New Products Management 11e / Crawford & Di Benedetto Part V Launch
Case Teaching Notes for Part V
Wii
Chapter 16
Wii has been a rapid success for Nintendo, and throughout the first several months of Wii’s
availability, it has remained scarce, and occasionally available at a marked-up price on eBay.
What is it about Wii that has accounted for its success?
Very clearly, technical superiority is not what Wii is all about, at least not how this has
been defined up to now in the game industry. Wii is not more advanced than the recent
Microsoft or Sony launches, and comes in at a lower retail price as well. But this apparently was
not the intent of Nintendo, which did not see its new product necessarily to be the next
generation of GameCube. The big advance was the Wii Remote, which allowed the player to
simulate participating in sports such as baseball, golf, tennis, or car racing, and also the ability to
play against other competitors head to head. As the case notes, Nintendo was praised for
So what happened in the marketplace that paved the way for Wii success? One
explanation is tied to the video game product life cycle. The first video games were primitive,
but popular, and as subsequent generations of products came out, the quality and realism of
games increased tremendously. As the market moved through maturity, leaders such as
Nintendo, Microsoft, and Sony emerged and competed in terms of performance. At the time of
the Wii launch, “bigger was better” in terms of gaming quality. But the market was maturing,
and according to classical PLC theory one would expect differentiation, and some targeting of
As a final word, the case asks about the choice of name. The company seemed to be
considering only Wii or the internal codename, Revolution; apparently a combination family
name “Nintendo Wii” was never under consideration. This is probably a good idea. Nintendo
has come to mean a product with its prime audience under about 15 years old; Wii is a totally
new brand name, and being a made-up word, can be defined by Nintendo to be whatever they
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people revolting against governments). Wii also has a wonderful double meaning: “We” (as in,
“We can play together”), and “Whee” (as one might say when riding a roller coaster). The two
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IRIDIUM
Chapter 16
The Iridium case illustrates the serious risks involved in attempting a “home run” strategy.
When the initial funds were committed in the mid 1980s, it was clear that some kind of cordless
phone technology was going to be the “next big thing,” but still unclear which technology was
going to win out: a cellular-based form, a satellite-based form, or something else entirely. Also,
if satellite was going to be cost-efficient enough for general use (or at least useful to enough
people in certain conditions), it was unclear whether Iridium or some other satellite system
would prevail. But, as time went on, the investors should have eventually faced up to the
following:
Despite the huge sums that had been invested up until the mid-1990s, there should have
been little doubt to Iridium consortium management that cell phones were winning in terms of
advanced technology, cost reduction, and customer acceptance. The case reminds the reader of
the competition among VCR makers a generation earlier. At the time, everyone in the consumer
Incredibly, however, investors continued to drop millions of dollars into Iridium even as
its stock plummeted, right up until it declared bankruptcy. It was one of those cases where many
There is a highly interesting postscript to the Iridium story.1 After Iridium filed for
bankruptcy, it was expected that the satellites would simply be allowed to burn up in space. But
the assets were bought by a consortium of investors in December 2000, for only $25 million.
1 The information for this postscript was derived from: Anonymous, “A New Orbit: Iridium’s Modest Comeback,”
The Economist, July 14, 2001, p. 5.
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estimated breakeven was 65,000 customers by mid-2003. With such a small breakeven target,
the new management was able to concentrate on niches such as defense, peacekeeping forces,
and oil and gas exploration. Connection charges were also down, to about $1.50 per minute. By
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COMPARING SMARTPHONES (C)
Chapter 16
There is a wide range of results possible here, depending on student assumptions. If students use
the same two positioning maps as shown in the answers to the (A) case, the BlackBerry launch is
potentially a serious threat to the industry leaders. In constructing the following tables, the
assumptions are that BlackBerry’s screen size is 5 inches, its rear camera is 13 megapixels (the
3.8 4 4.2 4.4 4.6 4.8 5 5.2
0
2
4
6
8
10
12
14
8.7
13
4
Screen Size
Rear Cam
1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8
0
2
4
6
8
10
12
14
16
18
20
CPU Speed
Talk T ime
*BB
*BB
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0.5 0.6 0.7 0.8 0.9 1 1.1
0
0.5
1
1.5
2
2.5
1.98
2.37
1.23
Screen Size
Re ar Cam
0.15 0.2 0.25 0.3 0.35
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
CPU Speed
Talk T ime
In the first case (screen size and rear camera), BlackBerry immediately becomes a
performance rival to the leaders, Sony and Samsung, and at its low price, completely dominates
So what should the competitors do? The first consideration is, how reliable is the
information? At this point it is an industry rumor. The BlackBerry may launch at the
less-threatening price of $450, or even at a higher price. It may never launch, or the rumors of
*BB
*BB
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even if the product is fine, the marketing may be inadequate for Blackberry to sustain a threat.
