Kelli Berg MKTG 2201 Exam 2 Review Chapter 8 Types of Innovation o Continuous Volvo beginning to offer cars with airbags o Dynamically continuous CD to MP3 players o Discontinuous typewriter to PC with Microsoft Word New Product Development Idea Generation 1 2 Product Concept Development and Screening 3 Marketing Strategy Development 4 Business Analysis Assessing commercial viability 5 Technical Development Engineers refine and perfect a product 6 Test Marketing Test in small geographic area 7 Commercialization Product launch Categories of Product Adopters o Innovators Well educated young better off financially Take risks with new products o Early Adopters Concerned with social acceptance Heavy media users Key to new product s success o Early Majority Middle class Deliberate and cautious Factors That Affect the Rate of Adoption o Late Majority o Laggards Older conservative lower than average education and income Low social class Bound by tradition Product may have been superseded by other innovations when adopted o Relative advantage degree to which a consumer perceives that a new product provides superior benefits o Compatibility consistency with society s values customs and practices o Complexity ease of use o Trialability ease of sampling a product o Observability how visible a product and its benefits are Chapter 9 Product line a firm s total product offering designed to satisfy a single need or desire of target customers ex Procter Gamble s dish detergents Dawn Ivory and Joy Product mix total set of all products a firm offers for sale Product Line Strategies o Full line targets many customer segments o Limited line fewer products specialized o Upward line stretch adding higher end products o Downward line stretch adding lower end products o Two way stretch adding higher end and lower end products simultaneously o Filling out strategy adding sizes styles not previously available in a product category i e Nabisco s bite size Oreos and Nutter Butters o Contracting deleting products from line Cannibalization loss of sales of an existing brand when a new item in a product line or product family is introduced Marketing Throughout the Product Life Cycle Introduction Get first time buyers to try the new product Growth Encourage brand loyalty Maturity Decline Attract new users Remain Goals Sales Profits Pricing Marketing Communications profitable decide whether to keep or phase out product Continue to decline Declining May reduce if product can remain profitable Peak then level off often decline Profit margins are narrow Price to maintain market share Reminder advertising Decreased to maintain profitability Increase at a slow but steady pace Negative High recover R D costs Low attract large numbers of customers Informing customers Rapid increase Increase and peak May need to reduce because of increased competition Heavy advertising to counter new competition Choosing a Brand Name o Fit the target market o Fit the product s benefits o Fit the customer s culture o Fit legal requirements brand Brand extension a new product sold with the same brand name as a strong existing
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