1. CHAPTER 12 Developing New Market Offerings

2. 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)

3. OTHER WAYS OF CLASSIFYING PRODUCTS Convenience goods Shopping goods Specialty Unsought goods Consumer Goods Industrial Goods Type I versus Type II Products

4. New Product Development New Product Development divided into five stages ( Cost $14m per success): 1) Idea Screening (n = 64) Concept Testing (n=16) Product Development (n = 8) Test Marketing (n = 4) Commercialization (n = 2)

5. 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.

6. Innovation (Cont’d)  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.

7. Innovation (Cont’d)  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.

8. Innovation (Cont’d) 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.

9. Innovation (Cont’d)  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.

10. 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

11. 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.

12. 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

13. 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.

14. 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.

15. Adoption Process and Marketing Strategy What is the implication of the Adoption Process for marketing strategy?