L8: Commercialization

Question 1

Commercialization of Innovation definition (Hultink et al., 1997)

Answer 1

The set of decisions which define how the new product is positioned and ultimately introduced into the market.

Question 2

The complexity of launch

Answer 2

• Less risky: internally controlled dimension related to the launch: tactical and strategic decisions.
• More risky: externally endogenous dimension

Question 3

Tactical decisions definition (Chiesa and Frattini, 2011)

Answer 3

• Encompass key elements of marketing mix, and concerned with operational aspects of the innovation launch.
• Include: Product, Distribution, Advertising and Pricing.

Question 4

Strategic decisions definition (Chiesa and Frattini, 2011)

Answer 4

• Taken prior to the launch of the innovation. They define the context of the innovation launch.
• Include: Inter-Firm relationships; Timing; Target and Positioning

Question 5

Two endogenous reasons for market failure of new products (Chiesa and Frattini, 2011)

Answer 5

• Lack of support from the innovation’s adoption network: Interconnectedness of High-Tech markets, Systemic innovations (great readjustment of products).
• Negative Post-purchase attitude of the innovation’s early adopters: Diffusion of innovation, Product trials and attitude change, Customer satisfaction and Radical innovations.

Question 6

3 factors to consider in Lack of support from the innovation’s adoption network (Chiesa and Frattini, 2011)

Answer 6

a. Inter-Firm relationships: (1) Fail to establish relationships with critical players in adoption network. (2) Unlicensed technology. (3) Relatively high price of software development tool. => L-T partnership, Out-licensing technology and Low price.
b. Timing: false belief that adoption network will support => L-T partnership with critical members in adoption network before the diffusion.
c. Unclear Target and Positioning. => Clear.

Question 7

4 factors to consider in Negative Post-purchase attitude of the innovation’s early adopters (Chiesa and Frattini, 2011)

Answer 7

a. Target and Positioning
b. Product
c. Advertising and Promotion
d. Timing

Question 8

The Target and Positioning in Negative Post-purchase attitude of the innovation’s early adopters (Chiesa and Frattini, 2011)

Answer 8

1) No targeting of early adopters in the launch of the innovation.
=> Proactive targeting
2) Wrong positioning = an improvement on existing products or as an extension of a well-respected product line. => Positioning as revolutionary technology.

Question 9

The Product in Negative Post-purchase attitude of the innovation’s early adopters (Chiesa and Frattini, 2011)

Answer 9

1) Product lacks some critical functionalities for early adopters. => Must include.
2) Some functionalities are not working perfectly at launch time. => Must work perfectly.
3) The configuration contains many additional functionalities. => Only allow limited additional functionalities.
4) The product at launch time lacks some features appearing in the pre-announcement campaign. => Complete set.

Question 10

The Advertising and Promotion in Negative Post-purchase attitude of the innovation’s early adopters (Chiesa and Frattini, 2011)

Answer 10

1) The message in pre-announcement focuses on features that are unavailable in product configuration. => Consistency between pre-announcement and real product.
2) The message focus on the product’s belonging to a family name or well-respected brand.
=> Focus on technical capabilities and sophistication of the innovation.

Question 11

The Timing in Negative Post-purchase attitude of the innovation’s early adopters (Chiesa and Frattini, 2011; Cantalone and di Bernedetto, 2012)

Answer 11

1) Attempt to launch when the product is not finished.
2) Early pre-announcement creates high expectation of early adopters who are disappointed by the configuration.
=> Only launch when the development / configuration of product is complete.
3) Consequences to “too late” or “too soon” launch

Question 12

A focus on critical product launch concerns 3 factors

Answer 12

1) Product evolution
2) Market evolution
3) Competitor evolution

Question 13

Product evolution as a product launch concern

Answer 13

• Product platform evolution.
• Scheduling further benefits for post launch to sustain value in the product.
• Brand extensions

Question 14

Market evolution as a product launch concern

Answer 14

The diffusion of innovations in the user network: from innovators to early adopters, early majority, late majority, and laggards.

Question 15

Competitor evolution as a product launch concern (Debruyne et al., 2012)

Answer 15

• The success of a new product is partly determined by the reactions and moves of competitors.
• Being able to react quickly and insightfully to competitive moves becomes increasingly important.

Question 16

3 factors triggering the competitive reaction (Debruyne et al., 2012)

Answer 16

• Characteristics of new product introduction.
• Characteristics of the market.
• Characteristics of the innovator.
  => Competitive reaction in 4P.

Question 17

3 characteristics of new product introduction in competitive reaction (Debruyne et al., 2012)

Answer 17

• Product newness
• Marketing effort
• Targeting strategy

Question 18

Product newness as a characteristic of new product introduction in competitive reaction (Debruyne et al., 2012)

Answer 18

• It triggers the retaliation behaviour of competitors.

- Two types of new products: Radical and Incremental.

Question 19

1) Radical product newness as a characteristic of new product introduction in competitive reaction (Debruyne et al., 2012)

Answer 19

• Represent a discontinuity within the industry and advances by an order of magnitude the technological state-of-the-art which characterizes a new industry.
• Competing firms may “wait and see” due to uncertainty concerning the success, the consequences and the target market of the innovation.
• Firms fail to respond due to:
  [1] did not recognize them as potential competitors
  [2] overly engaged in fulfilling their customers’ existing needs.
  [3] busy in fighting to keep up with their current competitors.

Question 20

2) Incremental product newness as a characteristic of new product introduction in competitive reaction (Debruyne et al., 2012)

Answer 20

• A logical extension to existing knowledge by introducing refinements or extensions of established designs that result in substantial increased value for customers.
• Firms will likely to respond due to: [1] It represents clear-cut attack on the existing market. [2] It captures the market’s attraction.

