _____ uses potential consumers who examine product prototype in real-use setting to determine functionality, performance, potential problems, and other issues specific to its use. Firm might develop several prototypes to give to users and survey those users to determine whether product worked as intended and identify issues that need resolution. People can sign up to become ____ for like Dell, Kodac, etc. YouEye eye tracking technology to see what a person attends to on a computer screen and his emotional reactions to these products

Beta Testing (Step 3 of Product Development Process)

Firms often engage in ______ which a group wirks together to generate ideas. Main thing is that no idea can be immediatly accepeted or rejected. Only at end do members vote on best ideas. These ideas carried on to next stage

Brainstorming (Idea Generation)

An idea with potential is developed further into a _____. IN this context refers to a brief written description of the product; its technology, working principles, and forms, and what customer needs it would satisfy, Might also use visual images of what the product would look like

Concept (Step 2 of Product Development Process)

The process which a ________ statement is presented to potential buyers or users to obtain their reactions. Helps developer estimate the sales value of product or service, maybe make changes to enhance sales value, and determine whether it needs further development. If _______ fails customers expectations doubtful it will succeed in market. Helps firms avoid costs. Usually begins with qualitative research like interviews and focus groups. Most important question is the respondent's purchase intentions id product or service was made available. Depending on type of product researchers may ask expected frequency of purchase, how much customers would buy, buy as a gift or themselves, if good value for price. Collects info on customer to see which consumer segment. Some ______ never make it past_____ but those that do move on to product development

Concept Testing (Step 2 of Product Development Process)

Because customers for B2B is few, firms can follow use of products closely and solicit suggestions and ideas to improve those products by using formal approach like focus groups, interviews, surveys, or through more informal discussions. B2C: Like online feedback, Ex: General Mills asking customers which flavor they liked the best out of 10 flavors. Sometimes consumers may not expressly demand for a new product, but behavior shows it. Ex: Home Depot invented Big Gripper because women have hard time taking out dirt and fertilizer

Customer Input (Idea Generation)

If this new life not successful then goes in ______ and eventually exits the market. Position themselves for a niche segment or die hard consumers, or those with special needs, or exit market. Laggards enter the market at this stage. Vinyls have had a resurgence because die hard music overs like unique sound of vinyl as opposed to music files and CD's.

Decline Stage

Use of innovation-whether a product, service, or a process-spreads throughout a market group, over time and across various categories of adopters. Helps marketers understand rate at which consumers likely to adopt a new product or service. Also allows them to identify the potential markets for their new products or services and predict their potential sales, even before they introduce the innovation

Diffusion of Innovation

The second subgroup that begins to use a product or service. Generally, don't want to take risk as innovators do but purchase product after review. This market waits for reviews of movie before buying ticket. Most go ahead and purchase because this group usually likes novelty. and regarded as opinion leaders. Makes up 13.5% of the market. If this group is small then the number of people who adopt the the innovation will likely be small

Early Adopters

Represents 34% of population, few products can be profitable until this group buys them. If the group never becomes large enough, product typically fails. ______ differs from buyers in first two stages because its members don't like too much risk and wait until the bugs are fixed in a product. Ex: _____ rents Hunger Games movie during first week on DVD. _____ experience little risk because all reviews in, and costs lower because renting instead of buying ticket. Also, when _____ customers enter market,number of competitors in marketplace has reached peak, so buyers have many prices and quality choices

Early Majority

After product launch, marketers have postlaunch review to determine whether product and launch were success or failure and what changes need to marketing mix are needed, if any. Many firms use panel data y panelists scanning in their receipts using home scanning device. Info used to measure household first time trials and repeat purchases. For the products that do move on, firms can measure success of new product by 3 interrelated factors: 1. satisfaction of technical requirements like performance, 2. customer acceptance, 3. Satisfaction of firm's financial requirements like sales and profits. If product not doing well, poor customer acceptance and then poor financial performance.

Evaluation of Results (Step 6 in in Product Development Process)

First to create the marketer product category, become recognizable to consumers, and establish a commanding and early market share lead. They can also command a greater market share over a long period of time than later entrants can. Not all pioneers successful. Imitators capitalize on weaknesses and gain advantage in market. Because pioneers establish the market alone, they pave way for followers, who can spend less on marketing effort creating demand for the product line and focus directly on creating demand for their specific brand. Also, since pioneer is first product in market, has less sophisticated style, and may be priced high, leaving room for better and cheaper competitive products

First Movers

Product gains acceptance, demand and sales increase, and more competitors emerge in the product category. Characterized by growing number of product adopters, fast growth in industry sales, inc in number of competitors and number of available product versions. Market becomes more segmented and consumer prefences more varied, which increases potential for new markets or new uses of product or service. Also during this stag, firms try to reach new customers by studying preferences like colors. ANd goal of segmentation is to establish firm's brand to not be outdone by competitors. Ex: Del Monte first major canned veggie seller to go organic. Profits in this stage rises because of economies of sale. Firms that re not well established may decide to exit which is called an industry shakeout

Growth Stage

To generate new ideas for products, firm can use its own internal research and development, collaborate with other firms, licence technology from research firms, etc. Firms that want to be pioneers rely more on R&D efforts. R&D is expensive. Reverse Innovation: They turn to subsidiaries in less developed markets for new product ideas. Ex: Shanghai research center made Minute Maid Pulpy moved to 19 countries

Idea Generation (Step 1 of Product Development Process) Internal Research and Development

Ideas are transformed into new offerings, including products, services, processes, and branding concepts that will help firms grow. Without _____ firms would only have two choices: to continue to market current products to current customers or take same product to another market with similar customers

Innovation

Buyers who want to be the first one to have the new product or service. These buyers enjoy taking risks and highly knowledgeable. Ex: person who stood in line overnight for the new movie is a ______. People who already have 3D printers are ______. _______ keep themselves informed about the product. They help product gain acceptance through word of mouth. They bring in the early adopters.

