MKTG Final- Ch 8
Low-learning product
has a short introductory stage in the product life cycle. In these instances, the benefits of purchasing these products are self-evident and very little learning is required
Minor innovations
refer to minor product modifications that require no adjustments on behalf of the consumer. Consumers do not need to be educated on how to use the product. Colgate Max Fresh KnockOut is an example of a minor innovation. The extra features in the new toothpaste do not require buyers to learn new behaviours, so effective marketing for a product like this is focused on generating awareness for the new innovation.
continuous innovation
refer to new products that include more than just a minor product improvement but do not require radical changes in consumer behaviour. Continuous innovations are not as common and require extensive product development by a company. Marketers must invest in marketing communication programs to launch these innovative products and to communicate their benefits to consumers
Neterm-22w Product Development Process
1. New product development strategy 2. Idea generation 3. Screening and evaluation 4. Business analysis 5. Development 6. Test marketing 7. Commercialization
Two strategies to deal with a declining product
Delete or harvest
Two strategies to deal with a declining product: delete
Deletion is when a product is discontinued. Normally, decisions to discontinue a product are not taken lightly as there can be residual customers who still use this product.
Extending the Product Life Cycle
It is important for a firm to manage its products through their life cycles, profitably extending and prolonging their relevance in the market. Product life cycles can be extended in a number of ways, namely by (1) modifying the product, (2) modifying the market, (3) repositioning a product, and (4) introducing a new product. It is important to realize that a combination of these approaches is most often used to keep products fresh and relevant
Product life cycle: decline stage
The decline stage of the product life cycle occurs when sales and profits steadily decline over time. Frequently, a product enters this stage when products become obsolete due to technological innovation or changes in consumer needs.
Product life cycle: growth stage
The growth stage of the product life cycle sees an increase in competition and a rapid rise in sales and profits. The market is flooded with competing brands that thrust a category and its products into the forefront. This results in new consumers being enticed into the category and a resultant increase in sales.
New Product Development Process: Test marketing
involves offering a product for sale on a limited basis in a defined geographic area. This test is done to determine whether consumers will actually buy the product, and to what extent. Marketers may use this opportunity to test different marketing approaches to support the product.
High-learning product
is one where there is an extended introductory period due to the significant efforts required to educate customers on the usage and benefits of the product
Introducing a new product
Adding a new product to a line can provide the focus that a mature product needs, bringing it back in the product life cycle to either the growth or early maturity stage. Apple has done this successfully by regularly introducing new versions of its iPhones, iPads, and computers with updates to its technology and design. Regardless of the type of product, new products have a greater chance of success if they provide meaningful benefits to its target market.
New Product Development Process: Business analysis
After the concept tests have determined which product, or line of products, are strong new product candidates, the business analysis step is necessary. This involves determining financial projections on bringing the new product to market and selling it in the future. Typical financial projections for a new product cover a three-year period and often look five years into the future.
Modifying the product
Can be done through: Product improvements (Pretty clear) Line extensions: is the term used when a new item is added to an already existing product line, such as Cheerios adding Banana Nut Cheerios and Chocolate Cheerios to its already well-established Cheerios product line.
Concept tests
Concept tests are external evaluations of the new product idea, rather than the actual product itself. Several key issues are addressed during concept testing, such as how the customer perceives the product, who would use it, and how it would be used. The purpose of these evaluations is to get feedback on the strengths and weaknesses of the concepts and to understand what further modifications are required. Concept tests will result in some concepts being eliminated and others surfacing as more-promising opportunities that require further investigation.
Two strategies to deal with a declining product: Harvest
Harvesting is when a company keeps the product but reduces marketing support in an attempt to reap some minor profits at this stage in the life cycle.
New Product Development Process: New product development strategy
Having a clear definition and understanding of what you are trying to achieve with product innovation is one of the most important building blocks in the new product development process. A new product development strategy involves setting the new product strategic direction for the company as a whole, as well as the precise objectives for the innovation at hand. There must be consistency between the two.
New Product Development Process: Development
New product ideas that survive the business analysis step proceed to actual development, turning the idea into a prototype for further consumer research and manufacturing tests. This step is considerably complex, involving laboratory and consumer tests to ensure that the product consistently meets legal and quality control requirements. Manufacturing trials are also conducted to eliminate manufacturing problems and to reduce costs.
