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McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

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CHAPTER EIGHTEEN

IMPLEMENTATION OF THE STRATEGIC PLAN

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The Launch Cycle

ExpendituresSales

Prelaunch Beachhead Early growth Announcement

Sales andExpenditures

Figure 18-1

4 18-4 Tactical Launch Decisions and Actions, 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 buyersSales 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 stimulatedPricing 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 advantageTiming 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 18.2

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Preannouncement

• Getting to be popular, and very creatively managed.

• Far from the old days of “tease the public.”

• Preannouncement signaling may be used (“vaporware”).

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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?

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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.

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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.

9 18-9 A-T-A-R Goals: The New Product 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.

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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 18-3

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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.

12 18-12 Appropriate Launch Tactics Given Relative Advantage and Compatibility

A. Low Relative Advantage B. High Relative Advantage1. Low Compatibility Penetration price

Slow deletionRisk-based promotion (leasing,money-back guarantees,equipment allowances)Intensive distribution

PreannounceBroad product assortmentsInformation-based promotion(shows, demonstrations, websites,publicity/education)Selective distribution

2. High Compatibility Secrecy before entryNarrow product assortmentsAwareness promotion (coupons,etc.)Intensive distribution

Skim priceFast deletionUsage-based promotion (samples,beta tests) to clarify benefitsreceivedSelective 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 18.4