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Chapter Eight: Developing New Products Concept Review Generally, the concept questions are designed to achieve a single purpose – to encourage students to test their knowledge and understanding of the theoretical content of the chapter. These questions encourage recall and reflection, which will better prepare students to answer the marketing applications questions based on their understanding of the theory. 1. Explain how new product or service innovations add value to the firm. Innovation is the process by which ideas are transformed into new products and services that will help firms grow. First, firms can create and deliver value more effectively by: • Satisfying the changing needs of their current and new customers or simply by keeping customers from getting bored with the current product or service offering. • Allowing market growth and creating opportunities. The longer a product exists in the marketplace, the more likely it is that the market will become saturated. • Changing its portfolio of products to include innovation. This can help the firm diversify its risk and therefore enhances firm value better than a single product can. 2. Sketch and describe the diffusion of innovation curve. How can marketers use the information provided by this curve to make marketing strategies and decisions? Using the diffusion of innovation theory or adoption cycle, marketers can predict which types of customers will buy their new product at each stage of introduction. With this knowledge, the firm can develop effective promotion, pricing, and other marketing strategies to push acceptance among each customer group. 3. Identify and discuss the factors that influence the adoption of new products. The characteristics that influence the adoption of new products are: • Relative advantage – perception as better than other products speeds adoption • Compatibility – existing acceptance of the required behaviours speeds adoption • Observability – easy observation of products speeds adoption • Complexity and Trialability – low complexity increases ease of trial and speeds adoption 4. List the steps in the new product development process. Describe some of the sources companies use to generate ideas for new products at the beginning of this process. The steps in the new product development process are: 1. Idea generation 2. Concept testing 3. Product development 4. Market testing 5. Product launch 6. Evaluation of results Some of the sources companies may use to generate ideas include employees, customers, suppliers and partners or reverse engineering. New ideas can come from anywhere! 5. Why might a company need to exercise caution during the text marketing stage of the new development process? Test marketing is important to innovation because it allows marketing firms the opportunity to study real consumer behaviour. However, they must exercise caution because test marketing provides critical new product information to your competitors. Diffusing this information early can lead to competitive launches, even before the firm launches in the full market. 6. What other factors besides the product itself does a company need to finalise during the product launch stage? During this step the company finalises the elements of the marketing mix, including the marketing budget for the first year. All decisions around product, price, place and promotion are critical to the successful launch of the product. 7. Do all products go through each and every stage of this process? Explain your answer. It’s not always necessary to take a new product through each stage in the process. Significantly new products will follow the process fairly closely while products involving marginal changes such as line extensions, lifting a successful product from a competitor or those with low development costs, may skip one or more steps. 8. What is the Product Life Cycle (PLC)? Describe the characteristics of each stage of the PLC in terms of sales, profits, typical consumers, competition, and 4Ps strategies. The product life cycle involves through the following stages Sales Profits Consumers Competition 4Ps Strategies Introduction Low Low, losses Innovators Low Communicate, introduce Growth Rapid growth High Early adopters, majority Increasing Establish the brand Maturity Declining Moderate Late majority Saturated Defend market share Decline Declining Declining Laggards Reducing Target niche 9. Describe some of the strategies companies can use to extend the life of a mature product. Some of the strategies available to extend the life of a mature product include: • Introduce to a new market segment • Introduce to new markets • Develop new uses • Lower prices 10. Explain why the product life cycle is not a fail-proof tool in managing products. The most challenging part of applying the product life cycle concept is that managers do not know exactly what shape each product’s life cycle will take, so there is no way to know precisely what stage a product is in. Marketing Applications 1. Some people think that a product should be considered “new” only if it is completely new to the market and has never existed before. Describe or give examples of other types of new products. While a product being completely new to the market is one way to define novelty, there are other types of new products that can be categorized based on different criteria: 1. Product Line Extensions: These are variations of existing products within a brand's range. They may offer different flavors, sizes, colors, or functionalities. For example, when Coca-Cola introduces new flavors like Cherry Coke or Vanilla Coke, these are considered extensions of their original product line. 2. Product Improvements or Enhancements: Sometimes, a product undergoes modifications or improvements to its features, performance, or design. These enhancements aim to offer better value or address specific customer needs. For instance, when Apple releases a new iPhone model with improved camera technology or longer battery life, it's an example of product improvement. 3. Repositioned Products: A repositioned product is one that is marketed differently from its original positioning. This could involve targeting a new market segment or emphasizing different features or benefits. For instance, if a luxury skincare brand decides to introduce a more affordable line targeting younger consumers, it's a repositioned product. 4. Cost Reduction Products: These are products that are essentially the same as existing ones but are offered at a lower price point. This could involve using cheaper materials or streamlining manufacturing processes. An example would be generic brands of household goods that offer similar functionality to branded products but at a lower cost. 5. Adaptations for New Markets: Sometimes, products are adapted or customized to suit the preferences or needs of different geographical or cultural markets. For example, fast-food chains like McDonald's often introduce menu items tailored to the tastes of specific regions or countries. 6. Product Line Innovations: These involve introducing a new product that is related to but different from existing products in a company's portfolio. This could be a new category altogether or a significant departure from existing offerings. For instance, when a company known for producing traditional watches introduces a smartwatch, it's a product line innovation. In summary, while a product being entirely novel to the market is one way to define newness, there are several other types of new products that can provide value to consumers and opportunities for companies to innovate and grow. Instructor’s Notes: Students must challenge the mindset of “new means completely new” and think about how marketers perceive the concept of product newness. Therefore, they might consider introducing an existing product to a new market, positioning a product using a new purpose, or repositioning a product to capture an existing or new market segment’s attention. • Example answers: o In addition to new breakthrough products that create new markets, other “new” products include existing products introduced to a new market or for a new purpose, such as a portable DVD player geared toward consumers who travel on planes extensively. With product repositioning, an existing product’s attributes (e.g., size, packaging) get modified to capture a new market segment’s attention. For example, Oscar Meyer repackaged its lunch meats into ready-to-eat meals that kids could take to school. 