03 NPD & PLC

Question 1

Types of Innovations (3)

Answer 1

1) Continuous innovation
2) Dynamically continuous
3) Discontinuous innovation

Question 2

Definition: Continuous innovation

Answer 2

slight modification of an existing product (flavoured water or new apple product - not much learning in between)

Question 3

Definition: Dynamically Continuous

Answer 3

Changing the product so that using it requires a moderate amount of learning. (laptop to windows surface)

Question 4

Definition: Discontinuous Innovation

Answer 4

Developing a new product that creates major changes in how we do a task. (water bubbles made of algae, classes moved online)

Question 5

New product/service adoption: types of adopters (5)

Answer 5

1) Innovators 2,5%
2) Early adopters 13,5%
3) Early mainstream 34%
4) Late mainstream 34%
5) Lagging adopters 16%

Question 6

Definition: Innovators

Answer 6

Will buy the product earlier than anyone else and buy it for intrinsic reasons or the so-called “feel-good factor”.

Question 7

Definition: Early adopters

Answer 7

Desire the product before anybody else has it, as they want to be the trend setters.

Question 8

Definition: Early mainstream

Answer 8

As products have now become cheaper, this group also purchases them. Also defined as the point in time that the product is now profitable.

Question 9

Definition: Late mainstream

Answer 9

Now prices have bottomed out and the technology has become standard. Almost everyone has it at this point.

Question 10

Definition: Lagging adopters

Answer 10

Will buy the product with close to 0% interest in buying due to their “if it aint broke don’t fix it” mentality.

Question 11

Factors to enhance new product adoption (need to be considered by marketers) (7)

Answer 11

1) Relative Advantage (toothpaste that’s the same but cheaper, closer…)
2) Divisibility (devide experience in one bit so customer can try it out/use it for short period of time)
3) Compatibility (laptop adapters: charger can be used in any country with different voltage)
4) Complexity (KISS: keep it short and simple, the more complex the product, the more likely it is to fail)
5) Timing (family movies released in winter time)
6) communicability (simple communication - 3 pictures instead of text)
7) local (some products not set up for all locations, soup with aligator tails in germany)

Question 12

Definition: NPD

Answer 12

new product development is a company-internal tool, plotting the number of product ideas over time that is classed as forecasted data (meaning it is predictable), highlighting the different stages involved in developing a new product.

Question 13

NPD Stages (8)

Answer 13

1) Idea Generation
2) Idea Screening
3) Business Analyses
4) Marketing Analyses
5) Product & Prototype Development
6) Market testing
7) Commercialization/Launch

Question 14

PLC Stages (5)

Answer 14

1) Product Development
2) Introduction
3) Growth
4) Maturity
5) Decline

Question 15

Definition: PLC

Answer 15

A historical tool that plots the sales of a product over a given time, divided into 4 different stages. Important to note that due to the historical aspect, the business can never predict the curve of the graph.

Question 16

2nd PLC stage: what happens (5) and what marketers can do (5)

Answer 16

Introduction: low sales, high cost per customer, negative profits, customers=innovators, few competitors

Marketers: offer a basic product, use cost-plus, build selective distribitution, build product awareness among early adopters and dealers, use heavy sales promotion to entice trial

Question 17

3rd PLC stage: what happens (5) and what marketers can do (5)

Answer 17

Growth: rapidly rising sales, average cost per customer, rising profits, customer=early adopters, growing number of competitors

Marketers: offer product extensions service and warranty, price to penetrate market, build intensive distribution, build awareness and interest in mass market, reduce to take advantage of heavy consumer demand

Question 18

4th PLC stage: what happens (5) and what marketers can do (5)

Answer 18

Maturity: peak sales, low cost per customer, high profits, customer=middle majority, competitors: stable number beginning to decline

diversify brand and models, price to match or beat competitors, build more intensive distribution, (advertising) stress brand differences and benefits, (sales promotion) increase to encourage brand switching

Question 19

5th PLC stage: what happens (5) and what marketers can do (5)

Answer 19

Decline: Declining sales, low cost per customer, declining profits, customers=laggards, declining number of competitors

phase out weak items, cut prices, go selective - phase out unprofitable outlets, reduce advertising to level needs to retain hard-core loyals, reduce sales promotion to minimal level