CHAPTER 11 Developing and Managing Products This chapter begins with the learning outcome summaries, followed by a set of lesson plans for you to use to deliver the content in Chapter 11. • Lecture (for large sections) on page 3 • Company Clips (video) on page 4 • Group Work (for smaller sections) on page 5 Review and Assignments begin on page 6 • Review questions • Application questions • Application exercise • Ethics exercise • Video assignment • Case assignment Great Ideas for Teaching Marketing from faculty around the country begin on page 15 LEARNING OUTCOMES 11-1 Explain the importance of developing new products and describe the six categories of new products New products are important to sustain growth and profits and to replace obsolete items. New products can be classified as new-to-the-world products (discontinuous innovations), new product lines, additions to existing product lines, improvements or revisions of existing products, repositioned products, or lower-priced products. To sustain or increase profits, a firm must innovate. 11-2 Explain the steps in the new-product development process First, a firm forms a new-product strategy by outlining the characteristics and roles of future products. Then new-product ideas are generated by customers, employees, distributors, competitors, vendors, and internal R&D personnel. Once a product idea has survived initial screening by an appointed screening group, it undergoes business analysis to determine its potential profitability. If a product concept seems viable, it progresses into the development phase, in which the technical and economic feasibility of the manufacturing process is evaluated. The development phase also includes laboratory and use testing of a product for performance and safety. Following initial testing and refinement, most products are introduced in a test market to evaluate consumer response and marketing strategies. Finally, test market successes are propelled into full commercialization. The commercialization process involves starting up production, building inventories, shipping to distributors, training a sales force, announcing the product to the trade, and advertising to consumers. 11-3 Understand why some products succeed and others fail Despite the amount of time and money spent on developing and testing new products, a large proportion of new product introductions fail. Products fail for a number of reasons. Failure can be a matter of degree—absolute failure occurs when a company cannot recoup its development, marketing, and production costs, while relative product failure occurs when the product returns a profit but fails to achieve sales, profit, or market share goals. 11-4 Discuss global issues in new-product development A marketer with global vision seeks to develop products that can easily be adapted to suit local needs. The goal is not simply to develop a standard product that can be sold worldwide. Smart global marketers also look for good product ideas worldwide. 11-5 Explain the diffusion process through which new products are adopted The diffusion process is the spread of a new product from its producer to ultimate adopters. Adopters in the diffusion process belong to five categories: innovators, early adopters, the early majority, the late majority, and laggards. Product characteristics that affect the rate of adoption include product complexity, compatibility with existing social values, relative advantage over existing substitutes, visibility, and “trialability.” The diffusion process is facilitated by word-of-mouth communication and communication from marketers to consumers. 11-6 Explain the concept of product life cycles All brands and product categories undergo a life cycle with four stages: introduction, growth, maturity, and decline. The rate at which products move through these stages varies dramatically. Marketing managers use the product life-cycle concept as an analytical tool to forecast a product’s future and devise effective marketing strategies. TERMS brainstorming growth stage product development business analysis innovation product life cycle (PLC) commercialization introductory stage screening concept test maturity stage simulated (laboratory) market testing decline stage new product simultaneous product development development new-product strategy test marketing diffusion product category LESSON PLAN FOR LECTURE Brief Outline and Suggested PowerPoint Slides: Learning Outcomes and Topics PowerPoint Slides LO1 Explain the importance of developing new products and describe the six categories of new products 11-1 The Importance of New Products 1: Developing and Managing Products 2: Learning Outcomes 3: Learning Outcomes 4: The Importance of New Products 5: Categories of New Products LO2 Explain the steps in the new-product development process 11-2 The New-Product Development Process 6: The New-Product Development Process 7: New Product Success Factors 8: New-Product Strategy 9: Exhibit 11.1: New-Product Development Process 10: Idea Generation 11: Approaches for New Product Development 12: Screening 13: Business Analysis 14: Development 15: Simultaneous Product Development 16: Test Marketing 17: Costs of Test Marketing 18: Alternatives to Test Marketing 19: Commercialization LO3 Understand why Some Products Succeed and Others Fail 11-3 Why Some Products Succeed and Others Fail 20: Why Some Products Succeed and Others Fail 21: Product Failure 22: New-Product Success Factors LO4 Discuss global issues in new-product development 11-4 Global Issues in New-Product Development 23: Global Issues in New-Product Development 24: Global Marketing Questions LO5 Explain the diffusion process through which new products are adopted 11-5 The Spread of New Products 25: The Spread of New Products 26: Diffusion 27: Categories of Adopters 28: Product Characteristics and the Rate of Adoption 29: Marketing Implications of the Adoption Process LO6 Explain the concept of product life cycles 