CHAPTER 17 CHAPTER 17 IMPLEMENTATION OF IMPLEMENTATION OF THE STRATEGIC PLAN THE STRATEGIC PLAN McGraw-Hill/Irwin Copyright ©2006 The McGraw-Hill Companies, Inc. All right reserved. The Launch Cycle The Launch Cycle Expenditures Sales Prelaunch Beachhead Early growth Announcement Sales and Expenditures Figure 17.1 Tactical Launch Decisions and Actions, Tactical Launch Decisions and Actions, Showing Influences on Demand Showing Influences on Demand Launch Tactic Effective For: Promotion Advertising Cases where awareness will stimulate trial Coupons Reinforcing awareness Publicity New and controversial technologies with high perceived usage risk Sampling Cases where product advantages best learned through usage Beta Test Sites Stimulating “sampling” and as a reference for other potential buyers Sales and Distribution Shows/Demonstrations Clarifying relative product advantages or where uncertainty exists Technical Support Cases of incompatibility in usage process Distribution Structure Cases where relative advantage strong (direct channels) Intensity of Coverage Cases where warranty/maintenance service needs to be offered easily Distribution Incentives Cases where availability needs to be stimulated Pricing Introductory Pricing High relative advantage and compatibility (skimming policy); early adoption needs to be stimulated (penetration policy) Price Administration Cases where economic risk needs to be reduced (i.e., through rebates or money-back guarantees) Product Breadth of Assortment Introducing new product categories with high relative advantage Timing Product Deletion High margin but strong relative advantage (fast deletion); high switching costs (slow deletion) Preannouncing Building hype for new products; useful if relative advantage is high Figure 17.2 Preannouncement Preannouncement Getting to be popular, and very creatively managed. Far from the old days of “tease the public.” Preannouncement signaling may be used (“vaporware”). Beachhead Beachhead This refers to the heavy expenditure needed to overcome sales inertia (“getting the ball rolling”). Steep rising expenditures curve during this period, up to point where sales are increasing at an increasing rate. Begins with the announcement. Key decision during beachhead: when do you end it? How do you know inertia has been overcome? Copy Strategy Statement Copy Strategy Statement Communications tools used at launch will have certain deliverables. The way in which the firm communicates these deliverables to the advertising and promotion creative people is the copy strategy statement. Typical contents: The market segment targeted The product positioning statement The communications (promotion) mix The major copy points to be communicated. Typical Examples of Copy Points Typical Examples of Copy Points “The provider of this insurance policy is the largest in the world.” “This cellular phone has no geographic limitation.” “Dockers are available at JCPenney.” “Future neurosurgeons benefit from the hand-to- eye skills of computer games like this one.” There is no limit to the choices here, but there must be a focus. Only a few copy points are going to be accomplished at a time. A-T-A-R Goals: The New Product A-T-A-R Goals: The New Product Group’s Obligation Group’s Obligation New product group must persuade itself and management that the plan can achieve the necessary awareness, availability, trial, and repeat purchase and that it can do so in sufficient quantity and at acceptable cost. Motivating Distributors Motivating Distributors Increase distributor’s unit volume. Increase distributor’s unit margin. Reduce distributor’s cost of doing business. Change distributor’s attitude toward the line. Figure 17.3 Barriers to Trial Barriers to Trial Lack of interest in the claim. Lack of belief in the claim. Rejecting something negative about product. Complacency. Competitive ties. Doubts about trial. Lack of usage opportunity. Cost. Routines. Risk of rejection. [...]... Compatibility Figure 17. 4 1 Low Compatibility 2 High Compatibility A Low Relative Advantage Penetration price Slow deletion Risk-based promotion (leasing, money-back guarantees, equipment allowances) Intensive distribution Secrecy before entry Narrow product assortments Awareness promotion (coupons, etc.) Intensive distribution B High Relative Advantage Preannounce Broad product assortments Information-based promotion... publicity/education) Selective distribution Skim price Fast deletion Usage-based promotion (samples, beta tests) to clarify benefits received Selective distribution Source: Adapted from Joseph P Guiltinan, "Launch Strategy, Launch Tactics, and Demand Outcomes," Journal of Product Innovation Management, Vol 16, No 6, November 1999, pp 52 0-5 21 . CHAPTER 17 CHAPTER 17 IMPLEMENTATION OF IMPLEMENTATION OF THE STRATEGIC PLAN THE STRATEGIC PLAN McGraw-Hill/Irwin Copyright ©2006 The McGraw-Hill Companies, Inc. All right reserved. The. time. A-T-A-R Goals: The New Product A-T-A-R Goals: The New Product Group’s Obligation Group’s Obligation New product group must persuade itself and management that the plan can achieve the necessary. hand-to- eye skills of computer games like this one.” There is no limit to the choices here, but there must be a focus. Only a few copy points are going to be accomplished at a time. A-T-A-R