360: 12 Developing New Products

Truly new-to-the-market products is actually less than __% of new products.

10%

Innovation is the process of turning..

ideas into new offerings to the public

Important: Only about 1 in __ new products succeed.

6

Firms Create New Products to respond to changing __ __.

customer needs

When creating new products in response to changing customer needs, the goal is to create and deliver…

more value

Market saturation is when MOST customers already…

own the product

Without new products, sales will __.

decline

Without new products, firm value will __.

decline

Without new products, customers will lose __.

interest

Introducing new things will encourage the customer to r___ their original products.

replace

3. Firms create many products to __ risk.

diversify

Managing Risk Through Product Diversity results in a more __ revenue.

stable

Managing Risk Through Product Diversity results in better protection from c__.

competition

Managing Risk Through Product Diversity results in better protection from changing ___ __.

consumer preferences

Fashion Cycles refer to industries with ___ product life cycles.

short

Fashion Cycles refer to industries that rely heavily on __ products

new

What are some examples of industries with a Fashion Cycle?

1. clothes

2. movies

3. books

4. music

5. technology

In industries with Fashion Cycles, MOST sales come from __ releases.

new

In industries with Fashion Cycles, products become outdated __.

quickly

New products are sometimes created to improve ___ relationships.

business

Diffusion of Innovation refers to how new products __ through a market.

spread

Diffusion of Innovation refers to how new products spread through a ___ over time.

market

Diffusion of innovation refers to the process by which the use of an ___ spreads.

innovation

Truly new products (new-to-the-world products) create new ___.

markets

t/f: Truly new products (new-to-the-world products) add tremendous value to firms.

true

Truly new products (new-to-the-world products) are also called __ or breakthroughs.

pioneers

t/f: Apple iPod was a pioneer product.

true

Pioneer Products are also known as '“__ Movers”.

First

The diffusion curve (1) shows how users adopt an ___ over time.

innovation

In theory the diffusion curve (2) generally follows a __-shaped curve.

bell

• Diffusion Curve adoption pattern:

  1. Few buyers at first

  2. Then many buyers

  3. Then…

fewer buyers again

Buyers are divided into how many groups?

five

“Innovators” are Buyers who want to be..

first to buy

“Innovators” as buyers represent about __% of the market.

2.5

Innovators(Buyers) are important because they help a product gain market ___.

acceptance

Innovators(Buyers) are important because they spread positive ___ __ ___.

word of mouth

Innovators(Buyers) are important because they bring in which type of buyer?

early adopters

What buyer group is the second to adopt product/service?

early adopters

Early Adopters take more/less risk than Innnovators.

less

t/f: Early Adopters wait for reviews for buying.

true

Which group of buyers enjoy novelty and are often opinion leaders?

Early adopters

Early Adopters represent __% of buyers.

13.5

t/f: Early Adopters help bring the next three buyer categories.

true

If the group of Early Adopters is small → total ___ will likely be small too.

adoption

Early Majority represents approximately __% of the population.

34

The Early Majority group is very important because the group is not large enough, the product usually __.

fails

The Early Majority does NOT like taking __.

risks

The Early Majority group is very important because products cannot be ___ until this group buys.

profitable

Late Majority represents approximately __% of the population.

34

When the Late Majority group enters the market, the product has reached ___ market potential.

full

When the Late Majority group enters the market, the sales __ __ or __.

level off or decline

The Laggards buying group represents about __% of the market.

16

The Laggards buying group avoids __.

change

The Laggards buying group prefer __ products.

traditional

The Laggards buying group adopts only when products may no longer be __.

available

The Laggards buying group sometimes never…

adopt the product

Firms use diffusion theory to predict which customers will buy ___.

immediately

Firms use diffusion theory to predict which customers will buy ___.

later

Firms use ___ theory to develop promotion, pricing, and marketing strategies.

promotion

What theory does firms use to encourage adoption among each customer group?

Diffusion

Factors Affecting Diffusion Rate: Which factor refers to if a product is perceived to be better than substitutes, diffusion occurs faster?

Relative advantage

Factors Affecting Diffusion Rate: Which factor says diffusion speed depends on consumer and cultural characteristics?

Compatibility

Factors Affecting Diffusion Rate: Which factor says that diffusion is based on how easily products are observed?

Observability

Products with high observability enable easier ___ for the products’ benefits.

communication

Factors Affecting Diffusion Rate: Complexity and Trialability basically says products that are less complex are… (2)

• easier to try

• diffuses faster

Factors Affecting Diffusion Rate: Complexity and Trialability - Firms help diffusion in this area by providing what two examples?

• in-store demonstrations

• product trials

Which method in Idea Generation develops new ideas and solve problems with scientists and engineers?

Internal R&D

Which method in Idea Generation is where groups of firms and institutions collaborate on R&D?

R&D Consortia

Which method in Idea Generation is where firms buy rights to use technology or ideas?

Licensing

Which method in Idea Generation is where groups generates ideas together?

Brainstorming

Which method in Idea Generation is where firms hire outside companies to help develop ideas/products?

Outsourcing

Which method in Idea Generation is where firms use reverse engineering on products of their competitors?

Competitors Products

Is Customer Input important in both B2B and B2C?

yes

What is the name for innovative users who modify products for their own needs?

Lead Users

At the end of Idea Generation Stage, a firm should have ___ idea(s).

several

The Concept Testing stage is where an ___ is developed into a concept.

idea

t/f: Concept Testing Process is used to help reduce unnecessary product development costs.

true

Qualitative research includes: (2)

• interviews

• focus groups

Quantitative research includes: (2)

• internet surveys

• mall-intercept surveys

The Concept Testing Process is presented to potential __/__.

buyers/users

The third stage of the New Product Development Process “Product Development” is also referred to as…

Product Design

Which stage of the New Product Development Process balances engineering, manufacturing, marketing, and economic considerations?

Product Development

What is the name for the first physical form/service description?

Prototype

A prototype is the rough version with the same __ as the final product.

properties

t/f: Prototypes are produced using different manufacturing processes.

true

Alpha Testing is conducted inside /outside firm.

inside

Alpha Testing tests whether the product __ correctly.

performs

Alpha Testing tests whether the product meets the intended __ .

need

Is Alpha or Beta Testing conducted with potential customers?

Beta

Is Alpha or Beta Testing conducted in a real-use setting?

Beta

Beta testing identifies functionality, performance, and __.

problems

After prototype testing, firm tests the __ with trial products.

market

After prototype testing, firm tests the market with ___ products.

trial

What are the two types of Market Testing in stage four of the New Product Development Process?

1. Premarket testing

2. Test marketing

Which type of market testing is conducted before full market launch?

Premarket testing

t/f: In Premarket Testing, a small group of consumers test the product.

true

t/f: Premarket Testing is used to estimate sales and repeat purchase probability.

true

Test Marketing is where the product introduced in a ___ ___ area.

limited geographic

How much of the marketing mix does test marketing use?

the full mix

t/f: Test marketing studies the ACTUAL purchase behavior.

true