11-6 Product Life Cycles 30: Product Life Cycles 31: Product Life Cycle 32: Exhibit 11.2: Four Stages of the Product Life Cycle 33: Exhibit 11.3: Product Life Cycles for Styles, Fashions, and Fads 34: Introductory Stage 35: Growth Stage 36: Maturity Stage 37: Decline Stage 38: Exhibit 11.4: Relationships between the Diffusion Process and the Product Life Cycle 39: Chapter 11 Video Suggested Homework: • The end of this chapter contains assignments on the GaGa’s Inc. video or the America Online case. • This chapter’s online study tools include flashcards, visual summaries, practice quizzes, and other resources that can be assigned or used as the basis for longer investigations into marketing. LESSON PLAN FOR VIDEO Company Clips Segment Summary: GaGa’s Inc. Jim King and his wife discuss how they decided to create the company GaGa’s Inc. using the product Sher better. The line expanded from just Lemon to several other flavors as well as Sher better bars, the struggles of branding, line extension, and other aspects of the frozen dessert market. These teaching notes combine activities that you can assign students to prepare before class, that you can do in class before watching the video, that you can do in class while watching the video, and that you can assign students to complete as assignments after watching the video class. During the viewing portion of the teaching notes, stop the video periodically where appropriate to ask students the questions or perform the activities listed on the grid. You may even want to give the students the questions before starting the video and have them think about the answer while viewing the segment. That way, students will be engaged in active viewing rather than passive viewing. PRE-CLASS PREP FOR YOU: PRE-CLASS PREP FOR YOUR STUDENTS: • Preview the Company Clips video segment for Chapter 11. This exercise reviews concepts for LO1, LO2, LO5, and LO6 • Review your lesson plan. • Make sure you have all of the equipment needed to show the video to the class, including the DVD and a way to project the video. • You can also stream the video HERE • Have students review and familiarize themselves with the following terms and concepts: types of new products, new-product development process, spread of new product, and product life cycles. • Ask students to review the section on test marketing and think about what U.S. cities might fit the qualifications of a good test market. VIDEO REVIEW EXERCISE ACTIVITY Warm Up Begin by asking students, “What is a product and why are products important?” While students respond, write the following on the board: New products are important to sustain growth, increase revenues and profits, and replace obsolete items. In-class Preview • Review the six categories of new products: new-to-the-world; new product lines; additions to existing product lines; improvements to existing products; repositioned products; and lower-priced products. • Discuss Exhibit 11.1, New-Product Development Process with the class. • Review Exhibit 11.2, Four Stages of the Product Life Cycle. Discuss the product life cycle with students, soliciting from them examples of products for each life cycle stage. • Review the Company Clips questions below with students and encourage them to keep the questions in mind while viewing the video. Viewing (Solutions below.) 1. What type of new product is GaGa’s Sher better? Why? 2. What stage in the Product Life Cycle does it seem that GaGa’s is in? Explain. Follow-up • Divide students into groups of three to five, and have them propose a new product or service for Kodak. Have them discuss and write a brief report on 1) the product category in which the new product/service belongs; 2) how, specifically, they would develop the product; and 3) how they would encourage adoption of that product. • Discuss with the class why Kodak has recently struggled. • Ask students for suggestions on what Kodak can do regain its success. Ask students to defend their answers with terms relating to the material of the chapter. This can also be done in small groups. • If you had students write answers to the viewing questions, give them a few minutes after viewing to finish their work. You can collect their responses as an in-class quiz. Solutions for Viewing Activities: 1. What type of new product is GaGa’s Sher better? Why? Answer: GaGa’s Sher better is most arguably a new to the world product because it was created by Jim King’s grandmother, but not sold before. 2. What stage in the Product Life Cycle does it seem that GaGa’s is in? Explain. Answer: Students should argue for introductory stage (which is most likely what they will choose) because Jim King is trying to educate customers about his product and break into the frozen dessert market. GaGa’s appears to be in the growth stage of the Product Life Cycle. This is indicated by increasing sales, expanding market acceptance, and rising brand awareness. The company likely has established a strong customer base and is focused on scaling operations and enhancing product offerings to capture more market share. LESSON PLAN FOR GROUP WORK In most cases, group activities should be completed after some chapter content has been covered, probably in the second or third session of the chapter coverage. (See “Lesson Plan for Lecture” above.) • For “Class Activity: Generating and Screening New Product Ideas,” provide the information and the questions asked by the class activity. • Application questions 1, 2, 3, and 5 lend themselves well to group work. For those activities, divide the class into small groups of four or five people. Each group should read the question and then use their textbooks, or any work completed previously, to perform the exercise. Then each group should discuss or present their work to the class. Class Activity – Generating and Screening New Product Ideas In the Class Activity in Chapter 1, students were asked to consider the range of marketing activities that a small manufacturer of tennis racquets would undertake. Now the class should assume that the tennis racket manufacturer has been very successful in manufacturing and marketing a single line of inexpensive tennis racquets, aimed at beginners and casual players. The manufacturer’s current distribution channel is through large discount retailers, such as Kmart and Walmart. Recently three major sporting goods chains also began to carry the racquets. The company puts most of its promotion budget into sales promotion to the retailers and into in-store displays. The competitive advantage for this company is its low price for good, sturdy tennis racquets. The company wishes to expand its operations, either with new products or in new customer markets. 