Chapter 8 Flashcards
Product
Anything that is of value to a consumer and can be offered through a marketing exchange
Innovation
The process by which ideas are transformed into new products and services that will help firms grow
Diffusion of innovation
The process by which the use of an innovation, whether a product or a service, spreads throughout a market group over time and over various categories of adopters
Pioneers
New product introductions that establish a completely new market or radically change both the rules of competition and consumer preferences in a market; also called breakthroughs
Disruptive innovations
New product introductions that are simpler, less sophisticated, and usually less expensive than existing products or services
First movers
Product pioneers that are the first to create a market or product category, making them readily recognizable to consumers and thus establishing a commanding and early market share lead
Innovators
Those buyers who want to be the first to have the new product or service
Early adapters
The 2nd group of consumers in the diffusion of innovation model, after innovators, to use a product or service innovation; generally don’t like to take as much risk as innovators
Early majority
A group of consumers who don’t like to take much risk and therefore rend to wait until bugs are worked out
Late majority
The last group of buyers to enter a new product market
Laggards
Consumers who like to avoid change and rely on traditional products until they are no longer available
The Product Development Process
1) Idea Generation
2) Concept Testing
3) Product Development
4) Market Testing
5) Product Launch
6) Evaluation of Results
Factors Affecting Product Diffusion Speed
- relative advantage
- compatibility
- observability
- complexity and trialability
Reverse Engineering
Involves taking apart a competitors product, analyzing it, and creating an improved product that does not infringe on the competitors’s patents, if any exist
Lead users
Innovative product users who modify existing products according to their own ideas to suit their specific needs
Concepts
Brief written descriptions of a product/service; its technology, working principles and forms, and what customer needs it would satisfy
Concept Testing
The process in which a concept statement that describes a product or a service is presented to potential buyers or users to obtain their reactions
Product Development
Entails a process of balancing various engineering, manufacturing, marketing and economic considerations to develop a product
Prototype
The 1st physical form or service description of a new product, still in rough or tentative form, that has the same properties as a new product but is produced through different manufacturing processes, sometimes even crafted individually
Alpha Testing
An attempt bu the firm to determine whether a product will perform according to its design and whether it satisfies the need for which it was intended; occurs in the firm’s R&D department
Beta Testing
Having potential consumers examine a product prototype in a real use setting to determine its functionality, performance, potential problems, and other issues specific to its use
Premarket Tests
Conducted before a product or service is brought to market to determine how many customers will try and then continue to use it
Test Marketing
Introduces a new product or service to a limited geographical area prior to a national launch
Product Life Cycle
Defines the stages that new products move through as they enter, get established in, and ultimately leave the marketplace and thereby offers marketers a starting point for their strategy planning
Introduction Stage
Stage of the product life clue when innovators start buying the product
Growth Stage
Stage of the product life cycle when the product gains acceptance, demand and sales increase, and competitors emerge in the product category
Maturity Stage
Stage of the product life cycle when industry sales reach their peak, so firms try to rejuvenate their products by adding new features or repositioning them
Decline Stage
Stage of the product life cycle when sales decline and the product eventually exits the market
