Quiz #2- Developing New Products and Strategic Pricing

A comprehensive set of vocabulary flashcards derived from the lecture notes on developing new products, strategic pricing, and integrated marketing communications.

Innovation

A process by which ideas are transformed into new products, services, or processes that help firms grow.

Pioneers

Firms or products that are the first to create a new market or radically change existing rules.

Diffusion of Innovation

The process by which a new product spreads through a population over time, explaining adoption patterns.

Adopter Categories

Groups of consumers that adopt new products at different stages in the diffusion process.

Innovators

The first group to adopt a new product, making up 2.5% of adopters, characterized by risk-taking.

Early Adopters

The second group to adopt a new product, making up 13.5%, known for being opinion leaders.

Early Majority

A large group, making up 34%, that adopts a new product once risks are perceived to be reduced.

Late Majority

Another 34% of adopters who are skeptical, waiting until most have adopted the product.

Laggards

The last group of adopters, comprising 16%, who are resistant to change and may never adopt new products.

New Product Development (NPD) Process

A structured, multi-step process that reduces risk and increases the chance of success for new products.

Brainstorming

A group creativity technique that aims to generate as many ideas as possible without criticism.

Concept Testing

Presenting a product idea to potential buyers to gauge interest and gather feedback.

Prototype

The first physical form of a product, used for testing functionality and design.

Alpha Testing

Internal testing within a firm to ensure a product works as intended.

Beta Testing

Testing a product with real customers in real-use settings to gather feedback.

Premarket Test

A controlled test where customers are exposed to the product and surveyed about purchase intentions.

Test Marketing

Launching a product in a limited geographic area to simulate a full launch.

Product Life Cycle (PLC)

A model describing how products move through four stages: introduction, growth, maturity, decline.

Introduction Stage

The initial stage of the PLC where sales are low and profits may be negative; heavy promotion is needed.

Growth Stage

A stage in the PLC where sales rise rapidly, competitors enter, and profits increase.

Maturity Stage

The stage in the PLC where sales peak, competition is intense, and prices may drop.

Decline Stage

The final stage in the PLC where sales and profits fall, and firms may choose to exit the market.

Cost-Based Pricing Method

A pricing method where price equals cost plus markup, often ignoring customer value and competition.

Competition-Based Pricing Method

A pricing strategy where price is set relative to competitors, useful in markets with similar products.

Value-Based Pricing Method

A pricing strategy where price reflects perceived customer value rather than cost.

Price Skimming

Setting a high initial price for a new product, which is lowered over time to capture consumer surplus.

Penetration Pricing Strategy

A low initial price strategy to quickly gain market share and discourage competitors from entering.

Markdowns

Temporary price reductions used to clear inventory or stimulate demand.

Sales Promotion

Short-term incentives, such as coupons or discounts, designed to stimulate immediate demand.

Advertising

A paid form of communication that uses mass media to inform, persuade, or remind a target audience.

Direct Marketing

Communicating directly with targeted individuals through channels like email and texts for personalized messages.

Public Relations (PR)

Managing a firm’s communications to build a positive image and maintain good relationships with the public.

AIDA Model

A model that describes how marketing messages move consumers through four stages: attention, interest, desire, and action.

Feedback Loop

A mechanism allowing receivers to respond to the sender, indicating whether the message was understood.

Gross Rating Points (GRP)

A measure combining reach and frequency to show the overall impact of a media plan.

Impressions

The number of times an advertisement appears in front of a user, regardless of engagement.