UMass Amherst MARKETNG 301 - Chapter 10: Developing New Products and Services

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Alex HartStudy Guide 2Marketing 3019 April 2014Chapter 10: Developing New Products and Services 1. What is a product? A good or service (idea) consisting of a bundle of tangible and intangible attributes that satisfies a consumers needs and is received in exchange for money or something of value. The starting point in creating a marketing mix.2. What is the difference between a good, a service, and an idea?a. Good: Has tangible attributes a consumers five senses can perceiveb. Service: Intangible activities or benefits an organization providesc. Idea: A though that leads to a product or action or concept3. What is the difference between a durable and nondurable good?a. Durable: Lasts over many uses (appliances, cars, phones, etc.)b. Nondurable: An item consumed in one or a few uses (Food, Fuel, etc.)4. What are the various ways that products can be classified? a. Consumer Products: Convenience, Shopping, Specialty, Unsoughtb. Business Products: Products organizations buy that assist in providing other products for resale5. What are the four types of consumer products and how do they differ?a. Convenience Product: Buy all the time (shampoo, etc.)b. Shopping Product: Products to think about (TV, Phone, etc.)c. Specialty Product: Unusual item (Rolex watch, specialty food, etc.)d. Unsought Product: Spontaneous (Chocolate you see at a store)6. What is the difference between a component product and support product?a. Component Product: Items that become part of the final product (raw materials, car parts, etc.)b. Support Product: Items used to assist in producing other goods and servicesi. Installationsii. Accessory equipmentiii. Suppliesiv. Industrial services7. What is product item vs. a product line vs. a product mix? a. Item: A specific version of a productb. Line: A group of closely-related product itemsc. Mix: All products that an organization sells8. How might marketing dashboards help improve new-product performance? They show how marketers measure actual market performance versus the goals set in new product planning9. What are a new product and the various dimensions in defining the newness of a product? a. Newness Compared with Existing Productsi. New-to-the-Worldb. Newness from the Consumer’s Perspectivei. Continuous Innovation: Requires no new learningii. Dynamically Continuous Innovation: Does not require totally new learningiii. Discontinuous Innovation: Requires new learning and consumption patternsc. Newness in Legal Termsd. Newness from the Organizations Perspectivei. New Product Linesii. Product Line Additionsiii. Improvements or Revisionsiv. Repositioned Productsv. Lower-Priced Products10. Why do new products succeed? a. Identifies a well defined target marketb. Identifies specific customers needs, wants, and preferencesc. Identifies what the product will be and do to satisfy consumers11. Why do new products fail? a. Insignificant point of differenceb. No economical access to buyersc. Incomplete market and product protocold. Not satisfying customer needs or critical factorse. Bad timingf. Poor product qualityg. Too little market attractivenessh. Poor execution of the marketing mix12. What are the 7 stages of the new product process and what occurs during each stage? a. New Product Strategy Development: Defines the role for a new product in terms of the firms overall objectives usingi. SWOT Analysisii. Environmental Scanb. Idea Generation: Developing a pool of concepts to serve as candidates for new products, building upon the previous stages resultsi. Employee and Co-Worker Suggestionsii. Customer and Supplier Suggestionsiii. Research and Development Labsiv. Competitive Productsv. Smaller Firms, Universities, and Inventorsc. Screening and Evaluation: Internally and externally evaluates new product ideas to eliminate those that warrant no further effortd. Business Analysis: Specifies the features of the product and the marketing strategy needed to bring it to market and make financial projectionse. Development: The stage of the new product process that turns the idea on paper into a prototypef. Market Testing: Involves exposing actual products to prospective consumers under realistic purchase conditions to see if they will buyi. Standard Test Marketsii. Controlled Test Marketsiii. Simulated Test Marketsg. Commercialization: Positions and launches a new product in full scale production and sales Chapter 11: Managing Successful Products, Services, and Brands 1. What is the product life cycle (PLC) and the four stages associated with it? The stages a new product goes through in the market placea. Introduction: When a new product is introduced to its intended target marketi. Sales grow slowly; Profit is minimal due to large investment costsii. Heavy spending on advertising and other promotional tools to build awareness and stimulate product trialb. Growth: Characterized by rapid increases in salesi. Competitors appearii. Product proliferation (edits and alterations)iii. Important to broaden distribution for the productc. Maturity: A slowing of total industry sales or product class revenuei. Profit declines (due to price competition)ii. Cost of gaining new buyers risesiii. Marketing attention is directed toward holding market share through further product differentiation and finding new buyersd. Decline: Occurs when sales dropi. Environmental changes play a heavy roleii. Products consume a disproportionate share of management and financial resources relative to their future worthiii. Product deletion/harvesting2. What are four key aspects of the PLC and how do they relate to outcomes and products? a. Length: There is no set time that it takes a product to move through the life cycle;depends on innovation, technology, and the availability of mass communicationb. Shape: Several different shapes; depends on marketing strategiesi. High Learningii. Low Learningiii. Fashion Productiv. Fad Productc. Class and Form: i. Class: Refers to the entire product category or industryii. Form: Pertains to variations within the product classd. Consumer PLC: The life cycle of a product depends on sales to consumers (diffusion of innovation)3. What does one do to manage the PLC? a. Product Manager: Manages the marketing efforts for a close knit family of products or brandsi. Responsible for managing existing products through the stages of the PLCii. Develop and execute a marketing program for the product line described in a marketing planb. Modify

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