Blas M.

Babia Product Management

BSBA MM – III

Chapter 13

1. What are the primary objectives of test marketing?

There are two primary objectives of test marketing, which may be defined as mechanical and
commercial.

2. Discuss the pros and cons of ‘real’ versus simulated test marketing.

There is no cons. The only drawback is, that the cost of producing the product per item will be
relatively high with a small scale production, because the full advantages of mass production will
be absent. This of course means that the profit margin also will be smaller or perhaps even zero
or negative with a small scale test marketing.

3. Summarize the major limitations of test marketing.

Failure to decide what is to be tested. Where one attempts to test several factors in a single test
area, it is more difficult to identify the real causes of success or failure;
Failure to base the test-market plan on an overall national marketing plan which is both realistic
and affordable; Failure to make comparative tests; Failure to establish benchmarks in the test area.
Failure to select representative test areas;
Failure to consider and get objective and reliable data on all factors influencing sales results in the
test area; Failure to stay in the test market long enough to get a clear-cut stop or go decision;

4. What is ‘time to market’? Why has it become increasingly important to firms developing
new
products?

Time to market (TTM) is the length of time it takes from a product being conceived until its being
available for sale. It is a means of accelerating the development and launch of new products and
reducing ‘time to market’, thereby securing a competitive advantage.
 5. Review the factors to be taken into account when deciding whether or not to launch a new
product.
- The time length of a commitment
- Product line implications
- The need for secrecy
- The position of the competitors

6. Explain diffusion theory and suggest its implications for launching new products.

New products is referred as ‘innovations’ and the process by which they spread through a body
of users is referred as ‘diffusion’. Diffusion of innovations is a theory that seeks to explain how,
why, and at what rate new ideas and technology spread.

7. Selecting any new product with which you are familiar, show how Rogers’ Five Factors
might have been used to develop a launch strategy.

Relative advantage, seeks to measure the economic benefit conferred upon or available to the
adopter of an innovation adjusted to take cognizance of the adopter’s present situation.
Divisibility is a measure of the extent to which it is possible to try an innovation before coming to
a final adoption/rejection decision.
Communication is a vital activity throughout the new product purchase decision process, with
impersonal or media communications being most important in creating initial awareness.

8. Why is it important to be able to pre-identify early adopters? How might you do this for a
new
consumer product? For a new industrial product?

If one could identify in advance those potential users so predisposed, one could concentrate one’s
marketing efforts on this most receptive sub-segment, thereby achieving initial sales more rapidly
than would be the case if a random approach were followed which presumes that all prospective
users are equally likely to adopt first.

9. What is the difference between personal and non-personal communication? What role do
they have to play when launching new products?

Personal sources becoming dominant as the buyer moves towards a decision, and impersonal
sources assuming the primary role of reassurance after the decision has been made.
Both impersonal and personal communication influence interest on the prospective users.
Blas M. Babia Product Management

Chapter 14

1. Describe von Hippel’s three broad categories of innovation. What use is this typology
in developing a launch strategy?
Known need “Just what I’ve always wanted” build a better product at an equivalent price, or an
equivalent product at a lower price.
Customer active (need pull) innovations also encounter relatively little resistance for, by definition,
they represent a response to a known and declared interest.
Supplier active (technology push) where most difficulties are encountered, for in this case
prospective customers have evinced no open or explicit interest in a new product.

2. What is resistance to change? How might you anticipate it? Overcome it? Illustrate
your answer with specific examples.
It is the action taken by individuals and groups when they ‘perceive’ that there is a change that is
occurring as a ‘threat’ to them. When entering in a growth stage, it is already anticipated that
there will be a newer version of your product in the market imitated and innovated by competitors
which poses a serious threat. To overcome such impending threat there should be changes in the
implications of the four P’s strategies. Such as changing the products price and make an effective
communication to promote certain product.

3. Identify and describe three alternative growth phase strategies.

Sustaining differentiation; Managing growth
Once a new product has become established it is inevitable that competitors will seek to cash in
on the new marketing opportunity. Given that few firms can cover all the potential segments in a
market the major challenge is to focus on those that offer the most profitable results, and to avoid
low-cost imitations.

4. Why did EMI lose its pioneering advantage as the innovator that introduced the body
scanner? With the benefit of hindsight what would you have advised them to do
differently?
EMI were quick to build up expertise in the new technology and it was their lack of presence in
the medical equipment market which was to prove their downfall when competitors began to
introduce their own CT machines.s

5. What lessons does the PLC concept have for firms entering the growth phase.
Innovators can preplan their competitive moves so as to avoid being out maneuvered and
overtaken by the competition. Advance planning should be directed at extending, or stretching
out, the life of the product. It is this idea of planning in advance of the actual launching of a new
product to take specific actions later in its life cycle – actions designed to sustain its growth and
profitability – which appears to have great potential as an instrument of long term product
strategy’.