Chapter 10 Flashcards
Four Major Cycles of “Product Life Cycle”
Marketing Introduction
Market Growth
Market Maturity
Sales Decline
describes the stages a really new product idea goes through from beginning to end
A concept that provides a way to trace the stages of a product’s acceptance, from its introduction (birth) to its decline (death).
Product Life Cycle
the stage where the sales are low as a new idea is first introduced to a market
High failure rates
Little competition
Frequent product modification
Limited distribution
High marketing and production cost
Negative profits with slow sales increases
Promotion focuses on awareness and information
Communication challenge is to stimulate primary demand
Market introduction stage
the stage when industry sales grow fast-but industry profits rise and then start falling
Increasing rate of sales Entrance of of competitors Market consolidation Initial healthy profits Aggressive advertising of the differences between brands Wider distribution
Market growth stage
the stage when industry sales level off and competition get tougher
Sales increase at a decreasing rate Saturated markets Annual models appear Lengthened product lines Service and repair assume important roles Heavy promotions to consumers and dealers Marginal competitors drop out Niche marketers emerge
Market maturity stage
the stage when new products replace the old
Long-run drop in sales
Large inventories of unit items
Elimination of all nonessential marketing expenses
“Organized abandonment”
Sales decline stage
the currently accepted or popular style
Fashion
is an idea that is fashionable only to certain groups who are enthusiastic about it
Fad
something new in any way for the company concerned
New product
the federal government agency that polices antimonopoly laws. Also, a firm can call its product new for only six months.
Federal Trade Commission (FTC)
New-Product Development Process 5 steps:
Idea generation Screening Idea evaluation Development Commercialization
Ideas from: Customers and users Marketing research Competitors Other markets Company people etc.
Idea generation
S.W.O.T Rough ROI (return on investment) estimate
the 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.
Screening
Concept testing
Reaction from customers
Rough estimates of cost, sales, and profits
Idea evaluation
R&D Develop model or service prototype Test marketing mix Revise plans as needed ROI estimate
Development
Finalize product and marketing plan
Start product and marketing “Roll out” in select markets
Final ROI estimate
Ordering Materials Production Inventory Buildup Distribution Shipments Sales Force Training Trade Announcements Customer Advertising
Commercialization
it set up Consumer Product Safety Commission to encourage safety in product design and better quality control
Consumer Product Safety Act (1972)
the legal obligation of sellers to pay damages to individuals who are injured by defective or unsafe products
Product liability
getting reactions from customers about how well a new-product idea fits their needs
a test to evaluate a new-product idea, usually before any prototype has been created. Often successful for line extensions.
Concept testing
manage specific products- often taking over the jobs formerly handled by an advertising manager
Product managers/Brand managers
the philosophy that everyone in the organization is concerned about quality, throughout all of the firm’s activities, to better serve customer needs
Total quality management (TQM)
a commitment to constantly make things better one step at a time
Continuous improvement
a graph that shows the number of times a problem cause occurs, with a problem cause ordered from moth frequent to least frequent
Pareto Chart
a visual aid that helps organize cause-and-effect relationships for “things gone wrong”
Fishbone chart
