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McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights

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PART
FIVE

LAUNCH
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Launch Figure V.1
417-4 The Five Decision Sets that Lead to a
Marketing Plan Figure V.2
517-5 Common Myths About Marketing Planning
for New Products Figure V.3

• Marketing people make the decisions that constitute a

marketing plan.
• The technical work is complete when the new item hits the
shipping dock. Marketing people take over.
• The marketer’s task is to persuade the end user to use the new
product.
• The more sales potential there is in a market segment, the
better that segment is as a target candidate.
• The pioneer wins control of a new market.
• As with Broadway shows, opening night is the culmination of
everything we have been working for.
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CHAPTER SEVENTEEN

STRATEGIC LAUNCH
PLANNING
717-7
Strategic Givens

Corporate, some team decisions made earlier. Often

found in the PIC Guidelines.
• A specified gross margin: affects funding.
• Speed-to-market: affects promotional outlays and schedules.
• Commitment to a given channel: affects distribution plan.
• Advertising policy: affects promotion decisions.
• Pricing policy: affects decision to use penetration or skimming
pricing (slide down demand curve).
817-8
Revision of PIC Goals

• Customer Acceptance Goals • Product Level Performance

– Use Goals
– Satisfaction – Cost
– Sales – Time to Market
– Market Share – Performance
• Financial Performance – Quality
Goals • Other
– Time to break even – Competitive Effect
– Margins – Image Change
– IRR, ROI – Morale Change
917-9
Strategic Platform Decisions

• Permanence
• Aggressiveness
• Type of Demand Sought
• Competitive Advantage
• Product Line Replacement
• Competitive Relationship
• Scope of Market Entry
• Image
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10
Permanence

• Permanent, stand-alone.
• Permanent, but as a bridge to other items --
e.g., platform strategy.
• Temporary. Given firms’ tendency to develop
streams of products, more and more new
products are actually only temporary.
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Some Other Strategic Platform Decisions

• Aggressiveness (aggressive versus cautious

attitude at entry)
• Type of demand sought (primary versus selective)
• Competitive advantage sought (differentiation,
price leadership, or both)
• Competitive relationship (aim at a competitor,
avoid a competitor)
• Image (create a new image, tweak an existing
image, use the already-existing image)
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Product Line Replacement Strategies
Figure 17.1

Butt-on product The existing one is simply dropped when the new one is announced. Example:
replacement Ford's marketing ofMondeo and dropping of Sierra.
Low-season switch Same as butt-on, but arranging the switch at a low point between seasons. Tour
companies use this switch when they develop their new catalogs.
High-season switch Same as butt-on, but arranging the new item at the top of a season. Example:
Polaroid used this strategy often, putting new replacement items out during the
Christmas season.
Roll-in, roll-out Another version of butt-on, but arranged by a sequence of market segments.
Mercedes introduced its C series country by country.
Downgrading Keeping the earlier product along side the new, but with decreased support.
Example: The 386 chip stayed along side the 486, until the Pentium was
introduced.
Splitting channels Putting the new item in a different channel or diverting the existing product into
another channel. Example: Old electronic products often end up in discounter
channels.
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Scope of Market Entry

This is not test marketing. This is launch. All

forces in place and working.
• Roll out slowly -- checking product, trade and service
capabilities, manufacturing fulfillment, promotion
communication, etc.
• Roll out moderately, but go to full market as soon as
volume success seems assured.
• Roll out rapidly -- full commitment to total market,
restricted only by capacity.
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The Target Market Decision

• Alternative ways to segment a market

– end-use, geographic/demographic,
behavioral/psychographic, benefit segmentation
• Micromarketing and mass customization
• Also consider the diffusion of innovation
 17-15
15 Using the Joint Space Map to Identify
Benefit Segments Figure 17.2

3
2

Comfort
Aqualine

Molokai 1
Islands

Fashion
Splash
Sunflare
 17-16
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Factors Affecting Diffusion of Innovation

• Relative Advantage
• Compatibility
• Complexity
• Divisibility
• Communicability
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Product Positioning

• Who -- Why -- How

• To whom are we marketing?
• Why should they buy it?
• How do we best make the claim?
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To Whom Are We Marketing?

• Users vs. non-users (primary vs. selective demand)

• Target market criteria (demographic, geographic,
psychographic, benefit segmentation)
• Everybody -- no narrowing down (mass customization,
Post-It notes)

The real issue here is commitment -- by all NPD

participants and by management
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Why Should They Buy It?

• This too we have been testing -- basic concept

statement used for testing and for guiding technical
(e.g., QFD “Whats”), and the key reason on the “How
likely would you be to buy this if we marketed it?”
(product use test)
• Formatted in three ways:
– Solves major problem current products do not.
– Better meet needs and preferences.
– Lower price than current items.
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How Do We Make the Claim?

