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Critical path method for introducing an industrial product
Critical Path Method for Introducing an Industrial Product Glenn R. Dundas Kathleen A. Krentler New product development continues to be a vital evil for most organizations. Considerable attention has been directed toward this function in the consumer goods field but relatively little research has been directed toward this critical task for producers of industrial goods. Industrial goods marketing managers seem to agree that error at the announcement/ introduction phase of the new product development process is responsible for the greatest number of new product failures. This article suggests use of the critical path method to ensure success at this crucial stage.
INTRODUCTION Introducing new industrial products in today's marketplace is becoming increasingly more risky. Corporate marketing managers must accept the additional burden placed upon their decision making by the uncertainty of economic conditions. Now is the time to reevaluate the new product introduction process in an effort to "get tough" and facilitate greater success during the new product announcement phase. Proven processes that spell out Address correspondence to: Kathleen A. Krentler, Department of Marketing, School of Business Administration, San Diego State University, San Diego, California 92182.
Industrial Marketing Management11, 125-131 (1982) © Elsevier Science Publishing Co., Inc. 1982 52 Vanderbilt Ave., New York, New York 10017
the necessary activities for introducing new industrial products, thus reducing risk, are major considerations of the 1980s for marketing managers. The purpose of this article is to suggest a means of introducing industrial products that overcomes the problems and pitfalls traditionally encountered at this stage of the new product development process.
THE NEED FOR INVESTIGATION Marketing researchers in the United States have conducted very few field experiments concerning the announcement and introduction of new industrial products [ 1]. Much of the research has been specifically geared to consumer products as opposed to industrial products. According to marketing managers operating in these fields today, practical guides to follow when introducing today's technologically advanced new industrial products are almost nonexistent. The present limited role of industrial marketing research in many companies is ample testimony to its underdeveloped state. Despite this dearth of research, industrial marketing managers have long been concerned with how to launch new products more efficiently. One reason for this interest is the high failure rate of new products. Failure rates of industrial products, similar to their consumer goods
125 0019-8501/82/020125-07/$02.75
counterparts, have been estimated at 92% of the approximately 6000 new items introduced each year [2]. Commercial firms manufacturing industrial equipment have long felt the risks of new product introduction. Industrial marketing managers are faced with a series of planning decisions to facilitate proper product introduction to the internal staff as well as the market. These planning decisions become extremely difficult as a result of the lack of material available on problems and techniques in industrial marketing. The new product development process contains a number of steps from the inception of an idea through the actual introduction of the new product, first internally to the organization and ultimately externally to the chosen target markets. Errors at any of these stages are costly and debilitating to the organization. The closer to the "'completed e n d " of the process, however, the greater the risk, as the firm has invested considerable time, dollars, and effort in the new product. Failure at the market introduction point is generally acknowledged to translate to heavy financial loss, tremendous man-hour loss, and possible design/concept loss to competition [3J. Errors directly attributable to the announcement/ introduction stage of the new product development process appear prominent in the literature concerned with major reasons for new product failure. In 1968, Gerlach and Wainwright [4] compiled and reported on the major reasons for new industrial product failure. Table 1 shows the results of their investigation, by order of frequency of mention throughout the literature. The emphasis on announcement/introduction stage errors is apparent, with at least five of the nine problem areas mentioned (poor timing, insufficient marketing effort, inadequate sales
GLENN R. DUNDAS is a marketing representative for the International Business Machines, Office Product Division, in San Diego, California. He received his M.B.A. from Colorado State University and a B.B.A. from Western Michigan University. Prior to working for IBM, Glenn has had experience in production management with Heublein, Inc. He has written a number of papers on the subject of new product rollout, and conducted several marketing studies on the feasibility of new products and services. KATHLEEN A. KRENTLER is Assistant Professor of Marketing at San Diego State University. She received her D.B.A. from the University of Kentucky and her M.B.A. from Wayne State University in Detroit, Michigan Dr. Krentler has presented papers at several professional and academic conferences. Her primary research interests include the new product development process in both the industrial and consumer goods fields.
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TABLE 1 Major Reasons for New Product Failure 1. 2. 3. 4. 5. 6. 7. 8. 9.
