Chapter 8 Flashcards
(14 cards)
Define new products
Which 2 ways can firms obtain new products? Define the first
Original products, product improvements, product modifications, and new brands that the firm develops through its own R & D efforts
- Acquisition - Buying a whole company, patent or a license to produce someone else’s product
- New-product development
Name the 8 steps in the new-product development process
- Ideas generation
- Idea screening
- Concept development and testing
- Marketing strategy development
- Business analysis
- Product development
- Test marketing
- Commercialization
Define idea(s) generation
What are the 2 main internal idea sources?
Give 3 examples of external idea sources
What is the most important source of new-product ideas?
Define crowdsourcing
The systematic search for new-product ideas
- Formal R & D
- Employees
- Distributors
- Suppliers
- Competitors
Customers
Inviting broad communities of people into the new-product innovation process (customers giving ideas)
Define idea screening
Give and define the 3 dimensions in the concept development and testing stage
Helps spot good ideas and drop poor ones ASAP
- Product Concept - Detailed version of the idea stated in meaningful consumer terms
- Concept Development - Several descriptions of the product are generated to find out how attractive each concept is to customers. The best one is chosen
- Concept Testing - Testing new-product concepts with groups of target consumers
Define marketing strategy development
Which 3 parts does the marketing strategy statement consist of?
Designing an initial marketing strategy for a new product based on the product concept
- A description of the target market, the planned value proposition and the sales, market share, and profit goals for first few years
- An outline of the product’s planned price, distribution and marketing budget for the first year
- A description of the planned long-run sales, profit goals and marketing mix strategy
Define business analysis
Define product development. What does this stage call for?
Define test marketing. What % of all new products fail?
Define commercialization. Which 2 decisions must be made at this stage?
A review of the sales, costs and profit projections for a new product to find out whether they satisfy the company’s objectives
R & D or engineering develops the product concept into a physical product. A large jump in investment
The stage at which the product and marketing program are introduced into realistic market settings. 80%
Introducing the new product into the market. Decisions about introduction timing and where to launch
What must new-product development be? What does customer centered new-product development focus on?
Name the 2 product development approaches
Define sequential product development
Give one advantage
Give one disadvantage
Customer centered. Finding new ways to solve customer problems and create more customer-satisfying experiences
Sequential product development, team-based new-product development
One company department works individually to complete its stage of the process before passing the new product along to the next department and stage
Helps bring control to complex and risky projects
Can be dangerously slow
Define team-based new-product development (2)
Company departments work closely together in cross-functional teams, overlapping the steps in the product development process to save time and increase effectiveness
Instead of passing the new product from department to department, the company assembles a team of people from various departments that stay with the new product from start to finish
What’s the vertical axis on the PLC graph?
What’s the horizontal axis on the PLC graph?
Which is the highest line on the graph?
Lowest?
Profits and sales
Time
Sales
Profits
Give and define the 5 stages in the product life-cycle
- Product development - When the company finds and develops a new product idea, sales are zero and high investment costs
- Introduction - Slow sales growth as the product is introduced in the market, profits are nonexistent due to heavy expenses
- Growth - Rapid market acceptance and increasing profits
- Maturity - Slowdown in sales growth because product has been accepted by most potential buyers, profits level off or decline because of increased marketing outlays to defend against competition
- Decline - Sales fall off and profits drop
What 3 things does the PLC concept describe? Give 1 point for each
Give 3 further points about the introduction stage
- Product Classes - Longest life cycle
- Product Forms - Standard PLC shape
- Product Brands - Can change quickly because of changing competitive attacks and responses
- Starts when a new product is first launched
- Profits low or negative, promotion spending is high and only basic versions of products are produced
- A company, especially a market pioneer, must choose a launch strategy that matches intended product positioning
Give 4 further points about the growth stage
Give 4 further points about the maturity stage
- Sales begin to quickly climb
- New competitors enter market introducing new features and market starts to expand
- Increased competition means more distribution outlets
- Prices remain stable but profits increase
- Slowing product/sales growth, resulting in many other producers with many products
- Competitors mark down prices, increase advertising and up product development budgets to make better versions
- Leads to a drop in profit
- Product managers should consider modifying market, product and marketing mix
How can a manager modify the market?
In which 2 ways can they increase consumption? Give 1 eg of each
How can a manager modify the product?
How can a manager modify the marketing mix?
Company tries to increase consumption of current product
- New usage (Arms and Hammer baking soda)
- Expand target market (Johnson’s targeting adults)
Company tries to change quality, features, style or packaging to attract new users/inspire more usage
Company tries to change one or more MM elements (e.g. more advertising, retailers etc)
What 3 choices do managers have in the decline stage?
- Maintain brand without change in the hope that competitors will leave
- Harvest the product - reducing various costs such as R & D, advertising etc and hoping that sales will hold up
- Drop the product from the line
