Proposition Development and Innovation
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Questions and Answers

Which of the following is NOT a customer acceptance measure?

  • Customer satisfaction
  • Break-even period (correct)
  • Market share
  • Net revenue (sales)

    • Radical service innovation refers to small improvements made to existing services.

    False

    What term refers to transforming a business model to compete through advanced services instead of products?

    Servitization

    The ________ stage of the adoption process identifies factors influencing the rate of adoption.

    <p>persuasion</p> Signup and view all the answers

    Match the following categories of adopters with their characteristics:

    <p>Innovators = Like new ideas and are financially strong Early adopters = Opinion leaders who take risks Early majority = Require reassurance and wait for price reductions Laggards = Suspicious of new ideas and resistant to change</p> Signup and view all the answers

    Which of the following factors affects the rate of adoption by ensuring the product fits with potential clients' values and experiences?

    <p>Compatibility</p> Signup and view all the answers

    What is one financial performance measure that companies track to evaluate their success?

    <p>Profitability goals</p> Signup and view all the answers

    The late majority are more likely to adopt new ideas based purely on innovative benefits.

    <p>False</p> Signup and view all the answers

    What does the core proposition emphasize?

    <p>Functional and emotional benefits</p> Signup and view all the answers

    An augmented proposition only includes the physical aspects of a product.

    <p>False</p> Signup and view all the answers

    What are the three levels of a proposition?

    <p>Core proposition, embodied proposition, augmented proposition</p> Signup and view all the answers

    A _______ good is a product that can be used repeatedly and provides benefits each time it is used.

    <p>durable</p> Signup and view all the answers

    Which of the following is an example of a specialty product?

    <p>High-end fashion items</p> Signup and view all the answers

    Match the following types of products with their characteristics:

    <p>Convenience products = Frequent purchase, low consumer involvement Shopping products = Less frequent purchase, much planning Specialty products = High-risk, strong brand loyalty Non-durable goods = Limited duration and often perishable</p> Signup and view all the answers

    What is a key characteristic of services compared to physical goods?

    <p>Intangible and cannot be stored</p> Signup and view all the answers

    Chanel No. 5's _______ proposition includes the feelings and associations derived from wearing the scent.

    <p>core</p> Signup and view all the answers

    Which of the following types of goods are used in the regular operations of an organization?

    <p>Equipment goods</p> Signup and view all the answers

    Unsought products are items that people usually anticipate buying.

    <p>False</p> Signup and view all the answers

    What is meant by 'component parts' in a business context?

    <p>Finished, complete parts bought from other organizations that are incorporated directly into the finished product.</p> Signup and view all the answers

    The _____ stage in the product life cycle is characterized by rapidly rising sales and peak profits.

    <p>growth</p> Signup and view all the answers

    What is the primary function of Maintenance, Repair, and Operating (MRO) goods?

    <p>To ensure ongoing operations within an organization</p> Signup and view all the answers

    The concept of the product life cycle suggests that all products eventually come to an end.

    <p>True</p> Signup and view all the answers

    Name one reason why 95% of new products fail.

    <p>No market exists for the product or it does not meet customer requirements.</p> Signup and view all the answers

    Product line length refers to the number of _____ available in a product line.

    <p>products</p> Signup and view all the answers

    Match the following stages of the product life cycle with their characteristics:

    <p>Introduction = Low sales, high production costs Growth = Rapidly rising sales and competitors Maturity = Maximize profit while defending market share Decline = Sales are declining, profits eliminated</p> Signup and view all the answers

    What is the main purpose of concept testing in new product development?

    <p>Test if a new product concept is attractive to the target audience</p> Signup and view all the answers

    Test marketing involves launching a product without any preliminary market evaluation.

    <p>False</p> Signup and view all the answers

    What does 'service-dominant logic' imply about products and services?

    <p>Goods are distribution mechanisms for service provision.</p> Signup and view all the answers

    The _____ stage of the product life cycle includes preparations for phase out and liquidation of inventory.

