MKT 305 CH 9 McGrawhill

commercialization

"roll out" product in select markets

Industries that are in the market maturity in the US

-breakfast cereal -carbonated soft drinks -and laundry detergent

Choices a firm might make during the sales decline stage of the product life cycle is to

-develop a new product for the same market -improve the product for the existing market -and target a new market in the earlier stages of the product life cycle

Potential advantages of performing concept tests online

-feedback is immediate and -research and testing costs are lower

This occurs in the market maturity stage of the product life cycle

-industry sales plateau -competition -and industry profits decline

Developing new-product ideas and strategies...

-is often the key to a firms success -is often the key to a firms survival -and can still lead to a high risk of product failure

The following are ideas behind total quality management

-it is less expensive to do things right the first time -poor quality erodes goodwill -poor quality equals lost customers -and everyone in the company should care about quality

The following factors are important to new product success

-offering superior customer value -effective product design -and effective transitions from idea to market

Characteristics of product managers:

-often coordinate w/ other employees and 3rd party service providers -several product managers can report to the same marketing manager -they are common in large companies w/ many products -they are sometimes responsible for the entire marketing effort of a product

A marketing manager analyzes these to find opportunities that have not been discovered by competitors

-present consumer behavior and -the companys markets

This occurs during the sales decline stage of the product life cycle

-price competition becomes vigorous -strong brands can make profits -successfully differentiated products succeed -new products replace old

The following occur in the market growth stage of the product life cycle

-product variety increase -sales grow fast -new competitors enter -and innovators profit

The factors contributed to an organized new-product development process is

-top management support -culture of innovation -clear understanding of customer needs -and cross-functional teams

These are evaluated under full-scale market testing

-various brand names -different slogans or advertising copy -a range of prices -and sales potential in different regions

The steps of the new-product development process is

1. idea generation 2. screening 3. idea evaluation 4. development of product and marketing mix 5. commercialization

Some firms use what's called reverse engineering.

For example, new-product specialists at Ford Motor Company buy other firms' cars as soon as they're available. Then they take the cars apart to look for new ideas or improvements. British Airways talks to travel agents to learn about new services offered by competitors.

Crowdsourcing

Gathering ideas for new products based on ratings and comments from online community members, it is one potential source of new-product ideas

Development

Product ideas that survive the screening and idea evaluation steps get further investment of time and money. Usually, this involves more research and development (R&D) to design and develop the physical part of the product. Or, in the case of a new service offering, the firm works out the details of what training, equipment, staff, and so on will be needed to deliver on the idea. Input from a firm's earlier efforts helps guide this technical work.

Managing maturing products

When a market moves into the market maturity stage it might provide a firm these competitive advantages: -a superior product -lower production cost and -successful promotion strategies

Idea Evalution

When an idea moves past the screening step, it is evaluated more carefully. This stage involves getting more reactions from customers, even though at this stage an actual product has yet to be developed. Although this can make getting customer input more difficult, firms need extensive feedback before adding the expense of producing the product.

idea evalution

When an idea moves past the screening step, it is evaluated more carefully. This stage involves getting more reactions from customers, even though at this stage an actual product has yet to be developed. Although this can make getting customer input more difficult, firms need extensive feedback before adding the expense of producing the product.

continuous improvement

a commitment to constantly make things better one step at a time.

Sometimes in a mature market...

a firm may find a new use for an existing product that aids in boosting sales and avoiding sales decline

commercialization

a new product is finally placed on the market

During the product life cycle firms can introduce a product at

any stage

market maturity

battle of the brands

market growth

build channels and stage, industry sales grow fast—but industry profits rise and then start falling.

screening

check idea fit with company objectives managers evaluate a potential new products strengths and weakness against market trends and company resources

idea evaluation

concept testing

The longer new-product development takes, the more likely it is that

customer needs will change

Product life cycle

describes the stages a really new product idea goes through from beginning to end. The product life cycle is divided into four major stages: (1) market introduction, (2) market growth, (3) market maturity, and (4) sales decline. The product life cycle is concerned with new types (or categories) of products in the market, not just what happens to an individual brand.

development

develop prototype

When companies use their competitors as sources of new-product ideas, they often...

disassemble competitors products in order to reverse engineer their innovations

According to the FTC, for a firm to call a product "new" it must be...

entirely new, substantially changed, and clearly labeled as new regardless of any changes

Total quality management requires

everyone in the organization to focus on quality and meeting customer needs

Concept testing

getting reactions from customers about how well a new-product idea fits their needs.