• Product positioning statement is a strategic driver --a

core item -- not a list of advantages. Some new products
get one short sentence -- technical items more.
• Can be stated as one or more features (what it is).
• Can be stated as a function (how it works).
• Can be stated as one or more benefits (how the user
gains).
• Can be stated as a surrogate (no features, functions,
benefits).
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Product Positioning Options Figure 17.2

Position to an Attribute Position on a Surrogate

• Feature • Nonpareil
• Function • Parentage
• Manufacture
• Benefit (direct or follow-
on) • Target
• Rank
• Endorsement
• Experience
• Competitor
• Predecessor
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Branding Decisions

• What is the brand’s role or purpose?

• Are you planning a line of products?
• Do you expect a long-term position in the market?
• How good is your budget?
• Physical/sensory qualities of brand considered?
• Message clear and relevant?
• Insulting or irritating to anyone?
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23 Questions and Guidelines in Brand Name
Selection Figure 17.8

Question
What is the brand's role or purpose?
Will this product be a bridgehead to a line of
products?
Do you expect a long-term position in the market?
Is the name irritating or insulting to any market
segment?
Guideline
If the brand is to aid in positioning, choose a brand
name with meaning (DieHard, Holiday Inn). If
purely for identification, aneologism (made-up
word) such as Kodak or Exxon will work.
If so, choose carefully so as not to be a limitation in
the future (Western Hotels changed name to
Western International, then finally to Westin.)
If not, a dramatic, novelty name might be useful
(such as Screaming Yellow Zonkers).
Women found Bic's Fannyhose to be objectionable.
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Some Brand Names That Didn’t Work Figure 17-9

Crapsy Fruit French cereal

Fduhy Sesane China Airlines snack food
Mukk Italian yogurt
Pschitt French lemonade
Atum Bom Portuguese tuna
Happy End German toilet paper
Pocari Sweat Japanese sport drink
Zit German lemonade
Creap Japanese coffee creamer
I'm Dripper Japanese instant coffee
Polio Czech laundry detergent
Sit & Smile Thai toilet paper
Barf Iranian laundry detergent
 17-25
25 Figure 17-10

How Brand Equity Provides Value

High High High More/Better

Other Brand
Brand Brand Perceived Brand
Assets
Loyalty Awareness Quality Associations

Reduced Easier to Supports Creates Patents or

marketing make quality positive trademarks
costs brand positioning image
associations
Increased Supports Helps Strong
trade Increased higher-price customer channel
leverage liking and strategy process relationships
familiarity information

Provides value to customer: Provides value to firm:

Assists in customer information processing Increases effectiveness of marketing programs
Increases confidence in purchase Increases customer loyalty and trade leverage
Increases satisfaction in product use Facilitates brand extensions
Is a source of competitive advantage
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Building Brand Equity

• Getting awareness of the brand and the

meaning.
• Making brand associations -- even the factory
location in Saturn’s case.
• Building perceived quality
• Loyalty in repurchase -- locking them in
• Getting reseller support
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A Brand Report Card
Characteristic
Delivers benefits desired by customers.
Stays relevant.
Prices are based on value.
Well positioned relative to competitors.
Is consistent.
The brand portfolio makes sense.
Marketing activities are coordinated.
What the brand means to customers is well
understood.
Is supported over the long run.
Sources of brand equity are monitored.
Figure 17.11
Examples
Starbucks offers “coffee house experience,” not just
coffee beans, and monitors bean selection and
roasting to preserve quality.
Gillette continuously invests in major product
improvements (MACH3), while using consistent
slogan “The best a man can get.”
P&Greduced operating costs and passed on savings
as “everyday lowpricing,” thus growing margins.
Saturn competes on excellent customer service,
Mercedes on product superiority. Visa stresses
being “everywhere you want to be.”
Michelob tried several different positionings and
campaigns between 1970 and 1995, while watching
sales slip.
The Gap has Gap, Banana Republic, and Old Navy
stores for different market segments; BMWhas the
3-, 5-, and 7-series.
Coca-Cola uses ads, promotions, catalogs,
sponsorships, and interactive media.
Bic couldn’t sell perfume in lighter-shaped bottles;
Gillette uses different brand names such as Oral-B
for toothbrushes to avoid this problem.
Coors cut back promotional support in favor of
Coors Light and Zima, and lost about 50%of its
sales over a four-year period.
Disney studies revealed that its characters were
becoming “overexposed” and sometimes used
inappropriately. They cut back on licensing and
other promotional activity as a result.
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Profitable Brand Strategies
Low Relative Market Share
Value Brand Category Dead End
Example: Nine Lives
Optimum strategies:
Slash costs and prices
“Trump” market leader with
superpremium brand
Premium Brand Category Hitchhikers
Example: Neutrogena, Post
Optimum strategies:
“Don’t rock the boat”
Innovate
Find a niche market
Source: Adapted from Vijay Vishwanath and Jonathan M ark, “Your Brand’s Best Strategy,”
Business Review
, M ay-June 1997, pp. 123-129.
Figure 17.12
High Relative Market Share
Low Road
Example: Oscar Meyer
Optimum strategies:
Cut costs and reduce prices
Build brand equity
High Road
Example: Gillette, Clorox
Optimum strategies:
Value-improving innovations
Premium prices
Harvard