This kind of rumor can be greatly exaggerated. On the other hand, it might be a wake-up call to
Students can be encouraged to compare their maps and the conclusions they have drawn
from them with respect to the seriousness of the threat. The answers will differ greatly, as they
will depend on which attributes were selected and also on the assumptions regarding the
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HULU
Chapter 17
Adopters of the 9th edition will recognize that there is some relationship between this case, and
the discontinued YouTube case that was at the end of Chapter 20. In a sense, it is an update of
this case, and shows NBC Universal’s response to the huge popularity of YouTube: Hulu, a
video site that they founded together with Fox and ABC (though it operates independently of all
of these).
The case shows that NBC initially was wary of YouTube. Users could upload content such as
popular NBC programs, which devalued these programs in the resale market. In theory, few
people would buy or rent, say, a DVD collection of the best Saturday Night Live skits if they
were all available on YouTube. The attitude at NBC at first was to “pull down” unauthorized
YouTube clips of their programming. But the promotional value of YouTube to TV networks or
record labels cannot be denied. In a sense, the case is really about NBC’s perception of the
Hulu, of course, is independently run, and it operates under a different business model
than does YouTube. No user-generated content is permitted, and several networks (NBC, Fox,
and ABC) all are co-founders and put their own material on the site. Think of the implications of
this:
Pioneering a new product into the marketplace is always risky. The pioneer potentially
builds a sustainable advantage, based on differentiation or cost advantages, but if the pioneering
product is not well aimed (doesn’t meet customer needs well, satisfies only a very small market
segment while leaving other segments open), then later entrants can surpass the pioneer and end
up with the best long-term position. Hulu seems to be doing a lot of things right. Quality control
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fee-for-service sites, notably the online New York Times, so there is precedent for this business
model. One could argue that since entertainment such as Saturday Night Live skits is available
Close relationships among direct competitors are rather rare, though not unheard of. As
one example, in the development of the Advantix camera (described in Chapter 18), Kodak
worked in a consortium with several Japanese camera makers, each having a stake in the new
camera system.
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DODGE NITRO
Chapter 17
The Chrysler folks must make the best use they can of their platforms. As noted in the
discussion of platforms in Chapter 3, car platforms can run to $1 billion or more, so it is up to car
manufacturers to allocate this amount across several car styles and at least a few years. As the
case points out, the greatest amount of growth in the SUV segment at the time is in small SUVs.
This is probably no surprise, as the very large SUVs were notorious gas-guzzlers and were
becoming favorite targets of environmentalists, yet SUVs offered load capacities that made them
attractive to many.
Complicating the issue was that Chrysler was already producing a small SUV, the Jeep
Liberty. Given car platform economics, it seemed unlikely that there was any alternative other
than making the new Nitro, if it is to go into production, on the Liberty platform. A reasonable
question to ask here is, do we need a second small SUV, and if so, how do we distinguish it
sufficiently well from the existing Liberty so that it just doesn’t cannibalize its sales?
