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Definition
Describes the stages a new product idea goes through from beginning to end.
The product life cycle is concerne with new types (or categories) of products in the market, not just what happens to an individual brand. |
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| In the market introduction stage, sales are low as a new idea is first introduced to a market. |
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| In the market growth stage, industry sales grow fast. This is the time of biggest profits for the industry. But it is toward the end of this stage when industry profits begin to decline as competition and consumer price sensitivity increase. |
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| The market maturity stage occurs when industry sales level off and competition gets tougher. |
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| During the sales decline stage, new products replace the old. |
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| The currently accepted or popular style. |
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| An idea that is fashionable only to certain groups who are enthusiastic about it. |
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| A product that is new in any way to the company offering it. |
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| Federal Trade Commission (FTC) |
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Definition
| The federal government agency that polices antimonopoly laws. |
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| Consumer Product Safety Act of 1972 |
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Definition
| Set up the Consumer Product Safety Commission to encourage safety in product design and better quality control. |
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Definition
| Legal obligation of sellers to pay damages to individuals who are injured by defective or unsafe products. |
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| A more formal method of getting customer reactions to a new product idea and how well the product fits their needs. |
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Definition
Responsible for the profitable operation of a particular products whole marketing effort.
"Product Champion" concerned with planning and getting the promotion effort implemented. |
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Definition
| Oversee marketing efforts of an entire brand, which may include multiple product lines each with their own marketing strategies and efforts. |
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| Total Quality Management (TQM) |
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Definition
| The philosophy that everyone in the organization is concerned about quality, throughout all of the firm's activities, to better serve customer needs. |
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Definition
| A committment to constantly make things better one step at a time. |
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| Giving employees the authority to figure out how to best satisfy customers' needs and correct a problem without first checking with management. |
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| What are the stages of the product life cycle? |
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Definition
| Market introduction, market growth, market maturity, and sales decline. |
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| Why do profits decrease during the market maturity stage? |
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Definition
| Promotion costs rise and competitors cut prices to attract business. |
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| What characteristics of a product will help it to move quickly through the early stages of the life cycle? |
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Definition
| Greater comparative advantage over other products. Easy to use. Advantages are easy to communicate. If the product can be tried on a limited basis, without a lot of risk to the customer. If the product is compatible with the values and experiences of target customers. |
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| What is price skimming during the market introduction stage? |
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Definition
| Charging a relatively high price to help pay for the introductory costs of a product? |
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| What is price penetration during the market introduction stage? |
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Definition
| Using a low initial price to help develop loyal customers early and keep competitors out. |
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| What constitutes a new product? |
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Definition
| A product must be entirely new or changed in a "functionally significant or substantial respect." |
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| What are the steps of a new product process? |
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Definition
| Idea generation, Screening, Idea Evaluation, Development, and Commercialization. |
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| Where can new product ideas come from? |
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Definition
| Sales or production staff, wholesalers or retailers, competitors, consumer surveys, trade associations, advertising agencies, or government agencies. |
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| What are new product development success factors? |
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Definition
| Top management support, culture of innovation, product champion with authority, cross-functional team, clear understanding of customer needs, and cost management. |
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| What are the two keys to improving service quality? |
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Definition
| training and empowerment. |
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