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Marketing An Introduction > New Product > Flashcards

New Product Flashcards

1
Q

A firm can obtain new products in two ways:

A

acquisition and new product development

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2
Q

acquisition

A

buying a whole company/patent/license to produce someone else’s product

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3
Q

4 new product development

A
  • the development of original products
  • product improvements
  • product modifications
  • new brands
    through the firm’s own product development efforts
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4
Q

2 Advantages of new products

A
  • offer solution and variety to customers
  • vital for company growth
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5
Q

2 Cons of new product development

A
  • innovation is costly and risky
  • failures rates for new products can be high
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6
Q

3 reasons for new product failures

A
  • although an idea may be good, the market size may have been overestimated
  • the actual product was not designed as well as it should have been
  • maybe it was incorrectly positioned (price too high or poorly advertised)
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7
Q

8 major steps in product development

A
  1. Idea generation
  2. idea screening
  3. concept department and testing
  4. marketing strategy development
  5. business analysis
  6. product development
  7. test marketing
  8. commercialization
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8
Q

idea generation

A

the systematic search for new product ideas.

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9
Q

Major sources of new product ideas

A

internal sources and
external sources such as customers, competitors, distributors and suppliers, and others.

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10
Q

3 Internal Idea Sources

A
  • find new ideas through formal R&D (innovation centre)
  • Internal brainpower (employee ideas, not just R%D)
  • Hackathons and events
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11
Q

5 External Idea Sources

A
  • Distributors and suppliers
  • Competitors
  • Customers
  • marketing research firms, agencies
  • trade magazines, seminars, government agencies, inventors, etc
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12
Q

Distributors and Suppliers as Idea Sources (2)

A

Distributors share market insights and consumer problems.
Suppliers offer new concepts, techniques, and materials for product development.

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13
Q

Competitors as a Source of Ideas (2)

A

Analyzing competitors’ ads and products provides insights.
Disassembling competing products helps understand their functionality and sales performance.

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14
Q

Customers as Crucial Idea Contributors (3)

A

Customer questions and complaints can spark ideas for better solutions.
Salesforce’s IdeaExchange involves customers in suggesting and voting on new software features.
Collaboration and brainstorming with customers often yield innovative outcomes.

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15
Q

Crowdsourcing

A

a company invites broad communities of people—customers, employees, independent scientists and researchers, and even the public at large—into the innovation process.

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16
Q

Idea Screening

A

spot good ideas and drop poor ones as soon as possible

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17
Q

idea screening framework

3 questions of R-W-W Framework

A
  1. Is it real?
  2. Can we win?
  3. Is it worth doing?
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18
Q

2 Purpose of the R-W-W Framework

A
  • Ensures a thorough evaluation of new product ideas.
  • Aims to filter out ideas that may not be feasible or profitable for the company.
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19
Q

is it real (R)

A
  • Existence of a genuine market need and customer desire.
  • Clarity of the product concept and its ability to satisfy market demands.
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20
Q

W: Can we win (2)

A

Presence of a sustainable competitive advantage.
Company’s resources and capacity to ensure product success.

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21
Q

W: Is it worth doing? (2)

A

Alignment of the product with the company’s growth strategy.
Potential profitability of the product.

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22
Q

Product concept

A

The idea that consumers will favour products that offer the most quality, performance, and features
-> organization should devote its energy to making continuous product improvements

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23
Q

distinguish between a product idea, a product concept, and a product image.

A
  • A product idea is an idea for a possible product that the company can see itself offering to the market.
  • A product concept is a detailed version of the idea stated in meaningful consumer terms.
  • product image is the way consumers perceive an actual or potential product.
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24
Q

Concept development Process

A

develop a new product into alternative product concepts, find out how attractive each concept is to customers, and choose the best one

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25
Q

concept testing

A

testing new product concepts with groups of target consumers.

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26
Q

marketing strategy development

A

designing an initial marketing strategy for a new product based on the product concept

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27
Q

The marketing strategy statement consists of three parts
3vs3vs3

A
  • Describes the target market + planned value proposition + sales, market share, profit goals for the first few years
  • Planned price, distribution, marketing budget for the first year
  • planned long-run sales, profit goals, marketing mix strategy
28
Q

Business analysis (3 analysis)

A

involves a review of the sales, costs, and profit projections for a new product to find out whether they satisfy the company’s objectives.

