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CHAPTER 17CHAPTER 17

LaunchLaunch

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LaunchLaunch

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Launch

Somewhere in the (development) process themanagement becomes convinced that the new productshould be marketed; this triggers the launch stage (alsocalled commercialization). At the end of the development and throughout launch,marketing activity picks up intensity. The market focushighlighted in the PIC eventually becomes the targetmarket.Launch planning decisions use all of the previous

activity and a great deal of new thinking and testing tobuild eventually toward launch capability.

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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 toimplement the strategic plan.In a later phase, the strategic and tactical decisions aretested 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.

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F ive Decision Sets That Lead to aMarketing Plan

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

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The F ive Decision Sets that Lead to The F ive Decision Sets that Lead to

a Marketing Plana Marketing Plan

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Common Myths About MarketingCommon Myths About Marketing

Planning for New ProductsPlanning for New ProductsMarketing people make the decisions that constitute aMarketing people make the decisions that constitute amarketing plan.marketing plan.

The technical work is complete when the new item hits The technical work is complete when the new item hits

the shipping dock. Marketing people take over.the shipping dock. Marketing people take over. The marketers task is to persuade the end user to use The marketers task is to persuade the end user to usethe new product.the new product.

The more sales potential there is in a market segment, The more sales potential there is in a market segment,the better that segment is as a target candidate.the better that segment is as a target candidate.

The pioneer wins control of a new market The pioneer wins control of a new market. .

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The Strategic Givens We begin by assessing the strategic givens: decisions that

are already madeSometimes they cover the entire range of theorganizations operations and are often set in concrete

without our knowing it. Some of them can be detrimentalto the innovation activity they comprise the resistanceto change.Sometimes the givens is an individual a strong

member of the upper management whose personaldruthers become corporate law.Others could be regulatory authorities, ethical postures,

advertising policies, centralized or decentralizedmanufacturing facilities, geographical preferences,

pricing policies, brand equity building, and in almost

every phase of the entire operation.

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The Strategic Givens The Strategic Givens- - Contd.Contd.Corporate, some team decisions made earlier. OftenCorporate, some team decisions made earlier. Often

found in the PIC Guidelines.found in the PIC Guidelines. A specified gross margin: affects funding. A specified gross margin: affects funding.

SpeedSpeed--toto--market: affects promotional outlays andmarket: affects promotional outlays andschedules.schedules.Commitment to a given channel: affectsCommitment to a given channel: affectsdistribution plan.distribution plan.

Advertising policy: affects promotion decisions. Advertising policy: affects promotion decisions.Pricing policy: affects decision to use penetrationPricing policy: affects decision to use penetrationor skimming pricing (slide down demand curve).or skimming pricing (slide down demand curve).

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Revisiting the Strategic Goals

They were put in the PIC early in the NP Process. Things might have changed; therefore, at this earlystage 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.

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Revision of PIC GoalsRevision of PIC Goals

Customer Acceptance Goals Customer Acceptance Goals U seU seSatisfactionSatisfactionSalesSalesMarket ShareMarket Share

Fi nanc i al Performance Goals Fi nanc i al Performance Goals Time to break even Time to break evenMarginsMarginsIRR, ROIIRR, ROI

Product Level Performance Product Level Performance Goals Goals

CostCost

Time to Market Time to MarketPerformancePerformanceQualityQuality

Other

Other Competitive EffectCompetitive EffectImage ChangeImage ChangeMorale ChangeMorale Change

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Strategic Platform DecisionsStrategic Platform Decisions 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 platformdecisions. We can start by considering how new the product is and consider the following Type of Demand Sought Type of Demand Sought

PermanencePermanence Aggressiveness AggressivenessCompetitiveCompetitive Advantage Advantage

Product Line ReplacementProduct Line ReplacementCompetitive RelationshipCompetitive RelationshipScope of Market EntryScope of Market EntryImageImage

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Type of Demand Sought

Type of demand sought (primary , replacement or Type of demand sought (primary , replacement orselective)selective)F or new-to-the-world product, primary demand has tostimulated for the product category.F or a product improvement or upgrade to existing

product; existing customers should be encourage tomigrate to the new product (Windows update) i.e.achieve customer migration. F or wooing competitors

customers the goal would be to stimulate replacementdemand.F or new entry or line addition in an established market,the emphasis is on stimulation of selective demand

(drawing market share away from the competitors)

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PermanencePermanence

We are here to stay; no thought given to gettingout. PermanentPermanent, stand, stand--alone.alone.In to stay if we meet our goals. PermanentPermanent, but as a, but as abridge to other itemsbridge to other items -- -- e.g., platform strategy.e.g., platform strategy.

Temporary. Given firms tendency to develop Temporary. Given firms tendency to developstreams of products, more and more new productsstreams of products, more and more new productsare actually only temporaryare actually only temporary. . Temporary i.e. havinga string of temporary products with short PLCs

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Aggressiveness

Aggressiveness (aggressive versus cautious Aggressiveness (aggressive versus cautiousattitude at entry)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.)