2. RIM has introduced the PlayBook featuring a touch screen. How quickly do you think this product will diffuse among the Canadian population? Describe the types of people that you expect will be in each of the diffusion of innovation categories. The diffusion of the PlayBook among the Canadian population would likely follow a typical adoption curve, as outlined in Everett Rogers' Diffusion of Innovations theory. Here's a breakdown of the categories of people you might expect to find in each stage: Innovators: These are the first individuals to adopt new technologies like the PlayBook. They are adventurous, risk-takers, and often have high social status. In Canada, this might include tech enthusiasts, early adopters, and professionals in the technology sector who are eager to try out the latest gadgets. Early Adopters: These are the opinion leaders and influencers within their social circles. They are usually younger, well-educated, and financially stable. In Canada, early adopters might include young professionals, tech-savvy individuals, and trendsetters who want to be among the first to own cutting-edge devices. Early Majority: This group represents the average consumer. They are cautious and prefer to wait until a technology has been proven before adopting it. In Canada, the early majority might consist of mainstream consumers, business professionals, and individuals who are interested in technology but prefer to see how it performs before making a purchase. Late Majority: These individuals are skeptical of new technologies and only adopt them once they have become mainstream. They tend to be older, less affluent, and more risk-averse. In Canada, the late majority might include older adults, individuals with limited technology literacy, and those who are hesitant to embrace change. Laggards: Laggards are the last to adopt new technologies, often due to tradition or skepticism. They are typically older, less educated, and resistant to change. In Canada, laggards might include elderly individuals, those living in rural areas with limited access to technology, and individuals who prefer traditional methods over new innovations. Considering the technological landscape in Canada, the PlayBook would likely initially attract innovators and early adopters who are eager to explore its features and capabilities. As positive experiences and word-of-mouth spread, it would gradually gain traction among the early majority and eventually reach the late majority and laggards as it becomes more established in the market. However, the exact speed of diffusion would depend on factors such as marketing efforts, pricing, competition, and consumer perceptions of the device's value and usability. Instructor’s Notes: In exploring the introduction of a new product like the PlayBook, students should consider how consumers perceive the company, the relative newness of the technology, and current marketing efforts, including the existing product’s price, promotion, and distribution. After gathering this information, students must decide how innovators, early adopters, early majority, late majority, and laggard consumers will respond. • Example answers: o The new PlayBook likely will diffuse relatively slowly, because many consumers already have laptops and/or smartphones and are not likely to switch immediately. The following types of people likely would represent each diffusion of innovation category: Innovators: A 20-something, tech-savvy man who prides himself on being the first person to own any new, hip technology. Early adopters: A young woman who already owns other RIM products—such as a BlackBerry Bold—and is looking for an exciting change and update of what she has. Early majority: A suburban mother who wants to be seen as hip by her kids and who is looking to watch her favourite show during her lunch break at work. Late majority: The suburban mother’s older female coworker who finally decides that this “new” PlayBook is worth giving a shot, because she is now the only one in her office who has not purchased one. Laggards: An older, diehard VCR and vinyl record user who does not even own a cell phone with recent features, let alone a video-playing PlayBook. 3. Are there any advantages for companies that are the first to introduce products that create new markets? Justify your answer. If you see advantages, explain why some new products still fail. Yes, being the first mover in introducing products that create new markets can offer several advantages: Market Leadership: The first company to introduce a product in a new market often establishes itself as the leader, gaining significant brand recognition and customer loyalty early on. This can translate into a dominant market share and competitive advantage over later entrants. Control over Standards and Technology: First movers have the opportunity to set industry standards and shape the direction of technological development within the new market. This can give them a significant advantage in terms of intellectual property rights, patents, and proprietary technologies. Barriers to Entry: By establishing a strong presence and loyal customer base early on, first movers can create significant barriers to entry for potential competitors. These barriers can include high switching costs for customers, economies of scale, and exclusive partnerships with suppliers or distributors. Learning Curve Advantage: First movers have the opportunity to learn from their initial mistakes and refine their product or service based on early feedback from customers. This allows them to continuously improve and stay ahead of the competition. However, despite these advantages, many new products still fail for several reasons: Poor Market Understanding: Sometimes, companies fail to accurately identify or understand the needs and preferences of the target market. This can result in products that don't effectively address customer pain points or provide compelling value propositions. Lack of Differentiation: In crowded markets or industries with low barriers to entry, new products may struggle to differentiate themselves from existing offerings. Without a unique selling proposition or clear competitive advantage, these products may fail to attract customers. Execution Challenges: Even with a great idea, bringing a new product to market successfully requires effective execution across various functions, including research and development, marketing, distribution, and customer support. Poor execution can lead to delays, cost overruns, or quality issues that hinder the product's success. Unexpected Market Dynamics: External factors such as changes in consumer preferences, technological advancements, regulatory hurdles, or economic downturns can significantly impact the success of new products. Companies that fail to anticipate or adapt to these market dynamics may struggle to gain traction. In conclusion, while being the first mover in introducing products that create new markets can offer significant advantages, success is not guaranteed. Companies must carefully assess market opportunities, differentiate their offerings, execute effectively, and remain agile in responding to evolving market dynamics to increase their chances of success. Instructor’s Notes: This question focuses on the idea of the first-mover advantage and asks students to consider whether it truly is an advantage to be first in the market with a new product or service. • Example answers: o There are many potential advantages for a firm that is the first to introduce a new product to a market; for example, the product becomes readily recognizable to consumers, so the company establishes a commanding and early market share lead, which can mean a greater market share over a longer period. Despite these advantages however, many new products fail because they do not successfully meet the consumer need, meet a need that consumers have not realized yet, or get imitated by competitors who can produce cheaper alternatives. 