MKTG 350 Test #3 Chapter 12

Internal R&D

-High product development costs -Often the source of technological products -Often the source of breakthrough products

R&D Consortia

-Lower costs and risks; firms join together -Form research consortiums -Benefits spread to all firms Example, pharmaceutical industry research

Concept testing

-Refers to the process in which a concept statement is presented to a potential buyers or users to obtain their reactions -Estimates the sales value of the product and determines whether the is worth further development -Triggers the marketing research process -Customers reactions determine whether or not it goes forward

A manufacturer must work with retailers to ensure that a new product will be delivered and available for sale: 2 things

-When a customer wants it -In sufficient quantities to meet demand

New Product launch Steps 1-3

1. Firms confirms its target market 2. Decides how the product will be positioned 3. Finalizes the remaining marketing mix variables for the new product

The product Development Process:

1. Idea generation 2. Concept Testing 3. Product Development 4. Market testing 5. Product Launch 6. Evaluation of results

Manufacturers may want to promote a new product and encourage retailers to carry the products, therefore, the manufacturer may use promotions such as: 2 of them

1. Short time price reductions 2. Trade shows

Concepts

Brief written descriptions of the product

Why do Firms Create new products? 5 reasons

Changing customer needs, Market saturation, Managing risk through diversity, fashion cycles, improving business relationships

The first year they were offered, John wanted a tablet computer, but he did not know which one to choose. He waited until there were more choices, lower prices, and improved quality. John is part of the ___________ diffusion of innovation group.

Early Majority

When a firm launches a new product, it needs to review the sales and profit levels of the product to determine if the product is successful. This stage of the new product development process is known as the _______ of results stage.

Evaluation

Slotting allowance

Fee paid simply to get new products into stores or to gin more better shelf space for their products

In terms of their place on the diffusion of innovation curve, innovators are the ______ category of consumers

First

Match the relative level of profitability with the stage of the product life cycle at which that level of profitability is typically observed: Growth --------------------Dropping Maturity------------------Low or Negative Decline---------Rapidly rising Introduction------- Peaking or beginning to decline

Growth-Rapidly Rising Maturity- Peaking or beg to decline Decline- Dropping Intro- Low Or Negative

Susan launched a brownie company and based on her market research she knew that she could sell three brownies for five dollars, but she decided to start seeing the brownies at a ________ in order to get customers to try the brownies

Introductory Price

Denise and Janet attend a large university in Texas. Denise asked for Janet's e-mail address, but Janet said she didn't have one. Janet would probably be considered a(n) ___________ in the diffusion of innovation process.

Laggards

Trade show

Outlet for exposing products to buyers

Diffusion of innovation: Early Majority

Represents approximately 34 percent of the population is crucial because few new products and services can be profitable until this large group buys them. If the group doesn't become large enough the product typically fails. Members of this group don't take as much risk and wait for the bugs to be fixed before buying the product

_______ _______ refers to taking apart a competitors product, analyzing it, and creating an improved product that does not infringe on the competitors patents

Reverse Engineering

Product Life cycle: Introduction

Sales Low, Profits Low Consumers: Innovators Competitors: One or Few

Product Life cycle: Decline

Sales: Declining Profits: Declining Consumers: Laggards Competitors: Low # of competitors and products

Product Life cycle: Maturity

Sales: Peak Profits: Peak to declining Consumers: Late Majority Competitors: High Number of competitors and products

Promotion for new products is required at each link in the _______

Supply chain

Alpha Testing

The firms first attempt to determine whether the product will perform according to its design and whether is satisfies the need for which it was intended

The 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.

If a concept test_________ customers expectations, it is doubtful it would succeed if it were to be produced and marketed

fails to meet

Test marketing

introduces the offering to a limited geographical area prior to a national launch. Mini product launch More expensive than premarket tests Market demand is estimated

Reverse engineering

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

Prototype

is the first physical form of a new product

what are some advantages experienced by pioneer firms over later entrants: 3 of them

1. More readily recognizable to consumers 2. More likely to command a greater market share over a longer period of time 3. Establish an early market share lead

Burger king launched the "Whopper bar", serving beer as well as burgers in a test market in Miami. Which of the following would have been elements of a good plan for this test market? 2 of them

1. Offering the complete menu planned for the full launch 2. Running the TV ads planned for the full launch

The Process by which the use of innovation, whether it be a product or service, is spread throughout a market group over time and over various categories of adopter is known as:

Diffusion of Innovation

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

Diffusion of Innovation

A Firms_______ _______ and _________ department consists of scientists who work to solve complex problems and develop new ideas

Internal Research and Development

Manufacturers encourage retailers to sell at a specified price known as the _________

MSRP

Not every product makes it through the life cycle to the last two stages of the PLC to reach ______ or decline

Maturity

Trade Promotions

Promotions to wholesalers or retailers to get them to purchase the new products. Often combine introductory price, special events, and personal selling

Pioneers

Radically change competition and consumer preferences. New to the world products that create new markets

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

________ deals with perception among consumers that a product is better than its substitutes

Relative Advantage

Product Life cycle: Growth

Sales: Rising Profits: Rapidly Rising Typical Consumers: Early adopters and early Majority Competitors: Few but increasing

Licensing typically occurs most frequently with products that are _____ and ______ have complex patents and copyrights

Scientific; technological

Diffusion of Innovation

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

Product Life cycle

The stages that products move through as they enter get established in and ultimately leave the market place Intro>Growth>Maturity>Decline

The methods a marketing manager can use to measure the success of a new product include all of the following except:

Timing

Beta Testing

Uses potential consumers, who examine the product prototype in a real use setting to determine its functionality, performance, potential problems, and other issues specific to its use

During the introduction stage sales are_______ and there are ________ competitors

Very low; No

Diffusion of innovation

is the process by which the use of an innovation spreads throughout a market group, over time and over various categories of adopters.

