Term
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Definition
Refers to original products, product improvements, product modifications, and new brands developed from the firm's own research and development.
New products are a key source of growth.
New products are risky.
90% of all products introduced to America fail.
Companies lose an estimated 20 to 30 billion dollars on failed food products alone. |
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Term
| Reasons for New product Failure (9 main reasons) |
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Definition
1. Overestimation of market size
2. Poor design
3. Incorrect Positioning
4. Wrong timing
5. Priced too high
6. Ineffective promotion
7. Management Influence
8. High Development Costs
9. Competition |
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Term
Major Stages in New-Product Development
(8 main stages) |
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Definition
1. Idea generation
2. Idea screening
3. Concept development and testing
4. Marketing strategy and development
5. Business analysis
6. Product development
7. Test marketing
8. Commercialization |
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Term
| Idea Generation: 2 Sources, Internal and External |
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Definition
Internal: Refers to the company's own formal research and development management and staff, and intraprenuerial programs.
External Sources: refers to sources outside of the company such as customers, distributors, competitors, suppliers, and outside design firms.
Dorito’s recently asked consumers to come up with a new flavor and new advertising. The Classic Mini Cooper brand was running Mini Mania’s the “Awesome New Product” Idea Contest. The grand prize winner received a 25 percent off promo code! Two second place winners will receive 15 percent off promo codes.
Lego enthusiasts: architects, engineers, designers.
Microsoft: “windows 7 was my idea”
Steve Jobs: “you can’t ask people what they want if it’s around the next corner”
Domino’s new campaign |
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Term
New Product Development Process:
Product Idea
Product Concept
Product Image |
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Definition
Product Idea: is an idea for a possible product that the company can see itself offering to the market
Product Concept: is a detailed version of the idea stated in meaningful consumer terms
Product Image: is the way consumers perceive an actual or potential product |
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Term
| Concept Development and Testing |
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Definition
Concept testing refers to testing new-product concepts with groups of target consumers
Think of a new Electric Car ad:
100% electric
Acceleration to 60 mph in 4 seconds
250 miles per charge
1 penny per mile to power
But how to go from here to commercialization? |
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Term
New Product Development Process: Market Strategy Development:
Test Marketing |
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Definition
Test marketing is the stage at which the product and marketing program are introduced into more realistic marketing settings
Provides the marketer with experience in testing the product and entire marketing program before full introduction |
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Term
New Product Development Process:Marketing Strategy Development
To Test or not to Test: |
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Definition
When Firms test market:
New Product with large investment
Uncertainty about product or Marketing Program
When Firms may not test:
Simple line extension
Copy of competitor product
Low Costs
Management confidence
It is always better to test than not to test. Data/Numbers speak for themselves |
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Term
New Product Development Process:
Commercialization |
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Definition
When to launch
Where to launch
Planned Market roll out |
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Term
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Definition
Product Development
Introduction
Growth
Maturity
Decline
Examples? |
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Term
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Definition
| Sales are zero and investment costs mount |
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Term
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Definition
| Slow sales growth and profits are non existent |
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Term
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Definition
| Rapid market acceptance and increasing profits |
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Term
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Definition
| Slow down in sales growth, profits level off or decline |
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Term
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Definition
| Sales fall off and profits drop |
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Term
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Definition
are temporary periods of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity
Product lifecycle graph looks like a triangle
Examples:
Ferbies
Beanie Babies
Pet Rock
Giga Pets, Tomagatchi |
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Term
| Product Life Cycle Strategies: Style |
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Definition
is a basic and distinctive mode of expression.
Describe Graph |
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Term
| Product Life cycle strategies: Fashion |
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Definition
is a currently accepted popular style in a given field.
Graph: less harsh than a fad |
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Term
| Product Life Cycle Strategies: Fads |
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Definition
temporary period of unusually high sales driven by consumer enthusiasms and immediate product or brand popularity (low carb diet)
Graph is a triangle |
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Term
| Product Life Cycle Strategies: Introduction Stage |
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Definition
Slow Sales Growth
Little or no profit
High distribution and promotion expense |
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Term
| Product Life Cycle Strategies: Growth |
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Definition
-Sales Increase
-New Competitors enter the market
-Price stability or decline to increase volume
-Consumer education
-Profits increase
-Promotion and manufacturing costs gain economies of scale |
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Term
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Definition
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Term
| Product Life Cycle Strategies: Maturity |
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Definition
-Slow down in sales
- Many Suppliers
- Substitue Products
-Overcapacity leads to competition
- Increased Promotion and R&D support sales and profits
Cars are very mature products so companies are always coming up with new models and features. |
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Term
| Product Life Cycle Strategies: Maturity Stage Modifying Strategies |
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Definition
-Market Modifying
-Product Modifying
-Marketing Mix Modifying
This link is for 1000 Uses of Glad Web site. It is described below, and in the book, as a way to modify the product.
In modifying the market, the company tries to increase the consumption of the current product. It may look for new users and new market segments. The manager may also look for ways to increase usage among present customers. The company might also try modifying the product—changing characteristics such as quality, features, style, or packaging to attract new users and to inspire more usage. It can improve the product’s styling and attractiveness. It might improve the product’s quality and performance—its durability, reliability, speed, taste. |
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Term
| Product Life Cycle Strategies: Decline Stage |
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Definition
Maintain the Product
Harvest the Product
Drop the product |
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