sa-bu launch report final

8/12/2019 SA-BU Launch Report Final

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The new product launch phase is a critical part ofthe total new product development process. This isespecially true in the consumer packaged goodsarena, where nearly 26,000 new products wereintroduced in 1999.1 This compares to just over12,000 new product introductions in 1986.2 Withthis dramatic escalation in the number of new prod-ucts competing for consumer attention, the qualityof launch programs greatly impacts the success ofproduct introductions.

Done well, a launch helps a new product rapidlyestablish itself among its target users, gain marketshare and enhance the company's brand position.Done poorly, a launch can negate all the time,money and human capital that went into developingthe new product if it fails to achieve commercial suc-

cess.

Marketing experts estimate that two-thirds of all newproducts fail within two years.3 Many factors con-tribute to this high failure rate, including productsthat do not match customer needs or experienceunforeseen competitive countermoves.4 In addition,each year it becomes more difficult to break throughthe noise generated by the thousands of existingproducts and line extensions.

Sometimes, even well-conceived, innovative prod-ucts meet with failure in the marketplace.

Companies can end up pulling the plug on a per-fectly good product because the launch strategy andexecution failed to score high marks on the complexmatrix of marketing factors that spell launch suc-cess. In this study, products had only six months toprove themselves in the marketplace. Consideringthe amount of time and resources spent on newproduct development and the short purchase cyclesof many products, new products have a surprisinglysmall window of opportunity in which their fates aresealed.

Despite the launch phase's critical nature, very littleformal study has been done on the ingredients thatcomprise a successful launch. To provide muchneeded learning in this area for CEOs, marketingexecutives, and new product/brand managers ofconsumer product companies, Schneider &Associates, a Boston-based public relations firm withover 20 years of experience in product launches,commissioned this extensive investigation.

The overall objectives of this two-phased study , theSchneider/Boston University New Product LaunchReport, which is believed to be the first-of-its-kindever undertaken, were to:

Examine how managers carry out launches

Identify launch success factors -- those strategies,

tactics, and processes likely to improve the launchprocess

Provide new information to help product managersincrease their launch success rate

The qualitative portion of the study included inter-views with twelve5 carefully chosen "launch experts"from companies such as Brita Inc., a division of TheClorox Company; Royal Appliance and Unilever.The products launched by these executives eachreceived more than two new product awards. Ourgoal in talking with the experts was to understandthe activities that comprised the launch process, thetools they applied, and the conventional or uncon-ventional wisdom and rules of thumb that guidedtheir launch activities. We analyzed the transcribedinterview data, identified salient issues, developedpreliminary hypotheses from these themes, and inte-grated the findings as inputs to the next phase of thestudy -- the survey design.

The quantitative research performed for this studylooked at large enterprises with annual revenuesranging from $10 million to $10 billion. TheSchneider/Boston University New Product Launch

Report presents highlights and key findings from thequantitative study along with relevant illustrativequotes from the 12 one-on-one interviews withlaunch experts. The report gives a broad pictureof the art of the launch as currently practiced bymajor consumer product companies.

INTRODUCTION

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 interviewees title and type of company since we were unable to obtain permission to use their name.

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The sample for this research represents a broadarray of consumer product companies from indus-tries heavily engaged in new product activities.

The Food & Beverage industry is most widely rep-resented at 61% of the total sample, followed bySporting Goods (16%) and Apparel & Shoes (13%)(See Appendix A for detailed list).

Organizations that were contacted for this studyare generally very large enterprises, with averageannual revenues of $2.6 billion.

Additionally, the companies who responded areactively involved in launching new products. Onaverage, one-fifth (21%) of organizational rev-enues over the past three years were generatedfrom new products.

Study participants are seasoned marketing profes-sionals with significant experience in new productactivities and launch management.

The study's sample is largely comprised of seniorlevel executives: 51% hold CEO, Senior VP, orMarketing VP positions; 25% are MarketingDirectors; and 24% are Marketing, Brand orProduct Managers.

The typical study participant has managed newproducts for eight years and has been personally

responsible for introducing an average of sevennew products and eleven line extensions from plan-ning through market launch.

All statistical significance testing reported in thisdocument has been performed at the 95% level ofconfidence, with significantly higher differencesdenoted by an asterisk (*)6.

For clarity, corresponding questions from the surveyare listed below the charts and tables.

Working closely with Michael Elasmar, Ph.D.,Executive Director of the Boston UniversityCommunications Research Center, we have com-piled what we hope will be the first roadmap thatprovides a solid path on which marketing execu-tives can travel to reach their product launch goals.

The quantitative research done for this studyinvolved an extensive and highly structured surveyamong consumer product executives with newproduct experience. A total of 91 completed inter-views were obtained, 63 conducted by mail and 28via the Internet. While reaching and obtainingresearch cooperation from executive-level audi-

ences is extremely difficult, responses from studyparticipants were found to be very open, honest,thorough, and insightful.

The project was a joint academic and researchpractitioner effort conducted by Prescott &Associates, a strategic marketing and research firmbased in Pittsburgh, in conjunction with theCommunication Research Center at BostonUniversity. Susan Fournier, Ph.D., AssociateProfessor of Business Administration/Marketing atHarvard Business School, was a consultant to thestudy.

METHODOLOGY

THE SAMPLE

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6. The data figures reported in this document were aggregated by Prescott & Associates, a strategic marketing and research firm based in Pittsburgh, PA.

Food &Beverage

61%

Health &

Beauty6%

Apparel & Shoes13%

Sporting Goods16%

OtherConsumerPackaged

Goods4%


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To closely examine the new productdevelopment/launch process, we asked study par-ticipants detailed information about their mostrecent new product introduction. It was our inten-tion that in soliciting information on the mostrecent launch, we would obtain a sample of recentlaunch successes as well as failures, thus allowingan analysis of the factors driving performance inthe marketplace.

