Chapter 7 - Developing and Managing Offerings Flashcards
What are the 7 steps in the ‘New Offering Development Process’
- Idea Generation
- Idea Screening
- Feature Specification
- Development
- Testing
- Launch (Commercialization)
- Evaluation
What happens at the ‘Idea Generation’ Step in the ‘New Offering Development Process’
Basic idea created and described
What What happens at the ‘Idea Screening’ Step in the ‘New Offering Development Process’
Cost, profits, and potential sales of the offering are calculated at different price levels
What What happens at the ‘Feature Specification’ Step in the ‘New Offering Development Process’
- Detailed specification for the product are developed
- Featured and pricing are established
What What happens at the ‘Development’ Step in the ‘New Offering Development Process’
- The actual offering is designed
- Prototypes of it are developed
- Firm considers the product’s Manufacturing process
What What happens at the ‘Testing’ Step in the ‘New Offering Development Process’
The offering is tested, first in the lab and then with real customers
What What happens at the ‘Launch (Commercialization)’ Step in the ‘New Offering Development Process’
The offering is made available to customers
What happens at the ‘Evaluation’ Step in the ‘New Offering Development Process’
The offering is evaluated as to whether it is delivering the appropriate value to consumers, as well as meeting the firms business goals
As you move through the product development process, each step is usually more ____
expensive than the last
What is ‘Line Extension’?
Occurs when a company comes out with another model (related product) based on the same platform and brand as one of its other products
What are ‘Lead Users’?
Customers who are good at generating new product ideas or applications of products (Exist in consumer markets, too)
What are the 4 sources of new offering ideas
- Customers
- Employees
- Suppilers
- Competitors
What is ‘Concept Testing’?
Involves running the idea of the offering by potential consumers
What are ‘Focus Groups’?
Groups of eight to twelve consumers gather and react to the concept
What are ‘Depth Interviews’?
Individuals are presented with the concept and can react to it individually
What are the 2 types of risks?
- Investment Risk
- Opportunity Risk
What are ‘Investment Risks’
The possibility that the company will fail to earn the appropriate return on the money and effort it puts into the new product.
What are ‘Opportunity Risks’
The risk that there is a better idea that gets ignored because the firm has invested in the idea at hand
What is ‘Quality Function Deployment (QFD)’?
A process whereby a company begins with the customer’s desired benefits and then designs an offering that delivers those benefits
What are the types of testing that occur in the testing phase?
- Alpha Testing
- Beta Testing
What is ‘Alpha Testing’?
Ensures that the offering works like it’s supposed to in a variety of different environments that it meets its specifications
What is ‘Beta Testing’?
Actual customers make sure the offering works under real world conditions
In B2B settings, beta tests are usually conducted with ___ and ____
- Lead users
- Preferred customers
What are the 3 strategies companies may use at launch?
- Launch an offering to all of its markets at once
- Rolling Launch - The offering is made available to certain markets first and other markets later
- Market Test - Test the complete launch of a products marketing plan to ensure it reaches buyers, gets positive feedback and generates sales of the product or service
What are the 4 stages in the ‘Product Life Cycle’?
- Introduction
- Growth
- Maturity
- Decline
In which stage of the ‘Product Life Cycle’ are marketing costs are typically higher in this stage
Introduction phase
In which stage of the ‘Product Life Cycle’ are profits often low?
Introduction phase
What are the organizations objectives during the introduction phase?
- Educating potential customers about its value and benefits
- Creating awareness, and getting potential customers to try the product or service
What are the 2 strategies widely used in the introduction stage?
- Penetration Pricing Strategy
- Skimming Pricing Strategy
What is the ‘Penetration Pricing Strategy’
involves using a low initial price to encourage many customers to try a product.
What is the ‘Skimming Pricing Strategy’
Involves setting a high initial price for a product, to more quickly recoup the investment related to its development and marketing
What is the growth stage characterized by?
- Increasing sales
- More competitors
- Higher profits
In which stage of the ‘Product Life Cycle’ are competitors attracted to the market?
Growth phase
In which stage of the ‘Product Life Cycle’ does the products cost remain high?
Growth phase
Sometimes companies increase their promotional spending during the growth phase.
What do they focus on?
The specific benefits the product offers and its value relative to competitive offerings