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Competitive Advantage

Competitive advantage sought (differentiation,Competitive advantage sought (differentiation, price leadership, or both) price leadership, or both) Would our product lower end-user costs (lower

price) or offer new benefits due to differentiationetc. Maximum benefit at the least price.

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Most new products relate to existing products in thecompany s product line; they do not enter markets new to the firm

How should we manage the replacement of the existingby the new?

Product Line Replacement

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Product Line Replacement StrategiesProduct Line Replacement Strategies

Butt-on productreplacement

The existing one is simply dropped when the newone is announced. Example:Ford's marketing of Mondeo and dropping of Sierra.

Low-season switch Same as butt-on, but arranging the switch at a lowpoint between seasons. Tour companies use this switch when they develop their newcatalogs.

High-season switch Same as butt-on, but arranging the newitemat the top of a season. Example:

Polaroid used this strategy often, putting newreplacement items out during theChristmas 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 Pentiumwasintroduced.

Splitting channels Putting the newitemin a different channel or diverting the existing product intoanother channel. Example: Old electronic products often end up in discounter channels.

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Competitive RelationshipCompetitive Relationship

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

3.21

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Scope of Market EntryScope of Market Entry This issue related to a firms desire to do markettesting. Introduce in one place and roll out or go tothe total market at the beginning etc. This This is notis nottest marketing. This is launch. All forces in placetest marketing. This is launch. All forces in placeand working.and working.Roll out slowlyRoll out slowly ---- checking product, trade andchecking product, trade andservice capabilities, manufacturing fulfillment,service capabilities, manufacturing fulfillment,

promotion communication, etc. promotion communication, etc.Roll out moderately, but go to full market as soonRoll out moderately, but go to full market as soonas volume success seems assured.as volume success seems assured.Roll out rapidlyRoll out rapidly ---- full commitment to total market,full commitment to total market,

restricted only by capacity.restricted only by capacity.

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The Target Market Decision The Target Market Decision

Alternative ways to segment a market Alternative ways to segment a marketMicromarketingMicromarketing and mass customizationand mass customization

Also consider the diffusion of innovation Also consider the diffusion of innovation

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Alternative Ways to Segment a Alternative Ways to Segment aMarketMarket

End- U seGeographic and DemographicBehavioral and Psychographic:

Values, activities, and life-styles etc.Benefit Segmentation: Identifying the segment basedon benefits sought and developing new products forsome of these segments.

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The current trend towards smallness (after identifyingsmall targets like neighborhoods or industrial subsets

with unique purchase patterns). These clusters havebeen labeled micro markets. The ultimate smallness, and the ultimate in building incustomer value, is mass customization (tailoring a good

or service to the unique specifications of individualcustomers)

Micromarketing & Mass Customization

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Spreading the usage of new products is calleddiffusion of innovation (new products areinnovations).

The factors that affect the speed of the product

adoption process are: the characteristics of theinnovative product, and the extent to which early usersencourage others to follow.

Relative AdvantageRelative Advantage

CompatibilityCompatibilityComplexityComplexityDivisibilityDivisibility

CommunicabilityCommunicability

Targeting May Also U se Diffusion of Innovation

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Product PositioningProduct Positioning

A product positioning statement is created bycompleting this statement: Buyers in the target marketshould buy our product rather than others being offeredor used because:____________.Positioning originated as a concept in advertising, but isnow seen as an ingredient of total strategy, not just as anadvertising policy. Product, brand, price, promotion, anddistribution must all be consistent with the product

positioning statement.

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Why Should They Buy It? Why Should They Buy It?

This too we have been testing This too we have been testing -- -- basic conceptbasic conceptstatement used for testing and for guidingstatement used for testing and for guidingtechnical (e.g., Q F D technical (e.g., Q F D Whats Whats), and the key reason), and the key reason

on the How likely would you be to buy this if weon the How likely would you be to buy this if wemarketed it? (product use test)marketed it? (product use test)

F ormatted in three ways:F ormatted in three ways:

Solves major problem current products do not.Solves major problem current products do not.Better meet needs and preferences.Better meet needs and preferences.Lower price than current items.Lower price than current items.

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How Do We Make the Claim?How Do We Make the Claim?

Product positioning statement is aProduct positioning statement is a strateg i c dr i ver strateg i c dr i ver -- --a a core i tem core i tem -- -- not a list of advantages. Some new not a list of advantages. Some new

products get one short sentence products get one short sentence -- -- technical itemstechnical items

more.more.Can be stated as one or more features (what it is).Can be stated as one or more features (what it is).Can be stated as a function (how it works).Can be stated as a function (how it works).

Can be stated as one or more benefits (how theCan be stated as one or more benefits (how theuser gains).user gains).Can be stated as a surrogate (no features,Can be stated as a surrogate (no features,functions, benefits).functions, benefits).

