Chapter 8 - Developing new products

Product: Anything that is of value toa consumer and ven be offered through a marketing exchange (goods
services)
Why do firms create new products ;
- “New Product: can be repositioning
- Firms MUST innovate to stay in business
- Without innovation firms would only market to current customer or take the same product to
another market with similar customers
1. Changing customer needs:
a. New product to deliver value by keeping customers from getting bored with current
product
i. The dyson vacuum into a dyson hairdryer
2. Market saturations
a. The longer a product exists in the marketplace, the more likely the market will become
saturated (the value of the firms declined if no new product arises)
i. a few consumers keep the same car until it stops running. Car companies revamp
their models every year. This gets consumers excited by the new looks.
3. Managing risk through diversity
a. Innovation helps diversify their risk and enhance firm value IE.DIVERSIFICATION OF
RISK
i. Firms with multiple products are better able to withstand external shocks,
including changes in consumer preferences or intensive competitive activity. “
don't put your eggs all in one basket”
4. Fashion cycles
a. In industries that rely on fashion trends and experience short product life
cycles—including apparel, arts, books, and software—most sales come from new
products
i. Video game; Consumers want to be challenged by another game or experience
the most recent version
5. Improving business relationships
a. New products do not always target end consumers; sometimes they function to improve
relationships with suppliers.
Innovation and Value
some new products fail because:
- They offer consumers too few benefits compared with existing products;
- They are too complex or require substantial learning and effort
- Bad timing—introduced at a time when consumers are not ready for such new g/s.
Pioneers: New product introductions that establish a completely new market or radically change both the
rules of competition and consumer preferences in a market…aka breakthroughs.
FIrst Movers: Product pioneers that are the first to create a market or product category, making them
readily recognizable to consumers and thus establishing a commanding and early market share.
Diffusion of innovation or adoption of innovation helps marketers understand the rate at which consumers
are likely to adopt a new product or service.
1. Innovators (2.5%) (help the product gain market acceptance)
- Innovators are those buyers who want to be the first on the block to have the new product
or service.
- Takes risk, not price sensitive, innovators are very well informed about the prefect by
subscribing to magazine and searing online
2. Early adaptors (13.5%) (spread the word in the best next groups)
- Early adopters tend to enjoy novelty and often are regarded as the opinion leaders for particular
product categories
- Don't like to take risks
3. Early Majority (34%)
- When early majority customers enter the market, the number of competitors in the marketplace
usually also has reached its peak, so these buyers have many different price and quality choices.
- They experience little risk, because all the reviews are in, and their costs are lower.
4. Late Majority(34%) (sales tend to decline)
- The product has achieved its full market potential
- These movie watchers wait until the latest movie is always in stock or just put it on Netflix
5. Laggards(16%)
- May never adopt a product, Avoid change