Textbook Notes (363,550)
Canada (158,417)
Marketing (881)
MKT 100 (485)
Asif Salam (24)
Chapter 8


3 Pages
Unlock Document

Ryerson University
MKT 100
Asif Salam

CHAPTER 8: DEVELPING NEW PRODUCTS Why do firms innovate? innovation process by which ideas are transformed into new prod/serv that will help firms grow CHANGING CUSTOMER NEEDS  keep customers from getting bored of their current prod/serv  E.g Dove Beauty Bar extended brand into hair, face, skin care lines  Can identify problems and develop products that customers never knew they needed MARKET SATURATION  Longer prod exists on market, more likely market will become more saturated  People get tired of same old thing, they seek variety  Car companies revamp their cars every year MANAGING RISK THROUGH DIVERSITY  Through innovation, often create a broader portfolio of products, which helps them diversity their risk and enhance firm value better than a single product can  Diversification enables company to achieve better results than with just one kind of prod.  Firms w/ multiple prod are better able to withstand external shocks changes in consumer preferences or competition INNOVATION AND VALUE  pioneers new prod introductions that establish completely new market/change both rules of competition & consumer preferences in a mkt (also called “breakthroughs”) o Consumers spend time learning how to use prod, and benefits they way they interact w ppl  first movers prod pioneers first to create mkt/prod category, making them readily recognizable to consumers, establishing a commanding and early mkt share lead o Pave way for followers o Less sophisticated design, priced higher, leaves room for better low price competitors o 95% of all consumer goods fail, products failure rates of 50-80% WHY?: 1. Offer consumers too few benefits compared w/ existing products 2. too complex/ require learning or effort before use 3. bad timing – when consumers are not ready for use  E.g. Sony Walkman CDs to Apple IPod ITunes, eliminate CDS FASHION CYCLES  Experience short product life cycles (apparel, arts, books, software)  Sales come from new products Diffusion of Innovation INNOVATORS buyers who want to be first to have the new prod/serv  Enjoy taking risk, highly knowledgeable, not price sensitive  2.5% of total market for new prod/serve  Crucial to success of any new prod  help prod gain mkt acceptance EARLY ADOPTERS second group of consumers in diffusion of innovation model, use prod/serv innovation  Don’t like to take as much risk as innovators  Wait to purchase product after careful review  Opinion leaders, 13.5% of all buyers in mkt  Spread word to early majority/late majority EARLY MAJORITY in diffusion of innovation model  34% of all buyers in mkt  Don’t take much risk, wait until bugs are worked out  Buyers have more prices/quality choices to compare since competitors are at peak LATE MAJORITY last group of buyers to enter a new prod mkt  Sales level off or be in decline  Product has already reached its market potential LAGGARDS consumers who like to avoid change and rely on traditional products until they’re not available  May never adopt new prod/serv  16% of buyers in mkt Using the Adoption Cycle firms can predict which type of consumers will buy their new prod after intro  RELATIVE ADVANTAGE product perceived to be better than substitutes, diffusion will be quick  COMPATABILITYbusiness prof/execs ma
More Less

Related notes for MKT 100

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.