chapter 6 marketing

Product

Anything offered to satisfy a need or want.

Goods

Tangible products that can be physically touched, such as phones, clothing, and cars.

Services

Actions or performances offered to customers, such as airline travel, streaming, or tutoring.

Ideas

Concepts designed to influence behavior, such as sustainability campaigns or public health messages.

Experiences

Curated interactions that create value, such as theme parks, live events, or premium travel.

What is a new product?

A product that is completely new to the world, new to a company, or a significant improvement or variation of an existing product.

Why are new products developed and launched faster today?

Faster and cheaper transportation, mass production, and electronic communication.

How does faster transportation affect new products?

It speeds up global distribution.

How does mass production affect new products?

It allows products to be manufactured on a large scale.

How does electronic communication affect new products?

It allows rapid idea sharing, market feedback, and digital promotion.

What happens when product life cycles become shorter?

Competition increases, and companies must innovate more frequently.

What factors differ among categories of new products?

Risk level, required investment, consumer adoption challenges, and competitive impact.

New-to-the-market products

Products that introduce something completely new that has never existed before.

What percentage of new products do new-to-the-market products represent?

They represent the smallest percentage of all new products.

Why are new-to-the-market products risky?

They require significant research and development, marketing investment, and consumer acceptance of something unfamiliar.

Example of a new-to-the-market product

The smartphone transformed communication by combining internet access, apps, and multimedia in one device.

Service innovation

Creating new services or changing how existing services are delivered or processed.

What is the goal of service innovation?

To improve convenience, speed, personalization, or accessibility.

Examples of service innovation

Mobile boarding passes replacing printed tickets and ride-sharing apps changing transportation access.

New-to-the-company products

Products that are new to a company but already exist in the market.

Why are new-to-the-company products generally less risky than new-to-the-market products?

Consumers already understand the product category.

What is the main risk of entering an existing product category?

Failing to differentiate the product from competitors.

Why does product differentiation matter?

Customers need to understand why a product is better, different, or more valuable than alternatives.

How could a new low-cost airline differentiate itself?

By offering distinct prices, routes, service models, or customer experiences.

Product-line extensions

New features, flavors, functions, or variations added to an existing product line.

Why are product-line extensions often less risky?

They build on an established brand, existing customer loyalty, and current manufacturing and distribution systems.

What is a key advantage of product-line extensions?

Existing brand recognition and loyalty can increase awareness and product trials.

Cannibalization

When a company’s new product takes sales away from its own existing products instead of attracting new customers.

Example of cannibalization

Coke Zero and Diet Coke competing for some of the same customers.

What is the purpose of idea generation?

To create a large number of possible new-product ideas.

What matters more during idea generation: quantity or quality?

Quantity matters more during the early idea-generation stage.

Why should companies gather ideas from many sources?

A wider range of ideas increases the chance of solving real customer problems.

Internal sources of new-product ideas

Employees, brainstorming sessions, and design-thinking activities within a company.

What is design thinking?

An approach emphasizing user needs, creativity, problem-solving, rapid idea generation, and collaboration.

External sources of new-product ideas

Customers, crowdsourcing, outsourcing, and open innovation.

Crowdsourcing

Gathering ideas or contributions from large groups of people, often online.

Outsourcing

Using outside firms or experts to help generate ideas or complete work.

Open innovation

Collaborating with external partners, startups, or researchers to develop ideas.

What is a prototype?

An early model or version of a product used to test its design, function, or performance.

True or false: A prototype is the final, fully marketed version of a product.

False. A prototype is an early version used for testing and improvement.

Why do companies assess risk during new-product development?

To determine investment levels, marketing intensity, and how cautiously to develop and launch a product.

How are risk and reward related in new-product development?

Higher risk can offer higher rewards but also creates the possibility of greater losses.

Very high risk in new-product development

Major changes that could seriously damage brand perception or customer loyalty if consumers react negatively.

Example of very high product risk

Changing a familiar product’s formula in a way that upsets loyal customers.

High risk in new-product development

Introducing major innovation or new technology that requires consumers to learn and accept something unfamiliar.

Example of high product risk

Ford introducing the all-electric F-150 Lightning.

