Chapter 12 – Developing New Products Marketing 6th
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
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Chapter 12
Developing New Products
Tools for Instructors
• Brief Chapter Outline
• Learning Objectives
• Extended Chapter Outline with Teaching Tips
• Answers to End of Chapter Learning Aids
• Chapter Case Study
• Additional Teaching Tips
• Connect Activities
Brief Chapter Outline
Why Do Firms Create New Products?
Diffusion of Innovation
How Firms Develop New Products
The Product Life Cycle
End of Chapter Learning Aids
Chapter Case Study: Is the Glass Half Full? The Launch, Death Struggles, and Potential Reemergence of
Google Glass
Learning Objectives
LO12-1 Identify the reasons firms create new products.
Firms need to innovate to respond to changing customer needs, prevent declines in sales from market
saturation, diversify their risk, and respond to short product life cycles, especially in industries such as
LO12-2 Describe the different groups of adopters articulated by the diffusion of innovation theory.
The diffusion of innovation theory can help firms predict which types of customers will buy their products
or services immediately upon introduction, as well as later as they gain more acceptance in the market.
Innovators are those buyers who want to be the first to have the new product or service. Early adopters
do not take as much risk as innovators but instead wait and purchase the product after careful review.
service.
LO12-3 Describe the various stages involved in developing a new product or service.
When firms develop new products, they go through several steps. First, they generate ideas for the
product or service using several alternative techniques, such as internal research and development, R&D
consortia, licensing, brainstorming, tracking competitors’ products or services, or working with customers.
Chapter 12 – Developing New Products Marketing 6th
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
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Second, firms test their concepts by either describing the idea of the new product or service to potential
LO12-4 Explain the product life cycle.
The product life cycle helps firms make marketing mix decisions on the basis of the product’s stage in its
life cycle. In the introduction stage, companies attempt to gain a strong foothold in the market quickly by
appealing to innovators. During the growth stage, the objective is to establish the brand firmly. When the
time.
Extended Chapter Outline with Teaching Tips
I. Why Do Firms Create New Products?
E. Improving Business Relationships
Progress Check: Several questions are offered for students to check their understanding of core
concepts.
1. What are the reasons firms innovate?
II. Diffusion of Innovation
1. Relative Advantage
Chapter 12 – Developing New Products Marketing 6th
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McGraw-Hill Education.
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2. Compatibility
3. Observability
4. Complexity and Trialability
Progress Check: Several questions are offered for students to check their understanding of core
concepts.
1. What are the five groups on the diffusion of innovation curve?
2. What factors enhance the diffusion of a good or service?
III. How Firms Develop New Products
A. Idea Generation
1. Internal Research and Development
2. R&D Consortia
3. Licensing
4. Brainstorming
5. Outsourcing
6. Competitors’ Products
7. Customer Input
Progress Check: Several questions are offered for students to check their understanding of core
concepts.
1. What are the steps in the new product development process?
2. Identify different sources of new product ideas.
Answer: To generate ideas for new products, a firm can use its own internal research and
Chapter 12 – Developing New Products Marketing 6th
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
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IV. The Product Life Cycle
Progress Check: Several questions are offered for students to check their understanding of core
concepts.
1. What are the key marketing characteristics of products or services at each stage of the product
life cycle?
Answer: In the introduction stage, marketers attempt to build awareness and develop the market
for the product. In the growth stage, marketers seek to build brand preferences and increase
2. Why might placement decisions for products or services into stages of the product life cycle
become a self-fulfilling prophecy?
Answer: If a product experiences several seasons of declining sales, a manager may determine
that it has moved from the growth stage to decline and so decides to stop promoting the product.
have been addressed with positive marketing support?
Answers to End of Chapter Learning Aids
Marketing Digitally
1 Go to http://www.quirky.com/ and read about how Quirky develops new products. How is this
different than traditional new-product development?
Quirky is a crowd-sourcing invention company that builds, markets, and sells devices that have been
proposed and worked on by its hundreds of thousands of members. The company uses social
Source: Raymond, Chris “How Quirky Turns Ideas Into Inventions,” Popular Mechanics, January 7, 2014
Chapter 12 – Developing New Products Marketing 6th
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
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2 The automotive industry is constantly adding new and different products and technologies to
their cars – both above and under the hood. Conduct an Internet or library database search
and discuss two innovative new automotive technologies that are changing the industry.
