SDSU Mktg 370 Ch. 12 Learnsmart

Acceptable methods for generating ideas

- communicating with a firm's R&D department - Brainstorming within the firm - Researching competitors products and services - conducting consumer research

Failure rate among new goods can be as high as

95%

Examples of True Pioneer Products

Amana's microwave oven 1971 Pampers disposable diapers early 1960s

Which questions likely to be asked of customers during concept testings?

Does the product meet a need that is not currently being satisfied? Does the proposed price seem like a good value? How often and in what quantities would the customer buy the product?

Compatibility example

Most Americans drink coffee each morning

Relative advantage example

Most would perceive that Starbucks is a superior form of coffee

________ or breakthrough products are brand new products that establish a completely new market or radically change both the rules of competition and consumer preferences in a market

Pioneer

True or False: A company may choose to launch a new product without extensive test marketing and instead rely on instinct, since test marketing costs are high. Additionally, test markets may offer an advantage to competitors that have a similar product.

True

True or False: Managers can use the PLC model to help predict what pricing, product, promotional, and placement strategies they should employ at teach of the four stages

True

A post launch review is conducted to determine if:

additional resources are needed changes to the marketing mix are needed the launch was a success or failure

Advantage of brainstorming over other idea generation methods

costs almost nothing

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

customer acceptance, how it satisfies financial requirements, performance

When a company adds new products this helps the company to ______ is risk

diversify

Along the diffusion of innovation curve, ______ make up the second group of consumers to adopt an innovation; they tend to be leaders in a social setting

early adopters

Adopter group that waits until the "bugs" are worked out of a particular product, in order to avoid risk

early majority

Product development or product design entails a process of balancing which types of considerations?

engineering, marketing, manufacturing

Prototype

first physical form or service description of a new product, still in rough form, that has the same properties as the product

During ______ stage of PLC, consumers are early adopters and early majority

growth stage

One disadvantage of being a first mover

having to establish the market all alone

Although there are numerous stages in the product development process, every firm starts to develop new products through _______ and then finishes with an evaluation of _______

idea generation; results

key characteristics of maturity stage

intense competition on price marketing costs increase

Fewest competitors in PLC stages:

introductory and decline

If a company invests all its time and effort into a new product and the product fails

it will be extremely difficult for the firm to recover

Licensing a trade-off in that it can save a firm from the high costs of in-house R&D, but instead the firm is banking on a solution (product) that already exists but has not been:

marketed

Entry into a ______ market may emerge through simple product design changes. For example Clorox has added pre-moistened Armor All wipes to its do-it-yourself car cleaning line

new

The speed with which products diffuse depends on a number of diff product characteristics to consider:

observability, relative advantage, complexity, compatibility

Manufacturer's suggest retail price

price manufacturers encourage retailers to sell at

Reverse Engineering

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

Manufacturers often coordinate delivery and storage of new product with its ______, the last part of the supply chain, to assure that products are available to sell to consumers

retailers

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

trade shows, short-term price reductions

Not every product makes it through the life cycle to the last 2 stages of maturity or decline.

true

The Apple iPod was readily accepted by consumers in part because it was an easy way to listen to music anywhere, with big advantages over portable CD players. This is an example of RELATIVE ADVANTAGE within the diffusion process

true

When products reach the growth stage of the PLC, you must study your customers and know their preferences such as:

varied color, features, styles

Sequential steps in product launch

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

Diffusion of Innovation Curve Order

1. Innovators 2. Early Adopters 3. Early Majority 4. Late Majority 5. Laggards

Product Development Process

1. idea generation 2. concept testing 3. product development 4. market testing 5. product launch 6. evaluation of results

level of sales matched with stage of product life cycle

Low - intro rising - growth peak - maturity dropping - decline

In distinguishing between firm strategies for developing new products, a pioneer firm will be more likely to rely on its _______, whereas a follower firm will be more likely to _______ for ideas

R&D department, scan the market

1. Intro 2. Growth 3. Maturity 4. Decline

Stages in order

Complexity and trialability

Starbucks coffee is a simple product and is easy to try

Observability example

Starbucks has their distinct logo on each of their coffee cups

Beta Testing

a firm 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.

