Ch. 12
When the ______ majority of consumers enters the market, the market reaches its full market potential.
late
A good or service may pass through many stages as it establishes itself in the marketplace. Marketing managers refer to this as the product
life cycle
Whenever a product has a ______ level of complexity, it will consequently be ______ to try.
low; easy
For many Americans, the daily ritual of having a coffee is almost automatic and assumed. The same can be said for the Chinese but with tea. For a firm that is marketing a product, this example serves as a reminder to consider the ______ of your product and its intended target market.
compatibility
pioneers 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.
Usually, during the ____ stage of the product life cycle, the typical consumers are early adopters, and there are increases in the number of competitors.
growth stage
During the decline stage of the product life cycle, ______ who have not yet tried the product or service will be entering the market for the first time.
laggards
What is a market testing method that offers a strong predictor of product success based on actual purchasing behavior?
test marketing
When Burger King introduced the new Whopper Bar to a limited geographic 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
test marketing
Sales of digital cameras have leveled off, and some producers have started to notice a decline in their profits. Consumers who purchase their first digital camera at this point are called
the late majority
Early adopters, although not as fast as innovators, are quick to purchase a new product or service. Which of the following characteristics are typically associated with early adopters?
- Are less risk seeking than innovators - Tend to be opinion leaders of particular product categories
While late to the party, the late majority category of consumers is still significant, making up roughly ______ of the total consumer market.
34%
Which product has the most observability? Multiple choice question. A. A cordless screwdriver B. A toilet cleaner C. A laundry detergent D. A personal grooming kit
A. A cordless screwdriver
risk can be diversified by
By creating a broader portfolio of products through innovation
How can a firm accomplish with knowledge gained from the diffusion of innovation theory?
Develop effective marketing strategies to increase product acceptance across all consumer groups
After a new product is launched, what is the next step of the product development process?
Evaluation of results
True or False: New products must be targeted toward end consumers.
FALSE - (new products do NOT always target end consumers.)
What is a key characteristic of the maturity stage?
Firms defending market share
Firms can highlight a product's relative advantage, which refers to which perception among consumers about the product?
It is better than its substitutes.
True or False: During test marketing, a firm will introduce all the elements of the marketing mix to determine demand for the entire market.
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.
TRUE
True or False: Managers can use the product life cycle model to help predict what pricing, product, promotional, and placement strategies they should employ at each of the four stages.
TRUE
Using the diffusion of innovation theory, what can a firm predict?
Which consumers will buy a new product immediately and which will buy it later
The diffusion of innovation curve 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.
A newly formed coffee company should not have much trouble finding coffee drinkers in America to purchase a new type of coffee maker. However, a company selling gear for the game of cricket might have a difficult time being successful in the United States. They would probably be more successful in India or Australia. The degree to which one's product is consistent with the needs and habits of target consumers is known as
compatibility
Laggards
consumers who like to avoid change and rely on traditional products until they are no longer available.
Five categories of consumers
1. Innovators 2. Early Adopters 3. Early Majority 4. Late Majority 5. Laggards
What are factors that influence how rapidly a product will move through the product life cycle?
- How different the product is from other offerings in the market - How valuable the product is to the consumer
Product development or product design entails a process of balancing which types of considerations?
- Marketing - Engineering - Manufacturing
What are some advantages experienced by pioneer firms over later entrants?
- More likely to command a greater market share over a longer period - More readily recognizable to consumers - Establish an early market share lead
What are the key characteristics of the growth stage of the product life cycle?
- Sales rise - Competitors increase
Product Development Process
1. idea generation 2. concept testing 3. product development 4. market testing 5. product launch 6. evaluation of results
While early adopters are crucial to the success of a new product, they still only make up a relatively small percentage of the total consumers in a given product market. This percentage is approximately how big?
13.5
Laggards make up roughly ______ of the market.
16%
traits of breakthrough products
- They can change the rules of competition. - They are referred to as pioneers. - They can alter consumer preferences.
Joanna is interested in new electronics products, but she prefers to wait a few weeks to buy them until technology bloggers post their initial opinions. Joanna probably belongs to which of the adopter groups?
early adopters
The problem with using the product life cycle concept is that no one can predict the shape that the product's life cycle will take; therefore, it is impossible to know
which stage the product is in
What are some processes that could be considered an acceptable method for generating ideas?
- Brainstorming within the firm. - Communicating with a firm's R&D department. - Researching competitors' products and services. - Conducting consumer research.
