June 2nd, 2010

Competitive Differentiation – Does Your Product Strategy Have a Halo?

What do Mercedes-Benz, Hewlett-Packard, Virgin Air, and Sony all have in common?

They all develop and launch halo products as a way to differentiate their brands and products from the competition.

What Are Halo Products?

Halo products are specially developed products that feature advanced technology, capability, and are usually produced in limited quantities – typically for consumer markets and customers. Often times, they are used in a product portfolio to showcase market-leading technology, advanced industrial design, enhanced customer experience, or new, advanced capability that is meant to promote the product and brand leadership of the company. They are called “halo” products because the concept is that the “halo” or “aura” of this type of product leadership will convey to the rest of the product line – the product line you are most likely going to buy. In other words, the halo effect is one where the perceived positive features of a particular item extend to a broader brand. Typically, these halo products are very high priced, relative to the rest of the company’s product portfolio.

Examples of halo products include the following:

Mercedes-Benz SLR McLaren

HP TouchSmart Inkjet Printer

Virgin Galactic Suborbital Flights

Sony Aibo Robot

There are some companies that try to launch all of their products as halo products. Examples that come to mind are Apple, Trump Hotels, and exotic car brands like Ferrari and Lamborghini.

What Can Halo Products Do for a Company?

For many companies, halo products provide a number of benefits. First, they are products that are so interesting and futuristic; they can generate a lot of positive press and PR. Of course the benefits here are obvious for a company. Second, they showcase technology and capabilities that, while not readily available, may eventually migrate down to the rest of a product portfolio over time as the technology becomes less expensive and more mature. Halo products can also convey exclusivity and status. For example, all my friends may drive a Mercedes SL Series but I have a Mercedes-Benz SLR McLaren.  Meaning … I have something special and different than everyone else. Finally, halo products may drive more consumer awareness and preference for your brand. The idea being if you read about or see the halo product (and you like what you see), you are more likely to buy a product from the rest of the company’s product line up.

Should Your Company Launch a Halo Product?

Perhaps it should. Halo products require resources – development, operations, marketing, etc. and funding to create and deploy. Also, a company has to have access to advanced technology, design, performance, etc. to build products that people are going to be interested in and can generate a halo effect. It should be tied to real customer needs and a relevant customer experience. A halo product strategy can be a very beneficial approach for a company, especially when combined with aggressive PR and strategic messaging. For companies that strive to be a premium brand in their industry and want to be seen as a technology leader, a carefully crafted halo strategy can be indispensible in conveying that premium brand image.

There are less expensive ways to create halo products for less money. For example, at HP, our team in Middle East created a gold plated LaserJet printer to celebrate a twenty anniversary for the business. Another example is the use of a limited edition product strategy to deliver a halo-like product. The only barrier here is your imagination and creativity.

Do you have examples of halo products you have seen or created? If so, I would like to hear from you! Please post your comments to my blog.

Additional Resources:

HP Halo Products

Definition of Halo Effect

Creating the Brand Halo Effect

Print

Email

Rss

61 Comments

Posted By Vince Ferraro

April 14th, 2010

Putting the “S” Back into Your Marketing Communications

I know a great many people who do excellent marketing. Ask them to write a data sheet, deliver a positioning statement, key product messages, brief an agency, customer story, etc. and they will rise to the occasion by delivering excellent work. Their messages will be prioritized and on target, the positioning will clearly differentiate their products from the competition, and the agencies will have what they need to create compelling  advertising, PR, and other elements of the marketing mix.

So why am I writing this blog entry? It’s simple. Often times, the communications are missing the sizzle and snap that differentiates excellent marketing communications from best-in-class. If you eat Rice Krispies  - nothing happens until put the milk on them. Then (and only then) do you hear the snap, crackle and pop. The milk is the activator of the crackling sounds. As a marketing person, this Kellogg differentiation has always fascinated me.

Likewise in marketing – something needs to be poured on the marketing communications to give it that something extra – an activator or catalyst. I call it the “S” or sizzle and snap. Others might call it the Wow factor, the Pixie Dust, the Secret Sauce.  You get the idea.

Kay Ross wrote and interesting article about creating more effective marketing communications that I like a lot. At the end of the day, the role of marketing is to “sell more stuff, to more people, for more money”, said Sergio Zyman, the former CMO of Coca-Cola.

