chapter 11 marketing 3000

categories of new products
-new to the world products
-new product lines
-additions to existing product lines
-improvements or revisions of existing products
-repositioned products
-lower prices products
new to the world products (discontinuous innovations)
create an entirely new market. make up the smallest category of new products
new product lines
products the first has not previously offered, entering an established market.
ex: notebook company creating pens, travel bags, and digital creative tools
additions to existing product lines
new products that supplement a first established line.
ex: taco bell and frito-lays launching the Doritios Locos Tacos
improvements or revisions of existing products
product may be significantly or only slightly changed
ex: tide laundry detergent formula changing
repositioned products
existing products targeting new markets or market segments
ex: Fort repositioning the Mustang for generation Y as they enter their car buying years by restyling the car to create a more modern look
lower priced products
refers to product that provide performance similar to other brands at a lower price
new product development process
1. new- product strategy
2. idea generation
3. idea screening
4. business analysis
5. development
6. test marketing
7. commercialization
8. new product
1. new product strategy
links new product development process with the objectives of marketing department, business unit, and the corporation. this sharpens the focus and provides general guidelines for generating, screening and evaluating new product ideas
idea generation
customers-customer innovation centers – forum with customers and involving them in the innovation process.
employers- have formal and informal process for employees to propose new product ideas
distributors- typically more aware of customer needs than are manufacturers.
competitors- monitoring the performance of competitors products
research and development- basic research, applied research, product development and product modification
consultants- always available to examine a business and recommend product ideas
other experts-crowdsourcing
idea screening
first filter in product development. it eliminates ideas that are inconsistent with the organizations new-product strategy or not appropriate. use concept test to evaluate a new idea
business analysis
preliminary figures for demand, cost, sales and profitability are calculated. costs and revenue are compared for the first time.
R&D or engineering may develop a prototype. it should map out packaging, branding, labeling, preliminary promotion, price and distribution strategies. this stage can last a long time and be very expensive.
test marketing
limited introduction of product and marketing program to determine the reactions of potential customers in a market situation. help management evaluate alternative strategies and assess how well the various aspects of the marketing mix fit together.
final stage in new product development, the decision to market a product. ordering production materials and equipment, starting production, building inventories, shipping the product to field distribution points.
Explain the importance of developing new products and describe the six categories of new products.
New products are important to sustain growth and profits and to replace obsolete items. New products can be classified as new-to-the-world products (discontinuous innovations), new product lines, additions to existing product lines, improvements or revisions of existing products, repositioned products, or lower-priced products. To sustain or increase profits, a firm must innovate.
Explain the steps in the new-product development process.
First, a firm forms a new-product strategy by outlining the characteristics and roles of future products. Then new-product ideas are generated by customers, employees, distributors, competitors, vendors, and internal research and development personnel. Once a product idea has survived initial screening by an appointed screening group, it undergoes business analysis to determine its potential profitability. If a product concept seems viable, it progresses into the development phase, in which the technical and economic feasibility of the manufacturing process is evaluated. The development phase also includes laboratory and use testing of a product for performance and safety. Following initial testing and refinement, most products are introduced in a test market to evaluate consumer response and marketing strategies. Finally, test market successes are propelled into full commercialization. The commercialization process involves starting up production, building inventories, shipping to distributors, training a sales force, announcing the product to the trade, and advertising to consumers.
Understand why some products succeed and others fail.
Despite the amount of time and money spent on developing and testing new products, a large proportion of new-product introductions fail. Products fail for a number of reasons. Failure can be a matter of degree—absolute failure occurs when a company cannot recoup its development, marketing, and production costs, while relative product failure occurs when the product returns a profit but fails to achieve sales, profit, or market share goals.
Discuss global issues in new-product development.
A marketer with global vision seeks to develop products that can easily be adapted to suit local needs. The goal is not simply to develop a standard product that can be sold worldwide. Smart global marketers also look for good product ideas worldwide.
Explain the diffusion process through which new products are adopted.
The diffusion process is the spread of a new product from its producer to ultimate adopters. Adopters in the diffusion process belong to five categories: innovators, early adopters, the early majority, the late majority, and laggards. Product characteristics that affect the rate of adoption include product complexity, compatibility with existing social values, relative advantage over existing substitutes, visibility, and “trialability.” The diffusion process is facilitated by word-of-mouth communication and communication from marketers to consumers.
Explain the concept of product life cycles.
All brands and product categories undergo a life cycle with four stages: introduction, growth, maturity, and decline. The rate at which products move through these stages varies dramatically. Marketing managers use the product life cycle concept as an analytical tool to forecast a product’s future and devise effective marketing strategies.

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