Because marketing plans are often ongoing strategies, it is often necessary to phase out struggling products...

gradually

Prototype

is an early sample or model built to test a concept

fad

is an idea that is fashionable only to certain groups who are enthusiastic about it.

new product

is one that is new in any way for the company concerned

Total Quality Management is based on the idea that poor product quality leads to

lost customers

Product managers or brand managers

manage specific products—often taking over the jobs formerly handled by an advertising manager. That gives a clue to what is often their major responsibility—Promotion—because the products have already been developed by the new-product people. However, some brand managers start at the new-product development stage and carry on from there.

Firms must try to use marketing mixes that will make the most of the

market growth stage, where profits tend to be the highest for the industry

many firms respond to the increased competition of the

market maturity stage of the product life cycle by slashing prices in order to maintain market share

As sales and profits decline in a mature market, a firm can stimulate overall demand by...

marketing the product differently to new markets

Competitive advantage is especially important in...

mature product-markets

Empowerment

means giving employees the authority to correct a problem without first checking with management.

Product Liability

means the legal obligation of sellers to pay damages to individuals who are injured by defective or unsafe products. Product liability is a serious matter. Liability settlements may exceed not only a company's insurance coverage but its total assets!

Sales and profits for an individual brand, rather than an industry brand, in a product-market will...

never follow the product life cycle pattern

The product life-cycle concept...

never indicates how long each stage will last

Rapidly changing technology is

one reason why product life cycles are getting shorter

When a firm determines that a product will no longer be profitable enough for the firm to meet its objectives, it may need to develop a...

phase-out strategy

Sales of an individual product will

rarely follow the product life-cycle pattern

discontinuous innovation

requires that customers adopting the innovation significantly change their behavior. This type of innovation often results in a completely new product-market and new-product life cycle

A firm that is concerned with maximizing its profits on a given product will often evaluate the

return on investment of several new-product ideas to determine the most attractive option

Products influenced by fashion typically have

short life cycles

According to the FTC, a product can only be called new for

six months

market introduction

skimming or penetration pricing

Idea generation

solicit ideas from customers

market decline

some firms drop out

Product life cycle patterns apply to the sales of a given product idea in a

specific product-market

market maturity

stage occurs when industry sales level off and competition gets tougher.

Finding a new use for an existing product in a mature market has the potential to...

stimulate sales growth

Federal Trade Commission

the federal government agency that polices antimonopoly laws. To be called new, says the FTC, a product must be entirely new or changed in a "functionally significant or substantial respect."

The development stage of the new-product development process helps to determine...

the materials, equipment, staff, or training that will be required to deliver a new product or service

The market growth stage is

the time of biggest profits for an industry

A firm that attempts to provide superior customer service by focusing on quality throughout each of its activities is engaging in

total quality management (TQM)

Two keys to improving service quality are

training and empowerment

The duration of the whole product life cycle is

various a lot across products

Consumer Product Safety Commission

was set up the Consumer Product Safety Commission to encourage safety in product design and better quality control. The commission has a great deal of power. It can set safety standards for products. It can order costly repairs or the return of unsafe products. And it can back up its orders with fines and jail sentences. The Food and Drug Administration has similar powers for foods and drugs.

rapid prototyping

where customer input is received and quickly designed into a revision of the product—and then fed back to customers for further input.

co-creation process

where customers react to prototypes and suggest improvements

Seeing sales of its tennis balls in decline, the brand manager made minor changes to the brands packaging, 3 to 4 balls, and promoted this as a new product. The Federal Trade Commission...

would allow the advertising campaign if it concluded that consumers thought the different package made it new