The new product cases reported on for this studycover a host of product categories and include suchproducts as ready-to-eat breakfast cereal, refriger-ated apple juice, athletic footwear, bicycles, sham-poo and wrinkle-free men's pants. Over 80% of thelaunches detailed in this report occurred in 1998,1999, or 2000.

New product cases were segmented into twogroups based on in-market performance - highlysuccessful and less successful launches. The seg-mentation derived from a self-reported measure ofmarket performance. Respondents were asked toevaluate the success of their most recent new prod-uct introduction on a 10-point scale where 10 = 'anoverwhelming success' and 1 = 'a dismal failure'.Roughly half (58%) of the executives rated theirproduct as being a top-three box success (that is, arating of 8, 9 or 10). Based on the total distributionof cases along this 10-point scale, these introduc-

tions were classified as 'highly successful' and thosewith a rating of 7 or lower were defined as 'less suc-cessful' (42%). The mean response to this questionwas 7.38.

This segmentation helped us to identify key driversand inhibitors that led to effective new productintroductions and successful launch processes, andthus proved to be extremely valuable in delineatingsignificant differences between more and less suc-cessful product introductions.

The segmentation approach was validated by sev-eral other performance measures. For example,these two groups differed significantly in terms ofperformance relative to goal, a standard by whichmany product introductions are judged. Almostthree-quarters (71%) of the product cases that havebeen defined as 'highly successful' outperformedthe goals set for the introduction, compared to just6% of the 'less successful' products. In contrast,two-thirds (67%) of the managers with less suc-

cessful products reported their product had per-formed below goals.

While complaints are often heard around the cor-porate water cooler about the difficulty in meetinggoals, most of the executives surveyed (72%) feltthat the goals set for their particular new productintroduction were realistic. However, it is not sur-prising that those with less successful products weresignificantly more likely to believe the goals wereset too high (39% vs. 12% of those with highly suc-cessful products).

In terms of the characteristics of the launches sur-veyed, some interesting facts include:

Over half (55%) of the new product cases were clas-sified by the executives as 'entirely new products tothe organization.'

The vast majority of new product cases (87%) reliedon either existing technology or a minor technologi-cal innovation, while only 14% relied on a major tech-nological breakthrough.

National roll-outs were the most common launch

strategy (48%), followed by regional introductions(24%) and nationally phased roll-outs (19%). Notsurprisingly, budgets for national introductions($5 million) and for national phased roll-outs($3.9 million) were significantly higher than forregional introductions ($2 million).

100%

80%

60%

40%

20%

0%

58%

42%

Highly Successful

Less Successful

HighlySuccessful

LessSuccessful

OVERVIEW OF NEW PRODUCT LAUNCHES STUDIED

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Q. In your opinion, how has this product fared in the market?


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Below we report the findings from our research. Where applicable, quotes from the qualitative phase of ourresearch are included to embellish and illustrate key themes. Results are presented in the form of fourteensuccess factors that are based on characteristics of highly successful launches:

Conduct launch with a different mind set, a different philosophy.

Treat launch as a distinct and separate phase.

Appreciate the sub-processes within the launch phase, and don't cut them short.

Respect and appreciate that launch timing is everything.

Get planning priorities straight.

Have a plan, but don't set it in stone.

Expect delays and learn to live with them.

Recognize that teams work.

Don't put the CEO in charge of launch.

Focus on the consumer to improve success.

Gaining shelf presence is key.

Spend money on products that are new.

Fight for bigger launch budgets.

Consider public relations: an overlooked weapon in the launch arsenal.

FINDINGS

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Our research suggests that launch is a rather unique business/marketing process, one that requires aparticular attitude and philosophy in its enactment and, accordingly, a different set of skills among managers.To better understand the characteristics of launch processes, we asked study participants to indicate how wella series of characteristics described the launch activities of their most recent product introduction. On anemotional level, the experience tends to be a positive, invigorating one. When we asked which phrases wereextremely descriptive of their most recent product launch, over 40% of the study participants described theexperience as exciting, creative, and rewarding. They were also likely to describe the process as comprehen-sive, opportunistic, and proactive. Launch was also described by significant numbers as difficult, includingmany hurdles in the process (40%) and being characterized as a high-pressured experience (34%).

"You can't underestimate the difficulty. Everything we did was more difficult than we thought itwould be. To make a product launch easier in the future, you have to allow for mistakes -- littlemistakes -- time delays, whatever else; nothing goes as planned. It's going to be harder than youthink and that's something you've got to keep in mind. It might take longer, be more expensive,be more difficult."

-- Charles Couric, President of Brita Inc., a division of The Clorox Company

We found some interesting differences between highly successful product launches and less successful ones7.Highly successful product launches are much more apt to be described as exciting, creative, rewarding andproactive experiences than are their less successful counterparts. The launch activities of highly successfulproducts were also more apt to be characterized as evolutionary, systematic, and synergistic, while those of less

successful products were more likely to be described as reactive, unpredictable, political, and ego-involving.

LAUNCH CHARACTERISTICS*

Total % Highly Successful Launches Less Successful Launches

Exciting 50% 63% 38%

Creative 46 57 35Rewarding 46 57 35Proactive 43 53 32Systematic 22 29 14Evolutionary 19 29 5Synergistic 20 26 14Ego-involving 24 20 32Reactive 22 18 30Political 21 14 32Unpredictable 14 10 22

*Top responses to the question asking respondents to choose from descriptors that best characterize the product launch process.

LAUNCH: A DIFFERENT MIND SET, A DIFFERENT PHILOSOPHY

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7. The data was categorized into two groups, highly successful and less successful, based upon how the survey participants rated their product's performance in the market ona scale of one to ten with 1 = "Dismal Failure" and 10 = "Overwhelming Success."

