Term
| 4 main types of new product innovation |
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Definition
1.A radically new invention, a real breakthrough product that appears to the consumer to bring true innovation to a category or creates a new category. Although these products typically incur high R&D expense, they can also generate high profit.
2. An adaptation of an existing product. Typically, this can consist of developing a product that is new to a category but is recognized by the consumer. A successful example of this is the diversification of many well established confectionery brands into the ice cream market.
3. A line extension of an existing product. A line extension is a new version of a product within the same category. An example would be the first yogurt with peach flavor. Leveraging an existing trademark can be a quick and efficient strategy for entering a market because significant investment is not required in introducing the brand.
4. ‘Innovative imitations’. These are imitative products that are superior to the original products, be it in terms of product origin, type/quality of ingredients, method of processing (e.g. smaller batches/hand made), packaging size/format etc. |
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Term
| Common Reasons for NPD Failure |
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Definition
• Poor marketing orientation
• Lack of consumer and trade market research
• Poor product performance
• High marketing costs, particularly for branded launches
• Inadequate distribution, often reflecting weak links with retailers
• Inefficient management of NPD/innovation and/or lack of a structured NPD system |
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Term
| essential element of developing successful new products is to have? |
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Definition
| a formal, market focused NPD system to manage and drive new products to market quickly and successfully |
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Term
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Definition
It is a mechanism which outlines the sequences and timing of the phases and the activities that should be carried out to move a project forward.
Emphasizes importance of key activities such as:
Marketing
technical development and
financial analysis running at the same time |
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Term
| What are the benefits of using an NPD system? |
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Definition
• faster new product introductions
• higher success rates at launch
• earlier detection of failures
• being on time and on budget
• greater customer satisfaction
• better launch plans
• cycle time reduction
• less recycling/rework
• improved teamwork |
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Term
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Definition
Phase 1. Idea Generation
Review 1. Idea Screening
Phase 2. Feasibility
Review 2. Feasibility Review
Phase 3. Concept Development
Review 3. Concept Review
Phase 4: Business Case
Review 4: Business Case Review
Phase 5: Further Development
Review 5: Post-development Review
Phase 6: Launch
Review 6: Post-launch Review
Phase 7: Project-Performance
Review 7: Project Evaluation |
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Term
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Definition
| team leader of a cross-functional team. |
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Term
| What does a NPD team offer? |
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Definition
structure
focus
increase speed to market
ensure adherence to budget and schedules
Can address issues early on in the process |
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Term
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Definition
| Its important to keep a reasonably steady flow of products through the NPD pipeline. |
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Term
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Definition
| allocation of important resources to solve unexpected problems. |
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Term
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Definition
Is the collection and analysis of data to identify and satisfy consumer needs.
Can ID consumers values, attitudes, lifestyles |
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Term
| Main purposes of consumer research are to? |
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Definition
Reduce risk
identify profitable market opportunities
facilitate decision making |
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Term
| What stage of the NPD process should consumer research be completed? |
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Definition
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Term
| Eight ways in which companies can out think and outsmart the competition in new product development: |
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Definition
1) Solving a consumer need in a way that nobody has before.
2) Not trying to outguess consumers but working with them to find out their needs.
3) Being personally involved with all consumer and market research.
4) Research, research, research.
5) Evolving and learning, continuously auditioning your product until you are sure you have a winner.
6) Knowing that consumers are interested in your product only as it pertains to them.
7) Having everyone who is part of the NPD team interact with consumers.
8) Not allowing preconceived notions to color your judgment. |
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Term
| five key questions by which manufacturers can analyze the paths of possible development for new products according to consumer demands and determine the goals of NPD |
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Definition
1.Who are the consumers?
2.What are they eating? (e.g. nutraceutical products, convenience products)
3.When and where are they eating? (in the workplace, on the go, out of home, on impulse)
4.Why do the consumers want the product? (e.g. for entertaining, family meals etc.)
5.How will the products affect the consumers life….for the better? |
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Term
| Two main methods of consumer research |
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Definition
Desk research-secondary
Field research-primary |
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Term
| Example of field research and desk research |
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Definition
field research- contacting potential consumers directly, surveys, questionnaires
desk research-making use of information, library,company reports, websites. |
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Term
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Definition
| talking directly to consumers to understand their perceptions, attitudes and reasons for doing things |
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Term
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Definition
| when the same focus group meets on numerous occasions. |
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Term
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Definition
| gathering of people of similar demographics having a focused discussion about a subject, usually led by a moderator. |
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Term
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Definition
Numerical data, every person is asked the same series of questions, face to face interviews, telephone.
