Marketing chapter 12

Outsourcing

A practice in which the client firm hires an outside firm to facilitate some aspect of its business. In the context of new product development, the outsourced firm helps its client develop new products or services

product development/ 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

the product development process

idea generation, concept testing, product development, market testing, product launch, evaluation of results

concept

Brief written description of a product or service; its technology, working principles, and forms; and what customer needs it would satisfy.

laggards

Consumers, representing approximately 16 percent of the population, who like to avoid change and rely on traditional products until they are no longer available. Sometimes laggards never adopt a product or service. When the sequel to Star Wars: The Force Awakens eventually shows up on their cable movie channels, they might watch it.

product life cycle

Defines the stages that new products move through as they enter, get established in, and ultimately leave the marketplace and thereby offers marketers a starting point for their strategy planning.

beta testing

Having potential consumers examine a product prototype in a real-use setting to determine its functionality, performance, potential problems, and other issues specific to its use.

lead users

Innovative product users who modify existing products according to their own ideas to suit their specific needs.

pioneers/breakthroughs

New product introductions that establish a completely new market or radically change both the rules of competition and consumer preferences in a market; also called breakthroughs. ex. Apple Watch ,iPod, iPhone, iPad, iTunes

prototype

The first physical form or service description of a new product, still in rough or tentative form, that has the same properties as a new product but is produced through different manufacturing processes, sometimes even crafted individually

R&D consortia

a group of firms and institutions, possibly including government and educational institutions, that explore new ideas or obtain solutions for developing products

diffusion of innovation

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

early majority

A group of consumers in the diffusion of innovation model that represents approximately 34 percent of the population; members don't like to take much risk and therefore tend to wait until bugs are worked out of a particular product or service; few new products and services can be profitable until this large crucial because few new products and services can be profitable until this large group buys them. Its members don't like to take as much risk and therefore tend to wait until the bugs are worked out of a particular product or service. This group probably rents thelatest Star Wars movie during the first week it comes out on-demand. Thus, early majority members experi-ence little risk because all the reviews are in, and their costs are lower because they're renting the movie in-stead of going to the theater.

test marketing

A method of determining the success potential of a new product; it introduces the offering to a limited geographic area prior to a national launch.

licensing

A method used in developing new products in which a firm buys the rights to use a technology or idea from another firm saves the high costs of in-house R&D, but it means that the firm is banking on a solution that already exists but has not been marketed.

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.

premarket test

Conducted before a product or service is brought to market to determine how many customers will try and then continue to use it.

first movers

Product pioneers that are the first to create a market or product category, making them readily recognizable to consumers and thus establishing a commanding and early market share lead. pioneers

maturity stage

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

introduction stage

Stage of the product life cycle when innovators start buying the product

decline stage

Stage of the product life cycle when sales decline and the product eventually exits the market.

growth stage

Stage of the product life cycle when the product gains acceptance, demand and sales increase, and competitors emerge in the product category.

reverse engineering

Taking apart a competitor's product, analyzing it, and creating an improved product that does not infringe on the competitor's patents, if any exist.

late majority

The last group of buyers to enter a new product market, representing approximately 34 percent of the population; when they do, the product has achieved its full market potential Perhaps these movie watchers wait until the newest movie is available without any additional cost on Netflix. By the time the late majority enters the market, sales tend to level off or may be in decline

innovation

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

concept testing

The process in which a concept statement that describes a product or a service is presented to potential buyers or users to obtain their reactions

early adopters

The second group of consumers in the diffusion of innovation model, after innovators, to use a product or service innovation represents about 13.5 percent of the population. They generally don't like to take as much risk as innovators but instead wait and purchase the product after careful review. this market waits for the first reviews of the latest movie before purchasing a ticket, though they likely still go a week or two after it opens. They do not stand in line to grab the first PlayStation VR headset; only after reading the innovators' complaints and praises do they decide whether the new technology is worth the cost. But most of them go ahead and purchase because early adopters tend to enjoy novelty and often are regarded as the opinion leaders for particular product categories

innovators

Those buyers, representing approximately 2.5 percent of the population, who want to be the first to have the new product or service