MKTG 311 1st Edition Lecture 15 Outline of Last Lecture I. Classifying Consumer ProductsII. Classifying Business ProductsIII. Key Concept: Product MixIV. Key Concept: Product Line & Other TermsV. Product Line ExtensionsVI. The Product Life CycleVII. The PLC as it applies to Basic Products, Fashion Products and Fad Products’Outline of Current LectureI. What is considered a New Product?II. New Product DevelopmentIII. Adopter Categories- ConsumersIV. Factors Affecting the Rate of AdoptionCurrent Lecture I. What is considered a New Product?Understanding the differences among:(Categories of new products: Amount of learning on the part of the consumer.)- Continuous Innovationo New features and new benefits. Example- A new and improved cereal- Dynamically Continuous Innovation These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.o Requires minor new learning on the part of the consumer. Easy squirt ketchup bottle- Discontinuous Innovationo Small number of products, new to world products, requires major new learning on the part of the consumer. Example- iPod and iPhoneII. New Product DevelopmentNew Product Development Steps:1. New-Product Strategy Development (Pre Product Development)- In this stage the company conducts environmental scanning and a SWOT analysis.2. Idea Generation- Looking for new product ideas. Can come inside the company and outside ideas from: Sales people, distributers and suppliers, customers, smaller firms and universities. What is the competition doing? Research Development Laboratories: Apple iPod.3. Screening and Evaluation- Weed out the less profitable ideas. Internally- Is heproduct technically feasible? Externally- Would the customer use this product? How?4. Business Analysis- Describe the product features, determine costs- Research and development, production marketing costs.5. Development- Engineers work with marketing to create a prototype of the new product.6. Market Testing- Try out the new product.2 ways:1) Test marketing: Offer the new product in small geographic regions that are representative (Variety of demographic factors) of the US market as a whole. Example- Wichita falls, TXPositive: Find out if the new product will be a failure.Negative: Costly and competition is likely to find out.2) Simulated Test market- Simulates a test market on a smaller scale. Testthe new product in a public place, like a mall.Positive: Costs less, easier to keep under wraps from the competitionNegative: Concerns over accuracy and Reliability of he results7. Commercialization- Full scale launch of the new product. Production, distribution, marketing. Launch it regionally, nationally, or globally?III. Adopter Categories- Consumers- The rate of diffusion, or the rate at which consumers adopt a new product.1. Innovators- First to adopt a new product. 2.5% of the population- younger, higher education levels, risk takers.2. Early Adopters- 13.5%. Share similar characteristics to the innovators. Opinion leaders are part of this group.3. Early Majority- 34%. Typical middle class consumer. Neither the first nor the last to try the product. When they adopt the product, it is no longer considered new or different.4. Late Majority- 34%. Older, more conservative consumers. They will wait to trythe product until they perceive there is no risk.5. Laggards- They are the last to adopt the product. They may never adopt the product.IV. Factors Affecting the Rate of AdoptionFactors that can affect the rate of adoption:1. Relative Advantage- Looks at the possibility of superior benefits with the new product?2. Compatibility- The extent to which the new product is consistent with existing cultural values and traditions?3. Complexity- How difficult is the new product to understand?4. Divisibility- Can we try out the new product on a limited basis? Example- Free samples, HBO offers 90 day trail.5. Communicability- How easily can we share the new