COMMERCE 2MA3 Study Guide - Final Guide: Market Saturation, Marketing Mix, Observability
27 Apr 2018
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Chapter 8: Developing New Products
What is a product?
Anything that is of value to a consumer and can be offered through a marketing
exchange
Goods, services, places, ideas organizations and communities
Innovation
Adds value
The process by which ideas are transformed into new products and services that
will help firms grow
Changing customer needs
Adding new products allows firms to create and deliver value by satisfying changing
needs of current and new customers
Well-known product and make it much more interesting
Market Saturation
The longer a product exists in marketplace, the more likely the market will become
saturated
Without new products or services, the value of the firm declines
Saturated markets also offer opportunities; Establish identity - saturated market can
still work
Managing risk through Diversity
Innovation = broader portfolio
Diversification of risk
Innovation and Value
Pioneers: New product introductions that establish a completely new market or
radically change both the rules of competition and consumer preferences in a
market; also called breakthroughs. Disruptive.
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 lead
Adoption/Diffusion of Innovation
The process by which the use of an innovation, whether a product or a service,
spreads throughout a market group over time and over various categories of
adopters.
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Innovators: enjoy taking risks, are regarded as highly knowledgeable, and are not
price sensitive. Help the product gain market acceptance.
Early Adopters: The second group of consumers to use a product or service
innovation; generally, don’t like to take as much risk as innovators. wait and
purchase the product after careful review.
Early Majority: percent of the population; members don’t like to take much risk
and therefore tend to wait until bugs are worked out. Cannot be profitable until this
group buys.
Late Majority: enter when it has reached its peak. last group of buyers to enter a
new product market.
Laggards: Consumers who like to avoid change and rely on traditional products until
they are no longer available
Relative advantage
o product is perceived to be better than substitutes, then the diffusion will be
relatively quick.
Compatibility
Observability
o products are easily observed, their benefits or uses are easily communicated
to others, which enhances the diffusion process
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