Chap 10 develop new products and service Flashcards
Product Line
a group of products that are closely related as they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range.
Product Mix
the number of product lines offered by a company.
two ways to classify the products
i. type of users
ii. degree of tangibility
two types of users
customer goods and business goods
degree of tangibility in terms of product classification
i. durable goods
ii. services
4 types of customer goods
i,. convenience goods
ii. shopping goods
iii. specialty goods
vi. unsought goods
def. convenience goods
the goods purchased frequently with minimum shopping effort.
def. shopping goods
Consumers compare several alternatives on criteria such proce, quality or style.
def. specialty goods
Specialty goods are items for which the consumer makes a special effort to obtain.
def. unsought goods
those products which the consumer either does not know about; or knows about them and does not initially want to have them
what is the difference between production goods and support goods?
Production Goods: Items used in the manufacturing process that become a part of the final product.
Support Good:
Items purchased and used to assist in the production of the final product.
three uses of support goods
Installations (e.g., Buildings, Fixed equipments; Capital intensive; Price by Competitive Bidding
Accessory Equipment (e.g., Tools and Office Equipment; purchased from distributors)
Supplies (e.g., Frequently bought with minimum efforts)
Services to assist buyers.
Explain the difference between product mix and product line.
A product line is a group of products that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same type of outlets, or fall within a given price range. Each product line has its own marketing strategy, whereas a product mix is a number of product lines offered by a company.
To which type of good (business or consumer) does the term derived demand generally apply?
Derived demand generally applies to an organizational or business good.
how to define the newness of a new product? 4 aspects
- Newness Compared with Existing Products
- Newness in Legal Terms – 12 months
- Newness from the Company’s Perspective
- Newness from the Consumer’s Perspective (must involving substantive learning by the consumer)
the three levels of newness for a company
in three levels: Brand Extension (Min Risk); significant innovation; revolutionary product.
the three levels of newness for a customer:
- Continuous innovation: No new behavious must be learned
- Dynamically continuous innovation: Minor behavious are learned
- Discontinuous innovation: Entirely new behavious must be learned
what is the market emphasis on continuous innovation?
generate awareness among consumers and obtain widespread distribution
what is the market emphasis on dynamically continuous innovation?
advertising benefits to consumers , highlight point of differentiation and consumer advantages
what is the market emphasis on dynamically discontinuous innovation?
educate consumers through product trial and personal selling
what are 7 categories of new services
- Major service innovations
- Major process innovations
- Service-line extensions
- Process-line extensions
- Supplementary-service innovations
- Basic service improvements
- Style changes
ex. . Major service innovations
radically new services & processes
ex. Major process innovations
Major process change to deliver service in a new way (online services)
ex. Service-line extensions
: Service extensions by banks in offering insurance to their customers
ex. Process-line extensions
a more improved process for more convenience, less time, higher value
ex. Supplementary-service innovations
Offering additional services – Fedex or Costco offering Internet
Basic service improvements
Offering additional services – Fedex or Costco offering Internet
Style changes
Simplest type of change – Changing styles – e.g., uniforms, colour schemes, etc
6 Marketing Reasons for New-Product Failures
Insignificant “point of difference”
Incomplete market and product definitions
Too little market-attractiveness
Poor execution of the marketing mix
Poor product quality on critical factors
Bad timing
No economical access to buyers
what is the protocol of a market and product definitions?
- A well defined target, 2. Specific customer needs, wants and preferences and 3. What the product will be and do
what are the 7 steps in a new-product process
- new-product strategy development
- idea generation
- screening and evaluation
- business analysis
- development
- marketing testing
- commercialization
function at step 1 new-product strategy development
defining the role for a new product in terms of the firm’s overall corporate objectives
objectives at step 1 new-product strategy development
Identify Markets and Strategic Roles:
Types of innovation, Time Horizon, budget, the role of the new product, its fit and contributions, etc.
Cross-Functional Teams
def. six sigma
A measure to delight the customer by achieving quality through highly disciplined process that is focused on developing and delivering near-perfect product and services
What are main sources of new-product ideas?
(1) Customer and supplier suggestions, (2) Employee and co-worker, (3) Research and development breakthroughs, and (4) Competitive products
What is the difference between internal and external screening and evaluation approaches used by a firm in the new-product process?
Internal approach means the firm evaluates the technical feasibility of the proposal and whether the idea meets the objectives defined in the new-product strategy development step. This is all done “in house.” External evaluations of concept tests consist of preliminary testing of the new-product idea (rather than the actual product) with consumers.
function in the second stage of new-product process
Idea generation involves developing a pool of concepts that are candidates to become new products.
function in the third stage of new-product process
Screening and evaluation involves internal and external evaluations of the new product ideas to eliminate ideas that do not warrant further effort
what is internal approach in stage 3
Internal Approach: Evaluate if the new idea matches corporate objectives and it is feasible (technically, technologically, $, Time, etc.).
what is external approach in stage 3
Concept Tests: written descriptions for potential customers to ask a lot of questions and generate a lot of feedback in:
On line
Simulated labs
Limited tests
function in the 4th stage of new-product process
: Business Analysis involves specifying the features of the product and the marketing strategy needed to commercialize it and making necessary financial projections.
function in the 5th stage of new-product process
Development. The Product ideas that survive proceed to actual development which turns the idea on paper into a prototype
function in the 6th stage of new-product process
: Market Testing involves exposing actual products to prospective consumers under realistic purchase conditions to see if they will buy.
what is a simulated test marketing
limited sale: asking potential customers to evaluate against competitors
STM
simulated test marketing
function in the 7th stage of new-product process
Commercialization involves positioning and launching the new product in full-scale production and sales.
Retailers are now requiring two fees (ask manufacturers to pay) for featuring new products:
what are they?
Slotting fees and fallure fees
slotting fees
a payment required of manufacturers to place a new item on a shelf
failure fees
a penalty payment by manufacturers to compensate the retailer for sales its valuable shelf space never made.
How does the development stage of the new-product process involve testing the product inside and outside the firm?
(1) Conducting lab tests and (2) Consumer tests
What is a test market?
Market testing is the exposing of actual products to prospective consumers under realistic purchase conditions to see if they will buy.
What is the commercialization of a new product?
It is positioning and launching a new product in full-scale and sales.
def. a product
A good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received in exchanges for money or some other unit of value
Consumer Goods
Products purchased by the ultimate consumer.
Business Goods
Products that assist directly or indirectly in providing products for resale.
Support Goods
Items used to assist in producing other goods and services.
Production Goods
Items used in the manufacturing process that become part of the final product.