1. What are some possible new products for this company? 2. Do these products fit the company’s image? Does the firm have the technological or production expertise needed for these products? 3. If a product is introduced and fails, what effect will the failure have on the company and its other products? REVIEW AND ASSIGNMENTS FOR CHAPTER 11 REVIEW QUESTIONS 1. List the advantages of simultaneous product development. Answer: Advantages of simultaneous product development include shortening the development process, reduced costs, and the involvement of suppliers who contribute specialized knowledge necessary to design and develop critical component parts. 2. What are the major disadvantages to test marketing and how might they be avoided? Answer: Test marketing is very expensive, as the product has to go into production, complete with packaging, advertising, distribution, and so on. In addition, test marketing “tips your hand” to the competition and they have an opportunity to quickly counter your new effort. 3. Describe some products whose adoption rates have been affected by complexity, compatibility, relative advantage, observability, and/or trialability. Answer: Although students’ answers will vary, they should address some of the following points. Computers were slow to be adopted by consumers because they were complicated to use. It wasn’t until “user-friendly” personal computers were designed that consumers began buying computers. The rate of adoption for mountain bikes was extremely rapid because the bikes’ sturdy design was highly compatible with both urban and rural biking conditions. The rate of adoption of low-cholesterol foods such as fish has increased substantially because of its relative advantage over other higher-cholesterol products like beef. The high visibility of fashionable athletic shoes has contributed dramatically to their high rate of adoption. Finally, because consumers ordinarily do not have the option of listening to CDs, records, and tapes before they buy them, music that is not played on the radio has a much slower rate of adoption. Here are some products affected by the factors you mentioned: 1. Smart Home Devices: Complexity can hinder adoption; users may find setups challenging. Compatibility with existing systems can also impact acceptance. 2. Electric Vehicles (EVs): They offer a relative advantage in sustainability but face adoption challenges due to charging infrastructure compatibility and range anxiety. 3. Streaming Services: Their observability is high, as people see others using them, which boosts adoption. However, complexity in subscription plans can deter some users. 4. Wearable Fitness Trackers: Trialability is significant here; users are more likely to adopt if they can try before buying. Compatibility with smartphones enhances their appeal. 5. Blockchain Technology: Its complexity can slow adoption in industries unfamiliar with it, while its potential advantages in security and transparency may not be immediately observable. 4. What type of adopter behavior do you typically follow? Explain. Answer: Each student will be different, but most may be early adopters as it is often a trait of the young or educated. I typically align with an early adopter behavior. This means I’m open to trying new technologies and trends before they become mainstream, often motivated by the potential benefits and innovations they offer. I enjoy exploring new ideas and sharing insights with others, helping to shape broader acceptance. APPLICATION QUESTIONS 1. How many new products can you identify? Visit the supermarket and make a list of at least 15 items with the word new on the label. Include on your list anything that looks like a new product. Next to each item on your list, write the category of new product that best describes the item. Share your results with the class. Answer: In the supermarket, it is likely that most of the products will be either additions to existing product lines or improvements/revisions of existing products. One note is that the word new can legally appear on a new product for about six months. 2. New entertainment products aren’t necessarily media products. Form a team of three to four students and brainstorm new non-media entertainment products. Try to identify one item for each of the categories of new products discussed in the chapter. Answer: Here are some ideas for new non-media entertainment products across different categories: 1. Innovative Game (New Product): A modular board game that allows players to customize rules and gameplay elements, fostering creativity and replay ability. 2. Improved Product (Product Improvement): A smart indoor garden that automates plant care with an app, making it easier for users to grow their own herbs and vegetables. 3. Repositioned Product (Repositioning): A portable mini-golf set designed for office spaces, promoting fun and relaxation during breaks, targeting corporate environments. 4. Cost Reduction (New Offering): An affordable subscription box for DIY craft kits, providing monthly materials and instructions for various projects, catering to hobbyists and families. 