CHAPTER 17 Launch

Launch

Launch


Somewhere in the (development) process the management becomes convinced that the new product should be marketed; this triggers the launch stage (also called commercialization). At the end of the development and throughout launch, marketing activity picks up intensity. The market focus highlighted in the PIC eventually becomes the target market. Launch planning decisions use all of the previous activity and a great deal of new thinking and testing to build eventually toward launch capability.

Launch contd.
     

Launch planning can be thought of in several phases. In strategic launch planning, the strategic decisions of marketing (such as targeting and positioning) are made; In tactical launch planning, tactics are developed to implement the strategic plan. In a later phase, the strategic and tactical decisions are tested in the marketplace. One more phase is added i.e. that of launch management, or managing the new product to success. A final launch plan is built from five sets of decisions, made somewhat in sequence.

Five Decision Sets That Lead to a Marketing Plan

    

Tactical decisions: (Product focus) Strategic driving decisions: (Product focus) Strategic platform decisions: (Product focus) Guideline decisions : (organizational focus) Strategic givens: (organizational focus)

The Five Decision Sets that Lead to a Marketing Plan

Example
If the firm decide to be  Very aggressive (a platform decision)  The target market (an action decision) must be rather broad  The introductory advertising plan (a tactical decision) will probably call for mass media and a strong attentiongetting campaign.

Common Myths About Marketing Planning for New Products

 

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 marketers 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. market.

Strategic Launch Planning



Strategic Launch Decisions include both strategic platform decisions that act overall tones and directions, and strategic action decisions that define to whom we are going to sell and how. Other strategic launch decisions include the desired innovativeness of the product, the time to market, the competitive stance or positioning, the driver of new product development (market, technology, or both), and many others. Tactical launch decisions are marketing mix decisions such as communication & promotion, distribution, and pricing that are typically made after the strategic launch decisions, and define how the strategic decisions will be implemented.

We begin by assessing the strategic givens: decisions that are already made  Sometimes they cover the entire range of the organizations operations and are often set in concrete without our knowing it. Some of them can be detrimental to the innovation activity they comprise the resistance to change.  Sometimes the givens is an individual a strong member of the upper management whose personal druthers become corporate law.  Others could be regulatory authorities, ethical postures, advertising policies, centralized or decentralized manufacturing facilities, geographical preferences, pricing policies, brand equity building, and in almost every phase of the entire operation.

The Strategic Givens

The Strategic Givens- Contd. GivensCorporate, some team decisions made earlier. Often found in the PIC Guidelines.  A specified gross margin: affects funding.  Speed-to-market: affects promotional outlays and Speed-toschedules.  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).

Revisiting the Strategic Goals



They were put in the PIC early in the NP Process. Things might have changed; therefore, at this early stage in the launch-planning process, the goals should be revisited and updated. Regardless of how measures (of goals) are expressed, there should be absolutely no doubt in the minds of any launch planners about what the launch is to produce or achieve.

Revision of PIC Goals



Customer Acceptance Goals  Use  Satisfaction  Sales  Market Share Financial Performance Goals  Time to break even  Margins  IRR, ROI

Product Level Performance Goals  Cost  Time to Market  Performance  Quality Other  Competitive Effect  Image Change  Morale Change

       

They vary from industry to industry, goods to services, industrial to packaged goods, so every launch planning team will want to make up with its own list of platform decisions. We can start by considering how new the product is and consider the following Type of Demand Sought Permanence Aggressiveness Competitive Advantage Product Line Replacement Competitive Relationship Scope of Market Entry Image

Strategic Platform Decisions

Type of Demand Sought

  

Type of demand sought (primary , replacement or selective) For new-to-the-world product, primary demand has to stimulated for the product category. For a product improvement or upgrade to existing product; existing customers should be encourage to migrate to the new product (Windows update) i.e. achieve customer migration. For wooing competitors customers the goal would be to stimulate replacement demand. For new entry or line addition in an established market, the emphasis is on stimulation of selective demand (drawing market share away from the competitors)

Permanence


We are here to stay; no thought given to getting out. Permanent, stand-alone. Permanent, standIn to stay if we meet our goals. Permanent, but as a Permanent, 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. Temporary i.e. having temporary. a string of temporary products with short PLCs

Aggressiveness
 

Aggressiveness (aggressive versus cautious attitude at entry) Refers to an attitude as much to funds. Lots of money is spent earlier on to get attention and trial. Some will have cautious entry (uncertain about product performance, competitive reaction etc.)

Competitive Advantage
 

Competitive advantage sought (differentiation, price leadership, or both) Would our product lower end-user costs (lower price) or offer new benefits due to differentiation etc. Maximum benefit at the least price.

Product Line Replacement



Most new products relate to existing products in the company s product line; they do not enter markets new to the firm How should we manage the replacement of the existing by the new?

Product Line Replacement Strategies

Butt-on product replacem ent L -seasonsw ow itch H igh-seasonsw itch T existingone is sim dropped w the newone is announced. Exam he ply hen ple: Ford's m arketingof M ondeoanddroppingof Sierra. Sam as butt-on, but arrangingthe sw at a lowpoint betw seasons. T e itch een our com panies use this sw w theydeveloptheir newcatalogs. itch hen Sam as butt-on, but arrangingthe newitemat the topof a season. Exam e ple: Polaroidusedthis strategyoften, puttingnewreplacem item out duringthe ent s Christm season. as A nother versionof butt-on, but arrangedbya sequence of m segm arket ents. M ercedes introducedits Cseries countrybycountry. K eepingthe earlier product alongside the new but w decreasedsupport. , ith Exam T 386chipstayedalongside the 486, until the Pentiumw ple: he as introduced. Puttingthe newitemina different channel or divertingthe existingproduct into another channel. Exam O electronic products oftenendupindiscounter ple: ld channels.

