Chapter 11: Developing and Managing Products Flashcards
What is the Importance of New Products
New products sustain growth, increase revenue and profits, replace old items, and meet ever-changing new consumer wants.
- Updated, made with new technology
Define Categories of New Products
The degree of newness even for the same product varies from one market to the other from one company to the next
Define New to the World as a Category of New Products
Discontinuous, innovative, creation of entirely new market
Define New Product Lines as a Category of New Products
Not previously offered by the fir, and allows a firm to enter an established market
Define Additions to Product Lines
Products to supplement existing product lines, and capitalize on brand equity
Define Improvements or Revisions to Existing Products
New and improved, significantly or slightly changed in some way.
Could even be package improvement
Define Repositioned Products
Existing products targeted at new markets or new segments
Define Lower-Priced Products
Providing performance similar to competing brands at a lower price
Define New Product Development Process
Long Term commitment, company-specific, approach capitalize on Experience, and Establish the Environment
Define New-Product Strategy from the New Product Development Process
Companies with success new-product introduction programs derive a substantial percentage of their total sales from new-product introductions. These companies tend to have tens of new-product ideas at various stages of development at the same times as they realize that very few of their ideas will be successful in the market
Define Idea Screening
The elimination of ideas that are inconsistent with the organization’s new product strategy
What does good screening require
Clear understanding of what their business is all about, and the understanding of business objectives
Define Business Analysis (Stage 2 of screening)
Demand, Costs, Sales, and Profitability
- At the end of this stage, management should have a good understanding of the products market potential
Define Test Marketing
Test marketing allows management to evaluate alternative strategies and to assess how well the various aspects of the marketing mix fit together. The locations chosen as test sites should reflect market conditions in the new product’s projected market area. When selecting test market cities, researchers should therefore find locations where the demographics and purchasing habits mirror the overall market
Define Commercialization
The decision to market the product
Product Characteristics
- Complexity
- Compatibility
- Relative Advantage
- Observability
- Trial Ability
Define the Product Life Cycle (PLC)
A concept can be used to analyze a brand, a product form, or concept category. A tool to help marketers forecast future events and suggest appropriate strategies
Define Stage 1 of PLC: Introductory Stage
High failure rate, little competition, frequent product modifications, limited distribution, costs (marketing and product are high), sales are increase slow, promotion focuses on product awareness and information (primary demand)
Define Stage 2 of PLC: Growth Stage
Sales are growing at an increasing rate, competition intensifies, profits rise rapidly, peak and fall off, promotion is aggressive brand advertising and communication of key differences, distribution is a major key to success
Define Stage 3 of PLC (Maturity Stage)
This stage tends to be the longest stage of the cycle. Sales increase at a decreasing rate, market saturation, profits fall, product modifications and product lines extended, service is key for differentiation, prices fall (price competition), promotion- consumer’s promotion investment to maintain market share
Define Stage 4 of PLC: Declining Stage
Sales are significant, and long decline, depending on how rapidly consumer tastes change, and requires a determined strategy
Define Stage 5 of PLC: Implications
PLC encourages marketers to plan versus react, useful for predicting or forecasting
