Launching New Products
Innovation Management
Kevin O’Brien
Launching New Products
Questions
Marketing Activities in NPD
Stage 1: Preliminary Investigation
•Market size/growth
•Competitive environment
•General technological feasibility
•Legal/regulatory constraints
•Resources required
Technical
development
What decisions do we need to make when
launching a new product?
Marketing
development
Assessments of product-company fit & market opportunity
Stage 2: Detailed Investigation
•User needs & wants studies
•Competitor analysis
•Detailed technical assessments
•Detailed market forecasts
•Concept tests
Are there models and frameworks that can
help us?
Marketing Strategy
•Target market/positioning
•Product design
Stage 3: Development
•Product development/testing
•Development of launch plan
Final Launch Plan
Launching New Products
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Decisions about when, where and how to
enter the market have a major impact on
subsequent product performance
Strategic launch decisions may be taken long
before time of market entry (e.g. product
features, target market)
Tactical launch activities (e.g. advertising,
promotion, customer service, product
delivery) are unlikely to compensate for a
poorly developed product/service
Strategic and tactical launch decisions need
to be properly aligned
(Adapted from Cooper, 1993)
Strategic Launch Decisions
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Target market/segment
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Market entry timing
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Relative innovativeness
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Magnitude of investment
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Niche or mass market?
Lead or follow?
Incremental or radical?
R&D
advertising, promotion, sales force, distribution
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Positioning
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Unique value proposition
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Avoid or attack the competition?
Core benefit, physical product, packaging, service,
branding?
(Adapted from Green et al., 1995; Guiltinan, 1999; Hultink et al., 1997, 1999)
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Tactical Launch Decisions
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Promotion
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Advertising
Price promotions
Publicity/education
campaigns
Free samples
Reference test sites
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Introductory price
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Price administration
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Events
Technical support
Distribution structure
Intensity of coverage
Distribution incentives
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Organisation’s
New product driver:
Technical vs. market
Degree of newness
Desired type of demand outcome
Skimming or penetration
pricing
Product
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Sales & distribution
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Pricing
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Launch Planning
Branding
Breadth of product
assortment
Strategic launch variables
Lead vs.
follow
Target
market
Design features
& innovativeness
Product-market
characteristics
Tactical launch variables
•Promotion
•Pricing
•Product
•Sales & distribution
•Announcement
•Deletion
Technical
environment
Firm’s
resources
Timing
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Fast or slow deletion of
existing products
Whether (or when) to
pre-announce
Perceived relative advantage
& compatibility
Realized demand outcomes
(Adapted from Guiltinan, 1999; Hultink et al., 1997, 1999)
(Guiltinan, 1999)
First Mover Advantage
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Competitive advantage resulting from market
entry timing
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consumer-based
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Advantages enjoyed by later entrants:
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economies of scale, learning effects
technological leadership
scarce resources (e.g. locations, supplier contracts)
Favours those with distinctive capabilities in
new product development
Firms with strong marketing and
manufacturing capabilities may be better as
followers.
‘free-riding’
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brand preference, standard for product category,
positioning in centre of market, customer lock-in, price
premiums, higher profits
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producer-based
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First Mover (Dis)Advantage
imitation costs lower than innovation costs
leverage pioneer’s investment in R&D, market
education, infrastructure development
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reduced technological/market uncertainty
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technological/market discontinuities
‘incumbent inertia’
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emergence of a ‘dominant design’
fixed assets, cannibalisation of existing
products, organisational inflexibility
(Lieberman & Montgomery, 1988, 1998)
Pioneers and Followers
(Lieberman & Montgomery, 1988, 1998)
Innovativeness & Buyer Behaviour
Degrees of innovativeness of new products & desired buying behaviours
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Sony:
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aggressive pursuit of
first-mover
advantages from
new product
innovation
forced to follow in
some areas in order
to maintain full
product line
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Matsushita:
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‘manashita denki’
‘electronics that have
been copied’
lets others innovate
positions based on
manufacturing and
marketing
capabilities
invests in R&D but
waits until market
begins rapid growth
New entry or
line addition in
existing market
Product
improvement
New to the world
Emphasis on
Selective
demand
Emphasis on
Replacement
demand
Emphasis on
Primary
demand
Trial & repeat
Migration
Adoption &
diffusion
(Guiltinan, 1999)
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Adoption of New Products
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Launch Planning
The decision to adopt a new product is
influenced (in part) by the
characteristics of the product itself, in
terms of:
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Relative advantage
Compatibility with values & experiences
Complexity in use or understanding
Trialability
Observability
Organisation’s
New product driver:
Technical vs. market
Strategic launch variables
Lead vs.
follow
Target
market
Design features
& innovativeness
Degree of newness
Desired type of demand outcome
Product-market
characteristics
Technical
environment
Firm’s
resources
Tactical launch variables
•Promotion
•Pricing
•Product
•Sales & distribution
•Announcement
•Deletion
Perceived relative advantage
& compatibility
Realized demand outcomes
(Rogers, 1995)
(Guiltinan, 1999)
The Launch Cycle
Pre-launch Activities
Sales
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Prelaunch
Introduction
Growth
Maturity
Decline
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The Launch Cycle
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Sales &
Expenditures
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Expenditures
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Sales
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Pre-launch
Beachhead
Training of sales/marketing staff
Building service capability
Pre-announcements/market signalling
Pre-stocking
Product listings, price lists etc.
Market access
Legal, regulatory, purchasers
Cultivating opinion leaders
Early Growth
Announcement
Launch Tactics
Airbus A380 ‘Super-jumbo’
A typology of launch tactics based upon relative advantage and compatibility
Low advantage/low compatibility
High advantage/low compatibility
•Penetration pricing
•Slow deletion
•Risk-based promotion
(leasing, money-back etc.)
•Intensive distribution
•Pre-announce
•Broad product assortments
•Information-based promotion
(shows, demonstrations etc.)
•Selective distribution
Low advantage/high compatibility High advantage/high compatibility
•Secrecy before entry
•Narrow product assortments
•Awareness promotion
(coupons etc)
•Intensive distribution
•Skimming pricing
•Fast deletion
•Usage-based promotion
(samples, beta-tests)
•Selective distribution
(Guiltinan, 1999)
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TalkTalk (or WaitWait!)
References
Cooper, R. (1993) Winning at New Products, 2nd Edn., Reading
MA: Addison-Wesley.
Green, D.H., Barclay, D.W. and Ryans, A.D. (1995) Entry strategy
and long-term performance: conceptualization and empirical
examination, Journal of Marketing, 59 (Oct), 1-16.
Guiltinan, J.P. (1999) Launch strategy, launch tactics, and demand
outcomes, Journal of Product Innovation Management, 16, 509529.
Hultink, E.J., Griffin, A., Hart, S. and Robben, H.S.J. (1997)
Industrial new product launch strategies and product
development performance, Journal of Product Innovation
Management, 14(4), 243-257.
Hultink, E.J., Hart, S.J., Robben, H.S.J. and Griffin, A.J. (1999)
New consumer product launch: strategies and performance,
Journal of Strategic Marketing, 7, 153-174.
Rogers, E.M. (1995) Diffusion of Innovations, 4th Edn., New York:
Free Press.
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