What are the steps taken by firms that have products in the decline stage of the product life cycle?
- Completely exit market - Target a niche segment
What might a concept include along with a brief written description of the product?
- Customer needs it satisfies - Visual images
Traits associated with the innovators consumer group
- Highly knowledgeable (about the product/service). - Risk takers.
While pioneers capture an early and commanding market share, imitators often enter the market and gain which advantages?
- Offering better products at lower prices - Capitalizing on the pioneer brand's weaknesses - Focusing marketing efforts on demand for their brand
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?
- Offering the complete menu planned for the full launch - Running the TV ads planned for the full launch
What objectives do firms have in adding new products, services, and processes to their offerings?
- To satisfy the changing needs of consumers - To keep customers from getting bored with existing products
What can marketers learn from the diffusion of innovation theory?
- Which markets are likely to be most receptive to new products or services. - The rate at which consumers are likely to adopt a new product or service.
What are the four stages that a product passes through as it enters, gets established in, and ultimately leaves the marketplace?
1. Introduction. 2. Growth. 3. Maturity. 4. Decline.
What percentage of new products is estimated to succeed?
3 percent (Book say only about 5 percent) EXTERMELY LOW
True or false: Since test marketing costs are high, a company may choose to launch a new product without extensive test marketing and instead rely on instinct.
TRUE
WITHOUT innovation what would be available to firms?
Take current products to new markets Continue to market current products to current customers
Crucial to the success of new products are early adopters, who are responsible for influencing what?
The other three categories of consumers
diffusion of innovation
The theory that helps marketers understand the product or service adoption rates of consumers
Why might it be an advantage for a company to launch a product without test marketing it?
They could get the product to market before the competition.
What refers to how complicated a product is and how easy or hard it is to try?
Trialability and complexity
New products and services that consumers accept quickly will have a high ______ rate early in their product life cycles, which will accelerate the diffusion process across the various stages.
adoption
When a product is in the stage of the product life cycle, its firm will often choose between targeting a niche segment or exiting the market.
decline
The product life cycle
defines the stages products move through as they enter, get established in, and ultimately leave the marketplace.
The theory that helps marketers understand the product or service adoption rates of consumers is called
diffusion of innovation
One advantage of product innovation is that a firm can expand into different product categories. The point of the risk ______ strategy is that if some products in one category are competing poorly, others in another category could be doing very well.
diversification
Lance enjoys owning new gadgets that make his life easier, but he is cautious. He doesn't want the hassle of working through all the initial problems with new technology, so he waits until those problems have been solved. Lance probably belongs to which of the adopter groups in the first half of adopters?
early majority
Product development entails a variety of processes and considerations to determine which aspects of a product or service?
form and features
After product development, firms conduct premarket tests, which help determine
how many customers will try and then continue to use it
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
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:
improve business. relationships.
According to the diffusion of innovation curve, when would marketers expect to see the highest frequency of purchases for a given product or service?
in the middle of the curve.
What stage of the product life cycle is characterized by initial losses to the firm due to its high start-up costs and low levels of sales revenue as the product begins to take off?
introduction stage
concept / concept testing
is a written description of a product and its technology and is presented to potential buyers or users to obtain their reactions.
innovation
is the process by which ideas are transformed into new products and services that will help firms grow.
Premarket test
is when a company shows potential customers a product or service before they actually bring it to market.
What will happen to a firm if it continues to produce the same products in a saturated market?
it will eventually decline
By the time the late majority enters the market, sales tend to
stabilize or decline slightly
Some analysts have attributed the success and quick diffusion of the Apple iPod in part to the white earbuds. At the time, earbuds were not seen as often, and most headphones were black, not white. As knowledge of the iPod spread, the white earbuds could be seen even if the iPod itself was out of sight. This is an example of which of the factors that affect speed of diffusion?
observability
When a product such as a "nick-free" razor blade is launched, it may diffuse more slowly than a product like the Apple iPad, which is easily seen and whose benefits or uses are easily communicated to others. This comparison exemplifies a difference in ______ one of the product characteristics that affect the speed of diffusion.
observability
In order to accurately evaluate the new product launch, marketers must undertake a critical ______ review to determine whether the product and its launch were a success or failure.
post-launch
In the context of how firms develop new products, what is the next step if a firm has positive results from market testing?
product launch
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 _____ ____ within the diffusion process.
relative advantage
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
