Chapter 8

Style

• A basic and distinctive mode of expression • EX. Style appears in homes, clothing art • Once a style is invented it may last for generations • Has a cycle showing several periods of renewed interest

Product concept

• A detailed version of the new product idea stated in meaningful consumer terms

Fad

• A temporary period of unusual high sales driven by consumer enthusiasm and immediate product or brand popularity • EX. Silly band, crocs, pet rocks

Product life cycle (PLC)

• Course of a product's sales and profits over its lifetime • Five distinct stages: 1. Introduction 2. Growth 3. Maturity 4. Decline

Fashion

• Currently accepted or popular style in a given field • Grow slowly, remain popular for a while, decline slowly

Marketing strategy development

• Designing an initial marketing strategy for a new product based on the product concept • Consist of three parts • Describe the target market, The planned value proposition, The sales, market-share, and profit goals for the first few years • Outlines the product's planned price, distribution, and marketing budget for the first year • Describes the planned long-run sales, profit goals, and marketing strategy

Product development

• Developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering • Starts after a product concept passes the business test • Huge jump in investment • R&D department develops and tests one more physical versions of the product concept to design a prototype • Involves product testing to make sure they perform safely, effectively, and that consumers will find value in them

Commercialization

• Introducing a new product into the market • High cost. Spend money on manufacturing facility, advertising, sales promotion, and other marketing efforts • Company must determine the timing of when to release product and where to launch it

Crowdsourcing

• Inviting broad communities of people - customers, employees, independent scientists, and researchers, and even the public at large - into the new product innovation process • Can produce unexpected and powerful ideas • For example. Instead of relying on its own R&D labs to produce all of the new product innovations needed to support growth they can crowd source and uncover promising innovations from the people that will improve consumer's lives

Team-based new-product development

• New product development in which various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness • Teams are usually people from marketing, finance, design, manufacturing, legal departments, and supplier and customar companies

Customer-centered new-product development

• New product development that focuses on finding new ways to solve customer problems and create more customer satisfying experiences

New-product development

• Original products, product improvements, product modifications, and new brands that the firm develops through it own research and development (R&D) efforts • Bring new solutions and variety to customer's lives • Key source of growth for companies • Expensive and risky, face tough odds • To be successful company must understand its consumers, markets, and competitors and develop products that deliver value

Decline stage

• PLC stage in which a product's sales fade away • Decline for many reasons like technological advances, shifts in consumer tastes and increased competition • May drop smaller market segments and marginal trade channels, or may cut the promotion budget and reduce prices further • Companies must identify products in the decline stage and decide whether to maintain, harvest, or drop them

Maturity stage

• PLC stage in which a product's sales growth slows or levels off • Lasts longer than other stages • Competitors begin marking down prices increasing their advertising an sales promotions and upping their product development budgets to find better versions of the product... lead to a drop in profit • Weaker competitors drop out • Products should be evolving and meeting changing consumer needs by modifying the market, product offering, and marketing mix

Growth stage

• PLC stage in which a product's sales start climbing quickly • New competitors will enter the market introducing new product features and the market will expand • Prices remain the same or decrease slightly • Profits increase, manufacturing cost decrease

Business analysis

• Review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company's objectives • If they do then the product can move to the product development stage

Idea screening

• Screening new product ideas to spot good ones and drop poor ones as soon as possible

Idea generation

• Systematic search for new product ideas • Major sources of new product ideas include internal sources and external sources such as customers, competitors, distributors, and suppliers

Concept testing

• Testing new product concepts with a group of target consumers to find out if the concepts have strong consumer appeal

Introduction stage

• The PLC stage in which a new product is first distributed and made available for purchase • Takes time and sales growth is slow • Profits are negative or low because of low sales and high distribution and promotion expenses

Test marketing

• The stage of new product development in which the product and its proposed marketing program are tested in realistic market settings • Ex. Starbucks VIA instant coffee was one of the company's biggest, most risky products ever. Spent 20 years developing the coffee and months testing before releasing nationally • Very expensive, company my do little or no test marketing because of price, confidence in product, costs of developing product is low, copies of competitor's successful products, or fast changing market