3. You are a marketing manager for Nike. Your department has come up with the idea of manufacturing a baseball bat for use in colleges around the nation. Assuming you are in the business analysis stage, write a brief analysis based on the questions in the “Business Analysis” section of the chapter. Answer: The students should use the “Business Analysis” section and answer each question. Nike will want to be certain there is sufficient demand and potential for profit. Business Analysis for Nike's Baseball Bat 1. Market Demand: Research indicates a growing interest in college baseball, with an increasing number of players and programs. Targeting this market can capitalize on the need for high-quality equipment. 2. Cost Analysis: Estimated production costs include materials, manufacturing, and marketing. Competitive pricing analysis suggests a price point that balances quality and affordability, appealing to college budgets. 3. Sales Forecast: Based on industry trends and college enrollment figures, we anticipate initial sales of approximately 20,000 units in the first year, with a 15% growth rate annually. 4. Break-even Analysis: Considering fixed and variable costs, the break-even point is projected at 12,000 units sold, achievable within the first year with effective marketing. 5. Profitability: With a competitive retail price, projected profit margins are around 30%, offering potential for significant returns as brand loyalty and recognition grow. 6. Risks: Key risks include competition from established brands and potential market saturation. Strategic partnerships with colleges and promotional events can mitigate these risks. This analysis supports the viability of the baseball bat project and aligns with Nike's commitment to innovation in sports. 4. How could information from customer orders at http://www.pizzahut.com help the company’s marketers plan product developments? Answer: When customers order, they might suggest new product ideas or ask for an item that does not currently exist. Pizza Hut could use these ideas, develop product prototypes, test them (in an actual test market), and then decide if it wants to roll out the product. (Note: Not all Pizza Hut locations allow online ordering, so students may have trouble answering this question.) 5. In small groups, brainstorm ideas for a new wet-weather clothing line. What type of product would potential customers want and need? Prepare and deliver a brief presentation to your class. Answer: Student answers will vary. For example, business travelers may want a raincoat that will be thin, pack up very small, never wrinkle, and yet have classic formal styling. Presentation: New Wet-Weather Clothing Line Introduction • Launching an innovative line of stylish, functional wet-weather clothing. Target Audience • Outdoor enthusiasts and urban commuters facing regular rain. Product Features 1. Waterproof & Breathable Fabrics: Keeps users dry while allowing ventilation. 2. Stylish Designs: Trendy options appealing to fashion-conscious consumers. 3. Versatile Layers: Mix-and-match for varying weather conditions. 4. Eco-Friendly Materials: Sustainable and recyclable options. Customer Needs • Functionality: High-performance clothing that ensures comfort. • Convenience: Lightweight and packable for easy transport. • Affordability: Competitive pricing without compromising quality. Marketing Strategy • Collaborate with influencers and engage in social media campaigns. Conclusion • Our line combines practicality with style, meeting the growing demand for functional fashion. 6. Visit http://pg.com and look at the brands it offers around the world. What conclusions can you draw about Procter &Gamble’s global new-product development strategy? Answer: Procter & Gamble has a highly global presence; 35 countries have Web site links off the PG.com site. P&G uses a combination of new product development strategies. One strategy is to simply take a product currently marketed in the United States (the home country), make only basic changes to the packaging, and market the same product in a foreign country. This has been done especially with Tide Detergent, the number-one detergent brand sold in the United States. Another strategy is to use the same formulation as what is used in the United States, rebrand it, repackage it, and market it in another country. Yet another strategy is to develop a totally different product (one that is not currently even sold in the United States.) and market it in other countries. A good example of that is Ariel detergent, a high-share detergent in Europe that is not even sold in the United States. P&G often uses the same or similar formulations under different brand names and different packaging to sell in other countries. 8. What is Cheerios doing to compete successfully in the maturity stage? Go to its Web site, http://www.cheerios.com, to find out. Answer: Students’ answers will vary in reporting on the maturity phase of the Cheerios product life cycle. Cheerios is successfully competing in the maturity stage by focusing on product innovation, such as introducing new flavors and varieties (like Honey Nut and Apple Cinnamon). They emphasize health benefits, promoting whole grains and heart health. Additionally, Cheerios engages customers through interactive marketing campaigns and recipes on their website, enhancing brand loyalty and encouraging repeat purchases. The brand also highlights its sustainability efforts, appealing to environmentally conscious consumers. APPLICATION EXERCISE A simple statistical analysis will help you better understand the types of new products. As in the Application Exercise in Chapter 6, you will be using print advertisements, but you will also be adding information from other sources (TV ads, trips to the store, and the like). Activities 1. Compile a list of 100 new products. If you are building a portfolio of ads (see the Application Exercise in Chapter 6), you can generate part of this list as you collect print advertisements for the topics in this chapter. Consider tabulating television ads for new products that are aired during programs you normally watch. A trip to the grocery could probably yield your entire list, but then your list would be limited to consumer products. 