W11 NPD pt. II Flashcards
What is product adoption
Product adoption is the process of customers buying and using a new product
What is product diffusion
Diffusion is how the product usage spreads throughout a population
What is the tipping point
When sales spike from slow climb → unprecedented new level
Beta testing and bleeding edge tech
Innovative tech is often released as beta test to allow usage and feedback from users testing the product under everyday conditions
Bleeding edge tech is tech not yet ready for market release due to reliability and stability issues
What model describes a person’s process from awareness to adoption?
The adoption pyramid
- Awareness
- Interest
- Evaluation
- Trial
- Adoption
- Confirmation
What are the steps of the adoption pyramid and how should marketers push the customer up through the pyramid at each stage?
- Awareness is when the consumers know a product exists
- Marketers: mass advertising/media blitz
- Interest is when a prospective consumer begins to see how the product satisfy their needs
- Marketers: teaser advertising to create curiosity and interest
- Evaluation is when customers weigh the cost and benefits of the new product
- Marketers: provides information to customers for high involvement, complex products
- Marketers: design appealing products and marketing for impulse products
- Trial is when potential buyers experience the product for the first time
- Marketers: provide demonstrations, samples
- Adoption is when the consumer actually buys the product
- Marketers: make product available and provide product use information
- Confirmation is the customer weighing expected vs. benefits and costs, good experiences → loyalty
- Marketers: reinforce customer’s choice through advertising, promotions, loyalty schemes etc. as well as providing follow-up communications to ensure satisfaction
What are the 5 types of adopters
- Innovators
- Early adopters
- Early majority
- Late majority
- Laggards
What are the characteristics of the 5 types of adopters?
Innovators
Young, risk-taking people, well-educated, financially capable
Early adopters
Heavy users concerned about social acceptance
Very influential for population, a target market for marketers
Early majority
Middle-class, above average education and social class
Tech has been well-established
Late majority
Below average education and social class
Innovation has become economic necessity, pressure from peer groups
Laggards
Traditional, lower in income level and education
New innovation may already be possible
What are the factors that affect diffusion and adoption
Diffusion of innovations model
- Relative advantage — superiority over existing products
- Compatibility — with consumer’s lifestyles, beliefs, and values
- Complexity — ease of use and understanding
- Trialability — how easy it is to sample a new product and its benefits
- Observability — how easy it is to observe consumers using the product
- Communication
- Perceived risk — the degree of risks (physical, financial, social, psychological, time) uncertainty, social approval, and costs
What is the product life cycle?
Product life cycle (PLC) framework is how marketing tactics change as the product’s age increases
Introduction
No profits due to R&D costs
Get the brand to be well-known
New products from known brands have an advantage
Many products never make it out due to low awareness
Growth
Profits increase and peak
The product is accepted by a market and sales rapidly increase
The ‘tipping point’ occurs here
Maturity
Sales peak, profit margins begin to narrow
Typically the longest phase
Decline
Market shrinks due to change in customer needs, sales fall and profits fall
How can marketers change strategy for a product over the PLC
- Introduction – offer basic product
- Growth – offer product extensions, service, warranty
- Maturity – diversify brand and models
- Phase out weak items
How can marketers change strategy for price over the PLC
- Cost-plus
- Penetration pricing
- Match competitors
- Cut price
How can marketers change strategy for distribution over the PLC
- Build selective distribution
- Intensive distribution
- More intensive distribution
- Selective, phase out unprofitable channels
How can marketers change strategy for advertising over the PLC
- Build awareness among early adopters
- Build interest among mass market
- Differentiate benefits
- Reduce level needs to retain hardcore loyal fans
How can marketers change strategy for sales promotion over the PLC
- Use heavy sales promotion to entice trials
- Reduce promotion
- Increase promotion to encourage brand switching
- Reduce promotion to minimal level
