New Product Launch Framework

There is a wide literature on the number of new product failures with figures going from 40% to 90%. Assuming the new product satisfies a real customer need, there is a need to ensure product launch excellence, as a means to increase the chances of new product success.

First and foremost, we have to assume that competitors will react to the product launch. Most product launch plans contain implicitly the assumption that the competitor will either:

• Not react at all
• React in a way that is not effective

And, thus, the product will seamlessly comply with its forecast. Needless to say, both assumptions are generally over-optimistic, as the competitor will do its best to make the product launch fail, as the competitor product manager’s revenues, profits, and bonus are at stake.

So, we have to realize that we must see how the competitors will respond, in addition to studying how the customer/physician/patient will receive the product. Indeed, competitors will take into account how customers/physicians/patients are reacting when they decide how to respond, as can be seen in the following chart:

Based on our experience in market launches, we propose the following framework to ensure new product launch excellence:

There are three levels of analysis in our framework:

1) Strategic, where strategic moves are analyzed and decided, which includes using:

• The product introduction framework
• Strategic war games

2) Tactical, where tactical moves are analyzed and decided, using, for example:

• The message/detailing analysis
• Tactical war games

3) Post-experience, where we analyze if everything went as expected and if not, how can we improve the analysis. This is extremely important because competitor analysis is not an exact science and analysis can be significantly improved over time, as this type of exercise always sheds some light on how the competitor thinks.

These models can be used independently, for example, by only doing the tactical analysis or just conducting the strategic analysis or any combination of strategic and tactical.

Competitive learning:

Again, estimating the competitors’ next moves is not an exact science; there will always be parts that will be correctly forecast and parts that will not be so well anticipated.

Analyzing what the competitor did differently from what we estimated, offers an opportunity to better understand the competitor. Generally, the misperceptions are in the competitors’ goals and assumptions, as these factors determine how it acts.

Every time a competitor does something irrational (according to us), there is something on the competitor that we do not understand well.

Most competitors are rational and act rationally. Just for reference, the definition[i] of rationality in a business context is the mental state of a rational person/organization characterized by:

• Beliefs that are coherent (not contradictory) and compatible with the person's/company’s experience within a given context
• Purposeful (intended to produce certain results) behavior guided by means versus ends analysis
• Decision making based on cost-versus-benefit (pain versus gain) evaluation, and
• An overall optimization approach (utility maximization) expressed in attempts to maximize advantages or gains and to minimize disadvantages or losses

Having that said, what comes up of a competitive move might not be satisfactory at times (the competitor might incur losses), however, remember that nobody makes mistakes or takes wrong decisions on purpose. Every competitor's move tells us something about how it thinks.

About the author: Adrian Alvarez is Managing Partner of Midas SN&M Consulting, a competitive intelligence, war-gaming, and strategy consultancy with offices in Buenos Aires, Sao Paulo, and Reading, PA. Adrian is a Wharton alumnus, speaks and writes frequently on strategy, war-gaming, and competitive intelligence and received a Fellow and Catalyst Award from SCIP (Strategic and Competitive Intelligence Professionals Association).

[i] https://www.businessdictionary.com/definition/rationality.html