Q. Which of the following phrases describe the process of planning and executing the product launch extremely well?


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A key question concerning launch activities addressed by this research concerns the extent to which organi-zations consider launch a separate and distinct phase within the overall new product introduction process,and if so, where that phase fits within the larger process. The study found that explicitly treating launch as aseparate phase leads to greater success. Conclusions can also be drawn from the study that support the ini-tiation of launch activities early on in the new product development phase, and the extension of launch activ-ities further into the new product introduction process. Doing so allows more time for analysis, planning, andassessment, and importantly, permits modifications that can impact marketplace success.

Interestingly, just 44% of the executives reported that theirorganizations have what is considered a distinct productlaunch phase. For the majority, launch was merely the cul-mination of the product development. Others, however,saw launch as something separate and distinct from newproduct development. Highly successful products, in fact,were much more likely to have been introduced by organi-zations that viewed launch as a separate phase: 51% com-pared to just 32% of the organizations introducing a less

successful product.

To determine the typical new product development cycle ofthe companies who participated in the study, we posedquestions pertaining to the duration of the new productdevelopment process. Based on the responses, the totalproduct development process (including concept genera-tion, prototype development, and development of finalproduct) generally begins 3 or more years before shipmentand can continue up to just 2 - 3 months before launch.The launch phase can perhaps be best understood through its placement within the overall process of newproduct development. The new product development process itself is comprised of 4 sub-processes:

1. Initial concept generation usually begins at least 1 or 2 years prior to shipment. Interestingly, conceptdevelopment for less successful products begins far earlier than for highly successful products (3 yearsversus 1 - 2 years). This may suggest a loss of internal momentum during the process, or is reflective of aproblem-plagued development process.

2 . Final product development is usually completed 2 or 3 months prior to shipment and is generallyconcurrent with the timing of a final "go/no go" decision on the product.

3 . Concept and product testing starts within 1 or 2 years after initiation of the product developmentphase, lasting almost right up to shipment, and generally runs hand-in-hand with the development of aprototype and a final product.

4 . The launch phase generally occurs 1 or 2 years prior to shipment of the final product. The initiation ofthis timing of this phase is best defined in the following respondent's words:

"As far as the terminology goes, there was a distinct phase called launch. It was when the mar-keting elements came together. Everything from national communications to point-of-purchasematerials, to even just the relationship building from a buyer to seller perspective.It was all part and parcel of launch. Not only do you have to get retailers to understand what thebenefit is from a consumer point of view, they also need to know how it is going to make themmoney and why is it relevant for their consumer base. That's all part and parcel of having an ade-quate and holistic launch. And that's what we call launch.

-- Director of Marketing at a major consumer durables company

TREAT LAUNCH AS A SEPARATE PHASE

Launch Phase44%

No Launch

Phase56%

Q. Within your organization is there a product launch phasewhich is distinguished from the "new product development"phase?

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So, what marks the launch phase? What triggers its initiation? Signals for the beginning of the launch phasevaried a great deal across organizations.

In over a third of the cases (38%), a product-related milestone (e.g., product concept, prototype, or actualproduct) signaled the beginning of launch.

"Launch begins once we have an operating prototype that we built in engineering. Once wedecide it's a product, we go with it. That's when we start working on the launch plan becausetypically we are about 13 - 15 months away from introduction.

-- Jim Holcomb, VP, Marketing and Strategic Planning, Royal Appliance, Dirt Devil launch

Internal approvals, essentially "go/no go" decisions, signal the start of the launch period for 26%.

Other companies (25%) use a later point in time, such as when they begin selling the product in themarket.

The end of the launch phase is likely to be:

Some predetermined period after being in-market (28%)

A date specified around the shipping period (26%)

A pre-market milestone such as commercialization or packaging completion (22%)

Interestingly, differences exist between highly successful and less successful launches in terms of process mark-ers. The companies with highly successful products were more likely to view the end of the launch phase whenthe product is on the shelves (35%), as opposed to the companies with less successful products (25%).Organizations with highly successful products were also nearly twice as likely to consider a shipping milestoneto mark the end of launch (31% vs. 16% for companies with less successful products). In contrast, the com-

panies with less successful products were twice as likely as those with highly successful products to consider apre-market milestone (i.e., the ship date or the in-store date) as the end of launch (32% vs. 16%). Overall, itappears that extending launch activities past a pre-market milestone improves success.

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TREAT LAUNCH AS A SEPARATE PHASE


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FIGURE 1

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The research clearly suggests that launch is a multi-staged process to be managed8 (See Figure 1 at left).Successful launches were in fact much more likely to have been managed through a series of definitive stagesthan were less successful products (62% to 35%). Similar to the Stage Gate Model9 used to specify the sub-processes in the new product development cycle, our findings indicate the following distinct and important

phases of the launch process (See Appendices B and C for revised Stage Gate Model and Schneider LaunchModel).

Phase 1 - Launch Plan Development: While this phase begins one or two years prior to shipment of the finalproduct, the finalization of a budget for launch may not occur until a year later (at the 10 - 12 month

period), thus rendering the plan stage of launch as the most lengthy sub-component of the process.

Phase 2 - PR/Communications Planning: The advertising agency is brought in quite early in the process,sometimes as far back as three or more years prior to shipment (during the initial concept generationphase). The timing is indicative of the on-going strategic relationships many ad agencies form with theirclients. Overall, PR firm selection and PR planning typically begins within a year of final product shipping,lasting beyond shipment date.

"We briefed the ad agency very, very early on. We met with them at the very beginning -- atGate Zero. We had a briefing with them at every gate.

-- General Manager, consumer durables company

Phase 3 - Campaign/Promotions Planning: Promotions planning generally takes place 10 - 12

months before shipment. While advertising agencies are brought on board very early in the process

during the concept development phase, promotions firms are generally not included until a more final

product has been developed.

Phase 4 - Distribution Planning/Channel Management: Distribution and channel management planning

begins approximately one year prior to final shipment and continues until the product is shipped.