29
Q

sales forecast approach

A
  • look at sales history of similar products
  • conduct market surveys
30
Q

5 Cost forecast aspects

A

marketing
R&D
operations
accounting
finance

31
Q

Product development step

A

company growth by offering modified or new products to current market segments

32
Q

Product Development Process

A
  1. R&D and Prototyping
  2. Testing and Validation
  3. Customer involvement
  4. functional and psychological attributes
33
Q

2 R&D and Prototyping:

A

develops physical versions of product concepts.
Aims to create a prototype that satisfies consumer needs and fits the budget.

34
Q

2 Testing and Validation:

A

Rigorous testing for safety, effectiveness, and consumer value.
In-house or outsourced testing to specialized firms.

35
Q

Customer Involvement:

A

engage actual customers in product development and testing.

36
Q

Functional and Psychological Attributes:

A

New products must possess functional features and convey intended psychological characteristics.

37
Q

Marketing testing

A

the stage at which the product and its proposed marketing program are tested in realistic market settings.

38
Q

2 Purpose of Test Marketing:
1vs8

A
  • Provides experience in marketing a product before a full-scale launch.
  • Evaluates the entire marketing program including targeting, positioning, advertising, distribution, pricing, branding, packaging, and budgeting.
39
Q

Variability in Test Marketing: 4

A
  • Varies based on the new product’s investment needs, risks, and management confidence.
  • Intensive test marketing for **high-risk **or uncertain products (e.g., Taco Bell’s Doritos Locos Tacos, Starbucks VIA instant coffee).
  • Limited or no test marketing for low-cost, confident products or simple line extensions.
  • Innovation and speed prioritized over a perfect, polished product to rapidly response to market
40
Q

Cons of test marketing 2

A
  • Test marketing can be costly and time-consuming.
  • May result in missed market opportunities or competitive disadvantages due to extended testing periods.
41
Q

Alternatives to Standard Test Markets
2vs2

A
  1. Controlled Test Markets:
  • Involves controlled shopper and store panels for testing products and tactics.
  • Combines consumer purchase data with demographics and media viewing to evaluate marketing impact.
  1. Simulated Test Markets:
  • Measures consumer responses to new products and marketing strategies in laboratory or simulated online shopping environments.
  • Reduces test marketing costs and expedites the evaluation process.
42
Q

commercialization

A

introducing the new product into the market

43
Q

2 Costs of Commercialization:

A
  1. building or renting manufacturing facilities
  2. substantial spending on advertising, sales promotions, and marketing efforts
44
Q

3 Introduction decisions

A
  1. timing considerations
  2. competition and readiness
  3. market entry choices
45
Q

commcercialization

timing considerations 2

A

Delay introduction if impacting existing product sales.
Economic conditions may influence the launch timeline.

46
Q

commercialization

COMPETITOR AND READINESS

A

Competitors’ readiness might push for an earlier product launch.
Decision hinges on product improvements, economic conditions, and competitive landscape.

47
Q

2 market entry choices

A
  1. Geographical Reach:
    * Introduction in a single location, region, national, or international market.
    * rapid global launches utilized by companies with international distribution networks.

Example: Apple’s iPhone X simultaneous launch in 55 countries, showcasing a swift global rollout strategy.

48
Q

Customer-Centred New Product Development

A

new product development that focuses on finding new ways to solve customer problems and create more customer-satisfying experiences

49
Q

sequential product development
def and pro and 3 cons

A

one company department works individually to complete its stage of the process before passing the new product along to the next department and stage.

this orderly, step-by-step process can help bring control to complex and risky projects

In fast-changing, highly competitive markets, such slow-but-sure product development can result in product failures, lost sales and profits, and crumbling market positions.

50
Q

team-based new product development

A

company departments work closely together in cross-functional teams, overlapping the steps in the product development process to save time and increase effectiveness

51
Q

Benefits and Constraints of Team-Based Product Development: 2

A
  • Speeds up development but may create organizational tension.
  • Valuable in fast-changing industries with shorter product life cycles.
52
Q

Innovation Management System Structure (3)

A

Led by an innovation manager to oversee idea collection and evaluation.
Uses web-based idea management software for stakeholder involvement.
Includes a cross-functional innovation committee for idea assessment.

