Marketing Chapter 12

Why Firms Create New Products

1) changing consumer needs, 2) market saturation, 3) managing risk through diversity, 4) fashion cycles, 5) improving business relationships

Stages of Product Development

1) idea generation, 2) concept testing, 3) product development, 4) marketing testing, 5) product launch, 6) evaluation of results

Categories of Adopters

1) innovators, 2) early adopters, 3) early majority, 4) late majority, 5) laggards

Product Life Cycle Stages

1) introduction, 2) growth, 3) maturity, 4) decline

Factors Affecting Product Diffusion

1) relative advantage, 2) compatibility, 3) observability, 3) complexity, 5) triability

Diffusion of Innovation

The process by which a new product spreads throughout a market group over time and across various categories of adopters

Test Marketing

a firm introduces the offering to a limited geographical area (usually a few cities) prior to a national launch

Alpha Testing

a firm's R & D department attempts to determine whether a new product will perform according to its design and whether it satisfies the need for which it was intended

Diffusion

a process where a group thinks of as many ways to vary a product or solve a problem as possible without considering the practicality of the ideas

Premarket Tests

conducted before a product or service is brought to market to determine how many customers will try the product and continue to use it

First Mover

products that are first to market in a product category, often establishing an early and commanding market share lead

Reverse Engineering

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

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

Innovation

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

Concept Testing

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

Product Development

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

Beta Testing

the use of potential consumers to examine a product prototype in a "real use" setting to determine its functionality, performance, and potential use

Pioneers

truly new, unprecedented products that establish a completely new market or radically change both the rules of competition and consumer preferences; also called breakthroughs and new-to-the-world products

Introduction Stage

when a firm actually begins to sell a new product to the entire market