Speed:The new mantra of success

A new criterion is appearing on the product development landscape : Speed. It seems to be the new buzzword of marketing.
Consider three scenarios:

In mid-1997 Dabur launched their Hommade Cooking Pastes, months ahead of Kissan's planned foray into this segment. Dabur seems to have taken the strategy of speed in launching new products. Within a five months' span, they launched as many new products, ranging from fruit juices to ethnic sauces. On another front, marketing giant Hindustan Lever introduced a new anti-dandruff shampoo, Clinic All Clear, in anticipation of arch rival P&G's launch of world leader Head & Shoulders (H&S). Clearly, HLL wanted to be head and shoulders ahead of H&S. Again, HLL segmented the detergents market further with a quick introduction of Surf with Excel Power, on the rumour that P&G's Tide is coming to this market. Evidently HLL do not desire another a la Nirma trap.
Estimates of expected future revenue and costs are no longer sufficient to measure the probable success of candidate offerings. Experience has verified that a factor which academic researchers previously identified - bringing a product to market fast - can be critical to future profitability and market share. There are numerous advantages to shortening the time between new idea generation and commercialisation. The earlier a product is brought to market, the greater the chance that revenue will be high. Delays only lead to lost sales. Remember P&G's losses during 1994-95 when they launched Ariel in a phased manner? HLL had a field day with Surf in many markets including the major launch market Hyderabad. During the time that lengthy managerial evaluations and tests are being conducted, the new offering could be in the distribution pipelines, moving toward target customers. Efforts toward making the process as scientific as possible often result in delays that can span years ofeffort. Rapid product development programmes can be less costly than longer ones.
It is expensive to introduce new offerings. Ad expenses are high, as the company strives to inform consumers about the product and its benefits. There are expenses associated with forming a new distribution network. Sales training programmes may have to be initiated. Overall, if the introductory period can be kept short, many of these costs can be contained.

Many companies confront learning curves, where the longer a product is produced, the more company personnel will learn how to produce and distribute it more efficiently. The earlier a product is brought to the market, the sooner the learning curve will begin to take effect. The result can be a decline in costs in such areas as production and physical distribution.

Fast product development is an important way to beat out rivals. When a firm brings a new product to market rapidly, it is one jump ahead of its rivals. Nestle practises this frequently with their product offerings ranging from Macaroni snacks to chocolates and soups. The pioneer always has an advantage in acquiring customers. Many will become attached to the brand and resist efforts by latecomers to make them change. Clinic All Clear is a case in point.

The company that's first to market its brand may develop a reputation for leadership. This can attract customers who believe that the leader offers benefits that latecomers can't furnish. Sony does this consistently. First came the Walkman, then came personal TV (Watchman), and now they have the personal movie system complete with portable DVD player. They also have their Trinitron technology. Unfortunately for them, in India, most customers cannot afford them, thereby estricting them to achieve mass-market leadership. Godrej-GE is another company, which introduces innovations regularly in the refrigerator market.

Ad clutter is a problem in a number of industries, but when a company moves into a market ahead of other enterprises it does not face clutter in the product class. I don't think anyone would have missed Akai TV ads during the last one year or so. Only one product is featured in the ads, and consumers are more likely to pay attention than they would in a cluttered setting.

The marketer can create brand equity, unhindered by competitors, when rivals enter the market later. Many consumers will have their preference well-established. Consumers are exposed to the pioneer company ads longer than they are to subsequent ads by latecomers. (How many of you remember the recent Sansui offer of one TV with another TV and a washing machine free? Or, for that matter, the Minto ads from Candico?). Further, consumers develop more experience with owning and using the products offered by pioneers. They may be quite comfortable with these brands and have no special incentive to try other brands.
The firm that's first into the market can target the most attractive consumers and direct its marketing activities to the segments with the most purchasing power and desire for the product. It can select the most promising regions of the country (or the world, in the case of multinationals) in which to operate, and the best retail locations within a region. It may be in a position to attract the better wholesalers.

The first company into a market will establish behavioural patterns with its customers that can make it difficult for them to switch to competitors who enter the market later. Buyers may sign contracts with the first entrant, making it impossible for them to switch until the contract period had ended. Or they may think that they'd be wasting their investments of time and money by switching.

Johnson & Johnson, when faced with a stagnant growth for their famous baby shampoo "No More Tears" in the US child-care market, started promoting it as a shampoo for adults as well. They used celebrities who have thinning hair. Their "gentle-enough-to-use-everyday-twice" and "so mild, so good" campaign resulted in finding new users for No More Tears and helped the marketing personnel from shedding any more tears! Today, No More Tears is one of the largest seller in the highly-competitive hair care market, globally. Johnson & Johnson's success was definitely through making customers invest in their shampoo in terms of time, trust and confidence, thereby making them feel successful in managing their thinning-hair better. ("If it is good for babies, it will not harm my hair.") J&J basically succeeded in making switching difficult.

Companies that get their products rapidly to market can create barriers to entry, obstacles that make it difficult for other firms to compete successfully. One way is to keep prices only slightly above costs so there's no strong profit incentive for possible newcomers into that segment as Akai has done. Another barrier is to conduct large-scale ad campaigns that win over a large number of customers as was done by Pepsi. The barriers chosen should be those that take advantage of company strengths and avoid its weaknesses. A company with very low costs may benefit from keeping prices low. A firm that uses ads efficiently may benefit by setting up ad barriers. An organisation that has considerable technical expertise may decide to take advantage of patents.

Rapid product development can reduce risk. In the case of such products as computers and compact disc players, technology is constantly upgraded. If the product is introduced quickly, this risk will be less because the  product will incorporate recent technology.

Fast product development can help companies reduce risk by giving them first access to scarce resources. A pioneering company may be able to affiliate with the best retail stores, acquire the best raw materials for production, hire the most gifted employees, etc. Other companies that fall in the wake of the pioneer may have to choose from whatever resources are left over.

A tool that has been around for decades – network analysis - can be very useful in developing products rapidly. Managers can sketch out the activities required for the project, the times needed for each, and the sequencing of the activities. The point is that time savings can be achieved and can be of considerable value to the company in terms of generating revenue, reducing costs, outpacing competitors and reducing risk. No wonder even sleeping Goliaths are waking up today to bring out arsenals quickly in order that the fast-paced Davids are kept at bay.