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MARK 201 > Chapter 8 > Flashcards

Chapter 8 Flashcards

1
Q

How do you get new products?

A

you can:
Develop new products (or brand) through firm’s own research & development effort
Acquire a company, a patent or a license
Improve a product
Modify a product

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2
Q

What are the advantages and disadvantages of developing a new product through R&D?

A

Advantage:
new solutions & variety to customer’s lives
key source of growth for companies
Disadvantage:
innovation can be very expensive & very risky

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3
Q

What is required to create successful new products?

A

Understanding consumers, markets and competitors
Developing products that deliver superior value to customers

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4
Q

Why do so many products fail? Name 3 reasons

A

overestimates market size
product:
poorly designed
incorrectly positioned
launched at the wrong time
priced too high
poorly advertised
cost to develop higher than expected
competitors fight harder than expected

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5
Q

What are the major stages in new product development?

A
  1. Idea generation
  2. Idea screening
  3. Concept development and testing
  4. Marketing strategy development
  5. Business analysis
  6. Product development
  7. Test marketing
  8. Commercialization
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6
Q

What is Idea Generation?

A

Systematic search for new product ideas

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7
Q

What are the major sources of new product ideas?

A

Internal sources: internal social networks & intrapreneurial programs (employees develop new product ideas) and external sources (distributors and suppliers, competitors, customers, and others (trade magazines, marketing research firms, shows, websites, seminars, government agencies, advertising agencies, university & commercial laboratories, inventors))

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8
Q

How can distributors contribute to ideas?

A

They are close to the market & can pass along info about consumer problems & new product possibilities

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9
Q

How can suppliers contribute to ideas?

A

They can tell the company about new concepts, techniques and materials that can be used to develop new products. ex: ikea’s supplier

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10
Q

How can competitors contribute to ideas?

A

Companies watch competitors’ ads to get clues about their new products. They buy competing new products, take them apart to see how they work, analyze their sales & decide whether they should bring out a new product of their own

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11
Q

How can customers contribute to ideas?

A

Companies can analyze customer questions and complaints to find new products that better solve consumer problems. Or it can invite customers to share suggestions and ideas.

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12
Q

What is crowdsourcing?

A

It’s the concept where companies invite communities of people (customers, employees, independent scientists and researchers, and the public at large) into the innovation process

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13
Q

What is Idea screening?

A

Screening new product ideas to spot good ones and drop poor ones ASAP.

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14
Q

What are the different ways to screen new ideas?

A

New idea write-up reviewed by a committee

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15
Q

What is an idea write-up?

A

Describes the product, value proposition, target market, competition
Estimates market size, product price, development time and costs, manufacturing costs, and rate of return

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16
Q

Describe the R-W-W framework.

A

R-W-W = Real, win, worth doing
R- is it real? Is there a real need and desire for the product and will customers buy it? is there a clear product concept and will such a product satisfy the market?
W- Can we win? Does the product offer a sustainable competitive advantage? Does the company have the resources to make such a product a success?
W- is it worth doing? Does the product fit the company’s overall growth strategy? is there profit potential?
THE COMPANY SHOULD BE ABLE TO ANSWER YES TO ALL THREE RWW QUESTIONS BEFORE DEVELOPING THE NEW PRODUCT IDEA FURTHER.

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17
Q

What is Concept development and testing?

A

An attractive idea must be developed into a product concept.
Product idea - idea for a possible product that the company can see itself offering to the market
Product concept - detailed version of the new product idea stated in meaningful consumer terms
Product image - way consumers perceive an actual or potential product.

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18
Q

What is concept testing?

A

Calls for testing new product concepts with groups of target consumers.
A more concrete and physical presentation of the concept will increase the reliability of the concept test.

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19
Q

What are the 3 parts of the Marketing strategy statement?

A

1- Describes the target market, planned value proposition, sales, market-share, and profit goals
2- Determines product’s planned price, distribution, and marketing budget
3- Develops long-run sales, profit goals and marketing mix strategy

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20
Q

What is the Business analysis?

A

Review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives

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21
Q

What is product development?

A

Developing the product concept into a physical product to ensure that the product idea cxan be turned into a workable market offering.

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22
Q

What is test marketing?

A

The stage at which the product and its proposed marketing program are introduced into realistic market settings.
Gives the marketer an experience with marketing a product before full introduction.
Tests the product and its marketing program.
Testing takes time, and costs can be high.

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23
Q

What are the alternatives to standard test markets, and why use them?

A

Because standard test markets are extensive and costly.
- Controlled test markets, where new products and tactics are tested among controlled panels of shoppers and stores.
- Simulated test markets, researchers measure consumer responses to new products and marketing tactics in laboratory stores or simulated online shopping environments.

24
Q

Do all companies do test marketing?

A

No! some companies skip test marketing to take advantage of fast-changing market developments.
ex: Starbucks quickly introducing less-than-perfect mobile payments app, then working out the flaws

25
Q

What is Commercialization?

A

Introducing the new product into the market

26
Q

What are the considerations for launching a new product?

A

When to launch
- will it eat into the sales of other company products? then delay
- can the product be improved further/is the economy down? wait another year to launch it
- are competitors ready to introduce their own competing products? introduce yours sooner
Where to launch
- single location, region, national market, or international market.

27
Q

What does managing a new product development require?

A

A holistic approach:
- customer-centered new product development
- team-based new product development
- systematic new product development

28
Q

What does Customer-centered new product development focus on?

A

Finding new ways to solve customer problems
Creating more customer-satisfying experiences
Can have positive effect on the return on assets and the growth in operation income of firms that did not

29
Q

What is the effect the customer involvement has on new product development process and product success?

