Exam 3 CH.11 Flashcards
new product
a product new to the world, the market, the producer, the seller, or some combination of these
new product strategy
a plan that links the new-product development process with the objectives of the marketing department, the business unit, and the corporation
− All three objectives must be consistent with one another.
- A new-product strategy should be part of an organization’s overall marketing
strategy
product development
a marketing strategy that entails the creation of marketable new products; the process of converting applications for new
technologies into marketable products
- Product modification makes cosmetic or functional changes to existing
products
screening
the first filter in the product development process, which eliminates ideas that are inconsistent with the organization’s new-product strategy or are obviously inappropriate for some other reason
concept test
a test to evaluate a new-product idea, usually before any prototype has been created
business analysis
the second stage of the screening process, where preliminary figures for demand, cost, sales, and profitability are calculated
- Forecasting market share for a new entry in a new, fragmented, or relatively small niche is a bigger challenge than for an established market.
- Analysis is especially important in product categories that are sensitive to
fluctuations in the business cycle
development
the stage in the product development process in which a
prototype is developed and a marketing strategy is outlined
− The development stage can last a long time and be very expensive
simultaneous product development
a team-oriented approach to new-
product development
− This approach, involving a cross-functional team working in unison, allows firms to shorten the development process and reduce costs
test marketing
the limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation
Simulated (laboratory) market testing
he presentation of advertising and
other promotional materials for several products, including a test product, to members of the product’s target market
- Product samples can be offered via the Internet and social media
commercialization
the decision to market a product
- The decision to commercialize the product sets several tasks in motion:
− Ordering production materials and equipment
− Starting production
− Building inventories
− Shipping the product to field distribution points
− Training the sales force
− Introducing the new product to the trade and consumers
Product lifecycle
a concept that provides a way to trace the stages of a product’s acceptance, from its introduction (birth) to its decline (death)
- Product categories have the longest life cycles.
− Product category – all brands that satisfy a particular type of need
- The time a product spends in any one stage may vary dramatically.
- The PLC concept does not tell managers the length of a product’s life cycle or its duration in any stage.
− It is simply a tool to help marketers forecast future events and suggest appropriate
strategies
introductory stage
the full-scale launch of a new product into the marketplace
- Typified by high failure rates, little competition, frequent product modifications,
and limited distribution - Marketing costs normally high
- Sales normally increase slowly
- Promotional strategy focuses on developing product awareness and informing consumers about potential benefits
growth stage
the second stage of the product life cycle, when sales typically
grow at an increasing rate; many competitors enter the market; large companies may start to acquire small pioneering firms; and profits are healthy
- Emphasis switches from primary demand promotion to aggressive brand advertising and communication of the differences between brands
- Distribution—through dealers and distributors or directly to consumers—
becomes a major key to success
maturity stage
a period during which sales increase at a slower rate
- Typically the longest stage of the PLC sustained through heavy consumer promotion
- Product lines lengthened to appeal to additional market segments
- Service and repair help distinguish some products from others
- Cutthroat competition can lead to price wars
