In some categories, introducing new products is so common that companies can use the Darwinian experience to guide the level of investment needed for subsequent product launches. Often, though, a product launch may be so new or outside the company’s core business that it has little direct experience to leverage. We’ve seen this often in technology businesses, but even in data-rich industries like CPG.
How can companies decide how much to invest in launch marketing, or how to best spend those investments? The good news is that companies can bring to bear a wealth of research and experience, even for new or different product categories. There are databases of marketing response and models of how marketing drives awareness and trial. Moreover, we know how innovation or the “newness” of a product can raise customer interest levels, which in turn enhances response to marketing. Such information and insights can be combined to guide investment decisions, both at the planning stage (“how much would we have to spend on introductory support to achieve our goals?”), and during introduction (“how do I best allocate the overall budget?”).
A recent example involved a client introducing a new mobile phone. Since the window for a successful launch was short, it was particularly vital to plan an appropriate level of spending, with the right media mix. Using benchmarks for comparable products and market situations a media plan was generated that was projected as optimal during each of the pre-launch, introduction and post-launch phases.
This validated the overall planned level of spending, while quantifying options for higher and lower investments. Importantly, the insights generated from the media allocation analysis created efficiencies in the spending, and facilitated more effective alignment with channel partner marketing.
Another example comes from a client introducing a consumer product with a historically long purchase cycle. Developing models of brand awareness and trial as a function of marketing spend and product distribution allowed expectations to be set for brand KPIs (e.g., awareness) that were tracked during the launch months, as well as making recommendations on media spend and allocation. These were validated through in-market testing and comprehensive econometric modeling post-launch.
Importantly, every product introduction provides companies with the potential for learning. If marketing investments associated with launches form a substantial line item, then finding ways to glean new insights of value for future product launches should be an objective.