Ch12 developing new products MKT IBC

Concept testing

-Concept is a brief written description of the product -Concept testing is the process in which the concept is presented to potential buyers or users to obtain their reactions -Triggers the marketing research process

The product development process: product development or product design

-prototype -alpha testing -beta testing

stages in product life cycle

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

Laggards make up roughly __ of the market

16%

the early majority represents approximately ______ of the total consumer market and is crucial to the profitability of a product or service. Without them, the product or service will typically fail

34%

while late to the party, the late majority category of consumers is still significant making up roughly ___ of the total consumer market

34%

R&D consortia

A group of firms and institutions, possibly including government and educational institutions, that explore new ideas or obtain solutions for developing new products. -involve pharmaceutical or high tech members

product development or product design entails a process of balancing which types of considerations A) manufacturing B) engineering C) marketing D) distribution

A, B, C

what does a post launch review help determine A) whether changes to the marketing mix are needed B) whether new management should be hired C) whether additional resources are needed D) whether the launch was a success or failure E) whether competitors should be eliminated

A, C, D

what are the 4 stages that a product passes as it enters, gets established in, and ultimately leaves the marketplace A) decline B) laggard C) growth D) introduction E) maturity

A, C, D, E

in distinguishing btwn firm strategies for developing new products, a pioneer firm will be more likely to rely on its ____ whereas a follow firm will be more likely to ___ for ideas

R&D department; scan the market

______ 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

pioneers

premarket tests vs test marketing

premarket: -Customers exposed to product -customers surveyed -firm makes decision test: -mini product launch -more expensive that premarket -market demand is estimated

If a new product concept gets positive evaluations from potential customers during concept testing, the next step for a firm is

product design

________ entails a process of balancing various engineering, manufacturing, marketing, and economic considerations to develop a product's form and features or a service's features.

product design

The ________ stage of the new product development process can involve the development of a prototype for alpha or beta testing.

product development

Early personal computer users remember the cumbersome, user-unfriendly DOS system. When Apple introduced System 1 and Microsoft introduced Windows, both of which were much easier to use, these new products diffused rapidly because of their

relative advantage

a firm that joins with other firms as well as government and educational institutions to research a costly new technology is participating in

research consortium

______ engineering refers to taking apart a competitors product, analyzing it, and creating an improved product that does not infringe on the competitors patents (if any exist)

reverse

which of the following processes could be considered an acceptable method for generating ideas A) communicating with a firms R&D department B) conducting consumer research C) arguing with other firms and institutions D) brainstorming within the firm E) researching competitors products and services

A, B, D, E

some markets demand a higher frequency of new product releases than others. in which of the following markets do sales come from new products A) books B) over the counter meds C) movies D) gardening equipment E) video games

A, C, E

alpha testing

An attempt by the firm to determine whether a product will perform according to its design and whether it satisfies the need for which it was intended; occurs in the firm's research and development (R&D) department.

what can marketers learn from the diffusion of innovation theory A) the length of the product life cycle in a given industry B) which markets are likely to be most receptive to new products or services C) the amount of time before a competitor releases a similar product D) the rate at which consumers are likely to adopt a new product or service

B, D

what are some advantages experienced by pioneer firms over later entrants? A) lower costs since the market is smaller B) establish an early market share lead C) low failure rate once new product launches D) more likely to command a greater market share over a longer period E) more readily recognizable to consumers

B, D, E

Which statement best explains the product life cycle? A) the process by which the use of an innovation spreads throughout a market group over time and over various categories of adopters B) the length of time a product exists in the marketplace before the market becomes saturated C) the stages that products move through as they enter, get established in, and ultimately leave the marketplace D) the time in which firms hire an outside firm to help generate ideas and develop new products and services E) the process in which a product is analyzed and improved so that it does not infringe on the competitor's patents

C

without innovation, what options would be available to firms A) develop new products for new markets B) develop new products for current markets C) continue to market current products to current customers D) take current products to new markets

C, D

Factors affecting product diffusion

Compatibility, Observability, Complexity and trialability, Relative advantage

T or F As personal computers became popular, the sale of typewriters decreased significantly and now typewriters are only used by a very small segment of consumers. Typewriters are in the maturity stage of the product life cycle.

