1. Common Myths About Marketing Planning for New Products
Marketing people make the decisions that constitute a marketing plan.
The technical work is complete when the new item hits the shipping dock. Marketing people take over.
The marketer’s task is to persuade the end user to use the new product.
The more sales potential there is in a market segment, the better that segment is as a target candidate.
The pioneer wins control of a new market.
As with Broadway shows, opening night is the culmination of everything we have been working for.

2. Strategic Givens
Corporate, some team decisions made earlier. Often found in the PIC Guidelines.
A specified gross margin: affects funding.
Speed-to-market: affects promotional outlays and schedules.
Commitment to a given channel: affects distribution plan.
Advertising policy: affects promotion decisions.
Pricing policy: affects decision to use penetration or skimming pricing (slide down demand curve).

3. Revision of PIC Goals Customer Acceptance Goals
Use
Satisfaction
Sales
Market Share
Financial Performance Goals
Time to break even
Margins
IRR, ROI
Product Level Performance Goals
Cost
Time to Market
Performance
Quality
Other
Competitive Effect
Image Change
Morale Change

4. Strategic Platform Decisions
Permanence
Aggressiveness
Type of Demand Sought
Competitive Advantage
Product Line Replacement
Competitive Relationship
Scope of Market Entry
Image

5. Permanence Permanent, stand-alone.
Permanent, but as a bridge to other items -- e.g., platform strategy.
Temporary. Given firms’ tendency to develop streams of products, more and more new products are actually only temporary.

6. Some Other Strategic Platform Decisions
Aggressiveness (aggressive versus cautious attitude at entry)
Type of demand sought (primary versus selective)
Competitive advantage sought (differentiation, price leadership, or both)
Competitive relationship (aim at a competitor, avoid a competitor)
Image (create a new image, tweak an existing image, use the already-existing image)

7. Scope of Market Entry
This is not test marketing. This is launch. All forces in place and working.
Roll out slowly -- checking product, trade and service capabilities, manufacturing fulfillment, promotion communication, etc.
Roll out moderately, but go to full market as soon as volume success seems assured.
Roll out rapidly -- full commitment to total market, restricted only by capacity.

8. The Target Market Decision
Alternative ways to segment a market
end-use, geographic/demographic, behavioral/psychographic, benefit segmentation
Micromarketing and mass customization
Also consider the diffusion of innovation

9. Factors Affecting Diffusion of Innovation
Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

10. Product Positioning Who -- Why -- How To whom are we marketing?
Why should they buy it?
How do we best make the claim?

11. To Whom Are We Marketing?
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)
The real issue here is commitment -- by all NPD participants and by management

12. Why Should They Buy It?
This too we have been testing -- basic concept statement used for testing and for guiding technical (e.g., QFD “Whats”), and the key reason on the “How likely would you be to buy this if we marketed it?” (product use test)
Formatted in three ways:
Solves major problem current products do not.
Better meet needs and preferences.
Lower price than current items.

13. How Do We Make the Claim?
Product positioning statement is a strategic driver --a core item -- not a list of advantages. Some new products get one short sentence -- technical items more.
Can be stated as one or more features (what it is).
Can be stated as a function (how it works).
Can be stated as one or more benefits (how the user gains).
Can be stated as a surrogate (no features, functions, benefits).

14. Branding Decisions What is the brand’s role or purpose?
Are you planning a line of products?
Do you expect a long-term position in the market?
How good is your budget?
Physical/sensory qualities of brand considered?
Message clear and relevant?
Insulting or irritating to anyone?

15. Questions and Guidelines in Brand Name Selection

16. Some Brand Names That Didn’t Work
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

17. How Brand Equity Provides Value
High
Brand
Loyalty
Other Brand
Assets
More/Better
Associations
Perceived
Quality
Awareness
Reduced
marketing
costs
Increased
trade
leverage
Patents or
trademarks
Strong
channel
relationships
Creates
positive
image
Helps
customer
process
information
Supports
quality
positioning
higher-price
strategy
Easier to
make
brand
associations
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

18. Preannouncement Getting to be popular, and very creatively managed.
Far from the old days of “tease the public.”
Preannouncement signaling may be used (“vaporware”).

19. 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?

20. 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.

21. 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.

22. A-T-A-R Goals: The New Product 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.

23. 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.

24. 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.

25. Appropriate Launch Tactics Given Relative Advantage and Compatibility

26. What Is Market Testing? Market testing is not test marketing!
Test marketing is one of many forms of market testing -- others include simulated test market, informal sale, minimarket, rollout.
Test marketing is also a much less common form now due to cost and time commitments and other drawbacks.

27. Where We Are Today in Market Testing
Scanner systems allow for immediate collection of product sales data.
Mathematical sales forecasting models are readily available that can run on a relatively limited amount of data.
We are “building quality in,” testing the marketing components of the product at early stages (ads, selling visuals, service contracts, package designs, etc.) rather than testing the whole product at the end.
Increased competition puts greater pressure on managers to accelerate product cycle time.
Market testing is a team issue, not solely in the province of the market research department.

28. How Market Testing Relates to the Other Testing Steps

29. Two Key Values Obtained from Market Testing
Solid forecasts of dollar and unit sales volume.
Diagnostic information to allow for revising and refining any aspect of the launch.

30. Deciding Whether to Market Test
Any special twists on the launch? (limited time or budget, need to make high volume quickly)
What information is needed? (expected sales volumes, unknowns in manufacturing process, etc.)
Costs (direct cost of test, cost of launch, lost revenue that an immediate national launch would have brought)
Nature of marketplace (competitive retaliation, customer demand)
Capability of testing methodologies (do they fit the managerial situation at hand)

31. Types of Information That May Be Lacking
Manufacturing process: can we ramp-up from pilot production to full scale easily?
Vendors and resellers: will they do as they have promised in supporting the launch?
Servicing infrastructure: adequate?
Customers: will they buy and use the product as expected?
Cannibalization: what will be the extent?