While it is hardly a no-brainer that Chrysler should enter a second small SUV, all of its
competitors (American and Japanese) have at least one entry in this segment of the car market,
and some have more. Triplets (three SUVs made off one platform) are even known to exist. So
The company did, to its credit, distinguish the Nitro from the Liberty as much as humanly
possible, given that they indeed are identical twins (indeed the case reminds one of the parents
who deliberately dress identical twin children differently so as to encourage their own
independent personalities). The case gives plenty of information on how these differences were
effected and won’t be repeated here, although it does deserve mention that the Nitro advertising
Also mentioned in the case is that the Nitro is designed to be very masculine looking,
almost like a small Hummer (if that’s even possible). Even the brand names seem to connote
different things: Liberty suggests freedom and, possibly, related virtues like happiness and
independence, while Nitro is all about power: it’s literally an explosion. The promotional
campaign chosen for launching Nitro seems also to be consistent with the masculine target
market.
So now, the last piece of the puzzle is getting dealer cooperation. Now, dealers are
franchisees, and don’t really have much of a choice as to whether they want to carry the Nitro.
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all the pieces fit together, the dealers must be convinced that the apparent growth in small SUVs
is continuing unabated, and that the Nitro is a worthy addition to their lineup.
Note: you might show ads that are available on YouTube for both the Dodge Nitro and the
Jeep Liberty, to emphasize that the two cars were positioned completely differently for the two
markets. Ads that have proven effective are:
Nitro: http://www.youtube.com/watch?v=wNM5fP7HBXY
Liberty: http://www.youtube.com/watch?v=yTLcZ1BCmms
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PEPSICO – PEPSI-KONA AND PEPSI ONE
Chapter 18
Pepsi-Kona makes for a very interesting class discussion. This seems to be one of those classic
ideas that sounds good on paper (or in the executive boardroom), but then something gets lost in
the translation to a finished product. For food products, the biggest “pothole” is usually whether
people like the taste, which is unknown until relatively late in the process. There is no
questioning that coffee and cola are two highly popular tastes among young people, so the
original coffee-flavored cola idea might have seemed pretty good (though I urge you to take a
quick class vote to see if students even like the sound of that idea!). But getting these flavors
together just right seemed to be a daunting problem for Pepsi; despite their best efforts as
described in the case, the product never sold well in the large-scale Philadelphia test market and
never went national. In fact, this begs a question: how did the product get this far and incur this
much cost, before getting killed? If the taste was that bad, how come that wasn’t noticed in a
product use test? Were product use tests ever conducted for Kona? We’ll never know the
answers to some of these questions, but it leads to useful discussion in class.
Interestingly, during the brief time Pepsi-Kona was on the market in Philadelphia, we
The Pepsi-Kona case bears some similarity to an early-90s effort by Royal Crown to
capture some cola market share with a “premium” cola. One can imagine the discussion in the
boardroom: there are premium waters, scotches, vodkas, you name it, but no premium colas: just
Pepsi and Coke. Sounds like a good way to grab some market share away from the leaders. But,
once again, translating the good idea into a desirable product proved difficult. Exactly what
Having been stung with Pepsi-Kona, Pepsi AM, and (a few years earlier) Crystal Pepsi,
Pepsi seemed to be much more careful in the planning of the Pepsi One launch. This new
product was designed to coexist on the shelves with Diet Pepsi despite offering an almost
identical benefit (a cola drink with virtually no calories). As the case notes, Pepsi successfully
launched Pepsi One by targeting a previously difficult market to reach (young males), choosing a
positioning and promotional campaign that would appeal to them, and deliberately not drawing
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One final thought: in subsequent years both Coke and Pepsi launched competing vanilla
products, competing lemon products, and competing low-carb products. While some of these
have done better than others, it appears that Pepsi did learn something from the Kona experience.
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LEVITRA
Chapter 19
The drug industry is unique in that the products need to undergo years of extensive testing before
they are approved by the FDA for use, and that a blockbuster drug may easily account for over
half of the manufacturer’s sales and profits for a few years, until it goes off patent and becomes
much less profitable. Furthermore, even approval by the FDA is no guarantee of financial
success. So many additional factors can make or break a new drug product. Physicians actually
make the choice of drug in most cases, though they are not the product user, and physician
preferences will significantly impact the product’s future success. As some students may know,
Vioxx was approved by the FDA later than Celebrex, but initially overtook it, partially because
physicians liked the dosing regimen and felt patient compliance would be higher. Vioxx went on
to be one of the most financially successful drugs in the Merck product line, until the health risks
associated with its use caused it to be withdrawn suddenly from the market.
