Chapter 12

word-of-mouth referrals.

As the first group to adopt a new product, innovators help the product gain initial market acceptance. Innovators may recommend the product to friends, creating ______.

Test marketing

A method of determining the potential success of a new product, ______, introduces the offering to a limited geographical area (usually a few cities) prior to national launch.

Late majority

At 34% of the market, the ______ is the next group of buyers to enter a new product market. When they do, the product has achieved its full market potential.

decline stage

Firms with products in the _____ either position themselves for a niche segment of diehard consumers or those with special needs or they completely exit the market.

Alpha testing

In ____, the firm attempts to determine whether the product will perform accordingly to its design and whether it satisfies the need for which it was intended.

maturity stage

In the ____, industry sales reach their peak, so firms try to rejuvenate their products by adding new features or repositioning them.

growth stage

In the ____, the product gains acceptance, demand and sales increase, and more competitors emerge in the product category.

licensing

In the search for new products, firms buy the rights to use a technology or ideas from other firms through a _____ agreement. This approach saves the high costs of in house R&D, but it means that the firm is banking on a solution that already exists but that has not been marketed.

rise

Production costs are actually likely to ___ due to new product development

Product life cycle

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

Early majority

The _____, which represents approximately 34% of the population, is crucial because few new products and services can be profitable until this larger group buys them.

Diffusion of innovation

The process by which the use of an innovation -- whether a product, service, or a process -- spreads throughout a market group, over time and across various categories of adopters

Lead users

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

R&D consortia

To develop new product ideas, more and more firms have been joining an _____, or groups of other firms and institutions, possibly including government and educational institutions, to explore ideas or obtain solutions for developing new products.

pioneers/breakthroughs

Truly new product introductions -- that is, new to the world products that create new markets -- can add tremendous value to firms. These new products, also called ____ or ____, establish completely new markets or radically change the rules of competition as well as consumer preferences in a market.

outsourcing

When companies have trouble moving through these steps alone, they turn to ____, a practice in which they hire an outside firm to help generate ideas and develop new products and services.

observability

When consumers see their friends using an innovation, it often persuades them to try it too. This is called ______.

Introduction stage

When the product category first launches and innovators start buying the product, the _____ begins.

Innovators

___ are those buyers who want to be the first on the block to have the new product or service.

Product development/product design

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

Reverse engineering

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

Laggards

____ make up roughly 16% of the market; These consumers like to avoid change and reply on traditional products until the products are no longer available.

Beta testing

____ uses potential consumers who examine the product prototype in a real-use setting to determine other issues specific to its use

Reverse engineering

_____ involves taking apart a product, analyzing it, and creating an improved product that does not infringe on the competitor's patents, if any exist.

Prototype

A ____ is the first physical form or service description of a new product, still in rough or tentative form, which has the same properties as a new product but is produced through different manufacturing processes -- sometimes even crafted individually

Concept

A brief written description of the product; its technology, working principles, and forms; and what customer needs it would satisfy.

Premarket tests

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 customers.

brainstorming

Firms often engage in ____ sessions during which a group works together to generate ideas.

decline stage

If the product is unable to achieve a new life in the maturity stage, then the product goes into the _______ and eventually exits the market.

satisfying the changing needs of current and new customers

Many restaurants offer daily specials, appetizers, entrees, and desserts not listed on their standard menu. These daily specials primarily provide the new product benefit of...

innovators

On the diffusion of innovation curve, the first group of buyers who want to be the first on the block to have the new product are known as ____.

first movers

Pioneers have the advantage of being _____; as the first to create the market or product category, they become readily recognizable to consumers and thus establish a commanding and early market share lead.

1. Internal R&D 2. R&D consortia 3. Licensing 4. Brainstorming 5. Outsourcing 6. Competitors' products 7. Customer input

Sources of new product ideas

1. Idea generation 2. Concept testing 3. Product development 4. Market testing 5. Product launch 6. Evaluation of results

Stages of the product development process

introduction stage

The ____ of the product life cycle is characterized by initial losses to the firm due to its high start-up costs and low levels of sales revenue as the product begins to take off.

Early adopters

The second subgroup that begins to use a product or service innovation is _____. They generally don't like to take as much risk as innovators do but instead wait and purchase the product after careful review

Innovation

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

Concept testing

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