MKTG 350 Test #3 Chapter 12
Internal R&D
-High product development costs -Often the source of technological products -Often the source of breakthrough products
R&D Consortia
-Lower costs and risks; firms join together -Form research consortiums -Benefits spread to all firms Example, pharmaceutical industry research
Concept testing
-Refers to the process in which a concept statement is presented to a potential buyers or users to obtain their reactions -Estimates the sales value of the product and determines whether the is worth further development -Triggers the marketing research process -Customers reactions determine whether or not it goes forward
A manufacturer must work with retailers to ensure that a new product will be delivered and available for sale: 2 things
-When a customer wants it -In sufficient quantities to meet demand
New Product launch Steps 1-3
1. Firms confirms its target market 2. Decides how the product will be positioned 3. Finalizes the remaining marketing mix variables for the new product
The product Development Process:
1. Idea generation 2. Concept Testing 3. Product Development 4. Market testing 5. Product Launch 6. Evaluation of results
Manufacturers may want to promote a new product and encourage retailers to carry the products, therefore, the manufacturer may use promotions such as: 2 of them
1. Short time price reductions 2. Trade shows
Concepts
Brief written descriptions of the product
Why do Firms Create new products? 5 reasons
Changing customer needs, Market saturation, Managing risk through diversity, fashion cycles, improving business relationships
The first year they were offered, John wanted a tablet computer, but he did not know which one to choose. He waited until there were more choices, lower prices, and improved quality. John is part of the ___________ diffusion of innovation group.
Early Majority
When a firm launches a new product, it needs to review the sales and profit levels of the product to determine if the product is successful. This stage of the new product development process is known as the _______ of results stage.
Evaluation
Slotting allowance
Fee paid simply to get new products into stores or to gin more better shelf space for their products
In terms of their place on the diffusion of innovation curve, innovators are the ______ category of consumers
First
Match the relative level of profitability with the stage of the product life cycle at which that level of profitability is typically observed: Growth --------------------Dropping Maturity------------------Low or Negative Decline---------Rapidly rising Introduction------- Peaking or beginning to decline
Growth-Rapidly Rising Maturity- Peaking or beg to decline Decline- Dropping Intro- Low Or Negative
Susan launched a brownie company and based on her market research she knew that she could sell three brownies for five dollars, but she decided to start seeing the brownies at a ________ in order to get customers to try the brownies
Introductory Price
Denise and Janet attend a large university in Texas. Denise asked for Janet's e-mail address, but Janet said she didn't have one. Janet would probably be considered a(n) ___________ in the diffusion of innovation process.
Laggards
Trade show
Outlet for exposing products to buyers
Diffusion of innovation: Early Majority
Represents approximately 34 percent of the population is crucial because few new products and services can be profitable until this large group buys them. If the group doesn't become large enough the product typically fails. Members of this group don't take as much risk and wait for the bugs to be fixed before buying the product
_______ _______ refers to taking apart a competitors product, analyzing it, and creating an improved product that does not infringe on the competitors patents
Reverse Engineering
Product Life cycle: Introduction
Sales Low, Profits Low Consumers: Innovators Competitors: One or Few
Product Life cycle: Decline
Sales: Declining Profits: Declining Consumers: Laggards Competitors: Low # of competitors and products
Product Life cycle: Maturity
Sales: Peak Profits: Peak to declining Consumers: Late Majority Competitors: High Number of competitors and products
Promotion for new products is required at each link in the _______
Supply chain
Alpha Testing
The firms first attempt to determine whether the product will perform according to its design and whether is satisfies the need for which it was intended
The 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.
If a concept test_________ customers expectations, it is doubtful it would succeed if it were to be produced and marketed
fails to meet
Test marketing
introduces the offering to a limited geographical area prior to a national launch. Mini product launch More expensive than premarket tests Market demand is estimated
Reverse engineering
involves taking apart a product, analyzing it, and creating an improved product that does not infringe on the competitors patents, if any exist.
Prototype
is the first physical form of a new product
what are some advantages experienced by pioneer firms over later entrants: 3 of them
1. More readily recognizable to consumers 2. More likely to command a greater market share over a longer period of time 3. Establish an early market share lead
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? 2 of them
1. Offering the complete menu planned for the full launch 2. Running the TV ads planned for the full launch
The Process by which the use of innovation, whether it be a product or service, is spread throughout a market group over time and over various categories of adopter is known as:
Diffusion of Innovation
________ of ________ is the process by which the use of innovation, whether a product or service, spreads throughout a market group over time and over various categories of adopters
Diffusion of Innovation
A Firms_______ _______ and _________ department consists of scientists who work to solve complex problems and develop new ideas
Internal Research and Development
Manufacturers encourage retailers to sell at a specified price known as the _________
MSRP
Not every product makes it through the life cycle to the last two stages of the PLC to reach ______ or decline
Maturity
Trade Promotions
Promotions to wholesalers or retailers to get them to purchase the new products. Often combine introductory price, special events, and personal selling
Pioneers
Radically change competition and consumer preferences. New to the world products that create new markets
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
________ deals with perception among consumers that a product is better than its substitutes
Relative Advantage
Product Life cycle: Growth
Sales: Rising Profits: Rapidly Rising Typical Consumers: Early adopters and early Majority Competitors: Few but increasing
Licensing typically occurs most frequently with products that are _____ and ______ have complex patents and copyrights
Scientific; technological
Diffusion of Innovation
The process by which the use of an innovation- whether a product, a service, or a process- spreads throughout a market group, overtime and across various categories of adopters
Product Life cycle
The stages that products move through as they enter get established in and ultimately leave the market place Intro>Growth>Maturity>Decline
The methods a marketing manager can use to measure the success of a new product include all of the following except:
Timing
Beta Testing
Uses potential consumers, who examine the product prototype in a real use setting to determine its functionality, performance, potential problems, and other issues specific to its use
During the introduction stage sales are_______ and there are ________ competitors
Very low; No
Diffusion of innovation
is the process by which the use of an innovation spreads throughout a market group, over time and over various categories of adopters.
