JOURNAL 2

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PART FIVE
LAUNCH

Chapter 16

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Launch

Figure V.1

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Chapter 16
Strategic Launch Planning

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Strategic Givens

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

  • A threshold gross margin affects funding.
  • Speed-to-market affects promotional spending and schedules.
  • Commitment to a given channel affects distribution plans.
  • Advertising policy affects promotion decisions.
  • Pricing policy affects decision to use penetration or skimming pricing.

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Revision of PIC Goals

  • Customer Acceptance Goals
  • Use
  • Satisfaction
  • Sales
  • Market Share
  • Financial Performance Goals
  • Cash-to-cash (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

  • Strategic options:
  • Permanent stand-alone product.
  • Permanent, but as a bridge to a platform strategy.
  • Temporary: driven by need to develop streams of category products (e.g., kid’s cereals, snacks tied to movies, TV shows).

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Type of Demand Sought

  • Primary demand: new-to-the-world product.
  • Replacement demand: product improvement or upgrade (computer chip, compact car).
  • Selective demand: an entry into an established market.

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Product Line Replacement Strategies

Figure 16.1

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Butt-on product replacement

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. Tour companies 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 the Christmas 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 was introduced.

Splitting channels

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.

Scope of Market Entry

  • Roll out slowly — check product, trade and service capabilities, manufacturing fulfillment, promotion communication, etc.
  • Roll out moderately, but go to full market as soon as volume goals reached.
  • Roll out rapidly — full commitment to total market, restricted only by capacity.

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Some Other Strategic Platform Decisions

  • Aggressiveness (aggressive or cautious attitude at entry?).
  • Type of demand sought (primary versus selective?).
  • Competitive advantage strategy (differentiation, price leadership, or both?).
  • Competitive relationship (leadership, challenge, follower, or niche?).
  • Image (new image, existing image, evolve existing image?).

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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.
  • Diffusion of innovation.

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Aqualine

Islands

Splash

Molokai

Sunflare

2

3

1

Fashion

Comfort

Using the Joint Space Map to Identify Benefit Segments

Figure 16.2

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Factors Affecting Diffusion of Innovation

The classic Rogers model of diffusion:

  • Relative Advantage (Google’s rapid acceptance by computer users).
  • Compatibility (digital cameras designed to use like film cameras).
  • Complexity (Apple Newton’s handwriting recognition was hard to use) .
  • Divisibility (try a new GPS system at low cost as an add-on with a rental car).
  • Communicability (long-term benefits of a decay-preventing toothpaste are impossible to discern at time of purchase).

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Another View of Diffusion: Crossing the Chasm*

  • Two adopter groups:
  • Visionaries (innovators and early adopters)
  • Pragmatists (all later categories).
  • The two groups differ in their expectations of new products.
  • Pragmatists do not use visionaries as their opinion leaders.
  • Visionaries might buy a cool new cell phone - while pragmatists may be looking for something that works well and is not too expensive.

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*Jeffrey Moore, Intel

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Crossing the Chasm

  • A value proposition may attract the visionaries but may never get acceptance in the mass market
  • To cross the chasm, the firm needs to develop a value proposition for pragmatists, and to develop a launch strategy designed to reach pragmatists.

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Product Positioning

  • Who — What — Why?
  • Who are we marketing to?
  • What better/best claim?
  • Reasons Why it is better/best?

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Who Are We Marketing to?

  • 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).

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What Better/Best Claim?

  • Product single positioning is a strategic driver — not a list of advantages (reasons why support).
  • Can be stated as a feature or benefit (what it is).
  • Can be stated as a function (how it works).

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Reasons Why It is Better/Best?

  • Possible multiple features/benefits supporting the single positioning.
  • Solves buyer rationale:
  • Solves major problem current products do not.
  • Better meet needs and preferences.
  • Lower price than current items.

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Product Positioning Options

Position to an Attribute

  • Feature: A dog food that has “as much protein as ten pounds of sirloin.”
  • Function: A shampoo that “coats your hair with a thin layer of protein.”
  • Benefit: A new toothpaste “saves you money” (direct) and “improves your sex life (brand character).

Drano’s classic tagline was “Thicker, stronger, faster” (a feature, a function, a benefit).

Miller Lite’ “Tastes great, less filling” (two benefits).