4. Identify and describe the ways that companies generate new product ideas. Which of these ways involve the customer? How can firms assess the value of the ideas that customers generate? Companies employ various methods to generate new product ideas, and many of these involve the customer directly. Here are some common ways companies generate new product ideas: Market Research: This involves gathering data from potential customers through surveys, interviews, focus groups, and observation to understand their needs, preferences, and pain points. Customer Feedback: Companies often collect feedback from existing customers through customer service interactions, feedback forms, social media channels, and online reviews to identify areas for improvement or new product opportunities. Observation and Ethnography: By observing how customers interact with existing products or how they go about their daily lives, companies can uncover unmet needs or opportunities for innovation. Crowdsourcing: Engaging customers in the product development process by soliciting ideas, feedback, and suggestions through online platforms, contests, or idea submission portals. Co-creation Workshops: Collaborating directly with customers in workshops or ideation sessions to generate new product concepts and refine existing ones. Lead User Analysis: Identifying and studying customers who are ahead of the curve in terms of adopting new trends or facing extreme needs can provide insights into future market demands. Competitor Analysis: Monitoring competitors' products and strategies can inspire new ideas or reveal gaps in the market that the company can exploit. Among these methods, those involving the customer directly include market research, customer feedback, crowdsourcing, co-creation workshops, and lead user analysis. Assessing the value of customer-generated ideas can be done through various means: Feasibility Analysis: Evaluate whether the idea is technically feasible and aligns with the company's capabilities and resources. Market Potential: Assess the size of the potential market for the product and estimate the demand based on customer feedback and market research. Competitive Advantage: Determine if the idea offers a unique selling proposition or competitive advantage over existing products in the market. Cost-Benefit Analysis: Estimate the costs associated with developing and marketing the product compared to the potential revenue it can generate. Prototype Testing: Create prototypes or minimum viable products (MVPs) to test the idea with customers and gather feedback on its usability, desirability, and perceived value. Pilot Launches: Conduct small-scale pilot launches or trials to gauge customer response and validate the idea before investing in full-scale production. Long-Term Viability: Consider the long-term sustainability and scalability of the idea in terms of evolving customer needs, technological advancements, and market trends. By systematically evaluating customer-generated ideas against these criteria, firms can prioritize and invest in the most promising ones while minimizing the risk of failure. Instructor’s Notes: Rather than considering the idea-generation process solely from an internal company perspective, students should understand that good ideas can come from many sources. After an idea gets generated, the company must determine its potential value by progressing to the next stage of the product development process: concept testing. • Example answers: o A company can generate new product ideas by maintaining an internal R&D department, collaborating in a research consortium that groups R&D investments, licensing new technology or ideas from other firms, conducting brainstorming sessions, reverse engineering competitors’ products, or gathering input from customers. Only the last of these options actually involves the customer directly in the idea-generation process. To assess the value of customers’ ideas, the firm could use concept testing and present a concept statement to potential buyers or users to obtain their reactions. If the reactions are positive, the idea might have high value; if not, the firm should consider other ideas. 5. Describe an example of a new product or service that is targeted at the college student market. Using the concept testing discussion in the chapter, describe how you would conduct a concept test for this product or service. A new product or service targeted at the college student market could be a mobile app that helps students manage their finances and budget effectively. Let's call it "CampusCash". To conduct a concept test for CampusCash, we would follow these steps: Define the Concept: Clearly define what CampusCash is and its key features. For example, it could include features like budget tracking, expense categorization, savings goals, and alerts for upcoming bills. Identify the Target Audience: Focus on college students as the primary target audience. This could include students from different backgrounds, majors, and financial situations. Create the Concept Test Survey: Develop a survey that presents the concept of CampusCash to potential users. The survey should include questions to gauge interest, perceived usefulness, willingness to pay, and any concerns or suggestions. Recruit Participants: Reach out to college students through various channels such as social media, campus organizations, or student forums to recruit participants for the concept test. Administer the Survey: Distribute the concept test survey to the recruited participants. Ensure that the survey is easily accessible and user-friendly, possibly through online platforms or mobile apps. Analyze Responses: Collect and analyze the responses from the survey. Look for patterns and trends in the data to understand the overall sentiment towards CampusCash. Follow-Up Interviews or Focus Groups: Conduct follow-up interviews or focus groups with a subset of participants to delve deeper into their thoughts and opinions. This qualitative data can provide valuable insights into specific aspects of CampusCash that may need improvement or further development. Iterate and Refine: Based on the feedback received from the concept test, iterate on the concept of CampusCash to address any concerns or suggestions raised by participants. This could involve refining existing features, adding new features, or adjusting the overall design and user experience. Repeat Testing if Necessary: If significant changes are made to the concept of CampusCash, consider conducting another round of concept testing to ensure that the updates resonate with the target audience. Final Evaluation: Once the concept of CampusCash has been refined based on feedback from concept testing, evaluate its viability for further development and eventual launch in the college student market. By following these steps, we can effectively conduct a concept test for CampusCash to gather valuable feedback from college students and ensure that the product meets their needs and expectations. Instructor’s Notes: Picking up where the previous question left off, this exercise challenges students to consider how they might perform concept testing of a product aimed at them. In particular, they will need to examine how to formulate the concept statement, conduct exploratory and conclusive research about the concept, and determine whether college-aged consumers might purchase the concept product if it were available. • Example answers: o Due to the popularity of cars like the Scion with college-aged consumers, Toyota is marketing its new car, the Yaris, to the same market segment. Assuming that the car is only in the form of an unrealized idea, Toyota should put together a concept statement that includes a short description of the car, its proposed attributes, and its suggested price. Using the concept statement, Toyota could conduct exploratory research through in-depth interviews and focus groups with college students, in which it asks students to give their reactions to the concept statement. After completing the exploratory research and refining the concept statement the basis of the students’ feedback, Toyota could conduct more conclusive research, in the form of Internet and mall-intercept surveys, and ask college students to respond to another series of questions about the concept statement. During this conclusive research, Toyota should ask whether students would consider purchasing the car if it were available. If respondents reacted unfavourably to the concept and/or indicated they would not purchase such a vehicle, even if the concept sounded good, the carmaker should consider another idea for the college student market. 