Traditional Product Launch Strategy
• Skim the market with premium prices (lead users,
technophiles)
• Establish first-mover advantage
• Descend learning curve with volume increases
• Reach broad market later with lower prices
What Are First-Mover Advantages?
• Brand loyalty
• Preempt capacity
• Preempt shelf space
• Head-start on learning
• Network externalities\
Question: Have first mover advantages disappeared?
The Survival Zone
Features
Price Point
Quality
•Product: Sony Cyber-shot DSC-T1
•Specs: 5.0 megapixels, 3X optical zoom
•Price: $550 list
•Company Info: Sony Electronics Inc., www.sonystyle.com
•Ease of use:
•Power:
•Performance:
•Image quality:
Editor Rating:
Calculating Target Cost
Price Point
- dealer margin
- import costs
- margin requirement
Target Cost
What If Estimated Costs Are
Higher Than Target Costs?
• Reduce features and lower price point
• Enhance features and raise price point
• Redesign the product or component
• Reexamine conditions (launch date, volume)
• Consider life cycle cost
Managing the Product
Development Process
• If you can’t meet the target, don’t launch the product
• Tip-toe objectives
• Cost target is a unifying metric