New Product Development & Market Launch Essentials

Key Concepts in Product Development

What is the Most Expensive Stage of New Product Development?

Product commercialization often turns out to be the most expensive and risky part of the new product development process due to the financial commitments to both production and marketing once the go-ahead is given.

Understanding Strategic Givens in Product Launch

Strategic givens are strategic decisions that may have already been made before the strategic launch planning begins.

Types of Strategic Platform Decisions

• Permanent: "We are in to stay."
• Permanent, but as a Bridge to Other Items (Platform Strategy): "We are in to stay if we meet our goals."
• Temporary: Given firms’ tendency to develop streams of products, more and more new products are actually only temporary (examples: cereals or snacks tied to recent children’s movies or TV shows).

Demand Types for New and Existing Products

• Primary Demand: Sought for new-to-the-world products.
• Replacement Demand: Sought for product improvements or upgrades (e.g., a new computer chip, a new compact car). The goal is to achieve customer migration to the new version.
• Selective Demand: Sought for entry into an established market. The aim is to draw market share away from the competition.

Factors Affecting the Diffusion of Innovation

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

First and Last Adopters of New Products

The first customers to adopt a new product are Innovators. The last are Laggards.

Different Types of Branding Strategies

• Individual Branding Strategy: No P&G cleaning products carry the P&G name (e.g., Tide, Bold, Mr. Clean).
• Umbrella (Family) Branding Strategy: Kellogg’s uses its corporate name as part of all cereal brands.
• Combination Branding Strategy: Kraft uses brands like Planters, Di Giorno, and Maxwell House, as well as Kraft, in its brand names.

Product Launch Cycle & Product Life Cycle

Relationship Between Launch Cycle and Product Life Cycle

The launch cycle is an expansion of the Introductory stage of the Product Life Cycle (PLC).

Key Activities During the Pre-Launch Phase

• Training of sales and other promotional personnel.
• Building service capability.
• Arranging for stocking of the product at the reseller level.
• Issuing preannouncements.

What is a Preannouncement?

A preannouncement is a planned sequence of announcements, usually involving subtle signaling.