PRODUCT DESIGN &

DEVELOPMENT

LEARNING UNIT IV: BRANDING,

PACKAGING AND LAUNCHING
STRATEGIES

WEEK 14: INTRODUCTION AND

LAUNCHING
 LEARNING UNIT IV: BRANDING, PACKAGING AND
LAUNCHING STRATEGIES
Learning results:
• Designs and develop in detail a plan and the process that an idea for a
product have to follow to turn it into a winning concept, analyzing carefully
each of its stages.
• Formulates and presents clearly how to develop a differential concept from
a product idea and a better comprehension of the needs of the target
audience.
Content of the session:
4.4 INTRODUCTION AND LAUNCHING
4.4.1 Consumer Buying Behavior for Innovations: Diffusion of
Innovation and Adoption Curve
4.4.2 Blocks and risks to new product adoption
4.4.3 Launching Methods and Strategies for a New Product
Introduction
4.4.4 Sales Promotions to accelerate introduction
 NEW PRODUCT INTRODUCTION THE
LIFE CYCLE

Saturation
US$ Competitive
Turbulence

Sales

Benefits

TIME
Introduction Growth Maturity Decline 13
 INTRODUCTION PHASE

 High failure rate

 Few competitors
 Frequently product updates
 Limited distribution
 High costs of production and advertising
 Promotion is focus on the creation of brand awareness,
product category benefits and the generation of the
first customers.
 Intensive personal selling to reclute wholesalers and
retailers to offer the product.
 MARKETING STRATEGIES
IN THE INTRODUCTION PHASE

INTRODUCTION

Product Limited number of product models

Strategy Frequent product updates(in the case of technology)

Distribution
Intense efforts to recruit wholesalers and retailers.
Strategy
Develop coverage

Develop product awareness, demand generation, recruit innovators and

Promotion
early adopters customers with product trials with samples and coupons.
Strategy
Intensive personal sales effort to engage distribution channels.

Price
Skimming prices for a faster recovery of cost development
Strategy
 GROWTH PHASE

 Sales increases
 New much more competitors
 Big players buy pioneers businesses
 Healthy profits
 Increase of advertising aggresiveness to communicate
brand´s differences
 Distribution coverage growth
 Price reduction
 MARKETING STRATEGIES
IN THE GROWTH PHASE

GROWTH

Product Ample number of models y frequently product

Strategy updates (in the case of technology).

Ample number of retailer, distributors and stock.

Distribution Intense efforts to build long term relationships with whosalers y retailers.
Strategy

Promote demand and agressivenes in promotion level

Promotion Increase consume and use frecuency.
Strategy Generate retrials and repurchase.

Price Skimming prices fall because of competitive pressure increase.

Strategy
 Diffusion
Process of the adoption of an innovation

Adoption
Consumers have the experience in using
the product trials and are willing to
repurchase
 NEW PRODUCT BLOCKS Y RISK

TYPES OF
PURCHASE
RISK

ECONOMICAL
SOCIAL RISK
RISK

FUNCTIONAL OR PHYSIC RISK

PERFORMANCE
RISK

PSYCHOLOGICAL
RISK
 How to Reduce Risks Perpections?

Appealing to:

• Brands • Advertising
• Celebrities • Warranty or
• Certification Seals
Experts
• Channel reputation
• Origin
• Product trial
• Delay pay
• Product
• Experiences
• Warrant
• Testimonies
• Aspect
Family Life Cycle Entrance Points

Couple with
children

Couple with
New Couple
teenagers

FAMILY
Couple with
Single Young LIFE CYCLE youngs

Retire Survival Empty Nester

Working
Survival with
Empty Nest
 Consumer Behaviour

• Internal (decision taking) and external

processes (observable conduct) follow by a
person when searching, purchasing, using
and evaluating products, services or ideas
to satisfy their needs.
 NEW PRODUCT ADOPTION STAGES

NEED RECOGNITION

IMPLICATION LEVEL

UNDERSTANDING

INTEREST
ADOPTION PROCESS
STAGES
EVALUATION

TRIAL

ADOPTION

CONFIRMATION
Diffusion of Innovations, Product Adoption
and Life Cycle 100%
Market
Share

2.5% 13.5% 34.0% 34.0% 16.0%

 Innovations Adopters Categories

Venturesome, higher educated and

Innovators
Innovatorsor
orPioneers
Pioneers higher incomes. Eager to try new ideas and
products.
Leaders in social settings. Much more reliant in
Early
EarlyAdopters
Adopters Groups norms. Tend to be opinion leaders.

