New Product Success: Launch and Marketing

Successful new products can enhance the success of an organization, and product introduction is critical to that success. With a failure rate of new products estimated as high as 50% at launch (Cooper and Edgett, 1996), new product launch strategies are critical to new product success; or, as Delre, et. al. , (2007) suggest, “the initial phase of market penetration is a critical moment for the future direction of a product. A fast and substantial takeoff can guarantee a competitive advantage.

”As Duquesne University prepared to launch the Master of Science in Sports Leadership (MSSL) program for fall 2006, it was acknowledged that, in order to facilitate diffusion and reach enrollment targets, pre- and post-launch advertising messages that both appealed to as well as reached the potential students had to be developed and placed. Delre et. al. (2007) acknowledge the complexity and unpredictability of promotional planning, noting that “the optimal targeting strategy as well as the right timing for promotional mass media campaigns remain unclear. Recognizing these challenges, the MSSL program launch committee was charged with identifying an optimal promotional strategy. LITERATURE REVIEW The MSSL program uses quantitative measurement to assess the attainment of stated objectives of particular advertising campaigns. In terms of true advertising effectiveness, measurement of website hits following ad drops can be considered a measure of desired behavior by the target audience.

Subsequent student applications are another measure of behavior, and, as such, equate with sales.Bendixen (1993) suggests that actual product sales, or “surrogate variables such as market share” are the only true measure of the behavioral stage of communication, such that “advertising effectiveness measurement is concerned with the quantitative description and interpretation of the advertising sales response function. ” While Bendixen also suggests that advertising effectiveness measurement is not as concerned with specific campaigns as with the long-term due to sales and advertising often aggregated on a monthly basis. However, due to the use of web statistics through SLPnet, we were able to capture data on a pre-campaign basis.Abraham and Lodish (1990) and Lodish et al. (1995a) suggest that an effective advertising strategy begins with an understanding of how advertising works (i. e.

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, how it affects consumers), as ineffective campaigns waste organizational resources. Promotional strategies can play an important role in new product launch, particularly in the early stages of The Journal of International Management Studies, Volume 4, Number 2, August, 2009 89 the product life cycle, helping to propel the new product from introduction to growth thus impacting product adoption.External influences, including promotions and advertising, tend to drive sales during the introduction phase, though it can be challenging to determine the most effective targeting and timing (Delre et. al. , 2007). Because expenditures in both marketing and production occur in product development, Guiltinan (1999) suggests that product launch may be one of the largest financial investments an organization may make. Numerous studies of product launch/product introduction have been conducted in the industrial arena.

There is much research to support the necessity of promotion as a mechanism for facilitating diffusion of new products (Delre et. al, 2007). While the new product in question, the MSSL program is not an industrial product, the authors accept that similarities do exist and borrow from this literature. According to Calantone et. al. (1996), new product success correlates to the level of marketing skills and resources as well as technical skills and resources, and a launch strategy includes reaching a target market with the marketing offer as well as generating sales through marketing efforts (Green and Ryans, 1990; Choffray and Lilien, 1984).Bass (1969) notes that promotions, including mass media advertising (external influences), tend to drive sales during product introduction.

Studies by Hardie (1994) and Reddy et al. , (1994, cited in Ambler & Styles, 1997) suggest new product share performance is related to the parent brand’s strength, the new product’s fit, or similarity, to other items under that parent brand’s umbrella, and the amount of support available for advertising and promotion.Subsequently, resources should be available for new program promotion in the higher education market, and in addition to product launch advertising for new academic programs, pre-announcements can play an important role. As enrollment in an academic program could be categorized as a novel purchase decision, providing advance notice of the new offering can insure that program information is available to potential student-customers during the information search stage of the buyer decision process, as well as build the reputation of the program.Typically, pre-announcements are released 17 weeks prior to product introduction (Kohli, 1999). http://www. jimsjournal.

org/11%20John%20Lanasa. pdf The long-term health of many organizations is tied to their ability to innovate-to provide existing and new customers with a continuing stream of new products and services. Under modern conditions of competition, it is becoming increasingly hazardous not to innovate. The firm that does not maintain a program of managed innovations can quickly find itself behind competition.Although innovation is important, it is risky and costly. Booz, Allen & Hamilton [3] estimate that almost half of the resources spent on new products are allocated to products that are never successful in the market. They also report that of over 13,000 new products of 700 U.

S. manufacturers, approximately onethird have not been successful. A survey of 148 companies by Hopkins [17] indicates that only half of the companies have achieved successful performance in two-thirds or more of their new industrial products. In a tudy of 122 industrial product innovations, Cooper [8] reports that for every 100 products that are fully developed, only 60 become commercial successes. Robert G. Cooper and Scott J. Edgett.

New product success is vital to the growth and prosperity of the modern corporation. Look around! Companies that are doing well today boast an enviable stable of successful new products. Product innovation is king! CEOs continue to rate innovation capability as a critical driver for their future business success as they focus on increasing profitability and growth.There are exceptions, however. Some companies, like Apple, Procter & Gamble, Johnson & Johnson, Kellogg’s, Microsoft, Hewlett Packard, Toyota, Sony and Pfizer, do make product innovation seem easy. They are the consistent winners, with one big new product breakthrough after another. But exceptional performance in product development is no accident – it is the result of a disciplined, systematic approach based on best practices.

So what are their secrets to success?That’s what this book is about – a collection of readings and articles that outline best practices in product innovation, and how the stellar companies do indeed succeed. The launch of the first product is an important event for start-ups, because it takes the new venture closer to growth, profitability and financial independence. Research-based start-ups (RBSUs), defined here as new business start-ups which develop and market new products or services based upon a proprietary technology or skill, have received a great deal of attention from academics in the last two decades (e. . ; Roberts, 1991; Shane, 2001;Utterback et al. , 1988; Woo et al. , 1994; Bower, 2003; Kaulio, 2003).

This is no surprise becauseRBSUs have been found to contribute to an economy in terms of exports, employment, taxespaid, research and development, and innovations(Utterback et al. , 1988) and play an importantrole in bringing new technologies to the market (Schumpeter, 1934; Henderson, 1993; Christensen, 1997; Hiltzik, 1999). The new product launch phase is a critical part of the total new product development process.This is especially true in the consumer packaged goods arena, where nearly 26,000 new products were introduced in 1999. 1 This compares to just over 12,000 new product introductions in 1986. 2 With this dramatic escalation in the number of new products competing for consumer attention, the quality of launch programs greatly impacts the success of product introductions. 1.

"Build a Better Mousetrap" 1999 New Product Innovations of the Year by Marketing Intelligence Service, Ltd. , Naples, NY, December 23, 1999. 2. Ibid. 3.Robert McMath, President, New Products Showcase and Learning Center, Ithaca, NY. 4.

Journal of Marketing article "Retaliatory Behavior to New Product Entry" by Sabine Kuester, Christian Homburg and Thomas S. Robertson, Vol. 63 No. 4, October 1999. 5. Out of the 12 executives interviewed, only three remain at their respective companies. We have attributed quotes only to those individuals who have given us permission to do so.

All other quotes are attributed using the interviewee’s title and type of company since we were unable to obtain permission to use their name.

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