Michael Baker and Susan Hart, Product Strategy and Management, 2 nd Edition, © Pearson Education Limited 2007 Slide 13.1 Chapter 13 Commercialization

Commercialization stages Alternative strategies: –Penetration –Roll-out Test marketing: –Objectives –Arguments against Selecting a launch strategy Importance of communication Agenda

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, 2 nd Edition, © Pearson Education Limited 2007 Slide 13.4 Commercialization stages 1. Complete final plans for production and marketing: 2. Initiate co-ordinated production and selling programmes 3. Check results. Make necessary improvements in product, manufacturing, or sales:

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

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.

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.

Where a rollout strategy is feasible some form of test marketing is often recommended.

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.

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, 2 nd Edition, © Pearson Education Limited 2007 Slide Test Marketing Recruit Subjects Test attitudes and beliefs Expose subjects to advertising stimuli Subjects left to purchase Subjects interviewed Subjects may be post -contacted

Michael Baker and Susan Hart, Product Strategy and Management, 2 nd Edition, © Pearson Education Limited 2007 Slide Pitfalls of Test Marketing Failure to decide what is to be tested Failure to base test market plan on overall Failure to make comparative tests Failure to establish benchmarks in test area Lack of time

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

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.

Roger’s five characteristics offer a useful approach to identifying the early adopter: –Relative advantage –Compatibility –Complexity –Divisibility –Communicability

Communication : 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.