Session 12 - Product 2 Flashcards
What is the difference between a new product for a company and for a customer?
for company: Anything different from previous one
For customer: Needs a certain degree of difference
What are the two ways of obtaining new products?
- Acquisition: Buying a company, patent or license
- New product development in the company’s own R&D
Why do so many new products fail?
Market size overestimated, competition faster/better, unresponsive target, incorrect positioning, design not good enough, too high price, bad advertising, over-confidence, high development costs causing higher BE volume
What are the three factors that determine outcomes?
- Doing (implementation)
- Deciding (The thinking and decision process)
- Chance (luck)
all three can lead to results
Who can provide ideas?
customers (questions, complaints, focus group), users, marketing research, competitors, other markets, internal idea sources (Formal R&D, employees’ ideas), middlemen, etc
What is the process of screening?
Separates ideas that have merit from those that do not. Sophisticated firms use complex tools that screen projects, examine expected financials, competitve reactions, etc
What are the criteria in Idea Screening?
- Valuable: does it benefit the firm.
- Acceptable: will stakeholders support it
- feasible: are there sufficient resources or time?
- Suitable: Is the idea consistent with strategy and the current situation?
- Enduring: Will it be valuable in long and short time?
What is a product concept?
A detailed version of the new-product idea stated in meaningful consumer terms.
Testing new-product concepts with a group of target consumers to find out if the concepts have strong consumer appeal.
What is business analysis
An analysis of sales, costs and profit projections for a new product to determine whether these factors satisfy the company objectives
What is standard test marketing?
Marketing program implemented in limited but carefully selected parts of the market.
Goal: Gain information and experience with the marketing program before making a total commitment to it.
Drawback: Competition has access to your product
What are controlled test markets?
Same as standing but instead of launching in representative cities, you launch in a few participating stores. Consumer behavior is followed through panel data
What is simulated test marketing?
To finalize 4Ps, simulated shopping environment. Visionary shopper/simulation shopper.
It is expensive and fallible because competitors can disrupt test market by unusual actions like suddenly lowering prices and increasing advertising.
It is also risky because it can give competitors information about the new product. Competitors can imitate the product or offer a better product
What is commercialization?
Finalize product and marketing plan, start production and marketing. Roll out in select markets and final ROI estimate
What is Development?
R&D, develop model or service prototype, test marketing mix, revise as needed, ROI estimate
