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1
Product Launch
Value Proposition
May 2009
2
1. Concept Definition and Key Challenges
2. Our Focus and Value Proposition
3. Our Approach
4. Why Frost & Sullivan
5. Case Studies and Key References
Table of Content
Table of Content
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• Additional revenue streams, reduction & diversification of risk
• Organic expansion
• Value of company, share price
• Opportunity for exponential and not just incremental sales
• Erosion of margins due to competition
• Changing market conditions or opportunities on growing markets
• Emerging markets
• Address changing customer needs
• Retaining leadership position/ be perceived as an industry shaper/ innovator
• Copying innovators
• Technology exploitation
• Capitalise on skills base
• Employee motivation and retention
Value-generation Value-generation CommercialCommercial OperationalOperational
Typical reasons for launching new products:
Generate additional revenue and margin
1. Concept Definition & Key Challenges
Companies seek out new product launch opportunities for strategic, commercial and operational reasons
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1. Concept Definition & Key Challenges
Not all launches meet expectations. To be successful, 'classic' product launch pitfalls need to be avoided
• The product or service should be launched to address customer needs. This is obvious, but is probably the biggest cause of launch failures. In today's competitive world, there is a shortage of customers, not of products or capacity.
• The company launching the product should know what specific needs its product will address. Which customers (target)? What offering (position)? Why is it better (differentiate)? It's not only because it works that customers will pay for it.
• Companies tend to overestimate revenue forecasts for the new product. They have not fully understood the market they are addressing, their ability to deliver and provide service, and how their current situation may hinder the launch process.
• A product launch should be executed by a clearly defined, cross-functional Launch Team, integrating key members of Corporate Management, R&D, Sales, Service, Supply Chain. It is not just the job of Marketing.
• A product launch process should be supported by a clearly defined Launch Plan: objectives, goals, timelines, toll gates, tasks, responsibilities, report lines, performance measurements.
• A product launch is a process, not an event.
External
Internal
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1. Concept Definition & Key Challenges
NPL is the 2nd step of Product Lifecycle Management and it determines the business success of the new product
New Product Development
New Product Launch
Product Management
Scope: New Product Launch in the Product LifecycleV
alu
e
Sales
0 Profit/ loss Profit/ loss
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1. Concept Definition and Key Challenges
2. Our Focus and Value Proposition
3. Our Approach
4. Why Frost & Sullivan
5. Case Studies and Key References
Table of Content
7
2. Our Focus & Value Proposition
Frost & Sullivan gives equal importance to building the fact foundation, marketing planning and implementation
New Product Development
New Product Launch
Product Management
Product Lifecycle & New Product Launch scope
Capability Assessment
MarketAssessment
Marketing Strategy Plan
MarketingOperations
Plan
LaunchMonitoring &Adjustments
Va
lue
Sales
0 Profit/ loss Profit/ loss
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2. Our Focus & Value Proposition
Frost & Sullivan focuses on fact-based and actionable analysis and recommendations
• Working value proposition summary• Resource analysis
• HR• Production Assets• Sourcing & Suppliers• Logistics• Sales & Marketing Network
• Budget analysis
• Segments: • Rank target markets & segments• Addressable market
• Customers: • Needs/ unmet needs• Price points, elasticity• External factors (regulation, etc.)
• Competition• Pricing, Positioning• Distribution• Differentiation strategies
• Adjustment by country/ region
• Performance dashboards• Operation monitoring• Product performance tracking
• Post launch product fine-tuning (bugs, customisation, targeting…)
• Marketing plan adjustments
• Value proposition confirmation • Distribution strategies • Draft critical pathway for launch• Sales and margins forecasts, KPI's• Impact of new product upon existing
product portfolio
• Product & packaging adjustments• Price levels• Customer value• Promotion plan• Support tools to effective launch
(sales, logistics, provisioning, crm, management)
Capability Assessment Market Assessment
Launch Monitoring & Adjustments
Marketing Strategy Marketing Operations Plan
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1. Concept Definition and Key Challenges
2. Our Focus and Value Proposition
3. Our Approach
4. Why Frost & Sullivan
5. Case Studies and Key References
Table of Content
10
Capability Assessment
Conclusions & Recommendations
Marketing Strategy
Step 1: Create a strong fact foundation
Output: Opportunity validation
Output: Value proposition + business case
Base case scenario GO/NO GO decisionImplementation plan
.
