Chapter Seven Flashcards
What is the product life cycle?
The life cycle of a new product. The segments include Introduction, Growth, Maturity, and Decline.
Introduction of a product
Low sales, high cost per customer, financial losses, innovative customers, and few competitors
Growth of a product
Increasing sales, cost per customer falls, profits rise, increasing number of customers, more competitors
Maturity of a product
Peak sales, cost per customer the lowest, profits high, mass market, stable number of competitors
Decline of a products
Falling sales, cost per customer low, profits fall, customer base contracts, number of competitors fall
Disruptive Innovation
New technology to an existing market, threatens to replace traditional approaches within an industry (Spotify disrupts the pay-per-song industry)
Types of innovation
Architectural, radical, incremental, disruptive
Incremental innovation
Steady improvement of a product or service (ex. Gillette now has a 6-bladed razor).
Radical innovation
Novel methods or materials serving new markets (ex. pharmaceutical researchers producing new products)
Architectural Innovation
Reconfigure known components to create new markets (Peloton combines bikes, internet, and communication tech)
Disruptive innovation
Novel technologies serving existing markets (tablet computers disrupting laptop sales)
The Crossing-the-Chasm Framework
Innovators (2.5%), Early Adopters (13.5%), CHASM, Early Majority (34%), Late Majority (34%), Laggards (16%)
Innovators
Tech enthusiasts trying to try new technologies
Early adopters
Visionaries who recognize the potential for competitive advantage or new capabilities
Early majority
Pragmatists who seek proven, practical solutions
Late majority
Skeptics who adopt technology out of necessity or social pressure
Laggards
Traditionalists who resist change and only adopt when there is no alternative
Two routes to advantage in a new market
Fast mover vs fast follower
Fast mover
Customer capture (get to customer first) and market control (superior performance to maintain an unattainable lead)
Fast follower
Existing market (skip market creation) and learning from mistakes (eliminate much of the cost being first by copying and learning)