A

Positive

30
Q

What is customer-centered new product development?

A

Focus on finding new ways to solve customer problems and create more customer-satisfying experiences

31
Q

What is team-based new product development?

A

Various company departments work together, overlapping the steps in the product development process

32
Q

What is systematic new product development?

A

Innovation management systems collect, review, evaluate, and manage new product ideas

33
Q

What does a team-based and systematic new product development approach mean for a company?

A

Company departments work closely together in cross-functional teams, overlapping the steps in the product development process to save time and increase effectiveness.

34
Q

New product development process:

A

Finally, the new product development process should be holistic and systematic rather than compartmentalized and haphazard. Otherwise, few new ideas will surface, and many good ideas will sputter and die. To avoid these problems, a company can install an innovation management system to collect, review, evaluate, and manage new product ideas. The innovation management system approach yields two favorable outcomes. First, it helps create an innovation-oriented company culture. Second, it will yield a larger number of new product ideas, among which will be found some especially good ones. The good new ideas will be more systematically developed, producing more new product successes.

35
Q

What is the first stage of the Product life cycle?

A

The product development stage. It begins when a company finds and develops a new product idea. During this time, sales are zero, and the company’s investment costs mount.

36
Q

What is the second stage of the PLC?

A

The introduction stage is where sales grow slowly as the product is introduced to the market. Profits are nonexistent at this stage because of the heavy expenses of product introduction.

37
Q

What is the third stage of the PLC?

A

Growth: period of rapid market acceptance and increasing profits.

38
Q

What is the fourth stage of the PLC?

A

Maturity: a slowdown in sales growth because the products have achieved acceptance by most potential buyers. Profit levels off or decline because of increased marketing outlays to defend the product against the competition.

39
Q

What is the fifth stage of the PLC?

A

Decline: The period when sales fall off and profits drop.

40
Q

Do all products follow all 5 stages of the PLC?

A

No, some are introduced and die quickly: others stay in the maturer stage for a long long time. Some enter the decline stage and are then cycled back into the growth stage through strong promotion or repositioning.

41
Q

What is the difference between Product Class, Product Form and Product Brand?

A

Using the Laundry detergent example, a Product Class would be the laundry detergent, Product Form would be powder, liquid or pods, and product brand is Tide, Gain, etc.

42
Q

Which of the following has the longest life cycle and why? Product class, product form, or product brand.

A

Product Class: the sales stay in the mature stage for a very long time.
Product Forms pass through a regular PLC.
Product Brand’s life cycle can quickly change because of changing competitive attacks and responses.

43
Q

What is a style and what is its life cycle?

A

Basic and distinctive mode of expression. (ex: formal vs casual clothing)
A style may last for generations, passing in and out of vogue.
A style has a cycle showing several periods of renewed interest.

44
Q

What is a fashion and what is its life cycle?

A

It is a currently accepted or popular style in a given field. Ex: business attire or business casual.
Fashions tend to grow slowly, remain popular for a while, andd then decline slowly

45
Q

What is a fad and what is its life cycle?

A

Fads are temporary periods of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity. A fad may be part of an otherwise normal life cycle or comprise a brand or product’s entire life cycle.

46
Q

What are some of the problems with the PLC framework?

A

It cannot be used to forecast the sales level at each product stage, the length of each stage, and the shape of the PLC curve.
It cannot be used to develop marketing strategies bc strategies can be both a cause or a result of the PLC.
It cannot be used to blindly push product through the traditional PLC.

47
Q

Moral of PLC

A

Companies must:
continually innovate
develop new products that bring new value to customers
manage PLC’S for future success
Systematically reinvent products to keep them in a perpetual growth stage and not letting them reach the maturity/decline

48
Q

What must be done during the introduction stage of the PLC, especially if you are the market pioneer?

A

A Launch strategy that is consistent with the intended product positioning.

It should realize that the initial strategy is just the first step in a grander marketing plan for the product’s entire life cycle.

If the pioneer chooses its launch strategy to make a “killing,” it may be sacrificing long-run revenue for the sake of short-run gain.

The pioneer has the best chance of building and retaining market leadership if it plays its cards correctly from the start.

49
Q

How does a company capture a dominant position in the Growth stage?

A

In the growth stage, the firm faces a trade-off between high market share and high current profit. By spending a lot of money on product improvement, promotion, and distribution, the company can capture a dominant position. In doing so, however, it gives up maximum current profit, which it hopes to make up in the next stage.

50
Q

Which stage is the longest one?

A

The maturity stage.

51
Q

What are some of the reasons why sales decline (esp. in the decline stage)?

A

Technological advances
A shift in consumer tastes
Increased competition

52
Q

What are the costs of carrying a weak product?

A

Takes up too much of mgmt’s time.
Requests frequent price and inventory adjustments.
Requires advertising and sales-force attention that might be use to make “healthy” products more profitable
Product’S failing reputation can cause customer concerns about other products and the company itself

53
Q

What are the 3 options management can choose from when a product is declining?

A

Maintaining, harvesting, or dropping the product

54
Q

What does Maintaining the brand in the decline stage entail?

A

Repositioning or reinvigorating the brand in hope of moving back into the growth stage.

55
Q

What does harvesting the product mean?

A

Reducing various costs hoping sales will hold up
ex: R&D, advertising, maintenance, sales force, etc.
IF successful, it will increase the profits in the short run.

56
Q

What does dropping a product entail?

A

Company can sell the product to another firm or simply liquidate it at salvage value.

MARK 201 (16 decks)

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