03 - NPD & PLC

Question 1

Types of Innovations (3)

Answer 1

1) Continuous innovation
2) Dynamically continuous
3) Discontinuous innovation

Question 2

Definition: Continuous innovation

Answer 2

Involves the slight modification of an existing product

Question 3

Definition: Dynamically Continuous

Answer 3

Changing the product so that using it requires a moderate amount of learning.

Question 4

Definition: Discontinuous Innovation

Answer 4

Developing a new product that creates major changes in how we do a task.

Question 5

Types of Adopters (5)

Answer 5

1) Innovators
2) Early adopters
3) Early mainstream
4) Late mainstream
5) Lagging adopters

Question 6

Definition: Innovators

Answer 6

Will buy the product earlier than anyone else and buy it for intrinsic reasons or the so-called “feel-good factor”.

Question 7

Definition: Early adopters

Answer 7

Desire the product before anybody else has it, as they want to be the trend setters.

Question 8

Definition: Early mainstream

Answer 8

As products have now become cheaper, this group also purchases them. Also defined as the point in time that the product is now profitable.

Question 9

Definition: Late mainstream

Answer 9

Now prices have bottomed out and the technology has become standard. Almost everyone has it at this point.

Question 10

Definition: Lagging adopters

Answer 10

Will buy the product with close to 0% interest in buying due to their “if it aint broke don’t fix it” mentality.

Question 11

Factors to enhance new product adoption (5)

Answer 11

1) Relative Advantage
2) Divisibility
3) Compatibility
4) Complexity
5) Timing + Communication

Question 12

Definition: NPD

Answer 12

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.

Question 13

NPD Stages (8)

Answer 13

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

Question 14

PLC Stages (5)

Answer 14

1) Product Development
2) Introduction
3) Growth
4) Maturity
5) Decline

Question 15

Definition: PLC

Answer 15

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.

Question 16

Idea Generation (Internal) (2)

Answer 16

1) R&D

2) Employee recommendations

Question 17

Idea Generation (External) (6)

Answer 17

1) customers
2) competitors
3) Supply chain employees
4) Product consultants
5) Acquisition of other businesses.
6) Crowdsourcing

Question 18

Idea Screening No Go’s (5)

Answer 18

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.

Question 19

Idea Screening Go’s (4)

Answer 19

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.

Question 20

Definition: Marketing strategy statement (3)

Answer 20

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.

Question 21

Definition: Product testing

Answer 21

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.

Question 22

Pros and cons of test marketing

Answer 22

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.

Question 23

Definition: Commercialization of the Idea/Product

Answer 23

Introducing a new product into the market taking timing and place into consideration.

Question 24

Definition: Sunk Costs

Answer 24

Costs that have been invested in the product that usually accumulate during the introduction and product development due to marketing and initial production expenses.

Question 25

Examples of Extension strategies

Answer 25

• Relaunch
• Repackage
• Special Editions/Limited Editions

Question 26

Definition: Extension strategies

Answer 26

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.