Marketing Chapter 8: Product Development

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Questions and Answers

At which stage of the product life cycle does a product gain rapid market acceptance and see increased profits?

Decline Stage

Maturity Stage

Introductory Stage

Growth Stage (correct)

What is a common strategy employed during the Maturity Stage to counteract market saturation?

Discontinue the product entirely

Increase marketing efforts (correct)

Reduce distribution channels

Lower product quality

What happens to profits during the Maturity Stage as competition intensifies?

Profits may decline (correct)

Profits remain unchanged

Profits consistently increase

Profits fluctuate randomly

Which company expanded its product line into men's grooming to increase consumption?

L’Oréal Signup and view all the answers

What does the strategy of 'harvesting' a product entail?

Reducing costs while maximizing short-term profits Signup and view all the answers

Which of the following is NOT a characteristic of the Decline Stage?

Sales and profits increasing Signup and view all the answers

What is the primary focus for companies during the Growth Stage?

Maximizing market share Signup and view all the answers

What type of modification may companies consider during the Maturity Stage to differentiate their products?

Product modification to enhance features Signup and view all the answers

What is the primary goal of idea screening in product development?

To reduce the number of product ideas before significant investment Signup and view all the answers

Which of the following is NOT a criterion used in the idea screening process?

Design aesthetics of the product Signup and view all the answers

What distinguishes a product concept from a product idea?

A product concept provides detailed consumer terms while a product idea is more general. Signup and view all the answers

Which framework evaluates whether a product idea should be pursued based on market demand and strategic fit?

R-W-W Framework Signup and view all the answers

What is concept testing primarily used for in product development?

To gauge consumer appeal of new product concepts Signup and view all the answers

Which of the following examples demonstrates effective crowdsourcing?

Migros inviting customers to suggest product ideas Signup and view all the answers

In the context of innovation, what would the 'Win' aspect of the R-W-W framework assess?

The product's competitive advantage and market position Signup and view all the answers

Which example illustrates the difference between a product image and a product concept?

A detailed description of a new toy versus how kids perceive it Signup and view all the answers

What percentage of the market share does Google dominate in mobile search?

94% Signup and view all the answers

Which of the following is NOT one of Alphabet's Moonshot Projects?

Google Maps Signup and view all the answers

Which strategy involves developing original products through the company's own efforts?

Internal Development Signup and view all the answers

What is the primary mission that guided Google's initial focus?

To organize the world's information Signup and view all the answers

What acquisition did Google make to enter the smart home market?

Nest Labs Signup and view all the answers

What is a key characteristic of projects selected by Alphabet's X Lab?

They must address significant problems. Signup and view all the answers

Which of the following is an example of Google's software innovations?

Gmail Signup and view all the answers

What is a significant factor in Google's culture regarding innovation?

Employees are encouraged to innovate fearlessly. Signup and view all the answers

What is a key reason for a product to enter the decline stage?

Technological advances Signup and view all the answers

What challenge is associated with managing a product in the decline stage?

High management resource consumption Signup and view all the answers

Which strategy involves repositioning a brand to extend its product life?

Maintain Signup and view all the answers

What impact can a failing product have on a company's reputation?

Delays innovation efforts Signup and view all the answers

What does the 'harvest' strategy focus on?

Minimizing production costs Signup and view all the answers

Which of the following is NOT a common reason for a product’s decline?

Product diversification Signup and view all the answers

In the decline stage, how can sales decline manifest?

Gradually fading away or stabilization Signup and view all the answers

When should a company consider dropping a product?

When it no longer aligns with the company's strategy Signup and view all the answers

What is the primary purpose of commercialization in new product development?

To officially launch the product and scale marketing efforts. Signup and view all the answers

Which of the following best describes customer-centered new product development?

Involving customers in solving problems and creating satisfying experiences. Signup and view all the answers

What is a key advantage of team-based new product development?

Allows overlapping development stages to reduce bottlenecks. Signup and view all the answers

What is one of the methods used to reduce time and cost in product testing?

Simulated test markets in lab environments. Signup and view all the answers

Why is timing a crucial consideration in the commercialization process?

It influences the potential reception based on external factors. Signup and view all the answers

What does a systematic approach to new product development entail?

Implementing a structured process to manage innovation. Signup and view all the answers

How does ASICS enhance customer satisfaction in product development?

By collecting customer input to personalize products. Signup and view all the answers

What is one of the roles of innovation management systems in product development?

To increase stakeholder participation in the idea-generation process. Signup and view all the answers

What must companies consider when deciding to drop a product?

