The prelaunch is the period prior to commercialization when the prod- uct manager verifies that all preparations have been made for the actual product introduction. During this stage, the product manager must identify all stakeholders and determine their information requirements.
Customer service needs to be prepared to handle inquiries and fulfill orders. Technical support personnel may require specialized training.
The distribution channel may require advance warning of any unique requirements of the product or service.
Also at this time, there may be a need to consider a market test or a simulated market test to determine whether the strategy (not just the product) is ready for introduction. Various use tests already should have determined the viability of the product, but the tests might not have addressed the best way to go to market. Test marketing helps assess whether the right price is being charged, whether the appropri- ate message is being communicated through advertising, and whether the proper distribution strategy is being employed. Of course, test mar- keting is expensive in terms of both money and time. Therefore, it should be undertaken only when the risk of not doing it is great.
For a typical test market, the product manager selects a geographic area that is as representative of the product’s target market as possible and markets the product on a limited basis in that region. The key decisions to be made include how many test markets, which ones, and how long the tests should run. Most companies select two or three test markets that provide good representation of their target customers.
Good representation refers to assuring that critical demographic vari- ables are dispersed in the target area in about the same proportion as exists in the total market area. The length of the test market will vary depending on the type of product. Some will require six to nine months, and others will need two years. The factor to consider is the length of the buying cycle, with the test market being at least as long as two buying cycles.5
Based on this information, a launch plan can be developed. The launch documentation should contain three specific components: (1) a milestone activities chart, (2) the marketing strategy to support the launch, and (3) an early indicator chart. (See Figure 10.7.) All of these guide the launch and early commercialization.
The milestone activities chart lists the desired dates of completion for significant activities such as purchasing equipment for the launch, final- izing package design, obtaining legal clearance, subcontracting special- ized labor, and preparing the owner’s manual. Each of these may require several steps and may vary in importance depending on the project. Their potential impact on product success must be considered in assessing pri- ority. For example, electronic or high-tech consumer products require clarity in technical documentation to be successful. Customers are
increasingly seeking simplicity in a complicated world. However, as a recent Business Week article stated, “Plain English is a language unknown in most of the manuals that are supposed to help us use elec- tronic products.”6The format of the milestone activities chart can vary from a simple list of activities and dates to more formal project sched- ule and control techniques like Gantt and PERT charts. (Refer to oper- ations management or project management books for more details.)
The marketing strategy component of the launch materials details the tactical components of the launch. Branding, packaging, pricing, advertising, and all aspects of marketing are studied. As with the annual product plan, the new-product marketing plan should start with an objective such as “Convert 25 percent of current customers to the product upgrade and obtain trial by an additional 25 percent.” The marketing tactics would then be put into place to accomplish this objective. A sample outline for this new-product marketing strategy is shown as Figure 10.8. Some companies include all or most of the listed components; others will need to be more selective. Line extensions might require only an abbreviated outline, whereas breakthrough prod- ucts will need extensive marketing strategy plans.
As mentioned earlier in the chapter, a decision will need to be made whether to price a product high initially to recover the development costs or to price it low to gain market share faster. Now you have more
Figure 10.7 Components of a Launch Control Document Early indicator chart Marketing plan with
event schedules Milestone activities chart
Figure 10.8 The Supporting New-Product Marketing Plan F. Marketing plan
1. Product marketing objectives 2. Target markets
• New or existing customers
• Demographics; psychographics 3. Distribution
• Channels (including Internet)
• Mark-ups/commissions/other incentives
• Available selling tools 4. Pricing
• Base price and discount schedule
• Promotional pricing programs
• Option pricing
• Product-line pricing 5. Promotion
• Sampling
• Merchandising
• Customer training 6. Advertising
• Product announcements
• Press releases
• Trade shows
• User groups
• Direct mail
• Advertising (media and copy strategy)
G. Cost and schedules
1. Development of sales support 2. Training costs (including lodging
and travel) 3. Trade shows
4. Media and advertising costs 5. Sampling and merchandising costs 6. Calendar of training schedules 7. Media calendar
8. Event schedule A. New-product objectives
1. Sales volume 2. Market penetration B. Background summary
1. Total industry sales volume and trends
2. Major competitors and analysis 3. Market potential and segments 4. Corporate charter
C. The company’s new product/service 1. Product
specifications/description 2. Brand name, trade name, and/or
trademark
3. Why is your product better?
4. Main user benefits 5. Customer profile(s) 6. Primary selling points 7. Positioning
8. Potential barriers 9. Frequency of purchase/use D. Entry strategy
1. Timing: when should the launch be planned?
2. Roll-out sequence: what are the priority markets?
3. Publicity
E. Company support/preparation 1. Internal announcements 2. Sales force tools 3. Customer service training 4. Technical support training 5. Field seminars
6. Policy statements
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.