Innovation
A product that customers perceive to be new and different from existing
products
Types of
Innovation
• Continuous
innovations: A modification to an existing product
Ø Sets a
brand apart from the competition
Ø Consumers
don’t need to learn anything new; change is minimal
• Dynamically
continuous innovation: A pronounced modification to an existing product
Ø Requires a
modest amount of learning or behavior change
• Discontinuous
innovations: A totally new product
Ø Creates
major changes in the way we live
Ø Consumers
must engage in a great deal of new learning
Phases
in New Product Development (NPD)
• Phase 2:
Product-concept development and screening
Ø Product
ideas are tested for technical and commercial success
Phase 3: Marketing
strategy development
Ø Developing
a strategy to introduce the product to the marketplace
• Phase 4:
Business analysis
Ø The
product’s commercial viability is assessed
Phase 5: Technical
development
Ø Firm
engineers refine and perfect the new product
Ø Test
versions of the proposed product are developed (in R&D department)
Ø The firm
may need to apply for a patent
• Phase 6:
Test marketing
Ø The
complete marketing plan is tested in a small geographic area similar to the
larger market
Phase 7:
Commercialization
Ø The new
product is launched into the market
Ø Full-scale
production, distribution, advertising, and sales promotion are begun
Adoption
and Diffusion
of New Products
of New Products
• Product
adoption:
Ø Process by
which a consumer or business customer begins to buy and use a new good,
service, or idea
Ø Diffusion:
Ø Process by
which the use of a product spreads throughout a population
Adoption
Pyramid
Categories
of Adopters
Product
Factors That Affect the Rate of Adoption
• Each
characteristic affects the speed of innovation diffusion:
Ø Relative
advantage
Ø Compatibility
Ø Complexity
Ø Trialability
Ø Observability
“Service”
• Services: Are
acts, efforts, or performances exchanged from producer to user without
ownership rights
• Services
accounted for 75% of US employment in 2010
• Services
may target consumers and/or businesses
Characteristics
of Services
Providing
Quality Service
• Quality
service ensures that customers are satisfied with what they have paid for
• Satisfaction
is based on customer expectations
• Not all
customers expect the same level of service
• Not all
customers can be satisfied
Measuring
Service Quality
• Several methods
of measuring service quality exist:
Ø Mystery
shoppers
Ø Lost
customers
Ø SERVQUAL
scale
Ø Gap
analysis
Ø Critical
incident technique
• SERVQUAL scale (questionnaire)
measures customer perceptions of five key dimensions
Ø Tangibles:
the physical facilities
and equipment and the professional appearance of the personnel
Ø Reliability:
the ability to provide
dependably and accurately what was promised
Ø Responsiveness:
the willingness to help
customer sand provide prompt service
Ø Assurance:
the knowledge and
courtesy of employees and the ability to convey trust and confidence
Ø Empathy: the degree of caring and individual
attention customer receive
• Additional methods of measuring
service quality:
Ø Critical
incident technique uses customers’ complaints to identify problems that lead to
dissatisfaction
The Gap
Model of Service Delivery
• Maximizing
the likelihood that a customer will use a service and become a loyal user
requires:
Ø Development
of effective marketing strategies
Ø Fast and
appropriate responses to service failures
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