Phase 5 - PR/Communications/Promotions Execution: The execution of advertising and promotions activities

tends to parallel each other in time, running from 2 - 3 months before shipment until 4 - 6 months after.

Execution of PR activities typically begins within 6 months of shipment and lasts until as late as 6 months after

the product rollout (generally beginning before advertising and promotions launch).

Phase 6 - Evaluation and Tracking: This phase concerns the period of close evaluation prior to making

major decisions about the product's future. Evaluation research occurs 4 - 6 months before shipment and often

lasts until 1 to 2 years after launch campaigns. In general, launch is described as 'a closely evaluated process'

(39%).

Phase 7 - Critical Evaluation Period: On average, the critical period for judging product viability is 6

months, surprisingly short considering the purchase cycles of many products.

APPRECIATE THE SUB-PROCESSES WITHIN THE LAUNCH PHASE,AND DON'T CUT THEM SHORT

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8. A model of the process timeline was constructed based on the qualitative phase of this research. This model was then tested by having study participants

complete a detailed timeline of the events and activities associated with the development and launch of their most recent product introduction. Respondentsindicated when 27 individual events/activities were initiated, completed or occurred (for one time events) in relation to the product shipment date.

9. Cooper, R.G. and E. J. Kleinschmidt (1986), "An Investigation into the New Product Process: Steps, Deficiencies, and Impact," Journal of Product and InnovationManagement, 3 (June), 71-85.


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In general, the time horizon for launch tends to be longer for more successful products. More successful andless successful launches differed significantly with respect to the timing of the sub-phases, in fact:

All major events considered to signal the beginning of the launch phase begin earlier for highly successfulproducts.

Less successful products tend to begin their launch planning far later than their business planning andbudgeting, pointing to a strong focus on internal/financial matters at the expense of focusing on

executional concerns.

In general, highly successful products tend to engage involvement with external constituencies far earlierthan less successful ones. They typically begin the planning and execution of external processes (advertising, PR, promotions) well before final product approval is received.

Less successful products tend to begin the PR process somewhat later at 7 - 9 months prior to ship datevs. 10 - 12 months for highly successful products.

Highly successful products tend to break their advertising campaign somewhat later than less successfulones, generally waiting until 2 to 3 months prior to shipment. This strategy allows for adequatedistribution prior to generating awareness and trial.

Highly successful products are more likely to begin distribution planning and channel managementactivities far earlier (approximately one year prior to final shipment) than their less successful counterparts(7 - 9 months before shipment).

Highly successful products begin PR activities several months prior to advertising launch - potentiallybuilding anticipation or creating a buzz at a grass roots level prior to more formal mass media campaigns.This point supports the need to engage public relations early on in the process.

The critical evaluation period for less successful products tends to begin earlier and last longer (fromshipment until 10 - 12 months after) than for highly successful products (2 - 3 months after shipment until7 - 9 months). Less successful products thus had a longer assessment period before decisions were made,with almost two-thirds (60%) being evaluated for more than 6 months after introduction, compared to only24% of the highly successful products. This longer period was likely a function of organizationsattempting to diagnose reasons for lower-than-expected success, or in line with research on sunk costinvestments,10 simply reflects a reluctance among managers to give up on a new product and to spendgood money after bad.

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10. Staw, B. M. (1976). "Knee-Deep in the Big Muddy: A Study of Escalating Commitment to a Chosen Course of Action." Organizational Behavior and HumanResources 16: 27-44.

APPRECIATE THE SUB-PROCESSES WITHIN THE LAUNCH PHASE,AND DON'T CUT THEM SHORT


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Two factors, seasonality/cyclical considerations (73%) and retailer demands (59%), were identified as havingtremendous or great impact on the timing of the launch date within consumer product organizations.Other key considerations were sales meetings/sales force needs (48%) and competitive product introductions(43%). It is interesting to note that, in general, external demands seemed more likely to drive launch timingthan internal, strategic concerns.

Importantly, study findings indicate that organizations with highly successful product introductions typicallyplace greater emphasis on internal factors to determine launch timing. Sales meetings/sales force needs (51%vs. 40% of less successful), corporate financial reporting (35% vs. 19% of less successful) and cycles of tech-nological innovation (40% vs. 27% of less successful) are more likely to drive launches in successful cases thanin non-successful cases. This suggests that companies which innovate on a routine basis and have internalfactors in place to drive innovation cycles have greater success with new product launches than companies thatdon't follow regular product launch cycles.

LAUNCH TIMING IS EVERYTHING

48%

43%

31%

30%

9%Government Regulations

20% 40% 60%0% 80% 100%

34%

59%

73%

Financial Reporting

Trade Events/Shows

Technology Innovation

Competition

Sales Force Needs

Retailer Demands

Seasonality/Cyclical

Q. To what extent do each of the following factors influence the timing of product introductions in your company/division?

FACTORS IMPACTING LAUNCH TIMING


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An organization's strategic priorities can undoubtedly impact the success of new product introductions. To thisend, we asked study participants about the importance of multiple factors in the planning of their most recentproduct introduction. In essence, where did they focus their attention and what did they consider critical tosuccess? These questions revealed interesting and significant differences in planning priorities between highlysuccessful and less successful product launches.

Our findings suggest that there are so many elements to consider in launch planning that, oftentimes, thebasics can be overlooked. The four P's of marketing -- product, price, promotion and place/distribution -- areshown to be critical to the success rates of products in the market. In addition, a focus on building the brandis important.

In the planning stage, managers of highly successful products placed greater emphasis on brand-buildingefforts: branding/brand strategy (94% vs. 75% high importance), product positioning (92% vs. 86% highimportance), packaging (82% vs. 60% high importance), and consumer advertising (60% vs. 53% highimportance).

More attention was paid during planning to public relations (33% vs. 14%) and media coverage (32% vs.

14%) by those with highly successful products than by those with less successful products.

