Chapter 11 - Developing & Managing Products

New Product

A product new to the world, the market, the producer, the seller, or some combination of these

New-to-the-world products

create an entirely new market

New-product lines

allow a firm to enter an established market

Additions to existing product lines

supplements to a firm’s established line

Improvements or revisions of existing products

significantly or slightly changed existing products

Repositioned products

targeted at new markets or market segments

Cost reductions

provide performance similar to competing brands at a reduced price

Many products fail or perform poorly because:

−They don’t offer any discernible benefit as compared with existing products.

−There is a poor match between product features and customer desires.

−Market size was smaller than estimated.

−The product was incorrectly targeted, positioned, distributed, or promoted.

−The price was too high or too low.

The product was inferior.

Innovation

A product perceived as new by a potential adopter

Diffusion

•The process by which the adoption of an innovation spreads

•Five categories of adopters participate in the process

Complexity

•The degree of difficulty involved in understanding and using a new product. The more complex the product, the slower is its diffusion.

Compatibility

The degree to which the new product is consistent with existing values and product knowledge, past experiences, and current needs. Incompatible products diffuse more slowly than compatible products.

Relative Advantage

•The degree to which a product is perceived as superior to existing substitutes.

Observability

•The degree to which the benefits or other results of using the product can be observed by others and communicated to target customers.

Trialability

•The degree to which a product can be tried on a limited basis. It is much easier to try a new toothpaste or breakfast cereal, for example, than a new personal computer.

Product Life Cycle PLC

A concept that provides a way to trace the stages of a product’s acceptance, from its introduction (birth) to its decline (death)

−It is simply a tool to help marketers forecast future events and suggest appropriate strategies.

Product Category

All brands that satisfy a particular type of need

Introductory stage

The full-scale launch of a new product into the marketplace

Growth Stage

The second stage of the product life cycle, when sales typically grow at an increasing rate; many competitors enter the market; large companies may start to acquire small pioneering firms; and profits are healthy

Maturity Stage

A period during which sales increase at a slower rate

Decline Stage

•A long-run drop in sales