Innovators

When product category first launches. Usually starts with single firm, and innovators are the ones to try new offering. Ex:Telephone: Graham,, Walkman: Sony. Seeing commercialization possibilities of new product, other firms soon enter market with similar products at lower prices. Same pattern holds for less innovative products like music, and soda. Characterized by initial losses to firm due to high start up costs and low levels of sales revenue, but if product successful then firms may see profits towards end of stage.

Introduction Stage

Make up app. 16% of market. THese consumers like to avoid change and rely on traditional products until they are no longer available. SOmetimes, _____ may never adopt a product or service. When dewuel to Hunger Games shows up they likely to watch it

Laggards

34% of market. Next group to enter market. Product has achieved full potential. is easy to find like on RedBox or Netflix after other consumers have already seen it. B the time ____ enters market sales tend to level off or may be in decline

Late Majority

Innovative product users who modify existing products according to their own ideas o suit their specific needs. Ex: jeans may appear with whiskers one season and the next season they may have holes

Lead Users (Idea Generation)

Firms buy the rights to use technology or ideas from other research intensive firms through a _________ agreement. Saves costs of in house R&D, but means firm is banking on a solution that already exists but has not been marketed. Ex: Weight loss solution

Licensing (Idea Generation)

Industry sales reach their peak, so firms try to rejuvenate their products by adding new features or re-positioning them. If successful, product goes in to new life. Characterized by adoption of product by late majority and intense competition for market share among firms. Faces competition on price as average price falls compared with the shifts during the previous two stages of the life cycle. Later phases of _____ market has become saturated. Firms try strategies during this stage to inc. customer base and/or defend market share. Other things to do include entry in to new markets and market segments and developing new products

Maturity Stage

Companies have trouble moving through these steps alone, which prompts them to turn to outside firms. Ex: Balanced Body partnered with IDEO

Outsourcing (Idea Generation)

New product introductions, new-to-the-world products that create new markets. Establish new market or radically change rules of competition and consumer preferences in a market. Ex: Apple iPod changed the way people listened to music and created industry devoted to accessories like ear buds, cases, etc.

Pioneers or Break-Throughs

Firms conduct ______ before they actually bring a product or service to market to determine how many customers will try and then continue to use the product or service according to a small group of potential consumers. Ex: Nielsen BASES is a _______ version. Potential consumers exposed to marketing mix variables, like advertising then surveyed and given sample of product to try. After, they are surveyed on whether or not they would buy/use product again. Estimates consumer's repeat purchase. Firm generates a sales estimate with this data. Enables them to decide whether to introduce product, abandon it, redesign before intro, or revise marketing plan. Saves marketers the costs of a nationwide launch if product fails. Sometimes simulate a product or service where potential customers view advertising of various available products along with advertising for new product or service. Receive money to buy product or service from stimulated environment. Test can determine the effectiveness of a firm's advertising a s well as expected trial rates for new product

Premarket Tests (Market Testing: Step 4 in in Product Development Process)

A process of balancing various engineering, manufacturing, marketing, and economic considerations to develop a product's form and features or a service's features. An engineering team develops prototype based on research finding s and concept testing.

Product Development or Product Design (Step 3 of Product Development Process)

If market testing returns with positive results, the firms ready to introduce product to entire market. Most crucial step requires a lot of money and coordination of aspects of marketing mix. If _____ is a failure, difficult for firm and product to recover. Ex: 3D movie theaters grow, but no declining. Popular enough tat sellers built a lot of 3D screens, but moviegoers don't want to spend higher to watch a 3D movie. First, on research its gathered on consumer perceptions, tests it has conducted, and competitive considerations, firm confirms target market and decides how product will be positioned. Firm finalizes marketing mix variables for new product, including marketing budget for first year. Timing of launch important too. Ex: Hollywood releases children's movies those rated G and PG during summer when kids are out of school

Product Launch (Market Testing: Step 5 in in Product Development Process)

Defines stages that products move through as they enter, get established in, and ultimately leave the marketplace. Offers marketers a starting point for strategy planning. Stages of life cycle reflects marketplace trends like healthy lifestyle trend. Life cycle passes through four stages: introduction, growth, maturity, and decline.

Product Life Cycle

First physical form or service description of a new product, still in rough or tentative form, which has same properties as new product but is produced through different manufacturing processes- sometime crafted individually

Prototype (Step 3 of Product Development Process)

More firms have been joining _______, o r groups of other firms and institutions possibly including govt. and eduacational institutions to explore new ideas or obtain solutions for developing new products. _____ usually involves pharmecutical or high tech members whose research is expensive.

Research Consortia (Idea Generation)

Involves taking apart a product, analyzing it, and creating an improved product that does not infringe on the competitor's patents, if any exist. Copycat approach used by even the most research-intensive firms. New product entry may trigger a market opportunity firm which can use _____ to understand competitor's product and then bring an improved version to market

Reverse Engineering (Idea Generation)

Introduces offering to a limited geographical area (usually a few cities) prior to a national launch. Strong predictor of product success because firm can study actual purchase behavior which more reliable then simulated test. Uses all elements of marketing mix includes promotions like advertising and coupons, just like product being introduced nationally, appears in retail outlets with appropriate pricing, Firm can estimate demand for entire marketing. _____ costs more and takes longer than premarket tests which may provide and advantage to competitors that could get a similar or better product to market first without market testing . Because of this, some firms may launch new products just based on instincts.

Test Marketing (Market Testing: Step 4 in in Product Development Process)