Legal obligations to stakeholders Signup and view all the answers

What is a key regulatory requirement for companies regarding product safety?

Compliance with the Federal Food, Drug, and Cosmetic Act Signup and view all the answers

What significant financial risk do companies face due to product liability issues?

Potential lawsuits running into millions or billions Signup and view all the answers

What role do product stewards play within a company?

Proactively identifying potential product issues Signup and view all the answers

What is one challenge international marketers face regarding product introduction?

Deciding on adaptation versus standardization Signup and view all the answers

How can standardization benefit international marketing strategies?

By creating a consistent global image and reducing costs Signup and view all the answers

Why might the government block a company's acquisition of another company?

To maintain market competition Signup and view all the answers

What can be a consequence of failing to comply with patent laws?

Legal repercussions and potential financial penalties Signup and view all the answers

Study Notes

Chapter 8: Developing New Products and Managing the Product Life Cycle

Google, a globally renowned company, is known for continuous innovation.
Google initially focused on organizing the world's information via online search, with a 94% market share in mobile search.
Google expanded beyond search to other markets, leveraging its core information mission (e.g., Gmail, Google Maps, Google Docs, Google Photos, Google Cloud, Chrome).
Google acquired companies to enter new markets (e.g., Nest Labs, Waze).
Alphabet (Google's parent company) was created to encompass diverse projects like self-driving cars (Waymo) and health technology (Verily).
Alphabet's X Lab focuses on addressing global issues with groundbreaking technologies (e.g., Waymo, Verily, Wing, Everyday Robot Project).

I - New Product Development Strategy

New product development encompasses original products, improvements, modifications, and new brands developed internally.
Companies acquire new products through purchase (acquisitions) or licensing.
New products are crucial for customer satisfaction and company growth.
A significant challenge in new product development is the high failure rate of approximately 95% of new products.
Common reasons for product failure include overestimation of market size, poor design, improper positioning, wrong price points, poor advertising, and internal company biases.
Understanding customer needs, markets, and competitors is key to successful new product development.
Prioritizing products that deliver superior value is essential.

II - The New Product Development Process

Idea generation is the systematic process of identifying new product concepts.
Internal sources of ideas include R&D departments and employee contributions (intrapreneurship, hackathons).
External sources of ideas include distributors, suppliers, competitors, and customers (crowdsourcing).
Companies use idea screening to narrow down ideas based on factors like customer value, potential market size, development time, and profitability.
The next phase is concept development, involving a detailed description of the product idea in consumer-friendly terms.
This is followed by concept testing with potential customers to assess their receptiveness.

III - Marketing Strategy Development

The marketing strategy outlines the launch plan and involves pricing, distribution, and marketing.
The plan includes target markets, value propositions, sales, market share, and profit goals for initial years.
A marketing plan considers product price, distribution strategy, and the initial budget.
The plan also addresses long-term sales and profits.

IV - Business Analysis, Product Development, and Test Marketing

Business analysis evaluates the financial viability of the product based on sales projections, costs, and profit projections.
Product development ensures production of a viable product prototype (satisfies customer needs and cost objectives)
Test marketing is the process of testing the product in the market prior to launch in order to gain insights.

V - Commercialization

Commercialization involves officially launching the product and scaling marketing efforts.
The timing and target market (geographic strategy) are vital components to successful launch.
Successful new product development requires a customer-centered, collaborative, and systematic approach.

VI - Product Life Cycle (PLC)

The product life cycle (PLC) illustrates the trajectory of product sales and profitability over time. Common stages are introduction, growth, maturity, and decline.
Product life cycles can be classified by style (e.g., clothing), fashion (e.g., business casual attire), or fad (e.g., fidget spinners).
Strategies tailored to each stage of the product life cycle are critical for success, including maintaining, harvesting, or discontinuing the product entirely.
Declining products can demand different approaches and considerations, impacting the company's reputation and requiring resource allocation decisions to maximize return.

Companies must consider product decision implications relating to social and ethical components.
Decisions about acquiring or dropping products due to competition considerations.
Patent protection and quality considerations, specifically the Federal Food, Drug, and Cosmetic Act, and the Consumer Product Safety Commission are relevant to product design considerations in the U.S.
International product marketing involves adopting products to specific market preferences (adaptation) or maintaining an identical standardized product for different markets.

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Description

Explore Chapter 8's insights on developing new products and managing the product life cycle. This quiz covers Google's innovative strategies and how they expanded their product offerings through acquisitions and internal development. Test your understanding of new product development strategies within a marketing context.