MKT 100 Study Guide - Final Guide: Price Ceiling, Business Ethics, Marketing

168 views31 pages
Published on 14 Jan 2013
School
Ryerson University
Department
Marketing
Course
MKT 100
Professor
MKT100 FINAL EXAM REVIEW Fall 2012
PRODUCT LIFE CYCLE
-PLC defines the stages that new products move through as they enter, get established in, and ultimately
leave the marketplace and thereby offers marketers a starting point for their strategy planning
Introduction Stage
o Usually starts with a single firm
o Innovators are the ones to try the new offering
o Initial losses due to its high start-up costs and low levels of sales revenue
Growth Stage
o Growing number of product adopters, rapid growth in industry sales and increase in
competitors and available product versions
o Market more segmented and preferences more varied = increase of potential for new
markets
o Early majority consumers enter
o Firms attempt to reach new consumers by studying their preferences and the goal is to
ride the rising sales trend and firmly establish the firm’s brand
o Industry Shakeout: firms that have not established a stronghold in the market deciding to
exit
Maturity Stage
o Characterized by the adoption of the product by the late majority and intense competition
among firms
o Marketing costs increase as the firms defend their market share & face intense
competition on price
o At the later phase of this stage, the market has become saturated and all potential
customers have already adopted the product
o Strategies for Extending the PLC
Entry into new markets or market segments
Due to highly saturated market, firms may attempt to enter new
geographical markets, international markets
Simply product design change
Development of new products
Decline Stage
o Firms position themselves for a niche segmentation of diehard consumers or those with
special needs
o Firms may completely exit the market
o Few laggards enter the market
Shape of the PLC
o In theory, bell-shaped with regard to sales and profits
o In reality, each product has its own individual shape
NEW PRODUCT ADOPTION PROCESS
Product Development Process
Idea Generation
-Development of viable new product ideas
o Internal Research and Development
R&D departments of the firm’s own have scientists who work to solve complex
problems and develop new ideas
Unlock document

This preview shows pages 1-3 of the document.
Unlock all 31 pages and 3 million more documents.

Already have an account? Log in
MKT100 FINAL EXAM REVIEW Fall 2012
The product development costs are quite high and new product has a good
chance of being a technological or market breakthrough
o Licensing
Firms buy the rights to use the technology or ideas through a licensing agreement.
Saves the high costs of in-house R&D, but the firm is banking on a solution that
already exists
o Brainstorming
Group works together to generate ideas
In a brainstorming session, no idea can be immediately accepted or rejected, best
ideas or the combination of ideas are determined at the end of the session from
the members’ votes
o Competitors’ Products
Reverse Engineering: involves taking apart a competitor’s product, analyzing it,
and creating an improved product that does not infringe on the competitor’s
patents
o Customer Input
85% of all B2B product ideas come from customers
One successful approach is to analyze lead users.
Concept Testing
o The process in which a concept statement that describes a product is presented to
potential buyers or users to obtain reactions
o Concept: brief written description of a product or service
o Concept testing helps the developer estimate the sales value, make changes to enhance
the product and determine if the idea is worth further development
Product Development
o Entails a process of balancing various engineering, manufacturing, marketing and
economic considerations to develop a product
o Prototype: first physical form or service description of a new product, still in rough or
tentative form
o Alpha Testing: attempt to determine whether a product will perform according to its
design and whether it satisfies the need for which it was intended
o Beta Testing: having potential customers examine a product prototype in a real-use
setting to determine its functionality, performance, potential problems and other issues
Market Testing
o Premarket Testing
Conducted before a product is brought to market to determine how many
customers will try and then continue to use it
One popular example is Nielsen BASES
o Test Marketing
Introduces a new product or service to a limited geographical area prior to a
nation launch
Test marketing costs more and takes longer than premarket tests
Firm can study actual consumer behaviour
Many firms use BehaviourScan to improve the probability of success and it
utilizes consumer panel data collected passively at the point of sale in stores
Product Launch
o Requires tremendous financial resources and extensive coordination of all aspects of
marketing mix
o Promotion
o Price
o Place
Unlock document

This preview shows pages 1-3 of the document.
Unlock all 31 pages and 3 million more documents.

Already have an account? Log in
MKT100 FINAL EXAM REVIEW Fall 2012
o Timing
Evaluation of Results
o Critical postlaunch review to determine what additional resources are needed to the
marketing mix
o Three interrelated factors:
1. Its satisfaction of technical requirements
2. Customer acceptance
3. Its satisfaction of the firm’s financial requirements
Adoption Cycle
Diffusion of Innovation: process by which the use of an innovation spreads throughout a market group
over time and over various categories of adopters
Helps marketers understand the rate at which consumers are likely to adopt a new product
Helps identify potential markets
Five Groups of Purchasers
o Innovators
Those buyers who want to be first to have the new product or service
Enjoy taking risks, highly knowledgeable, and are not price sensitive
Firms that invest in the latest technology to make the firm more efficient are also
innovators
Innovators are crucial to the success as they help the product gain market
acceptance
o Early Adopters
Don’t like as much risk as innovators
Wait and purchase after careful review
Represent 13.5% of all buyers
Crucial for bringing the other three buyer categories
o Early Majority
34%
New products/services can be profitable when this large group buys them
Tend to wait until the bugs are worked out
The number of competitors in the marketplace has reached its peak at this point,
giving them many choices
o Late Majority
Product has achieved full market potential and sales tend to level off and decline
o Laggards
16%
Avoid change and rely on traditional products until they are no longer available
May never adopt a certain product or service
Factors Affecting Product Diffusion
o Relative Advantage
If a product is perceived to be better than its substitutes, then the diffusion will be
relatively quick
o Compatibility
o Observability
When products are easily observed, the benefits or uses are easily communicated
which enhances the diffusion process
o Complexity and Trialability
Products that are less complex are easy to try and will diffuse more quickly
Unlock document

This preview shows pages 1-3 of the document.
Unlock all 31 pages and 3 million more documents.

Already have an account? Log in

Document Summary

Plc defines the stages that new products move through as they enter, get established in, and ultimately leave the marketplace and thereby offers marketers a starting point for their strategy planning. Introduction stage: usually starts with a single firm. Innovators are the ones to try the new offering. Initial losses due to its high start-up costs and low levels of sales revenue. Industry shakeout: firms that have not established a stronghold in the market deciding to exit. Entry into new markets or market segments. Due to highly saturated market, firms may attempt to enter new geographical markets, international markets. Decline stage: firms position themselves for a niche segmentation of diehard consumers or those with special needs, firms may completely exit the market, few laggards enter the market. In theory, bell-shaped with regard to sales and profits. In reality, each product has its own individual shape.

Get OneClass Grade+

Unlimited access to all notes and study guides.

YearlyMost Popular
75% OFF
$9.98/m
Monthly
$39.98/m
Single doc
$39.98

or

You will be charged $119.76 upfront and auto renewed at the end of each cycle. You may cancel anytime under Payment Settings. For more information, see our Terms and Privacy.
Payments are encrypted using 256-bit SSL. Powered by Stripe.