STRATEGIC PRODUCT LAUNCH

1. STRATEGIC PRODUCT LAUNCH Compiled & Presented by DR M. GUNAWAN ALIF

2. QUESTIONS • What’s a good/bad… new/existing… product/launch/promotion/ad/package… Why? • Name the 3 most unique brands you can think of and tell me why you think they are unique. • What’s an innovative product? What would you do to improve it? • How would change the way brand Nescafe is marketed? • Give me 3 line extensions for brand Lifebuoy. What’s your critical comment? • When you walk down the supermarket aisle, what product jumps out and says “buy me” and why? • What would the title of your autobiography be?

3. Why Launching Strategy? Recent Study of nearly 300 companies • 93% of Marketing department responsible for product launches (89% control budget) • 88% use multiple face-to-face meetings to rollout products • 69% of companies spend >3 months to launch products (42% over 5 months) • 66% of companies launch 5 or more products/year (45% - 10 or more) Source: Eloquent Market Survey, 2001

4. Why Does It Matter? Eroding Margins Less time to sell New innovations More channels More, Complex Products Increased Competition

5. New Product Launch • Always start with the consumer. Do consumers want/need this product? • Assess the opportunity: • Size of the market—How big is the consumer need? • Competition—Have they entered? Are they likely to? • Estimate of your market share—Will this product have a fast adoption rate? • Cost/ease of entry (capital investment and manufacturing, branding, distribution, company skills, etc.) • Identify consumer segments, and choose your target (Think STP) • Determine your positioning: Choose one singular benefit that you intend to deliver to your target consumers. Positioning should be differentiating versus competition. • Determine marketing strategy for new product (Think 4Ps) • Price – set to reflect positioning (premium, popular, or value) and drive profit • Product – which attributes to offer (flavor, size, etc.) • Promotion – how will you create awareness and trial of product (advertising, coupons, sampling, product demos, etc.) • Placement – where will consumers buy product (grocery, mass, drug, club, convenience, etc.)

6. Measured Goals • Customer Acceptance Measures (Customer aceptance/use; customer satisfaction; revenue; market share; unit volume) • Financial Performance (time to break even; margin; profitability/ROI) • Product level performance (product cost; time to launch; product performance; quality guidelines) • Other (nonfinancial measures peculiar to the new product being launched; example: competitive effect, image change, morale change.

7. Pricing • Positioning: Always choose a price that reflect your brand’s positioning. • Premium vs. Popular vs. Value/Fighter brand (private label) • Elasticity: Elasticity tells you how responsive/sensitive your brand’s sales are to changes in price. Use elasticity to analyze how pricing changes will impact your brand’s volume and profit. • Elastic (commodity products) vs. Inelastic (differentiated products) • Cost Structure: Always consider costs when analyzing pricing. Clearly, revenues should exceed costs and the brand should be profitable. • Profits = Revenue – Costs • Pricing Strategies/Considerations: Keep your brand plan & goals in mind when determining your pricing strategy! • Perceived customer value, markup, going rate/comparative, discriminatory, bundling

8. NPL Discussion You are a BM at Nestle, and the company is considering launching a new chocolate-flavored KitKat product. What factors/issues would you consider to make the decision to launch and subsequently introduce the product? • You are charged with marketing a candy bar in Indonesia which has been very successful in the UK. What things should you consider in bringing the product to Indonesian market? • Give me an example of a recent new product launch that was well done.

9. New Competitor • How viable is this threat? Assess the threat to determine whether or not you need to defend: • Does the new product meet a consumer need? Will anyone buy this product? • How strong is the competitor? Will they spend to support the launch – are they smart marketers? • Where will they take volume from? Are they targeting you or your competitors? • Should you decide it is necessary to defend, there are some strategies to consider (Think 4Ps): • Reinforce equity with advertising/promotion – remind consumers why your product is better than new competitor – don’t give them a reason to try. • Product upgrade to provide new benefit – never give consumers a product-based reason to switch. • Load consumers – provide price incentives so consumers will be stocked up with your product when a competitor launches (aka Pantry Loading). • Track new competitor’s performance after launch to see if it is successful.

