MKTG 2201 exam 3

new product development

developing products through the firm’s own efforts

three types of new product development

brand-new products; product improvements/modifications; new brands

stages in new product development

idea generation; idea screening; concept development and testing; marketing strategy development; business analysis; product development; test marketing; commercialization

idea generation

systematic search for new product ideas

two idea generation sources

internal and external

two internal idea sources

R&D and intrapreneurship

three external idea sources

competitors; customers; crowdsourcing

crowdsourcing

inviting communities of people into the product innovation process

toughest stage in new product development

idea screening

idea screening

screening new product ideas to spot good ones and drop poor ones as soon as possible

two major problems in idea screening stage

law #1: value is subjective; asymmetry: easy to come up with ideas, difficult to analyze them

product concept

a detailed version of new product idea stated in customer terms

concept testing

testing new product concepts with groups of target consumers

groupthink

a group decision-making style in which maintaining group cohesiveness is more important than considering the facts in a realistic manner

marketing strategy development

designing initial marketing strategy

three facets of marketing strategy development

formalize target market and value proposition; price, distribution strategy, budget; goals (sales, profit, etc.)

business analysis

a review of the sales, costs, and business projections for a new product (do these factors satisfy the company’s objectives?)

product development

developing the product concept into a physical concept

minimum viable product (MVP)

product with just enough features to satisfy early customers, and to provide feedback for future product developement

advantages of MVP

first to market; doesn’t waste resources

disadvantages of MVP

possibility of imitation; harm to brand

test marketing

product and its marketing program are testing in realistic settings

commercialization

introducing a new product into the market

two considerations for launching a new product

where to launch; when to launch

options for where to launch

single location; region; national market; international market

product life cycle stages

product development; introduction; growth; maturity; decline

introduction

profits will be low (if existent)

growth

sales climb quickly; other firms enter the market

difficulty with growth stage

balance penetration and profit

major practical tip for growth

raise cost of entry for competitors through market penetration and development

maturity

sales growth slows or levels off

what to do in maturity stage

identify new target market; modify the marketing mix

decline

product’s sales fade away

value delivery network

the company, its suppliers, its distributors, and its customers

marketing channel

route from the producer to the customer

three facets of a marketing channel

multiple organizations; multiple organizations jointly creating efficient product and service availability; designed to create consumption and use at the right place, time, quantity, and with appropriate level of information

most important facet of a marketing channel

designed to create consumption and use at the right place, time, quantity, and with appropriate level of information

channel level

each layer that brings a product closer to the final buyer

two types of marketing channels

direct and indirect

direct marketing channel

has no intermediary levels

indirect marketing channel

has at least one intermediary level

two major types of indirect channels

conventional distribution channel and vertical marketing system (VMS)

conventional distribution channel

channel levels act in their own best interests; case-by-case agreements

vertical marketing system (VMS)

channel levels act as a unified system

three types of VMS

corporate VMS; contractual VMS; administered VMS

corporate VMS

single owner

contractual VMS

contracts between channel levels (e.g., franchise)

administered VMS

one company (unofficially) dominates

disintermediation

cutting out intermediaries or displacement of traditional resellers by new types of intermediaries

channel value (firm perspective)

promotion; risk; physical distribution; negotiation; financing

promotion (channel value)

promote your product in ways you can’t

risk (channel value)

provide info on the market – can warn you about demand and help control inventory

physical distribution (channel value)

hold/manage inventory

negotiation

handle orders from individual customers

financing

buy many products and provide quick liquidity

channel value (consumer perspective)

distance to store; waiting time to receive product; customer service

channel conflict

disagreements among channel members

why channel conflict occurs

channel members have different goals and competing financial interests

global firms

companies that operate in more than one country

three stages of going global

deciding which markets to enter; deciding how to enter the market; deciding what marketing program

less rational reasons for deciding which market

personal experiences; anecdotes; gut feelings; herd mentality; “because we should”

how companies should decide which market

growth; GDP; cultural fit; institutional voids

institutional voids

lack of “institutions” that help facilitate market transactions

institutional void examples

absence of physical infrastructure (e.g., retailers, transportation); absence of market research firms; absence of banks; absence of effective regulators (e.g., law enforcement, patents)

whole-channel view

taking into account the entire global supply chain

global value delivery network

international seller; channels between nations; channels within nations; final user or buyer

trickiest stage in the global value delivery network

channels within nations

market entry strategies

exporting; joint venturing; direct investment

exporting

selling goods produced in home country

two types of exporting

indirect and direct

indirect exporting

company works with intermediaries in other country

direct exporting

company handles their own exports

joint venturing

partnering with a foreign company to produce or market the product

two types of joint venturing

licensing and joint ownership

licensing

developing agreement with foreign firms for production or marketing

joint ownership

creating business with foreign investors who also share ownership

direct investment

company develops its own foreign-based assembly or manufacturing facilities

biggest decision in deciding what marketing program

standardized vs. adapted

standardized global marketing

use the same marketing strategy in all markets

adapted global marketing

adjust to each market

advantages of standardized global marketing

brand equity and economies of scale

advantages of adapted global marketing

segmentation and targeting

solutions to the standardization vs. adaptation problem

adapt strategies, keep value proposition; change the context; stay away

adapt strategies, keep value proposition

standardize value proposition and adapt presentation (e.g., names)

change the context

filling an institutional void

stay away

can’t deliver on value proposition