Chapter 8: Developing New Products Flashcards
why do firms create new products
new market offerings provide value to both firms and customers
firms must innovate in order to stay in business and current
innovation = new products and services
managing risk through diversity
how firms develop new products (6)
idea generation
concept testing
product development
market testing
product launch
evaluation of results
how firms develop new products: idea generation
development of viable new product ideas
3 step process:
does the idea align with our capabilities, values, etc.
technical feasibility study on ideas
market feasibility study
how firms develop new products: concept testing
concept is a brief written description of the product
customers reactions determine whether or not it goes forward
triggers the marketing research process
how firms develop new products: product development
prototype
alpha testing: attempt to determine whether the product will perform according to its design and whether it satisfies the need for which it was intended
beta testing: uses potential consumers who examine the prototype in a real use setting to determine its functionality, performance, and potential problems
how firms develop new products: market testing
premarket tests: customers exposed, surveyed and firm makes decision
test marketing: mini product launch, more expensive than premarket tests, market demand is estimated
standard market tests
conducts a full marketing campaign in a few small cities/areas to gauge product performance
drawbacks: costly and time consuming
controlled market tests
controlled panels of stores that agree to carry the new product for a fee. sales are tracked to gauge impact
drawbacks: costly and time consuming
simulated market tests
simulated shopping environment. sample of consumers are shown ads and promotions of products including the new products
invited to lab or real store
given money to spend on products to see if they buy targeted product
how firms develop new products: product launch
PLC (product life cycle)
the product life cycle represents an important tool managers use to plan their marketing activities
look at textbook for picture
strategies for extending PLC
develop new uses
modify product
increase frequency of use
increase numbers of use
find new users
reposition product
