Marketing Strategies in Consumer Behavior

Changing Customer Needs

• Firms can create value by meeting changing customer needs with new products or service offerings.
• Dyson redesigned the vacuum cleaner to improve its functionality and appeal to customers.

Market Saturation

• As a product ages in the marketplace, it's more likely the market will become saturated.
• Without new products or services, a firm's value declines.
• Saturated markets can also present opportunities for new products or services to address specific needs.

Managing Risk Through Diversity

• Innovation helps companies diversify their risk by expanding their product portfolio.
• A broader product portfolio is more resilient than relying on a single product.

Fashion Cycles

• The fashion industry depends on trends and experiences, resulting in short product life cycles.
• New products are crucial for driving sales in the fashion industry.
• Consumers demand new versions of video games, as they seek new challenges and experiences.

Improving Business Relationships

• New products don't always target end consumers; they can also improve relationships with suppliers, such as Walmart.

Adoption of Innovation

• Diffusion of innovation describes how the use of new products or services spreads across a market group over time.

Pioneers

• Breakthrough products establish entirely new markets or completely change industry competition and consumer preferences.
• Apple's Apple Watch is an example of a pioneer product.

First Movers

• These are the first to create a market or product category, gaining early recognition and market share.
• Google Glass failed due to privacy concerns, system bugs, and restrictions in public spaces.

Using the Adoption Cycle

• The adoption cycle helps understand how consumers adopt new products or services.

Relative Advantage

• Products with a perceived advantage over substitutes tend to diffuse quickly in the market.
• Swiffer's relative advantage over competitors lies in its faster, easier, and more efficient cleaning process.

Compatibility

• Products that adapt to various cultures and needs, such as different sizes, enjoy greater compatibility.

Observability

• Products that are easily observed benefit from greater communication of their benefits or uses, promoting wider adoption.

How Firms Develop New Products

• Firms use a variety of methods to generate new product ideas.

Idea Generation

• Internal R&D focuses on developing new technologies and products.
• Licensing involves acquiring rights to technology or ideas from other companies for a fee.
• Brainstorming encourages group collaboration to generate new ideas without immediate judgment.
• Outsourcing provides access to external expertise for specific product development stages.
• Competitors' products can provide insights for reverse engineering, developing "me too" products, or identifying market gaps.
• Customer input is crucial, especially in B2B settings, where a significant portion of new products are derived from customer needs.

Internal Research & Development (R&D)

• R&D development often involves high costs.
• R&D is a frequent source of technologically advanced products.
• General Motors leverages its OnStar system for remote communication and data analysis to support new car development.

Licensing

• Companies purchase licenses to use technology or ideas from other research-intensive organizations.
• Universities also contribute to this process by licensing their research.

Outsourcing

• Companies may outsource product development to outside firms when they lack internal capability or expertise.

Customer Input

• Customer input is crucial in B2B, accounting for a significant portion of new product development.
• "Lead users" modify existing products to meet their own needs, influencing trends.

Concept Testing

• Concept testing is essential to gauge customer reactions to a new product idea before proceeding further.
• It involves a brief written description of the product and triggers further market research.

Product Development

• This stage involves creating prototypes, testing them internally (alpha testing) and with external groups (beta testing).
• Ben & Jerry's conducts alpha testing with its employees to fine-tune product taste and feel.

Market Testing

• Pre-market testing involves surveying customers on their willingness to purchase the product.
• Mini product launch tests the real-world demand for the product in a smaller market before full-scale launch.

Product Launch

• This involves defining the launch timing, the product's promotional strategy, its pricing, and distribution channels.

Evaluation of Results

• Firms evaluate their product development program by assessing technical specifications, customer acceptance, and financial performance.

The Product Life Cycle

• The product life cycle encompasses a product's journey through the marketplace, from introduction to decline.

Stages & Characteristics of The Product Life Cycle

• Introduction: Low sales, negative or low profits, characterized by innovators as primary consumers.
• Growth: Rising sales and profits, early adopters and early majority join in.
• Maturity: Peak sales and profits, late majority join, higher number of competitors.
• Decline: Declining sales and profits, laggards as primary consumers, fewer competitors.

Strategies for Extending the Product Life Cycle

• Develop new product uses.
• Modify existing products to meet changing needs.
• Increase product usage frequency.
• Expand the user base.
• Target new customer segments.
• Reposition the product for a different market.
• Adjust the marketing strategy.