Chp. 12

Question 1

Innovation

Answer 1

the process by which ideas are transformed into new offerings, including products, services, processes, and branding concepts that will help firms grow

Question 2

Why do firms add products, services, and processes to their offerings?

Answer 2

it creates and delivers value more effectively by satisfying customers changing needs and keeps them from getting bored with the current product or service

Question 3

True or false: without new products or services the value of the firm will ultimately decline

Answer 3

true

Question 4

How does innovation affect risk?

Answer 4

diversification creates a broader portfolio of products which helps diversify the risk and enhance firm value better than a single product can

Question 5

What industries experience short product life cycles?

Answer 5

apparel, arts, books, and software

Question 6

Diffusion of Innovation

Answer 6

the process by which the use of innovation spreads throughout a market group over time and across various categories of adopters

Question 7

Pioneers (break throughs)

Answer 7

establish a completely new market or radically change both the rules of competition and consumer preferences in the market

Question 8

First Movers

Answer 8

the first to create the market or product category, they become readily recognizable to consumers and thus establish a commanding and early market share lead

Question 9

Innovators

Answer 9

those buyers who want to be the first on the block to have the new product or service. risk takers and highly knowledgeable. stands in line overnight. 2.5%

Question 10

Early adopters

Answer 10

second subgroup that begins to use a product. not as risky as innovators, purchase product after careful review, wait for the first reviews to be released do not stand in line to be first to get product. 13.5%

Question 11

Early Majority

Answer 11

34%. few new products can be profitable if this group doesn’t adopt them. wait for bugs to be out of the product. enter the market when the # of competitors has reached its peak so they have price choice

Question 12

Late Majority

Answer 12

34% last group. product has reached its full market potential when they buy. sales have leveled off or declined

Question 13

Laggards

Answer 13

16%. rely on traditional products until they are no longer available may never adopt a new product or service

Question 14

How can firms use the diffusion of innovation theory?

Answer 14

to predict which types of customers will buy their new product or service immediately after its intro as well as later as the product is more and more accepted by the market

Question 15

Relative advantage

Answer 15

product or service is perceived to be better than subs then the diffusion will be quick

Question 16

Compatibility

Answer 16

diffusion process may be faster or slower depending on various customer features including international culture differences

Question 17

Observability

Answer 17

products are easily observed their benefits or uses are easily communicated to others which enhances the diffusion process

Question 18

Complexity and trialability

Answer 18

products that are less complex and are easy to try will diffuse more quickly and lead to faster adoption than those that are not as easy to try (apple stores always have tons of products to try)

Question 19

What are some ways of idea generation?

Answer 19

internal research and development, license tech. from research intensive firms, brainstorm, research competitors products, conduct consumer research

Question 20

R&D Consortia

Answer 20

firms joining groups of other firms and institutions to explore new ideas or obtain solutions for developing new products

Question 21

Reverse engineering

Answer 21

taking apart a product, analyzing it, and creating an improved product that does not infringe on the competitors patents

Question 22

Lead users

Answer 22

those innovative product users who modify existing products according to their own

Question 23

Concept testing

Answer 23

the process in which a concept statement is presented to potential buyers or users to obtain their reactions

Question 24

Product development/design

Answer 24

entails a process of balancing various engineering, manufacturing, marketing, and economic considerations to develop a products form and features

Question 25

Prototype

Answer 25

the first physical form or service description of a new product still in rough form

Question 26

<p>Beta Testing
</p>

Answer 26

<p>uses potential customers, examine the prototype in a real use setting to determine its functionality performance potential problems and other issues specific to its use</p>

Question 27

Premarket Tests

Answer 27

tests conducted before they actually bring a product or service to market to determine how many customers will try and then continue to use the product or service according to a small group of potential consumers

Question 28

Test Marketing

Answer 28

introduces the offering to limited geographical area

Question 29

Trade Promotions

Answer 29

promotions to wholesalers or retailers to get them to purchase the new products

Question 30

Introductory Price Promotions

Answer 30

limited-duration, lower-than-normal prices designed to provide retailers with incentive to try the product

Question 31

Trade Show

Answer 31

a temporary concentration of manufacturers that provides retailers the opportunity to view what is available and new in the marketplace

Question 32

Manufacturers Suggested Retail Price (MSRP)

Answer 32

manufacturers encourage retailers to sell at this price

Question 33

Slotting Allowance

Answer 33

a fee paid simply to get new products into stores or to gain more or better shelf space for their products

Question 34

Evaluation of results

Answer 34

takes place after the product has been launched determines whether the product was a success or a failure

Question 35

Three interrelated factors to access success of a new product.

Answer 35

(1) satisfaction of technical requirements, performance (2) customer acceptance (3) satisfaction of the firms financial requirements

Question 36

Product life cycle

Answer 36

the stages that products move through as they enter get est. in and ultimately leave the marketplace

Question 37

Intro stage

Answer 37

first launch of the product

Question 38

growth Stage

Answer 38

product gains acceptance, demand and sales increase competitors emerge

Question 39

maturity Stage

Answer 39

industry sales reach their peak

Question 40

decline

Answer 40

if the product doesn’t achieve success it will decline and eventually leave the market

Question 41

alpha testing

Answer 41

firm attempts to determine whether the product will perform according to its design and whether it satisfies the needs for which it was intended