Bmgt 205 chapter_12
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Firms develop new products for several reasons: to respond to changing customer needs, improve business relationships, follow fashion cycles, address market saturation, and manage risk through diversity. There are five stages to new product development: idea generation, concept testing, product development, market testing, and product launch. New products also progress through distinct stages in their life cycle from introduction to growth, maturity, and decline.
Bmgt 205 chapter_12
- 1. BMGT 205: Principles of Marketing Chapter 12: Developing New Products
- 2. Why do companies innovate?
- 6. CHECK YOURSELF 1. What are the reasons firms innovate?
- 9. Compatibility Observability Relative Advantage Factors Affecting Product Diffusion Complexity and Trialability Using the Diffusion of Innovation Theory
- 10. CHECK YOURSELF 1. What are the five groups on the diffusion of innovation curve? 2. What factors enhance the diffusion of a good or service?
- 11. How Firms Develop New Products IDEA GENERATION CONCEPT TESTING • Development of viable new product ideas. • Testing the new product idea among a set of potential customers. EVALUATION OF RESULTS PRODUCT LAUNCH MARKET TESTING • Full-scale commercialization of the product. • Testing the actual products in a few test markets. • Analysis of the performance of the new product and making appropriate modifications. PRODUCT DEVELOPMENT • Development of prototypes and/or the product.
- 12. Crowdsourcing Ideas More and more firms are generating new product ideas from customers User friendly ideas Cost savings Outside ideas bring innovation http://lego.cuusoo.com/#
- 13. Idea Generation Source of ideas • • • • • • • Internal R&D R&D consortia Licensing Brainstorming Outsourcing Competitor’ products Customer input
- 14. Concept Testing Concept is a brief written description of the product Customers reactions determine whether or not it goes forward Triggers the marketing research process
- 15. Product Development Prototype http://youtu.be/v4boTbv9_nU Alpha testing Beta testing
- 16. Market Testing Premarket tests Customers exposed Customers surveyed Test marketing Firm makes decision Mini product launch More expensive than premarket tests Market demand is estimated
- 17. Product Launch This is the part where the product is launched with chosen 4 p’s Success is often known early Failures can be very expensive companies want a sure thing http://youtu.be/WB6kwSfUvhQ
- 18. Evaluation of Results Satisfaction of technical requirements Customer acceptance Satisfaction of the firm’s financial requirements
- 19. CHECK YOURSELF 1. What are the steps in the new product development process? 2. Identify different sources of new product ideas.
- 21. Stages in the Product Life Cycle
- 22. Strategies Based on the Product Life Cycle: Some Caveats Bell shaped, but can take many shapes. Challenging to know precisely the stage of the PLC.
- 23. Check Yourself 1. What are the stages in the product life cycle? 2. How do sales and profits change during the various stages?
- 24. Key Terms Alpha testing is testing where the firm attempts to determine whether the product will perform according to its design and whether it satisfies the need for which it was intended. Beta testing uses potential consumers, who examine the product prototype in a “real use” setting to determine its functionality, performance, potential problems, and other issues specific to its use.
- 25. Key Terms Firms with products in the decline stage either position themselves for a niche segment of diehard consumers or those with special needs or they completely exit the market. Diffusion of innovation is the process by which the use of an innovation spreads throughout a market group, over time and over various categories of adopters.
- 26. Key Terms The growth stage of the product life cycle is marked by a growing number of product adopters, rapid growth in industry sales, and increases in both the number of competitors and the number of available product versions. Innovation is the process by which ideas are transformed into new products and services that will help firms grow.
- 27. Key Terms The introduction stage for a new, innovative product or service usually starts with a single firm, and innovators are the ones to try the new offering. The maturity stage of the product life cycle is characterized by the adoption of the product by the late majority and intense competition for market share among firms. Pioneers or breakthroughs are new product introductions, especially new-to-the-world products that create new markets.