chapter 8: Developing New Products Flashcards
what is a product?
-anything of value to a customer that can be offered through a market exchange
why do firms create new products?
-new products provide value to both firms and customers
-firms must innovate to stay in business and current
-satisfies changing needs
what is market saturation
when a product exists in the market place for so long there is no new opportunities or customers
-offers opportunities for new processes or new products, if not then value of firm declines
diffusion of innovation
process of innovation spreading throughout market group over time and over various categories of adopters
pioneers (breakthroughs)
new product introductions that establish a completely new market or radically change both the rules of competition and consumer preferences in a market
disruptive innovations
new product innovations that are simpler and less expensive than the originals
first moves
product pioneers that are first to create a market/product category , making them recognizable to consumers and establishing a commanding and easy market share
order of subgroup use of product or service innovation (4 groups)
early adopters: will wait and purchase after careful review
early majority: experiences little risk
late majority: enters market when its at full potential
laggards: may never adopt to change
relative advantage
if a product is perceived to be better than its substitutes, the diffusion will be quick
steps of how firms develop new products
- idea generation
- concept testing
- product development
- market testing
- product launch
- evaluation of results
step 1 of how firms develop new products: idea generation
internal research and development
step 2 of how firms develop new products: concept testing
concept statement describing product or service is presented to potential buyers or users to obtain their reactions
step 3 of how firms develop new products: product development
balancing various economic, manufacturing, marketing considerations
prototype: 1st physical form or service description of new product
alpha testing: R&D, determination by firm if product will perform accordingly
beta testing: using consumers to examine product prototype in real-use setting to determine functionality and performance
step 4 of how firms develop new products: market testing
premarket tests: customers exposed and surveyed, firm makes deciion
test marketing: mini product launch, more expensive than premarket tests, market demand is estimated
step 5 of how firms develop new products: product launch
new product relies on promotion, place, price, timing
step 6 of how firms develop new products: evaluation of results
-satisfaction of technical requirements
-customer acceptance
stages of the product life cycle
introduction: when innovators start buying the product
growth: product gains acceptance, demand, sales increase, competitors emerge
maturity: industry sales reach peak, innovation attempted
decline: exits the market
