New Products Management - CHAPTER 16 PART FIVE LAUNCH pot

Product Line Replacement StrategiesButt-on product replacement The existing one is simply dropped when the new one is announced.. The Target Market Decision Alternative ways to segment

PART FIVE

LAUNCH

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Figure V.1

The Five Decision Sets that Lead to a

Marketing Plan

Figure V.2

Common Myths About Marketing Planning

for New Products

a marketing plan.

shipping dock Marketing people take over.

use the new product.

better that segment is as a target candidate.

of everything we have been working for.

Figure V.3

CHAPTER 16

STRATEGIC LAUNCH PLANNING

McGraw-Hill/Irwin Copyright ©2006 The McGraw-Hill Companies, Inc All right reserved

Strategic Givens

 Corporate, some team decisions made earlier

Often found in the PIC Guidelines.

schedules.

distribution plan.

or skimming pricing (slide down demand curve).

Revision of PIC Goals

Strategic Platform Decisions

 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.

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)

Product Line Replacement Strategies

Butt-on product

replacement The existing one is simply dropped when the new one 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 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.

Figure 16.1

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.

The Target Market Decision

 Alternative ways to segment a market

behavioral/psychographic, benefit segmentation

 Micromarketing and mass customization

 Also consider the diffusion of innovation

Using the Joint Space Map to Identify Benefit Segments

Factors Affecting Diffusion of Innovation

Product Positioning

 Who Why How

 To whom are we marketing?

 Why should they buy it?

 How do we best make the claim?

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

Why Should They Buy It?

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)

 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 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

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?

 Physical/sensory qualities of brand considered?

 Insulting or irritating to anyone?

Questions and Guidelines in Brand

Name Selection

What is the brand's role or purpose? If the brand is to aid in positioning, choose a brand

name with meaning (DieHard, Holiday Inn) If

purely for identification, a neologism (made-up

word) such as Kodak or Exxon will work.

Will this product be a bridgehead to a line of

products?

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.)

Do you expect a long-term position in the market? If not, a dramatic, novelty name might be useful

(such as Screaming Yellow Zonkers).

Is the name irritating or insulting to any market

segment? Women found Bic's Fannyhose to be objectionable.

Figure 16.8

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

Some Brand Names That Didn’t Work

Figure 16-9

How Brand Equity Provides Value

High

Brand

Loyalty

Other Brand Assets

More/Better Brand Associations

High Perceived Quality

High Brand Awareness

Strong channel relationships

Creates positive image

Helps customer process information

Supports quality positioning

Supports higher-price strategy

Easier to make brand associations

Increased liking and familiarity

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

Figure 16-10

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

A Brand Report Card

Characteristic Examples

coffee beans, and monitors bean selection androasting to preserve quality

improvements (MACH3), while using consistentslogan “The best a man can get.”

as “everyday low pricing,” thus growing margins

Mercedes on product superiority Visa stressesbeing “everywhere you want to be.”

campaigns between 1970 and 1995, while watchingsales slip

stores for different market segments; BMW has the3-, 5-, and 7-series

sponsorships, and interactive media

What the brand means to customers is well

understood 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 Light and Zima, and lost about 50% of itssales over a four-year period

becoming “overexposed” and sometimes usedinappropriately They cut back on licensing andother promotional activity as a result

Figure 16.11

Profitable Brand Strategies

Example: Nine Lives Optimum strategies:

Slash costs and prices “Trump” market leader with superpremium brand

Example: Neutrogena, Post Optimum strategies:

“Don’t rock the boat”

Innovate Find a niche market

High Road

Example: Gillette, Clorox Optimum strategies:

Value-improving innovations Premium prices

Source: Adapted from Vijay Vishwanath and Jonathan Mark, “Your Brand’s Best Strategy,” Harvard

Business Review, May-June 1997, pp 123-129.

Figure 16.12