Marketing Principles Chapter 12: Developing New Products – Flashcards
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innovation
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the process by which ideas are transformed into new products and services that help firms grow
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diffusion of innovation
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the process by which the use of an innovation, whether a product or a service, spreads throughout a market group over time and over various categories of adopters
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pioneers
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new product introductions that establish a completely new market or radically change both the rules of competition and consumer preference in a market; also called breakthroughs
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first movers
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product pioneers that are the first to create a market or product category, making them readily recognizable to consumers and thus establishing a commanding and early market share lead
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innovators
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those buyers who want to be the first to have the new product or service
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early adopters
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the second group of consumers in the diffusion of innovation model, after innovators, to use a product or service innovation; generally don't like to take as much risk as innovators but instead wait and purchase the product after careful review
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early majority
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a group of consumers in the diffusion of innovation model that represents approximately 34 percent of the population; members don't like to take much risk and therefore tend to wait until bugs are worked out of a particular product or service; few new products and services can be profitable until this large group buys them
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late majority
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the last group of buyers to enter a new product market; when they do, the product has achieved its full market potential
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laggards
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consumers who like to avoid change and rely on traditional products until they are no longer available
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reverse engineering
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involves taking apart a competitor's product, analyzing it, and creating an improved product that does not infringe on the competitor's patents, if any exist
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lead users
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innovative product users who modify existing products according to their own ideas to suit their specific needs
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concepts
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brief written descriptions of a product or service; its technology, working principles, and forms; and what customer needs it would satisfy
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concept testing
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the process in which a concept statement that describes a product or a service is presented to potential buyers or users to obtain their reactions
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product development
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also called product design; entails a process of balancing various engineering, manufacturing, marketing, and economic considerations to develop a product's form and features or a service's features
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prototype
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the first physical form or service description of a new product, still in rough or tentative form, that has the same properties as a new product but is produced through different manufacturing processes, sometimes even crafted individually
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alpha testing
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an attempt by the firm to determine whether a product will perform according to its design and whether it satisfies the need for which it was intended; occurs in the firm's research and development department
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beta testing
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having potential consumers examine a product prototype in a real-use setting to determine its functionality, performance, potential problems, and other issues specific to its use
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premarket test
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conducted before a product or service is brought to market to determine how many customers will try and then continue to use it
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test marketing
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introduces a new product or service to a limited geographical area (usually a few cities) prior to a national launch
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trade promotions
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advertising to wholesalers or retailers to get them to purchase new products, often through special pricing incentives
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introductory price promotions
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short-term price discounts designed to encourage trial
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trade show
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major events attended by buyers who choose to be exposed to products and services offered by potential suppliers in an industry
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manufacturer's suggested retail price (MSRP)
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the price that manufacturers suggest retailers use to sell their merchandise
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slotting allowance
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fee firms pay to retailers simply to get new products into stores or to gain more or better shelf space for their products
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product life cycle
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defines the stages that new products move though as they enter, get established in, and ultimately leave the marketplace and thereby offers marketers a starting point for their strategy planning
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introduction stage
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stage of the product life cycle when innovators start buying the product
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growth stage
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stage of the product life cycle when the product gains acceptance, demand and sales increase, and competitors emerge in the product category
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maturity stage
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stage of the product life cycle when the product gains acceptance, demand and sales increase, and competitors emerge in the product category
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decline
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stage of the product life cycle when sales decline and the product eventually exits the market