10. New Competitor - Private Label • Build your equity: Use advertising to communicate quality/image of branded products to consumers. Establish a point of difference versus private label. Customers must understand the enhanced value of the brand. • Innovate: Increase product quality or innovate by introducing new flavors, scents or choices. • Manage the price gap: Consider a price sensitivity analysis. Determine how much of a premium you can afford to charge before your brand starts losing volume to private label (in essence, quantify the value of your brand to consumers). • Introduce a value brand: Larger companies that have more than one brand competing in a given category could position one brand as a value brand to compete against the private label. This offers consumers a branded option at a lower price.

11. Declining Sales Is the decline driven by a general category decline or a share decline on my brand? These drivers lead to very different strategies for reversing the decline: • Why is my category declining? • Changing consumer needs/habits/trends (health, convenience), macroeconomic factors • Why is my share declining? • You changed something or your competitors changed something (new product substitute – e.g. bleach usage declined when Tide w/ bleach was launched)?

12. Declining Sales • If category is declining, determine strategy to increase category usage: • Increase frequency – “brush after every meal instead of in the morning/evening” • Use more per usage occasion – “for whiter whites use a full cup instead of half” • New product uses – e.g. recipes • Expand across categories • If share is declining, determine why. Explore 4 Ps for yourself and your competitors: • Price – Changes? Temporary or permanent? Reason – lower costs, inventory, steal share, etc? • Product – Has the quality changed? Any new products/upgrades? SKU rationalization? • Promotion – Have promos/advertising changed? Message? • Placement – Have I lost distribution? Have competitors gained distribution?

13. Product Strategies • Product – bundle of benefits • Offered to a market • For attention, ownership, use or consumption • Satisfy a need or want • Object, service, place, organization or idea

14. Product – Service Continuum • Pure tangible good (soap) • Tangible good augmented by service(s) • Clothes, camcorder • Hybrid offer – equal parts product/service (custom suit) • A service with accompanying goods- • Airplane trip • An intangible benefit -(doctor’s app’t)

15. Product Onion • Core Product: core benefit to buyer • Actual Product: quality level, design, brand name, packaging • Augmented Product: Additional services and benefits surrounding the product

16. Product Classifications • Consumer Products • Industrial Products • Organizations, Persons, Places and Ideas • Organization: Unicef, WALHI • Persons: Roy Suryo, Paris Hilton • Places:business site marketing and tourism marketing • Ideas: demarketing, green living

17. Consumer Product Classifications • Convenience products • Staples, impulse and emergency • Shopping products • Specialty products • Unsought products

18. Analytical Dimensions • Consumer buying behavior: frequency, degree of planning and purchase effort; degree of customer involvement; degree of comparison • Price • Distribution • Promotion

19. Convenience Product • Buy it often, little planning or comparison, low involvement • Price: low • Distribution: widespread, convenient locations • Promotion: Mass (by the producer) • Examples: toothpaste, detergent

20. Shopping Product • Buy it less often, do plan and do compare brands on quality, price, style • Price: higher (than convenience) • Distribution: Selective but still reasonable convenient locations • Promotion: advertising and personal selling by producer and reseller • Examples: computer, furniture, clothing

21. Specialty Products • Strong brand preference, special purchase effort, little comparison, low price sensitivity • Price: high • Distribution: one or a few outlets • Promotion: carefully targeted by producer and reseller • Examples: luxury and some hobby goods

22. Unsought Product • Little awareness or interest until needed; often negative interest • Price: varies • Distribution: varies • Promotion: Aggressive ads and personal selling by producer/reseller • Ex: funeral home, dental services

23. The Importance of Launches “A company….must choose a launch strategy that is consistent with its intended positioning. The launch strategy should be the first step in a grand plan for life-cycle marketing.” Philip Kotler Marketing Management Does your product launch plan reflect all of the money and time put into developing the product?

24. Some Factoids • 85% of new B2B products are failures • 95% of new consumer products are failures • Failures = doesn’t meet company objectives, withdrawn from market within 12-18 months Source: New Product News

25. Positioning Strategy Process Market/Customer Segmentation Competitive Differentiation Market Vision Strategy Evidence Market Entry Customer Segment Critical Need and Total Product Requirements Market Drivers Positioning StrategyStatement Market Segment TechnologyEnablers Total Product Assets Company Total Product Solution’s Potential Differentiators Customer Segments Customer/End-User Problem(s)Definition Technology and Total Product Roadmap Competitors’ Total Product Solutions’ Potential Differentiators Critical Needs Applications Partnerships Barriers to Adoption Company Product/Service Match Product/Market Category Business Model Market Entry Customer Segment Roadmap and Market Segment Leadership Roadmap Company Differentiator Mission Statement (Functional) Programs POSITIONING STRATEGY BRANDING STRATEGY

