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CHAPTER 12
Developing New Market
Offerings
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)
OTHER WAYS OF
CLASSIFYING PRODUCTS
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Convenience goods
Shopping goods
Specialty
Unsought goods
Consumer Goods
Industrial Goods
Type I versus Type II Products
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)
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.
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.
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.
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.
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.
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
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.
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
Adoption Stages
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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.
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.
Adoption Process and
Marketing Strategy
• What is the implication of the Adoption Process
for marketing strategy?