Poor timing. Insufl'icient marketing effort. Inadequate sales force+ Competition reaction. Inadequate market analysis. Weakness in distribution. Higher costs than anticipated. Product defects. Lack of proper support staff.
force, weakness in distribution, and lack of proper support staff) being cited specifically as announcement/ introduction activities by a convenience sample of marketing managers in the industrial goods accessory products field. More recently Cooper [5] investigated the dimensions of new industrial product success and failure. Of twentyone variables that have been studied for their possible impact on success or failure of new ventures, at least seven (33%) can be seen to be primarily related to the announcement/introduction phase of the new product development process. Another two are also associated with activities at this stage in a more minor way. Table 2 lists the variables Cooper reported as having been investigated throughout the literature. Those related to the announcement/introduction stage are noted. The emphasis on reasons directly or indirectly related to decisions at the introduction stage is further supported by information from a convenience sample survey of marketing managers in the industrial goods office products field. The results of eight extended interviews produces agreement that failures were not caused by defective design, workmanship, or product features. Poor timing and generally improper product announcement both internally and externally were the most frequently cited reasons for new product failure in the industrial field. Consensus of the sources contacted, in fact, was that at least fifty percent of all new industrial accessory products fail during the announcement/introduction phase. Strong evidence thus appears to suggest that this stage of the new product development process is particularly troublesome for the industrial marketing manager. It seems appropriate, then, to focus on potential means of minimizing the problems encountered at this stage. Poor timing of the actual introduction as well as of the activities associated with the introduction received primary focus both in the literature and from industrial marketing managers contacted. This emphasis suggests that a method aimed at ensuring proper timing of activities
TABLE 2 Variables Affecting Success or Failure of New Industrial Products Understanding user needs Fewer after sales problems" Extensive customer-producer interfacing ~' Strong promotional, user education effort" Efficient performance of development process/' No initial marketing difficulties" Sales forecasting carried out Market pull (idea derived from market) Strong selling (and marketing) effort" Technology push (tbr major successes) Product and/or price advantages" Good fit with company potentials, resources Close to current market (familiarity with market) Better internal and external communication" Better coordination of R&D, Marketing, Production" Product champion or top management support Better planning and systematic approach to innovation Industry maturity (affects nature of venture) Business cycle (influenced efforts) Government role (induced efforts) Government support insignificant (except for major innovations) " Variables primarily related to the announcement/introduction phase. ~'Variables secondarily related to the announcement/introduction phase. (Variable list adapted from 15].)
could improve the likelihood of a successful product introduction and ultimately a successful new product.
A CRITICAL PATH METHOD APPROACH The critical path method (CPM) is a planning tool that is suited for the announcement/introduction phase planning requirements of new industrial products. The critical path method utilizes a detailed flowchart describing the introduction of the new product. It identifies the sequence in which activities must be completed and, by totaling time allotments for each activity, identifies the critical (or longest) path to completion of the task. The critical path method has been applied to the development and marketing of new products of all types including automobiles and computer programs [6]. Since the technique requires establishment of project objectives and specifications, it is advantageous to planning. It requires that the marketing manager clearly identify what is important and what must be accomplished. To demonstrate the use of CPM at the announcement/ introduction phase of the new product development process for industrial goods a CPM network was designed in relation to a specific industrial office product. An electric typewriter is a good example for the CPM network to reflect the introduction process.
The Activities The purpose of the introduction stage is to enable a product to 1. reach potential, 2. take its place beside the other products in the product mix, and 3. allow the transition from new product to established product to take place smoothly, efficiently, and as quickly as possible. To achieve these objectives, the industrial firm must use a phased approach involving all concerned parties. To begin implementation of the CPM approach, therefore, all planners involved in the process must be called on to identify activities important to completion of the task. Based on the data received from the various operating departments, such as production and finance, and once it appears that the new product may turn out to be successful, marketing management should initiate the process plan by making a master schedule for the product [7]. This schedule would include operating requirements and plans furnished by each department, capital expenditures and lead times, and the remaining steps of the new product process with their estimated completion dates. Such a schedule should include variables found in both the internal introduction and the external introduction of the new product. The activities to be included in the overall introduction process for a new typewriter might include those listed in Table 3. ~
The Critical Path Having identified the elements that make up the critical path network, a flowchart (Fig. 1) is designed, with the time-sequencing element on the upper horizontal axis. For ease of display, the time axis begins with January 1, and is numbered by week, spanning a duration of six months. This is not to imply that all announcements begin at the first of the year, and that it always takes six months for this process. The six-month time duration is accurate for introduction of an electric typewriter based on the number of activities shown in the CPM design. The vertical axis of Fig. 1 lists headings that comprise the major concentration areas within the announcement/
~This list of variables was derived from information provided in the extended interviews of marketing managers that were conducted in this research. A more complete description of each variable can be found in Ref. 8.