2. Make a table with six columns labeled as follows: new-to-the-world products, new product line, addition to existing product line, improvement/revision of existing product line, repositioned product, and lower-priced product. 3. Place each of your 100 new products into one of the six categories. Tabulate your results at the bottom of each column. What conclusions can you draw from the distribution of your products? Consider adding your results together with the rest of the class to get a larger and more random sample. Purpose: This exercise is designed to show a distribution curve of new products on the market and to confirm that most new products are modifications of existing products. Setting It Up: In the book, the students are assigned to compile a list of 100 new products, a feat easily accomplished by a trip to the supermarket and the mall. They are to create their own distribution curve. You can use this exercise as an individual assignment (as just described), or as a group assignment with an entire class as the introduction to the chapter (as described below). This exercise was inspired by the following Great Idea in Teaching Marketing: Karen Stewart Richard Stockton, College of New Jersey NEW PRODUCT DEVELOPMENT To help introduce the concept of new product development, I ask students to bring either a new product to class or an ad for a new product. Students are then asked to share with the class this new product idea. In addition to describing this new item, students must also indicate whether the product represents: (a) a new-to-the-world product (10% of all new products introduced each year) (b) a new product line (20% of all new products) (c) an addition to existing product lines (26% of all new products) (d) an improvement or revision of existing products (26% of all new products) (e) a repositioned product (7% of all new products) (f) a lower-cost product (account for about 11% of all new products) From this it is evident that the textbook authors are correct when they state that most new products are either additions to existing product lines or improvements or revisions of existing products. We then talk about the reasons for this pattern. I also ask the students to indicate whether they believe their new product will be among the few new product ideas that are truly successful. This provides a good opportunity to address why companies spend a considerable amount of time and effort developing new products even though the chances of success are small. We can then discuss the new product development process and the factors which contribute to new product success and product failure. ETHICS EXERCISE One source of new-product ideas is competitors. Steven Fischer recently joined Frankie and Alex Specialty Products as a brand manager. His new boss told him, “We don’t have a budget for new-product development. We just monitor our competitors’ new-product introductions and offer knockoffs of any that look like they will be successful.” 1. Is this practice ethical? Answer: One way that companies can define themselves is by the business strategy they follow. For example, a company can be an innovator, or a quick follower of innovations. Being a quick follower, or offering your own version of a popular product developed by another company is not necessarily unethical. When a company seeks to improve upon an idea or takes an idea from a competitor and then builds upon it before releasing its own version of the new product, the company is trying to gain a competitive advantage, or to recoup any advantage that it lost when its competitor introduced the new product. The diaper wars are an example of this. Pampers and Huggies have been locked in a competitive battle since Kimberly-Clark introduced the first disposable diaper in the middle of the twentieth century. Procter & Gamble was quick to improve upon Kimberly-Clark’s design and introduce Pampers in the market. Over the years, each company has seen what the other has innovated, then quickly copied and upgraded it to introduce a more competitive diaper to the market. Piracy, however, is the direct copy of a company’s product and is unethical. Piracy is most prevalent in the video, music, perfume, and designer clothing industries, and is not a replacement for new-product development. 2. Does the AMA Statement of Ethics address this issue? Go to http://www.marketingpower.com and review the statement. Then write a brief paragraph on what the AMA Statement of Ethics contains that relates to knock-off products. Answer: The AMA Statement of Ethics does not explicitly discuss piracy and knock-offs. It does, however, directly prohibit taking the work of others, in whole or in part, for one’s own. Piracy and knock-offs in their purest form fall under that proviso. Reverse engineering and building on innovation, however, are not part of this. VIDEO ASSIGNMENT: GaGa’s Inc. 1. When GaGa’s developed Sher better Bars, what type of new product was that? A. Repositioned product B. Improvement on an existing product C. Addition to an existing product line D. New product line Answer: D Jim King established the market for Sher better with the lemon flavor in a pint. He then developed the new product line of Sher better novelty bars. Repositioned products exist on the market but are targeted at new markets. Improvements on existing products would be modifying Sher better packaging or the length of the stick on the novelty bar, rather than creating a new product line. An addition to a product line would be when GaGa’s added new flavors to the pints. 