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Marketing Chapter 11 Notes

Marketing Chapter 11 Notes - Chapter 11 Developing New...

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Chapter 11 – Developing New Products I. Innovation and Value a. Innovation is the process by which ideas are transformed into new products and services that will help firms grow b. Why innovate? i. By adding new products to their offerings, firms can create and deliver value more effectively ii. The longer a product exists in the marketplace, the more likely the market will become saturated iii. Helps firms diversify its risk and enhance firm value iv. New products, also called pioneers or breakthroughs , establish a completely new market or radically change both the rules of competition and consumer preference in a market v. Pioneers have the advantage of being first movers and become readily recognizable to consumers, giving them an early market share lead. II. Diffusion of Innovation a. Diffusion of innovation refers to the process by which the use of an innovation spreads throughout a market group over time and over various categories of adopters. b. Innovators i. Innovators are buyers who want to be the first on the block to have the new product or service c. Early adopters i. Early adopters are the second subgroup that begins to use a product or service innovation (this group is regarded as the opinion leaders) d. Early Majority i. The early majority represents approximately 34% of the population and is crucial because few new products and services can be profitable until this large group buys them e. Late Majority i. The late majority represents 34% of the market and is the last group of buyers to enter a new product market; when they do, the product has achieved its full
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market potential. By the time the late majority enters the market, sales tend to level off or may be in decline f. Laggards i. Laggards make up roughly 16% of the market. These consumers like to avoid change and rely on traditional products until they are no longer available. g. Using the Diffusion of Innovation Theory i. Using the diffusion of innovation theory, firms can predict which types o customers will buy their product or service immediately after its introduction, as well as later as the product gets more accepted by the market.
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Marketing Chapter 11 Notes - Chapter 11 Developing New...

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