Moderate risk in new-product development

Extending an established brand into a related product form that customers can recognize and trust.

Example of moderate product risk

Coca-Cola introducing K-Cups.

What can happen if a product fails to generate sales or is considered dangerous, defective, or deceptive?

The company may suffer image damage, lawsuits, legal liabilities, or regulatory action.

Diffusion

The process through which a new product, service, or idea spreads through a market over time.

Consumer-adoption process

The steps individuals follow when deciding whether to adopt a new product.

Stage 1 of consumer adoption: Awareness

The consumer learns that the product exists.

Stage 2 of consumer adoption: Interest

The consumer seeks more information about the product.

Stage 3 of consumer adoption: Evaluation

The consumer considers whether the product meets their needs and is worth trying.

Stage 4 of consumer adoption: Trial

The consumer tests or samples the product on a limited basis.

Stage 5 of consumer adoption: Adoption

The consumer decides to regularly use or purchase the product.

What are the five stages of consumer adoption in order?

Awareness, interest, evaluation, trial, adoption.

Competitive advantage as a product characteristic

The degree to which a product is perceived as better than existing alternatives.

How does competitive advantage affect adoption?

Greater perceived advantage generally leads to faster adoption.

Compatibility as a product characteristic

How well a product fits consumers’ values, experiences, and lifestyles.

How does compatibility affect adoption?

Products that feel familiar and fit consumers’ lives are often adopted more quickly.

Observability as a product characteristic

How easily other people can see a product being used.

How does observability affect adoption?

High visibility can increase awareness and social proof.

Complexity as a product characteristic

How difficult a product is to understand or use.

How does complexity affect adoption?

Higher complexity generally slows adoption.

Technological complexity

How difficult a product’s technology is to understand.

Usability

How easy a product is for a consumer to use.

Trialability

The ability to try a product on a limited basis before committing to it.

How can companies increase trialability?

Offer free trials, samples, or demonstrations to reduce perceived risk.

Why do low-learning products diffuse faster than high-learning products?

They closely resemble products consumers already understand, so less learning is required.

Product Life Cycle (PLC)

The stages a product moves through in the market over time, from idea to decline.

Why is the product life cycle useful to marketers?

It helps guide pricing, promotion, product improvements, and timing decisions.

Stage 1 of the product life cycle: Idea generation

New ideas are developed through research, creativity, and innovation. There are no sales yet, and development costs can be high.

Stage 2 of the product life cycle: Introduction

The product launches, sales grow slowly, competitors may be limited, and profits are often low because of launch and marketing costs.

Stage 3 of the product life cycle: Growth

Sales and profits increase rapidly, brand awareness rises, and more competitors enter the market.

Stage 4 of the product life cycle: Maturity

Sales level off as the market becomes saturated. Competition increases, and companies focus on differentiation, loyalty, efficiency, and reminding customers of value.

Stage 5 of the product life cycle: Decline

Sales and profits decrease, some competitors leave, and the company decides whether to reposition, harvest, or discontinue the product.

What are the five stages of the product life cycle in order?

Idea generation, introduction, growth, maturity, decline.

What happens to profits during the introduction stage?

Profits are often low because launch and marketing costs are high.

What is a key characteristic of the growth stage?

Sales and profits rise rapidly as demand and brand awareness increase.

What is a key characteristic of the maturity stage?

Sales level off, competition intensifies, and price pressure may increase.

What are a company’s options during the decline stage?

Reposition the product, harvest remaining profits, or discontinue it.

What determines the length of a product’s life cycle?

The product type and the company’s overall product strategy.

Product mix

All the products and services a company offers.

Product mix width

The number of different product categories or product lines a company offers.

Example of product mix width

A company offering vehicles, appliances, and financial services has multiple product categories.

Product mix depth

The number of versions, models, or variations within a single product line.

Example of product mix depth

Chevrolet offering multiple vehicle models within its brand.

Product-mix consistency

How closely related a company’s product lines are in terms of use, production, or distribution.

Example of product-mix consistency

Buick and GMC share related markets and technologies.

Do service companies have a product mix?

Yes. A service company may offer different accounts, cards, and digital services.

Example of a bank’s product mix

Checking accounts, savings accounts, credit cards, student banking, and online or mobile banking.