1) Who will use this product?
B) The answers to these questions will form several concepts:
1) Concept 1
C) Each concept represents a category concept that defines the product’s competition.
D) Next, the product concept has to be turned into a brand concept. The brand-
positioning map helps the company to decide how much to charge and how
calorific to make its drink.
Concept Testing
Concept testing involves presenting the product concept to target consumers and getting
their reactions. The concepts can be presented symbolically or physically.
A) In the past, creating physical prototypes was costly and time-consuming.
E) After receiving information, researchers measure product dimensions by having
consumers respond to the following:
1) Communicability and believability
2) Need level
F) The respondents’ answers indicate whether the concept:
1) Has a broad consumer appeal
Conjoint Analysis
Consumers’ preferences for alternative product concepts can be measured through conjoint
analysis, a method for deriving the utility values that consumers attach to varying levels of a
product’s attributes.
A) Respondents are shown different hypothetical offers formed by combining varying
levels of the attributes, then asked to rank the various offers.
D) When preference data are collected from a sufficient sample of target consumers, the
data can be used to estimate the market share any specific offer is likely to achieve,
given any assumptions about competitive response.
E) The most customer-appealing offer is not always the most profitable offer to make.
Marketing Strategy Development
Following a successful concept test, the new-product manager will develop a preliminary
strategy plan for introducing the new product into the market.
A) The plan consists of three parts:
1) The first part describes the
a. Target market’s size
b. Structure
2) The second part outlines
a. Planned price
3) The third part describes the
Business Analysis
After management develops the product concept and marketing strategy, it can evaluate
Estimating Total Sales
Total estimated sales are the sum of estimated first-time sales, replacement sales, and
repeat sales. Sales-estimation methods depend on whether the product is a one-time
purchase, an infrequently purchased product, or a frequently purchased product.
A) Infrequently purchased products exhibit replacement cycles dictated by physical
wearing out or by obsolescence.
Estimating Costs and Profits
Costs are estimated by the R&D, manufacturing, marketing, and finance departments.
A) The payback period here is approximately three and a half years.
B) Management has to decide whether to risk a maximum investment loss of $4.6 million
and a possible payback period of three and a half years.
MANAGING THE DEVELOPMENT PROCESS: DEVELOPMENT TO
COMMERCIALIZATION
The company will determine whether the product idea can translate into a technically and
commercially feasible product.
Product Development
The job of translating target customer requirements into a working prototype is helped by
Physical Prototypes
The goal of the R&D department is to find a prototype that:
1) Embodies the key attributes described in the product-concept statement.
2) Performs safely under normal use and conditions.
3) Can be produced within the budgeted manufacturing costs.
consumers seek and how consumers judge whether these attributes are present.
Customer Tests
When the prototypes are ready, they must be put through rigorous functional tests and
consumer tests.
A) Alpha testing is a name given to testing the product within the company.
B) Beta testing is testing the product with customers.
C) Consumer testing can take several forms:
Market Testing
After management is satisfied with functional and psychological performance, the
product is ready to be branded with a name, logo, and packaging and go into a market
test.
A) Not all companies undertake market testing.
Consumer-Goods Market Testing
A) In testing consumer products, the company seeks to estimate four variables:
1) Trial
Here are four major methods of consumer-goods market testing, from the least to most costly:
1) Sales-Wave Research
In sales-wave research, consumers who initially try the product at no cost are re-offered
the product, or a competitor’s product, at slightly reduced prices.
A) They might be offered the product as many as five times (sales wave) with the
company noting how many customers selected the product again and their reported
levels of satisfaction.
D) It does not indicate what trial rates would be achieved with different sales-promotion
incentives.
2) Simulated Test Marketing
Simulated test marketing calls for finding 30 to 40 qualified shoppers and questioning
them about brand familiarity and preferences in a specific product category.
A) These people are then invited to a brief screening of both well-known and new
commercials or print ads.
3) Controlled Test Marketing
In this method, a research firm manages a panel of stores that will carry new products for
a fee.
A) The company specifies the number of stores and the geographic locations it wants to
test.
4) Test Markets
The ultimate way to test a new consumer product is to put it into full-blown test markets.
A) The company chooses the cities; the sales force tries to sell the trade on carrying the
product and giving it good shelf exposure.
D) Management faces several decisions:
1) How many test cities
2) Which cities
Business-Goods Market Testing
Business goods can also benefit from market testing.
A) Expensive industrial goods and new technologies will normally undergo alpha and
beta testing (with vendors).
Commercialization
Commercialization incurs the company’s highest costs to date.
A) The company will need to contract for manufacturers or build or rent a full-scale
manufacturing facility.
When (Timing)
In commercializing a new product, market-entry timing is critical. The company faces
three choices:
A) First entry
B) Parallel entry
C) Late entry
D) The timing decision involves additional considerations:
1) If the new product replaces an older product
Where (Geographic Strategy)
The company must decide whether to launch the new product in a single locality, a
region, several regions, the national market, or the international market. Most will
develop a planned rollout over time.
A) Small companies will select an attractive city and put on a blitz campaign, then enter
other cities one at a time.
B) Larger companies will introduce their products into a whole region and then move to
the next region.
3) Cost of filling the pipeline
To Whom (Target-Market Prospects)
Within the rollout markets, the company must target its initial distribution and promotion
to the best prospect groups.
A) These would be:
1) Early adopters
How (Introductory Market Strategy)
The company must develop an action plan for introducing the new product into the
rollout markets.
A) To coordinate the many activities involved in launching a new product, management
can use network-planning techniques such as critical path scheduling (CPS).
THE CONSUMER-ADOPTION PROCESS
Adoption is an individual’s decision to become a regular user of a product.
A) The consumer–adoption process is followed by the:
1) Consumer-loyalty process and is the concern of the established producer.
Stages in the Adoption Process
An innovation is any goods, service, or idea that is perceived by someone as new.
C) The new–product marketers should facilitate movement through these stages.
Factors Influencing the Adoption Process
Marketers recognize the following characteristics of the adoption process: differences in
Readiness to Try New Products and Personal Influence
In each product area, there are pioneers and early adopters.
A) People can be classified into these adopter categories:
1) Innovators
2) Early adopters
B) Each of the five groups must be approached with a different type of marketing if the
firm wants to move its innovation through the full product life cycle.
C) Personal influence is the effect that one person has on another’s attitude or purchase
probability.
1) Its significance is greater in some situations and for some individuals than for
others.
D) Companies often target innovators and early adopters with product rollouts.
Characteristics of the Innovation
Some products catch on immediately, whereas others take a long time to gain acceptance.
A) Five characteristics influence the rate of adoption of an innovation:
1) Relative advantage—the degree to which the innovation appears superior to
existing products.
or describable to others.
B) Other characteristics that influence the rate of adoption are:
1) Costs
2) Risk and uncertainty
Organizations’ Readiness to Adopt Innovations
A) Adoption is associated with variables in the organization’s environment
(community progressiveness, community income), the organization itself (size,
profits, pressure to change), and the administrators (education level, age,
sophistication).