03 - NPD & PLC Flashcards
Types of Innovations (3)
1) Continuous innovation
2) Dynamically continuous
3) Discontinuous innovation
Definition: Continuous innovation
Involves the slight modification of an existing product
Definition: Dynamically Continuous
Changing the product so that using it requires a moderate amount of learning.
Definition: Discontinuous Innovation
Developing a new product that creates major changes in how we do a task.
Types of Adopters (5)
1) Innovators
2) Early adopters
3) Early mainstream
4) Late mainstream
5) Lagging adopters
Definition: Innovators
Will buy the product earlier than anyone else and buy it for intrinsic reasons or the so-called “feel-good factor”.
Definition: Early adopters
Desire the product before anybody else has it, as they want to be the trend setters.
Definition: Early mainstream
As products have now become cheaper, this group also purchases them. Also defined as the point in time that the product is now profitable.
Definition: Late mainstream
Now prices have bottomed out and the technology has become standard. Almost everyone has it at this point.
Definition: Lagging adopters
Will buy the product with close to 0% interest in buying due to their “if it aint broke don’t fix it” mentality.
Factors to enhance new product adoption (5)
1) Relative Advantage
2) Divisibility
3) Compatibility
4) Complexity
5) Timing + Communication
Definition: NPD
NPD is a company-internal tool, plotting the number of product ideas over time that is classed as forecasted data (meaning it is predictable), highlighting the different stages involved in developing a new product.
NPD Stages (8)
1) Idea Generation
2) Idea Screening
3) Concept Development & Testing
4) Marketing Strategy Development
5) Business Analyses
6) Product Development
7) Test Marketing
8) Commercialization
PLC Stages (5)
1) Product Development
2) Introduction
3) Growth
4) Maturity
5) Decline
Definition: PLC
A historical tool that plots the sales of a product over a given time, divided into 4 different stages. Important to note that due to the historical aspect, the business can never predict the curve of the graph.
Idea Generation (Internal) (2)
1) R&D
2) Employee recommendations
Idea Generation (External) (6)
1) customers
2) competitors
3) Supply chain employees
4) Product consultants
5) Acquisition of other businesses.
6) Crowdsourcing
Idea Screening No Go’s (5)
The new product idea should not be:
1) Inconsistent with company offerings
2) Cost prohibitive to produce
3) Difficult to explain and for consumers to understand
4) Be a money loser in the long run
5) Just plain bad/stupid.
Idea Screening Go’s (4)
A new product idea should be:
1) Consistent with the company offerings
2) Cost effective
3) Simple to explain and for consumers to understand.
4) Be profitable in the long run.
Definition: Marketing strategy statement (3)
1) Should describe the target market, planned value proposition, sales, market-share and profit goals for the first few years.
2) Outlines planned product price, distribution and marketing budget for the first year.
3) Describes the planed long-run sales, profit goals and marketing mix strategy.
Definition: Product testing
Product testing involves presenting the concepts to consumers symbolically, physically or with a word or picture description whilst asking the customers about their reactions to the concepts.
Pros and cons of test marketing
Pros:
- Gather intelligence on market conditions
- Problems can be unearthed and corrected
Cons:
- High costs
- Possibility of competitors copying you or even improving on your test product.
Definition: Commercialization of the Idea/Product
Introducing a new product into the market taking timing and place into consideration.
Definition: Sunk Costs
Costs that have been invested in the product that usually accumulate during the introduction and product development due to marketing and initial production expenses.
Examples of Extension strategies
- Relaunch
- Repackage
- Special Editions/Limited Editions
Definition: Extension strategies
Usually considered at the maturity stage of the PLC where the product is close to dying out and something is needed to “revive” the product for a short period of time.