.
Step 2: Confirm new product launch strategy Step 3: Implement the strategy
Launch Monitoring & Adjustments
Output: Implementation roll out & impact measurement
.
Market Assessment
Output: Opportunity validation
.
3. Our Approach
The New Product Launch best practice programme is organised in 3 complementary and successive steps
Marketing Operations
Output: Marketing (launch) plan
Using the components of this framework, careful diagnosis of client challenges and opportunities allows a tailor-made approach to be recommended
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3. Our Approach
Capability Assessment (1)
Capability Assessment
• Manufacturing needed• Partner network, suppliers &
platform needed • Organisation structure & RACI• Investment needed (human capital,
financial, technologies, assets)• Promotion resources required
• What are our capability & expertise gaps to target these product and customer segments?
• What are the required changes?• What are the key success factors?
• Capability gap analysis: • Production, Sourcing &
Suppliers • Sales & Marketing, other HR
• Cross-functional stakeholder buy-in• Priorities for validation and planning• Assign Launch team
• What expectations are common to key stakeholders?
• What are key challenges and opportunities?
• Who is on steering committee?
• Working version of value proposition
Key drivers Key questions
• Key financials: • Revenue streams• CAPEX, OPEX, margins
• What are ROI scenarios?• How do we manage the risks?• What are the key milestones?• What are the critical success
factors?
• Budget Analysis
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Benefits of the proposed changes will come from six areas and initial forecasts suggest they are significant:
1. Increased stand alone Solution XYZ sales
2. Increased XYZ sales to current customers
3. Increased XYZ and technology sales to high-end customers
4. Increased XYZ and technology sales to following market by developing a targeted proposition
5. Improved margin
6. Protection from business erosion
Incremental revenue p.a. by year 5
$800k-$1m
$480k-$600k
$5m-$7.5m (IT $1m-$1.5m)
$5-$6m (IT $500k-$600k)
Currently unquantified
$1.24m in lost IT share
Return on Investment
Year 1 Year 2 Year 3 Year 4 Year 5-$5m
0$5m
$10m
$15m
$20m
$25m
$30m$35m
Highest negative in investment cycle$2.6m
Cumulative Revenue
Quarterly Revenue
An estimate of implementation costs suggests payback could begin after 24 months
Key Assumptions-Transitional costs tail off after 24 months-Ongoing costs after change remain the same as now. Any cost savings taken as benefit, any new staff taken on through restructuring-Average total cost to employ project team is $1,200 per day during implementation
3. Our Approach
Capability Assessment (2) - Budget Analysis, illustrative
Question: What levels of ROI can be expected and when?
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3. Our Approach
Market Assessment
Market Assessment Key drivers Key issues and questions
• Regulatory & certifications• Characteristics (intrinsic
environment)• Features/ technologies required• Existing technologies & limits • Decision making • Usage trends; sensitivity
• Key players, offering• Distinctive advantages, barriers• Best practices• Economics• Go-to market routes
• Segmentation• Size & growth; forecast• Market penetration• Product switch
• What are the trends/ behaviours/ expectations? Interests in new approach?
• What are the opportunities?• What are the key success factors?
• How is the market segmented?• What are the opportunities?• Which ones should be captured?• What share can be reached?
• Key competitors SWOT• Most likely scenarios for
supply/demand balance, implications
• Transferable best practices?
• Features• Segments• Distribution
• Does the product need to be adjusted to local specificities?
• What’s the impact?• Adjustment by country/ region
• Competition• Pricing, Positioning• Distribution• Differentiation strategies
• Customers: • Needs/ unmet needs• Price points, elasticity• External factors (regulation,
etc.)