Levitra, the Glaxo-Bayer competitor to Pfizer’s Viagra, would seem to be a classic
illustration of finding a positioning gap left behind by a first mover (see chapter 6 discussion of
perceptual maps). While we don’t have customer data to build a formal perceptual map, the
Even if Levitra clearly surpasses Viagra on all of these dimensions, success is not
guaranteed, and that is where the launch strategy and management comes in. Here, Chapter 19
material can be effectively incorporated into the discussion. The launch of Levitra is detailed in
the case: the choice of spokesperson, tagline, sponsorship and advertising, distribution networks,
and price. All of these components will have to be managed, and sales tracked, to see what kind
of inroads Levitra is making against Viagra (and, in the future, any other competing drug by
another manufacturer). While there are no hard and fast answers, students may be asked to
critique these components of the launch strategy, prioritize them in terms of importance to
What happened? Both products coexist in the marketplace at the time of this writing and
both are successful. In mid 2004, Viagra entered a new phase of promotion. It was no longer the
only name, and primary demand promotion was no longer appropriate. A new promotional
campaign, featuring heavy television advertising, strongly reinforced Viagra as the brand that
would “get couples closer,” so to speak (this was the infamous campaign in which the blue V
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new competitor in this category) has made significant inroads by doing something neither Viagra
or Levitra did: promoting to couples (women could encourage their husbands to see the doctor
and ask advice) as well as to doctors.
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CLOROX GREEN WORKS
Chapter 20
The Clorox Green Works line was a big success for the Clorox Company, not only in terms of
sales generated but also in terms of positive publicity for having developed an environmentally
friendly product line.
One reason for the success of Green Works was that Clorox understood customer demand
for environmentally friendly products. As noted in the text, it may have been enough ten years
earlier to slap on an “environmentally friendly” label and declare your product to be “green,” but
times have changed and customers are more knowledgeable. They recognize that “green” terms
are easily overused, and a claim of “greenness” might be relatively meaningless. Therefore, they
require a clear explanation of exactly how a new product is “green” and why this is beneficial.
Clorox Green Works might well have failed if it were positioned as just another one of the
so-called environmentally friendly products on the market. Clorox research suggested that the
Second, once the target segment had been identified, Clorox did excellent market research
to understand its needs and desires. The case outlines many of the Chemical-Avoiding
Naturalist’s concerns regarding performance, convenience, ease of use, price, credible and
trustworthy benefits, etc. Perhaps surprisingly, this target segment would prefer not to go
“green” (or all-natural, to be precise), if that meant sacrificing safety or paying too high a price
Third, Clorox used the market research to support decisions on all “4P” decisions. Price
was a slight premium over regular cleaners but substantially lower than competitive “green,”
“all-natural” cleaners. Distribution was intensive this was not a product that the desired target
audience would necessarily go all over town to try to find. The products themselves worked very
well, considering that they were based on natural ingredients such as coconut oils or corn-based
ethanol solvents; this was because cleaning technology had advanced to the point where very
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As a sidebar, if you haven’t done this previously in the discussion of brands in Chapter 16,
visit www.thecloroxcompany.com with your students. (This is the corporate site of the parent
company of Clorox and many other products.) Have them explore the many cleaning, and
non-cleaning products made by this company. Most of these are acquisitions. Students are
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HYBRID OR HYDROGEN VEHICLES AT GENERAL MOTORS?
Chapter 20
A key issue here is for GM to establish its position as a producer of hybrid vehicles. Japanese as
well as North American-based carmakers are already in the market and seeking to expand their
positions. There are some obvious Chapter 3 considerations in this case (i.e., opportunity and
threat assessment, and corporate strategy development), but note the positioning of the case here,
in Chapter 20: what are the public policy implications of getting into the hybrid car business?