We begin thinking , 'Are we going to support it with advertising?' 'What kind of point of salematerials will it need?' 'What should we say on the carton, the box?' 'How are we going to priceit?' All that is needed to get a product ready to launch."

-- Jim Holcomb, VP, Marketing and Strategic Planning, Royal Appliance, Dirt Devil launch

GET PLANNING PRIORITIES STRAIGHT

Q. How critical was each of these considered when planning this product introduction?

PLANNING PRIORITIES IN PRODUCT INTRODUCTION*

*Figures reported are based on highest number of responses indicating Extremely Critical and Very Important

12

Packaging

Cons Adv

Trade Prom

PR

Trade Adv

Media Coverage

Highly Successful Less Successful

Distribution

Pricing

Positioning

Quality

Branding

20% 40% 60%

75%94%

84%

60%82%

53%60%

51%34%

14% 33%

39%33%

32%

94%

86%92%

84%84%

92%

14%

0% 80% 100%

Cons Prom 44%43%

89%


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A slight majority of the organizations studied (59%) created detailed launch plans. Companies launching acompletely new product (55%) were more likely to have crafted a detailed launch plan than those launchingcategory (30%) or line extensions (6%). In addition, product introductions in which a PR firm is used were sig-nificantly more likely to have a physical launch document than products introduced without a PR firm (78% vs.45%). Importantly, those with highly successful products were far more apt to have penned a plan than lesssuccessful ones (72% vs. 46%).

The contents of launch plans invariably include pricing (96%), distribution (93%), positioning (91%), packagedesign (87%), financials (85%), advertising (82%) and sales (80%). Public relations was much less likely to beconsidered a staple plan element (63%). Sensibly, companies using a PR firm were more likely to have includ-ed public relations in the original plan than those who did not (74% vs. 48%). Only 17% articulated an Internetstrategy in their plan, indicating the fact that consumer product companies were slow to adopt the Internet asa marketing tool. Surprisingly, only 7% of the companies included a crisis plan as part of their launch plan, anespecially low number considering that 61% of the companies surveyed were in the food and beverage cate-gories.

Interestingly, there were no differences between highly and less successful products in the types of strategies

and tactics included in the plan. This suggests that it is not so much what is covered in the plan but the qual-ity and execution of plan elements that dictate success.

Needless to say, not all launches go according to the best-laid plans; events and/or milestones exist that canchange the nature or course of the launch. When study participants described such milestones, negative fac-tors were cited more often than positive ones (42% vs. 23%). Product delays, competitive announcements andregulatory problems were among the negative triggers most frequently mentioned. Perhaps expectedly, exec-utives with highly successful products were more likely to mention positive milestones than those with less suc-cessful products (30% vs. 10%). Outstanding retailer response, reaching 100% distribution and high consumerdemand were typical positive milestones that triggered changes in plans. These findings encourage flexibleattitudes previously mentioned in managing the launch process.

"Have a process, but don't be a slave to the process. In other words, be careful not to get caught.

You know, a lot of companies, big companies, have a product development life cycle and think thatwith launch, there's a cookie cutter way to do it. The one thing I'd say is that every situation is dif-ferent. It's not all the same, and your circumstances are different. Business environments are dif-ferent. So have a process and stick to it where it makes sense, but also do what makes sense. Itsounds really simple when you think about it, but it's tough to be flexible."

-- VP of Marketing, consumer technology company

"Launch plans, as you know, are not fixed instruments. They evolve over time, particularly in a cat-egory that's as dynamic as this. The thing is, technology is changing, product specs change.Youve got to have a plan and be flexible about it."

-- Senior Marketing Manager, consumer durables company

Interestingly, a tendency to stick to plan was more evident in successful launches than in unsuccessful coun-terparts. Approximately two-thirds (65%) of the launches for the highly successful products went extremely orvery close to plan compared to 47% of the less successful ones. This might reflect the previously mentionedfact that highly successful launches had longer planning cycles and/or created better plans.

HAVE A PLAN, BUT DON'T SET IT IN STONE


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A company's tendency toward structure appears to carry over into the launch phase of the new product devel-opment process. However, while many organizations have standard protocols that guide product introductiontiming, actual launch dates are rarely set in stone. Delays are inevitable; 70% of the reported cases had atleast one change in launch timing. Interestingly, sticking to the original launch schedule does not appear tobe a driving success factor. There were no differences between highly successful and less successful productson this measure. While timing changes are inevitable and do not impact launch success, respondents com-municated the importance of being flexible when confronting these delays.

While there were no differences between highly successful and less successful companies in the number oftimes they changed their launch timing, there was a difference in the managers' attitude toward change.Findings suggest that companies that were more flexible about launch timing achieved the best results. Abouthalf (48%) of highly successful companies said it was important to be flexible about launch timing, while only26% of the less successful said timing should be flexible. Thus, while a specified and temporally boundedlaunch phase is articulated, a desire for flexibility around these dates and openness to change and evolutionas the process advances is recommended from successful launch tales.

DELAYS ARE INEVITABLE; LEARN TO LIVE WITH THEM

None30%

One or Two50%Three or More

20%

NUMBER OF CHANGES IN LAUNCH DATE

Q: How many times, if ever, did the launch timing change?

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Characteristics most commonly seen as descriptive of launch activities are driven by a project champion(64%) and significant senior management involvement (63%).

Team formation and composition (both internal and external) emerged as critical to launch success. The key

learning here is that teams are good, big teams are better, and multidisciplinary teams work best. Teams arebrought in early in the process -- much in advance even of the formal go/no go decision. The assembly of theproject team closely parallels the development of the business plan.

"Get them in up front so that they are involved in the planning process."

-- General Manager, consumer durables company

Teams were established in 60% of the new product launches studied. On average, these teams included 5 or6 core members. An analysis of team composition revealed several interesting findings:

The typical team includes at least one Marketing VP/Marketing Manager/Brand Manager (90% of cases).

