Ch.9 Flashcards
Innovation is the engine that drives growth (T/F)
True
- enhances product mix
benefits of developing new products
- expensive
- creates risk of market failure
disadvantages of developing new products
original products, product improvements, product modifications, and new brands that the firm develops through its own product development
new products development
- idea generation
- idea screening
- concept development and testing
- marketing strategy development
- business analysis
- product development
- test marketing
- commercialization
stages in new product development
the systematic search for new product ideas (sources are both internal and external)
idea generation
company’s own formal research and development, management and staff, and intrapreneurial programs
internal sources
sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms
external sources
inviting broad communities of people
crowd sourcing
first filter in the product development process, which eliminates ideas that are inconsistent with the organization’s new product strategy or are inappropriate for some other reason
idea screening
a test with consumers to evaluate a new product concept usually before any prototype has been created
concept test
expresses the key idea in the concept
headline
expresses the target consumer’s unmet need
accepted consumer belief (ACB)
the concept’s promise that answers the target consumer’s question: What’s in it for me?
benefit
the portion of the concept that gives credibility to the product promise
reason to believe (RTB)
assess how the new product will fit into the firm’s total product mix, evaluate whether the product can be profitable contribution for the organizations product mix
business analysis
involves the creation and testing of one or more physical versions by the R&D or engineering departments
product development
try out the complete marketing plan (4P’s) in a small geographic area that is similar to larger target market
market testing
- no discernible benefits
- poor match between features and customer desire
- overestimation of market size
- price too high or too low
- incorrect positioning
- poor promotion
-inadequate distribution - inferior product
reasons why new products fail
explains how features change over the life of a product (must change and evolve as product moves through the PLC)
concept that seeks to describe a product’s sales, competitors, customers, and marketing emphasis from its beginning until it is removed from the market
product life cycle (PLC)
- Introduction
- Growth
- Maturity
- Decline
product life cycle stages
- full scale launch of new product into marketplace
- sales are low, high failure rate
- little competition
- limited distribution
- high marketing and product costs
introduction
- sales grow at an increasing rate
- many competitors enter the market
- large companies may acquire small pioneering firms
- profits are healthy
- promotion emphasizes brand advertising and comparative ads
- wider distribution
growth
- sales continue to increase but at a decreasing rate
- marketplace is approaching saturation
- product lines are often extended
- marginal competitors drop out
- increased promotion and R&D
- prices and profits fall
maturity