Collect more information, evaluate and evaluate

Early
EarlyMajority
Majority More before adoption. Rely on friends, opinion
leaders for information and norms.

Adoption come from pressure to conform.

Late
LateMajority
Majority Skeptical. Are older than others
Below average income and education.
Fear of doubt. Have the lowest socio economic
Laggards
Laggards status. Are suspicious of new products.
Alienated from an advancing society.
 Factors that Condition a New
Product Adoption
Market Inertia Level

How easy or how elastic is the switch from

a product or brand to another

• High Inertia Level: product need

significant differential attractive to
breakthrough the habits.

• Low Inertia level: the problem is to

mantein the habit of comsuption of the
product in the long term (fashions).
Factors that Affects Innovation Acceptance

INNOVATION CUSTOMERS DIFFUSION

CHARACTERISTICS CHARACTERISTICS MECHANICS
Relative Advantage Cultural Launching Strategies
Compatibility Social Product
Perceived Risk Demographic Price
Complexity Physicological Distribution
Understanding Education Promotions
Observability Experiences

Rejection Resistence Modification

Adoption
17
 Product Characteristics and the
Rate of Adoption

Complexity Level of difficulty to understand the uses of

Complexity the new product

Degree to which the new product is

Compatibility
Compatibility consistent with the existing values,
knowledge and experiences of adopters

Relative Level of innovation superiority from

RelativeAdvantage
Advantage
substitutes

Degree on which results and benefits can

Observability
Observability be observe and easily verify by others

Trialibility Level in which results can be verify.

Trialibility
Demostration easiness
 PURCHASER ROLES

• INITIATOR: the person that suggest the idea of

purchase the product first.

• INFLUENCER: the person who´s point

of view is taken in consideration in
the final decision.
• DECISION MAKER: the person who decides to
purchase or not. Decide in other elements of the
purchase like what, where and how to purchase.
• BUYER: person who takes the action of buying the
product.
• USER: person who consumes o uses the product.
TYPES OF PURCHASES AND THE CONSUMER
BEHAVIOUR

High implication Low implication

Significant A. Complex B. Variable search

differences purchase behaviour
between brands behaviour
(Buyers takes importance to the
(Expensive low frequency and brand selection)
risky purchase)

C .Reduce D. Habitual Purchase

Low disonnance behaviour
differences behaviour
between brands (Consume products,
(Expensive low frequency and frequently use)
risky purchase, but buyers
only find little differentiation
between brands)
 Post Purchase Feelings

Cognitive Dissonance
Creates uncertainty in the purchase, because of the negative feelings
generate by the contradiction betwwen the knowledge, the thoughs and the
actions taken.

To reduce dissonance is key to provide initial satisfaction and more

information to the real buyer. These feedback would support the generation
of ideas for an attitude change and the conssonance to justify the purchase
action.

Reduce
Product uncertainty
Offer more
Satisfaction
information Reinforce
options
decision taken
Introduction Strategies
 STRATEGIC OBJECTIVES
NEW PRODUCT LAUNCHING AND INTRODUCTION

RETURN OF INVESTMENT OBJECTIVE

INCOMES
ORIENTED
MAXIMIZE BENEFITS

SALES GROWTH
SALES
ORIENTED
PENETRATION AND MARKET SHARE

STATU QUO COMPETITION OF OTHER TYPE

COMPETE WITHOUT MOVING PRICE

 JUDGMENTS OF VALUE MATRIX
QUALITY / BENEFITS PERCEIVED

JUDGEMENTS
OF VALUE:
LOW MEDIUM HIGH

POSITIVE ++
1 ++ 4+ 7

NEUTRAL
2+ 5 8-

3 6- 9 -- NEGATIVE --

LOW MEDIUM HIGH

PRICE PERCEIVED

WHEN THERE IS MORE VALUE ---> THE CUSTOMER EXPECTATIONS

ARE OVERCOME
 INTRODUCTION STRATEGY
USING PRICE

• PRESTIGE (Skimming):
– Initial high price to capture selective market demand.
– Reduce market and few competitors.
– Exclusive image, high price, selective distribution.
– Faster research and development investment recovery.

