Marketing – Ch.9 – Flashcards

66% of all new products introduced by established companies fail within two years. 96% of all innovations fail to return their development costs

*The systematic search for new product ideas. *Major sources of new product ideas include internal sources and external sources such as customers, competitors, distributors, and suppliers.

* The company finds new ideas through formal research and development - only 33% * Customers as a key source - 41% *Heads of company business units - 35% * Employees - 33% *Sales Force - 17% A company can pick the brains of its own people - from executives to salespeople to scientists, engineers, and manufacturing staff. Social networks and intrapreneurial programs that encourage employees to develop new product ideas.

*Distributors and Suppliers *Customers themselves *Even competitors

Inviting broad communities of people - customers, employees, independent scientists and researchers, and even the public at large - into the new product innovation process. By tapping into sources both inside and outside the company, you can have unexpected but powerful new ideas

Idea generation - create large numbers of ideas. Idea screening - spot good ideas, drop poor ones as soon as possible. You only want profitable ideas worth the money ideas. ideas are expanded into more complete product concepts. When screening, marketers and researchers examine the chances that the product concept might achieve technical and commercial success.

*Product Idea: an idea for a possible product that the company can see itself offering to the market *Product concept: a detailed version of the idea stated in meaningful consumer terms *Product Image: the way consumers perceive an actual or potential product.

Several descriptions of the product are generated to find out how attractive each concept is to customers. From these concepts, the best one is chosen.

Testing new product concepts with groups of target consumers.

Designing an initial marketing strategy for introducing this car to the market. Part 1: A description of the target market; the planned value proposition; and the sales, market share, and profit goals for the first few years. Part 2: Outline of the product's planned price, distribution, and marketing budget for the first year. Part 3: Description of the planned long-run sales, profit goals, and marketing mix strategy.

A review of the sales, costs, and profit projections for a new product to find out weather these factors satisfy the company's objectives.

*Developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering *Huge jump in investment *Can take a long time

The stage of new product development in which the product and its proposed marketing program are tested in realistic market settings. Gives the marketer experience with marketing a product before going to the great expense of full introduction. An alternative to extensive and costly standard test markets: companies can use controlled test markets, where new products are tested among controlled panels of shoppers and stores. Or stimulated test markets. Researchers measure consumer responses to new product and marketing tactics in laboratory stores or stimulated online shopping environments.

Introducing a new product to the market. high costs Decisions must be made concerning: timing, where to launch the new product, and how to implement the market rollout.

Finding new ways to solve customer problems and create more customer satisfying experiences. Most successful new products are ones that are differentiated, solve major customer problems, and offer a compelling customer value proposition.

Total company, cross-functional effort. Various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness. Sometimes creates organizational tension. Sequential product development approach: one company department works individually to complete its stage of the process before passing the new product along to the next department and stage. Can be slow.

Innovation management system: collect, review, evaluate, and manage new product ideas. Appoint an innovation manager. Helps create innovation-oriented company culture. Shows that top management supports, encourages, and rewards innovations. Yields a large number of new product ideas.

*Product Development: When the company finds and develops a new product idea. Sales are zero and the company has a lot of money invested already *Introduction: Slow sales growth as product is just being introduced in the market. Profits are nonexistent because of the heavy expenses of product intro. *Growth: period of rapid market acceptance and increasing profits. *Maturity: A period of slowdown in sales growth b/c product has achieved acceptance by most potential buyers. Profits level off or decline. *Decline: Sales fall off and profits drop

a basic and distinctive mode of expression. Once a style is invented, it may last for generations. Has a cycle showing several periods of renewed interest. Ex: Styles of homes: colonial, ranch, transitional; clothing: formal or casual

Currently accepted or popular style in a given field. Fashions tend to grow slowly, remain popular for a while, and then decline slowly.

Temporary periods of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity. Ex Pet Rock

CHARCTERISTICS *Low Sales *High cost per customer *Negative profits *Customers are innovators *Few Competitors MARKETING OBJECTIVES: Create product engagement and trial *Offer a basic product *Use price-cost method *Build selective distribution *Build product awareness among early adopters and dealers *Use heavy sales promotion to entice trial

CHARACTERISTICS *Rapidly rising sales *Average cost per customer *Rising Profits *Customers are Early adopters *Growing number of competitors MARKETING OBJECTIVES: Maximize market share *Offer product extensions, service, and warranty *Price to penetrate market *Build extensive distribution *Build engagement and interest in the mass market *Reduce sales promotion to take advantage of heavy consumer demand

CHARACTERISTICS *Peak Sales *Low cost per customer *High profits *Customers are mainstream adopters *Stable number of competitors beginning to decline MARKETING OBJECTIVES: Maximizing profit while defending market share *Diversify brand and models *Price to match or beat competitors *Build more extensive distribution *Stress brand differences and benefits *Increase sales promotion to encourage brand switching

CHARACTERISTICS *Declining sales *Low cost per customer *Declining profits *Customers are lagging adopters *Declining # of competitors MARKETING OBJECTIVES: Reduce expenditure and milk the brand *Phase out weak items *Cut Price *Go selective; phase out unprofitable outlets *Reduce to level needed to retain hard-core loyals *Reduce to minimal level

Ironically named Launch a product and never reaches growth phase; just goes flat