32. The Launch Management System
Spot potential problems.
Select those to control.
Consider expected impact/damage.
Develop contingency plans for the management of problems.
Design the tracking system.
Select variables.
Devise measuring system.
Select trigger points.
Adage: in driving a car, it is the potholes you don’t know about (or forget about) that cause you damage.

33. Spotting Potential Problems
Problems section from the situation analysis.
Role-play what competitors will do.
Look back over all the data in the new product's "file."
Consider hierarchy of effects needed to result in a satisfied customer (A-T-A-R).

34. A-T-A-R Hierarchy: Where Does the Problem Lie?
Aware
Unaware
Tried
Not
Reused
Not R.
Does the problem lie in awareness, trial, or repeat?

35. Designing the Tracking System
Select the tracking variables
Relevant, measurable, predictable
Select the trigger points
Consider the nontrackable problems

36. Questions from New Product Tracking Study
Category Usage Questions
In the past six months, how many times have you bought (product category)?
What brands of (product category) have you ever heard of?
Have you ever heard of (brand)? (Ask for 4 to 6 brands)
Have you ever bought (brand)? (Ask for 4 to 6 brands)
About how many times have you bought (brand) in the past six months?
Advertising Awareness Questions
Do you recall seeing any advertising for (brand)? (ask all brands respondent is aware of)
Describe the advertising for (brand).
Where did you see the advertising for (brand)?

37. Questions from New Product Tracking Study (continued)
Purchase Questions
Have you ever bought (brand)?
If "Yes":
How many times have you bought it?
How likely are you to buy (brand) again?
What did you like/dislike about (brand)?
What do you think of the price of
(brand)?
If "No":
Did you look for (brand) in the
store?
Why didn't you try (brand)?
How likely are you to try (brand) in the future?

38. A Sample Launch Management Plan
Potential Problem
Salespeople fail to contact general-purpose market at prescribed rate.
Tracking
Track weekly sales call reports (plan is for at least 10 general-purpose calls per week per rep).
Contingency Plan
If activity falls below this level for three weeks running, a remedial program of one-day district sales meetings will be held.

39. Another Problem Illustrated
Potential Problem
Potential customers are not making trial purchases of the product.
Tracking
Begin a series of 10 follow-up calls a week to prospects.
There must be 25% agreement on product's main feature and trial orders from 30% of those prospects that agree on the feature.
Contingency Plan
Special follow-up phone sales calls to all prospects by reps, offering a 50% discount on all first-time purchases.

40. A Stepwise Product Deletion Process
Recognition of the product to be deleted
Analysis and revitalization stage
Evaluation and decision formulation stage
Implementation stage

41. Product Liability: Typology of Injury Sources
Inherent Risk in Product
Design Defects
Dangerous Condition
No Safety Device
Inadequate Materials
Defects in Manufacture
Inadequate Instructions or Warnings
Dangers After Use

42. Four Legal Bases for Product Liability
Negligence
Manufacturer let the product be injurious
Warranty
A promise
Express warranty: a statement of fact about a product
Implied warranty: arises when product is made available for a given use

43. Four Legal Bases for Product Liability (continued)
Strict Liability
Seller is responsible for not putting a defective product on the market
Defenses: assumption of risk; unforeseeable misuse; not defective
Misrepresentation
Implied use of product, even if not defective
Other Legislation
Consumer Product Safety Act/Safety Commission

44. Which Are the Real Product Warning Labels?
1. On a disposable razor: “Do not use this product during an earthquake.”
2. On a rock garden: “Eating rocks may lead to broken teeth.”
3. On a roll of Life Savers: “Not for use as a flotation device.”
4. On a hair dryer: “Do not use while sleeping.”
5. On a piano: “Harmful or fatal if swallowed.”
6. On a cardboard windshield sun shade: “Warning: Do not drive with sun shield in place.”
7. On shin guards: “Shin guards cannot protect any part of the body they do not cover.”
8. On syrup of ipecac: “Caution: may induce vomiting.”
9. On an iron: “Do not iron clothes while being worn.”
10. On a plastic sled: “Not to be eaten or burned.”
11. On work gloves: “For best results, do not leave at crime scene.”
12. On a jet ski: “Riders may suffer injury due to forceful entry of water into body cavities while falling off this craft.”
13. On a carpenter’s router: “This product not intended for use as a dentist’s drill.”
14. On a blender: “Not for use as an aquarium.”
15. On a stroller: "Always remove child from stroller before folding."

45. Other Areas of Public Policy Debate
Environmental Needs
Worthy Products
Morality
Monopoly
Personal Ethics (what would you do?)

46. Environmental Needs A new product is said to hurt the environment if:
Its raw materials are scarce or hard to get to.
Its design or manufacture causes pollution or excess power usage.
Its use causes pollution.
Its disposal cannot be handled by recycling.
Some companies test market their products in Germany and Scandinavia, because of the strict greenness tests there.

47. Worthy Products
Coffee manufacturers agreed to produce some brands containing no beans from El Salvador.
Manufacturers have been asked to produce special exercise equipment for the handicapped or modified products for the elderly.
Orphan drugs supported by the federal government; otherwise would not be commercially feasible due to few users.

48. What Can the New Product Manager Do?
Include in Strategy and Policy
Consider public policy implications in PIC
Control Systems
Product Testing
Marketing Prepares Warnings/Labels
Adequate Market Testing (to identify miscommunications)
Education (to company personnel and customers)
External Affairs