26. Unite company around shared objective: making the launch successful Provide strategy evidence of the company’s intent, and right, to be a market segment leader in product/service category Build independent third-party validation, and strategy evidence, of positioning strategy Start the ‘buzz’, market pull with a consistent message architecture Support long leadtime sales cycles Facilitate fundraising Launch Objectives

27. Launch Objectives (con’t) • Establish core technology/system as an extensible platform for future products and partnerships • Establish broad-based awareness and credibility with product customer segment • Generate market momentum/Accelerate the sales cycle for Product iPad; delay customer purchase commitments to competitors

28. Strategic Platform Decision • Type of demand sought: - New-to-the-world, develop entry strategy with emphasis on stimulating primary demand for the product category (iPad) - Product improvement, to achieve customer migration, to stipulate replacement deal. -Line addition, stimulate selective demand • Permanence (stay, stay if meet the goals, temporary) • Agressiveness (agressive, cautious, balanced) • Competitive advantage (differentiation, price, or both) • Product line replacement • Competitive relationship • Scope of market entry • Image

29. Target Market Decision • Segmentation (end-use; geographic & demographic; behavioral and psychographic, benefit segmentation) • Micromarketing & mass customization (loyalist, rotators on alternative sets, deal-selective, price-driven, store brand buyers, light users) • Diffusion of innovation • Product characteristic (relative advantage, compatibility, complexity, divisibility, communicability)

30. Product Positioning • Buyers should buy our product rather than others being offered and used because:....................! • Attribute (a feature, function, benefit) • Feature, “the car that can’t make you lost (with a GPS ready)” • Function, “shampoo that coats your hair with athin layer of protein” • Benefit, “saves your money.”

31. Branding & Brand Management • Trademarks & registration • Thinks of a good brand name • Avoid brand name pitfalls • Manage brand equity

32. ‘Pre-Announcing a Product’?* • Why? • Complex problem/solution = market education • Big budget line item product = long budget cycle, complex buying process • Competitive pressures • Need market ‘buzz’ for funding round • Risks? • Too much competitive information, too early • Market environment can change substantively • Product development slips • ‘Obsolete’ an existing product • Analysts/Media won’t cover ‘the real deal’ * Often executed as a ‘crescendo launch,’ a series of targeted announcements leading up to product launch

33. ‘Pre-Announcing’ Tips • Do • Describe key elements of technology • Explain benefits of technology/potential applications enabled • Articulate initial total product assumptions (services, standards, partnerships, etc.) • Don’t • Name product, provide specifications • Announce pricing • Provide precise launch date

34. Launch Plan Outline • Positioning Strategy Statement and Message Architecture • Objectives and Strategies • Competitors/Competitive Response • Market leverage/Influencer plan • Sales training and lead generation (closed loop) • Marketing programs materials • Schedule/Timeline • Momentum milestones • Appendix - positioning toolkit - customer segment profile - buying decision process

35. Launch Checklist: Some Strategy Evidence Options • Positioning Toolkit • Sales, channel strategy • Product Release schedule • Programs • Ads, site sponsorships • CD, Flash demo • Customer seminars • Data sheets, application notes • Direct mail, e-mail, list promotions • Newsletters • Sales, channel launch; training • Trial, swap-up program • Trade shows, conferences, events; suite briefings • Advance press and analyst tour • Speaker program • Regional field sales champions • User groups, customer councils • Webcasts/Webinars with guest • experts: customers, analysts, partners • Lead management system…salesforce • Materials • Brochures • Data sheets, application notes • Presentations • Price lists • Product catalogs • Product demonstrations • Product roadmap • Press releases • Technical articles • Technology, company backgrounders • Testimonials • White papers • Web site update

36. Launch Manager is ‘Command and Control’ Creative, Website, Interactive Marketing Weekly Status and Project Management Product Development/ Technical Marketing: Data Sheets & Demos Sales: Customer Advocates Content Launch Program Manager CTO/Guru: White Papers, Simulation Strategies Press/Analyst Relations, Materials Production Shows, Conferences, Events Strategic Partners, Investor Relations

