Chapter 8 - Developing New Products Flashcards
what is a product?
anything that is of value to a consumer and can be offered through a marketing exchange
why do firms create products?
New market offerings provide value to both firms and the consumers. They also must innovate in order to stay in business
What is market saturation?
The longer a product exists in a market, the more likely the market will become more saturated, without any new products or service the value of the firm declines.
what is diffusion of innovation or adoption 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.
What are 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.
ex: Iphone/smartphone
what are 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.
what are innovators?
Create product and first to adopt
what are early adopters?
The second 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.
what are early majority?
A group of consumers that don’t like to take much risk and therefore tend to wait until bugs are worked out.
what are late majority?
The last group of buyers to enter a new product market
what are laggards?
Consumers who like to avoid change and rely on traditional products until they are no longer available.
what are the 4 factors affecting product diffusion?
compatibility, relative advantage, complexity and trial-ability, and observability
what is compatibility?
more compatible, diffusion will increase
what is observability?
when products are easily observed (their benefits are easily identifiable), diffusion increases
What is complexity?
The more confusing a product is the slower the diffusion will occur. Makes the product more compatible with needs of different people in different cultures
what is trial-ability?
if a consumer can play around with a product, diffusion will increase
what is relative advantage?
if the product is perceived to be better than substitutes, than diffusion will be quicker
ex: swifter mops are a lot better than normal mops.
what are the steps for company developing new products
step 1 - Idea generation
step 2 - Concept testing
step 3 - Product development
step 4 - Market Testing
step 5 - Product launch
step 6 - Evaluation of results
what is idea generation?
generating ideas through R&D to come up with a product/service idea
what is 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.
What is product development?
Entails a process of balancing various engineering, manufacturing, marketing, and economic considerations to develop a product.
what is market testing?
testing within a market, either a premarket test which is before they bring it to the actual market, or test marketing which is brining it to certain geographic locations like different cities
what is product launch?
If the product is tested successfully then it will launch
what is evaluation of results?
After the product has launched, marketers must undertake a critical post launch review. (satisfaction of technical requirements, customer acceptance, satisfaction of the firms financial requirements