If a Marketing VP/Marketing Manager/Brand Manager is not on the team, the team is most apt to be

managed by the CEO and includes just 1 or 2 other people. One or more people from Operations/Engineering, Manufacturing, or Product Development/R&D are also

usually present (81%).

Communications and Information Technology are only included as core members on very large teams(10+ members).

TEAMS WORK

NUMBER OF MEMBERS OF CORE TEAM*

50%

40%

30%

20%

10%

0%

Highly Successful

Less Successful

1 to 3 4 or 5 6 or 7 8 or more

22%24%

38%38%

30%

10% 10%

29%

*Figures reported here are comparative totals from responses to the survey question (Q. 33a)about team compositions and level of involvement.


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The person in charge of launch plays a critical role in the success of a new product.

Overall, Marketing VPs and Marketing Directors were most likely to have primary responsibility for theproduct introduction (37%).

About one-quarter (24%) of the introductions were managed by Brand, Product, or New Product Managers.

Marketing Managers (14%) and other senior management representatives (13%) made up the remainderof the cases.

There are, however, a number of important differences between highly successful and less successful launch-es in terms of the individuals with primary responsibility for product introduction:

Highly successful launches were far more apt to have been managed by Brand or Product Managers thanless successful ones (36% vs. 6%).

Less successful launches were also more apt to be under the direct responsibility of senior management(CEOs/Presidents) compared to more successful products. Of the less successful efforts, 23% were

managed by CEOs/Presidents, compared to 16% for highly successful products. Of the less successful launches, 66% were managed by senior marketing personnel (Marketing VP,

Marketing Director, or Marketing Manager) compared to 43% for highly successful products.

These findings suggest that while the involvement of senior management (including CEOs or Presidents) is crit-ical to new product success (61% of highly successful launches involved senior management), such high levelmanagers should cede a direct management role. Individuals solely dedicated to the launch effort, (Brand orProduct Managers), are best suited to be primarily responsible for the launch process, rather than senior per-sonnel whose multiple and competing duties can impair focus and tactical expertise.

DON'T PUT THE CEO IN CHARGE OF LAUNCH

50%

40%

30%

20%

10%0%


MarketingVP/Dir/Mgr

Brand/Product/New Product Mgr

Sr Mgmt/CEO/Pres

Other

8%

23%

16%

6%

36%

43%

60%

70%

6%

66%

PRIMARY RESPONSIBILITY FOR PRODUCT INTRODUCTION

Q: Which one of the following individuals had primary responsibility for this product introduction (either as ateam leader or as the sole individual responsible)?


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Our research suggests that when it comes to launch budgets, it's not just how much money you have, but howyou spend it that ensures product success. An important finding emerging from this research is that adoptinga "push" strategy for launch -- i.e., one that says "put it on the shelf and they will come" -- is far less effectivethan a "pull" strategy that drives consumers into stores. Strategies focused on trade initiatives were lesssuccessful than those geared primarily toward consumers.

Our analysis of marketing budget allocations reveals four distinct strategies, some of which worked far betterthan others.

1. Consumer-Focused: Spent 78% of their marketing dollars on consumer-related activities.

2. Trade-Focused: Devoted 86% of their funds to trade-related support.

3. Consumer/Trade: Split their budget evenly between consumer (47%) and trade (42%).

4. Diverse: Spread marketing funds across a wide range of support activities, with no one area receiving morethan 30% of the budget.

The Consumer/Trade and Consumer-Focused segments had the largest average marketing budgets ($10.8 and$3.9 million, respectively). Interestingly, the Diverse segment had a generally lower average budget ($1.6 mil-lion), suggesting that those employing this strategy were spreading less money across a wider range of supportactivities.

Interestingly, highly successful products were more apt to belong to the Consumer-Focused segment (35%)than less successful ones (22%), while the less successful tended to fall within the Trade-Focused (25% vs. 14%for highly successful) or Diverse segments (28% vs. 18% for highly successful).

Even though combined Consumer/Trade budgets exceeded straight consumer spending by almost 3 times, it

appears that marketing dollars focused directly at the consumer are more effective than spending combineddollars on Consumer/Trade. Managers who put money into Consumer/Trade focused strategies were just aslikely to succeed as they were to fail. Programs geared directly at the consumer enhanced the chance oflaunch success.

Managers' perceptions of what delivered a bang-for-the-buck corroborate these findings. Activities with thegreatest perceived return on investment are consumer-oriented: consumer advertising (51%), consumer pro-motions (44%), and merchandising (43%).

CONSUMER-FOCUSED SPENDING SPELLS SUCCESS

40%

30%

20%

10%

0%

Highly Successful

Less Successful

Consumer-Focused

14%

25% 28%

18%16%18%22%

35%

Consumer/Trade DiverseTrade-Focused

50%

Q: Please indicate how the marketing budget was allocated across each of the marketing support categories listed below.

MARKETING BUDGET ALLOCATIONS


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Reflecting the broad scope of launches included in the present study, participants reported a wide spectrum ofintroductory SKUs, from one to more than fifty. Nonetheless, the division between highly successful launchesand less successful launches shows that more SKUs are definitely better.

One-third (34%) of highly successful products rolled out with more than 10 SKUs compared to just 15% ofthe less successful efforts. Over half (61%) of the latter segment had only 1 to 4 SKUs.

These findings reinforce the importance of on-shelf/in-store presence to product success. It's Marketing 101 allover again; you need shelf presence to gain attention from consumers and the trade.

ON SHELF PRESENCE IS KEY

100%

80%

60%

40%

20%

0%Less than 5

61%

40%

5 to 9 10 or more

29%36%

15%34%

Q: How many SKUs were associated with this new product?

Highly Successful

Less Successful

NUMBER OF SKUs ASSOCIATED WITH PRODUCT

20


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The study revealed that among the factors that influence the ultimate success of a product launch is product"newness," both in terms of fit within the organization and the technology underlying the product.

