information than was available early in the process and you are able to fine-tune the pricing. A number of factors affect this decision. First, how likely is it that competitors will enter the market soon? The abil- ity of competitors to enter the market will be based on the investment required to enter, the ease of entering, and their own strategies. The faster that competition is likely to enter, the more appropriate a pene- tration (low) price strategy. Second, is there a large enough segment of customers willing to pay a high price for the product initially? Third, is the company, product, or service positioned appropriately for the price strategy being considered? Finally, what are the payback period,
“hurdle rates,” and return required by the company?
The final component of the launch documentation (after completing the milestone activities chart and the various event calendars and sched- ules from the marketing plan) is a calendar of early indicators of poten- tial launch success. Early indicators refer to outcomes, such as the number of inquiries, that can help predict or provide early indicators of the level of launch success. For example, history might indicate that thirty inquiries typically convert to one sale. In that case, tracking the number of inquiries could provide an early indicator of future sales. Other early indicators might include the number of sales calls made on the new product, the per- centage of distributors willing to carry it, the awareness level of the mar- ket, the number of facings retailers give to the product, and so on. After identifying the early indicators, the next step is to set time-based (e.g., weekly, monthly) goals to achieve for each. The early indicator chart, then, lists the outcomes expected by the end of designated time periods (e.g., each month), enabling the product manager to compare actual against expected performance without waiting for final sales data.
With launch documentation prepared, the product is ready to move to the launch phase. It’s worth noting that sales training may sometimes be required during the prelaunch phase (perhaps six to nine months prior to the official launch). The information on sales training is pre- sented in the next section covering the launch stage.
egy, target market prospects, sales and customer service support, and final marketing strategy.
Timing can be a critical component of new-product success. If com- petitors might be (or are) entering the market, the product manager must decide whether to get there first, concurrently, or after the com- petition. First entry usually provides an advantage, but if rushing results in a flawed product, the result can be more damaging than good. Tim- ing an entry with competition can neutralize the competitor’s potential first-mover advantage as well as possibly increase the potential market faster. Delaying an entry until after competition is in the market might make it possible to capitalize on competitive flaws as well as benefit from any competitive advertising that educates the market. Timing is also important if there are seasonal or cyclical aspects to a product, or if the introduction impacts the sales of existing products.
It is also necessary to make decisions on a geographic strategy. On some occasions, a national launch is appropriate, but most new prod- ucts start with a roll-out strategy. Prioritize the markets (e.g., regions, industries, or countries) and decide on an entry sequence. For exam- ple, it might be desirable to first enter the most attractive markets in terms of size and dollar potential. Or it might be more desirable to enter markets where competition is weak, providing an ability to gain experience, exposure, and market position. In other situations, the selection of roll-out markets is based on different product applications, pipeline inventory in the markets, ability to gain distributor or retailer support, company reputation in the market, or a host of other factors.
Although the roll-out might appear similar to test marketing, it dif- fers in a couple of important ways. First, in a test market the product manager targets regions that are representative of the final launch. This is not the case with a roll-out. The markets are selected based on their ability to provide an early cash flow or to gain commitment from an influential market needed for the continued roll-out. Second, the test market is a final test before the commercialization decision is made. The roll-out is the first step in commercialization after the decision is made.7 As part of this geographic strategy, identify specific target market prospects. This is particularly important in the business-to-business market where clients/prospects can be listed by name. The more detail that can be provided here for the sales force, the greater the chances of encouraging them to sell the new product. That leads right into sales
support. Work closely with the sales force to provide them with infor- mation that will help them sell. Prepare “how to sell it” booklets that discuss customers (not target markets), applications (not features), and useful questions to ask on a sales call. Make sure that customer service stays in the loop with sufficient communication through internal newsletters, informal and formal meetings, and various announcements.
The last part is fine-tuning of the introductory marketing strategy.
This action plan details introductory pricing, base price, and option pricing; press releases and product announcements; direct mail to select customers; shipping policies and procedures; channel and end-user communications; and training for the sales force and/or customers.
The sales training in particular should help salespeople sellthe prod- uct rather than simply pitch the product. (See Figures 10.9 and 10.10).
The sales training that is part of the product launch should educate and motivate the salespeople to sell your product. In other words, why
Figure 10.9 Avoid the “Pitch-the-Product” Launch 1 Prepare launch material based on
product capabilities and superiorities.
2 Home office communicates product’s “bells and whistles.”
3 Sales force learns product-centered information about capabilities and competitive superiorities.
4 Sales force communicates product to customers in the same way it was communicated to them—in terms of product capabilities.
Product development
Marketing
Launch the product to the sales force
Communicate product to customers
Sales force
Customers
should the salespeople believe the product will perform as claimed?
What motivation is there for them to sell it? For an existing product, the best proof is past sales success. For new products, a bit more per- suasion is necessary. Results from test marketing or beta testing, state- ments from sales managers or other salespeople indicating their success in a roll-out region, sales that you (as product manager) have person- ally made, or trade shows and lead generation programs in place can convince salespeople that the product is worth their time and effort to pursue. In addition, financial and nonfinancial motivators should be considered. Higher commissions, better bonuses, and desirable con- tests can work under the right circumstances. (See feature Launching a New Product to a New Customer Segment: The Catera.) Nonfinan- cial motivators could include customer input suggesting that less sales
Figure 10.10 Provide Need-Centered Sales Training in the Product Launch
1 Prepare problem-centered launch collateral.
2 Communicate in problem-solving terms, not “bells and whistles.”
3 Sales people list actual and potential customers who are likely to have the problems that have been identified.
4 Plan a call in terms of questions to uncover problems and needs, not in terms of product capabilities.
5 Conduct dry-run using role-plays and discussions.
6 Plan a call for each strategically important customer type.
Prepare product descriptions in terms of the problems the product solves for key customers.
Introduce product to salespeople in terms of its problem-solving capacities.
Plan calls to other key customer segments and types.
Identify target customers.
Plan call to a target customer.
Role-play and test the call plan.
effort is necessary to be successful, the ability to sell the product along with another product with a minimal increase in selling time, or unquestionable proof of competitive superiority.
A portion of the training might also include a motivational expla- nation of the need for and use of market intelligence by product man- agers, and how providing this information can help the salespeople. A standard intelligence report form can be built into a call report, designed into the menu system on a computer, or included as part of the expense form. Because this information typically comes into sales management or sales administration, a process would need to be estab- lished to send a copy of relevant product-related data to the appropri- ate product manager. The type of information useful for submission might include the following:
• New-product announcements by competitors
• Effective and ineffective approaches to selling a product
• Changes in competitive strategies
• Unusual product applications by customers, especially if they indicate a trend
• Perspectives on market trends that might affect company strategy