Position on a Surrogate

  • Nonpareil: Jaguar cars, Perrier water.
  • Parentage: A Chanel perfume, a Disney movie, a Ralph Lauren designer suit.
  • Manufacture: Budweiser (beechwood aging), Audi (renowned engineering).
  • Target: Airlines designed for the business traveler, Vector tires for use on wet roads.
  • Rank: Hertz, Blue Cross/Blue Shield, and others who claim to be No. 1.
  • Endorsement: Doctor recommendation, celebrity spokesperson.
  • Experience: Stress long use by satisfied customers (Nuprin, Yellow Pages).
  • Competitor: USPS Express Mail and some Kia autos are just like competitors but cheaper.
  • Predecessor: You liked Hershey’s Kisses so you will also like Hugs.

Figure 16.5

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Branding Decisions

  • Brand role or purpose?
  • Line of products?
  • Long-term position in the market?
  • Budget?
  • Physical/sensory qualities of the brand?
  • Brand Essence clear and relevant?
  • Brand Character insulting/irritating?

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Brand Name Categories

  • Famous Names (Coca-Cola, Disney): protected by Federal Trademark Dilution Act preventing others from using similar names. (Ex.: “Victor’s Little Secret”).
  • Fanciful Names (Bluetooth, Kodak, Ameriprise): Distinctive neologisms; easy to protect but the firm must create a meaning for the word.
  • Arbitrary Names (Apple, Virgin, Monster.com): Real words but unrelated to the nature of the product; again, easy to protect.
  • Suggestive Names (Coinstar, Quadra Tred tires): Require a little imagination , but can communicate a product benefits. May be harder to protect under trademark laws.
  • Descriptive Names (Lean Cuisine, Hot Jobs): Harder to protect; may go first onto the Supplemental Register and after five years can get advanced legal protection (this happened to Rollerblades).
  • Generic Names (Thermos, Aspirin, Cellophane): The name becomes synonymous with the product category and the original trademark holder loses exclusive rights to the name.

Figure 16.7

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Trademarks and Registration

  • Trademark: A word, symbol, logo, word string, sound signature that identifies a product.
  • Examples: BMW Z3 or Z4 Roadster, the GE script lettering, Apple Inc.’s multicolored apple, Nike’s “Just Do It,” the three-note NBC chimes or the “Intel Inside” sound.
  • Generally, “trademark” refers to legal aspects while “brand” refers to marketing strategy.
  • Technically, services have service marks, and businesses have trade names (not trademarks).
  • If a trademark is registered, the firm can keep the trademark forever even if another firm can show prior use.
  • Trademarks should not be immoral or misleading.
  • Trademarks should not be too descriptive of a product type (Light cigarettes).
  • Should not be confusingly similar to other trademarks (consider Apple Inc. vs. Apple Corps, McSleep vs. McDonald’s).

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Questions and Guidelines in Brand Name Selection

Figure 16.8

  • Assess the role or purpose of the brand. If the brand is to aid in positioning, choose a meaningful brand name like DieHard.
  • Possibility of extension to a line of products. If so, choose carefully so that it is not a limitation in the future (Allegheny Airlines became US Airways).
  • Possibility of long-term position in market. A dramatic novelty name usually doesn’t do as well if a long-term position in the market is sought.
  • Avoid an irritating or insulting name. Can especially be a problem when entering foreign markets (Nova means “no go” in Spanish).
  • Be careful of regional differences in language. An acceptable name in some Spanish dialects may be offensive in others.
  • Allocate enough time to brand selection. The brand name should not be a last-minute rush job.
  • Don’t choose the wrong comfort level. A provocative and controversial brand name such as Yahoo! or Bluetooth may be a great strategy,.
  • Other pitfalls. Not identifying the key decision makers; people involved in decision don’t understand brand naming; getting “stuck” on a brand name early in the process; not hiring the best patent attorney.

Source: Lee Schaeffer and Jim Twerdahl, “Giving Your Product the Right Name,” in A. Griffin and S. M. Somermeyer, The PDMA Toolbook 3 for New Product Development, Wiley, 2007, Ch. 8.

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Crapsy Fruit French cereal

Fduhy Sesane China Airlines snack food

Mukk Italian yogurt

Pschitt French lemonade

Atum Bom Portuguese tuna

Happy End German toilet paper

Pocari Sweat Japanese sport drink

Zit German lemonade

Creap Japanese coffee creamer

I'm Dripper Japanese instant coffee

Polio Czech laundry detergent

Sit & Smile Thai toilet paper

Barf Iranian laundry detergent

Cream Pain Japanese snack cake

Of course this works in both directions: Germans laugh at Mist Stick curling irons while the French find Mon Cuisine frozen entrees amusing (check your text to see why).

