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

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LAUNCH

PART

FIVE

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LaunchFigure V.1

4 17-4 The Five Decision Sets that Lead to a Marketing Plan Figure V.2

5 17-5 Common Myths About Marketing Planning for New Products

• Marketing people make the decisions that constitute a marketing plan.

• The technical work is complete when the new item hits the shipping dock. Marketing people take over.

• The marketer’s task is to persuade the end user to use the new product.

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

• The pioneer wins control of a new market.• As with Broadway shows, opening night is the culmination

of everything we have been working for.

Figure V.3

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CHAPTER SEVENTEEN

STRATEGIC LAUNCH PLANNING

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Strategic Givens

Corporate, some team decisions made earlier. Often found in the PIC Guidelines.

• A specified gross margin: affects funding.

• Speed-to-market: affects promotional outlays and schedules.

• Commitment to a given channel: affects distribution plan.

• Advertising policy: affects promotion decisions.

• Pricing policy: affects decision to use penetration or skimming pricing (slide down demand curve).

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Revision of PIC Goals

• Customer Acceptance Goals– Use

– Satisfaction

– Sales

– Market Share

• Financial Performance Goals– Time to break even

– Margins

– IRR, ROI

• Product Level Performance Goals– Cost

– Time to Market

– Performance

– Quality

• Other– Competitive Effect

– Image Change

– Morale Change

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Strategic Platform Decisions

• Permanence• Aggressiveness• Type of Demand Sought• Competitive Advantage• Product Line Replacement• Competitive Relationship• Scope of Market Entry• Image

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Permanence

• 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.

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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)

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Product Line Replacement Strategies

Butt-on productreplacement

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. Tourcompanies 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 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 Pentium wasintroduced.

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

Figure 17.1

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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.

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The Target Market Decision

• Alternative ways to segment a market– end-use, geographic/demographic,

behavioral/psychographic, benefit segmentation

• Micromarketing and mass customization

• Also consider the diffusion of innovation

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Aqualine

Islands

Splash

Molokai

Sunflare

23

1

FashionC

om

fort

Using the Joint Space Map to Identify Benefit Segments Figure 17.2

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Factors Affecting Diffusion of Innovation

• Relative Advantage

• Compatibility

• Complexity

• Divisibility

• Communicability

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Product Positioning

• Who -- Why -- How

• To whom are we marketing?

• Why should they buy it?

• How do we best make the claim?

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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

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Why Should They Buy It?

• This too we have been testing -- basic concept 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)

• Formatted in three ways:– Solves major problem current products do not.– Better meet needs and preferences.– Lower price than current items.

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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).

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Product Positioning Options

Position to an Attribute

• Feature

• Function

• Benefit (direct or follow-on)

Position on a Surrogate

• Nonpareil

• Parentage

• Manufacture

• Target

• Rank

• Endorsement

• Experience

• Competitor

• Predecessor

Figure 17.2

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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?

• How good is your budget?

• Physical/sensory qualities of brand considered?

• Message clear and relevant?

• Insulting or irritating to anyone?

23 17-23 Questions and Guidelines in Brand Name Selection

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

name with meaning (DieHard, Holiday Inn). Ifpurely for identification, a neologism (made-upword) such as Kodak or Exxon will work.

Will this product be a bridgehead to a line ofproducts?

If so, choose carefully so as not to be a limitation inthe future (Western Hotels changed name toWestern 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 marketsegment?

Women found Bic's Fannyhose to be objectionable.

Figure 17.8

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Crapsy Fruit French cereal Fduhy Sesane China Airlines snack foodMukk Italian yogurtPschitt French lemonadeAtum Bom Portuguese tunaHappy End German toilet paperPocari Sweat Japanese sport drinkZit German lemonadeCreap Japanese coffee creamerI'm Dripper Japanese instant coffeePolio Czech laundry detergentSit & Smile Thai toilet paperBarf Iranian laundry detergent

Some Brand Names That Didn’t WorkFigure 17-9

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How Brand Equity Provides Value

HighBrand

Loyalty

Other BrandAssets

More/BetterBrand

Associations

HighPerceived

Quality

HighBrand

Awareness

Reduced marketing costs

Increased trade leverage

Patents or trademarks

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 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 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

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A Brand Report CardCharacteristic ExamplesDelivers benefits desired by customers. Starbucks offers “coffee house experience,” not just

coffee beans, and monitors bean selection androasting to preserve quality.

Stays relevant. Gillette continuously invests in major productimprovements (MACH3), while using consistentslogan “The best a man can get.”

Prices are based on value. P&G reduced operating costs and passed on savingsas “everyday low pricing,” thus growing margins.

Well positioned relative to competitors. Saturn competes on excellent customer service,Mercedes on product superiority. Visa stressesbeing “everywhere you want to be.”

Is consistent. Michelob tried several different positionings andcampaigns between 1970 and 1995, while watchingsales slip.

The brand portfolio makes sense. The Gap has Gap, Banana Republic, and Old Navystores for different market segments; BMW has the3-, 5-, and 7-series.

Marketing activities are coordinated. Coca-Cola uses ads, promotions, catalogs,sponsorships, and interactive media.

What the brand means to customers is wellunderstood.

Bic couldn’t sell perfume in lighter-shaped bottles;Gillette uses different brand names such as Oral-Bfor toothbrushes to avoid this problem.

Is supported over the long run. Coors cut back promotional support in favor ofCoors Light and Zima, and lost about 50% of itssales over a four-year period.

Sources of brand equity are monitored. Disney studies revealed that its characters werebecoming “overexposed” and sometimes usedinappropriately. They cut back on licensing andother promotional activity as a result.

Figure 17.11

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Profitable Brand Strategies

Low Relative Market Share High Relative Market ShareValue Brand Category Dead End

Example: Nine LivesOptimum strategies: Slash costs and prices “Trump” market leader with superpremium brand

Low RoadExample: Oscar MeyerOptimum strategies: Cut costs and reduce prices Build brand equity

Premium Brand Category HitchhikersExample: Neutrogena, PostOptimum strategies: “Don’t rock the boat” Innovate Find a niche market

High RoadExample: Gillette, CloroxOptimum strategies: Value-improving innovations Premium prices

Source: Adapted from Vijay Vishwanath and Jonathan Mark, “Your Brand’s Best Strategy,” HarvardBusiness Review, May-June 1997, pp. 123-129.

Figure 17.12