Marketing chap 6

What is a product? (the first P in the marketing mix)

Anything of value to a consumer that can be offered through a marketing exchange (goods, services, ideas)

•Central to the creation of value for the consumer

What is innovation?

The process that transforms ideas into products and services that generate value for the firm (and for clients).

Approximately 3% of new products succeed in the market

Why do firms create new products?

Changing consumer needs; (Consumer needs evolve over time. Successful firms will track these trends to capture market growth opportunities.) (ex: soap evolving into moisturizer, exfoliating, day cream, shaving gel, after shave)

market saturation; (When a large part of the market has already bought a product, growth opportunities shrink. Companies then add new features or benefits to entice consumers to buy a “new” product.) (ex: apple selling replacement upgrades or new features to people who already own a device.)

managing risk through diversity; (Innovation allows firms to create a broader portfolio of products, this leads to diversification of risk. A portfolio of products is better than having just a single product, “don’t put all your eggs in one basket”) (ex: iphone, airpods, macbook,)

fashion cycles; (Consumers want to be challenged by another game or experience, or to have the most recent version) (example: yearly game releases in October 2024, November 2025 and October 2026)

improving business relationships; (New products do not always target end consumers; sometimes they improve relationships with suppliers (e.g. developing products with a supplier). In the end, the consumer still gets more value.)

What is a latent need?

A need consumers are not aware of, which can be uncovered and exploited through innovation.

What is diffusion of innovation?

The process by which the use of an innovation (product or service) spreads throughout a market group over time and over various categories of adopters.

What is a pioneer product?

A new product or service that creates a new market. It can add tremendous value to the firm. (microwaves)

What are the advantages of being first to market (first-mover advantage)? vs disadvantages for a pioneer?

advantages: Increased brand awareness and market share.

disadvantages: Being the pioneer often requires paving the way which is costly in a new category and subsequent firms entering the market will benefit from it. Pioneers must often quickly adapt from trendsetters to a market defenders when other brands enter the market to preserve its market share.

What are the five adopter categories? (the classification of individuals based on how quickly and willingly they adopt a new idea, product, or technology)

Innovators 2.5%; (They actively seek information (specialized publications and sites, experts, forums), enjoy being among the first to try products, are less price-sensitive, and will wait in line. They can be allies by stimulating word of mouth. Because they seek out new products they may not be loyal, so they are a risk as spokespersons.

early adopters 13.5%; Open to new ideas but don’t actively seek information; less keen on risk than innovators; prefer to see product reviews (by innovators) first; slightly more price-sensitive. Their adoption level gives insight into the early and late majority. They have the potential to serve as opinion leaders.

early majority 34%; More risk averse; prefer established products whose problems have been resolved. The number of brands is often at its maximum when they enter (read as a sign of maturity). They are vital to market success given their numbers

late majority 34%; Great resistance to change (“if it isn’t broke, don’t fix it”). They buy when a product becomes the de facto standard. Sales volumes sometimes start to decline when this group enters.

laggards 16%; Great resistance to change, which is a source of anxiety. They adopt only when the standard product is no longer available. They are rarely the object of marketing programs.

What factors facilitate the adoption cycle (how new products, ideas, are embraced by a market over time) ?

Relative advantage; (If a product is perceived as better than substitutes, diffusion will be relatively quick.)

compatibility; (The goal is to make the product more compatible with the needs of people in different cultures.)

observability; (The ability to see others using the innovation and infer its ease of use.)

complexity;

trialability;

for triability and complexity; The more complex the product, the longer it takes to diffuse. Products that can be tried diffuse faster.

What are the six steps of the product development process?

1. Idea generation; development of new product ideas

2. Concept testing; testing the new product idea w potential customers

3. Product development; development of prototypes/ or the product (prototype, alpha testing, beta testing)

4. Market testing; testing the actual product in a few test markets

5. Product launch; commercialization of the product

6. Evaluation of results; analysis of the performance of the new product and making appropriate modifications

What are the sources of ideas in idea generation? (step 1 of the process)

Customer input, internal R&D, licensing (buying access to an innovation; you do not own the rights.), brainstorming, and competitors’ products

What is a prototype? (step 3)

The first physical form of the product in a tentative form, not manufactured on an assembly line.

