MKT 320 CH 12

Product development process

1.) idea generation 2.) concept testing 3.) product development 4.) market testing 5.) product launch 6.) evaluation

2 reasons why failure rate for new products is so high

1.) neglecting product testing 2.) venturing into products that don't align w brand

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.

Laggards

Avoid change and rely on products until they aren't available

Product development (product design)

Balancing various engineering manufacturing, marketing, and economical considerations to develop FEATURES and FORMS

Observability

Benefits and uses are communicated to others which enhances diffusion

Customer input

By monitoring online feedback, companies can create new products and better ideas about existing ones, surveys, polls.

Concept testing

Concept statement presented to potential buyers to obtain reactions

test marketing

Determines success potential; introduces the offering to a limited geographical area prior to national launch. Ex.) restaurant in Florida

Relative advantage

Diffusion is quicker if it is better than substitutes

Compatibility

Diffusion may be faster or slower, depending on consumer features like culture differences, sizes

Late majority CONSERVATIVES

Enter when product reaches full potential and sales are leveling off

Decline stage

Exists marketplace, decline sales

Licensing

Firms by rights to use a technology or ideas from other firms

Prototype

First physical form of new product or service

R&D consortia (idea generation)

Groups of firms and institutions explore new ideas and solutions for developing new products. EX.) pharmaceutical and high-tech

Outsourcing

Have an outside firm to help generate ideas and develop new products

Innovators- THINKERS

Help product gain market acceptance

Early majority PRAGMATIST

If this group never becomes large enough, the product will fail. Reviews are in, they buy.

It is ____ to know what stage the product is in

Impossible

Qualitative examples

Interviews, focus groups

When the sequel to a movie eventually shows up on their regular television networks, ______might watch it.

Laggards

Which of the following groups are included in the diffusion of innovation curve?

Late majority

During the ______stage of the product life cycle, sales peak and profits begin to decline as competition becomes intense.

Maturity

Firms expect that few highly successful products will cover the costs of____

R&D

4 reasons why DIC is useful

Relative advantage, compatibility, observability, complexity

Quantitative examples

Surveys

Competitors products or reverse engineering

Taking apart a product and creating an improved product that doesn't infringe on competitors patents

Introduction stage

The initial stage of a product's life cycle; its first appearance in the marketplace, low sales

Concept

Written design of product, its technology, working principles, visual images, and what consumer needs it would satisfy

Freida is using a test model of her firm's new inline skates to see if they work according to the design specifications. She is involved in

alpha testing

Pioneer or breakthrough products

can change consumer preferences

Premarket Tests (market testing)

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

By adding new product lines beyond its core business of computer software, like the Surface Pro tablet and Xbox 360 game system, Microsoft primarily benefits by

creating diversification and reducing risk

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

Maturity Stage

industry sales reach their peak, so firms try to rejuvenate their products by adding new features or repositioning them. Ex.) appliances

Which of the following is the correct sequence of new product adopters in the diffusion of innovation curve?

innovators, early adopters, early majority, late majority, laggards

4 stages of product life cycle

introduction, growth, maturity, decline

The diffusion of innovation theory is useful to marketers in helping them

predict which types of customers will buy their product immediately and later.

Complexity and triability

products that are relatively less complex are also relatively easy to try

Blockbusters

products that generate enough revenue to cover the losses from other unsuccessful introductions

Growth stage

stage of the product life cycle when the product gains acceptance, demand and sales increase, and competitors emerge, rising sales

Many restaurants roll out new ideas first in Orlando, Florida, a location that attracts a vast range of diverse tourists and thus might offer insights into what various consumer groups will like. This is an example of

test marketing

Diffusion of innovation

the process by which the use of an innovation spreads throughout a market group over time and over various categories of adopters

Early adopters VISIONARIES

they bring the other three categories together and they purchase after careful review