AEM 2400 Lecture Notes - Lecture 11: Observability, Dominate

• School: Cornell University
• Department: Applied Economics & Management
• Course: AEM 2400
• Professor: Debra Perosio

Document Summary

For each successful new product introduced, a company needs between 50 and 60 other new product ideas in the new-product development process. Why do new products fail: no discernible benefits, poor match between features and customer desires, overestimation of market size. Incorrect positioning: price too high or too low. The spread of new products: diffusion the process by which the adoption of an innovation spreads. Product life cycle: a concept that provides a way to trace the stages of a product"s acceptance, from its introduction (birth) to its decline (death). Introductory stage, growth stage, maturity stage, decline stage. Introductory stage: high failure rates, little competition, frequent product modification, limited distribution, high marketing and production costs, negative profits with slow sales increases, promotion focuses on awareness and information, communication challenge is to stimulate primary demand. Increasing rate of sales: entrance of competitors, market consolidation. Initial healthy profits: aggressive advertising of the differences between brands, wider distribution.