• PENETRATION:
– Ample market, price elasticity, intensive competitions.
– Aim to obtain and attract the market by low prices,
goes with massive communications and intensive
distribution.
25
 LAUNCHING METHODS
Methods Main Application
ESSAY ZONE New products that modifies habits and customs.
Selection of a representative city or market of the
potential market to start the introduction. Let to
concentrate actions, efforts and monitoring.
It is a launching by steps.
GLOBAL For products that do not change consumer´s
purchase or usage behaviour. Fast and organized
introduction to the totallity of the market. Uses all
the sales promotional capacity. Need constant
monitoring of results to apply corrections.
PILOT POINTS Between both previous methods. Select initials
points of sales with the highest image and then
made them be follow by other channels.
 LAUNCHING METHODS
Method Main Application
COMPETITIVE To breakthrough competitor´s barriers. Direct
aggressives arguments of comparission between
the new product and the previously existing.

EDUCATIVE For complex products with remarkable different

characteristics in the usage way.
SENSIBILIZATION Innovative products with technical complexity and
limited potential market
DIFFUSION Products that first need to be approved by opinion
leaders.
PRESCRIPTORS Selective action to influencers who can recommend
the product. Concentrate efforts in advisers with
professional expertise.
 PULLING STRATEGY

PULLING STRATEGY
Uses communications mix to attract final
consumers.
Objective: when consumers ask for the product to
the distributors and then they ask to the
manufactures.
Demand Generation

Manufacturer Channels Final User

Marketing
Activities
 CONSUMER SALES PROMOTION - OBJECTIVES

¿WHEN TO USE SALES PROMOTIONS AND WHAT FOR?:

• PROMOTE PRODUCT TRIAL:

• LAUNCHING OF NEW PRODUCTS O NEW PACKAGES.
• RE-LAUNCHINGS.
• PROGRAMS TO CAPTURE ENTRY USERS.
• LOW PENETRATION CATEGORIES.
• HIGH VOLABILITY CATEGORY. (Teenagers)
• GENERATE SECOND TRIALS:
• HIGH NUMBERS OF SWITCHER USERS.
• GENERATE REPURCHASE AND RETENTION:
• WHEN PURCHASES PREFERENCES ARE TIE.
• IMPROVE CONSUME LEVEL:
• IN CATEGORIES WHERE CONSUME RISES BECAUSE OF HAVING MORE STOCK.
• SPECIAL PACKAGES THAT INCREASES PRODUCT USAGE.
• DEVELOP STOCK LEVEL:
• RESPOND TO A COMPETITOR´S LAUNCHING.
• LEVERAGE PRODUCT USAGE EXPERIENCE LEVEL.
 SALES PROMOTION TECHNIQUES

• SAMPLING, SALES-SAMPLING AND TASTING .

• BONUS PACKS
• IN/ON PACK PRIZES
• COMPRA IN PACKS, COMBOS
• CONTESTS, RAFFLES AND LOTERIES
• CONTINUITY OF ACCUMULATIVES PROGRAMS.
• EVENT SPONSORING.
• TEMPORAL PRICE REDUCTION
• DIRECT DISCOUNT IN PRICE
• REBATES DISCOUNTS
• CUPONS
• OFERTA DE PREMIOS: GIFTS AND SWOPS
SALES PROMOTION TECHNICS vs. OBJECTIVES
 SALES PROMOTION
CONSUMERS PROSPECTING

SAMPLE TRIAL CAN BE THE FIRST SIGNIFICANT EXPERIENCE OF

A CONSUMERS WITH THE PRODUCT.

