marketing chapter 12

what are reasons for firms to innovate

Changing customer needs, market saturation, managing risk through diversity, and fashion cycles

the steps in the new product development process?

First, they generate ideas for the product or service. Second, firms test their concepts by either describing the idea of the new product or service to potential customers or showing them images of what the product would look like. Third, the design process entails determining what the product or service will actually include and provide. Fourth, firms test market their designs. Fifth, if everything goes well in the test market, the product is launched. Sixth, firms must evaluate the new product or service to determine its success.

five groups on the diffusion of innovation curve?

Innovators, early adopters, early majority, late majority, laggards

Identify different sources of new product ideas.

Internal research and development (R&D) efforts, collaborate with other firms and institutions, license technology from research-intensive firms, brainstorm, research competitors' products and services, and/or conduct consumer research.

What factors enhance the diffusion of a good or service?

Relative advantage, compatibility, complexity, and trialability

the key marketing characteristics of products or services at each stage of the product life cycle?

The introduction stage for a new, innovative product or service usually starts with a single firm, and innovators are the ones to try the new offering. Sensing the viability and commercialization possibilities of some market-creating new product, other firms soon enter the market with similar or improved products at lower prices. The growth stage of the product life cycle is marked by a growing number of product adopters, rapid growth in industry sales, and increases in both the number of competitors and the number of available product versions. The maturity stage of the product life cycle is characterized by the adoption of the product by the late majority and intense competition for market share among firms. Marketing costs (e.g., promotion, distribution) increase as these firms vigorously defend their market share against competitors. Firms with products in the decline stage either position themselves for a niche segment of diehard consumers or those with special needs or they completely exit the market.

Why might placement decisions for products or services into stages of the product life cycle become a self-fulfilling prophecy?

The most challenging part of applying the product life cycle concept is that managers do not know exactly what shape each product's life cycle will take, so there is no way to know precisely what stage a product is in. If, for example, a product experiences several seasons of declining sales, a manager may determine that it has moved from the growth stage to decline and so decides to stop promoting the product. As a result, of course, sales decline further. The manager then believes he or she made the right decision because the product continues to follow a predetermined life cycle. But what if the original sales decline was due to a poor strategy or increased competition—issues that could have been addressed with positive marketing support? In this case, the product life cycle decision became a self-fulfilling prophecy, and a growth product was doomed to an unnecessary decline.

lead users

innovative product users who modify existing products according to their own ideas to suit their specific needs. If lead users customize a firm's products, other customers might wish to do so as well.

Pioneers

radically change competition and consumer preferences.