3.3.4 (PLC influences) Making marketing decisions: using the marketing mix

Question 1

Outline the stages of new product development.

Answer 1

Generation of ideas.
Analysis of ideas.
Product development.
Test marketing.
Launch.

Question 2

Define product development.

Answer 2

When a firm creates a new or improved good or service, for release into an existing market.

Question 3

Outline how technology influences new product development.

Answer 3

Can allow new products to be developed that are considered superior to existing products.

Can lead to the development of new products that can fulfil consumer needs that previously couldn’t be.

Can bring products into a wider market.

Production and process technology has advanced considerable - produce goods and services that are more advanced and cost-effective.

Allows companies to be aware of any changes in consumer wishes - achieved through loyalty cards and monitoring of sales records.

Question 4

Outline how competitors actions can influence new product development.

Answer 4

Introduction of a competitors new product can take away the businesses market share. Elicits a counter product in order to match competitors.

Competitor products can give ideas to a business for new products.

Changes in consumer tastes can be detected through competitors.

Question 5

Outline how the entrepreneurial skills of managers and owners can influence new product development.

Answer 5

If gap in the market is identified, the business can gain ‘first mover’ advantage.

Organisations try to encourage and reward managers who come up with innovating ideas - suggestion boxes, kaizen groups etc.

Some new products arise from research and development. Many organisations devote considerable resources to the investigation of new products - especially pharmaceuticals, engineering etc.

Question 6

Outline how other factors can influence new product development.

Answer 6

Market research enables organisations to identify potential new products or services than can meet consumer needs.

Ideas from other countries.

Personal experience: some products arise from personal experience.

Environmental awareness.

Question 7

Define penetration pricing.

Answer 7

A strategy in which low prices are set to break into a market or to achieve a sudden increase in market share.