Chapter 9 - Developing New Products Flashcards
Identify reasons firms make new products
Innovation Changing customer needs Market saturation Managing risk through diversity Fashion cycles Improving business relationships
Innovation
All firms must innovate, evolving to better meet the needs of the market
Changing customer needs
Firms create and deliver value more effectively by satisfying needs of current and new customers by keeping customers interested by creating new products
Market saturation
Without new goods or services, the value of the firm will ultimately decline
Managing risk through diversity
Firms with multiple products can better withstand external shock
Fashion cycles
Industries that rely of fashion trends and experience short product life cycles, most sales come from new products
Improving business relationships
Enhances value creation
Describe the different groups of adopters within the diffusion of innovation theory
Innovators Early adopters Early majority Late majority Laggards
Innovators
Buyers who want to be the first to have the new product
Early adopters
Buyers who wait and purchase after careful review
Early majority
Represents approx 34% of the population. If this group never becomes large enough, the product typically fails
Late majority
Last group of buyers to enter the new product markets. After this the product has achieved its full market potential
Laggards
Roughly 16% of the market. Avoids change and relies on traditional products. May never adopt a certain product
Describe the various stages involved in developing a new product
Idea generation Concept development Product development Market testing Product launch Evaluation of results
What are some idea sources
Internal R and D R and D consortia Licensing Brainstorming Outsourcing Competitors' products Customer input
What are the types of market testing?
Pre-market testing
Test marketing
Pre-market testing
Determine how many customers will try and then continue to use the product
Test marketing
Determined the success potential of a new product
What is the marketing mix
Promotion
Place
Price
Timing
Explain the product life cycle
Introduction
Growth stage
Maturity stage
Decline
Introduction
The product category first launches
Growth stage
Gains acceptance, demand and sales increase and more competitors emerge in the product category
Maturity stage
Industry sales peak, firms rejuvenate their products by adding new features of repositioning them. If succeed the product achieves new life
Decline
If rejuvenation fails, the product eventually exits the market
