Discussion question 600 words | Marketing homework help

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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  8.
Concept Testing, Design, & Development
(slide 3 of 4)
Conjoint procedure
Different combinations of attributes are put together and compared
Customer says which is best, next best, etc.
Use in focus groups, online studies, etc.
Allows marketers to see what attributes are most attractive
e.g., Should a laptop be light, powerful, specific color, and preloaded with software?
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Concept Testing, Design, & Development
(slide 4 of 4)
Research results are used to develop a prototype
Only one prototype is developed at a time
If the prototype is not successful, another prototype is developed
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Beta Testing
(slide 1 of 4)
A beta version is made available for trial
Ideal to simulate a real-world purchase
Used to help forecast sales
Customer reactions to marketing materials are also examined
Ad copy, price points, distribution, etc.
Clarifies image of product to customer
Allows company to get feedback
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Beta Testing
(slide 2 of 4)
Try product in market on a small scale before an expensive full-scale rollout
Area test markets:
Product is made available and ads are run in a few randomly selected metropolitan areas
Sales are observed and compared to sales in control markets
Not as commonly used now because
They are expensive, require setup, tip off competition, and sampled areas may have own “flavors”
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Beta Testing
(slide 3 of 4)
Electronic test markets are more valid than area test markets
Households within a sample of metropolitan areas are selected: some are designated “test” and some are “control”
Electronic (cable) transmissions are sent to test households, but not sent to the control households
Differences between the test and control households’ purchasing are evaluated
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Beta Testing
(slide 4 of 4)
Simulated test markets
Popular premarket launch tests
Customers are recruited and given play money to shop in a simulated environment
They can buy the new product and competitors’ products
Advertising materials are available with competitors’ advertising
Marketers record purchases
Customers complete a survey
Data are used as input to forecast sales
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Launch
(slide 1 of 5)
Forecast sales
If not promising, abort launch
If promising, launch
Forecasts are important to
Accounting and finance for budgeting
Sales force for setting sales goals
Production and logistics for planning equipment, storage, transportation, etc.
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Launch
(slide 2 of 5)
Forecasting
Goal is to estimate sales potential ($SP), not sales
Determine market potential (MP)
How many units might be sold
Start with secondary data
Census, sales for similar products, etc.
Relevant in-house benchmarking data
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Launch
(slide 3 of 5)
Forecasting (continued)
Estimate the purchase intention (PI)
Likelihood target will buy the product
Use recent marketing research
e.g., Assume research suggests PI = 0.7
Note: Customers usually overstate PI; estimate ¾ downward P = ¾(0.7)= 0.525
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Launch
(slide 4 of 5)
Forecasting (continued)
Determine the price (Pr)
Remember economics; PI may increase as Pr decreases
Forecasting equation: $SP = MP × PI × Pr
Remember this number is not profit; it is maximum sales
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Launch
(slide 5 of 5)
Timing
Process of developing new products can be relatively quick or slow
Delays caused by
Internal activities such as testing
External factors such as regulations
e.g., New pharmaceuticals take years
Promotional efforts are intended to create enough sales to recoup development costs
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Discussion Question #2
Outline each likely stage in the new product development process for the introduction of Swiffer Sweeper.
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Product Life Cycle
(slide 1 of 5)

Describes the evolution and duration of a product in the marketplace
Phases have predictable sales and profits as well as optimal marketing actions
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Product Life Cycle
(slide 2 of 5)
Market introduction
Low sales
Heavy marketing spending on awareness
Pricing strategies
Penetration: low price
Skimming: high price; recoup R&D costs
Limited distribution
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Product Life Cycle
(slide 3 of 5)
Market growth
Sales and profits increase
Distribution coverage is greater
Price may increase
Competition
Competitors enter the market and kill each other off or specialize
Product needs competitive advantage
Promotion focuses on product’s superiority
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Product Life Cycle
(slide 4 of 5)
Market maturity
Industry sales level off; competition is fierce with weaker firms leaving; profits decline
Promotion focuses on product’s superiority and provides a reminder to buy
Product line may be extended and new benefits may be added
Marketing costs increase and price falls due to competition
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Product Life Cycle
(slide 5 of 5)
Market decline
Sales and profit decline
New products replace older generations
Old products may be
Divested: sold—sell early to get best price
Harvested: support reduced
Rejuvenated: refurbished with new benefits
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Discussion Questions #3
Do products have to die?
Are the lengths of product life cycles consistent across products?
Do individual brands have shorter or longer life cycles than product categories?
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Diffusion of Innovation
(slide 1 of 3)

A normal curve is utilized to partition customers into groups to show how new products spread through the marketplace
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Diffusion of Innovation
(slide 2 of 3)
Innovators: first 3–5%
Like to try new products; willing to take risks
Early adopters: next 10–15%
Even more influential as opinion leaders because the group is bigger
Early majority: next 34%
More risk averse
Waiting to hear about favorable experiences from early adopters
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Diffusion of Innovation
(slide 3 of 3)
Late majority: next 34%
Even more cautious
Often older and more conservative
Want to buy only proven products
Laggards or non-adopters: next 5–15%
Most risk averse
Skeptical of new products
Stereotypically lower in income
Product category may not be relevant to them
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Discussion Question #4
Use the diffusion of innovation model to explain the growth of the smartphone market.
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Cumulative Diffusion

Diffusion curve is recast to show cumulative sales
Tipping point: point at which sales rate increases rapidly
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Mathematical Model of Diffusion

Two ways to use diffusion model
Observe early sales data, fit the model, and predict future sales
Plug in past results on similar products and predict future sales
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Model of Diffusion
Coefficient of innovation (p)
Likelihood purchase or adoption due to promotion
Increase p by decreasing price earlier
Coefficient of imitation (q)
Likelihood of purchase or adoption due to word-of-mouth information
q is usually bigger than p
Increase q by decreasing price later
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

New Product Acceptance
Acceptance of new products tends to be higher when the new product:
Has clear relative advantage
Is compatible with customers’ lifestyles
Is not overly complex or has a user-friendly interface
Is easily tried or sampled
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

New Product Willingness
Companies vary in their willingness to pursue new products
From innovator to reactor
Market pioneers have difficulty with “really new” products
First movers launch “incrementally new” products because there is less risk
Early followers have approximately the same survival risks
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Growth Strategies
(slide 1 of 3)

© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Growth Strategies
(slide 2 of 3)
Market penetration
Sell the same products to current customers
New ways to use, better marketing mix, etc.
Easiest strategy
Product development
Sell new or modified products to current customers
Introduce extensions or new variations
Company wants to be innovative
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Growth Strategies
(slide 3 of 3)
Market development
Sell existing products to new segments
Move global or target different segment
May need to change image, channels, etc.
Diversification
Pursue new markets with new products
Too difficult for most companies due to lack of experience in product and market
Toughest strategy
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Trends to Watch
Aging of population
Hispanic population growth
More wealthy Americans
Growing concern for environment and corporate social responsibility
Cultural differences
Role of China and fast-growing economies
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Discussion Questions #5
How could firms capitalize on the opportunity presented by the aging population?
Discuss changes in the global economy.
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Managerial Recap
(slide 1 of 2)
New products are crucial to growth
New product development process
Idea generation to market potential, to concept testing, design and development, then beta testing, and ultimately the launch
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

Managerial Recap
(slide 2 of 2)
Products evolve through a life cycle
Introduction, growth, maturity, and decline
Each stage is recognizable by its sales and profitability and carries 4P recommendations
Models can be used to forecast sales
Marketers should study important trends
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© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
8.

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