New Products Management - CHAPTER 17 IMPLEMENTATION OF THE STRATEGIC PLAN potx

CHAPTER 17
CHAPTER 17
IMPLEMENTATION OF
IMPLEMENTATION OF
THE STRATEGIC PLAN
THE STRATEGIC PLAN
McGraw-Hill/Irwin
Copyright ©2006 The McGraw-Hill Companies, Inc. All right reserved.
The Launch Cycle
The Launch Cycle
Expenditures
Sales
Prelaunch Beachhead Early growth
Announcement
Sales and
Expenditures
Figure 17.1
Tactical Launch Decisions and Actions,
Tactical Launch Decisions and Actions,
Showing Influences on Demand
Showing Influences on Demand
Launch Tactic Effective For:
Promotion
Advertising Cases where awareness will stimulate trial
Coupons Reinforcing awareness
Publicity New and controversial technologies with high perceived usage risk
Sampling Cases where product advantages best learned through usage
Beta Test Sites Stimulating “sampling” and as a reference for other potential buyers
Sales and Distribution
Shows/Demonstrations Clarifying relative product advantages or where uncertainty exists
Technical Support Cases of incompatibility in usage process

Distribution Structure Cases where relative advantage strong (direct channels)
Intensity of Coverage Cases where warranty/maintenance service needs to be offered easily
Distribution Incentives Cases where availability needs to be stimulated
Pricing
Introductory Pricing High relative advantage and compatibility (skimming policy); early
adoption needs to be stimulated (penetration policy)
Price Administration Cases where economic risk needs to be reduced (i.e., through rebates or
money-back guarantees)
Product
Breadth of Assortment Introducing new product categories with high relative advantage
Timing
Product Deletion High margin but strong relative advantage (fast deletion); high switching
costs (slow deletion)
Preannouncing Building hype for new products; useful if relative advantage is high
Figure 17.2
Preannouncement
Preannouncement

Getting to be popular, and very creatively
managed.

Far from the old days of “tease the
public.”

Preannouncement signaling may be used
(“vaporware”).
Beachhead
Beachhead

This refers to the heavy expenditure

needed to overcome sales inertia
(“getting the ball rolling”).

Steep rising expenditures curve during
this period, up to point where sales are
increasing at an increasing rate.

Begins with the announcement.

Key decision during beachhead: when do
you end it? How do you know inertia has
been overcome?
Copy Strategy Statement
Copy Strategy Statement

Communications tools used at launch will have
certain deliverables.

The way in which the firm communicates these
deliverables to the advertising and promotion
creative people is the copy strategy statement.

Typical contents:

The market segment targeted

The product positioning statement

The communications (promotion) mix


The major copy points to be communicated.
Typical Examples of Copy Points
Typical Examples of Copy Points

“The provider of this insurance policy is the
largest in the world.”

“This cellular phone has no geographic
limitation.”

“Dockers are available at JCPenney.”

“Future neurosurgeons benefit from the hand-to-
eye skills of computer games like this one.”
There is no limit to the choices here, but there must be a
focus. Only a few copy points are going to be accomplished
at a time.
A-T-A-R Goals: The New Product
A-T-A-R Goals: The New Product
Group’s Obligation
Group’s Obligation

New product group must persuade itself
and management that the plan can
achieve the necessary awareness,
availability, trial, and repeat purchase

and that it can do so in sufficient quantity
and at acceptable cost.
Motivating Distributors

Motivating Distributors

Increase distributor’s unit volume.

Increase distributor’s unit margin.

Reduce distributor’s cost of doing
business.

Change distributor’s attitude toward
the line.
Figure 17.3
Barriers to Trial
Barriers to Trial

Lack of interest in the claim.

Lack of belief in the claim.

Rejecting something negative about product.

Complacency.

Competitive ties.

Doubts about trial.

Lack of usage opportunity.

Cost.


Routines.

Risk of rejection.
Appropriate Launch Tactics Given Relative
Appropriate Launch Tactics Given Relative
Advantage and Compatibility
Advantage and Compatibility


A. Low Relative Advantage B. High Relative Advantage
1. Low Compatibility
Penetration price
Slow deletion
Risk-based promotion (leasing,
money-back guarantees,
equipment allowances)
Intensive distribution
Preannounce
Broad product assortments
Information-based promotion
(shows, demonstrations, websites,
publicity/education)
Selective distribution
2. High Compatibility
Secrecy before entry
Narrow product assortments
Awareness promotion (coupons,
etc.)
Intensive distribution

Skim price
Fast deletion
Usage-based promotion (samples,
beta tests) to clarify benefits
received
Selective distribution
Source: Adapted from Joseph P. Guiltinan, "Launch Strategy, Launch Tactics, and Demand Outcomes,"
Journal of Product Innovation Management, Vol. 16, No. 6, November 1999, pp. 520-521.
Figure 17.4