Roll-in, roll-out D ngrading ow

Splittingchannels

Competitive Relationship


Competitive relationship (aim at a competitor, avoid a competitor) Competitive Relationship: Make no reference to specific competitors, aimed directly at a specific competitor, and avoid a specific competitor.

3.21

Scope of Market Entry

This issue related to a firms desire to do market testing. Introduce in one place and roll out or go to the total market at the beginning etc. 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.

Image


Image (create a new image, tweak an existing image, use the already-existing image) alreadyWill the new product need an entirely new image, a major change in an existing image etc

3.23

The Target Market Decision

  

Alternative ways to segment a market Micromarketing and mass customization Also consider the diffusion of innovation

Alternative Ways to Segment a Market

   

End-Use Geographic and Demographic Behavioral and Psychographic: Values, activities, and life-styles etc. Benefit Segmentation: Identifying the segment based on benefits sought and developing new products for some of these segments.

Micromarketing & Mass Customization

The current trend towards smallness (after identifying small targets like neighborhoods or industrial subsets with unique purchase patterns). These clusters have been labeled micro markets. The ultimate smallness, and the ultimate in building in customer value, is mass customization (tailoring a good or service to the unique specifications of individual customers)

Targeting May Also Use Diffusion of Innovation



Spreading the usage of new products is called diffusion of innovation (new products are innovations). The factors that affect the speed of the product adoption process are: the characteristics of the innovative product, and the extent to which early users encourage others to follow.  Relative Advantage  Compatibility  Complexity  Divisibility  Communicability

Product Positioning


A product positioning statement is created by completing this statement: Buyers in the target market should buy our product rather than others being offered or used because:____________. Positioning originated as a concept in advertising, but is now seen as an ingredient of total strategy, not just as an advertising policy. Product, brand, price, promotion, and distribution must all be consistent with the product positioning statement.

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 Whats), 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.

How Do We Make the Claim?



  

Product positioning statement is a strategic driver --a --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).

Product Positioning Options

Position to an Attribute  Feature  Function  Benefit (direct or followfollow-on)
Position on a Surrogate
        

Nonpareil Parentage Manufacture Target Rank Endorsement Experience Competitor Predecessor

Creating Unique Value for the Chosen Target



What buyer actually buys: one or more core benefits are wanted by the buyer; but to get them, the buyer must also take delivery on the physical product or service sequence, its packaging, its attendant service, and all intangibles that go with the brand and the firm making/selling it. These other purchase layers may enhance the total value or detract from it, but they each offer opportunity for differentiation or for the core benefit to be destroyed or overpowered if not handled correctly by the new products manager.

Branding and Brand Management

     

Trademarks and Registration What is a Good Brand Name? Managing Brand Equity Brand Name Dilution Brand Profitability Global Brand Leadership

Branding Decisions
  

What is the brands role or purpose? Are you planning a line of products? Do you expect a long-term position in the longmarket? How good is your budget? Physical/sensory qualities of brand considered? Message clear and relevant? Insulting or irritating to anyone?

   

Questions and Guidelines in Brand Name Selection

Question W is the brands role or purpose? hat Guideline I the brand is to aid in positioning, choose a brand nam ith m e eaning( ie ard, oliday Inn). I purely or identi ication, a neologism(m ade-up ord) such as odak or xxon ill ork. itation in I so, choose care ullyso as not to be a lim the uture (W estern otels changed nam to e estin.) W estern International, then inallyto W I not, a dram noveltynam m be use ul atic, e ight (such as cream Yello Zonkers). ing W en ound ics annyhose to be objectionable. om

W this product be a bridgehead to a line o ill products? o you expect a long-termposition inthe m arket? Is the nam irritatingor insultingto any m e arket segm ent?

Some Brand Names That Didnt Work

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

Figure 17-10

How Brand Equity Provides Value

High Brand Loyalty
Reduced marketing costs Increased trade leverage

High Brand Awareness

Easier to make brand associations Increased liking and familiarity

High Perceived Quality

Supports quality positioning Supports higher-price strategy

More/Better Brand Associations

Creates positive image Helps customer process information

Other Brand Assets

Patents or trademarks

Strong channel relationships

Provides value to customer:

Assists in customer information processing Increases confidence in purchase Increases satisfaction in product use

Provides value to firm:

Increases effectiveness of marketing programs Increases customer loyalty and trade leverage Facilitates brand extensions Is a source of competitive advantage

Building Brand Equity

 

  

Getting awareness of the brand and the meaning. Making brand associations -- even the factory location in Saturns case. Building perceived quality Loyalty in repurchase -- locking them in Getting reseller support

A Brand Report Card

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Profitable Brand Strategies

Low Relative M arket Share V Brand Category alue High Relative M arket Share

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PremiumBrand Category

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Packaging


What is packaging? : Primary packaging, Secondary packaging, Tertiary packaging . The Various Role of Packaging: containment (hold for transportation), protection (from elements and the careless), safety (from causing injury) display (to attract attention) and to inform and persuade. The Packaging Decision