False

T or F: new products must be targeted toward end consumers

False

Identify the adopter

JOHN early majority tiffany innovator denise n janet laggards

observability

When products are easily observed, their benefits or uses are easily communicated to others, which enhances the diffusion process

Innovation and Value

Why do firms create new products? changing customer needs, market saturation, managing risk through diversity, fashion cycles, improving business relationships

Disney recently released new versions of its classic movies, Aladdin and The Lion King. This is an example of new product innovation based on

a fashion cycle

which type of firm is most likely to engage in a licensing approach to R&D

a firm with a low budget and a need to get a product to market quickly

When Ben & Jerry's Ice Cream tests all its proposed new flavors on its own employees at its corporate headquarters in Vermont, it is partaking in

alpha testing

Kendrick is highly knowledgeable about new developments in computer technology, since he reads everything he can find about the subject. Typically, being the first to try out new computer parts and models, he would be classified ________ in terms of the diffusion of innovation curve.

as an innovator

When a firm uses potential consumers who examine the product prototype in a real-use setting to determine its functionality, performance, and potential problems, it partakes in

beta testing

products that generate enough revenue to cover the losses from other unsuccessful introductions are known as

blockbusters

When a product is offered in a foreign market but cultural differences slow down the diffusion process, it would most likely be attributed to low levels of

compatibility

a written description of a product and its technology and is presented to potential buyers or users to obtain their reactiong

concept

In the new product development process, this stage is when the company provides brief written descriptions of the product and what customer needs it would satisfy, sometimes including visual images of what the product would look like.

concept testing

The 5.5 million vinyl long-playing (LP) records sold in the United States per year pales in comparison with the 1.26 billion digital downloads. The grooves in vinyl records create sound waves that are similar to those of a live performance, however, which means they provide a more authentic sound, which in turn means nightclub DJs, discerning music listeners, and collectors will always prefer them. Firms that sell LPs position themselves for a niche segment of diehard consumers. They are in the ________ stage.

decline

when a product goes into the ____ stage of the product life cycle, the product eventually exits the market

decline

________ refers to the process by which the use of a product, service, or process spreads throughout a market group over time and across various categories.

diffusion of innovation

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

diffusion of innovation

the theory that helps marketers understand the product or service adoption rates of consumers is called

diffusion of innovation

when a company adds new products this helps the company to ____ its risk

diversify

If the _______ buying group is relatively small, the number of people who ultimately adopt the innovation likely will also be small.

early adopter

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

Although they enjoy novelty and are considered to be opinion leaders, ________ are not the first to purchase new product innovations.

early adopters

the _____ _______ represents the earlier half of the 2 largest categories of consumers on the diffusion of innovation curve

early majority

after a new product is launched, what is the next step of the product development process

evaluation of results

what is a key characteristic of the maturity stage

firms defending market share

As ________, one of the advantages that pioneers have is they create a new market or product category, establishing a commanding initial market share lead.

first movers

product development entails a variety of processes and considerations to determine which aspects of a product or service

form and features

At which stage in the product life cycle do sales experience their most rapid increase?

growth

At which stage of the product life cycle will you find a growing number of product adopters, rapid growth in industry sales, and increases in the number of competitors and the number of available product versions?

growth

When Toyota introduced hybrid cars, there were waiting lists to buy them. Then Honda and a few other manufacturers entered the market, shifting the product life cycle for hybrid cars into the ________ stage of the product life cycle.

growth

during the ____ stage of the product life cycle, the typical consumers are early adopters, and there are increases in the number of competitors

growth

In the new product development process, companies have a variety of ways for ________, including collaborating with other firms, brainstorming, licensing, and customer research.

idea generation

product development process

idea generation: development of viable new product ideas concept testing: testing of the new product ideas among a set of potential customers product development: development of prototypes and/or the product market testing: testing the actual products in a few test markets product launch: full scale commercialization of the product evaluation of results: analysis of the performance among the new product and making appropriate modifications

every firm starts to develop new products through ___ and then finishes with an evaluation of _____

idea generation; results

_____ generation refers to the first stage in the process by which firms develop a new product

idea or concept

Which term refers to the process by which ideas get transformed into new offerings, including products, services, processes, and branding concepts that will help firms grow?