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TABLE 3 Announcement/Introduction Activities Internal Introduction Elements I. Product Overview" A. Product description--identify 1. features and functions 2. unique characteristics B. Identify product fit in relation to existing product mix C. Product expectations D, Re-check estimates and forecasts 1. sales-volume forecast 2. profit computation and forecast 11. Announcement Plan (internal) A. Announcement strategy 1. description of pre-announcement activities and schedules a. regional upper level managers' meeting b. national management meeting 2. Arrange for external announcement a. press conference planning b. publicity/press arrangements c. customer/prospect announcement meeting invitations Ill. Environmental Factors" A. Industry, application, and customer benefits areas 1. by customer type 2. by customer benefits B. Review of competition 1. are they announcing also'? 2. similar products already on market IV. Marketing Objectives" A. Review of objectives for new product I. position in marketplace 2. net sales revenue goal B. Increase marketing productivity V. Sales Force and Distribution Strategy" A. Utilizing available resources I. sales fi.~rce a. existing b. alternate 2. distribution channels a. existing b. alternate 3. sales approach/techniques 4. sales tools/aids Vl. Sales Plan" A. Sales potential and incentive 1. develop quotas 2. new account bonus 3. special product bonus 4. quota and compensation plan 5. support/field organization VII. Primary Education and Communication Plan (internal) A. Internal education I. sales training program 2. support staff training 3. managerial training a. centralized training b. decentralized training VIII. Supplemental Education and Communications Plan (internal) A, Communications strategy I. customer brochures and publications 2. sales aids a. video/visual
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TABLE 3
(Continued) b. direct mail 3. sales force sales manuals a. technical writing b. edit and distribute
External Introduction Elements IX. Announcement Plan (external) A, Announcement activities and support material I. customer/prospect announcement meeting agenda 2. press conference/press release plan 3, content of announcement kit a. brochures b. slides c, video d. charts c. marketing guide f. technical publications 4. demonstration support 5. executive buyer announcements a. meetings b. tape/video c. telephone d. publicity 6. advertising support/mailing to media X. Market Announcement A. Select channels and announce I. press conference 2. meetings--geographically a. meetings with prospective clients in house h. demonstration of product 3. direct mail brochures 4. advertising blitz XI. Advertising Campaign A. Media Selection 1. newspapers 2. magazines 3. television 4. radio 5. direct mail B. Copy layout C. Scheduling Xll. Sales Promotional Campaign A, Distribution of support materials in final form 1. select literature 2. introduce at trade shows 3. distribute literature through sales force XIII. Release Follow-up A. Feedback on internal events 1. from sales staff 2. support staff B. Feedback on external events 1. review of publicity 2. review of press conference 3. customer/prospect reactions C. Success measurements 1. achieve goals'? a. profit b. sales "These functional sections have been completed during the Product Development and Marketing Analysis Process which occurs prior to the Introduction Process.
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introduction process. Sub-activities are listed (in order) across the page from left to right. Many of the activities listed on the CPM design have already been carried out (prior to the start of the design) in the Product Development and Marketing Analysis Process. The starting point for the process can be considered the decision to introduce the product. Activities listed within the network are universal to new industrial accessory product announcements. The final outcome can be conceived as the point where the product has been announced, both internally and externally. Time durations were assigned to fit the example product--an electric typewriter. Estimates are based on the literature and information provided in the extended interviews described earlier. The critical path as well as slack time (free time) in the design are denoted as indicated in the legend in Fig. 1.
Description of the CPM Design The activities that comprise the critical path network in Fig. 1 have been assigned a time duration and sequential order based on the introduction process for the example product--an electric typewriter. For ease of explanation, each of the major headings listed on the left axis of the CPM network will be outlined describing the importance of the major activities within the heading, and what is actually accomplished in each heading. SALES PROMOTION. The sales promotion campaign reflects the activities outlined in Table 3 under the Sales Promotion Campaign heading. This section is important because it deals with taking the specifications from the data sheets supplied from the engineering staff and creating support materials to be used later at trade shows. The process starts with selecting the literature that will corn-
129
prise the trade show support material (two weeks). Creative artists must be hired to formulate the rough art and copy layout (six weeks). The rough art and copy layout is revised (one week), final layout is then developed and approved (three weeks). These materials are printed and packaged (four weeks) and are then ready to introduce at trade shows through the sales staff. COMMUNICATIONS PLANS. The communications plan reflects the activities outlined in Table 3 under the Supplemental Education and Communications Plan (internal) heading. In this section the crucial activities include the development of sales aids, customer brochures, and sales force sales manuals. In developing sales aids, professionals must be contacted to develop high quality video/ visual films and brochures that salespeople can show to their customers ( 12 weeks). Also, direct-mail advertising literature should be developed so that it is ready to be distributed to the market when the product is announced (four weeks). When these sales aids are complete, they should be approved (one week) and distributed to the sales staff. Sales force sales manuals are technical manuals that salespeople can reference for specific application areas according to customer