Students must fit innovations developed for the automobile industry to the product life cycle model.
Marketing Applications
1 Some people think that a product should be considered “new” only if it is completely new to
the market and has never existed before. Describe or give examples of other types of new
products.
Students must challenge the mindset of “new means completely new” and think about how marketers
perceive the concept of product newness. Therefore, they might consider introducing an existing product
to a new market, positioning a product using a new purpose, or repositioning a product to capture an
2 Android Wear is a new category of wearable computing devices that link to Android
smartphones. How quickly do you think this product will diffuse among the U.S. population?
Describe the types of people that you expect will be in each of the diffusion of innovation
stages.
The new wearables have some impediments to overcome to be successful. Some experts do not see
them as “radical” innovations. They may be seen as “incremental” innovations that only improve current
technologies.
Innovators: These customers will either pre-order or wait in line overnight to get the latest
Android Wear watch.
Chapter 12 – Developing New Products Marketing 6th
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McGraw-Hill Education.
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3 What are the advantages and disadvantages for companies that are the first to introduce
products that create new markets?
This question focuses on the idea of the first-mover advantage and asks students to consider whether it
truly is an advantage to be first in the market with a new product or service.
There are many potential advantages for a firm that is the first to introduce a new product to a market. For
4 Identify and describe the ways that companies generate new product ideas. Which of these
ways involve the customer? How can firms assess the value of the ideas that customers
generate?
Rather than considering the idea-generation process solely from an internal company perspective,
students should understand that good ideas can come from many sources. After an idea gets generated,
the company must determine its potential value by progressing to the next stage of the product
5 Describe an example of a new product or service that is targeted at the college-student
market. Using the concept-testing discussion in the chapter, describe how you would conduct
a concept test for this product or service.
Picking up where the previous question left off, this exercise challenges students to consider how they
might perform concept testing of a product aimed at them. In particular, they will need to examine how to
formulate the concept statement, conduct exploratory and conclusive research about the concept, and
determine whether college-aged consumers might purchase the concept product if it were available.
Due to the popularity of cars like the Scion with college-aged consumers, Toyota markets another car, the
sounded good, the carmaker should consider another idea for the college student market.
6 Using the same product or service you used in question 5, use the diffusion of innovation
theory, to assess how quickly it will diffuse based on its relative advantage, compatibility,
observability, complexity, and trialability.
Chapter 12 – Developing New Products Marketing 6th
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
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The Toyota Yaris is an inexpensive, entry–level subcompact automobile. The Yaris’ predecessor was the
oddly proportioned Echo. All of the following will lead to quicker diffusion of the auto:
7 How does the Internet help companies gain customer input on their existing and new
products?
Listening to the customer in both B2B and B2C markets is essential for successful idea generation. The
Internet provides another channel for customers to use. Companies realize that their customers are on
8 Nature’s Path is about to introduce a type of granola and is in the market-testing phase of the
new product-development process. Describe two ways that Nature’s Path might conduct initial
market testing prior to launching this new product.
Firms conduct premarket tests before they bring a product or service to market to determine how many
customers will try and then continue to use the product or service based on a small group of potential
9 In what stage of the product life cycle is a new model of a PlayStation 4 video game console?
Is Sony’s marketing strategy—its four Ps—consistent with the product’s stage in its life
cycle? Explain.
A new model of the PlayStation video game is in the introduction stage of the product life cycle, because
only innovators purchase it in the beginning, before it gains wider acceptance. Sony’s marketing strategy
10 You have recently been hired by a cosmetics company in the product-development group. The
firm’s brand is a top-selling, high-end line of cosmetics. The head of the development team
has just presented research that shows that “tween” girls, aged 11 to 15, are very interested in
cosmetics and have the money to spend. The decision is made to create a line of tween
cosmetics based on the existing adult line. As the product moves through development you
begin to notice that the team seems to lean toward a very edgy and sexual theme for the line,
including naming the various lines “envy,” “desire,” “prowess,” and “fatal attraction.” You
begin to wonder, is this concept too much for girls in the targeted age group?
Student answers to this question may vary. This question asks students to think about the ethical
implications of using provocative messages to target younger girls. Will this message drive sales or will it