Lecture 5 Flashcards
What are the two ways in which a firm can obtain a new product?
Through acquisition or innovation
Why do so many new products fail?
They can fail for several reasons:
Although the idea may be good, the market size may have been overestimated
The actual product may not have been designed as well as it should have been
The product was incorrectly positioned in the market, price too high, or advertised poorly
What does a new-product strategy do?
It sharpens the focus of the company and provides general guidelines for generating, screening, and evaluating new-product ideas
What is idea generation?
It is the process of searching for new-product ideas. A company typically has to generate many ideas in order to find a few good ones
Where could new product ideas come from?
Internal sources
Watching and listening to customers
Watch competitors’ ads and other communications
What is idea screeing?
It is the process of identifying good ideas and dropping poor ones as soon as possible
What are some questions that are asked when idea screening?
Is the product truly useful to the consumer?
Does it mix well with the company’s objectives and strategies
Do we have the people, skills and resources to make it succeed?
Does it deliver more value to customers than competing products?
What is the likely demand for the product?
How might competitors respond?
What is the risk of failure? Is the company willing to take the risk?
What is concept development?
It is the process of expanding the new-product idea into various alternatives forms based on questions such as
Who will use the product
What primary benefit should the product provide?
When and where will the product be used?
What is concept testing?
It is the process of testing new-product concepts with a group of target consumers to find out if the concepts have strong consumer appeal
What is product development?
This is when R&D or engineering develops the product concept into a physical product
What is test marketing?
It is when the product and the marketing program are introduced into more realistic market setting.
What does test marketing provide to the marketer?
It gives the marketer experience with marketing the product before going to the expense of full introduction/market
What is a standard test market?
It is when the company finds a small number of representative test cities and conducts a full marketing campaign in these cities and then measures product performance
What are product-use tests?
It is when companies select a small group of potential customers who agree to use the new product for a limited time
What is a trade show?
It is when new industrial products are displayed to consumers so that manufacturers can see how buyers react to various product features and terms, and can asses buyer interest and purchase intentions
What is commercialization?
It is when test marketing gives management the information needed to make a final decision about whether to launch the new product
If the company goes ahead with commercialization - introducing the new product into the market
What is the product life-cycle?
It is a concept that provides a way to trace the stages of a product’s acceptance from its introduction to its decline
What is the introduction stage?
It is the stage of the product life-cycle where the new product is first launched
What are some of the characteristics of the introduction stage?
Marketing costs are high
Incentives are needed to get consumers to try the new product
Advertising expenses are high because of the need to educate consumers about the new product’s benefits
Promotion strategy focuses on developing product awareness
What determines the length of the introduction stage?
It is determined by product characteristics, such as the product’s advantages over substitute products. the educational effort required to make the products known
What is the growth stage?
It is the stage where, if the product satisfies the market, sales will begin to climb quickly and profits will increase
Who are the main consumers of the growth stage?
They are the early “adopters” and late buyers will start following their lead, especially if they hear favourable word of mouth
What are some of the characteristics of the growth stage?
New competitors will enter the market
Improvements to product quality and additions of new features
Market shares are formed
What is the maturity stage?
It is the period of slowdown in sales growth because the product has achieved acceptance by most potential buyersW
