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Traditional Product Launch Strategy Skim the market with premium prices (lead users, technophiles) Establish first-mover advantage Descend learning curve with volume increases Reach broad market later with lower prices

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Page 1: Traditional Product Launch Strategy Skim the market with premium prices (lead users, technophiles) Establish first-mover advantage Descend learning curve

Traditional Product Launch Strategy

• Skim the market with premium prices (lead users, technophiles)

• Establish first-mover advantage

• Descend learning curve with volume increases

• Reach broad market later with lower prices

Page 2: Traditional Product Launch Strategy Skim the market with premium prices (lead users, technophiles) Establish first-mover advantage Descend learning curve

What Are First-Mover Advantages?

• Brand loyalty

• Preempt capacity

• Preempt shelf space

• Head-start on learning

• Network externalities\

Question: Have first mover advantages disappeared?

Page 3: Traditional Product Launch Strategy Skim the market with premium prices (lead users, technophiles) Establish first-mover advantage Descend learning curve

The Survival Zone

Price Point Quality

Features

Page 4: Traditional Product Launch Strategy Skim the market with premium prices (lead users, technophiles) Establish first-mover advantage Descend learning curve

        

         

•Product: Sony Cyber-shot DSC-T1 •Specs: 5.0 megapixels, 3X optical zoom •Price: $550 list •Company Info: Sony Electronics Inc., www.sonystyle.com •Ease of use:          •Power:          •Performance:          •Image quality:         

Editor Rating:          

Page 5: Traditional Product Launch Strategy Skim the market with premium prices (lead users, technophiles) Establish first-mover advantage Descend learning curve

Calculating Target Cost

Price Point

- dealer margin

- import costs

- margin requirement

Target Cost

Page 6: Traditional Product Launch Strategy Skim the market with premium prices (lead users, technophiles) Establish first-mover advantage Descend learning curve
Page 7: Traditional Product Launch Strategy Skim the market with premium prices (lead users, technophiles) Establish first-mover advantage Descend learning curve

What If Estimated Costs AreHigher Than Target Costs?

• Reduce features and lower price point

• Enhance features and raise price point

• Redesign the product or component

• Reexamine conditions (launch date, volume)

• Consider life cycle cost

Page 8: Traditional Product Launch Strategy Skim the market with premium prices (lead users, technophiles) Establish first-mover advantage Descend learning curve

Managing the Product Development Process

• If you can’t meet the target, don’t launch the product

• Tip-toe objectives

• Cost target is a unifying metric