6. A number of portable MP3 players are currently available in the market. How might the design and value provided by MP3 players make this product more appealing to consumers than, say, portable cassette or CD players? MP3 players offer several advantages over portable cassette or CD players, making them more appealing to consumers in today's market: Compact Size and Portability: MP3 players are typically smaller and lighter than portable cassette or CD players, making them easier to carry around. This portability is highly valued in today's on-the-go lifestyle. Large Storage Capacity: MP3 players can store thousands of songs, while cassette and CD players are limited by the physical space of the cassette tape or CD. This allows consumers to carry a diverse range of music without the hassle of changing tapes or CDs frequently. Ease of Use: MP3 players offer intuitive interfaces and navigation systems, allowing users to quickly browse through their music library and select tracks with ease. This simplicity enhances the user experience compared to the sometimes cumbersome controls of cassette or CD players. Customization and Versatility: MP3 players often come with features such as playlist creation, customizable equalizers, and compatibility with various audio formats. This versatility allows users to personalize their listening experience according to their preferences, which is not possible with traditional cassette or CD players. Durability and Longevity: Unlike cassette tapes or CDs, which can degrade over time with frequent use, MP3 players utilize solid-state storage technology, which is more durable and less prone to damage. This ensures that users can enjoy their music collection for years without worrying about deterioration in sound quality. Integration with Digital Music Platforms: Many MP3 players are designed to seamlessly integrate with digital music platforms such as iTunes or Spotify, allowing users to easily transfer their music collection from their computer to their device. This convenience is a significant advantage over the manual process of recording music onto cassette tapes or burning CDs. Overall, the combination of compact size, large storage capacity, ease of use, customization options, durability, and integration with digital music platforms makes MP3 players a more appealing choice for consumers compared to portable cassette or CD players in today's market. Instructor’s Notes: In line with the design concepts discussed in Adding Value 10-1, this question asks students to suggest MP3 player designs that might create greater value than other products with similar functions. Students should consider the five key rules of design: (1) utility, (2) appearance, (3) ease of maintenance and repair, (4) good value, and (5) communication. • Example answers: o If the MP3 player is easy and intuitive to use, has a fun and appealing appearance, is easy to maintain, and has a lot of functionality (e.g., multiple ways to organize and play songs), it might be more appealing to consumers than a portable cassette or CD player. For many consumers, it will come down to two main factors: the number of songs that the device can store and the necessity (or lack thereof) of carrying around cumbersome cassette tapes or CDs. 7. Mazda is about to introduce a new model and is currently in the market testing phase of the new product development process. Describe two ways that Mazda might conduct initial market testing prior to launching this new model. There are two ways Mazda might conduct initial market testing before launching a new model: Focus Groups and Surveys: Mazda could organize focus groups consisting of potential customers from different demographics to gather feedback on the new model. These focus groups can provide valuable insights into consumer preferences, likes, dislikes, and expectations regarding design, features, pricing, and more. Additionally, Mazda could distribute surveys online or through dealership networks to reach a larger audience and gather quantitative data on consumer preferences and opinions. Prototype Testing: Mazda might also conduct prototype testing by providing pre-production models to selected individuals or groups for evaluation. This approach allows real-world testing of the new model in various conditions and environments. Feedback from prototype testers can help identify any design flaws, performance issues, or features that need improvement before the official launch. Mazda can gather feedback through structured test drives, online forums, or dedicated feedback channels. These methods allow Mazda to gauge consumer interest, gather feedback, and make necessary adjustments to ensure the new model meets the expectations and preferences of their target market before it is officially launched. Instructor’s Notes: Market testing helps determine the marketability of a new offering, so students must demonstrate an understanding of the two predominant methods, namely, premarket testing and test marketing, to answer this question. • Example answers: o Mazda might conduct premarket testing by exposing potential customers to the marketing mix variables (e.g., advertising), surveying them, and giving them the chance to test drive the new vehicle. After these experiences, consumers can indicate whether they would buy or use this vehicle again. In addition, Mazda could use test marketing and offer the vehicle in a limited geographical area prior to its full national launch. With this step, the company can discover how well the product fares with consumers, as well as test the elements of the marketing mix. 8. What type of shampoo do you use? What stage of the product life cycle is it in? Is the shampoo manufacturer’s marketing strategy—its 4Ps—consistent with the product’s stage in its life cycle? Explain. I can provide some insights. Typically, shampoos fall into different stages of the product life cycle, including introduction, growth, maturity, and decline. Introduction: During this stage, a new shampoo product is launched into the market. Marketing efforts focus on creating awareness and generating trial among consumers. The manufacturer's marketing strategy may emphasize product features and benefits to differentiate it from competitors. Growth: In this stage, sales of the shampoo product begin to increase as more consumers become aware of it and purchase it. Marketing efforts may focus on expanding distribution channels, building brand loyalty, and introducing variations or new formulations of the shampoo to cater to different consumer needs. Maturity: At this stage, sales of the shampoo product reach their peak, and the market becomes saturated with competitors offering similar products. Marketing strategies may focus on maintaining market share through competitive pricing, promotional activities, and product differentiation. Decline: Eventually, sales of the shampoo product begin to decline due to changes in consumer preferences, advancements in technology, or the introduction of newer, more innovative products. Marketing efforts may involve reducing costs, discontinuing certain product variations, or targeting niche markets to prolong the product's lifecycle. The manufacturer's marketing strategy, represented by the 4Ps (Product, Price, Place, Promotion), should ideally align with the product's stage in its life cycle: Product: The manufacturer should continuously innovate and improve the shampoo product to meet changing consumer needs and preferences. This may involve introducing new formulations, packaging designs, or features to differentiate the product from competitors. Price: Pricing strategies may vary depending on the product's stage in the life cycle. During the introduction stage, the manufacturer may use penetration pricing to gain market share, while in the maturity stage, they may adjust prices to remain competitive and maintain profitability. Place: Distribution channels should be optimized to ensure the shampoo product is readily available to consumers. This may involve expanding distribution networks during the growth stage and focusing on selective distribution during the maturity stage to maintain brand