Whenever a product has a _______ level of complexity, it will consequently be _______ to try.
low; easy
In _____ testing, the firm attempts to determine whether the product prototype will perform according to its design and whether it satisfies the need for which it was intended, by performing test in the R&D department
Alpha
When firms decide to develop products, it is typically a long process that is broken into______ stages
Six
It is usually easier to start our with a high MSRP and then overtime lowering it. T/F
True
________ is the process by which ideas are transformed into new products and services that will help firms grow
Innovation
A ______ allowance is a payment made by a manufacturer to get new products into stores or to gain more shelf space in retail stores for their products
Slotting
By the time the late majority enters the market, sales tend to _______ or even ________
Stabilize; Decrease
Concept testing can be as simple as a brief written description of the product that might also include:
1. Visual images 2. customer needs it satisfies
A post-launch review is conducted to determine if : 3 of them
1. changes to the marketing mix is needed 2. additional resources are needed 3. the launch was success or failure
Introductory Price Promotions
are limited duration, lower than normal prices
Identify the steps taken by firms who have products in the decline stage of the product life cycle: 2 of them
1. create a niche segment 2. completely exit the market
Key Characteristics of the maturity stage are: 2 of them
1. marketing costs increase 2. intense competition of price
The KEY characteristics of the growth stage of the product life cycle are:
1. rising sales 2. Profits rise 3. typical consumers are early adopters and early majority
During test Marketing, the potential elements of the marketing mix that may be used include: 2 of them
Advertising and coupons
Diffusion of innovation: Late Majority
Also at 34 percent of the market. These buyers enter the market when the product has achieved its full market potential. Example: Wait for the movie is on netflix
______ refers to a group session in which participants work together to generate new ideas
Brainstorming
What factors enhance the diffusion of a good or service?
Compatibility, Observability, Complexity and Trial-ability, Relative Advantage
During the Maturity phase firms defend their market share against ___________
Competitors
In _______ testing, a statement is presented to potential buyers to obtain their reactions
Concept
_________ testing is a written description of a product and its technology and is presented to potential buyers or users to obtain their reactions. Occurs very early in the new product introduction process, even before the real product has been made and its helps the firms to avoid the costs of unnecessary product development
Concept
If a firm produces a visual image of an imagined or projected product to bring an idea to life, this is an example of
Concept Testing
The Product Development Process
Idea Generation, Concept Testing, Product Development, Market Testing, Product Launch, Evaluation of Results
Lead Users
Innovative Product users who modify existing products according to their own own ideas to fit there specific needs
Tiffany always asks Samantha about beauty supply products. She considers her a well-informed friend who always knows the latest trends. For Tiffany, Samantha is a(n) ___________ in the diffusion of innovation curve.
Innovators
Products go through a number of stages in the PLC. The life cycle stage where a product begins the PLC this is known as the _________ stage
Introduction
Diffusion of innovation: Laggards
Makeup roughly 16 percent of the market. These consumers like to avoid change and rely on traditional products until they are no longer available.
Firms measure the success of a new product by its sales ________, customer acceptance and its satisfaction of the firms financial requirements
Performance
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
During Concept testing it is important to present a brief written description to _____ to obtain their reactions to the ideas presented
Potential buyers or users
Production Development or Product Design
Process of Balancing various engineering, manufacturing, marketing, and economic considerations to develop a products form and features or a services features.
Diffusion of innovation: Innovators
are those buyers who want to be the first on the block to have the new product or service; Buyers enjoy taking risks and are regarded as highly crucial for bring the other three buyer categories to the market
A good or service may pass through many stages as it establishes itself in the marketplace. Marketing managers refer to this as the ________ ______ cycle .
Product Life
Starbucks is an excellent example of how a firm can use its knowledge of a product characteristics to be successful. Match each statement about Starbucks to the product characteristic it represents: Relative Advantage ---- Starbucks is a simple product and quite easy to try Compatibility---- Starbucks has their distinct logo on each of there cups Observablilty---- Most would perceive that Starbucks is a superior form of coffee Complexity and trailabilty ---- Most Americans drink coffee each morning
Relative Advantage ---- Most would perceive that Starbucks is a superior form of coffee Compatibility --- Most Americans drink coffee each morning Observablilty---- Starbucks has their distinct logo on each of there cups Complexity and trailabilty ---- Starbucks is a simple product and quite easy to try
Diffusion of innovation: First Movers
The first to create the market of product category: Become readily recognizable to consumers and this establish a commanding and early market share lead.
Which of the following is a possible advantage for a firm that chooses to use brainstorming for its new products as opposed to other idea generation methods?
Through brainstorming those ideas or combination of ideas which receive the mosts votes are carried forward to the next stage
Market Testing: Premarket tests
are conducted by firms before they actually bring a product or service to market to determine how many customers will try and then continue to use the product or service according to a small group of potential consumers Customers exposed Customers surveyed Firm makes decision