Some strategies you might need

By Rhenald Kasali

JAKARTA (JP): If you are ever in New York, make a point of visiting Naples, the International Supermarket and Museum-the last, which conveys the message: "Be careful when you want to launch new products."

The museum is chock-full of products and their brands that were launched, but flopped and are now no more.

Marketing literature shows that between 40 to 80 percent of new products fall flat on their face shortly after launching.

Some flopped in their first year, others in the succeeding years. Some became a hot commodity in the first one or two years but then vanished without a trace.

Take Beauty shampoo, for instance, which was once a success but disappeared from the market two years later. In this museum we can even see Sempati Airlines aircraft -- which are no more, which we now understand had subsisted for years on continuous injections of funding rather than from sales.

Perhaps we could also ask Gramedia Group about publications they have withdrawn because they fell flat in the market, or Unilever, P&G, Orang Tua Group and other producers of superior commodities that simply did not sell. They must know what it feels like to produce something and see it fail.

It is never easy to determine whether a product is a failure because the market we wish to penetrate is very often different from the one that first greets us.

We may think our product is a great innovation, something that nobody can do without. We think we know. But as soon as it is launched, we find out that other people have thought of the same thing.

Or perhaps other people soon copy our product and sell the imitation product at a fraction of the price.

Whether or not we succeed in launching new products does not depend only on whether the market wants it, but also on how we market them. This is why some products which producers launched with modest hopes, began selling like hot cakes.

In 1962, a new band auditioned for a leading recording company then, Decca Records, which rejected their music.

The band trudged along to four other companies, which also turned them down. In the following months, however, the band launched their songs elsewhere and soon found themselves to be a trendsetter and in big demand. The band was, of course, the Beatles.

The same thing happened to Steve Wozniak who, when working for Hewlett-Packard in California, invented the PC in his own garage. He suggested that HP produce the PC, but the company rejected it.

The cash-strapped Wozniak managed to produce the Apple Computer, and found success. Similar success stories are in abundance in Indonesia -- including the success of Dewi Lestari or Dee who achieved almost overnight fame as a writer with her first novel, Supernova.

Several publishing houses rejected her manuscript until she lost patience and decided to print it and sell it herself. She toured university campuses, cafes, held talks on her book and sold 12,000 copies within the first 35 days. She would not have sold 3,000 copies in a year if she had actually gone through publishers like other writers.

All of the above examples serve to illustrate how risky a business launching new products is, but also proves that if we approach it wholeheartedly, there is always a chance of success.

Many marketing gurus have expounded in their manuals the virtue of preparing strategies for launching new products.

Ideally, a company should keep on inventing and have a clear concept about how to proceed in its product development projects.

Take the automotive industry, for example, in the past it used to have to produce a new car every eight years.

Now, the product life cycle is getting shorter so that companies have to produce new designs every two years.

Its purpose, certainly, is to fill the replacement market -- where loyal customers wish to replace their vehicles periodically.

Cellular phones have an even shorter life cycle with companies launching new products every year! Indeed, the more a product is in vogue, the shorter the time before it has to produce new designs.

Launching a new product is not only about bringing out new goods or designs.

It can also mean launching a new identity. Take PT Astra International that launched last year its new corporate identity -- thus sending a signal to the market that the company is responding positively to changes.

A corporate identity might have a longer life cycle (between ten to twenty years, for example), but a logo or product identity does not.

This is why companies such as Coca Cola, Betty Crocker and Lucky Strike continuously and gradually change their packaging so it looks fresh and the products do not seem dated.

Careful planning is needed. The new products should be "contextual", meaning they have to be appropriate to the time and target market.

Being a consultant, I am often asked by clients to help with the launching of new products to avoid the risk of failure.

Usually we start by identifying the main target of the products, who have to be reached first (called "early adapters"), who will act as the "influencers", how big a group they are, when is the best moment to hit the market, how rivals would react and what marketing strategies are needed.

I conclude with the following tips for launching new products:

First, reexamine the company's motive for launching new products.

The strategies devised should be geared toward achieving that objective. The launching of Klik BCA, an online banking service, was mainly to reduce long queues in front of teller counters and the ATMs. The launching of the recent Garuda Indonesia commercial was to rebuild its badly tarnished image and redefine its marketing target.

Secondly, check the real target market of the product, its apriori and post-hoc segmentation. The Klik BCA was aimed at the young BCA cardholders with Internet access. Judging from its post-hoc segmentation, the project is suitable for five major cities: Jakarta, Bandung, Surabaya, Yogyakarta and Medan. Garuda Indonesia, on the other hand, targets business people on business trips.

Thirdly, one should devise an integrated marketing program that guides all marketing activities. This should be done consistently and guide the third party such as the advertising agency when carrying out promotion programs and selecting the media for promotion. My working experience in advertising has taught me that not all advertising people, be they local or foreign, are as smart as you want them to be. Without clear guidance, they could embark on a misguided promotional program and harm your interests.

The fourth tip is for you to find someone to advise you on whether or not you have taken the right move. Preoccupation on minute details might trap you into tunnel vision and rob you of the ability to see the bigger picture. You need independent partners -- people who you talk to long before the launching so they give you their optimal value.

Fifth, reexamine the characteristics of the product and see whether the company is ready to handle the line. There are products that demand a strong distribution chain before being launched officially. Mass consumer goods, for instance, should usually be distributed evenly before marketing communication is launched.

It would be "dangerous" for a company to launch marketing communication before the goods are in the market.

The same principle applies for the automotive industry. The company that produces Honda Accord recently launched a new product at Hotel Kempinsky in Jakarta, which was followed the next day by big ads offering test drives.

When potential consumers visited dealers, the car was not yet there. The test drive was unavailable as well because the show rooms did not have the stock. They claimed the cars belonged to customers who had paid a deposit.

"You can see it, but you cannot test drive it," said one of the salesmen in a show room. When some customers said they wanted to purchase the car, again the salesman said, "We don't have the stock yet, but you can pay a deposit. Mind you, however, the price can change."

What kind of a launching was that?

As a final tip, carry out periodical evaluation. If customers remain unmoved by your promotion, resort to 'plan B'. Check whether there are obstacles originating from competitors.

This evaluation must be done systematically whether your product launching is a success or a flop. Because, remember, you need to maintain customer loyalty so they become repeat customers and even recommend your products to other people.

When customers do not repeat orders, it could be because they have been only "trying" or "tasting" -- and it would be dangerous for a company to consider this testing of a product as real market potential.