Chapter Nine

Challenges that arise in growth stage

1) Customer service quality because we want to create brand loyalty 2) Production demands become very important and if we don't have the products to match our demand we end up loosing customers 3) Production quality control, meaning they can reduce the amount of testing to increase the production rate, but is dangerous and may loose customers ultimately

First-to-market Products

: Must go through all four stages (Market Intro, Market Growth, Market Maturity, Sales Decline) EX) HONDA FUEL CELL CAR -Includes: Careful product design, reasonable pricing, limited distribution, and educational promotion

Product Life Cycle

: The stages a new product category will go through, during which the marketing mixes used will change

Which of the following statements is true of a second-mover?

A second-mover is one that quickly follows a pioneer.

Which of the following statements is true of the market introduction stage of the product life cycle?

In this stage, there is a need for informative promotion

Which of the following is true of the types of new product categories?

Discontinuous innovations require that customers adopting the innovation significantly change their behavior.

Entrench and Snipe

Entrenching the brand loyal customers a company already has and sniping your competitors customers one by one

Which of the following statements about fashion-related products is false?

Fashion products have long life cycles.

Which of the following statements about organizing for new-product development is true?

For a firm to be successful in its new product development endeavors, it should encourage a culture that supports innovation.

Maturity Stage

Industry sales are "flat" meaning for every product sold one is taken off the market (laptops). Brand loyalty is "key." Competition may enter under-serviced or under-niche market segments. First payoff to the first-to-market products at this stage. Cost ten times more to earn a new customer than to keep a happy customer (APPLE).

Which of the following statements regarding the market growth stage of the product life cycle is false?

Innovators still earn profits, but this stage is less profitable for them than the previous stage.

Which of the following can the Consumer Product Safety Commission do?

It can order costly repairs of "unsafe products." It can order returns of "unsafe products." It can back up its orders with jail sentences. It can back up its orders with fines.

Second-to-market Products

May enter at the market growth or even market maturity stage

Penetration Pricing

Pricing a product low to stimulate demand for the product

Cash cow

Revenue-generation with little to no marketing effort

Growth Stage

Sales rise rapidly and competition enters. 1) Branding begins! 2) Distribution expands 3) Pricing flexibility due to economies of scale

Skimming Pricing

Selling a new product at a very high price to get back development costs

Which of the following is true of patents?

They give firms a short-term monopoly on their new technology

Which of the following would not be good advice for an organization trying to make new-product development a total company effort?

Use only R&D insights to drive market needs.

Sales Decline Stage

Ususally due to obsolescence of a product line. 1) Pull most/all of promotions. 2) Reduce distribution channels. Where the first-to-market product will have a second payout because brand loyalist seek out product line! Obsolete your own products before the competition does. First-to-market develop during the growth stage not the maturity stage, which lets them consistently stay ahead of competition. Ex) Intel introducing Pentium and working on the next one while the product was still in its growth stage, staying one step ahead of competitors

Cloud Storage Solutions works closely with customers—showing them early versions of its software and interface and then quickly making changes based on customer feedback before soliciting feedback again. The company wants to fail early and often so that it quickly brings to market a product that meets customer needs. In this scenario, Cloud Storage Solutions is using

a co-creation process.

Lee works as a market researcher for a company that makes frozen foods. The company is considering releasing a new line of frozen dinners featuring flavors from around the world. The dinners have not been created yet, so Lee creates an online survey to ask potential consumers questions and gauge how well the new products will meet the needs and tastes of customers. Lee is engaging in

concept testing.

Whirlpool introduced a new high gloss white finish to its refrigerators. This innovation would be classified as a ______ innovation.

continuous

BlueSpray Co. has created a new clothes dryer that uses light to dry clothes. The company has created a prototype and is testing a marketing mix. The product manager has developed an estimate of the return on investment. Considering these activities, the product is most likely in the _____ stage of the new-product development process.

development

Which of the following strategies is not used to rejuvenate the sales of a product that is heading toward the sales decline stage of the product life cycle?

devising a phase-out strategy

Which of the following is not one of the stages of the product life cycle?

economic competition

Albert works as a server for a restaurant that gives him a certain amount of autonomy. For example, if customers complain about their meal, Albert is allowed to provide them with a free dessert or otherwise compensate them as he deems appropriate. He does not need to check with management before he makes his decision. In this case, the restaurant Albert works for is promoting better service quality through

empowerment.

Product or brand managers are commonly used when a firm

has several different kinds of products or brands.

A new product that requires only minor changes in customer behavior

is called a dynamically continuous innovation.

An industry with tough competition faces falling profits, and its sales growth is slow. Demand for individual brands has become quite elastic—as consumers see competing products as almost homogeneous. Several firms have dropped out. Which of the following stages of the product life cycle does this indicate?

market maturity

Maria's company makes televisions. The Clarity, a 4K television featuring wireless capabilities, is their best selling model, and the company plans to release a new version in a month. However, next year Maria's company plans to release a television featuring brand new technology that offers even better picture quality than the Clarity. This is an example of

planned obsolescence.

Which of hte following terms refers to the legal obligation of sellers to pay damages to individuals who are injured by defective or unsafe products?

product liability

Product ideas that survive the screening and idea evaluation steps get further investment of time and money, including the creation of a(n) _____, which is an early sample or model built to test a concept.

prototype

When Yahoo! develops new online services, the company develops a version of the service and shows it to customers. It solicits immediate feedback and then revises the trial version of the product. This process is continued. In this case, Yahoo! is utilizing

rapid prototyping.

Karina works for a company that makes fans, space heaters, and air purifiers. When the competition comes out with a new air purifier that is supposed to clean air twice as fast with half the energy usage, Karina buys one of the new purifiers so that her research and design team can disassemble it and attempt to build their own highly efficient version. This is an example of

reverse engineering

Using total quality management to improve the implementation of a marketing plan is likely to involve

the training and empowerment of employees to identify and solve customer problems.