• Segments: • Rank target markets &
segments• Addressable market
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Revenuefrom
segment(000's)
Revenuegrowth
Company G
Company C
Company F
Company H
Company E
Company D
Company B
Company A(US only)
Size of the bubble: relative breadth of portfolio
3. Our Approach
Market Assessment (2) - Competitive Analysis, Illustrative
Question: How does breadth of portfolio translate into revenues and revenue growth?
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3. Our Approach
Marketing Strategy
Marketing Strategy Plan
• Fit with current strategy, objectives and projects?
• Impact on existing projects?
• Sales scenarios • Margin scenarios• KPIs relevant to the business
(NPV)
• Roadmap (short, mid, long term)• Action plan (quarterly plan for the
first year)
Key drivers Key questions
• Segment to be targeted• Product characteristics• Unmet needs to be covered by the
new product• Distinctive advantage• Strategic fit with portfolio
• How is the market segmented?• What is the proposition to
customers?• What is the unique selling point?• How can the product best
complement the portfolio?
• Distribution and channel model
• What is most effective way to reach, sell to and retain customers?
• What adjustments are needed to current model?
• What are the pitfalls to avoid?• What are the key actions to be
launched?
• What is the business scenario?• What are the key assumptions?• What are the key success
indicators to monitor?
• Cannibalisation/ substitution• Existing product/ project lifecycle• Impact over current investments
• Draft critical pathway for launch
• Distribution strategy
• Validation of value proposition
• Impact of new product on existing product portfolio
• Sales and margins forecasts, KPI's
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47
48
62
85
100Top long term complications
Top short term side effects
Top target values
Middle long term complications
Middle short term side effects
Top cost of disposables
Standard size
Top learning time
Top staffing time
Middle learning time
Middle machine purchase cost
Small sizeTop integration
Q
C
E
E
E
C
C
Question: what set of features and benefits are most likely to lead to purchase?Conjoint Analysis of Customer Priorities, Medical Technologies
QQuality
CCost
EEase of Use
Top machine purchase cost
Middle cost of disposables
Quality of Treatment
Total Cost
Ease of Use/Ergonomics
Category Utility/Score
!
Q
Customers overwhelmingly traded Cost and Ease of Use for Quality of Treatment. The ranking of sub-levels showed meaningful variations per country.
Conjoint analysis tests the criteria buyers use to make purchase decisions by forcing them to make trade-offs between different features/benefits.
E
3. Our Approach
Marketing Strategy (2) - Value Proposition, Illustrative
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100
Category Utility/Score
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3. Our Approach
Marketing Operations
Marketing Operations Plan Key drivers Key questions
• Local Product usage & preferences• Product features specific to
targeted local market• Packaging specific to targeted local
market
• What product adjustments are required to adapt locally?
• Any certification required?• What are local regulatory
requirements?
• Product & packaging adjustments
• Competitor price• Churn rate• Production costs• Customer price acceptance
• How price sensitive are customers?
• What’s the price elasticity?• Do we target premium position?
• Price levels
• Brand• Product features & quality level• Warranty• Packaging
• What is our unique selling point?• What are the priorities of our target
customer?• Do we target premium position?
• Customer value
• Promotional mix: advertising, sales, promotions, PR
• Budget• Program & targeted impact • CRM model
• Which message will resonate best with the customer segment?
• Which media provide optimal access to our target?
• How do we roll it out over time?
• Promotion plan
• Sales force, tools & training• Distribution & logistics• CRM tools• Product management tools & KPIs
• Who will sell/ distribute and how? • What are the tangible/ intangible
assets needed?• What are the projected results &
boundaries?
• Support tools for effective launch
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3. Our Approach
Launch Monitoring & Adjustments
Launch Monitoring & Adjustments
Key drivers Key questions
• Product features & quality level• Packaging
• Is product delivering as expected?• What adjustments are required?• Post-launch product fine-tuning
• Market penetration• Customer satisfaction• Actual sales, costs & margin
• Is product delivering as expected?• Are we progressing according to
plan?• Which KPIs need strengthening?
• Post-launch product tracking
• Promotion• Distribution• Price levels
• Is performance in line with forecasts?
