Principles of Marketing v5.0 – Chapter 7: Developing and Managing Offerings

32 Question-and-Answer flashcards covering the 7-step new-offering development process, idea sources, screening, feasibility, testing, launch, evaluation, and the full Product Life Cycle stages with related pricing, distribution, and extension strategies.

What is the first step in the new-offering development process?

Need recognition—realizing that a customer problem or desire exists.

In the 7-step offering development model, what follows ‘Need Recognition’?

Search for product information.

During which step of offering development do consumers compare products against evaluative criteria?

Product evaluation.

Which stage of the consumer purchase process involves deciding when, where, and how to buy?

Product choices and purchase.

What are two possible outcomes in the ‘Disposal’ step of the offering development model?

Consumers may repurchase/upgrade or discard/sell/give away the product.

Name four common internal or external sources of new-product ideas.

Employees, customers, suppliers, and competitors.

Who are ‘lead users’ in B2B markets?

Customers skilled at generating innovative product ideas or applications.

Define crowdsourcing in product innovation.

Obtaining ideas, funding, or contributions online from large groups rather than internal sources.

How does crowdfunding differ from crowdsourcing?

Crowdfunding refers specifically to obtaining online funding (e.g., Kickstarter).

What is a ‘line extension’?

A new product or service that builds on an existing company offering.

Give two key questions asked during idea screening.

Does the idea add customer value? Can it be produced profitably within budget?

What is concept testing?

Presenting the product idea to potential customers via focus groups or depth interviews to gauge reactions.

Differentiate investment risk from opportunity risk in new-product development.

Investment risk is failing to earn ROI on development costs; opportunity risk is missing out on a better idea because resources were committed elsewhere.

What does Quality Function Deployment (QFD) focus on?

Designing an offering that delivers the benefits customers desire.

Explain alpha testing.

Laboratory or in-house testing of the prototype before customer exposure.

What is beta testing?

Real-world use of the product by actual customers to identify issues before launch.

Define a ‘market test’.

A small-scale launch of the full marketing plan to gauge market response before nationwide roll-out.

What is a ‘rolling launch’?

Making the new offering available in select markets first, then expanding gradually.

List the seven basic steps in the new-offering development process.

Idea generation, idea screening, feature specification, development, testing, launch/commercialization, and evaluation.

What does the Product Life Cycle (PLC) describe?

The stages a product goes through in the market: introduction, growth, maturity, and decline.

Why are marketing costs typically highest in the introduction stage?

Because firms invest heavily in R&D recovery, promotion, and initial distribution setup.

Contrast penetration and skimming pricing strategies.

Penetration sets a low initial price to gain share; skimming sets a high price to recoup investment quickly.

What triggers the shift from introduction to growth in the PLC?

Market acceptance resulting in rapidly increasing sales.

Why do firms need sufficient inventory in the growth stage?

To meet rising demand and expand distribution coverage.

Describe typical pricing behavior in the growth stage.

Prices often remain stable, though some competitors may lower prices to gain share.

What characterizes the maturity stage of the PLC?

Sales level off, demand is driven by replacement purchases, and competition is intense.

Give three tactics for extending a product’s mature phase.

Modify the product (new features, packaging), target new markets, or adjust marketing strategy.

How can packaging changes extend product maturity?

By refreshing design or creating new usage occasions that attract existing and new buyers.

Name three ways firms can reach new markets to prolong product life.

Entering global markets, selling online, or finding substitute product applications.

What happens to sales and profits in the decline stage?

Sales drop rapidly and profits erode unless costs are reduced (harvesting).

What is ‘harvesting’ a declining product?

Cutting marketing and production costs to maximize remaining profit until the product is phased out.

List two reasons some products never enter the growth stage.

Failure to generate sufficient consumer awareness or inability to demonstrate compelling value versus competitors.