Chapter 12 - Marketing Final
Fashion Circles
- In industries that rely on fashion trends and experience short product life cycle (i.e. including apparel, arts, books and software markets) most sales come from new products. - Movies make revenue within a year of their release.
Managing Risk Through Diversity
- Innovation: broader portfolio of products, which help them diversify their risk and enhance firm value better than a single product can. - Firms with multiple products can better withstand external shocks, including changes in consumer preferences or intensive competitive activity.
Improving Business Relationships
- New products do not always target end consumers; sometimes they function to improve relationships with suppliers. (I.E. Kraft Capri Sun's Lemonade) - Even if they succeed in innovating and creating new products, new-to-the-world products are not adopted by everyone at the same time. Rather, they diffuse or spread through a population in a process known as diffusion of innovation.
Changing Customer Needs
- New products, services and processes to offerings: - Create and deliver value more effectively by satisfying the changing needs of their customers and new customers - Keep customers from getting bored with current product or service offering.
Market Saturation
- The longer a product exists in the market place, the more likely it is that the market will become saturated. Without new products or services, the value of the firm will ultimately decline. - Example Cars: The firms sustain their growth by getting consumers excited by the new looks and new features, prompting many care buyers to exchange their old vehicle years before its functional life is over.
Why do firms to continue introducing new products and services?
1. Changing Customer Needs 2. Market Saturation 3. Managing Risk Through Diversity 4. Fashion Circles 5. Improving Business Relationships
Why do companies create new products?
Innovation! Refers to the process by which ideas are transformed into new offerings, including products, services, processes and branding concepts that will help firms grow.
Diffusion of Innovation
Pioneers