Completion can be results such as: what % of population that would buy product. |
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Term
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Definition
Numerical data, every person is asked the same series of questions, face to face interviews, telephone.
Completion can be results such as: what % of population that would buy product. |
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Term
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Definition
| Placing new product in consumers home and letting them test it out for a period of time |
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Term
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Definition
| Consumers are targeted on the street and asked a series of questions to determine if they fall within the target market. If they do fall in that market they are invited into a hall/venue to take part in a product sampling and questionaire |
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Term
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Definition
| Sensory analysis or product tasting is used to test a product’s sensory attributes e.g. aroma/odor, color, flavor, texture, mouth-feel and after-taste. |
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Term
| What research is an absolute necessity for all companies engaging in new product development. |
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Definition
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Term
Without a clear knowledge and understanding of
• consumer’s lifestyles,
• shopping behavior,
• demographics and behaviors,
What can happen? |
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Definition
companies cannot develop products to effectively meet consumer needs. Desk research is inexpensive and easily accessible and should be used as the basis for all companies engaging in the development of new
products. |
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Term
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Definition
| Single price to all customers. No room for negotiation. Mass merchandising or retail sales. |
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Term
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Definition
| Allow different price to different kinds of buyers. Gas with Kroger plus card, senior citizen tickets, airplane tickets |
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Term
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Definition
| Purposeful setting of price above market price. Short term monopoly |
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Term
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Definition
| setting market price, high competition, high sensitivity of price changes (gas prices) |
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Term
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Definition
| below market price to penetrate the market. “dumping” |
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Term
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Definition
| charge price based on volume purchased. $1.75 up to 1,000 units, $1.00 every unit above 1,000. Bulk fuel, feed, differentiate customers in the market by volume purchase |
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Term
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Definition
| pricing on the 9s. Retail pricing strategy, targets consumer perception of price-value. |
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Term
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Definition
| high price to send a value signal. Targeting wealthy customers, not price sensitive. Price is a + attribute. Cross pens, Mercedes, Jaguar. |
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Term
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Definition
Product price is set at a lower level initially.
Common with credit cards, phone services |
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Term
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Definition
| everyday low price. Intentionally minimize price variability across time and across customers. Regular source, customer loyalty |
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Term
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Definition
Fixed cost + variable cost +Profit/
Number of units |
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Term
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Definition
Fixed cost + variable cost x (1+ % Profit)/
Number of units |
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Term
| Those that exert a downward pressure on prices |
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Definition
• Macro-economic pressure
• Sensitivity to price and gaps to key competitors
• Whether the product is a luxury, necessity, or substitute |
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Term
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Definition
| buyer pays for product including cost of delivery to the stated destination. Cost of delivery is included in the price quoted. |
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Term
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Definition
| standard shipping cost to all buyers in all locations. |
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Term
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Definition
| price charged varies by geographic zone. Bulky or expensive items. |
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Term
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Definition
| the seller absorbs part or all of freight cost. Salesperson has a tool for negotiation (especially for new or important customer). |
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Term
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Definition
discount for large purchases. Cumulative purchase arrangement leading to discount.
Frequent flyer programs |
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Term
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Definition
| special discount offered to buyer in return for the buyer performing special functions for the seller. Merchandising program participation |
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Term
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Definition
discounts for timely cash payments.
2/10 n-30: 2% discount for payment within 10 days otherwise balance due in 30 days |
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Term
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Definition
| Off-season product needs to be removed. Need some additional cash flow during slow season |
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Term
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Definition
| discounts offered to the buyer for participating in a special promotion program |
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Term
| Robinson Patman Act of 1936 |
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Definition
• The act prohibits price discrimination if its effect is to lessen competition substantially. Its purpose is to help protect small businesses by preventing larger companies from squeezing out small firms.
• The act prohibits price differentials that are not based upon equal and corresponding cost differentials. Therefore if the product and the quantity ordered are the same, the same price must be charged to all buyers who are in competition with each other. |
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Term
| Magnuson-Moss Warranty Act |
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Definition
establishes standards for how warranties are presented
All warranties should be written to the average person can understand them
Written disclosure indicating what is included or excluded |
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Term
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Definition
salesperson should not use exaggerated or unprovable claims:
• Increasing legal enforcement or fraud
• Consequences of raising expectations too high |
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