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Chapter 11

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Monash University
Dr Maya Mandery

NEW PRODUCTS New product – a good, service, or an idea that is perceived by some potential customers as new. There are five categories of new products namely 1) New to the world – this is a 2) completely new product that doesn’t exist anywhere in the world. Requires huge costs of R&D. it could be the first anti-malarial vaccine. 3) New category entries – it includes developing a new category of products that the company didn’t produce before. Like Google’s first phone or Apple’s clothing line. 4) Additions to the product line – it includes adding a similar product with a few additional features to the product line like BMW’s first 4WD. 5) Product improvements – it involves continuously improving the products to stay up-to-date with the needs of the market and pretty much every company has to do this to remain successful. 6) Repositioning – it involves merely repositioning the same product in the market to do different things. For example baking soda could be positioned as a baking ingredient, cleaning agent or a fridge deodorant. A firm can introduce new products in two ways, either through acquisition of another company’s product through licensing or purchasing of the company or purchasing a patent. The other way is through new product developments which is introducing original products, product improvements, product modifications and new brands through the firm’s own product development efforts. New services can also be developed, however they won’t necessarily be as big as the first laptop. The reason is service companies are smaller in relation to goods companies and tend to be more social and organisational rather than technology based. Sydney’s BridgeClimb developed new services like a proposal on the bridge or a quick tour of the bridge. THE ADOPTION PROCESS FOR NEW PRODUCTS STAGES IN THE ADOPTION PROCESS Adoption process – it is the metal process from first learning of the innovation to the final adoption. 1) Awareness – the first stage where the customer knows that the product exists but doesn’t have any information about it. 2) Interest – it is the stage where customers start seeking information about the product. 3) Evaluation – the consumer contemplates whether using the product makes sense or not. 4) Trial – the consumer tries the product in small quantities to estimate the value of the product 5) Adoption – the consumer decides whether to make full or regular use of the product. INDIVIDUALS DIFFERENCES IN THE ADOPTION OF INNOVATIONS 1) Initiators (2.5%) – they are willing to take risks to try the innovations. Usually have a higher than average income and good education and rely on scientific sources and experts for information. Don’t follow group norms. 2) Early adopters (13.5%) – they usually follow the initiators and tend to be the opinion leaders of the bunch to create positive word of mouth 3) Early majority (34%) – they are definitely dependent on group norms and follow the opinion leaders. They make up quite a large bit of the population and adopt ideas before the average person. 4) Late majority (34%) – they are very late in adopting new innovations. Not usually reliant on group norms, have lower than average income and education. 5) Laggards (16%) – they are the last ones to adopt a product and will only do so if it becomes a tradition. They have the lowest socio-economic status. Buzz marketing is quite effective if associated with an incentive. Dropbox provides additional free storage along with the initial free amount if the customers recommend the product t
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