Question 21

Marketing effort as a characteristic of new product introduction in competitive reaction (Debruyne et al., 2012)

Answer 21

• It accelerates the diffusion process and the adoption rate, and stimulates superior L-T market performance.
• The action visibility (towards customer and competitors) in:
  + distribution - invest on new channels => not intrude the traditional playground of competitors.
  + promotion - directly intervene with competitors effort to promote products to consumers.

Question 22

Targeting strategy as a characteristic of new product introduction in competitive reaction (Debruyne et al., 2012)

Answer 22

• It determines the number and identity of competitors that are directly affected by NPL.
• Three types: selective (clear attack), undifferentiated (indirect attack) and niche (relatively low rivalry) strategy.

Question 23

Market traits as a characteristic of competitive reaction (Debruyne et al., 2012)

Answer 23

• Market growth rate considerably influences the reactive behavior. They are more likely to react faster and more aggressively in markets that exhibit high growth rates.
• Based on BCGs growth-share matrix to evaluate.

Question 24

Innovator as a characteristic of competitive reaction (Debruyne et al., 2012)

Answer 24

• The interpretation of a company’s moves depends on its reputation in the market. It is based on the past actions of the company, that is, its market heritage.
• NPL by companies that have an outstanding track record in introducing new products are perceived as more threatening, which competitors more likely to react.

Question 25

Managerial implications toward the reactive behaviour of competitors (Debruyne et al., 2012)

Answer 25

1) Competitor orientation in the NPL: develop detailed scenarios for different competitive situations.
2) Understand the antecedents of competitive reaction: consider how the centrality and scale of our attack affects competitors. (Ex: radically innovative product or niche market)
3) Manipulate the competitive arena: An avoidance strategy for small companies. Firms may abandon the dysfunctional competitive focus on incremental developments.

Question 26

“lean” launch definition (Calantone and di Benedetto, 2012)

Answer 26

• Refer to a launch strategy in which the firm makes small commitments of resources, ramps up manufacturing slowly, and keeps the amount of inventory during rollout low
• With lean launch, the firm remains flexible in supply chain and is able to respond rapidly to early sales trends by: 1) reducing raw materials 2) minimizing dependence on uncertain demand forecasts.

Question 27

Corporate mindset (Talke and Hutlink, 2010)

Answer 27

• It is a firm resource that reflect a holistic perspective on firm’s posture toward its behaviour and performance. It determines the launch strategy decisions, which in turn impact market performance.
• A multi-dimensional phenomenon: analytical, risk-taking and aggressive.

Question 28

Types of Corporate mindset (Talke and Hutlink, 2010)

Answer 28

1) Analytical: information about market => Alert the firm, Increase internal capability to recognize the deficiency, Understand customers.
2) Risk-taking: Venture into new markets, Follow new market trends or Progress technological strategy.
3) Aggressive: Capitalize on new technology or Serve new market needs to ensure CA and outperform rivals.

Question 29

Relationship between Launch strategy decisions and Market performance (Talke and Hutlink, 2010)

Answer 29

1) Launch objectives: define direction of NPL and serve as a benchmark.
2) Market segmentation: effectively reach and satisfy customer that differ in unique needs and wants.
3) Product positioning: coincide with both CA of product and expectations of market.

Question 30

Launch activities include 2 dimensions (Kuester et al., 2012)

Answer 30

Launch activities can be both outwardly directed (targeted the customers) and inwardly directed (targeted the departmental coordination, top management support, or employee incentives).

Question 31

Outwardly directed market launch activities (Kuester et al., 2012)

Answer 31

• Market-related launch success: Since customers are uncertain to adopt new products, their decision-making requires the support of MKT activities to provide more info.
• Time-related: Externally directed instruments like pre-announcing and distribution support the diffusion acceleration.
• Financial: Brand strength (affected by branding, communication, and broad assortments) drives profit and can reduce customer price sensitivity.

Question 32

Inwardly directed market launch activities (Kuester et al., 2012)

Answer 32

• Internal corporate culture is the dominant driver of successful radical innovation.
• Activities such as: establishing interactions and coordination between departments or by demonstrating the support of top management.
• Internal commitment of internal stakeholders.
• Efficiently internal work process.

Question 33

The role of moderating factors (Kuester et al., 2012)

Answer 33

1) Product newness for customers: the adoption barrier when the products are radical => Pre-announcement or trial offers.
2) Product newness for companies: radical products may lead to uncertainty of employees. => Training, incentive.
3) Driver of NPD: Market drivers (pull) or Technology drivers (push).
4) Size of the company: the larger of firm, the less likely to introduce innovation => More coordination and inwardly directed activities for large firms.

Question 34

The impact of Cross-functional integration on lean launch (Calantone and di Bernedetto, 2012)

Answer 34

• Definition: the level of unity of effort across the functions involved in NPD like MKT, RnD, and manufacturing.
  1) Improve the quality of MKT: customize product offering, reduce number of material or service suppliers, minimize logistic facilities, or eliminate marginal customers.
  2) Improve the competency of supply chain: collaborative relationships with external partners, internal operations, and integration of external operations.

Question 35

The impact of MKT quality on lean launch (Calantone and di Bernedetto, 2012)

Answer 35

• Ways to improve MKT quality: selecting customers for product use testing, conducting test MKT, training the sales force, and developing and testing the advertising.
  1) Understanding of the MKT efforts at the launch time.
  2) Understanding of Target customers’ responses to price levels, resulting in better tactical launch decisions such
  as improved timing.