Chapter 12 - MGMT 323

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 group buys them.

What are the key characteristics of the growth stage of the product life cycle?

Competitors increase Sales rise

true or False: New products must be targeted toward end consumers.

False

What is a key characteristic of the maturity stage?

Firms defending market share

Which of the following factors 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

Firms can highlight a product's relative advantage, which refers to which perception among consumers about the product?

It is better than its substitutes.

pioneers

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.

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.

innovators

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

Adding new products is MOST likely to prompt consumers to purchase in which of the following industries?

Video games

What might a concept include along with a brief written description of the product?

Visual images Customer needs it satisfies

brainstorming

a group activity used to generated ideas

licensing

a method used in developing new products in which a firm buys the rights to use a technology or idea from another firm

outsourcing

a practice in which the client firm hires an outside firm to facilitate some aspect of its business

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

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

product development

development of prototypes and/or the product

idea generation

development of viable new product ideas

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

diversify

product launch

full-scale commercialization of the product

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

The product development process can be diagrammed as a sequential process.

know the order

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.

postlaunch

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

innovation

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

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 over various categories of 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

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.

test marketing

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

product development

Also called 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.

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.

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.

advantage

evaluation of results

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

concept

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

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

laggards

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

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

lead users

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

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

concept testing

testing new product concepts with a group of target consumers to find out if the concepts have strong consumer appeal

market testing

testing the actual products in a few test markets

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

late majority

the last group of buyers to enter a new product market; when they do, the product has achieved its full market potential

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; generally don't like to take as much risk as innovators but instead wait and purchase the product after careful review

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

very low; essentially no

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, movies, books