MKT Ch. 12/13
MKT Ch. 12/13 80302 - MKT 3010 - 002
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80302 - MKT 3010 - 002
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Popular in Marketing
80302 - MKT 3010 - 002
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This 9 page Class Notes was uploaded by Nicole Dunne on Tuesday October 20, 2015. The Class Notes belongs to 80302 - MKT 3010 - 002 at Clemson University taught by Carter Willis McElveen in Summer 2015. Since its upload, it has received 58 views. For similar materials see Principles of Marketing in Marketing at Clemson University.
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Date Created: 10/20/15
Chapter 12 Developing New Products oz Go Pro 0 10 year overnight success story 0 invested as wrist camera for surfers 0 gives customers the opportunity to innovate o 95 of products fall within the rst year Why to rms create new products lnnovation the process by which ideas are transformed into new products and services that will help rms grow Consumer s needs are changing 0 Internet on a cell phone Market saturation 0 Without new products or services the value of the rm will ultimately decline Managing risk through diversity 0 Firms with multiple products can better withstand external shocks including changes in consumer preferences or intensive competitive activity Fashion Cycles 0 sales come from new products 0 when a person beats the video game they want the next one improving business relationships 0 capri sun made chimney stacks for the retailers to sell avors better Diffusion of Innovation diffusion of innovation 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 over time it increases then lays off cell phones takes a while for innovation to spread the theory surrounding diffusion of innovation helps marketing s understand the rate at which consumers are likely to adopt a new product or service pioneers new product introductions that establish a completely new market or radically change both the rules of competition and consumer preferences in a market breakthroughs st movers product pioneers that are the rst to create a market or product category making them readily recognizable to consumers and thus establishing a commanding and early market share lead o lnnovators those buyers who want to be the rst on the block to have the new product or service 0 Early adopters the second subgroup that begins to use a product or service innovation usually doesn t like to take much risk 0 Early majority represents approximately 34 of the population Crucial because without them the product will fail Don t like to take much risk so they wait till the product works itself out 0 Late majority last group of buyers to enter a new product market Laggards 16 like to avoid change and rely on traditional products until they are no longer available EQUINE 5quot H li li n m WIFE ll am Earn clawquots W W i39 miw m lth hall5n an lha any chh m E39il r M EDDIE of V 7 v II 9mm a in 7 Mt Hum M Fran 0 Using the Diffusion of Innovation Theory 0 Relative advantage apple created an lpad that does many things rather than a reader tablet o Compatibility 0 Observability when a product is easily observed their bene ts or uses are easily communicated to others which enhances the diffusion process 0 Complexity amp Trialibility less complex easier to try Ability to try to the product for a limited time How Firms Develop New Products ldea generation 0 Internal RampD High product development costs Often the source of technological products Often the source of breakthrough products 0 RampD Consortia Consortia groups of other rms and institutions to explore new ideas or obtain solutions for developing new products Lower costs and risks Bene ts spread to all rms Ex pharmaceutical industry research Licensing Firms purchase the rights to technology or ideas from other searchintensive rms Saves high costs of internal RampD but the rm is banking on a solution that already exists but has not been marketed Brainstorming Firms often engage in brainstorming sessions during which a group works together to generate ideas No idea can be immediately accepted or rejected Only at the end of the session do members vote on ideas Outsourcing IDEAsells ideas to companies Competitor s Products Reverse engineering involves taking apart a competitor s product analyzing it and creating an improvement product that does not infringe on the competitor s patents if any exists copycat customer input as much as 85 of BZB products come from consumers uses to surveys for inputs lead users modify existing products according to their own ideas to suit their speci c needs ex Lays potato chips 0 Concept Testing 0 Concept brief written descriptions of a product or service its technology working principles and forms and what customer needs it would satisfy Concept testing refers the process in which a concept statement is presented to potential buyers or users to obtain their reactions 0 Triggers the market research process 0 ldea screening a lter that product development process which eliminates ideas that are inconsistent with the organizations new product strategy or are inappropriate for some other reason 0 Product Development 0 Product development 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 0 Prototype the rst 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 0 Alpha testing an attempt by the rm to determine whether a product will perform according to its design and whether it satis es the need for which it was intended occurs in the rm s RampD 0 Beta testing having potential consumers examine a product prototype in a real use setting to determine its functionality performance potential problems and other issues speci c to its use 0 Premarket test conducted before a product or service is brought to market to determine how many customers will try and then continue to use it 0 Market Testing 0 The limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation 0 Premarket Tests conducted before a product or service is brought to market to determine how many customers will try and then continue to use it Customers exposed Customers surveyed Firm makes decision 0 Test marketing introduces a new product or service to a limited geographical area usually a few cities prior to a national launch More expensive than premarket tests Market demand is estimated 0 Product Launch Trade promotions advertising to wholesalers or retailers to get them to purchase new products often through special pricing incentives Introductory price promotions limitedduration lower than normal process designed to provide retailers with an incentive to try the products Trade show major events attended by buyers who choose to be exposed to products and services offered by potential suppliers in an industry Place Price