Chapter 12 Marketing

Early Majority

A group of consumers in the diffusion of innovation model that represents approximately 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; few new products can be profitable until this large group buys them.

Product Development

Also called product design; entails a process of balancing various engineering, manufacturing, marketing, and economic considerations to develop a product's form and features or a service's features.

Concepts

Brief written descriptions of a product or service; its technology, working principles, and forms; and what customer needs it would satisfy.

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.

Laggards

Consumers who like to avoid change and rely on traditional products until they are no longer available.

Beta Testing

Having potential consumers examine a product prototype in a real-use setting to determine its functionality, performance, potential problems and other issues specific to its use.

Lead Users

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

Reverse Engineering

Involves 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.

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; also called breakthroughs.

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.

Decline

Stage of the product life cycle when sales decline and the product eventually exits the market.

Growth Stage

Stages of the product life cycle when the product gains acceptance, demand and sales increase, and competitors emerge in the product category.

Late Majority

The last group of buyers to enter a new product market; when they do; the product has achieved its full market potential.

Innovation

The process by which ideas are transformed into new products and services that will help firms grow.

Diffusion of innovation

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

Innovators

Those buyers who want to be the first to have the new product or service.

Alpha Testing

An attempt by the firm to determine whether a product will perform according to its design and whether it satisfies the need for which it was intended; occurs in the firm's research and development (R&D) department.

Test Marketing

Introduces a new product or service to a limited geographical area prior to a national launch.

Maturity Stage

Stage of the product life cycle when industry sales reach their peak; so firms try to rejuvenate their products by adding new features or re-positioning them.

Introduction Stage

Stage of the product life cycle when innovators start buying the product.

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.

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, sometimes even crafted individually.

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.

Product Life Cycle

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.