innovation

is the process by which ideas are transformed into new products and services that will help firms grow

innovation

_______ are crucial to the success of any new product or service because they help the product gain market acceptance by spreading positive word of mouth about the new product.

innovators

5 groups of the diffusion of the innovation curve

innovators, early adopters, early majority, late majority, laggards

sources of new product ideas

internal R&D, R&D consortia, licensing, brainstorming, outsourcing, competitors' products, customer input

During the ________ stage of the product life cycle, sales are low and profits are small or negative.

introduction

firms can highlight a products relative advantage, which refers to which perception among consumers about the product

it is better than its substitutes

what will happen to a firm if it continue to product the same products in a saturated market

it will eventually decline

In some cases, ________ may never adopt a certain product or service since they rely on traditional products until they are no longer available.

laggards

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

laggards

when the _____ majority of consumers enters the market, the market has already reached its full market potential.

late

When _________ enter a new product market, the product has achieved its full market potential, sales tend to level off, or may be in decline.

late majority adopters

Rolling River Golf Equipment Corp. has been trying to develop a lightweight putter for years but hasn't come up with the best technology. After learning that Griggson Group had what Rolling River needed, Rolling River bought the right to use the technology in its putters. What process is helping the company develop its new putters?

licensing

in a _____ agreement companies buy the rights to use technologies from another company

licensing

In managing its product portfolio, 3M demands that a specific percentage of its yearly sales come from new products introduced within the previous few years to better withstand external shocks and to

manage risk through diversification

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

marketed

A product in the ________ stage faces intense competition on price.

maturity

During the ________ stage, firms face intense competition for market share, causing them to market their product aggressively.

maturity

During the __________ stage of the product life cycle, industry sales reach the peak, so firms try to rejuvenate their products by adding new features or repositioning them

maturity

Even if they succeed, new-to-the-world products are

not adopted by everyone at the same time

Many interior design businesses volunteer to provide their services for house-walk fundraisers because they know their design efforts will benefit from

observability

People who get Botox treatments consider it to be a private matter; therefore, they do not discuss it with others. This lowers the level of ________, slowing down the diffusion process.

observability. When products are easily observed, their benefits are easily communicated to others, which enhances the diffusion process. Since people may not want to talk about their Botox treatments to reduce wrinkles, the use of this product is less easily observed by others and therefore diffused more slowly. Even a great product might diffuse more slowly if people feel uncomfortable talking about what they perceive to be involved in their personal care.

when a company hires an outside firm to help accomplish a task

outsourcing

The introduction of the BlackBerry is an example of a(n) ________ because its introduction to the market radically changed consumer preferences and the entire competitive landscape.

pioneer

When a company takes apart a product, analyzes it, and creates an improved product that does not infringe on the competitor's patents, if any exist, it is

reverse engineering

What is one of the three interrelated factors that firms use to measure the success of a new product?

satisfaction of the firms financial requirements

Many restaurants offer daily specials, appetizers, entrees, and desserts not listed on their standard menu. These daily specials primarily provide the new product benefit of

satisfying the changing needs of current and new customers

Terri is trying to sell a new line of mammography equipment. Unlike existing technology, these machines are compact, creating the potential for general practice physicians to have and use them in their offices. Terri would want to identify innovators in his market, knowing these customers will most likely

spread positive word of mouth to other physicians

a market testing method that offers a strong predictor of product success based on actual purchasing behavior

test marketing

Diffusion of Innovation curve

the process by which the use of an innovation spreads throughout a market group over time and across categories of adopters Pioneers or breakthroughs establish completely new markets or radically change competition and consumer preferences pioneers have the advantage of being first movers

A company has a new concept for a lightweight electric scooter that can be easily folded and taken with you inside a building or on public transportation. The company is currently engaged in concept testing. The most important question during this phase of product development pertains to

the respondents purchase intentions if the product were made available

________ relates to how easily consumers can test and use the product.

trialability

when a product is first launched during the introduction stage, sales are usually ____ and there are ____ competitors

very low; essentially no

the problem with using the product life cycle is that no one can predict the shape that the products life cycle will take; therefore, it is impossible to know ___

which stage the product is in