Principles of mktg ch9

Idea generation, idea screening, concept development and testing, marketing strategy development, business analysis, product development, test marketing, and commercialization

Eight major steps in the New-Product development process - IICMBPTC

Product development, introduction, growth, maturity, and decline

The five distinct stages of the PLC - PIGMD

Acquisition and new-product development

Two ways a firm can obtain products - AN

Style

a basic and distinctive mode of expression

Innovation management system

a company can install this to collect, review, evaluate, and manage new-product ideas

Fashion

a currently accepted or popular style in a given field

Growth

a period of rapid market acceptance and increasing profits

Maturity

a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. profits level off or decline because of increased marketing outlays to defend the product against competition

Product concept

an attractive idea must be formed into this; a detailed version of the new-product idea stated in meaningful consumer terms

Product idea

an idea for a possible product that the company see itself offering to the market

Sequential product development

approach - one company department works individually to complete its stage of the process before passing the new product along to the next department and stage

Product development

begins when the company finds and develops a new-product idea; sales are zero, and the company's investment costs mount

Acquisition

buying a whole company, a patent, or a license to produce someone else's product

Modifying the product

changing characteristics such as quality, features, style, or packaging to attract new users and inspire more usage

External sources

companies obtain new-product ideas from distributors and suppliers, competitors, customers themselves, and outside design firms

Marketing strategy statement

consists of three parts: first part describes the target market; the planned value proposition; and the sales, market share, and profit goals for the first years; second part outlines the product's planned price, distribution, and marketing budget for the first year; and third part describes the planned long-run sales, profit goals, and marketing mix strategies

Product development

developing the product concept into a physical product or a prototype to ensure that the product idea can be turned into a workable market offering

Customer-centered new-product development

focuses on finding new ways to solve customer problems and create more customer-satisfying experiences

Product class

have the longest life cycles; the sales of many of these stay in the mature stage for a long time

Growth

if the new product satisfies the market, it will enter this PLC stage, in which sales will start climbing quickly; new competitors will enter the market, prices remain where they are or decrease only slightly, profits increase as promotion costs are spread over a large volume and as unit manufacturing costs decrease

Fads

important periods of unusually high sales driven by customer enthusiasm and immediate product or brand popularity

Modifying the marketing mix

improving sales by changing one or more marketing mix elements

Business Analysis

in this stage in the new-product development process, firms consider sales, costs and profit; involves a review of the sales, costs, and profit projections for a new product to find out whether they satisfy the company's objectives

Modifying the market

in this, the company tries to increase consumption by finding new users and new market segments for its brands

Commercialization

introducing the new product into the market- it will face high costs; when to launch, where to launch, and planned market roll-out

Crowdsourcing

inviting broad communities of people - customers, employees, independent scientists and researchers, and even the public at large- into the new-product innovation process

Introduction

is a period of slow sales growth as the product is introduced in the market; profits are nonexistent in the stage because of the heavy expenses of product introduction

Decline

is the period when sales fall off and profit drops

Internal sources and external sources

major sources of new-product ideas

Drop

management may decide to __ the product form fro its line. it can ell it to another firm or simply liquidate it at salvage value

Maintain

management may decide to ___ its brand, repositioning or reinvigorating it in hopes of moving it back into the growth stage of PLC

Harvest

management may decide to ___ the product, which means reducing various costs, hoping that the sales hold up. if successful, will increase the company's profits in the short-run

Customers

most important source of new-product ideas

Market pioneer

must choose a launch strategy that is consistent with the intended product positioning

Controlled test markets

new products and tactics are tested among controlled groups of customers and stores

Product life cycle

or PLC; the course that a product's sales and profits take over its lifetime; has five distinct stages

Maintain the product, harvest the product, and drop the product

remaining choices of a firm in the decline stage - MHD

Simulated test markets

researchers measure responses to new products and marketing tactics in laboratory stores or simulated shopping environments

Marketing strategy development

stage of new-product development process comprised of STP- designing an actual marketing strategy for introducing a product to the market

Product forms

tend to have the standard PLC shape

Concept testing

testing new-product concepts with groups of target consumers

Introduction

the PLC stage in which a new product is first launched, distributed and made available for purchase

Maturity

the PLC stage in which a product's sales growth slows or levels off; this stage normally lasts longer than the previous stages, and it poses strong challenges to marketing management; overcapacity lead to greater competition. competitors begin marking down prices, increasing their advertising and sales promotions, and upping their product development budgets to find better versions of the product. these steps lead to a drop in profit.

New-product development

the development of original products, product improvements, product modifications, and new brands that the firm develops through its own R&D efforts

Idea Screening

the first idea-reducing stage; helps spot good ideas and drop poor ones as soon as possible

Brand

the life cycle of this can change quickly because of changing competitive attacks and responses

Decline

the sales of most product forms and brands eventually dip; this may be slow or rapid. sales may plunge to zero, or they may drop to a low level where they continue for many years

Test Marketing

the stage at which the product and its proposed marketing program are introduced into realistic market settings; gives the marketer experience with marketing a product before going to the great expense of full introduction; advantages are feedback, customer's perception, and flaws of product while disadvantages are costly, possibility of bad impression and imitators

Idea generation

the systematic search for new-product ideas;the purpose of this is to create a large number of ideas

Innovation management system

the two favorable outcomes of this are it helps to create an innovation-oriented company culture and it will yield a larger number of new-product ideas among which will be found some especially good ones

Product image

the way consumers perceive an actual or potential product

Product life cycle

this concept can describe a product class, a product form, or a brand

Team-based new-product development

under this approach - company departments work closely together in cross-functional teams, overlapping the steps in the product development process to save time and increase effectiveness

Internal sources

using these sources, the company can find new ideas through formal R&D

Test market

when firms do this, there is a new product with large investment and uncertainty about product or marketing program. when firms may not test market - simple line extension, copy of competitor product, low costs, and management confidence