Slotting allowance

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

Introductory price promotion

a short-term price discount to encourage new product trial

Concept testing

a statement is presented to potential buyers or users to obtain their reactions

Trade Show

a temporary concentration of manufacturers, giving retailers an opportunity to see what is available in the marketplace

The diffusion of innovation refers to the rate in which consumers ______ a given product or service

adopt

Firms need to continue to innovate because customer needs

are constantly changing

R&D Consortia

are groups of firms and institutions who collaborate to do research and development

A company selling gear for cricket has trouble selling to USA. they could sell cricket gear better in cricket-playing countries. The degree to which one's product is consistent with the needs and habits of target consumers is known as ______

compatibility

Despite market saturation, firms are constantly introducing products with new and improved features or in order to gain market share against intense _______

competition

During the maturity phase firms must defend their market share against ______

competitors

Steps taken by firms who have products in decline stage of PLC

completely exit market create a niche segment

Research Development and internal department

consists of scientists who work to solve complex problems and develop new ideas

Early adopters are 13.5% of

consumers

Laggards

consumers who like to avoid changes and rely on traditional products until they are no longer available

Without innovation, what options would be available to the firms?

continue to market current products to current customers and take current products to new markets

While product development costs are very high for firms with R&D departments, they are not always expected to produce a successful new product. A firm might lose money in the short term, but because R&D departments are viewed as _______, the firms hope that they will be profitable in the long term

continuous investments

Sometimes firms have difficulty moving through the brainstorming process themselves. When this occurs, they can hire outside firms such as IDEO, which help to create an environment that is conducive to:

creativity

Crucial to the success of new products are ____ _____, who are responsible for influencing the final three categories of consumers to purchase the product

early adopters

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

Lead users

innovative consumers who modify existing products according to their own ideas to suit their specific needs

The ______ stage of the life cycle for a new, innovative product or service usually starts with a single firm, and innovators are the ones to try the new offering

introduction

Premarket tests

involve tests conducted b4 product/service brought to market to determine how many customers will try and then continue to use it

Diffusion of Innovation

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

When a firm uses the ___ _____ customer input approach, they customize their products based on the input of these innovative consumers

lead user

When a firm uses the _____ _____ customer input approach, they customize their products based on the input of these innovative consumers

lead user

The _______ stage of the PLC is the adoption of the product by LATE MAJORITY and good profitability

maturity stage

Advantages by pioneering firms over later entrants

more readily recognizable to consumers establish an early market share lead more likely to command a greater market share over a longer period

Firms measure the success of a new product by its sales _______, customer acceptance and its satisfaction of the firm's financial requirements

performance

IMC encompasses a variety of comm disciplines used during INTRO phase such as:

price promotions and trade promotions

If a firm has a positive result from the market testing the next step is known as ______ launch

product

Growth Stage

product gains acceptance, experiences increased demand and sales, and encounters increasing competition

Key characteristics of growth stage of product life cycle:

profits rise, typical consumers are early adopters and early majority, rising sales

During intense competition, a firm continually needs product _______ and continual innovation to protect its market share

proliferation

Trade Promotions

promotions to wholesalers and retailers to get them to purchase new products

In order for a firm to successfully make a new product out of a competitors's product, that firm must engage in ______ to figure out how to bring an improved version to the market

reverse engineering

Innovators have these traits

risk takers, highly knowledgable about the product/service, trend starters

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?

running the TV ads planned for the full launch offering the complete menu planned for the full launch

New product and service innovation is important because the longer a product or service exists in a given marketplace, the more likely that the market will become ______

saturated

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

scientific; technological

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

supply chain

Early adopters traits

tend to be opinion leaders of particular product categories less risky than innovators

When Burger King introduced the Whopper Bar to a limited geographical area prior to a national launch, it was engaging in

test marketing

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

the diffusion of innovation

Alpha 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 tests in the R&D department.

Some markets demand a higher frequency of new product releases than others. Examples include:

video games, movies, clothing, books

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

when a customer wants it in sufficient quantities to meet demand

early adopters

will go to the movie theater to see it a week after release and after consulting several reviews

late majority

will view the movie at a discount-price theater, rent the DVD, or stream it on Netflix

early majority

will view the movie once some of their friends, who saw it within the first couple weeks, have enjoyed it

laggards

will watch the movie once it is on TV or possibly never

innovators

would sleep overnight outside the movie theater just to be one of first to see it

Based on history of dozens of consumer products, the PLC concept provides rules for detecting the key turning points in the cycle

yeah

Innovators are 2.5% of consumers

yeah

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

yeah