Successful Strategies for Product Rollovers
In a dynamic marketplace, shortening the new product development process can be a competitive weapon.1 Xerox, for example, reduced its product development time from seven to two years and recaptured its lead in the copier market. GE shortened the product development time for its circuit breaker line and regained its market share.2 Fast product introduction helps companies be first to market, acquire additional market share, and establish industry leadership.
We are currently witnessing shorter and shorter product life cycles. The life cycles of most electronics, for example, are now well under one year.3 As new products appear on the market, old products may become obsolete and need to be phased out. Short product life cycles increase the frequency of “product rollovers,” the introduction of new and the eventual displacement of old products. The displacement of an old product by a new one does not have to happen instantaneously, however, and the product life cycles of old and new products often overlap, with both products coexisting in the marketplace.
In an ideal product rollover, the old product is sold out at the planned introduction date of the new product, and the new product is readily available. Whatever the pattern with a product, a successful product rollover requires careful planning and coordination. Apple’s Mac Classic replacing the Mac Plus and Mac SE4 and Kodak’s Royal Gold replacing Ektar film5 are good examples.
Unfortunately, most companies experience less than successful product rollovers. Consider these failures:
- Technical problems can delay a new product’s introduction. In 1987, Ashton-Tate announced its new product, dBase IV. The product was intended to replace its leading database software, dBase III. Due to technical problems, however, dBase IV was introduced in late 1988, but the early version had many technical problems and customers were disappointed with it. The sales of dBase IV plunged, the stock price of the company fell, and Ashton-Tate was eventually acquired by Borland in 1991.6 In a similar example of delay due to technical problems, Microsoft encountered difficulties developing Windows 95 as the replacement for Windows 3.11. Consequently, Windows 95 was introduced one year late, leading to some market confusion and customer dissatisfaction.
- Excess product inventory can hold up a new product as well. In 1983, Ford Europe introduced Cortina to replace the older model Sierra.
References
1. R.M. Kanter, “How to Compete,” Harvard Business Review, volume 90, January–February 1990, pp. 1–8.
2. B. Dumaine, “How Managers Can Succeed through Speed,” Fortune, 13 February 1989, pp. 5–59.
3. T. Nevens, G. Summe, and B. Uttal, “Commercializing Technology: What the Best Companies Do,” Harvard Business Review, volume 90, May–June 1990, pp. 154–163.
4. M. Levin, “Apple’s Low Cost Strategy Pays Off in Asia,” Electronic Business, 8 July 1991, pp. 57–60.
5. M. Maremont, “Kodak’s New Focus,” Business Week International Editions, 13 February 1995, pp. 1–15 .
6. A. Alper, “They Came to Feast on a Glimpse of the New Release of dBase, But They Left Still Hungry,” Computer World, 21 December 1987, pp. 83–88; and
B. Freedman, “Ashton-Tate to Woo Back Users with Feature-Laden dBase IV,” PC Week, 24 November 1987, p. 1.
7. “Will Sierra Become Ford’s European Edsel?,” Automotive News, 25 April 1983, pp. D1–2.
8. L. Keough, “IBM: Glut, Greed, and Strategic Blunder?,” Computer Decisions, volume 17, 10 September 1985, pp. 58–62.
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“Osborne, Financially Shaky, Seeks Investors,” New York Times, 13 September 1983, p. 7; and
J. Dorsch, “Osborne Filed for Chapter 11 with His Negative Worth of $5 Million,” Electronic News, 19 September 1983, p. 21.
10. J. Eliashberg and T. Robertson, “New Product Pre-announcing Behavior: A Market Signaling Study,”Journal of Marketing Research, volume 25, August 1988, pp. 282–292; and
D. Levinthal and D. Purohit, “Durable Goods and Product Obsolescence,” Marketing Science, volume 8, Winter 1989, pp. 35–56.
11. “20 Spectacular Failures,” Byte, September 1995, p. 146.
12. J. Ettlie, “Success Means Doing Many Things Right,” Production, October 1993, p. 30.
13. Y. Wind, Product Policy: Concepts, Method and Strategy (Reading, Massachusetts: Addison-Wesley, 1982).
14. G. Greenley and B. Bayus, “A Comparative Study of Product Launch and Elimination Decisions in U.K. and U.S. Companies,” European Journal of Marketing, volume 28, number 2, 1994, pp. 5–29.
15. J. Saunders and D. Jobber, “Product Replacement: Strategies for Simultaneous Product Deletion and Launch,” Journal of Product Innovation Management, volume 11, number 5, 1994, pp. 433–450.
16. A.W. Pearson, “Innovation Strategy,” Technovation, volume 10, March 1990, pp. 185–192.
17. Saunders and Jobber (1994).
18. “Gillette Sensor Excel Becomes the Number One Selling Razor in North America and Europe,” Business Wire, 27 June 1995, p. 1;
F. Biddle, “The Sun Never Sets: Gillette’s Razor Blade Empire Expands into Lucrative Third World Markets,” Boston Globe, 27 June 1993, p. 51; and
E. Randall, “Gillette Strategy Rides Cutting Edge,” USA Today, 16 September 1992, p. 3.
19. D. Scott, “Glitzy Niketown Looks for Dallas Home,” Dallas Business Journal, volume 16, 26 February 1993, p. 4; and
J. Stevenson, “Secret Sources: Resources for Buying Low-Price Products,” Men’s Health, July 1994, p. 62.
20. P. Elstrom, “Launch of Intel’s Pentium Pro Will Kick Off New Price Cycle,” Investor’s Business Daily, 2 November 1995, p. 8; and
J. Detar, “Pentiums, DX2s Set Price Pace: Intel Reduces Prices,” Electronic News, 11 July 1994, p. 1.
21. L. Carlat, “CES Holds No Surprises for Electronic Buyers,” Discount Store News, 3 February 1986, p. 1; and
M. Holleran, “Boomers Begin Mid-life, Heralding Golden TV Age,” Weekly Home Furnishings Newspaper, volume 63, 15 May, 1989, p. 79.
22. Detar (1994).