Strategy And Control

Launch Management:Strategy and Control

Tim SmithBP 4504-5504

University of Minnesota

© Dr. Timothy M. Smith, University of Minnesota, 2005

Business must control NPDL to manage risk

Strategic Control – Market Risk The ability to hit targets for time to market, market

share, margin, competitive position

Financial Control – Financial Risk The ability to stay within budgets and quantitatively

measure risk/return tradeoffs


Common Myths About Launching 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


“Over the wall…”


Launch


Launch Strategy and Implementation


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.


What Is Market Testing?

Market testing is not test marketing!

Test marketing is one of many forms of market testing -- others include simulated test market, informal sale, minimarket, rollout.

Test marketing is also a much less common form now due to cost and time commitments and other drawbacks.


How Market Testing Relates to the Other Testing Steps


The Test Market

Several test market cities are selected.

Product is sold into those cities in the regular channels and advertised at representative levels in local media.

Once used to support the decision whether to launch a product, now more frequently used to determine how best to do so.


Pros and Cons of Test Marketing

Advantages: Risk Reduction

monetary risk channel relationships sales force morale

Strategic Improvement marketing mix production facilities

Disadvantages: Cost ($1 mill+)

Time (9-12 months+) hurt competitive advantage competitor may monitor

test market competitor may go national

Competitor can disrupt test market


A-T-A-R and the Market Testing Methods


The Rollout

Select a limited area of the country (one or several cities or states, 25% of the market, etc.) and monitor sales of product there.

Starting areas are not necessarily representative The company may be able to get the ball rolling more

easily there The company may deliberately choose a hard area to

sell in, to learn the pitfalls and what really drives success.

Decision point: when to switch to the full national launch.


Patterns of Information Gained During Rollout


Launch Management Concept Showing Remedial Action

% aware whohave tried

As of now Goal

Launch Now 6 months

Time

PlanActual

With action

Without action


The Launch Management System

Spot potential problems. Select those to control.

Consider expected impact/damage. Develop contingency plans for the management of problems. Design the tracking system.

Select variables. Devise measuring system. Select trigger points.

Adage: in driving a car, it is the potholes you don’t know about (or forget about) that cause you damage.


Decision Model for Building Launch Control Plan


A Sample Launch Management Plan

Potential Problem Salespeople fail to contact general-purpose market at prescribed rate.

Tracking Track weekly sales call reports (plan is for at least 10 general-purpose

calls per week per rep).

Contingency Plan If activity falls below this level for three weeks running, a remedial

program of one-day district sales meetings will be held.


Another Problem Illustrated

Potential Problem Potential customers are not making trial purchases of the product.

Tracking Begin a series of 10 follow-up calls a week to prospects. There must be 25% agreement on product's main feature and trial

orders from 30% of those prospects that agree on the feature.

Contingency Plan Special follow-up phone sales calls to all prospects by reps, offering

a 50% discount on all first-time purchases.


Public Policy Issues in Launch

Liability

Environmental Needs

Monopoly

Personal/Corporate Ethics


Product Liability: Typology of Injury Sources

Inherent Risk in Product

Design Defects Dangerous Condition No Safety Device Inadequate Materials

Defects in Manufacture

Inadequate Instructions or Warnings

Dangers After Use


Four Legal Bases for Product Liability

Negligence Manufacturer let the product be injurious

Warranty A promise Express warranty: a statement of fact about a product Implied warranty: arises when product is made available for a given

use Strict Liability

Seller is responsible for not putting a defective product on the market

Defenses: assumption of risk; unforeseeable misuse; not defective

Misrepresentation Implied use of product, even if not defective

Other Legislation Consumer Product Safety Act/Safety Commission


Which Are the Real Product Warning Labels?

1. On a disposable razor: “Do not use this product during an earthquake.”2. On a rock garden: “Eating rocks may lead to broken teeth.”3. On a roll of Life Savers: “Not for use as a flotation device.”4. On a hair dryer: “Do not use while sleeping.”5. On a piano: “Harmful or fatal if swallowed.”6. On a cardboard windshield sun shade: “Warning: Do not drive with sun shield in

place.”7. On shin guards: “Shin guards cannot protect any part of the body they do not

cover.” 8. On syrup of ipecac: “Caution: may induce vomiting.”9. On an iron: “Do not iron clothes while being worn.”10. On a plastic sled: “Not to be eaten or burned.”11. On work gloves: “For best results, do not leave at crime scene.”12. On a jet ski: “Riders may suffer injury due to forceful entry of water into body

cavities while falling off this craft.”13. On a carpenter’s router: “This product not intended for use as a dentist’s drill.”14. On a blender: “Not for use as an aquarium.”15. On a stroller: "Always remove child from stroller before folding."


Environmental Needs

A new product is said to hurt the environment if: Its raw materials are scarce or hard to get to. Its design or manufacture causes pollution or excess

power usage. Its use causes pollution. Its disposal cannot be handled by recycling.

Some companies test market their products in Germany and Scandinavia, because of the strict greenness tests there.


Public Policy Problems and the New Products Process


What Can the New Product Manager Do?

Include in Strategy and Policy Consider public policy implications in PIC

Control Systems

Product Testing

Marketing Prepares Warnings/Labels

Adequate Market Testing (to identify miscommunications)

Education (to company personnel and customers)

External Affairs


Summary and Launch Checklist

An effective product launch process results in faster time-to-market and time-to-profit. Activities are better planned and coordinated and more tightly

integrated. System data requirements are better understood, and systems

may be better integrated. better production ramp-up more effective marketing a sales force better prepared to begin selling the new

product, and a service and support group better able to service and

support the new product

All lead to greater customer acceptance.


Summary and Launch Checklist

The product launch/production launch process needs to address the following:

A product launch plan has been prepared covering all activities to be performed by Engineering, Manufacturing, Marketing, Sales, Product Support, and Field Service.

Product performance is evaluated through testing and qualification. Market receptivity is evaluated by key customer feedback, focus groups, test markets, or beta

tests prior to launch. Final packaging has been redesigned and ordered. Sales channels have been identified and established. Product forecasts are updated based on market feedback and analysis. Product launch plan is based on forecast of market demand. All product documentation has been completed and finalized and the product is under

configuration control. Required process documentation or outputs (e.g., work instructions, CNC programs, manning

plans, etc., are complete. Production processes are developed initially using pilot production lines and later using actual

production lines. The product and the production process have been qualified or validated and all regulatory

approvals and/or certifications have been obtained. The product and demand forecast data has been established in the enterprise resource planning

(ERP) system and ERP is used to plan and manage the supply chain and production. Needed materials are on-order or in stock. Engineering, Purchasing, and Manufacturing personnel stand ready to address any issues that

arise. User documentation, operating manuals and maintenance instructions have been completed. Advertising, product brochures, marketing materials, press releases, and web-site pages have

been prepared and are ready to distribute at the appropriate time. Sales, service and support personnel have been trained or a phased training program is

underway. A Production Readiness Review or related Stage-Gate confirms that all preparations have been

completed and the product is ready to launch. The distribution pipeline is filled with the appropriate level of product.

The new product is launched when service, sales and distribution channels are ready.