product devleopment - semester 2 Flashcards
what counts as a successful product?
Schneider and Hall (2011) say that the product must be profitable after 3 years
what does NPD include
Includes improvements, modifications, new brands and development efforts
what is a high risk product?
A completely new product that has never
been offered before
what is a medium risk product?
The company already makes similar products, however there is a substantial change in how the product works/is used
what is a low risk, minor innovation product?
The company already makes similar products, used in a similar way. Minor changes to product (e.g. new flavours, improved functioning)
characteristics of a high risk product?
Challenging, create new market and convince people to buy product
Need to educate people about product
Benefits include market share, dominant position & harder for competitors
Consumer suspicion – does it work?
characteristics of a low risk, minor innovation product?
New flavour, faster processer, new ingredient in shampoo to make it work better
Little risk because company makes similar products, so therefore only minor changes are inserted into the product.
Little consumer ed
more easily copied by compietiors
Consumers may feel change not worth extra money
Competitor retailiation mean that competitors could innovate better goods than you as they already know what you have produced so can add additional deatures that you included
characteristics of a low risk, no innovation product?
Exisiting products serve same purposes, no additional features
Lower research and development costs
Aesthetic appeal
Example is Netflix and amazon instant video (same products)
Under price competitor, people go cheaper as its same product
characteristics of a medium risk product?
Example includes dyson bagless vacuum cleaner
Market is already there they just had to convince people that bagless was beneficial
People asked if they needed it?
Need to educate consumer about product to an extent
People know about vacuums in genral so know problems assosatied with bags
what is a low risk, no innovation product?
The company copies existing competitor products, adding no significant features or benefits. Differences are mainly aesthetic
benefits to introducing new products?
Replace declining products
Tap into emerging markets
Competitive advnatge- encourage brand switching with new product benefits
Avoid risk of not innovating, being outexposed by compeitiors
risks to intorducing new products?
High research/engeneer cost
High launch costs – more averising and promotion
Distracts consumers from other goods in business
High failure rate (80%)
Long time to produce profits
why do products fail?
1) Over estimate market size/demand (love product and focus to much on it)
2) Poor design – negative press on social media
3) Haven’t thought out benefits of buying products, why buy good?
4) Competing to directly
5) To expensive to produce
6) Not a good promotional strategy
what attracts people to products?
New product is better then replacement
Product fits into persons life
Tried out before purchase
Seen by others
8 stages of NPD
idea generation idea screening concept development and testing marketing stratergy devlopment business analaysis product devlopment test marketing commercialisation
what is idea screening?
Will customers buy it?
USP
Resources to make the product successful
Does it fit with business stratergy
what is idea generation?
Some companies hire R&D
Google has innovation team where they allow them time by themselves to create ideas
Suppliers can help you identify new materials to increase sales
Competitors, learn from their trends/products
Consumers, identify wants and needs
what is marketing stratergy development?
Value propostion Target market Marketing objectives Marketing budget Marketing mix
what is business anayalsis?
Don’t overestimate sales
Will product be profitable
How long will it take to become profitable
To far down line to cut product
Last chance to drop product before expensive stages
what is product development?
R&D teams create product
High costs
Prototypes/feedback
Consumer testing
what is test marketing?
Do consumers buy product
Tested in real life settings
Enables time to change product before officially launching
High costs and competitors trying to take your product off the market by holidng sales promotions/copying
what is commercialisation?
Sprinkler stratergy – immeidtae national launch – big buzz
To late to correct everything as its relased nationally
Waterfall stratergy is relasing city by city
Mistaies have less impacts
Less impactful
what are the 5 stages of the product lifecycle?
product devlopement introduction growth maturity decline
example product of the product lifecycle?
apple watch
at first people questioned if it worked and only the early adaptors brought the product
matuirty is when mjority of people brought it as it gained good repuatation
declining stage occured when cheaper alternatives were released
what is intro stage of the product lifecyle?
Intro – build awareness/ target people
what is growth stage of the product lifecyle?
Growth – people start buying product, still have to invest in market share to gain profit
what is maturity stage of the product lifecyle?
Maturity – sales level off – aggressive promotions to gain more sales as not many more people to target (time to maximise products)
what is decling stage of the product lifecyle?
Decline – sales drop and fall, lack of interest in product
what is crowdsourcing?
Crowdsourcing is offering consumers the choice to create goods, good way for innovation with minimum cost
Ideas are voted and short listed, are then created
2 examples of firms that use crowdsourcing?
lego ‘ideas’
my starbucks idea
