MKTG 5- Chapter 11

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UTSA -Tharp

New-to-the-world products, where the product category itself is new, are also called:

discontinuous innovations

For years, Diet Dr. Pepper has been considered a diet drink. After declining sales, the company is attempting to present Diet Dr. Pepper as an alternative to having a dessert. This is an example of a _____ strategy.

repositioning

_____ occurs when an existing product is targeted toward new market segments. It is another type of new-product development because the product is new to that segment.

Repositioning

In the _____ stage of new-product development, preliminary demand, cost, sales, and profitability estimates are made.

business analysis

_____ is a limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation.

Test marketing

_____ embrace products relatively early in the product life cycle, are likely to be community oriented, and often are opinion leaders themselves.

Early adopters

Leon is not very quick to purchase innovative products when they come out, but after a while he breaks down and buys if after most of his friends have bought it. He gets most of his information from them when he decides to buy something. He is very skeptical of marketing, so he trusts his friends more than anything. Leon is best described as a(n):

late majority

When the Segway Human Transporter was introduced in 2002, many people expected the product to be a phenomenal success. While the Segway is still on the market it has never been the success so many expected. A recent Wall Street Journal article suggested that the Segway, while brilliant technologically, seemed impractical to most people as it could not be used to replace their current method of transportation. In other words, the Segway had problems with _____.

compatibility

B.F. Goodrich has been manufacturing and marketing automotive tires for over one hundred years. It spends much of its marketing budget on short-term promotions aimed at stealing market share from Goodyear, Dunlap, and other tire manufacturers. From this information, you should know tires are in the _____ stage of their product life cycle.

maturity

A long-run drop in sales signals the beginning of which stage in the product life cycle?

decline stage

Finland-based Rapala VMC Corporation is the world's largest fishing lure manufacturer. It developed its first fishing lure--a cigar-shaped minnow--in 1962. The annual market for fishing lures in terms of retail sales is approximately $600 million. Rapala VMC garnered one-third of that amount in 2008. New lures must be introduced each year in order to stay competitive in this industry. Like other lure manufacturers, Rapala focuses on two questions in developing and making new lures: Does it work, and does it look good? Developing a new lure takes two or three years and involves extensive field testing by tournament professionals and fishing guides. At the annual fishing industry trade show in 2008, Rapala unveiled the "dream lure for the 21st century."

Refer to Rapala. Because buyers of fishing lures want to have the newest, most technologically improved lure, most of Rapala's customers would more than likely fall into the _____ category of adopters.

innovators

Finland-based Rapala VMC Corporation is the world's largest fishing lure manufacturer. It developed its first fishing lure--a cigar-shaped minnow--in 1962. The annual market for fishing lures in terms of retail sales is approximately $600 million. Rapala VMC garnered one-third of that amount in 2008. New lures must be introduced each year in order to stay competitive in this industry. Like other lure manufacturers, Rapala focuses on two questions in developing and making new lures: Does it work, and does it look good? Developing a new lure takes two or three years and involves extensive field testing by tournament professionals and fishing guides. At the annual fishing industry trade show in 2008, Rapala unveiled the "dream lure for the 21st century."

Refer to Rapala. The degree to which the newest lures are perceived as superior to earlier models refers to their _____, a characteristic used to predict the rate of adoption.

relative advantage

After the research team at Nabisco had generated more than two dozen new-product ideas for a substitute for partially hydrogenated oils that tastes the same but has zero trans fat, the company formed a committee to analyze whether the product ideas were consistent with the organization's new-product strategy. This is called:

idea screening

Demand for pet services is greatly increasing across the United States. In fact, Americans will spend nearly $44 billion dollars on their pets this year. Many American dog owners are seeking out "doggy daycares" that are more like a resort or spa than an ordinary kennel for their canine companion. Daycare services for dogs now include toy rooms, outside play areas, doggie massages, treadmills, swimming pools and cushy beds for nap time. Pet owners can watch their pets via a Web cam and some doggy daycares have a phone where owners can talk to their dog when they feel their pet needs to hear their voice. Rates vary from $20 to $45 a day per pet, depending on the amenities that the pet owner chooses.

Refer to Going to the Dogs. One challenge to adoption of the dog daycare is the fact that dog owners are used to paying a somewhat minimal fee for boarding their dog in a kennel, while a daycare center may demand many times as much for the same time span. This suggests the _____ of the new product may affect the rate of diffusion.

compatibility

Hewlett-Packard is the number one seller of personal computers worldwide. The company has been increasingly more creative in their computer designs following the trend set by Apple Inc. Hewlett-Packard has created a ultra thin laptop called the Voodoo Envy. The laptop is less than a half inch thick and weights less than 3 1/2 pounds. It is priced at $2000. HP created the laptop to compete against Apple's MacBook Air and a model created by the Lenovo Group Ltd. Both these models were priced at around $3000. The MacBook Air does not have removable batteries or a built-in socket for plugging into Ethernet networks. HP's Voodoo envy does have removable batteries and offers an Ethernet port that is part of its power adapter. The Voodoo can also be booted up in less than five seconds made possible by software developed by HP.

Refer to Voodoo Envy. With very few competitors and high product prices, those purchasing ultrathin computers now are probably the most venturesome consumers, also known as the _____.

innovators

New product strategy

a plan that links the new-product development process with the objectives of the marketing department, the business unit, and the corporation

Idea Generation

Comes from many resources including customers, employees, distributors, competitors, vendors, research and development, and consultants

Brainstorming

The process of getting a group to think of unlimited ways to vary a product or solve a problem

Idea Screening

After new ideas have been generated, they pass through the first filter in the product development process.

Screening

The first filter in the product development process, which eliminates ideas that inconsistent with the organization's new-product strategy or are obviously inappropriate for some other reason

Concept Test

Evaluates a new-product idea usually before any prototype has been created.

Business Analysis

The second stage of the screening process where preliminary figures for demand, cost, sales and profitability are calculated

Development

The stage in the product development process in which a prototype is developed and a marketing strategy is outlined

Test Market

The limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation

Innovators

the first 2.5 percent of all those who adopt the product

Early Adopters

The next 13.5 percent to adopt the product compared to innovators, they rely much more on group norms and values

Early majority

the next 34 percent to adopt. They are likely to collect more information and evaluate more brands than early adopters.

Late Majority

The late majority adopts a new product because most of their friends have already adopted it

Laggards

Laggard do no rely on group norms. Their independence is rooted in their ties to tradition.

The Rate of Adoption

Complexity
Compatibility
Relative Advantage
Observability
Trialability

Complexity

The degree of difficulty involved in understanding and using a new product

Compatibility

The degree to which the new product is consistent with existing values and product knowledge, past experiences and current needs

Relative Advantage

The degree to which a product is perceived as superior to existing substitutes.

Observability

The degree to which the benefits or other results of using the product can be observed by others and communicated to target customers

Trialability

The degree to which a product can be tried on a limited basis

Introductory Stage

The full-scale launch of a new product into the marketplace

Growth Stage

The second stage of the product life cycle when sales typically grow at an increasing rate, many competitors enter the market, large companies may start to acquire small pioneering firms, and profits are healthy

Maturity Stage

A period during which sales increase at a decreasing rate

Decline Stage

a long run drop in sales

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