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Chapter 8

BU352 Marketing Chapter 8.docx

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ECON 344
Deborah Reyner

BUSWeek 6Chapter 8 Developing New ProductsIdentify the reasons firms innovateDescribe the diffusion of innovation theory and how managers can use it to make product line decisionsExplain the stages involved in developing new products and servicesDescribe the product life cycle and summarize how it is used to make product line decisionsInnovation the process by which ideas are transformed into new products and services that will help firms growContinue to market current products to current customersTake same product to another market with similar customersWHY DO FIRMS CREATE NEW PRODUCTSChanging customer needsadd new products or offerings to satisfy customer needs Innovate to make it more interestingMarket saturationThe longer the product exists in the marketplace the more likely that the market will become saturatedManaging risk through diversityCreate portfolio products help diversify risk and enhance firm value Add new ideas to existing product Diversification enables companies to achieve better results than I would be with just one kind of the product Fashion cyclesTo generate sales apparel fashion designers produce entirely new product selections a few times a yearChanging customer needs By adding new products Unilevers Dove brand creates and delivers value more effectively by satisfying the changing needs of its current and new customers or simply by keeping customers from getting bored with its current product offeringsNew Product Introductions Pioneers radically change competition and consumer preferencesReasons of failure products1Offer consumers too few benefits compared with existing products2Too complex or require substantial learning and effort before consumers can use them3Bad timing consumers are not ready for such new productsEx iPod example shows new products succeed because they offer substantial benefits that customers like and want even though they may not be inexpensive1
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