exclusivity. Promotion: Marketing efforts should be tailored to communicate the unique selling proposition of the shampoo product and persuade consumers to purchase it. This may involve advertising, sales promotions, public relations, and other promotional activities targeted at the product's specific stage in the life cycle. Overall, the manufacturer's marketing strategy should evolve in response to the changing dynamics of the shampoo product's life cycle to remain competitive and maximize profitability. Instructor’s Notes: Because students must consider their own shampoo, they should think about ways to determine the product’s life cycle based on the manufacturer’s behaviour. • Example answers: o I use Head & Shoulders dandruff shampoo, and the product is probably in the maturity stage of the PLC because it is past its peak profits, most consumers are late majority buyers, and many competitive products challenge it for market share. The manufacturer’s marketing strategy is consistent with this stage; it heavily advertises the product to maintain market share, offers price discounts, attempts to create new market opportunities by offering different formulations of the product, and markets the product in multiple geographic markets to maintain or increase sales. 9. In what stage of the product life cycle is a new model of a Palm Pre? Is Palm’s marketing strategy—its 4Ps—consistent with the product’s stage in its life cycle? How is it different from that of the shampoo in the previous question? Explain. The stage of the product life cycle that a new model of a Palm Pre would be in depends on various factors such as market dynamics, consumer demand, and technological advancements. However, assuming it's a completely new model, it would likely be in the introduction or growth stage of the product life cycle. During the introduction stage, the focus is on building awareness and establishing a market presence for the product. Companies typically invest heavily in research and development, marketing, and distribution during this stage to attract early adopters and gain a foothold in the market. Palm's marketing strategy, encompassing the 4Ps (Product, Price, Place, Promotion), should align with the product's stage in its life cycle. Here's how Palm's strategy might look: Product: The new Palm Pre model would emphasize its unique features and capabilities compared to previous versions or competitors' products. Palm may also offer different variants to cater to different customer segments. Price: Pricing strategies during the introduction stage can vary. Palm might initially use a skimming strategy, setting a relatively high price to capitalize on early adopters' willingness to pay. Alternatively, they might adopt a penetration pricing strategy to quickly gain market share by offering the new model at a lower price point. Place: Distribution channels would focus on reaching early adopters and tech enthusiasts through online sales, select retail outlets, and possibly carrier partnerships for subsidized pricing. Promotion: Palm would heavily invest in promotional activities to generate awareness and create buzz around the new Palm Pre model. This could include advertising campaigns, influencer marketing, public relations, and product demonstrations. Now, comparing Palm's marketing strategy for the new Palm Pre model with the shampoo example from the previous question: The shampoo, being an established product, might be in the maturity or decline stage of its life cycle. Therefore, the marketing strategies would differ significantly. In the case of the shampoo, the focus would be on maintaining market share, perhaps through product differentiation, pricing incentives, and distribution strategies aimed at reaching a wide audience. Promotion for the shampoo might emphasize brand loyalty, customer testimonials, and reminders of the product's benefits rather than generating awareness or creating excitement. In summary, Palm's marketing strategy for the new Palm Pre model would be tailored to the introduction or growth stage of the product life cycle, focusing on building awareness, attracting early adopters, and establishing a strong market presence. This differs from the marketing strategy for a shampoo product, which would focus more on maintaining market share and sustaining customer loyalty in the maturity or decline stage. Instructor’s Notes: To extend the product life cycle stages discussion they provided in response to the previous question, students must consider the same issues but this time with a newer product. • Example answers: o A new model of a Palm Pre device is probably in the introduction stage of the product life cycle, because only innovators purchase it in the beginning, before it gains wider acceptance. Palm’s marketing strategy is consistent with this stage of the PLC: It charges a high price because of its newness, the promotion is starting to create buzz and prepare for wider acceptance, and distribution remains limited to key sales channels to keep demand high and inventory low until the channels can support it. Compared with the shampoo example in the previous question, this marketing strategy generally suggests a possibility of growth, whereas the shampoo marketing strategy focuses on avoiding product decline. 10. You have recently been hired to join the product development group of a cosmetics company. The firm’s brand is a top-selling, high-end line of cosmetics. The head of the development team presents research that indicates “tween” girls, aged 11 to 15 years, are very interested in cosmetics and have money to spend. The company decides to create a line of tween cosmetics, adapted from the existing adult line. As the product moves through development, you notice that the team seems to be leaning toward a very edgy and sexual theme for the line, including naming the various products “envy,” “desire,” “prowess,” and “fatal attraction.” Is this strategy appropriate for tween girls? Creating a line of cosmetics targeted at tween girls can be a lucrative endeavor, given their interest in cosmetics and disposable income. However, the approach taken by the development team, leaning towards an edgy and sexual theme with product names like "envy," "desire," "prowess," and "fatal attraction," raises concerns about appropriateness. Tween girls are in a crucial stage of development, both physically and emotionally. They are exploring their identities and navigating societal influences, including media and advertising. Therefore, it's essential to consider the potential impact of marketing strategies on their self-esteem, body image, and understanding of healthy relationships. Using overtly sexual themes and suggestive language may send harmful messages to tween girls, promoting unrealistic beauty standards and reinforcing harmful stereotypes about femininity and attractiveness. It may also encourage them to engage in behaviors beyond their developmental stage and level of maturity. Instead, the company should prioritize creating a line of cosmetics that celebrates diversity, empowers girls to express themselves authentically, and promotes positive self-image and confidence. Product names and marketing campaigns should reflect these values, focusing on themes of self-expression, creativity, and individuality. Furthermore, it's crucial for the company to engage with parents and experts in child development and psychology to ensure that the products and marketing strategies are age-appropriate and align with ethical standards. By taking a responsible approach to product development and marketing, the company can build trust with customers and contribute to the well-being of tween girls. Instructor’s Notes: This scenario forces student to determine whether sexual themes marketed to young teenagers violate their own ethical standards. Using the ethical decision-making framework, students should evaluate this practice and thereby determine an appropriate course of action. • Example answers: o In applying the ethical decision-making framework: “Have you thought broadly of any ethical issues associated with the decision to be made?” I have thought broadly about the ethical issues. In this case, I have concerns about whether product names with sexual implications are appropriate for young teenage girls and about reactions to such marketing