37. Launch Responsibilities Launch Strategy Marcom: Creative, Website, Interactive Marketing Product Marketing:Data Sheets & Demos Marcom: Press/Analyst Relations, Collateral Biz Dev: Strategic Partners Marcom: Tradeshows, Conferences, Events CTO/Guru: White Papers, Simulation Strategies Sales:Customer Advocates Content Finance: Investor Relations Product Development:Product Availability Launch Manager and Champion

38. Developing Strategy Evidence: Market Leverage Model Education Market Segment BUS I N E S S p R E S S T R A D E P R E S S INVESTORS F I N A N C I A L A C C O U N T S P A R T N E R S I N D U S T R Y A N A L Y S T S A N A L Y S T S E D I T O R S C H A N N E L E D I T O R S T A R G E T SALES MarketEntryCustomer Segment Company Validation

39. Market Leverage/Influencer Plan

40. Launch Pitfalls • Launch planning starts too late in product development process • Positioning strategy half-baked and untested, externally • Not enough (credible) strategy evidence: bug-free product, the right – at least one Tier 1 - customer testimonials and references (negotiated into contracts), application notes and documentation, channels, customer support • Proper market foundation has not been laid, no one has heard of the company or product • A non-programmatic approach (‘escapes’ vs. launches): lack of launch manager, market leverage and message models, launch objectives, plan, measurable goals • Lack of fully integrated plan (from product management to marketing communications to product development)

41. Hints: Start Yesterday! • Validate size of market and positioning as foundation for plan • Build consensus on key messages • Give yourself lead time to create sales tools • Technology, solution partners play a larger role today Develop the Launch Plan Early

42. Hints: It takes a village to raise a child or launch a product! Leverage Cross-Functional Team Expertise • Development • Product marketing • Sales (U.S., Int’l) • Technical sales • Strategic partners • PR, MarCom • Customers • Support

43. Hints: Leverage Cross-Functional Team Expertise • Launch manager • Oversee process • Subject Matter Experts • Create content: Author white papers, presentations, webcasts to ensure message consistency • Sales management, “friends and family” analysts, customers and partners • Bullet-proof launch messages, content, and delivery prior to general release • Early indicator of product success in market • Pre-define roles and responsibilities for all

44. Hints: Sales is From Mars Marketing From Venus** • Know Your Audience (and they don’t think like you!) • Sales: what it takes to win individual deals; don’t naturally sell “new stuff” • Marketing: best way to capture a market segment • Walk in Their Shoes • Spend time with the telesales group for a day • Make a few cold calls to see what works and what doesn't. • Shadow a sales rep through an entire sales cycle—from the first call to signing the papers. You'll learn first hand what it really takes to get a deal done. Source: TopLine Strategy Group

45. Hints: Get to the Point – Fast Where’s the beef? • Keep It About the Customer • Answer 4 Basic Questions* • Who am I selling to? • Why are they buying anything? • What do I have to sell them? • Why would they buy from me? • Reinforce key messages • No more than 3 key sub-messages • Be creative – but make it meaningful • Repeat throughout *Source: Customer Message Management Forum

46. Hints: One Size Doesn’t Fit All • Different needs for: • Domestic and international launches • Field sales, inside sales, channel partners, distributors, technical sales, service and support • 76% of companies tailor messages • For each audience • Customize the message to what they care about • Tailor delivery with a blend of tools

47. Hints: KISS – Keep It Simple Stupid • Create a comprehensive self-service information center • Supports multiple forms of content • Live events, help center, reference materials, samples, simulations….. • Accessible online and remote • Plan for peak usage, not average • Based on typical user desktop, no special requirements • Don’t expect the field to learn a new process easily • LESS is MORE! • Refrain from adding “extra” information • Make everything easy to find • Delete outdated information

48. Why Launches Can Make You Crazy Multiple Objectives Multiple Tools (presentation, web cast, press releases, demos,..) (educate, announce, certify,…) Multiple Delivery Options Multiple Audiences (Web, CD, face-face PDA, Document) (Customers, sales, resellers, distributors, integrators)

49. Hints: Integrated Process • Start with the customer presentation, messaging • Gain consensus on the target, value proposition, features • Integrated communication programs • Re-examine at the list of what’s needed each time • Multiple-activity communication campaigns • Build sales and channels into the programs • Communications content for all audiences managed together • Make it easy for subject matter experts to create, submit and update content into single framework

50. Summary and Wrap-Up The Launch Plan is the chance to get the company and product off to a good start in the market! Make it clear and execute it creatively.