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MKT 337-CH 9: Product Management and New Product Development
Terms in this set (52)
product life cycle
1. market introduction
2. market growth
3. market maturity
4. sales decline
industry profits decline while...
industry sales continue to rise
product life cycle stage 1: market introduction
in this stage, sales are low as a new idea is first introduced to a market.
product life cycle stage 2: market growth stage
industry sales grow fast, but industry profits immediately start falling after this stage. innovator makes big profits as more customers buy, but competitors begin to enter the market
product life cycle stage 3: market maturity stage
occurs when industry sales level off and competition gets tougher
product life cycle stage 4: sales decline stage
a time a of replacement. new products replace the old
product life cycles do not relate to
individual products. product life cycles describe industry sales and profits for a product idea within a particular product market
currently accepted or popular style. fashion influences sales of some products
idea that is fashionable only to certain groups who are enthusiastic about it. fads are shorter lived than fashion.
"skimming the market"
charging a relatively high price for a product to help pay for introductory costs.
what is a new product?
one that is new in any way for the company concerned. this differs what a consumer may view as a new product.
Federal Trade Commission. The federal gov't agency that polices antimonopoly laws.
FTC's definition of "new"
products must be entirely new or changed in a "functionally significant or substantial respect"
New-product development process steps:
1. idea generation
3. idea evaluation
4. development (of product and marketing mix)
New-product development process Step 1: idea generation
ideas come from customers or from other companies and markets
New-product development process Step 2: screening
screen product for details. safety must be considered. products can turn into liabilities
Consumer Protection Safety Act
(1972). Set up the Consumer Product Safety Commission to encourage safety in product design and better quality control.
legal obligation of sellers to pay damages to individuals who are injured by defective or unsafe products.
New-product development process Step 3: Idea evaluation
includes concept testing
getting reactions from customers about how well a new-product idea fits their needs
New-product development process Step 4: Development
-customers react to prototypes
-market testing uses real market conditions
early sample or model built to test a concept
New-product development process Step 5: Commercialization
product enters commercial market
also called brand managers - manage specific products - often taking over jobs formally handled by an advertising manager
total quality management
TQM-philosophy that everyone in the organization is concerned about quality, throughout all of the firm's activities to better serve customer needs
the cost of poor quality is
commitment to constantly make things better one step at a time.
what drives quality improvement?
building quality into services
parts where there is contact b/w the customer and company
2 keys to improving service quality:
giving employers the authority to correct a problem w/o first checking w/ management
product life cycle (plc)
a concept that provides a way to trace the stages of a product's acceptance, from its introduction (birth) to its decline (death).
characteristics of the introductory stage
-high failure rates
-frequent product modification
-high marketing and production costs
-negative profits with slow sales increases
-promotion focuses on awareness and information
-communication challenge is to stimulate primary demand
characteristics of growth stage
-increasing rate of sales
-entrance of competitors
-initial healthy profits
-aggressive advertising of the differences between brands
characteristics of maturity stage
-sales increase at a decreasing rate
-annual models appear
-lengthened product lines
-service and repair assume important roles
-heavy promotions to consumers and dealers
-marginal competitors drop out
-niche marketers emerge
characteristics of the decline stage
-long-run drop in sales
-large inventories of unsold items
-elimination of all nonessential marketing expenses
new-product success factors
-listening to customers
-producing the best product
-vision of future market
-getting every aspect right
-commitment to new-product development
-project-based team approach
why new products fail
-no discernible benefits
-poor match between features and customer desires
-overestimation of market size
-incorrect positioning (against the competition or your own product line)
-price too high or too low
things to take into consideration when considering market introduction and growth
-allocate sufficient money
-consider the four Ps
-anticipate the speed of money
-competitors may help adoption
phasing out dying products
-phase-out may be necessary
-don't pull the plug so quickly
-sales decline can be profitable (if you're the only (or one of the few) producer remaining)
the issue with phasing out dying products is...
balancing profitability w/ product line customer support
FTC only allows a product to be called new for...
Step 1. Idea Generation
-company people, intermediaries, etc.
the process of getting a group to think of of unlimited ways to vary a product or solve a problem
the objective of focus group interviews is to stimulate insightful comments through group interaction.
Step 2. Screening
-strengths and weaknesses
-fit with objectives
-rough ROI estimate (return on investment estimate--is there financial viability?)
the first filter in the product development process which eliminates ideas that are inconsistent with the organization's new-product strategy or are inappropriate for some other reason.
a concept test is..
a test to evaluate a new-product idea, usually before any prototype has been created. often successful for line extensions.
Considerations in business analysis stage
Step 3. Idea evaluation
-reactions from customers
-rough estimates of costs, sales, and profits
Step 4. Development
-develop model or service
-test marketing mix
-revise plans as needed
Step 5. Commercialization
-finalize product and marketing plan
-start production and marketing
-"roll out" in select markets
-final ROI estimate
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