among the target market, the girls’ parents, and the general public. “Have you involved as many possible people who might have a right to offer input into or have actual involvement in making this decision and action plan?” At this point, the teenage girls have had no input into the marketing decision, and the parents definitely have not been consulted. “Does this decision respect the rights and dignity of the stakeholders?” Parents may believe the company is trying to sexualize their female children too early, even if the girls themselves think the products are acceptable because they want to rebel and be seen as more adult. “Does this decision produce the most good and the least harm to the relevant stakeholders?” Such marketing might foster an unhealthy attitude among the girls and lead to greater conflict with parents and even school administrators. “Does this decision uphold relevant conventional moral rules?” It likely violates the community’s standard for what is appropriate regarding marketing to children and eroticizing young girls for the purpose of increasing sales. “Can you live with this decision alternative?” If the decision alternative is to tone down the sexy names and images and use something more age-appropriate, I can live with that decision. o Based on my answers to the framework questions, I will advocate that my company consider using fun, quirky, maybe even rebellious names and images for the product marketing that are less sexual in nature. Net Savvy 1. Go to www.bestnewproducts.ca/ and search for an interesting new product. Is this an innovative, new-to-the-world product? Discuss the extent to which the new product has the properties that would be important for new product design and development. However, I can offer some guidance on evaluating whether a product is innovative and discuss important properties for new product design and development. When assessing whether a product is innovative and new-to-the-world, consider the following: Novelty: Is the product introducing a new concept, technology, or solution to the market? It should offer something that hasn't been seen before or significantly improves upon existing solutions. Market Need: Does the product address a genuine need or pain point in the market? Products that solve pressing problems tend to have higher chances of success. Differentiation: How does the product differentiate itself from existing alternatives? It should offer unique features, benefits, or value propositions that set it apart from competitors. Market Potential: Assess the market size and growth potential for the product. A truly innovative product should have a sizable target market and the potential for widespread adoption. Feasibility: Consider the technical feasibility of developing and manufacturing the product. It should be achievable within reasonable constraints of technology, resources, and time. User Experience: Evaluate the user experience and usability of the product. A well-designed product should be intuitive, easy to use, and provide a positive experience for the end user. Scalability: Assess whether the product can scale effectively to meet increasing demand over time. Scalability is crucial for long-term success and growth in the market. Sustainability: Consider the environmental and social impact of the product throughout its lifecycle. Sustainable design and manufacturing practices are becoming increasingly important to consumers and regulators. By considering these factors, you can determine the extent to which a new product is innovative and has the properties important for successful design and development. If you have a specific product in mind, feel free to describe it, and I can help you analyze its potential based on these criteria. Instructor’s Notes: To deepen students’ understanding of how good design foster value—and subsequently sales—this exercise asks them to apply the five key rules of design. • Example answers: o The Smart Car is an innovative but not a new-to-the-world product; rather, it combines automobile innovations that already appeared in the market. In design terms, the Smart Car performs as follows: Utility: A compact vehicle that takes up less space, operates like a normal car, and has better fuel economy than the average sedan. Appearance: Cute and quirky, in different colors. Ease of maintenance: Difficult to maintain and repair in the United States because of the limited number of dealerships and limited experience among mechanics. Value: Due to better fuel economy, hip design, and better storage capability, the value is high. Communication: Communicates the simple, modern, and cutting-edge design aesthetic of the car company 2. The automotive industry is constantly adding new and different products into car and truck markets. Conduct an Internet or library database search for innovative new automotive technologies. Choose products that fit each stage of the product life cycle and justify your choices. et's explore innovative automotive technologies across different stages of the product life cycle: Introduction Stage: Electric Vehicles (EVs): EVs have been around for some time but are still in the introductory stage in terms of market penetration. Companies like Tesla, Rivian, and Lucid Motors are pushing the boundaries with advancements in battery technology, range, and charging infrastructure. These vehicles are still gaining acceptance and market share, making them a prime example of a product in the introduction stage. Growth Stage: Autonomous Driving Systems: Autonomous driving technology is rapidly advancing, with companies like Waymo, Tesla, and General Motors investing heavily in research and development. These systems are transitioning from the introduction to the growth stage as they become more widespread and accepted. The growing demand for safety, convenience, and efficiency is driving the adoption of autonomous features such as lane-keeping assistance, adaptive cruise control, and self-parking capabilities. Maturity Stage: Advanced Driver Assistance Systems (ADAS): ADAS technologies, including collision warning systems, blind-spot detection, and automatic emergency braking, are now common in many vehicles. These technologies have reached maturity as they are widely adopted by automakers across various vehicle segments. Companies like Bosch, Continental, and Mobileye continue to innovate in this space, refining existing features and introducing new ones to enhance safety and driver convenience. Decline Stage: Internal Combustion Engine (ICE) Efficiency Improvements: While traditional internal combustion engines are in decline due to the rise of electric vehicles, there is still ongoing innovation aimed at improving their efficiency and reducing emissions. Technologies such as turbocharging, direct fuel injection, and cylinder deactivation are examples of advancements that extend the decline stage by providing incremental improvements in performance and fuel economy. Each of these technologies represents a different stage in the automotive product life cycle, from introduction to decline, demonstrating the continuous innovation and evolution within the industry. Instructor’s Notes: Students must fit innovations developed for the automobile industry to the product life cycle model. • Example answers: o Introduction: Multistage convertible rooftop, which very few vehicles even offer. o Growth: Hybrid engines for better fuel economy; the demand for cars with this technology has skyrocketed in the past two years. o Maturity: Greater payload capacity in trucks and SUVs, because most vehicles now have some provision for this capacity. o Decline: Cassette tape decks for cars; most cars now come with CD players, satellite radio, or iPod sockets. End-of-Chapter Case Study Apple’s iProducts: The Great Consumer Hope Questions 1. One critical factor that affects the market potential for a product innovation is the ability to offer a differentiated product that delivers unique and superior value to customers. Discuss the extent to which Apple successfully accomplished this with the iPhone and the iPad. Apple has undeniably achieved significant success in offering differentiated products that deliver unique and superior value to customers with the iPhone and the iPad. Here's how: Innovation and Design: Apple's products are known for their