Marketing: Developing Products, Services, and the New-Product Process

Vocabulary flashcards detailing key terminology, consumer and business product classifications, levels of innovation, failure reasons, and the seven stages of the new-product development process.

Product

A good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers' needs and is received in exchange for money or something else of value.

Good

An offering with tangible attributes that a consumer's five senses can perceive, as well as intangible attributes such as delivery or warranties.

Nondurable Good

An item consumed in one or a few uses, such as food products, fuel, or chewing gum, which typically relies heavily on consumer advertising.

Durable Good

An item that usually lasts over many uses, such as appliances, cars, and smartphones, which generally emphasizes personal selling.

Services

Intangible activities or benefits that an organization provides to satisfy consumers' needs in exchange for money or something else of value.

Idea

A thought that leads to a product or action, such as a concept for a new invention or an initiative for eating healthier foods.

Consumer Products

Products purchased by the ultimate consumer.

Business Products

Products organizations buy that assist in providing other products for resale; also called B2B products or industrial products.

Convenience Products

Items that the consumer purchases frequently, conveniently, and with a minimum of shopping effort.

Shopping Products

Items for which the consumer compares several alternatives on criteria such as price, quality, or style.

Specialty Products

Items that the consumer makes a special effort to search out and buy.

Unsought Products

Items that the consumer either does not know about or knows about but does not initially want.

Derived Demand

A characteristic of business products where demand and sales frequently result or derive from the sale of consumer products.

Components

Business products that become part of the final product, including raw materials such as lumber and assemblies such as car engines.

Support Products

Business items used to assist in producing other goods and services, including installations, accessory equipment, supplies, and industrial services.

Product Item

A specific product that has a unique brand, size, or price.

Stock Keeping Unit (SKU)

A unique identification number that defines a specific product item for ordering or inventory purposes.

Product Line

A group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range.

Product Mix

All the product lines offered by an organization.

Feature Bloat

The tendency for product developers to add additional features or functionalities to a product that are not of any benefit to most consumers and unnecessarily add to the cost of the product.

Feature Fatigue

Consumer dissatisfaction and annoyance that occurs after purchase when the complexity of using a product overpowers its usability, reducing repeat purchase and retention.

Continuous Innovation

An innovation requiring no new behaviors to be learned by consumers, where marketing focuses primarily on generating awareness.

Dynamically Continuous Innovation

An innovation requiring only minor changes in consumer behavior, where marketing focuses on educating buyers on benefits, advantages, and proper use.

Discontinuous Innovation

An innovation that forces consumers to learn entirely new consumption patterns to use the product, necessitating extensive consumer education and awareness efforts.

Product Line Extension

The lowest level of organization-level innovation, involving an incremental improvement of an existing product line the company already sells.

Brand Extension

The practice of using an established brand name to introduce a new product into an unfamiliar market.

Radical Invention

The highest level of newness from an organization's perspective, representing a truly revolutionary new product that creates substantial value for consumers.

Protocol

A statement that, before product development begins, identifies: (1) a well-defined target market; (2) specific customers' needs, wants, and preferences; and (3) what the product will be and do to satisfy consumers.

Closed Innovation

An innovation protocol based on the conviction that new-product ideas, designs, and consumer solutions can originate and emerge successfully only from inside the organization.

Open Innovation

Practices and processes that encourage the use of external as well as internal ideas and collaboration when conceiving, producing, and marketing new products and services.

Groupthink

A phenomenon in task force and committee meetings where team members remain silent about flaws in a product concept out of fear of being cast as a negative thinker or not a team player.

New Product Vitality Index

A marketing metric originated by 3M and used by $62\%$ of large U.S. companies that tracks the percentage of total company sales revenue generated by new products released in the past three years.

New-Product Development Process

The sequence of seven stages an organization goes through to identify opportunities and convert them into salable products or services.

Stage-Gate Process

A formal evaluation process used by firms to evaluate whether the results at each stage of the new-product development process are successful enough to warrant proceeding to the next stage or terminating the project.

New-Product Strategy Development

The first stage of the new-product development process that defines the role for a new product in terms of the firm's overall objectives using SWOT analysis and environmental scanning.

Idea Generation

The second stage of the new-product development process, involving the creation of a pool of concepts from consumers, employees, basic R&D, and competitors to serve as candidates for new products.

Crowdsourcing

An open innovation method of idea generation that involves generating insights leading to actions based on ideas submitted by massive numbers of people in response to a precise question.

Crowdfunding

A method of gathering an online community of supporters to financially back a specific early-stage project that is unlikely to obtain resources from traditional sources such as banks or venture capital firms.

Screening and Evaluation

The third stage of the new-product development process, which internally and externally evaluates new-product ideas to eliminate those that warrant no further effort.

Customer Experience Management (CEM)

The process of managing the entire customer experience within a company, ensuring that service interactions are consistently delivered, differentiated, and aligned with employee capabilities.

Concept Tests

External evaluations with consumers that consist of preliminary testing of a written description, sketch, or mockup of a new-product idea rather than an actual finished product.

Business Analysis

The fourth stage of the new-product development process, which specifies product features, develops the marketing strategy, assesses corporate fit and synergies, and makes financial projections prior to building a prototype.

Prototype

A full-scale operating model of a new product or service.

Development (Stage 5)

The fifth stage of the new-product development process that turns an idea on paper into a demonstrable, producible prototype through manufacturing, laboratory testing, and consumer evaluations.

Market Testing

The sixth stage of the new-product development process, which involves exposing actual products to prospective consumers under realistic purchase conditions to determine if they will buy.

Standard Test Market

A test marketing method where a company sells a product through normal distribution channels to distributors, wholesalers, and retailers in selected demographically representative cities.

Controlled Test Market

A test marketing method that involves contracting the entire test program to an outside service that pays retailers for shelf space and guarantees a specified percentage of the product's distribution volume.

Simulated Test Market (STM)

A laboratory testing technique, often run in shopping malls, that replicates a full-scale test market by questioning qualified consumers, showing advertisements, and giving them money to make purchase choices in a simulated or real store environment.

Commercialization

The seventh and final stage of the new-product development process that positions and launches a new product in full-scale production and sales with a specific marketing program.