Some Brand Names That Didn’t Work

Figure 16.9

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How Brand Equity Provides Value

Figure 16.10

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High

Brand

Loyalty

Other Brand

Assets

More/Better

Brand

Associations

High

Perceived

Quality

High

Brand

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 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 Saturn’s case.
  • Building perceived quality
  • Loyalty in repurchase — locking them in
  • Getting reseller support

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A Brand Report Card

Figure 16.11

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Characteristic

Examples

Delivers benefits desired by customers.

Starbucks offers “coffee house experience,” not just coffee beans, and monitors bean selection and roasting to preserve quality.

Stays relevant.

Gillette continuously invests in major product improvements (MACH3), while using consistent slogan “The best a man can get.”

Prices are based on value.

P&G reduced operating costs and passed on savings as “everyday low pricing,” thus growing margins.

Well positioned relative to competitors.

Saturn competes on excellent customer service, Mercedes on product superiority. Visa stresses being “everywhere you want to be.”

Is consistent.

Michelob tried several different positionings and campaigns between 1970 and 1995, while watching sales slip.

The brand portfolio makes sense.

The Gap has Gap, Banana Republic, and Old Navy stores for different market segments; BMW has the 3-, 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 well understood.

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

Is supported over the long run.

Coors cut back promotional support in favor of Coors Light and Zima, and lost about 50% of its sales over a four-year period.

Sources of brand equity are monitored.

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.

Brand Equity and Branding Strategies

  • Umbrella branding strategy
  • Kellogg’s uses corporate name as part of all cereal brands.
  • Kraft uses Planters, Di Giorno, Maxwell House as well as Kraft in its brand names.
  • Individual branding strategy
  • No P&G cleaning products carry the P&G name (Tide, Bold, Mr. Clean, etc.).
  • Clorox does not use the Clorox name on many of its cleaning products (409, SOS) and does not use it at all on non-cleaning products (Hidden Valley, KC Masterpiece).

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Other Options in Branding Strategy

  • ConAgra Foods used individual branding for years on its products:
  • Orville Redenbacher, Reddi-Wip, Healthy Choice, Peter Pan)
  • but now uses a unifying logo (smiling plate with spoon) and slogan (“Food You Love”).

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Global Branding and Positioning

  • Standardization: Gillette uses the same brand name and positioning worldwide (“The Best A Man Can Get”).
  • Adaptation of Positioning: Canon sells the same camera worldwide but uses the “So Advanced, It’s Simple” positioning in North America.
  • Adaptation of Brands: General Mills cereals are marketed in Europe through a joint venture with Nestle and sold under the Nestle corporate name.

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Extreme Brand Adaptation: Unilever

  • Several Unilever brands have the same name worldwide (Lipton, Bertolli, Knorr, Dove, Vaseline).
  • A household cleaner is Cif in Italy and France but Viss in Germany, and Vim in Canada.
  • The fabric softener Snuggle has many names in Europe.
  • Unilever uses the local ice cream name in every global market.

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Packaging

  • The role of packaging: containment, protection, safety, display, and information/persuasion.
  • Packaging can assist the user, permit reusability, meet environmental needs, carry warnings, meet legal requirements, aid in disposability.
  • Packaging as a competitive tool: recognizability, convenience, customer attraction, etc.

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Butt-on product

replacement

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. Tour

companies 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 the

Christmas 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 was

introduced.

Splitting channels

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.

Characteristic Examples

Delivers benefits desired by customers. Starbucks offers “coffee house experience,” not just

coffee beans, and monitors bean selection and

roasting to preserve quality.

Stays relevant. Gillette continuously invests in major prod uct

improvements (MACH3), while using consistent

slogan “The best a man can get.”

Prices are based on value. P&G reduced operating costs and passed on savings

as “everyday low pricing,” thus growing margins.

Well positioned relative to competitors. Saturn competes on excellent customer service,

Mercedes on product superiority. Visa stresses

being “everywhere you want to be.”

Is consistent. Michelob tried several different positionings and

campaigns between 1970 and 1995, while watching

sales slip.

The brand portfolio makes sense. The Gap has Gap, Banana Republic, and Old Navy

stores for different market segments; BMW has the

3-, 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 well

understood.

Bic couldn’t sell perfume in lighter -shaped bottles;

Gillette uses different brand names such as Oral -B

for toothbrushes to avoid this problem.

Is supported over the long run. Coors cut back promotional support in favor of

Coors Light and Zima, and lost about 50% of its

sales over a four-year period.

Sources of brand equity are monitored. 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.