Fundamentals of Marketing - Chapter 8: New Product Development

Vocabulary practice flashcards covering key terms, concepts, stages, and frameworks from Chapter 8 (New Product Development) of Fundamentals of Marketing (MK 2210).

Product Life Cycle (PLC)

The sequence of stages that a new product goes through starting with introduction and evolving into growth, maturity, and decline over its lifetime.

Introduction Stage

A period of slow sales growth as a product is introduced into the market with high marketing spend, minimal sales, nonexistent or low profits, and few competitors.

Growth Stage

A period of rapid market acceptance and increasing profits driven by marketing programs and product demand, accompanied by increasing competition.

Maturity Stage

A period of slowdown in sales growth because the product has achieved acceptance by most potential consumers, where profits level off due to high marketing spend to defend against severe competition.

Decline Stage

The period when sales steadily decline and profits drop over time, requiring a disproportionate share of resources relative to future value, leading products to be harvested or deleted.

High-Learning Product

A product requiring significant consumer education, which results in an extended introductory period in its life cycle.

Low-Learning Product

A product whose benefits are self-evident, requiring little consumer education and resulting in a short introductory stage.

Fashion Product

A product category with a relatively short and cyclical life cycle, typically transitioning from introduction to decline within $2$ to $3$ years, only to resurface a few years later.

Fad Product

A novelty product with a very short life cycle that experiences immediate rapid growth followed by an equally rapid decline.

Line Extension

The addition of a new item or variation to an already existing product line to keep products in the maturity stage longer.

Modifying the Market

A strategy to extend the product life cycle by finding new customers, increasing a product's current usage, or creating a new usage situation.

Repositioning a Product

Changing the place a product occupies in consumers' minds to meet changing consumer needs, react to competitors, or improve the value offered.

Minor Innovation

A new product variation that requires no new learning or adjustments by consumers (e.g., new and improved toothpaste or detergent).

Continuous Innovation

A product that changes a consumer's normal routine but does not require totally new learning (e.g., Swiffer WetJet or wearable technology).

Radical Innovation

A breakthrough product that requires completely new learning and consumption patterns by consumers (e.g., self-driving cars or $3\text{D}$ printers).

Adoption Curve

The sequential diffusion and acceptance of an innovation into the market by consumers over time.

Innovators

The first $2.5\%$ of adopters; venturesome consumers who try new ideas at some risk, have higher education, and utilize multiple information sources.

Early Adopters

The second group of adopters, representing $13.5\%$ of the market, who serve as social opinion leaders, have slightly above average education, and adopt new ideas early but carefully.

Early Majority

The $34\%$ of adopters who are deliberate, hold many informal social contacts, rarely lead, and adopt new ideas before the average person.

Late Majority

The $34\%$ of adopters who are skeptical, possess below average social status, and adopt innovations only after a majority of people have tried them.

Laggards

The final $16\%$ of adopters who are tradition-bound, fear debt, rely on neighbors and friends as information sources, and adopt innovations after they become traditions.

Usage Barrier

A barrier to adoption occurring when a new product is not consistent with consumers' existing usage habits.

Value Barrier

A barrier to adoption that exists when consumers perceive no incentive to change from their current product.

Risk Barrier

A barrier to adoption stemming from the perceived existence of physical, economic, or social risks if the product is purchased.

Psychological Barrier

A barrier to adoption that arises due to cultural differences or product image conflicts.

Product/Market Expansion Grid

A portfolio-planning tool (also known as the Growth matrix or Ansoff matrix) used to identify company growth opportunities through four distinct strategic approaches.

Market Penetration

A growth strategy focused on increasing sales of existing products to existing market segments without altering the product itself.

Market Development

A growth strategy centered on identifying and developing new geographic or demographic market segments for current company products.

Product Development (Strategic Direction)

A growth strategy centered on offering modified or entirely new products and SKUs to current company market segments.

Diversification

A growth strategy achieved through starting up or acquiring businesses with products and markets outside of the firm's existing domain.

Cross-Functional Team

An organizational approach that includes representation from many departments across an organization, including marketing, regulatory, product development, quality assurance, and sales.

New Venture Teams

Specialized organizational units formed to concentrate exclusively on all innovation projects for a company, including new products, new processes, or new business ventures.

New-Product Development Strategy

The first step in the NPD process, involving the identification of a development focus that aligns project-level objectives with the firm's overall strategic goals.

Idea Generation

The systematic search for new product ideas using internal organizational sources and external sources.

Crowdsourcing

Open-innovation new product idea programs that invite broad communities of customers, employees, independent scientists, researchers, and the general public into the innovation process.

Idea Screening

The process of evaluating new product ideas to spot good ideas and drop poor ideas as soon as possible, narrowing them down to a list of promising concepts.

Product Concept

A detailed version of a new product idea stated in meaningful consumer terms.

Concept Testing

The external evaluation of a new product idea with consumers to obtain early feedback on its strengths and weaknesses prior to manufacturing the physical product.

Business Analysis

The evaluation of the commercial viability of a new product concept, including $3$-to-$5$-year financial projections of sales, costs, profits, and market share.

Commercialization

The final stage of the NPD process where the new product is brought to market with full-scale production, sales, and marketing support.