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McGraw-Hill/Irwin

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

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PART FIVE
LAUNCH

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Launch

Figure V.1

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The Five Decision Sets that Lead to a Marketing Plan

Figure V.2

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Common Myths About Marketing Planning for New Products

Figure V.3

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 marketers 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.

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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

Product Level Performance Goals

Cost Time to Market Performance Quality

Financial Performance Goals

Time to break even Margins IRR, ROI

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

Figure 17.1

Butt-on product replacement Low-season switch High-season switch

Roll-in, roll-out Downgrading

Splitting channels

The existing one is simply dropped when the new one is announced. Example: Ford's marketing of Mondeo and dropping of Sierra. Same as butt-on, but arranging the switch at a low point between seasons. Tour companies use this switch when they develop their new catalogs. 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 the Christmas season. Another version of butt-on, but arranged by a sequence of market segments. Mercedes introduced its C series country by country. Keeping the earlier product along side the new, but with decreased support. Example: The 386 chip stayed along side the 486, until the Pentium was introduced. Putting the new item in a different channel or diverting the existing product into another channel. Example: Old electronic products often end up in discounter channels.

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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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Using the Joint Space Map to Identify Benefit Segments

Comfort

Figure 17.2

Aqualine

Islands

Molokai

Fashion

Splash Sunflare

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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 followon)

Figure 17.2

Position on a Surrogate Nonpareil Parentage Manufacture Target Rank Endorsement Experience Competitor Predecessor

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Branding Decisions
What is the brands 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?

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Questions and Guidelines in Brand Name Selection

Figure 17.8

Question What is the brand's role or purpose?

Will this product be a bridgehead to a line of products? Do you expect a long-term position in the market? Is the name irritating or insulting to any market segment?

Guideline If the brand is to aid in positioning, choose a brand name with meaning (DieHard, Holiday Inn). If purely for identification, a neologism (made-up word) such as Kodak or Exxon will work. If so, choose carefully so as not to be a limitation in the future (Western Hotels changed name to Western International, then finally to Westin.) If not, a dramatic, novelty name might be useful (such as Screaming Yellow Zonkers). Women found Bic's Fannyhose to be objectionable.

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Some Brand Names That Didnt Work

Crapsy Fruit Fduhy Sesane Mukk Pschitt Atum Bom Happy End Pocari Sweat Zit Creap I'm Dripper Polio Sit & Smile Barf French cereal China Airlines snack food Italian yogurt French lemonade Portuguese tuna German toilet paper Japanese sport drink German lemonade Japanese coffee creamer Japanese instant coffee Czech laundry detergent Thai toilet paper Iranian laundry detergent

Figure 17-9

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Figure 17-10

How Brand Equity Provides Value

High Brand Loyalty
Reduced marketing costs

High Brand Awareness

Easier to make brand associations Increased liking and familiarity

High Perceived Quality

Supports quality positioning

More/Better Brand Associations

Creates positive image

Other Brand Assets

Patents or trademarks

Increased trade leverage

Supports higher-price strategy

Helps customer process information

Strong channel relationships

Provides value to customer:

Assists in customer information processing Increases confidence in purchase Increases satisfaction in product use

Provides value to firm:

Increases effectiveness of marketing programs Increases customer loyalty and trade leverage Facilitates brand extensions Is a source of competitive advantage

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Building Brand Equity

Getting awareness of the brand and the meaning. Making brand associations -- even the factory location in Saturns case. Building perceived quality Loyalty in repurchase -- locking them in Getting reseller support

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A Brand Report Card

Characteristic Delivers benefits desired by customers. Stays relevant.

Figure 17.11

Prices are based on value. Well positioned relative to competitors.

Is consistent.

The brand portfolio makes sense.

Marketing activities are coordinated. What the brand means to customers is well understood. Is supported over the long run.

Sources of brand equity are monitored.

Examples Starbucks offers coffee house experience, not just coffee beans, and monitors bean selection and roasting to preserve quality. Gillette continuously invests in major product improvements (MACH3), while using consistent slogan The best a man can get. P&G reduced operating costs and passed on savings as everyday low pricing, thus growing margins. Saturn competes on excellent customer service, Mercedes on product superiority. Visa stresses being everywhere you want to be. Michelob tried several different positionings and campaigns between 1970 and 1995, while watching sales slip. The Gap has Gap, Banana Republic, and Old Navy stores for different market segments; BMW has the 3-, 5-, and 7-series. Coca-Cola uses ads, promotions, catalogs, sponsorships, and interactive media. Bic couldnt sell perfume in lighter-shaped bottles; Gillette uses different brand names such as Oral-B for toothbrushes to avoid this problem. Coors cut back promotional support in favor of Coors Light and Zima, and lost about 50% of its sales over a four-year period. Disney studies revealed that its characters were becoming overexposed and sometimes used inappropriately. They cut back on licensing and other promotional activity as a result.

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Profitable Brand Strategies

Low Relative Market Share Value Brand Category

Figure 17.12

High Relative Market Share

Dead End
Example: Nine Lives Optimum strategies: Slash costs and prices Trump market leader with superpremium brand

Low Road
Example: Oscar Meyer Optimum strategies: Cut costs and reduce prices Build brand equity

Premium Brand Category

Hitchhikers
Example: Neutrogena, Post Optimum strategies: Dont rock the boat Innovate Find a niche market

High Road
Example: Gillette, Clorox Optimum strategies: Value-improving innovations Premium prices

Source: Adapted from Vijay Vishwanath and Jonathan Mark, Your Brands Best Strategy, Harvard Business Review, May-June 1997, pp. 123-129.