Marketing Chapter 12

improve business relationships

A company that develops a new merchandise tracking technology that automatically notifies suppliers when a new shipment is needed is using its new product to ______.

concept testing

A concept is a brief written description of the product. _____ is the process in which the concept is presented to potential buyers or users to obtain their reactions. It triggers the marketing research process.

early adopters

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.

lead users

Another particularly successful customer input approach is to analyze ____, those innovative product users who modify existing products according to their own ideas to suit their specific needs.

service

Any intangible offering that involves a deed, performance, or effort that cannot be physically possessed. By providing good customer service, firms add value to their products and services.

relative advantage, compatibility, observability, complexity and trialability

Factors affecting product diffusion

True

True or false: If market testing returns with positive results, the firm is then ready to introduce the product to the entire market, which is called a product launch.

diversify

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

product launch

full-scale commercialization of the product

idea or concept generation

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

Brainstorming

Groups work together to generate ideas. No idea is immediately accepted or dismissed. Members vote on the best idea or combination of ideas.

internal R & D

High product development costs Often the source of technological products Often the source of breakthrough products

Outsourcing

Hiring an outside firm to help generate ideas and develop new products and services. Design firms help clients generate new product and service ideas in industries such as health care, toys, and computers.

16%

Laggards make up roughly ______ of the market.

Test marketing

Mini product launch More expensive than premarket tests Market demand is estimated

The Service-Product Continuum

Most offerings lie somewhere in the middle

Manufacturing Marketing Engineering

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

blockbusters

Products that generate enough revenue to cover the losses from other unsuccessful introductions are known as ______.

Decline

Sales: Declining Profits: Declining Typical consumers: Laggards Competitors: Low number of competitors and products

Introduction

Sales: Low Profits: Negative or low Typical consumers: Innovators Competitors (number of firms and products): One or few

Maturity

Sales: Peak Profits: Peak to declining Typical consumers: Late majority Competitors: High number of competitors and competitive products

Growth

Sales: Rising Profits: Rapidly rising Typical consumers: Early adopters and early majority Competitors: Few but increasing

Video games Books Movies

Some markets demand a higher frequency of new product releases than others. In which of the following markets do sales come from new products? Video games Books Gardening equipment Over-the-counter medicines Movies

advantage

The Apple iPod was readily accepted by consumers in part because it was an easy way to listen to music anywhere, with substantial improvements over portable CD players. This is an example of a relative _______, within the diffusion process.

very low; essentially no

When a product is first launched during the introduction stage, sales are usually ______ and there are ______ competitors.

six

When firms decide to develop new products, it is typically a long process that is broken into ______ stages.

pioneers

_____ or breakthroughs establish completely new markets or radically change competition and consumer preferences.

Laggards

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

prototypes

allows consumers to interact physically with the product. Some _____, such as the concept cars revealed at auto shows, never actually go into production.

empathy

caring, individualized attention to customers

34%

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.

product development

development of prototypes and/or the product

saturated

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 ______.

False- New products do not always target end consumers; sometimes they function to improve relationships with suppliers.

New products must be targeted toward end consumers.

diffusion of innovation

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

Limitations of Product Life Cycle

Each product or service has its own shape. Challenging to know precisely the stage of the PLC.

premarket tests

Customers exposed to product Customers surveyed Firm makes decision

Product Life Cycle

Defines the stages that products move through as they enter, get established in, and ultimately leave the marketplace. A useful tool in marketing strategy planning. Reflects marketplace trends.

pioneers For example, CD walkmans have been taken over by apple iPods. First movers must staunchly defend their territory. After establishing the market, they generally must switch to a defender mode to fend off newcomers.

Despite first-mover advantages, _____ often lose out to superior competitors.

maturity

During the ______ stage of the product life cycle, the market for the product usually becomes saturated.

R & D Consortia

Firms join together to form research consortiums Lower costs and risks Benefits spread to all firms Example: pharmaceutical industry research

Licensing

Firms purchase the rights to technology or ideas from other research-intensive firms. University research centers often provide such licenses.

R&D department; scan the market

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.

first

In terms of their place on the diffusion of innovation curve, innovators are the ______ category of consumers.

Services Marketing Differs from Products Marketing

Inseparable, heterogeneous, perishable, intangible

Customer input

Listening to the customer in both B2B and B2C markets can lead to successful idea generation. Lead users: innovative product users who modify existing products according to their own specific needs.

diffusion of innovation

The process by which the use of an innovation spreads throughout a market group over time and across categories of adopters.

Reverse engineering

The process of taking something apart and analyzing its workings in detail.

innovators, early adopters, early majority, late majority, and laggards.

These purchasers can be divided into five groups according to how soon they buy the product after it has been introduced:

Product Launch

This step requires tremendous financial resources and extensive coordination of all aspects of the marketing mix. The firm confirms its target market(s), decides how the product will be positioned, finalizes the remaining marketing mix variables, and determines the marketing budget. Timing may be critical.

Competitors increase Sales rise

What are the key characteristics of the growth stage of the product life cycle? (Select all that apply.) Sales stabilize Typical consumers are innovators Competitors increase Sales rise

Improving Business relationships, Changing Customer Needs, Market Saturation, Managing Risk through Diversity, Fashion Cycles

What do firms create new products?

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

What does a postlaunch review help determine? (Select all that apply.) Whether changes to the marketing mix are needed Whether competitors should be eliminated Whether additional resources are needed Whether new management should be hired Whether the launch was a success or failure

Firms defend market share

What is a key characteristic of the maturity stage? High prices Firms defend market share Few competitors in the market Adoption of the product by early majority

test marketing

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

test marketing

When Subway introduced a new Southwestern Club sandwich in South Florida before launching it nationwide, it was engaging in ______.

A test kitchen at a fast food restaurant

Which of the following is an example of a research and development effort? A call center where workers offer product support to customers An agreement to market another firm's products A test kitchen at a fast food restaurant A retail store where the firm offers trials of new or upcoming products

Firms expect to lose money on R&D in the long run but consider it an advertising expense.

Which of the following statements about firms' expectations regarding the success of internal research and development efforts is true? Firms expect to lose money on R&D in the long run but consider it an advertising expense. Firms do not track the profitability of their R&D efforts because some research pays off many years later. Firms expect that every product developed by in-house researchers will be profitable. Firms expect that a few highly successful products will cover the costs of the entire R&D effort.

34%

While late to the party, the late majority category of consumers is still significant, making up roughly ______ of the total consumer market.

evaluation of results

analysis of the performance of the new product and making appropriate modifications

premarket tests

are conducted by research firms, such as ACNielsen (BASES). Because test marketing reveals a new product to competitors, it might be inappropriate to expose some new products this way.

idea generation

development of viable new product ideas

Copycat products

inexpensive substitutes with the same functionality (product equity) as the original

Sources of new product ideas

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

Product Development or Product Design

prototype, alpha testing, beta testing

Established Marketing Metrics

reliability, responsiveness, assurance, empathy

evaluation of results

satisfaction of technical requirements, customer acceptance, satisfaction of the firm's financial requirements

maturity

stage of the product life cycle is characterized by the adoption of the product by the late majority and good profitability

market testing

testing the actual products in a few test markets

concept testing

testing the new product idea among a set of potential customers

reliability

the ability to perform the service dependably and accurately

assurance

the knowledge and courtesy by employees and their ability to convey trust and confidence

responsiveness

the willingness to help customers and provide prompt service