innovative designs and user-friendly interfaces. The iPhone, upon its release, revolutionized the smartphone industry with its sleek design, multi-touch interface, and intuitive user experience. Similarly, the iPad introduced a new category of devices, the tablet, with its large touch screen, portability, and versatility. Ecosystem Integration: Apple has created a seamless ecosystem of hardware, software, and services that work together seamlessly. The iPhone and iPad integrate effortlessly with other Apple devices such as Macs, Apple Watch, and Apple TV, creating a cohesive user experience. This ecosystem lock-in also encourages customer loyalty and increases the perceived value of Apple products. Brand Image and Perception: Apple has built a strong brand image associated with innovation, quality, and luxury. The iPhone and iPad are seen as aspirational products, appealing not only for their features but also for the status and prestige associated with owning an Apple device. This perception of superiority enhances the value proposition for customers. Continuous Improvement: Apple continuously innovates and improves its products with each new iteration. Through regular updates and new releases, Apple enhances the functionality and features of the iPhone and iPad, ensuring that customers always have access to the latest technology and improvements. Ecosystem of Apps and Services: The App Store and the iTunes Store provide customers with access to a vast ecosystem of apps, games, music, movies, and more. This rich ecosystem adds value to the iPhone and iPad, making them not just hardware devices but platforms for entertainment, productivity, and creativity. Overall, Apple has successfully differentiated its products by focusing on innovation, design, ecosystem integration, brand image, and continuous improvement. This differentiation has allowed the iPhone and iPad to capture significant market share and maintain their position as leaders in their respective categories. Instructor’s Notes: Apple strategically used both creative innovation and marketing to set its iPod and other products apart from similar products on the market, like cheaper MP3 players. • Example answers: o Apple differentiates its products and delivers unique and superior value in several ways. First, the design of the products themselves is simple, elegant, and stylish—to the point that they have nearly become fashion accessories. Second, Apple made the products easy to carry and easy to use, particularly with the click-wheel technology it employs to control song selections, volume, and user options. Third, Apple created a simple plug-and-play product when combined with the online music store, iTunes, so consumers can easily download and update their music players. Fourth, Apple was smart about introducing new products to keep the product line fresh and innovative in the mind of consumers. 2. How would you classify the iPod, iPhone and iPad today in terms of each product’s stage in the product life cycle? Why? The iPod, iPhone, and iPad have each traversed different phases of the product life cycle since their respective launches. iPod: The iPod can be considered to be in the decline phase of its product life cycle. With the advent of smartphones that can play music, the standalone portable music player market has dwindled. Apple has also shifted its focus away from the iPod line in recent years, offering fewer updates and innovations compared to its heyday in the early to mid-2000s. iPhone: The iPhone continues to be in the maturity phase of its product life cycle. While there is still innovation and development occurring with each new model release, the market for smartphones, particularly iPhones, has matured significantly. Sales growth has slowed compared to the rapid expansion seen in the early years, and competition in the smartphone market is intense. However, Apple continues to command a significant share of the market and enjoys strong brand loyalty. iPad: The iPad is also in the maturity phase of its product life cycle. Similar to the iPhone, sales growth has slowed compared to the initial surge following its introduction. While there are still updates and improvements with each new iteration, the tablet market has matured, and competition from other manufacturers has intensified. However, the iPad remains a popular choice for consumers, particularly in certain segments such as education and enterprise. In summary, while the iPod is in the decline phase, both the iPhone and iPad are in the maturity phase of their product life cycles, characterized by slower growth and intense competition. However, they continue to be significant products for Apple, contributing to its overall success in the technology market. Instructor’s Notes: Some students might offer different answers, but as long as they support their answer with characteristics that meet the stage of the product life cycle, they are acceptable. • Example answers: o The iPod is in the maturity stage, because sales have levelled off. However, new models would spend some time in the introduction stage. o The iPhone is in the growth stage as sales are still increasing and people can’t seem to get enough of each new model. However, it may be in the latter half of the growth stage, because competitors may start making successful in-roads, which would cut in to Apple’s market share. o The iPad is in the early growth stage. Other competitors are just starting to announce their own products but Apple still dominates the tablet market. 3. Provide a description of what you think each type of adopter would be for an iPad. Do you think we are seeing late majority adopters or laggards yet? Innovators: These are the first individuals to adopt new technology. They are tech enthusiasts who are eager to try out new gadgets and are typically willing to take risks. Innovators likely pre-order or purchase the iPad as soon as it's released, excited about its potential and intrigued by its novelty. Early Adopters: Following the innovators, early adopters are also enthusiastic about technology but tend to be more practical in their approach. They see the value in being among the first to try out new products but are also interested in how the technology can improve their lives. Early adopters may purchase the iPad shortly after its release, once they've read reviews and seen demonstrations highlighting its features. Early Majority: The early majority represents a larger segment of the population that adopts new technology after it has been tried and tested by innovators and early adopters. These individuals are more cautious and may wait until the iPad has gained widespread acceptance and proven its usefulness before making a purchase. They are interested in the practical applications of the technology and may buy the iPad once it becomes more mainstream. Late Majority: The late majority consists of individuals who are skeptical of new technology and are hesitant to adopt it until it has become the norm. They may wait until the iPad is well-established in the market and widely used by others before considering purchasing one themselves. Late majority adopters are motivated by social proof and the reassurance of seeing others successfully using the product. Laggards: Laggards are the last to adopt new technology, often out of a reluctance to change or a lack of interest in technological advancements. They may resist purchasing an iPad until it becomes absolutely necessary or until there are no other viable alternatives. Laggards may only adopt the iPad when it has become obsolete and replaced by newer technology. As for whether we are seeing late majority adopters or laggards for the iPad, it depends on the specific context and timeline. In the early years of the iPad's release, it's likely that we are still primarily seeing early majority adopters, with some late majority adopters beginning to enter the market as the technology becomes more mainstream. Laggards may not start adopting the iPad until much later in its lifecycle, if at all. Instructor’s Notes: Similar to the previous question, some students may pose effective arguments for both sides, and their answer to the previous question will likely influence their answers here. • Example answers: o The late majority adopters are not quite buying the iPad product line. As