TRIALS CAN BE GENERATED THROUGH:

• PERSUASIVE ADVERSTISING THAT MOTIVATES THE TRIAL

• SAMPLING / TASTING

SAMPLING IS ALWAYS THE BEST WAY WHEN THE PRODUCT

HAVE SIGNIFICANT SUPERIORITY IN RELEVANT BENEFITS
THAT LEAD TO THE REPURCHASES AND LOYALTY
 SALES PROMOTION
CONSUMERS PROSPECTING
THE PRODUCT TRIAL IS AN STRATEGIC KEY ACTION TO GAIN YOUR
FIRST COSTURMERS OR PROSPECTS

TYPES OF SAMPLE TRIAL:

• MASSIVE
• SEGMENTED
• CONCENTRATED IN ENTRY POINTS (be the first for newly users of the category)
• GIVE MORE INFORMATION AS SALES SUPPORT ARGUMENTS
• USE AN EXPERT REFERRAL

TYPES OF VEHICLES:
• Mailing or direct marketing
• In stores
• Newspapers inserts, magazines
• Co-sampling
• Door to door, face to face, in street corners
 PUSHING STRATEGY

PUSHING STRATEGY

Manufacturer uses sales force to engage

channels .

Objective: lead sales and promote products

Demand Generation

Manufacturer Channels Final User

Marketing
Activities
 TYPES OF SALES FORCE SALES PROMOTIONS

• SUPPORT PROGRAM (TRAINNINGS)

• PRESENTATION EVENT FOR THE SALES FORCES
• TALLER DE VENTAS DE ENTRENAMIENTO
• SUPPORT MATERIAL, BROCHURES,
HOJA VENDEDORA, AUDIOVISUAL, SAMPLES
• INTERNAL COMMUNICATION BULLETINS

• MOTIVATIONAL PROGRAMS (TEMPORALS O PERMANENTS)

• SALES CONTEST.
• SALES INCENTIVES PROGRAM TO ACCOMPLISH SALES GOALS,
COVERAGE, COLLECTIONS, SERVICES LEVEL AND OTHERS.
 SALES FORCE SALES PROMOTIONS

ADRESSED TO THE SALES FORCE MOTIVATION FOR THE GOAL

ACCOMPLISHMENT AND THE IMPROVEMENT OF THEIR
PRODUCTIVITY AND ENTUSIASM TO THE WORK.

SHORT TERM OBJECTIVES ARE:

• EXCEED SALES QUOTES

• WIN NEW CUSTOMERS
• PROMOTE SALES OF AN ARTICLE
• INTRODUCE A NEW ITEM TO THE MARKET
• COMMUNICATE SPECIAL SALES TO RETAILERS
• INCREASE ORDER SIZE
• IMPROVE COVERAGE DISTRIBUTION
• IMPLEMENT BETTER WORKING HABITS
• REDUCE COSTS OF SALES
• BALANCE COMPETITIVE OFFERS
 CHANNELS SALES PROMOTIONS

• AIM TO THE DISTRIBUTION CHANNELS

• OBJECTIVES:

• DEVELOP MERCHANDISING IN POINT OF PURCHASE

• STOCK CONTROL
• IMPROVE DISTRIBUTION
• MOTIVATE CHANNELS TO IMPLEMENT SPECIFICS ACTIONS
 TYPE OF CHANNELS SALES PROMOTIONS

• POP MATERIALS OR POP ACTIVATIONS (Increase Visibility)

• CONTEST

• EXHIBITS, FAIRS

• SALES MEETING

• CASH OR PRODUCT BONIFICATIONS

• SPECIAL DISCOUNTS S FOR EXHIBITION SPACE OR ADVERTISING

• PRIZES OR SPECIAL OFERTS FOR FIRST PURCHASE OF REPURCHASE

Dreams can´t be conquer by luck

They are conquer with Purpose with Pasion

with Discipline

is a matter of Attitude
 References
Baker, M. & Hart, S. (2007). Chaps. 13, Commercialization: test
marketing and launching the new product. In Product Strategy &
Management. (pp. 357-395). (2nd. Ed.) Edinburgh: Pearson
Education.