2. Performing which of the following steps in the new-product development process would have helped Jim King realize that the novelty bars and the pints of Sher better would not be shelved together? A. Business Analysis B. Development C. Test Marketing D. Commercialization Answer: B The business analysis stage looks at preliminary figures for costs, demand, sales, and profitability, not distribution decisions (such as shelving and packaging), which happen in the development stage. 3. What category of new product does the new Coconut Sher better pint fall under? A. Repositioned product B. Improvement on an existing product C. Addition to an existing product line D. New product line Answer: C Adding a new flavor is expanding an existing product line—in this case, Sher better. Repositioned products exist on the market but are targeted at new markets. Improvements on existing products would be modifying Sher better formula or the length of the stick on the novelty bar, rather than creating a new flavor in the product line. A new product line would be the Sher better on a stick novelty bars, but adding one flavor to the pints is consider an addition to an existing product line. 4. Sher better takes some explaining because it isn’t ice cream and it isn’t sherbet. Which product characteristic is this that might affect how quickly people adopt Sher better? A. Complexity B. Compatibility C. Observability D. Trialability Answer: A Sher better appears to baffle some customers, indicating that it is a complex concept for them to grasp, impeding adoptions. 5. At which stage should GaGa’s have conducted its extensive focus groups and any research it needed before putting GaGa’s Sher better on the shelves? A. Idea Generation B. Development C. Idea Screening D. Business Analysis Answer: C This kind of focus group research is typically done in the idea screening stage, which gives concept tests to groups of customers to see their reactions. Instead of relying on a dog at Munroe Dairy, it may have been wiser to talk to some people! 6. Because GaGa’s Inc. is such a small business, it could be said that their sampling system is a way of using Rhode Island as a business analysis opportunity.. A. True B. False Answer: B By sampling the product and monitoring the sales at those stores closely, GaGa’s is using Rhode Island as a test market before working to find a larger distributor. 7. Based on what you saw in this video, GaGa’s is aiding the diffusion process by communicating directly with potential adopters, particularly the early adopters. A. True B. False Answer: A 8. In what stage of the PLC is Sher better? A. Introduction B. Growth C. Maturity D. Decline Answer: A Sher better is in the introductory phase. People are learning about a new type of frozen dessert product, and GaGa’s is working to increase word of mouth through sampling. CASE ASSIGNMENT: America Online It has been more than a decade since America Online (AOL) has been even a minor player in the Internet world. However, in an effort to reposition itself as an online heavyweight, AOL recently unveiled Alto, a new product that it hopes will revolutionize e-mail. In general, nearly all e-mail platforms have the same layout. In Alto, the e-mail inbox list is located on a small vertical column on the left third of the page, while the other two-thirds of the page are occupied by what AOL calls “stacks.” Messages and multimedia are instantly categorized and sorted into visual stacks according to their content. Daily deals, social notifications, business transactions, photos, and attachments each have their own stacks, and users can create their own customized stacks as well. Instead of a bloated inbox, then, Alto provides a simplified, organized, visually dominated e-mail experience. Alto does not require users to sign up for yet another new e-mail address (though the option to create a new @altomail.com address is available). Instead, users can simply sign into Alto using their existing credentials for Gmail, Yahoo, .me, and other accounts. According to David Temkin, AOL’s senior vice president of mobile and mail, Alto is fully intended to be a disruptive and innovative product in market that has grown somewhat complacent. As Temkin says, “Email hasn’t had a serious rethink really since Gmail came out. We wanted to take a swing at that and not be tethered by the existing 20 million or so people using AOL Mail.” Early reviews of Alto are quite positive, though the product certainly faces an uphill battle in the crowded e-mail market. Adam Bluestein, “AOL’s Alto Reimagines the Email Experience with a Twitter, Pinterest, Gmail Mashup,” Fast Company, October 18, 2012, www.fastcompany.com/3001755/aols-alto-reimagines-email-experience-twitter-pinterest-gmail-mashup (Accessed March 26, 2013); Caitline McGarry, “AOL’s Alto Adds Visual Organization to E-mail,” PCWorld, October 18, 2012, www.pcworld.com/article/2012220/aol-s-alto-adds-visual-organization-to-e-mail.html (Accessed March 26, 2013); Julianne Pepitone, “AOL Unveils Alto, an Email Service that Syncs 5 Accounts,” CNN, October 18, 2012, http://money.cnn.com/2012/10/18/technology/aol-alto-email/index.html (Accessed March 26, 2013). TRUE/FALSE 1. Even though America Online has been in the email business for decades, Alto represents a new product. Answer: True 2. Alto has successfully passed the commercialization stage. Answer: True 3. America Online engages in simultaneous product development, meaning that it works to improve AOL Mail and Alto at the same time Answer: False Simultaneous product development entails all the involved business areas working together rather than sequentially on a single product. 