While just 14% introduced a new product with a major technological breakthrough, highly successful

products were significantly more likely to have been based on a technological breakthrough than lesssuccessful products (20% vs. 5%).

Highly successful products were much more likely than less successful ones to be "new to the organization"(63% vs. 46%). "Newness" was defined broadly by study participants, including not just technology anduniqueness, but innovation in packaging, advertising and distribution as well.

This finding suggests two possibilities. First, greater organizational resources are given to products that have"homerun" potential. Since really new products get higher budget allocations and more human resourcesdevoted to their launch, it's not surprising that significant investment contributes to launch success. Secondly,companies may have a hard time drumming up internal enthusiasm and support for mere line extensions ofexisting products, which hinders marketplace success in the end.

"Get consumers to reconsider the way they have done something before. Surprise them. Theuniqueness was Mentadent's packaging. There can be as much innovation in the packaging as inthe product."

-- Natalie Danysh, VP of Strategic Planning, Unilever Home & Personal Care US

"When we launched our fragrance, we placed it in record stores, a previously unheard of channelstrategy in the category."

-- VP Marketing, consumer company

"We included clips from our movie product placement in the ads. That was new, exciting, very dif-ferent in the category."

-- VP Marketing, consumer durables firm

SPEND $$ ON PRODUCTS THAT ARE "NEW"

100%

80%

60%

40%

20%

0%Entirely New

46%

63%

Category Extension Re-introduction

35%

26%11%

8%

Line Extension

8%4%


NEWNESS OF PRODUCT TO THE ORGANIZATION

Q: Which of the following best describes how "new" this product was to your organization?


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The likelihood that a product remains on-shelf for more than one year is influenced by the amount and typeof marketing support received during the introductory period. We asked executives to provide their introduc-tory marketing budgets, along with how those budgets were allocated among a variety of marketing-supportactivities.

With respect to budget allocations, activities generally receiving the greatest slice of the marketing pie were'consumer advertising/promotions' (40% of total budgets) and trade advertising/promotions (30%). On aver-age, 11% was allocated to merchandising and 11% went to public relations efforts.

Highly successful products had significantly larger average budgets than less successful ones ($4.7 millioncompared to $2.5 million).

Not surprisingly, successful launches were backed by substantially larger budgets. On average, the launchbudgets for highly successful products were 88% higher than those of less successful products.11

It's Marketing 101 all over again, but apparently this is a lesson that is quickly forgotten. Launch successrequires investment.

FIGHT FOR BIGGER LAUNCH BUDGETS

22

11. Actual budget figures are not reported here given the wide range of launch types (national roll-outs, regional roll-outs and test markets) and the widevariation of industries. Caution is advised when interpreting these numbers.

ConsAdv/Prom

40%

PR

11%

Merch.11%

Trade Adv/Prom30%

Trade Events5%

AllOther3%

MARKETING BUDGET ALLOCATIONS

Q: Please indicate how the Marketing Budget wasallocated across each of the marketing supportcategories listed below.


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Our study highlights the existence of a fifth P in the marketing mix -- public relations.

Highly successful products are much more likely to engage in PR-related activities than less successful ones.While between 76% and 90% of highly successful products engage a PR firm to help plan and execute

launch, less than 60% of less successful ones do the same.

In general, our study suggests that public relations is an under-utilized launch tool.

Just 44% of the new product cases included the assistance of a PR firm for their most recent product launch.

Less than 60% of the companies with a PR firm included PR on the core team for its productintroduction. Virtually all of those same organizations had an advertising agency representative on thecore launch team.

We learned that the role of public relations, while underutilized, was extremely significant when leveraged. Weasked those who used a public relations firm for their most recent product introduction to evaluate the impactof both marketing and public relations activities on product launch success. Executives with highly successfullaunches reported significantly greater returns and perceived impact across all public relations-related activi-ties. An average impact rating across all PR activities of 76% for highly successful products compared to 56%for less successful ones. This suggests that more comprehensive PR programs are likely to provide greaterimpact in the marketplace. Overall, the public relations activities perceived as having the greatest impact werethose likely to build awareness among the media, consumers, and the trade by generating excitement aboutthe product.

Overall, PR was seen as having far more impact for highly successful products (61%) than less successful ones(41%).

IMPACT RATING* OF PR ACTIVITIES

*Frequency of top box responses rating impact of public relations activities based on a 5 point scalewhere 1 = Tremendous Impact and 5 = No Impact At All.

PUBLIC RELATIONS - AN OVERLOOKED WEAPONIN THE LAUNCH ARSENAL


Generating positive consumer press 90% 69%

Creating retailer interest 80% 77%

Obtaining positive reviews 84% 76%

Generating positive trade press 84% 67%


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Verbatim accounts12 of effective and notable PR efforts included the following:

"Grass roots PR and product sampling via media and promotional opportunities were vital to success."

"Our PR firm created innovative displays to demonstrate product availability and create newswor-thy events. After core launch activities were completed, the agency stayed away from the mundaneand introduced many interesting takes on issues."

"We sent actual refrigerated product samples to the press which were very impactful and wellreceived."

"PR was a cornerstone of the product launch -- it has been effective and provided a strong returnon investment."

"Never underestimate the power of media 'stunts'."

Importantly, the strategic use of PR appears to be a lead indicator of launch savvy overall. Those using a PR

firm were...

More likely to be introducing an entirely new product (68% vs. 45% who did not use a PR firm).

More apt to be capitalizing on a major technological breakthrough in product development (75% vs. 25%

who did not use a PR firm).

More likely to have formulated a launch plan (78% vs. 45%).

Committed to putting more total funds against the introductory marketing effort. Marketing budgets for

those with a PR firm averaged 48% higher ($5.2 million vs. $2.5 million) than those without external PR

support.

