Marketing Innovation

Diffusion of Innovation
– The process by which the use of an innovation, whether a product line or service, spreads throughout a market group over time and over various categories of adopters
Innovators
– Try new products immediately, want to be first, 2.5% of pop.
Early Adopters
– connected to group norms, opinion leaders,
– want more research than innovator
– Wait and purchase product after careful review, 13.5% of population
Early majority
– Adopt new product after collecting information and evaluating brand
– Don’t take as much risk
– Few new products/services are profitable until this large groups buys them, 34% of pop.
Late majority
– Want product to be tried and true, want friends and family to try it first — more skeptic, 34% of pop.
– Product achieved its full market potential
Laggards
Consumers who like to avoid change and rely on traditional products until they’re no longer available, 16% of pop.
How Firms Develop a Product
– Idea Generation
– Concept Testing
– Product Development
– Market Testing
– Product Launch
– Evaluation
Pioneers
New product introductions that establish a completely new market or radically change both the rules of competition and consumer preferences in a market
Example: iPhones
First movers
Product pioneers that are the first to create a market or product category, making them readily recognizable to consumers and thus establishing a commanding and early market share lead
Apple
Product Development Process
Idea generation
Concept Testing
Product Development
Market Testing
Product Launch
Evaluation
Concept testing
Concept is a brief written description of product
Customers reactions determine whether it will go forward
Product development
Idea developed into PROTOTYPE
Alpha testing: asking those within company
Beta testing: asking the “innovators” what they think
Market testing
More refined product
Premarket tests: consumers give feedback on new product
Test market: Mini product launch in a refined geographic area
– More expensive than PMT
Product Launch
Implement price, place, and promotion
Lanham Act
Protects brand names
Product life cycle
Introduction
Growth
Maturity
Decline
Lead users
Innovative product users who modify existing products according to their own ideas to suit their specific needs
Trade promotions
Advertising to wholesalers or retailers to get them to purchase new products, often through special pricing incentives
Trade show
Major events attended by buyers who choose to be exposed to products and services offered by potential suppliers in an industry
Slotting allowance
Fees firms pay to retailers simply to get new products into stores or to gain more or better shelf space for their products