Developing New Market Offerings

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CHAPTER 12

• Developing New Market Offerings

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NOTION OF A PRODUCT

• A product is that which is offered to the market
  (consumer) to meet an identified need.
• Products can be classified as
• Goods (tangibles)
• Services (intangibles)

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OTHER WAYS OF CLASSIFYING PRODUCTS

• Convenience goods
• Shopping goods
• Specialty
• Unsought goods
• Consumer Goods
• Industrial Goods
• Type I versus Type II Products

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New Product Development

• New Product Development divided into five stages
  ( Cost 14m per success)
• 1) Idea Screening (n 64)
• Concept Testing (n16)
• Product Development (n 8)
• Test Marketing (n 4)
• Commercialization (n 2)

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Innovation

• What is a New product?
• There are many meanings to the term new (to the
  market, to the customer, to the firm?)
• Marketers speak in terms of an Innovation as this
  is less confusing.

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Innovation (Contd)

• Continuous Innovation Small changes to existing
  products such that no new learning ort effort
  required to adopt the new product. For example
  --- change from powdered detergent to liquid
  detergent.
• Such innovations tend to be easily and readily
  accepted by the market and they quickly move
  through the PLC.

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Innovation (Contd)

•    Continuous Innovation -  significant change
  to existing products such that there is some
  effort and new learning required if you are to
  purchase and use the new product. For example
  manual type writer to electric type writer.
• The product takes a longer time to advance
  through the product life cycle as customers have
  to determine it it is worth buying and using the
  product.  

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Innovation (Contd)

• Discontinuous Innovation this represents a
  break from the pass. It requires a great deal of
  effort and new learning if the consumer is to
  adopt the product --- example going from
  typewriter to computer.
• Adoption of the new product tends to be slow as
  consumers have to see an advantage in the new
  product over what they are currently using.
  Further the marketer must expend lots of
  marketing effort to educate the consumer on the
  advantages of the new product.

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Innovation (Contd)

•   Introduction of an innovation does not
  guarantee market success. Success comes ONLY if
  the consumer sees an advantage in purchasing and
  using the innovation.
• The notion of purchasing and using an innovation
  is called ADOPTION.

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Characteristics of a Successful Innovation

• Relative Advantage superior to current products
• Compatibility matches consumer experiences
• Complexity ease of understanding and usage
• Divisibility can be tried
• Communicability ease of observing and promoting
  (describing) benefits and results
• Other Factors - Costs, Risk, Credibility, Social
  Approval

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Product Adoption

•   Adoption is the purchase and repeated use of a
  product.
• A single purchase and use is called a Trial.
• Adoption will not usually occur without trial.

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The Adoption Process

•   Consumers go through a hierarchy of effects
  reroute adopting a product
• Awareness takes notice
• Interest seeks information
• Evaluation considers alternatives
• Trial tries the innovation
• Adoption decides to make full regular use of
  the innovation thereby replacing current usage

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Adoption Stages

• Innovators (2.5)
• Early Adopters (13.5)
• Early Majority (34)
• Late Majority (34)
• Laggards (16)
• A laggard in one product category may be an
  innovator in another.

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Diffusion

• Diffusion is the spread of the innovation through
  the society.
• For diffusion to occur there must be time and a
  society.
• Diffusion is very much like dropping a pebble
  into water. First an opinion leader uses the
  products and she/he influences others to follow
  (copy) and soon other copy then and so on until
  the innovation is spread through the society.

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Adoption Process and Marketing Strategy

• What is the implication of the Adoption Process
  for marketing strategy?