MARK1012 Chapter 9: CHAPTER 9 Developing New Products
CHAPTER 9 Developing New Products
Sunday, 21 May 2017
18:27
1. Reason for creating a new product:
Firms must evolve to meet the needs and wants of the market better as markets are dynamic,
consumer needs are ever-changing and the market is saturated with alternative and
substitute products--> must seek out ways to create value for consumers so that products can
stand out in the market. For firms that aim for longevity and success, innovation is a matter of
complete survival.
When firms keep up with consumer demands, they are being responsive to the market or
market-driven and when they possess satisfactory capabilities for producing a new innovation
they can create an opportunity to develop new markets by offering an unprecedented value.
Innovation refers to the process by which ideas get transformed into new offerings, including
products, services, processes, and branding concepts--> represents firm's commitment to
investing in their long run competitiveness and growth. Without innovation, firms have 2
choices: continue to market current products to current customers or to take the same
product and market it to another market with similar customers.
2. Product market expansion grid
Suggests that with innovation, a firm has 4 choices when deciding which growth strategy to
adopt:
A. Sell existing products to existing markets (market penetration)
B. Sell existing products to new markets (market development)
C. Sell new products to existing market (product development)
D. Sell new products to new markets (diversification)
C. Changing customer needs
When they add products, services, processes to their offerings, firms can create and deliver
value more effectively by satisfying the changing needs of their current and new customers or
by keeping customers from getting bored with the current product offering and thereby
switching brand.
4. Market saturation
The longer a product exists in the marketplace, the more likely it is that the market will
become saturated. Without new goods and services, the value of the firm will ultimately
decline. The firm can sustain their growth by getting consumers excited by new looks and new
features, prompting many consumers to buy the newer version before the old product's
functional life is over.
But saturated market can offer opportunities for a company that is willing to adopt a new
process or mentality. Companies are now looking to niche or small markets for brand growth.
5. Managing risks through diversity
Through innovation, firms often create a broader portfolio of products, which help them
diversify their risk and enhance firm value better than a single product can. If some products
in a portfolio performs poorly, others may do well.
6. Fashion cycles
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Document Summary
18:27: reason for creating a new product: For firms that aim for longevity and success, innovation is a matter of complete survival. Innovation refers to the process by which ideas get transformed into new offerings, including products, services, processes, and branding concepts--> represents firm"s commitment to investing in their long run competitiveness and growth. Without innovation, firms have 2 choices: continue to market current products to current customers or to take the same product and market it to another market with similar customers: product market expansion grid. The longer a product exists in the marketplace, the more likely it is that the market will become saturated. Without new goods and services, the value of the firm will ultimately decline. The firm can sustain their growth by getting consumers excited by new looks and new features, prompting many consumers to buy the newer version before the old product"s functional life is over.
