Chapter 12 Guided Notes
Chapter 12 Guided Notes MKT1211K
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This 6 page Class Notes was uploaded by Lia Pearson on Sunday October 4, 2015. The Class Notes belongs to MKT1211K at Jamestown Business College taught by Mrs. Halftown in Summer 2015. Since its upload, it has received 32 views. For similar materials see PRINCIPLES OF MARKETING in Marketing at Jamestown Business College.
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Date Created: 10/04/15
Chapter 12 Developing New Products Identify the reason firms create new products Firms create new products to keep Up with chanaina customer needs to avoid market saturation to manaae risks throuah diversitv to keep up with fashion cvcles and improve business relationships In depth descriptions Keeping Up with changing customer needs when they add products services and processes to their offerings firms can create and deliver value more effectively by satisfying the changing needs of their current and new customers or by keeping customers from getting bored with the current product or service offering Avoidind market saturation the longer a product exists on the market the higher the likelihood that the market will become saturated or full Without new products or services the value of the firm will ultimately decline Managing risk throuoh diversitv firms use innovation the process by which ideas get transformed into new offerings including products services processes and branding concepts that help the firm grow to create a broader portfolio of products which helps them to diversify their risk and enhance the firm value better than a single product can As the saying goes don t put all of your eggs in one basket Keeping Up with fashion cvcles in industries that rely on fashion trends and experience short product life cycles such as books apparel arts and software markets most sales come from new products Because of this firms must continuously release new products in order to remain successful and maintain their market share Improving business relationships new products do not always target end consumers sometimes they function to improve relationships with suppliers Having new products entails communication with the suppliers retailers and all aspects of the supply chain A strong supply chain is vital for the success of any firm Define the term pioneersbreakthroughs Pioneers also known as breakthroughs are truly new product introductions or newto theworld products that create new markets These products can add tremendous value to a firm Pioneers are first movers or the first to create the new market or product category The pioneers become readily recognizable to consumers and thus establish a commanding and early market share lead Studies have found that market pioneers can command a greater market share over a longer period of time than firms that enter the market later down the road can It is important to remember though that not all pioneers succeed Sometimes imitator companies have more capital and resources and end up gaining a higher market share than the original pioneer s product Describe the different groups of adopters articulated by the diffusion of innovation theory Innovators Buyers who want to be the first on the block to have the newest product They enjoy taking risks and are regarded as highly knowledgeable Typically innovators keep themselves very well informed about the product category by subscribing to trade and specialty magazines talking to other experts visiting productspecific blogs and forums that describe the new products and attending productrelated forums seminars and special events Innovators only represent around 25 percent of the total market for any new product or service Earlv Adooters The second group to purchase the product They generally do not like to take as much risk as innovators do and instead wait only purchasing the product after careful review and analysis This group represents around 135 percent of all buyers in the market 0 Early adopters are crucial for bringing the other three buyer categories to the market Earlv Maioritv Represents around 34 percent of the population This group is crucial since it makes up such a large portion of the market 0 Members typically wait until the bugs have all been worked out of the product before purchasing 0 When early majority customers enter the market the number of competitors in the marketplace usually also has reached its peak so these buyers have many different price and quality choices Late Maioritv Also represents about 34 percent of the population 0 This group is the last to enter the market 0 At this stage the product has usually reached its full market potential and its price may at this point be decreasing Laggards Laggards make up roughly 16 percent of the market 0 These consumers like to avoid change and rely on traditional products until they are no longer available 0 In some cases laggards may never purchase the product or service Explain the stages involved in developing a new product or service ldea Generation to generate new ideas for products a firm may use its own internal research and development R amp D efforts collaborate with other firms brainstorm research competitors products and services or conduct consumer research Concept Testind refers to the process in which a concept statement is presented to potential buyers or users to obtain their reactions These reactions help to enable the developer to estimate the sales value of the product or service possibly making changes and determine if the idea is worth developing or not Product Develooment entails a process of balancing various engineering manufacturing marketing and economic considerations to develop a products form and features or a services features A prototype or the first physical form of the product is then created After that developers move on to alpha testing and beta testing In alpha testing the firm attempts to determine whether the product will perform according to its design and whether it satisfies the need for which it was intended ln beta testing firms use potential customers who examine the product prototype in a real use setting to determine its functionality performance potential problems and other issues specific to its use Market Testind trial batches of products grouped into two segments premarket tests and test marketing Firms conduct premarket tests before they actually bring a product to market to determine how many customers will try and then continue to use the product or service according to a s mall group of potential consumers Test marketing is a method of determining the success potential of a new product and introduces the offering to a limited geographical area prior to a national launch Product Launch the firm determines how a product will be positioned sets a budget selects promotion tactics sets a place and a price and then releases the product nationwide to consumers Timing is also important when launching a product 0 Promotion can be done through trade shows trade promotions and introductory price promotions Price is often set thorough a manufacturer s suggested retail price also known as the MSRP Retailers sometimes receive a slotting allowance or a fee paid by the manufacturer to get new products into stores or to gain more or better shelf space for their products Evaluation of Results after the product has been launched marketers must undertake a critical postlaunch review to determine whether the product and its launch were a success or failure and what additional resources or changes to the marketing mix are needed if any are needed at all Describe the various product life cycle concepts Introduction Stage The introduction staae for a new innovative product or service usually starts with a single firm and innovators are the ones to try the new offering The introduction stage is characterized by initial losses to the firm due to its high start up costs and low levels of sales revenue as the product begins to take off If the product is successful firms may start seeing profits towards the end of this stage Growth Stage The growth stage of the product life cycle is marked by a growing number of production adopters rapid growth in industry sales and increases in both the number of competitors and the number of available product versions The market becomes more segmented and consumer preferences more varied which increases the potential for new markets or new uses of the product or service Also during this stage firms attempt to reach new consumers by studying their preferences and producing different product variations accordingly Maturity Stage The maturity stage of the product life cycle is characterized by the adoption of the product by late majority and intense competition for market share among firms Marketing costs increase as these firms compete for the most amount of the market share Because of this competition prices usually begin to decline Decline Stage Firms with products in this stage either position themselves for a niche segment of diehard consumers or those with special needs or they exit the market completely At this stage laggards may or may not enter the market
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