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
decline stage
a long-run drop in sales
- Rate of decline governed by how rapidly consumer tastes change or substitute products are adopted
- Successful strategy for marketing in the decline stage: eliminate all nonessential marketing expenses and let sales decline as customers discontinue purchasing the products
innovators
The first 2.5 percent of all those who adopt the product
- Eager, if not obsessed, to try new ideas and products
- More wealthy, worldly, and active outside their community
- Better educated and more likely to get their information from scientific sources and experts
early adopters
The next 13.5 percent to adopt the product
- Rely much more on group norms and values
- More oriented to their local community
- More likely than innovators to be opinion leaders because of their closer affiliation with groups
- Desire others’ respect, which they earn by sharing what they know
early majority
The next 34 percent to adopt the product
- Weigh the pros and cons through information gathering and evaluation
- Trust in recommendations from friends and family
- Deliberateness is a dominant characteristic
late majority
The next 34 percent to adopt the product
- Adopt new products after most of their friends have already adopted them and they feel a pressure to conform
- Tend to be older and below average in income and education
- Depend mainly on word-of-mouth communication rather than on mass media
- Skeptical
laggards
Final 16 percent to adopt
- Do not rely on group norms
- The past heavily influences their
decisions - By the time laggards adopt an
innovation, it may already be
outmoded and replaced by
something else
