Chapter 8 Developing New Products.docx

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Department
Management and Organizational Studies
Course
Management and Organizational Studies 2320A/B
Professor
John White
Semester
Fall

Description
Chapter 8 Developing New Products Product Anything that is of value to a consumer and can be offered through a marketing exchangeWhy Do Firms Create New ProductsInnovation The process by which ideas are transformed into new products and services that will help firms grow Changing Customer NeedsMarket SaturationManaging Risk through Diversity Firms with multiple products are better able to withstand external shocks including changes in consumer preferences or intensive competitive activityFashion Cycles In industries that rely on fashion trends and experience short product life cyclesincluding apparel arts books and softwaremost sales come from new productsInnovation and Value Pioneers New product introductions that establish a completely new market or radically change both the rules of competition and consumer preferences in market also called breakthroughsFirst 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 leadMajority of new products are failures because 1 offer consumers too few benefits compares with existing products 2 they are too complex or require substantial learning and effort before consumers can use them and 3 bad timing that is they are introduced at a time when consumers are not ready for such new products or services Adoption of Innovation 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 Consumer adoption cycle Bellcurve Innovators 25 Early Adopters 135 Early Majority 34 Late Majority 34 Laggards 16Innovators Those buyers who want to be the first to have the new product or service Enjoy taking risks regarded as highly knowledgeable and are not price sensitive Early Adopters The second group of consumers in the diffusion of innovation model after innovators to use a product or service innovation generally dont like to take as much risk as innovators 1
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