What is alpha testing? (step 3)

The initial assessment to ascertain whether the product will perform as designed.

What is beta testing? (step 3)

Uses consumers to provide feedback on functionality and performance.

Why do new products fail?

Target market too small; poor design; low product quality; incorrect positioning; wrong price strategy; poor marketing communication; competition. Even the most rigorous development process does not guarantee success.

What are the four stages of the product life cycle?

Introduction,

growth,

maturity

declin

-The Product Life Cycle (PLC) represents an important tool managers use to plan their marketing activities.

-It defines the stages that new products move through as they enter, get established in, & ultimately leave the marketplace & thereby offers marketers a starting point for their strategy planning.

The curve does not always take the same shape; there are variations on the life cycle curve, and strategy should not be applied mechanically by stage.

What are the strategies for extending the product life cycle?

Develop new uses; modify the product; increase frequency of use; increase the number of users; find new users; reposition the product; tweak the marketing strategy.

What are the four types of consumer products

Specialty products: consumers expend considerable effort to evaluate (cars, designer clothes).

Shopping products: consumers spend a fair amount of time comparing or trying (shoes, furniture, appliances, travel alternatives).

Convenience products: little time evaluating before purchase (beverages, soap).

Unsought products: consumers don’t typically think about them (fire extinguishers, funeral services).

What can a brand use as elements?

Name, logo, symbols, characters, slogans, jingles and even distinctive packages.

what is brand equity ?

Brand equity is the added commercial and psychological value a company gains from a product with a recognizable and admired name compared to a generic or unbranded alternative

What are the four components of brand equity?

Brand awareness; (Measures how many consumers in a market are familiar with the brand, know what it stands for, and have an opinion about it.)

perceived value; Measures the relationship between a product or service’s benefits and its costs.

brand associations: Mental links that consumers make between a product’s key attributes. It can include logos, slogans. Some firms develop brand personalities that refer to a set of human characteristics associated to the brand which have symbolic or self-expressive meaning for consumers. (ex: Volvo and its strong mental link to safety)

brand loyalty: Consumers are less price-sensitive; marketing costs are much lower; loyal customers praise their favourite products; and high loyalty insulates the firm from competition. (ex: dove)

What risk exists when a brand name becomes synonymous with its product category?

When the brand name becomes the common name for the category, the company might lose its ownership rights.

ex: The generic name for the product is cotton swabs. However, the brand has achieved such immense historical dominance that the vast majority of people say "hand me a Q-tip" rather than asking for a cotton swab

What are the brand ownership strategies

Manufacturer brands, generic, and private label or store brand

What is cobranding?

The practice of marketing two or more brands on the same package.

What are the desirable qualities when choosing a brand name?

easy to pronounce, recognize and remember; capable of registration and legal protection; translates easily.

What is a brand extension? and its benefits/ negatif

Using the same brand name for new products.

benefits: well-established name; perception of high quality carries over; lower marketing costs; synergy among complementary products; boosts sales of the core brand.

negatif: Too many extensions result in brand dilution. Ensure the brands can be distanced from one another if need be.

what is brand dilution?

Brand dilution is the gradual loss of a brand's strength, perceived value, uniqueness, and core identity in the minds of consumers

How do you avoid brand dilution?

Evaluate the fit between the product class of the core brand and the extension; evaluate consumer perceptions of the core brand’s attributes and seek extensions with similar attributes; refrain from extending the name to too many products; check whether the extension is distanced enough from the core brand.

What is brand licensing?

A contractual arrangement between two firms that allows one to use the other’s brand name in exchange for a negotiated fee. (canadian de mtl logo on a school bag)

What are the functions of packaging?

Attracts attention; serves as a promotional tool (“new and improved”); appeals to different markets through various sizes; and protects the product.

What is the purpose of labelling?

Labels on products and packages provide information the consumer needs for the purchase decision and for consuming the product.