4. The early majority is likely to collect more information about Alto than early adopters, thereby extending the adoption process. Answer: True 5. AOL’s marketing for Alto will likely need to change over time because a message developed for and targeted toward early adopters will not be perceived similarly by late majority adopters. Answer: True MULTIPLE CHOICE 1. Which of the following types of new product best represents Alto? A. New-to-the-world. B. New product line. C. Addition to an existing product line. D. Repositioned product. E. Lower-priced product. Answer: C Alto will operate alongside America Online’s existing AIL Mail service, making it an addition to an existing product line. 2. If America Online wants Alto to be successful, it should do all of the following except: A. Get every aspect of the product development process right. B. Exercise strong leadership. C. Listen to customers carefully. D. Make a commitment to new-product development. E. All of these. Answer: E Firms that routinely experience success in new-product introductions do all of these. 3. The first 2.5 percent of customers to start using Alto are known as: A. Forerunners. B. Pioneers. C. Visionaries. D. Trendsetters. E. Innovators. Answer: E Innovators are the first 2.5 percent of all those who adopt a product. 4. Which of the following factors speaks to Alto’s trialability? A. Alto is designed to revolutionize email. B. Users can log into Alto using their existing email accounts. C. Alto allows consumers to take control of their email marketing. D. Twenty million people use AOL Mail. E. Early reviews of Alto are quite positive. Answer: B Trialability is the degree to which a product can be tried on a limited basis. 5. Email is currently in which stage of the product life cycle? A. Introduction. B. Growth. C. Stabilization. D. Maturity. E. Decline. Answer: D New users cannot be added indefinitely, and sooner or later the market approaches saturation. Normally, the maturity sage is the longest stage of the PLC. Great Ideas for Teaching Chapter 11 James S. Cleveland, Sage College of Albany DISCUSSION BOARD TOPICS TO ENCOURAGE PARTICIPATION Discussion board questions provided to students to encourage them to engage in thinking and writing about the content of the Principles of Marketing course usually take the form of a provocative statement to which students are asked to respond. An example of this would be “All PR is good PR.” Discussion topics such as this one are abstract and often require that the instructor provide an initial reply to show students what is expected of them in their own replies. For students with limited work experience, this approach may be quite appropriate. For adult students with extensive experience as employees and consumers, however, the abstract nature of such topics can be frustrating. I have developed, therefore, a series of discussion board questions to use with experienced, adult students. These questions are designed to encourage them to use their experiences as employees and consumers as doorways to better understand the course material, and to make their own responses more interesting to themselves and to the other students in the class who will read and comment on them. Each question has three parts: 1. First, there is a sentence or two from the students’ textbook introducing the topic. By using the text author’s own words, students are enabled to locate relevant material in the text more easily, the text content is reinforced, and confusion resulting from use of variant terms or expressions is minimized. 2. Second, there is a reference to text pages the students should review before proceeding. Since the goal of the exercise is for students to apply the course content to their own experiences, reviewing the content first is important. 3. Third, there is a request for the students to think about or remember some specific situation in their experiences to which they can apply the text material, and a question or questions for them to address in their replies. Here are additional such discussion board questions developed for Chapter 11 of MKTG10. Each is written to fit the same text cited above but could easily be rewritten and revised to fit another text. Series A 1. An innovation is a product perceived as new by a potential adopter. Diffusion is the process by which the adoption of an innovation spreads. There are five categories of adopters: innovators, early adopters, early majority, late majority, and laggards. You will fall into a different category of adopter depending on the type of product involved. 2. Review how new products spread in section 11-4a of your text. 3. Then choose a product that you have recently adopted. Which category of adopter are you for that product? Do you fall into a different category for a different type of product? Give an example. Series B 1. The PLC is a bioglogical metaphor that traces the stages of a product’s acceptance, from its introduction (birth) to its decline (death). 2. Review the stages of the product life cycle in section 11-5 of your text. 3. Suggest an example of a product in each stage of the product life cycle. Explain your examples. Which of these products do you own? What does this suggest about the type of adopter you are? Deborah Reed Scarfino, William Jewell College A PROJECT TO FAIL I have used the project, “Create a Product, Good, or Service That Will Fail,” to instill or recharge creativity in my students. We spend the first half of the semester understanding the concepts, working on case studies and analyzing material to make recommendations to improve the existing situation or resolve problems that pose challenges. There are no real textbook answers to some of these cases, and that alone creates personal frustration to some students. Thinking beyond the textbook is a foreign challenge to many of my students who have successfully completed courses where memorization made all the difference. The world of marketing is multifaceted and offers unending challenges that require creative thinking to make a difference. In the second half of the course, I offer the challenge to design a product, good, or service idea that will fail in the marketplace. The class evaluates the ideas after oral presentations. Those that truly fail get the best grades. The results of this assignment are often humorous and ridiculous but very creative. The students initially