53
Q

Innovtion management system outcomes: 2

A
  • ultivates an innovation-driven culture with top management support.
  • Generates a higher volume of new product ideas, increasing success rates.
54
Q

Product life cycle (PLC)

A

The course of a product’s sales and profits over its lifetime

55
Q

5 growth stages in PLC

A
  1. Product Development
  2. Introduction
  3. Growth
  4. Maturity
  5. Decline
56
Q

PLC

PRODUCT DEVELOPMENT STAGE

A

Characteristics: Zero sales, high investment costs.
Focus: Developing and refining the new product idea.

57
Q

PLC

INTRODUCTION STAGE 11

A
  1. SALES: low sales
  2. COSTS: high cost per customer
  3. PROFITS: low or negative
  4. CUSTOMERS: innovators
  5. COMPETITORS: few
  6. OBJECTIVES: create product engagement and trial, build awareness
  7. PRODUCT: offer basic product
  8. PRICE: use cost-plus
  9. DISTRIBUTION: build selective distribution
  10. ADVERTISING: build product awareness among early adopters and dealers
  11. SALES PROMOTION: use heavy sales promotion to entice trial
58
Q

PLC

GROWTH STAGE

A
  1. SALES: rapidly rising
  2. COSTS: average per customer
  3. PROFITS: rising
  4. CUSTOMERS: early adopters
  5. COMPETITORS: growing number
  6. OBJECTIVES: maximize market share
  7. PRODUCT: offer product extensions, service, and warranty
  8. PRICE:price to penetrate market
  9. DISTRIBUTION: build intensive distribution
  10. ADVERTISING: build engagement and interest in the mass market
  11. SALES PROMOTION: reduce to take advantage of heavy consumer demand
59
Q

PLC

MATURITY STAGE

A
  1. SALES: peak sales
  2. COSTS: low cost per customer
  3. PROFITS” high profit
  4. CUSTOMERS: mainstream adopters
  5. COMPETITORS: stable number beginning to decline
  6. OBJECTIVES: maximize profit while defending market share
  7. PRODUCT: diversify brand and models
  8. PRICE: price to match or beat competitors
  9. DISTRIBUTION: build more intensive distribution
  10. ADVERTISING: stress brand differences and benefits
  11. SALES PROMOTION: increase to encourage brand switching
60
Q

PLC

DECLINE STAGE

A
  1. SALES: declining sales
  2. COSTS: low cost per customer
  3. PROFITS: declining profits
  4. CUSTOMERS: lagging adopters
  5. COMPETITORS: declining number
  6. OBJECTIVES: reduce expenditure and milk th brand
  7. PRODUCT: phase out weak items
  8. PRICE: cut price
  9. DISTRIBUTION: go selective: phase out unprofitable outlets
  10. ADVERTISING: reduce to level needed to retain hard-core loyals
  11. SALES PROMOTION: reduce to minimal level
61
Q

Varied Life cycles

A
  • Products can experience an expedited cycle, rapidly entering and exiting stages.
  • Others may linger in one stage for an extended period, or they might resurge through repositioning or innovative marketing.
  • Well-managed brands can endure across PLC stages, sometimes indefinitely.
62
Q

PLC STYLE 2

A
  • A style represents a distinctive mode of expression seen in various domains like homes, clothing, or art.
  • Styles can endure for generations, cycling **in and out **of popularity over time, showcasing periodic renewals of interest.
63
Q

PLC FASHION 2

A
  • Fashions encompass currently popular styles within a specific field.
  • They typically** evolve graduall**y, experiencing periods of sustained popularity before gradually declining.
64
Q

PLC FADS

A
  • Fads denote temporary surges in sales driven by immediate and enthusiastic consumer interest.
  • They might align with a typical product life cycle or encompass an entire life cycle for a brand or product.
65
Q

Product Decisions and Social Responsibility

A
  • Government regulations may restrict product acquisitions that threaten competition.
  • **Dropping products requires companies to fulfill legal obligations **to suppliers, dealers, and customers.
  • Adherence to patent laws is crucial to avoid illegal similarities with competitors’ products.
  • Compliance with laws on product quality and safety, especially in food, drugs, and cosmetics.
66
Q

Internation Product and Service Marketing challenges

A
  • determining products/services to introduce
  • standardization vs adaptation
67
Q
A

Marketing An Introduction (10 decks)

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