Whenever a product has a _______ level of complexity, it will consequently be _______ to try.

low; easy

In _____ testing, the firm attempts to determine whether the product prototype will perform according to its design and whether it satisfies the need for which it was intended, by performing test in the R&D department

Alpha

When firms decide to develop products, it is typically a long process that is broken into______ stages

Six

It is usually easier to start our with a high MSRP and then overtime lowering it. T/F

True

________ is the process by which ideas are transformed into new products and services that will help firms grow

Innovation

A ______ allowance is a payment made by a manufacturer to get new products into stores or to gain more shelf space in retail stores for their products

Slotting

By the time the late majority enters the market, sales tend to _______ or even ________

Stabilize; Decrease

Concept testing can be as simple as a brief written description of the product that might also include:

1. Visual images 2. customer needs it satisfies

A post-launch review is conducted to determine if : 3 of them

1. changes to the marketing mix is needed 2. additional resources are needed 3. the launch was success or failure

Introductory Price Promotions

are limited duration, lower than normal prices

Identify the steps taken by firms who have products in the decline stage of the product life cycle: 2 of them

1. create a niche segment 2. completely exit the market

Key Characteristics of the maturity stage are: 2 of them

1. marketing costs increase 2. intense competition of price

The KEY characteristics of the growth stage of the product life cycle are:

1. rising sales 2. Profits rise 3. typical consumers are early adopters and early majority

During test Marketing, the potential elements of the marketing mix that may be used include: 2 of them

Advertising and coupons

Diffusion of innovation: Late Majority

Also at 34 percent of the market. These buyers enter the market when the product has achieved its full market potential. Example: Wait for the movie is on netflix

______ refers to a group session in which participants work together to generate new ideas

Brainstorming

What factors enhance the diffusion of a good or service?

Compatibility, Observability, Complexity and Trial-ability, Relative Advantage

During the Maturity phase firms defend their market share against ___________

Competitors

In _______ testing, a statement is presented to potential buyers to obtain their reactions

Concept

_________ testing is a written description of a product and its technology and is presented to potential buyers or users to obtain their reactions. Occurs very early in the new product introduction process, even before the real product has been made and its helps the firms to avoid the costs of unnecessary product development

Concept

If a firm produces a visual image of an imagined or projected product to bring an idea to life, this is an example of

Concept Testing

The Product Development Process

Idea Generation, Concept Testing, Product Development, Market Testing, Product Launch, Evaluation of Results

Lead Users

Innovative Product users who modify existing products according to their own own ideas to fit there specific needs

Tiffany always asks Samantha about beauty supply products. She considers her a well-informed friend who always knows the latest trends. For Tiffany, Samantha is a(n) ___________ in the diffusion of innovation curve.

Innovators

Products go through a number of stages in the PLC. The life cycle stage where a product begins the PLC this is known as the _________ stage

Introduction

Diffusion of innovation: Laggards

Makeup roughly 16 percent of the market. These consumers like to avoid change and rely on traditional products until they are no longer available.

Firms measure the success of a new product by its sales ________, customer acceptance and its satisfaction of the firms financial requirements

Performance

In order to accurately evaluate the new product launch, marketers must undertake a critical ________ review to determine whether the product and its launch were a success or failure

Post- Launch

During Concept testing it is important to present a brief written description to _____ to obtain their reactions to the ideas presented

Potential buyers or users

Production Development or Product Design

Process of Balancing various engineering, manufacturing, marketing, and economic considerations to develop a products form and features or a services features.

Diffusion of innovation: Innovators

are those buyers who want to be the first on the block to have the new product or service; Buyers enjoy taking risks and are regarded as highly crucial for bring the other three buyer categories to the market

A good or service may pass through many stages as it establishes itself in the marketplace. Marketing managers refer to this as the ________ ______ cycle .

Product Life

Starbucks is an excellent example of how a firm can use its knowledge of a product characteristics to be successful. Match each statement about Starbucks to the product characteristic it represents: Relative Advantage ---- Starbucks is a simple product and quite easy to try Compatibility---- Starbucks has their distinct logo on each of there cups Observablilty---- Most would perceive that Starbucks is a superior form of coffee Complexity and trailabilty ---- Most Americans drink coffee each morning

Relative Advantage ---- Most would perceive that Starbucks is a superior form of coffee Compatibility --- Most Americans drink coffee each morning Observablilty---- Starbucks has their distinct logo on each of there cups Complexity and trailabilty ---- Starbucks is a simple product and quite easy to try

Diffusion of innovation: First Movers

The first to create the market of product category: Become readily recognizable to consumers and this establish a commanding and early market share lead.

Which of the following is a possible advantage for a firm that chooses to use brainstorming for its new products as opposed to other idea generation methods?

Through brainstorming those ideas or combination of ideas which receive the mosts votes are carried forward to the next stage

Market Testing: Premarket tests

are conducted by firms 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 Customers exposed Customers surveyed Firm makes decision