• Have unforeseen external factors impacted progression?
• What adjustment are required?
• Post-launch product operation monitoring
• Sales, costs and margin forecast• Targeted customer segment• Promotion• Distribution• Price levels
• What evidence is available to support marketing and promotional efficacy?
• How do we address the weakest links?
• Any adjustment required to our forecast plan as a result?
• Post-launch product marketing plan adjustment
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1. Concept Definition and Key Challenges
2. Our Focus and Value Proposition
3. Our Approach
4. Why Frost & Sullivan
5. Case Studies and Key References
Table of Content
20
Why Frost & Sullivan?
Dedicated focus on growth and how new product launches contribute to growth.
Track record of successful new product launch consulting projects over 45 years.
Frost & Sullivan combines both Consulting and Research expertise
Frost & Sullivan offers both global and local perspectives
Frost & Sullivan generates synergies across different sectors and markets
Frost & Sullivan is the Growth strategy consulting firm
International organisation with 32 offices across all key regional markets
Strong understanding of the local issues which underpin the success of new product launch strategies and roll-out
Industry expertise supported by an international pool of functional experts
Best-in-class consulting methodologies proven to be effective through experience in multiple new product launch projects
Experience gained across a complete range of industries and services used to advantage in product launch projects
Capability to identify new product launch opportunities across different industries and markets
Frost & Sullivan assets for a successful new product launch project :
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1. Concept Definition and Key Challenges
2. Our Focus and Value Proposition
3. Our Approach
4. Why Frost & Sullivan
5. Case Studies and Key References
Table of Content
22
The client: • A global medical technology and healthcare company with
leading positions in renal care marketsThe challenge • Steady decline in market share of a core revenue-
generator• Product perceived as less reliable than competition• Gaps in their product line and pipeline• Hence a need to redefine the product portfolio and
establish the value proposition for new products due for launch mid-term.
The Objectives • Develop a market-entry/ development
roadmap• Undertake end-user analysis to support
the value proposition• Complement its business planning with a
robust business case
Outcome & business impact• Clear value proposition to focus all pre-launch initiatives• Shift in focus from product to market• Market-driven business case for Board• Investment in key product features to support the value
proposition
5. Case Studies & Key References
Develop Value Proposition - Medical Technology
Our approach & work• Stage 1 - Validate the existing processes and assumptions• Stage 2 - Define the Value Proposition by understanding user requirements and perceptions (Conjoint &
Qualitative Analyses).• Stage3 - Develop a business case to define the product mix, generate addressable market plan, identify
risks and generate input for making business plan.
• Cross-functional team alignment around market needs
• and client value proposition• ‘Best practice’ precedent for ongoing
product portfolio assessments
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The Client • Our client was created in 2005 by ultrasound medical imaging
experts. Funded by venture capital firms, our client had already performed early-stage clinical studies which demonstrated significant improvements in diagnostic specificity.
The Challenge• They were about to launch their first system for use in breast
cancer diagnosis. To support further investment decisions and attract further investors, the client and their key VC partner needed to validate both the price premium for the new technology and their corresponding business case for launch.
The Objectives • Validate key points of client’s
business case for EU and US:• Validate price points for novel
system across 6 countries• Validate volume and value market
potential and estimate five-year adoption curve
• Identify distributor remuneration models
Outcome & business impactKey success factors were identified for our client and price premium ranges were validated. The detailed market scenarios highlighted the impact of validated clinical evidence short-term and of price pressures long-term. The improved understanding of regional variants helped validate go-to-market strategy.The client will use the assessment as objective, third-party validation when raising further capital and during marketing launch at the RSNA annual congress.
5. Case Studies & Key ReferencesInternational launch, innovative ultrasound system, market potential assessment
Our approach & work
Supported with secondary research, markets were modelled based on information gathered from key opinion leaders in leading breast centres, ultrasound manufacturers and distributors. Market models were drafted for multifunction, breast-dedicated and the client ultrasound system. Market penetration scenarios were drafted based on weighted competitive, quantitative and qualitative factors
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