Timing of launch is important 0 Evaluation of results satisfaction of technological requirements Customer acceptance Satisfaction of the rms nancial requirements Why new products fail No discernable bene ts 0 Poor match between features and customer desires Overestimation of market size Incorrect positioning 0 Price too high of too low Inadequate distribution 0 Poor promotion Inferior product Product Life Cycle 0 Introduction state state of the product life cycle when innovators start buying the product 0 Low sales 0 Lownegative pro ts 0 Innovators buy 0 One or few copetitors Growth stage stage of the product life cycle when the product gains acceptance demand and sales increase and competitors emerge in the product category 0 Sales rising o Pro ts rapidl rising 0 Early adopters and early majority 0 Few but increasing competitors Maturity stage stage of the product life cycle sales reach their peak so rms try to rejuvenate their products by adding new features or product category 0 Peak of sales 0 Pro ts are peak to declining 0 Late majority buyers 0 High number of competitors and competitive products Decline stage of product life cycle when sales decline and the product eventually exists in the market place 0 Sales declining o Pro ts declining o Laggards are buying 0 Low number of competitors and products Chapter 13 Services the intangible product oz Disney 0 Mass customization 0 Lessons from the mouse Day 1 in training how to create magical moments sweat the details Green side up all hands on deck Use your mouse ears weddingsparking solutions Always show ready case members onstage guests not customers 0 Every guest is important assertive friendly special treatment 0 Provide communications training 0 Magic and bands enhancing customer service further 0 Builds loyalty Over 80 of GDP is made up of services 0 Service any intangible offering that involves a deed performance or effort that cannot be physically possessed Customer service speci cally refers to human or mechanical activities rms undertake to help satisfy their customers needs and wants By providing good customer service rms add value to their products 0 Core service the most basic bene t the customer is buying hotel bed 0 Supplementary service a group of services that support the core service hotel room service Services Marketing Differs From Product Marketing 0 Factors differentiating services from goods 0 Intangible Cannot be touched tasted or seen Requires cues to aid customers Atmosphere is important to convey value Images are used to convey bene t of value 0 lnseparable It is produced and consumers at the same time that is service and consumption are inseparable Little opportunity to test a service before use Lower risk by offering guarantees or warranties Ex haircut o Heterogeneous Delivery of service is more variable Ex hair stylist may give a bad hair cut because she went out the night before Technology Training Automation 0 Perishable Cannot be stored for use in the future Airplane seats Hotel rooms not sold restaurant add specials to get customers Service as a Process 0 people processing the service directed at customer haircut doctors nails possession procession service directed at customer s physical possessions ex dry cleaning lawn maintenance maid mental stimulus processing service directed at people s minds ex college concerts FB games plays 0 information processing services that use technology brain power directed at customer s assets ex banking nancial planning Evaluating Service Quality reliability the ability to perform the service dependably and accurately Responsiveness the willingness to help customers and provide prompt service assurance the knowledge of and courtesy by employees and their ability to convey trust and con dence 0 empathy the caring individualized attention provided to customers tangibles the appearance of physical facilities equipment personnel and communication materials Providing Great Service The Gaps Model 0 service gap results when a service fails to meet the expectations that customers have about how it should be delivered 0 Knowledge Gap 0 Re ects the difference between customers expectations and the firm s perception of those expectations 0 Firms can close this gap by determining what the customers want 0 Understanding Customer Expectations Expectations are Based on their knowledge and expedences Expectations Vary according to the type of service Expectations also vary depending on the situation Service quality customer s perceptions of how well a service meets or exceeds their expectations Zone of tolerance the area between customers expectations regarding their desired service and the minimum level of acceptable service that is the difference between what eh customer really wants and what he or she will accept before going elsewhere list of acceptable outcomes Standards gap 0 O O I The difference between the firm s perception of customers expectations an the service stands it sets By setting appropriate service standards training employees to meet and exceed those standard and measuring service performance rms can close this gap Ex made to order chicken Delivery Gap 0 O O O 0 Difference between the firm s service standards and the actual service it provides to customers This gap can be closed by getting employees to meet or exceed service standards when the service is being delivered by empowering service producers providing support and incentives and using technology where appropriate Empowerment allowing employees to make decisions about how service is provided to customers Emotional support concerns for others wellbeing and support of their decisions in a job setting Instrumental support providing the equipment or systems needed to perform a task in a job setting Communications Gap 0 O O Refers to the difference between the actual service provided to customers and the service that the firm s promotion program promises If rms are more realistic about the services they can provide and at the same time manage customer expectations effectively they general can close the gap Only promise what you can deliver Communicate service expectations Service Quality Increase service quality by Listening to the customers and involving them in the service recovery Finding a fair solution Distributive fairness pertains to a customer s perception of the bene ts he or she received compared with the costs inconvenience or loss that resulted from a service failure Procedural fairness refers to the customer s perception of the fairness of the process used to resolve complaints about service Resolving problems quickly The longer it takes to resolve service failure the irritated the customer will become and the more people he or she is likely to tell about the problem
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