    <p>decline</p> Signup and view all the answers

    Which of the following describes 'business services'?

    <p>Services that enhance operational aspects</p> Signup and view all the answers

    Match the following product types with their definitions:

    <p>Raw Materials = Basic materials for finished goods Semi-Finished Goods = Temporary stage of raw materials Component Parts = Complete parts incorporated into unfinished products MRO = Goods for maintenance and repair</p> Signup and view all the answers

    Study Notes

    Proposition Development and Innovation

    • Proposition: Tangible and intangible attributes associated with goods, services, ideas, people, places, experiences, or a combination.

    Proposition Levels

    • Core Proposition: The fundamental benefit (functional or emotional) a product provides.
      • Functional benefit: What the product does.
      • Emotional benefit: How the product makes the user feel.
    • Embodied Proposition: Physical good or service delivering the core benefit. This includes features, quality, design, packaging, and brand name.
    • Augmented Proposition: All factors supporting the purchase and post-purchase phases (e.g., financing options, training, warranty, customer service).

    Classifying Physical Propositions

    • Durable Goods: Used repeatedly, providing benefits each time.
    • Non-Durable Goods: Perishable, often used once.
    • Services: Intangible propositions not storable.
    • Convenience Products: Non-durable goods bought with minimal effort, frequent purchases, low involvement.
    • Shopping Products: Consumers engage in extensive planning and comparison effort before purchasing, less frequent than convenience products.
    • Specialty Products: High-risk, infrequent purchases, strong brand loyalty, high price, limited distribution.
    • Unsought Products: Products consumers don't anticipate buying.
    • Equipment Goods: Used in regular operations (capital and accessory).
    • Raw Materials: Basic materials for finished goods.
    • Semi-Finished Goods: Raw materials in a temporary transformation state.
    • Maintenance, Repair, and Operating (MRO): Sustaining organizational functions (supplies, etc.).
    • Component Parts: Finished parts integrated into a final product.
    • Business Services: Enhance operational aspects (consulting, research).

    Product Range, Line, and Mix

    • Product Item: A specific single product within a line.
    • Product Line: A collection of related products.
    • Product Mix: The total number of product lines offered by an organization.
    • Product Line Length: Number of products in a product line.
    • Product Line Depth: Variations within a product line.
    • Product Mix Width: Number of product lines.

    Product Life Cycles

    • Introduction Stage: Low sales, few competitors, high costs, few or no profits, selective distribution, market establishment.
    • Growth Stage: Rising sales, increasing competitors, increased profits; maximizing market share; intensive distribution; moderate advertising.
    • Maturity Stage: Growth slows, intense competition; high profits, defending brand position; price matching, more intensive distribution, stressing brand differences.
    • Decline Stage: Falling sales, fewer competitors, declining profits, minimizing expenditure.

    Alternative Perspectives

    • Service-Dominant Logic (SDL): Value creation and exchange fundamentally driven by service.
    • Jobs-to-be-Done Framework: Understanding consumer needs and problems fulfilled by the product.

    Developing New Propositions

    • Reasons for New Product Failures: Lack of market, unmet customer needs, poor communication of product's value.
    • New Proposition Development Methods: Acquisition, collaboration, internal R&D, adapting existing products.
    • Concept Testing: Assessing the attractiveness of a new product concept.
    • Test Marketing: Evaluating a product under real-market conditions.
    • Success Measurement Criteria: Customer acceptance, financial performance (profitability), product-level (development costs), speed to market.

    Developing New Service Propositions

    • Incremental or Radical service Innovation
    • Servitization: Integrating services into product offering.

    Adoption Process

    • Factors Influencing Adoption Rate: Relative advantage, compatibility, complexity, triability, observability.

    Diffusion Theory

    • Categories of Adopters: Innovators, Early Adopters, Early Majority, Late Majority, Laggards.

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    Description

    Explore the fundamental aspects of proposition development in products and services. This quiz covers core, embodied, and augmented propositions, as well as classifications of goods and services. Test your understanding of tangible and intangible attributes that influence purchase decisions.

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