24

12. Quotations are verbatim responses to the survey question: We are very interested in accounts of particularly effective or ineffective public relations effortsrelated to the new product launch you have been detailing in this survey. Please share any of your experiences in this regard. Since the participants completedthe quantitative survey anonymously, we are unable to attribute their quotes .

PUBLIC RELATIONS - AN OVERLOOKED WEAPONIN THE LAUNCH ARSENAL


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Apparel (3)Athletic Footwear Baking Mixes Baseball Beer Beverage Beverage Wine Bicycles/Toys Bottled Water Camping Appliances-Stoves/Lanterns Canadian Whiskies Category Extension Cereal

Chilled Juice and Juice Beverages Commercial Confectionary - Lollipops Consumer Food Consumer Products/Beverage/Wine Dairy Designer Fashion Dinner Sausage Distilled Spirit - Rum Specialty Dry Pasta Retail Packaged Goods Exact Weight Boneless Ham Products Eye Care-Contact Lenses Fishing Reel

Food (3) Foodservice (2) Foodservice Storage and Handling Foodservice/Pizza for Delivery or Carry-out Food - Yogurt Footwear Frozen Frozen Chicken Burgers Frozen Coffee Frozen Foods/Entrees Frozen Pizza Frozen Vegetable Golf Bags Golf Clubs Golf Equipment

Golf Irons (Premium) Hair Care Shampoo/Conditioner Hard Candy Housewares Lighting Meat Meat Snacks Meat Solution - Frozen Menswear Milk New Product No Response (5) Nutraceutical

Nutritional Bars Packaged Fruit Pantyhose Personal Care Bath Products Pie Pizza Plumbing Pool Accessories Processed Meats Protective Equipment Ready-to-eat Breakfast Cereal Refrigerated Apple Juice Refrigerated Salad Dressing

Refrigerated Yogurt Retail - Beauty Product Sandwich Seafood Appetizers Seasonal Food Gifts Side Dishes - Food/Foodservice Smoking Control (OTC) Smoothies Snack Food Steel Golf Shaft Super Premium WineVarietal Table Wine Womens Clothing Work Boots Wrinkle Free Men's Pants

APPENDIX A

The following list comprises the participants verbatim written responses to the question: Into which productcategory does this product fall? For organizational purposes, we have listed them in alphabetical order andnoted instances of duplicate responses:


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APPENDIX B

1 2 4 5 6Ideation PIR

PreliminaryInvestigation

DetailedInvestigation

Development

Testing &Validation

Full Production

Market Launch

Post-Implementation

Review




Development

Testing &Validation

Full Production &Market Launch

Post-Implementation

Review

3

The highly regarded Stage Gate Model, developed by Robert Cooper, plots the new product development process.In his model, the new product development process has five gates -- with the last gate combining full productionand market launch.

STAGE GATE MODEL

LAUNCH AS A SEPARATE GATE MODEL

Our research suggests that launch deserves its own gate separate from full production. Given the multi-stagedprocesses involved in this complex phase, we are suggesting that a sixth gate be added called Market Launch.In the model below, the dotted lines represent launch activities that overlap other new product development gatesand extend beyond the post-implementation review.


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APPENDIX C

1 2 3 4 5 6

Launch PlanDevelopment

Adv./PR/Comm.Selection &Planning

Campaign/PromotionsPlanning

DistributionPlanning/Channel

Management

PR/Adv./Comm./Promo Execution

Market Evaluation& TrackingResearch

CriticalEvaluation

Period

7

The Launch Model extracts the sub-processes that comprise the proposed sixth gate as shown below. Ourresearch suggests that launch is a multi-staged process with seven distinct phases, all of which need to beclosely managed.




Development

Testing &Validation

Full Production

Market Launch

Post-Implementation

Review

3

LAUNCH AS A SEPARATE GATE MODEL

S&A LAUNCH MODEL


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APPENDIX D

SalesSales VP/Managers

Ad AgencyPR Agency

Promotions FirmsPackaging Company

Internet Partners

The diagram shows the proposed methodology for creating launch teams. The core launch team members(Marketing, Operations and Sales) anchor the launch process with the external agencies available asresources for the core team. All participants need to interact with senior management from time to timethroughout the launch process for approvals and funding.

CORE LAUNCH TEAM COMPOSITION DIAGRAM

Senior Management/Finance

MarketingMarketing Manager, Brand Manager,

Marketing Research

OperationsR&D, Engineering,

Manufacturing


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ABOUT SCHNEIDER & ASSOCIATESFounded in 1980, Boston-based Schneider & Associates has been providing innovative public relationscampaigns to a variety of clients in the consumer products, professional service and business-to-businessindustries. As Launch Public RelationsSM specialists, we have created award-winning launch programs fornumerous clients including Pepperidge Farms Smiley Goldfish, Hellmanns Mayonnaise, Mazola Canola Oil,

Staples, Inc., HP Hoods Peak Treasures Ice Cream and New England Confectionery Companys (NECCO)Sweethearts Conversation Hearts. The Schneider/Boston University New Product Launch Report provides theagency with substantial research-based information to determine best practices in the launch process.

EXPAND OUR KNOWLEDGE

To expand our research, we are asking additional companies to participate in the study by taking the survey onthe Web or by mail. In exchange, we are offering participants the complete Executive Summary of theSchneider/BU New Product Launch Report. If you are interested in taking part in this survey, please e-mailBoston University's Communication Research Center at [email protected]. To take the survey online, type LaunchSurvey-Web in the subject line and Boston University will send out the URL address with a user name andpassword to access the survey online. If you prefer to fill out the survey by hand and mail it to BU, please typeLaunch Survey-Mail in the subject line and add your address information in the message box to receive the

survey by mail. We thank you in advance for your participation.

585 Boylston StreetBoston, MA 02116Phone: 617-536-3300Fax: 617-536-3180www.schneiderpr.com

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