chapter 10 - LO1) Innovation and ValueInnovation is the...

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LO1) Innovation and Value- Innovation – is the process by which ideas are transformed into new products and services that will help firms grow. This is how firms create new products, instead of selling the same products to the same consumer, or selling the same products to a different consumer group. The first step is for a firm to satisfy the changing needs of the consumer with adding value with new products. Second, in order to keep their sales from declining they must make sure that their customers are not getting bored with the same old products, and they need to make new products to add variety. Pioneer or break through- new products introductions that establish a completely new market or radically change the rules of competition and consumer preferences. First movers- product pioneers, first to create a market or product category; readily recognizable to consumers, they establish a commanding early market share lead. LO2) Outline the diffusion of innovation theory and determine how managers use it to make product line decisions Diffusion of innovation- process by which an innovation spreads throughout a target market over time and various categories of adopters. This theory helps marketers understand the rate at which consumers are likely to adopt a new product or service. It also helps the identify markets and predict the sales of their new innovation. Innovators-consumers who want to be the first to have a new product or service. Innovators tend to be informed about the new products, and are very important in the success because they help the product gain market acceptance. By using the product and giving positive feedback will help bring the next adaptor category. They make up 2.5% of the total market. Early adapters- the second group of consumers in the diffusion of innovation model to use an innovation wait to purchase until after careful review. They don’t like take as much risk but wait until there is review on the product before purchasing. They make up 13.5 % of the market. Early majority- consumers in the diffusion of innovation model who avoid risk; they wait until innovation is tested; few new products and services are profitable until they buy. By the time this group comes around to purchase, there might be other options available. This group makes up 34% of the market. Late Majority- Last group of buyers to enter a new product market; when they do, the product has achieved its full market product. By the time this group purchases sales have already met their peak. They make up 34% of the market group.
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Laggards- Consumers who avoid change and rely on traditional products until they are no longer available. This group often avoids change and relies on traditional products. They make up 16% of the market.
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This note was uploaded on 10/18/2010 for the course BM 110 taught by Professor Arthur during the Spring '08 term at Mohawk Valley Community College.

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chapter 10 - LO1) Innovation and ValueInnovation is the...

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