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Product Positioning OptionsProduct Positioning Options

Position to an AttributePosition to an AttributeF eatureF eatureF unctionF unction

Benefit (direct orBenefit (direct orfollow follow--on)on)

Pos i t i on on a Surrogate Pos i t i on on a Surrogate NonpareilNonpareilParentageParentage

ManufactureManufacture Target TargetRank Rank EndorsementEndorsementExperienceExperienceCompetitorCompetitorPredecessorPredecessor

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Creating U nique Value for theCreating U nique Value for theChosen TargetChosen Target

What buyer actually buys: one or more core benefits are wanted by the buyer; but to get them, the buyer mustalso take delivery on the physical product or servicesequence, its packaging, its attendant service, and all

intangibles that go with the brand and the firmmaking/selling it.

These other purchase layers may enhance the total value or detract from it, but they each offer opportunityfor differentiation or for the core benefit to be destroyedor overpowered if not handled correctly by the new

products manager.

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Branding and Brand ManagementBranding and Brand Management

Trademarks and Registration What is a Good Brand Name?Managing Brand EquityBrand Name DilutionBrand ProfitabilityGlobal Brand Leadership

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Branding DecisionsBranding Decisions

What is the brands role or purpose? What is the brands role or purpose?

Are you planning a line of products? Are you planning a line of products?

Do you expect a longDo you expect a long- -term position in theterm position in themarket?market?

How good is your budget?How good is your budget?

Physical/sensory qualities of brand considered?Physical/sensory qualities of brand considered?Message clear and relevant?Message clear and relevant?

Insulting or irritating to anyone?Insulting or irritating to anyone?

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Questions and Guidelines in BrandQuestions and Guidelines in BrandName SelectionName Selection

Question GuidelineWhat is the brands role or purpose? I the brand is to aid in positioning, choose a brand

name ith meaning ( ie ard, oliday Inn). I purely or identi ication, a neologism (made-up

ord) such as odak or xxon ill ork.Will this product be a bridgehead to a line o

products?I so, choose careully so as not to be a limitation inthe uture ( Western otels changed name toWestern International, then inally to Westin.)

o you expect a long-termposition in the market? I not, a dramatic, novelty name might be use ul(such as creaming Yello Zonkers).Is the name irritating or insulting to any marketsegment?

Women ound ics annyhose to be objectionable.

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CrapsyF

ruitF

rench cerealF duhy Sesane China Airlines snack foodMukk Italian yogurtPschitt F rench lemonade

Atum Bom Portuguese tunaHappy End German toilet paperPocari Sweat Japanese sport drink Zit German lemonade

Creap Japanese coffee creamerI'm Dripper Japanese instant coffeePolio Czech laundry detergentSit & Smile Thai toilet paper

Barf Iranian laundry detergent

Some Brand Names That DidntSome Brand Names That Didnt Work Work

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How Brand Equity Provides ValueHow Brand Equity Provides Value

HighBrand

Loyalty

Other Brand Assets

More/Better Brand

Associations

HighPerceived

Quality

HighBrand

Awareness

Reducedmarketingcosts

Increasedtradeleverage

Patents or trademarks

Strongchannelrelationships

Createspositiveimage

Helpscustomer processinformation

Supportsqualitypositioning

Supportshigher-pricestrategy

Easier tomakebrandassociations

Increasedliking andfamiliarity

Provides value to customer: Assists in customer information processingIncreases confidence in purchaseIncreases satisfaction in product use

Provides value to firm:Increases effectiveness of marketing programsIncreases customer loyalty and trade leverageFacilitates brand extensionsIs a source of competitive advantage

Figure 17 -10

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Building Brand EquityBuilding Brand Equity

GettingGetting awareness awareness of the brand and the meaning.of the brand and the meaning.MakingMaking b rand assoc i at i ons b rand assoc i at i ons ---- even the factory locationeven the factory locationin Saturns case.in Saturns case.BuildingBuilding perce i ved perce i ved qualityqualityLoyalty inLoyalty in repurchase repurchase ---- locking them inlocking them inGettingGetting reseller reseller supportsupport

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Profitable Brand StrategiesProfitable Brand Strategies

Low Relative Ma rk et Sha r e High Relative Ma rk et Sha r eValue B r and Catego ry Dead nd

xample: ine ives ptimumstrategies:

lash costs and pricesTrump market leader ithsuperpremiumbrand

o oadxample: scar eyer ptimumstrategies:

ut costs and reduce pricesuild brand equity

P r emium B r and Catego ry itchhikersxample: eutrogena, ost ptimumstrategies:

Dont rock the boatInnovateind a niche market

igh oadxample: illette, lorox ptimumstrategies:

alue-improving innovationsremium prices

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PackagingPackaging

What is packaging? : Primary packaging, Secondary packaging, Tertiary packaging .

The Various Role of Packaging: containment (hold for

transportation), protection (from elements and thecareless), safety (from causing injury) display (to attractattention) and to inform and persuade.

The Packaging Decision