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Chapter 12 Txtbk Notes.docx - Chapter 12: Developing New...

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Chapter 12: Developing New ProductsWhy firms create New Products:- innovation: process by which ideas are transformed into new offerings (products, services, processes, concepts) to help firms grow- Changing Customer Needs-Market Saturation- the longer product exists in marketplace, the more likely the market will become saturated- firms sustain growth by getting consumers excited about new looks and features- Managing Risk through Diversity- Broader portfolio of products: diversifies risk and enhances firm value- can better withstand external shocks (consumer preferences, intensive competitive activity)- Fashion Cycles- industries that rely on trends and experience short product life cycles: most sales come from new products- Improving Business RelationshipsDiffusion of Innovation: process by which use of innovation (product, service or process) spreads throughout market group over time and across various categories of adopters- Pioneers/Breakthroughs: truly new product introductions- establish completely new markets/changes rules of competition- first movers: first to create market or product categoryreadily recognizable to consumers which establishes a commanding and early market share lead- Disadvantage: pave way for followers who spend less effort creating demand forproduct, less sophisticated design and priced higher because it is the first- Innovators: buyers who want to be the first to have new product/service (2.5% of pop.)- enjoy taking risks, also highly knowledgeable- help product gain market acceptance- Early Adopters: don’t like to take as much risk as innovators but instead wait and purchase product after careful review (13.5% of population)- waits for first reviews of before purchasing- enjoy novelty and regarded as opinion leaders for particular product categories- spreads the word- Early Majority: represents about 34% of population- few new products/services can be profitable until this group buys them- members don’t like to take as much riskwaits until buys are worked out - point where this group enters market, number of competitors also reaches its peak so these buyers have many prices and quality choices to choose from

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Term
Spring
Professor
LICHTENTHAL
Tags
Marketing, Product life cycle management, new products

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