So on one hand, I think there is a bunch of tactical things you can do to improve the effectiveness of your marketing materials and communications. You can have strong calls to action, features and benefits expressed from a customer point of view. Equally important is to ensure that the products and communication strategy reinforce the strategic pillars of your company. This is especially true in PR and analyst relations. Unless you are Apple, sophisticated press does not want to hear about your products. What is more valuable to a company are communications that 1) outline the company’s strategy, 2) is explicit about the pillars of its strategy, and 3) uses products, solutions, and partnerships, alliances, acquisitions as proof points of its strategy. And in the messaging of all of this, there needs to be something tangible and sizzling to hang on to and get interested about. This is where your marketing creativity comes in.

For example at HP, we introduced the HP 1018 as the world’s smallest laser printer. While you might think that was a small story (no pun intended), improving the customer experience of the space a printer occupies on a desktop is important, which plays into the larger strategy and a proof point that HP delivers a great customer experiences.

Another example was the recent announcement by Cisco that it was improving the ability of small businesses to connect, secure, and communicate. The products, features, support, and services were the proof points of its ability to deliver on the strategy.

What doesn’t work as well? Here are Sony’s product-centric press releases.

Tie your product or services messaging and marketing collateral around your business’ strategy and strategic initiatives. The net result is that you will build more industry momentum, improve the company’s image and reputation, and educate customers who will really see the differentiation and value your products bring to the market.

Now – go out there and start sizzling!

Print

Email

Rss

2 Comments

Posted By Vince Ferraro

March 30th, 2010

Is Your New Product Introduction Process Launching Your Company to Success (Part 2)?

In this blog post, I will continue the conversation about key success factors for new product introductions. In the last blog (Part 1) we identified 6 factors that are crucial to your company’s product launch success. In this blog, I will discuss 3 more and offer some conclusions.

Accurate Supply and Demand Planning

Related to rollover strategy, having the right demand and supply plan is crucial for a successful product launch. In addition to the uncertainty of fluctuating introduction dates and slipping R & D schedules, a poorly executed supply and demand plan will knock the wind out of the sails of any new product launch, no matter how well executed or creative the other elements of the marketing mix are. This topic, in more detail, will be the subject of another blog post. But the short answer is that (often times) significant inventory needs to be built in advance of a product introduction, in order to accommodate the initial ordering spike and channel stocking requirements. There is no hard and fast or easy rule to apply here. The decision on how much inventory to build is a function of many factors including B2B or B2C segmentation, forecast accuracy, long lead time parts procurement, channel stocking requirements, and of course the rollover strategy – hard or soft. Also to be considered is the inventory policies for that range of products. For example, you may choose to have a higher degree of inventory, manufacturing and mix flexibility with a $199 product than a $99 product. Why? Because (generally speaking) there is more revenue, profit etc. in selling the higher priced products. When companies have a broad portfolio of products (like HP did) – low end and low priced products generally had lower levels of profitability than higher end and higher priced products. This should not be a surprise. As a result in some companies, low end volumes are limited to a certain percentage of total products sold or to a specific market share goal, in order to prevent too much erosion of profitability and mix to the low end.

Delivering Broad Communications

The importance of delivering broad launch communications to suppliers, the channel, key customers, and sales reps are crucial to coordinating a successful product introduction across key stakeholders. Some companies (like Apple) don’t let their sales reps know about their new products the day of the launch. This often results in end user confusion as nobody can answer the inquiries/support calls of end users when the product is announced. While there are legitimate issues with wanting to maintain confidentiality of a product launch (e.g. to prevent a premature competitive response), years of experience have told me the more open and coordinated conversations around the new products, their launch strategy, rollover plans, key messages, etc. are, the better the outcomes for OEMs and their channel partners and customers.

Having An Integrated Marketing Plan

For many people, the launch plan is synonymous with marketing communications – PR, marketing, demo units, marketing collateral, advertising, and promotions. While these are certainly important elements of any new product intro, there is another layer of thinking in the launch plan that needs to be considered. For example, how strategic is this product for the company’s future revenues or company/brand image and how strong is the story? Is there any announcement within this intro (e.g. hardware, technology, partnerships) that fortifies or offers proof points for the company’s strategy along a new or existing dimension? Each product introduction should be like a piece of gigantic jigsaw puzzle that fortifies and moves the company to improved competitive advantage. Master this concept and you will beat out 95% of your competition in the effectiveness of your product launch process. If you start thinking like this right now, I am confident you will get the new product launch results you are looking for.

