Gambling with new products

By Jonminofri Nazir

JAKARTA (JP): Preparing the launch a new product is akin to strategizing for a war. There might be threats from competitors, hitches in the line of distribution or simply bad timing.

Every week, tens or even hundreds of new products are introduced to the Indonesian market as can be seen on the Seremonia page of Kompas' Sunday edition.

Many companies are also introducing their new products via the radio.

For example, last week the ITC Cempaka Mas shopping center in Jakarta, claiming to be the largest wholesale market in Southeast Asia, advertised by inviting listeners to join in its daily quiz show that offered interesting prizes.

Irek, a traditional medicine, whose producer claims is a local version of Viagra, was also introduced to the market through radio advertisements.

In trying to win the hearts of consumers, there are producers who introduce their products in line with regulations and there those who choose to ignoring them. Both categories of producers, however, hope their products will be absorbed by the market and better still, edge similar products out of the market.

Some producers prepare the launch of their products meticulously, even setting up special teams to closely monitor the launch and the market's reaction.

The period before a launch can be stressful for those involved as the producer has to ensure the product is acceptable to the market, and that the lines of distribution is secure and not sabotage by its competitors.

An interesting marketing competition to watch is the "war" between three cellular phone operators in Indonesia, namely Satelindo, Telkomsel and Excelcom.

The competition between them has been fierce since the beginning of the cellular phone industry in the country. Every time a new product is introduced by one of them, the others will almost immediately follow suit.

This indicates that they monitor each others moves and try to precede the others in introducing new products.

As an example, soon after Excelcom began its services in Batam Island last year, Telkomsel introduced a new service there too. Also last year, when Telkomsel announced its new mobile banking service at Panin Bank, Excelcom introduced a similar service at Bank Central Asia -- which thus far has not materialized.

In competition with Telkomsel and Excelcom, Satelindo introduced its prepaid cellular telephone card called Mentari, offering the lowest rate for calls. Customers' response to the card has been positive, but the high demand for Mentari cards has lowered Satelindo's ratio of calling.

The competition in the cellular telephone industry is expected to become fiercer in the future as two other operators, Indosat and Telkom, will also enter the market.

The entrance of new products into the market does not necessarily spell the death of the old products.

Very often, the opposite happens. New products may fail to break into the market because they are "attacked" by competitors or their producers fail to meet market demands. The publications of Koran Cepat Detikcom and Koran Tempo are examples of that.

Koran Cepat Detikcom, designed to be a daily that will be distributed at around noon, seemed right as it was different from the other newspapers in content and in the time of distribution.

But the paper failed to reach readers on time because newspaper agencies were reluctant to distribute the paper at this awkward time. Just like its predecessor Berita Buana, Koran Cepat Detikcom failed to win the market, not because it was attacked by its competitors, but by its own failure to reach readers at lunch time.

Koran Tempo is also facing problems in its distribution as many major agencies have allegedly been pressured by rival newspapers not to distribute the newcomer.

Such unfair business practices have been perpetrated by several leading publishers in the country for many years.

Thus, selecting an appropriate time for the launch of a new product is crucial.

Some products are well-accepted by the market because they are introduced at the right time, while others are not, simply due to their late arrival.

For example, publishers Grasindo and Gramedia have both published books on Indonesia's first president Sukarno recently.

The former's venture was a great success because it released the books prior to Sukarno's centennial celebration, while the latter has -- so far -- been less successful because its books came out after the celebration.

The success of a product launch requires the full attention of the personnel in charge.

The recent opening of Haryono's new branch of Bersih Sehat, a traditional Javanese parlor, in Singapore, for example, was a success because he fulfilled the country's strict regulations and gave his full attention to the business.