Transcript File

Slide 13.1
Chapter 13
Commercialization
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.2
Agenda
• Commercialization stages
• Alternative strategies:
– Penetration
– Roll-out
• Test marketing:
– Objectives
– Arguments against
• Selecting a launch strategy
• Importance of communication
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.3
Having established that the new product will
deliver the promised benefits and that a need
still exists for it in the marketplace, the next
step in the process is to launch the product and
make it available to intended customers. This
phase is known as commercialization.
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.4
Commercialization stages
1. Complete final plans for production and marketing:
• Establish patterns for overall direction and co-ordination
of the product.
• Expand product teams to encompass all departments
involved.
• Designate individuals responsible for each part of the
commercialization programme.
• Assure that these individuals work out all programme
details to fit co-ordinated plan.
Source: Booz, Allen and Hamilton (1968)
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.5
Commercialization stages (Continued)
2. Initiate co-ordinated production and selling
programmes:
• Brief all participating personnel.
• Maintain established programme sequence and
schedule.
• Provide feedback mechanisms for programme
corrections.
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.6
Commercialization stages (Continued)
3. Check results. Make necessary improvements
•
•
•
•
in product, manufacturing, or sales:
Make design changes promptly to correct ‘bugs’.
Work continuously for cost reduction and quality
control.
Shape the product and its programme to meet
competitive reaction and changing internal pressures.
Maintain necessary team members until the product is
a going commercial success, absorbed by established
organization.
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.7
Launching a new product involves consideration
of all the elements of the marketing mix and that
combination of price, promotion and place, or
distribution, that will optimize the chance of success.
Essentially, the choice is between one or other of
two basic strategies:
• Market penetration
• Roll out
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.8
A strategy of market penetration is to be
preferred when:
• There is a strong likelihood of competitive reaction.
• The new product is relatively easy to clone.
• The launch company has the resources to finance
a large scale effort.
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.9
A rollout strategy is to be preferred when:
• The firm has limited resources and needs to grow
through organic development.
• The firm enjoys a sustainable competitive
advantage.
• There is only a limited threat of competitive
reaction.
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.10
Where a rollout strategy is feasible some
form of test marketing is often recommended.
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.11
Test marketing may be defined as a small
scale trial of the proposed marketing mix
in a sub-market believed to be representative
of the larger regional or national market.
Its objectives may be both mechanical and
commercial.
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.12
The mechanical objectives of a test market are
to assess arrangements for handling and storing
materials, producing and distributing the product
in good condition, and monitoring
distributor/retailer performance. The commercial
objectives of a test market are to evaluate the
mix elements working together and provide
forecasts of likely sales.
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.13
While test marketing is given considerable
attention in most marketing textbooks, it should
be remembered that these books are usually
concerned with fast moving consumer good
(FMCG) and large companies operating in
mature markets. This represents a minority of
all new product launches and is the exception
rather than the rule.
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.14
Most companies avoid test marketing because:
• It gives advance warning to your competitors of your
Intentions.
• It allows them to benchmark your product and monitor
its performance.
• It is only possible to measure one mix element at
a time.
• It is virtually impossible to find a test market which is
representative of the total market.
• Proper execution of the preceding steps should have
provided clear guidance as to the preferred strategy.
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.15
To avoid the risks and costs associated with real
test marketing many firms simulate test markets
although this may be seen as an extension of the
beta or product testing phase.
Similarly, major multinational companies may
launch in their domestic market first and then rollout
into other national or regional markets on the basis
of their experience in the home market.
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.16
Four basic factors govern the selection of a
launch strategy:
1. The degree of novelty
2. Existing familiarity with and position in the
intended market
3. Current status of competition and response
expected to the launch
4.The resources available
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.17
Other strategic factors are:
• Source of competitive advantage
• Characteristics of the markets to be served
• Breadth of the segment(s) served
• Order of entry versus competitors
• Size of production scale on entry
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.18
A successful launch strategy depends heavily
upon the firm’s ability to target those customers
for whom the product will be perceived as
offering the greatest advantage.
Innovators fall into three broad categories:
1. People who get added value from being first.
2. People who have a very strong need for the product
and are actively seeking a solution to a need.
3. People who can afford to experiment.
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.19
Roger’s five characteristics offer a useful
approach to identifying the early adopter:
– Relative advantage
– Compatibility
– Complexity
– Divisibility
– Communicability
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.20
Radically new products may appeal to several different
market segments. The marketing decision is which to
approach first, i.e. which is likely to be most receptive.
This segment must be targeted and a decision made
on how to position the product within the segment.
Positioning is achieved through the selection of the
marketing mix, and especially the communication
strategy.
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007
Slide 13.21
For successful communication to occur four basic
conditions must be fulfilled:
1. The message must be so designed and delivered as to
gain the attention of the intended destination.
2. The message must employ signs which refer to
experience common to source and destination, so as to
‘get the meaning across’.
3. The message must arouse personality needs in the
destination and suggest some ways to meet those needs.
4. The message must suggest a way to satisfy the need in
the context in which the destination finds himself.
Michael Baker and Susan Hart, Product Strategy and Management, 2nd Edition, © Pearson Education Limited 2007