Here are some additional questions to think about, related to your launch strategy.

10 Questions to Consider About Your Launch Strategy

1. Is the new product strategic or tactical? Both in financial performance and market segment
2. What is the key value proposition and messaging of the product? Is it compelling and sustainable?
3. What is the positioning of the product, related to the competition, and other products the company manufactures? Is the product innovative and can it disrupt the competition?
4. How does this product contribute to the longer term vision and financial performance of the businesses? Is it a big contributor to future growth?
5. Is this product newsworthy? Will the press or industry analysts run a story about it?
6. How much do end users care, read or follow the news of a new product announcement?
7. How frequently does the company launch products – monthly, quarterly, or annually? The idea being is that the velocity of any particular introduction, and its activities, will be a function of how often introductions are done the business unit. Not all of them can be strategic.
8. Will there be enough inventory available at launch? A related question … is there too much inventory remaining for the old product? If so, what do we do about it?
9. Are all of the elements of the launch aligned and ready to go? For example in addition to product availability are demo units ready, advertising creatives media buying plan in place?
10. Is the product launch coordinated with end user and channel seasonality? If timing is not synched, the potential exists that you will not get enough channel or end user momentum for the launch.

Let’s recap. There are 9 factors that are key to successful product introductions. They include:

1. Reliability of the Product Development Schedule
2. Strategic Nature of the Product
3. What is The Story Behind the Product?
4. Availability of the Product after the Launch Announcement
5. Rollover Strategy
6. Windows Planning
7. Accurate Supply and Demand Planning
8. Delivering Broad Communications
9. Having an Integrated Marketing Plan

In conclusion, a product launch is one of those top 5 things marketing can do to help ensure the successful viability of the future business. Careful consideration about the right focus, resourcing, and support given to a new product launch will go a long way in helping build brand awareness and preference and future financial and market share growth. One final comment and that is as it relates to services and software. In the case of these product groups (vs. hardware), there may not be a physical product to rollover. But the think most of the other factors apply to these product categories. So please let me know your NPI success factors in your comments back to me on this blog.

Print

Email

Rss

4 Comments

Posted By Vince Ferraro

March 22nd, 2010

Is Your New Product Introduction Process Launching Your Company to Success (Part 1)?

For many companies that are trying to grow, new product introductions (often called NPIs) are a critical component to that growth strategy. In fact, some companies even set goals around new product introductions in hopes that it drives significant future revenues and profitability. For example, 50% of future revenues over the next three years is derived from new product introductions. Of course, not all companies can achieve that goal. It depends on the industry, its typical product development cycle, customer expectations for new product releases, etc. A 50% goal for a technology company would not be an overly aggressive goal.

There are important distinctions to be made about how new products get introduced, depending on what type of product it is. Using Apple, as an example, new products can come from three general pipelines (although there are certainly variations). Completely new products (like the iPad), replacement products (like the iPhone 3GS), and product line extensions (iPod Touch after iPod Classic).

As a marketer attempting to plan for a successful NPI, there are some important considerations that need to be included. First, many people equate a new product introduction with their PR and Marcom activities. They would say that they have done the press release, created the data sheet, took a few photos, put the new product in the catalog and price list – so they are done. While these are essential components of an introduction, it is only a few of the many launch activities. Second, most successful introductions are tied to defining and articulating the strategic intent of the company and its business strategy. What do you think is more interesting? A press release about a new product and its specifications or a press release which talks about the strategic intent/strategy of the company with a new product and/or its technology as the proof or substantiation point? Here is a great example about merging strategy and product introduction messages from Hewlett-Packard.

The more effective new product introductions are measured on a weekly basis. Depending on the type of product introduction – new products in new markets are typically more complicated than a replacement/rollover product. Starting an introduction process more than 12 months in advance is not unheard of.

Other important considerations include the following.