Types of new products
New products are the lifeblood of a company, helping to make products relevant and to bring future revenues into the company. There are many types of new products, ranging from a slight product modification to a more radical innovation. How new products are categorized depends on the degree of newness involved, and how much time a consumer needs to learn to use the product. Based on these factors, we classify innovations as (1) minor innovations, (2) continuous innovations, and (3) radical innovations
Repositioning a product
Once a product has reached its maturity stage, it often needs an injection of newness to focus the market on the product and to provide it with a renewed competitive advantage. This can be achieved through repositioning the product to meet changing consumer needs, to react to a competitor's move, or to improve the value offered to the consumer.
New Product Development Process: Idea generation
Once the purpose and direction for the product development project is clarified, the second step of idea generation comes into play. Ideas can be generated from a number of sources and in a number of different ways. Ideas can come from inside or outside the company, depending on the organization's approach to new product development. Brainstorming sessions can be utilized, which focus on participants coming up with new ideas for the project at hand. It is important for these brainstorming sessions to include individuals who are creative, have varied experiences, and have differing areas of expertise. This should stimulate a more varied and interesting pool of ideas.
Adoption curve
The adoption curve takes the point of view that some consumers are more ready than others to buy a product innovation. North American research (statistics vary across the world) shows that 2.5 percent of the population are innovators who are the first to purchase new products; 13.5 percent are considered early adopters, another group that will accept a new offering sooner rather than later. In the middle of the pack are the early and late majority, each comprising approximately 34 percent of the population. Once accepted by the innovators and early adopters, the adoption of new products moves on to the early majority and late majority, who respond to the product being well-established in the market and are influenced by the purchase habits of their peers. Another 16 percent of the population are the laggards, who are either reluctant or late purchasers of the innovation and may in fact never purchase it
Product life cycle
The concept of the product life cycle describes the stages that a new product goes through, starting with its initial introduction into the marketplace and moving through to the stages of growth, maturity, and decline.
Product life cycle: introduction stage
The introduction stage of the product life cycle occurs when a product is first introduced to its intended target market. During this period, profits are minimal typically due to three things: (1) slow sales growth, (2) high product development costs, and (3) high levels of marketing spending needed to launch the new product. The key marketing objective during this stage is to create consumer awareness and to stimulate trial (or the first purchase) of the new product.
Length of the product life cycle
The length of a product life cycle varies according to the industry, the competition, technological innovation, and approaches to marketing the product. There is no set timeframe for a product to move through its life cycle. Generally, consumer products have shorter life cycles than business products. For example, some new consumer food products such as FritoLay's Baked Lay's potato chips move from the introduction stage to maturity quickly. The availability of mass communication vehicles informs consumers quickly and shortens life cycles. Technological change shortens product life cycles as product innovation replaces existing products. For example, smartphones have largely replaced digital cameras in the amateur photography market. Other products, such as Heinz ketchup, have extended product life cycles that have continued for years, driven by marketing approaches that keep the product relevant.
Product life cycle: Maturity stage
The maturity stage of the product life cycle is characterized by a slowdown of sales growth and profit. Competitors are well-established and fewer new consumers enter the market. Marketing focuses on holding or gaining market share by continuing to differentiate the product and building on existing customer loyalty. Profits level off at this stage, often due to price competition. A major consideration in a company's strategy in this stage is to control overall marketing costs by improving promotional and distribution efficiency.
New Product Development Process: Screening and evaluation
The third stage of the new product development process, screening and evaluation, attempts to reduce the array of product ideas down to a manageable list of promising concepts. Ideas are initially screened internally by the new product development team, which eliminates ideas that do not meet the objectives, as well as those that are clearly not technically feasible. The short list of ideas is then further developed by the product development team into concepts. A concept is a more detailed idea, written in consumer terms, with enough detail for consumers to fully understand. Consumers are presented with a short descriptive paragraph and an accompanying visual, which could be a sketch, mock-up, or promotional piece. They are then asked for feedback.
Modifying the market
There are three key market modification strategies. Companies may decide that their current product is under-represented with certain consumer groups and may see an opportunity to target these consumers. In addition, marketers may try to increase a product's use within its existing customer group, which is an especially useful strategy where there is strong brand loyalty. Lastly, a company may develop new uses for a product, extending its utility to the customer.
Radical innovations
are the least common form of innovation. They involve the introduction of a product that is entirely new to the market. The success of these products is often dependent on the education of the consumer, usually through advertising and/or public relations efforts
New Product Development Process: Commercialization
is the step when the new product is brought to market with full-scale production, sales, and marketing support. Companies proceed very carefully at the commercialization stage because this is the most expensive stage for most new products. To minimize the risk of financial failure, many companies use regional rollouts, introducing the product sequentially into geographic areas of the country to allow production levels and marketing activities to build gradually. Grocery product manufacturers and some telecommunication service providers are examples of firms that use this strategy.