HO2 - Lecture 6: Product Development

Question 1

What are the 4 Development Philosophies enterprises may adopt? Describe each philosophy.

Answer 1

1. R&D base: Need this for market leadership, expensive option.
2. React quickly to innovation of others: Hope to “catch-up” w/ competition during growth phase, must observe patents and respect IP.
3. Special market segment: Adapt offerings to meet needs of a special market segment.
4. Economies of scale: Rely on their ability to produce on a mass scale - offer very competitive prices. Expertise are in manufacturing than product design.

Question 2

What are the Market Policies?

Answer 2

1. Market aggregation
2. Market segmentation
3. Market refreshment

Question 3

Describe Market Aggregation.

Answer 3

1. Penetration of the market to greatest possible width and depth w/ very limited range.
2. Relies on uniform pattern of consumption.
3. Appeal to needs which customers have in common.

Question 4

Describe Market Segmentation.

Answer 4

1. Segmentation: Name given to process of dividing large numbers of customers into smaller groups.
2. Organisation having this policy: try and have an extensive range of offerings each suited to needs of a different segment.

Question 5

Describe Market Refreshment.

Answer 5

1. Customer base - segmented - organisation sold to different segments - demand starts to fall - due to customers already having best product available to meet their need.
2. Company identifies new ways of stimulating customer base to buy products again.
3. Basis on which process depends: customer who buy product to do so, not because of absolute need for a given level of performance but rather relative need for performance.
4. Gap between what is actually needed and what is on offer becomes too large for customer to bear = fails.

Question 6

Look at notes for product development process.