far as the other adopter types go, each of them probably include the following: Innovators: Young, predominately male consumers who rushed out to buy the iPad before the products were even in wide distribution. Early adopters: 20-something young professionals wanting to look hip to their friends, workout partners, or dates. Early majority: Business professionals who use the product as a business tool. 4. Do you think the iPad will continue to be a success? What factors support your position? Yes, I believe the iPad will continue to be a success for several reasons: Versatility: The iPad has evolved beyond just a tablet for entertainment to a versatile tool for work, education, creativity, and more. Its adaptability appeals to a wide range of users, from students to professionals. Powerful Hardware: With each iteration, the iPad's hardware becomes more powerful, rivaling some laptops in performance. This makes it capable of handling demanding tasks like graphic design, video editing, and gaming, further expanding its appeal. Software Ecosystem: The vast ecosystem of apps designed specifically for the iPad enhances its functionality and utility. From productivity apps like Microsoft Office to creative tools like Adobe Photoshop, there's something for everyone, making the iPad a valuable tool in various domains. Apple Ecosystem Integration: The iPad seamlessly integrates with other Apple devices, such as iPhones, Macs, and Apple Watches. This interoperability enhances the user experience, allowing for seamless continuity across different devices. Continued Innovation: Apple consistently introduces new features and improvements to the iPad lineup, keeping it competitive in the market. Whether it's advancements in display technology, enhancements to the Apple Pencil, or new productivity features, innovation drives continued interest in the iPad. Growing Demand for Mobility: As people increasingly seek mobility and flexibility in their computing devices, the iPad fulfills this need with its lightweight design and long battery life. This trend towards mobile computing is likely to continue, benefiting the iPad. Overall, the combination of versatility, powerful hardware, a rich software ecosystem, integration within the Apple ecosystem, ongoing innovation, and the growing demand for mobile computing positions the iPad for continued success in the future. Instructor’s Notes: Similar to the previous question, some students may pose effective arguments for both sides, and their answer to the previous question will likely influence their answers here. • Example answers: o While other companies have launched tablet products (HP, RIM, Sony, Samsung) Apple continues to dominate. HP left the market only a few months after introducing its tablet. RIM has failed to generate much enthusiasm for its PlayBook. As the first mover, Apple has attracted a loyal audience and considerable sales. 5. Apple has introduced several winning products over the last few years –iPod, iPhone, and iPad- in markets where the company was a newcomer that successfully challenged market leaders. How would you describe Apple’s product innovation strategy in the mobile devices market? Based on your analysis, what do you think Apple’s next winning innovation might be? What are some of the barriers it may need to consider? Apple's product innovation strategy in the mobile devices market can be described as groundbreaking and disruptive. Instead of simply entering existing markets, Apple redefined them by introducing products that not only met consumer needs but also created entirely new experiences. One key aspect of Apple's strategy is its focus on user experience and design. From the iPod to the iPhone and iPad, Apple has consistently delivered sleek, intuitive devices that resonate with consumers. This emphasis on design, coupled with seamless integration between hardware and software, has set Apple apart from its competitors. Another aspect of Apple's strategy is its ecosystem approach. By creating a tightly integrated ecosystem of devices, software, and services, Apple has built a loyal customer base and increased customer lock-in. This approach encourages customers to stay within the Apple ecosystem, leading to repeat purchases and long-term revenue streams. Looking ahead, Apple's next winning innovation might lie in the realm of augmented reality (AR) or virtual reality (VR). With the continued advancement of AR and VR technologies, there is immense potential for Apple to create immersive experiences that revolutionize how we interact with technology. Whether it's through AR glasses, VR headsets, or innovative software applications, Apple has the resources and expertise to lead the way in this emerging market. However, there are several barriers that Apple may need to consider in pursuing AR/VR innovation. Firstly, the technology is still in its early stages, with challenges such as limited hardware capabilities and high production costs. Additionally, there are concerns around privacy and data security in AR/VR applications, which Apple will need to address to maintain consumer trust. Finally, competition in the AR/VR space is intensifying, with tech giants like Facebook, Google, and Microsoft investing heavily in the technology. Apple will need to differentiate itself and deliver compelling experiences to stay ahead of the curve. Instructor’s Notes: Students may note that not all of Apple’s first mover products have been a success, for example, iTv. However, their answers to the previous questions will likely influence their answers here. • Example answers: o Apple has successfully marketed the cool factor in all its mobile devices to the point that many people lined up to buy an iPad without really knowing what it could do or how they would use it. Part of their success revolves around their positioning as an “innovative” company. While products like the iPod are not necessarily the most innovative MP3 players on the market, consumers “believe” that everything Apple produces is leading edge. One of the biggest barriers Apple will face in the next few years is the departure of Steve Jobs as CEO. He has been credited for much of the company’s innovation and without him at the helm, its image may suffer. Video Activities Video: Mom's Healthy Secrets Learning Objective: LO3 Page Number in Text: 264 Description: Entrepreneur Julie Arora capitalized on consumer desire for healthy, organic food when she launched Mom's Healthy Secrets and a new line of cereal. The video presents her challenges in developing the new product and then taking it to market. She was featured in CBC's Fortune Hunters in 2008 and 2009, has been recognized as one of the Top 10 Innovators of 2008 by Food in Canada magazine and has appeared on Dragon's Den. Key Words: concepts, concept testing, product development, prototype, test marketing, product launch Activity: Play this video until just before the expert panel weighs in on how successful (or not) they feel the Mom’s Healthy Secrets launch will be. Ask students if they would buy the product. Ask if they’ve ever seen it on store shelves. After this discussion, play the expert panel discussion and compare their views to those of your students. After watching the video up until just before the expert panel weighs in, engage the students in a discussion about whether they would buy Mom’s Healthy Secrets cereal based on what they've seen so far. Encourage them to consider factors such as the product's healthiness, organic nature, and any other aspects highlighted in the video. Then, ask if any of the students have ever seen Mom’s Healthy Secrets cereal on store shelves or heard about it before. This can provide insights into the brand's visibility and market presence. After this discussion, play the expert panel discussion from the video. Have the students compare their own views to those of the experts. Did they agree or disagree with the panel's assessment of the product's potential success? Encourage them to discuss any discrepancies and reasons behind them. This activity not only allows students to engage critically with the product and its marketing strategies but also encourages them to reflect on their own consumer behavior and perceptions. Solution Manual for Marketing Dhruv Grewal, Michael Levy, Shirley Lichti, Ajax Persaud 9780071320382, 9780070984929