Reliability of the Product Development Schedule

It is paramount that a new product is introduced using a highly confident R & D schedule and process. Nothing screws up an introduction more than a development team that cannot commit to key dates, especially within 90-120 days of the launch for this is when key introduction trigger decisions (e.g. buying media, press and analyst tours, product rollover decisions) need to be made. Often times, you will hear the term “pull the trigger”. This simply means a critical decision has to be made and any pull back would be difficult and/or costly.

Strategic Nature of the Product

How strategic the product is (which could be defined by revenue contribution, profitability, new market, market share potential, etc.) will determine how much effort and money will go into the launch strategy and plan. So the question is, is it a Big Bang launch or a minor new product introduction? Or is it something in between? Resources will generally get applied according to the strategic significance of a product’s launch. The Boston Consulting Group’s Portfolio Growth Matrix is one way to help define which products are the “Stars” and are worth more attention vs. the “Dogs”.

What is The Story Behind the Product?

In a successful, new product launch, there needs to be a strategic message or story behind the product. How does the product contribute to the future success of the company, develop a new market, and reinforce previous strategic announcements? A successful product launch will be a proof point to a company’s strategy and reinforce a strategic initiative, not distract from it.

Availability of the Product after the Launch Announcement

In a perfect world, we would launch a product on a particular day and customers would hear about it, rush to the store and buy it, and have instant gratification. Rarely does it work that way. There are two important things to consider. First, If it is a new product category for the company or a new product in a new market or a new product in a market where the company does not play (e.g. Apples original iPhone or Microsoft’s Xbox 360), there is some flexibility on when a product needs to be available in the channel. In fact, many companies introducing products in a category like this will sometimes pre-announce a product in order to disrupt their competitor’s business (like Apple’s iPad and Amazon’s Kindle). This can be an effective strategy when used appropriately. When the product replaces an existing product, great care needs to be exercised to ensure the rollover from the old product to the new product does not disrupt channel supply or company revenues. Of course, this is easier said than done; but it is possible in a company with world-class product development launch capabilities. There are, of course, numerous examples of companies that get this wrong.

Rollover Strategy

With products that are replacing existing products, great care needs to be exercised in the formulation of the rollover strategy. Sometimes companies will initiate a “hard rollover”, which means that production of a new product will ramp down or stop as the production of a new product ramps up. Others prefer to do a “soft rollover” where the old product and a new product co-exist for several months, until the new product has enough inventory and there is confidence of high quality units being produced. Based on my experience launching hundreds of new products, my suggestion is a “soft rollover” approach as a hard rollover is extremely difficult to execute well. It is somewhat channel dependent. There are other considerations including customer type, channel used, and build to order vs. an inventoried and stocked product.

Windows Planning

It almost always makes sense for new products to be bunched up together and introduced in a few, strategic timeframes (also called Windows as opposed to numerous discreet product introduction events throughout the year. Why? Because, some of the best product introductions will be tied to seasonal purchasing cycles of the customer. For example in retail, such windows include Back to School and Holiday. You would never launch a product in December. With business customers, these Windows can be tied to government and education buying cycles or non-holiday Spring and Fall months. For example, it makes no sense to introduce products for business during regional times for vacation (like summer months, August in Europe). I suggest a 3 stage introduction window planning approach – which looks at 0-6 months, 7-12 months, and 13-18 months out into the future. The idea is that introductions are being managed across three different time horizons as opposed to discreet moments in time. It would not uncommon for the actual launch dates and plans to change in these outer windows (greater than 12 months out) as more certainty comes from the product development schedule. At the same time, there needs to be a lot of detail (and stability) about launch plans in 0-6 months. Another important part of this process is that it allows comparative window introduction window planning. What I mean by this is the product messaging, promotional campaigns, advertising, strategic intent communications can be looked at as evolving and inter-related to each other over the 3 introduction windows. This approach, in and of itself, will make your new product launch process more strategic.

I will end the blog here for now. I will complete this discussion in a Part 2 of this topic, which will be my next blog post. In conclusion, let me say that the keys to success for any new product introduction is planning, planning, planning. In addition, it’s knowing how the new product fits into your company’s strategic plan and vision and being able to articulate that (product and strategy) to customers, channel partners, stockholders, and other key stakeholders.

Print

Email

Rss

2 Comments

Posted By Vince Ferraro

March 17th, 2010

Click here for orginal article

Print

Email

Rss

9 Comments

Posted By Vince Ferraro