The clearest (external) opportunity here is the apparent growth potential for hybrid
vehicles: from under two dozen sold in 1999 to 40,000 by 2002 and a projected million vehicles
by 2012. A skeptic might raise two questions here. First, are we overblowing the projected
future sales – are those first 40,000 sales the “low-hanging fruit,” with future growth being much
more difficult? Clear monitoring of trends will be critical here in formulating a strategy.
Second, what about the future of hybrid technology? Even in the earliest days of hybrid
technology, many industry observers felt it was a stop-gap measure, soon to be replaced by
As far as public policy is concerned, GM cannot risk being the only major carmaker not
actively exploring alternative fuels, so waiting too long to get into the business. Nonetheless, by
jumping too soon on the “wrong” technology (whatever that is), it can still err, by raising
suspicions among those desiring alternate fuel vehicles about their real commitment to finding a
solution to the alternate fuel problem. Still, the details presented in the case seem to make it
clear that this is a product whose time has finally come.
As a final thought, this case can be effectively tied in to a product life cycle discussion.
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PRODUCT(RED)
Chapter 20
This case is deliberately left wide open, for student inputs. First, they should comment on the
whole concept of Product(RED). While eye-catching, for it to be really effective in reaching its
objectives, Product(RED) should be attaching its name to products that will be very popular with
its targeted relatively young target market. The best possible scenario is that Product(RED)
becomes a label to wear and be seen in, which might be stimulated by a strong public relations
campaign (e.g., famous movie or TV stars making appearances wearing Product(RED) apparel or
carrying Product(RED) products). Generating word-of-mouth using any of the popular “guerrilla
marketing” techniques would be essential to raising consciousness and reaching project
objectives.
Students should be asked their opinions of the choices of sponsoring companies. Certainly
the idea of a “superbrand” shared by several companies for a common good cause is an
intriguing one, and one that has little precedent. Also, few can argue the importance of having
highly visible, popular leadership individuals (like Bono) whose positive reputation can rub off
on this program. Still, some students might be skeptical of the whole program, and their
comments should be encouraged.
The questions at the end are rather interesting. Which other firms ought to get involved,
and what other causes might be supported by this kind of effort? For which firms, the answer
may lie in the specific activity being planned. Research on corporate social responsibility
suggests that the further away the charitable cause is from the company’s main line of work, the
Applying the same set of reasoning to Product(RED), which firms might be good choices
to be new contributors? Which would be a poor fit? Student response will vary here but is
unlikely to be boring. Similarly, students should be pressed to think of other causes that might be
supported with similar activities. While this is a valid question, and several possible alternate
solutions immediately come to mind: Raising awareness and funds to fight starvation, corrupt
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Course Concepts for Part V
1. Strategic givens.
2. Guideline decisions.
3. Strategic platform decisions.
4. Target market, options and basic analytical method of market selection in business.
5. Product positioning, why and how, including the concept of surrogate.
6. Internal support, internal marketing, and how to get the firm ready for marketing the
new product.
7. The rationale behind diffusion of innovation.
8. Adopter categories, and how customers get into each. Action appropriate to each.
9. Four phases of the launch cycle, and the new products manager’s task in each.
10. Trademark: obtaining and protecting.
11. How to find and test a new brand name.
12. A-T-A-R in marketing planning.
13. Awareness, how to get more of it.
14. The highly critical nature of trial as a success factor.
15. Launch management:
Identifying the potential problems that require control.
Identifying variables to measure potential existence of each of those problems.
Preparing stand-by contingency plans that can be put into effect on short notice.
16. Market testing, what it is all about and why is it important?
17. Pseudo-sale methods of market testing, with attention to speculative sale and premarket
testing. For these (and the other) methods, know when appropriate to use.
18. Controlled sale methods of market testing, with attention to informal selling and to
minimarkets.
19. Full sale methods of market testing, especially limitations of test marketing and various
types of rollout marketing.
20. The life cycle of public policy concerns.
21. The sources of product liability.
22. Management techniques to help avoid product liability problems.
23. What environmental and ecological concerns are relevant to new products. The power
of the movement.
24. What is meant by the less-publicized issue areas: worthy products, monopoly,
morality, and personal ethics.
25. Some things managements have done to meet issues of public policy.
20