complain about how hard it is—but in the end, some exceptional ideas are evaluated. Building a better mousetrap won’t guarantee success, and such a project drives this message home. Students who learn that failure is a valuable learning tool and that many great ideas are born from the experience of failure are well on the road to success. We suffer from stagnant practicality and from the pressure to succeed. This approach makes it okay to fail and rewards the student who identifies a marketing mix that supports a useless idea and knows exactly what he is doing. You must truly understand your subject to succeed at this PROJECT TO FAIL! Barbara Ross Wooldridge, The University of Texas at Tyler PACKING THE POWERFUL P! THE IMPACT PACKAGING HAS ON HOW WE “SEE” PRODUCTS: A TASTE TEST EXPERIMENT Most students in an introduction marketing course can easily visualize the role packaging plays in protecting and facilitating the storage of products, it is not as clear to them the powerful role packing can play in determining how a consumer views and classifies a product (the promotion aspect). This taste test experiment is designed to graphically demonstrate how packaging makes us see three very similar products as completely different items. Exercise Overview Three products are used in this taste test: KitKat Candy Bars, Sweet Escapes, and Keebler Fudge Sticks. The items should be cut up into bite-size pieces. Each product is placed in separate bags labeled “A,” “B,” and “C.” Students are divided into groups of three to five, depending on class size. The groups are given taste test sheets to fill out as a team. These sheets include the following questions: Which product did you prefer and why did you prefer it? Who is the target market for the product? What is the name of each product? What price does each sell for (or list most the expensive to least)? Once these are completed, they are collected and reviewed with the class and the identity of the products is revealed. Next, the groups are given the ingredient lists for the three products labeled “A,” “B,” and “C” and are asked to match the product with its ingredients. These sheets are collected and reviewed. Finally, students are given the nutritional breakdown for each product—standardized—so that each product’s nutritional breakdown is for the identical serving portion and asked to identify which product goes to which nutritional breakdown. These are collected and reviewed and how each team fared on the three tasks is reviewed. After the taste test is completed, the results are discussed as a class. The Results What the students discover is that although the three products are all basically chocolate-covered wafers, they are viewed very differently and sell for very different prices based on packaging. KitKat is packaged individually as a candy bar, while Fudge Sticks are packaged in a group as cookies, and Sweet Escapes—a cross between a cookie and a candy bar—are packaged as a group of individually wrapped snacks.. Students tend to be surprised at the fact that they cannot identify the candy bar, which they perceive as a chocolate bar, by its ingredients. Benefits to the Student The taste test allows students to immediately begin to understand the relevance of packaging in determining how one perceives a product. It also demonstrates how packaging interacts with the price, promotion, and positioning of a product. Additionally, it allows them to apply their own experience to the material presented in class lectures. This exercise has a side benefit as it exposes students to taste tests as a form of marketing research. Most importantly it forces students from a passive state of learning to participatory learning. A good follow-up is to ask them to try to find their own examples. Conclusion This exercise, depending on class size, takes some time to create the tasting samples but does not require a lot of preparation time. Students tend to really enjoy it because the results surprise them. It’s also a painless way to get students to take an active part class. Michelle DeMoss, Stetson University DID YOU MEAN TO THROW THAT AWAY? Proponents of marketing state that a market-driven economy allows for more choices, better products, and lower prices. Critics claim that marketing promotes materialism and a throw-away culture. Is it possible to live in a society that embraces the benefits of marketing yet reduces the costs? From a sustainable marketing perspective, practices that encourage reusing, recycling, and reducing materials may provide the answer. Yet the question remains as to whether consumers and marketers are using or are willing to adopt these practices. This exercise encourages students to examine the impact of their consumption decisions on the environment around them. Students are asked to become aware of decisions concerning how they dispose of marketing-related items and how they make these decisions. Specifically, students are asked to: 1. Write down everything they throw away in one week. (Note: The typical American generates 4.39 pounds of garbage a day.) 2. Specify whether it was a durable product; nondurable product; or promotional message/mailer, package, or some other marketing-related item. 3. Assess whether they could alter the item in order to reuse, recycle, or reduce waste. 4. Write down what, if any, impact this experience has had on their perceptions and attitudes during this week. Discussion should center on any shift in students’ perspectives concerning the impact of their consumption processes in their community. Specifically, students should be encouraged to explore how sustainable their consumption behavior is in the long term. Are these choices encouraging marketers to implement sustainable marketing practices? Solution Manual for MKTG: Principles of Marketing Charles W. Lamb, Joe F. Hair, Carl McDaniel 9781305631823, 9781285860145, 9781337116800
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