Chapter 9

Question 1

Importance of new products?

Answer 1

1. Replace old products
2. To create profit
3. Fit changing needs of customers
4. Remain competitive

Question 2

Product categories?

Answer 2

1. New products
2. New product lines
3. existing product line
4. Replacement products
5. Lower price

Question 3

New product development

Answer 3

1. New product strategy- consumer, employees, competition or research and development
2. Idea generation- focus groups, think-tanks and brainstorming
3. Idea Screening- remove products not aligning with product strategy
4. Business Analysis- estimate cost, demand and profitability
5. Product development and Testing- Prototypes, primary benefits
6. Commercialisation- distribution channels, inventory and shipments

Question 4

Why do products succeed and fail?

Answer 4

• The product doesn’t aline with customer needs
• Better competitor products
• price is too high or too low
• inadequate distribution
• Poor advertising

Question 5

Product life cycle

Answer 5

Introduction Characteristics and strategies:
Characteristics
- slows sales with high costs
- Poor distribution
- No competitors

Strategies:
- rapid Skimming
- slow skimming
- rapid penetration
- slow penetration

Growth Characteristics and Strategies:
Characteristics
- sales increases
- reduce advertising
- new competitors
- more aggressive brand advertising

Strategies
- Decrease prices to increase barrier to entry
- increase distribution networks
- improve quality
- product line extension
- change packaging

Maturity Characteristics and Strategies:
Characteristics
- Sales increase at a lower rate
- competition dropouts
- stability

Strategies
- slight changes to products
- better guarantees
- new distribution channels
- find new users and markets
- price below the market

Decline Characteristics and strategies:
Characteristics
- drop in typical sales
- competition dropout
- new product adoption

Strategies
- reduce market expenditure
- harvest- try and get as much profit out as possible if the sales
- withdraw- drop marketing and sell assets
- hang-in- hope of resurgence

Question 6

Adopter categories:

Answer 6

• Innovators (first 2,5%)
• Early adopters (next 13,5%)
• Early majority (next 34%)
• Late majority (next 34%)
• Laggards (final 16%)