needs. The writing and editing of the sales force sales manuals should take ten weeks to complete and the distribution to the sales staff should comprise three weeks and be available just prior to market announcement. Without these support materials, the task of selling complex industrial accessory equipment becomes very difficult. ADVERTISING STRATEGY. The activities of the advertising strategy reflect the activities outlined in Table 3 under Advertising Campaign. The important factors in this section include the selection and scheduling of all media as well as the copy layout of the print media. Using the objectives of the industrial accessory product, the types of advertising media can be selected (about two weeks). If print media are selected, the copy of the ad and its rough layout can be developed in four weeks. Final approval of media and their finished art design should be complete in approximately six weeks. It is important to schedule the advertisements so that maximum coverage of the desired market is obtained. Scheduling of the ads should take three weeks for the example product. Finally, when the advertisements have been completed and scheduled with the media, they must be placed with the media and reprints distributed to the sales staff (tour weeks). MARKETING STRATEGY. The marketing strategy reflects the activities outlined in Table 3 under the Sales
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Promotion and Distribution Strategy as well as activities found in the Sales Plan heading, It is extremely important to identify your sales force, a strategy for the sales force to follow, approach techniques that facilitate more successful sales calls, and an equitable way to compensate the sales staff that provides incentive. The sales force is a critical segment of a new product's success formula. If the sales force has a hard time selling the product, and/or if they are not compensated fairly for the product's sales--they will not make an effort to sell the new equipment. Lack of sales force effort often results in product failure. This section should entail selecting the existing sales staff or an alternative staff (five weeks). A sales strategy including approach techniques should be developed (eight weeks) and revised (three weeks) before a compensation/incentive plan is developed. This allows managers to identify the degree of difficulty involved with the new equipment sale. Next, the compensation plan providing incentive and outlining quotas and bonuses is developed (four weeks). MARKET TEST. Market testing is not a specific element involved in the introduction process of new industrial accessory equipment. This section was included in the CPM design for clarity purposes only. The important message here is that market testing does take place at some specific time. In the electric typewriter example, it is illustrated that test marketing has not been fully completed before the decision to introduce has been made. Instead, test marketing is an ongoing concern comprising eighteen weeks within the twenty four week introduction process. It is not uncommon in today's competitive markets to have test marketing going on during the introduction process. This could be due to a timing constraint in the marketplace. PUBLIC ANNOUNCEMENT. The public announcement reflects the activities outlined in Table 3 under the Market Announcement heading. Announcement channels are reviewed, selected, and scheduled in an effort to disseminate the message of the new product to the targeted market. It is important to schedule prospect meetings (two weeks) well in advance of the market announcement so that prospect and customer invitations can be distributed (three weeks). This gives the prospects and customers enough advance notice so they can plan to attend the market announcement meetings. ADMINISTRATIVE FUNCTIONS, The announcement plan reflects the activities outlined in Table 3 under the An-
nouncement Plan (internal) and Announcement Plan (external) headings. One of the most important factors here is to get managers to recognize the need for an announcement strategy. Once the need has been identified, the current market environment should be reviewed (one week) in an attempt to collect current information that would affect the timing and scheduling of the release date (three weeks). A series of concurrent activities begins after the market release date has been selected. There should be regional upper level management meetings as well as national management meetings to discuss press conference planning (two weeks), and to develop the content of the market announcement kit (five weeks). The content of the market announcement kit should include all of the support materials needed on the market announcement day. If films, slides, or charts are to be used during market announcement meetings with customers, they must be developed prior to the market announcement date. Executive buyer meetings are to be scheduled (one week) and support materials for these meetings should be developed (two weeks). The administrative functions reflect the activities outlined in Table 3 under the headings Product Overview, Environmental Factors, and Marketing Objectives. It is important for marketing managers to fully understand the new product by identifying its features, functions, unique characteristics, and fit in relation to the existing product mix (three weeks). If management does not understand the product itself, and the way it is to be introduced, the product is sure to fail. Sales estimates and forecasted volume should be rechecked (three weeks) while considering environmental and existing competition factors. Any modifications in forecasts should be done now, because these estimates will become the benchmarks for measuring later success. Finally, a brief review of marketing objectives (four weeks) as they pertain to the new product should take place. All information in the Administrative heading is then sent as input into the announcement plan activity section. TRAINING AND EDUCATION. The training and education section reflects the activities outlined in Table 3 under the headings Primary Education and Communication Plan (internal) and Sales Force and Distribution Strategy. Internal education is imperative at all levels for the introduction process to operate smoothly and efficiently. Internal training begins on a limited overview basis with the training managers (two weeks). The training mana-
gers must learn enough to develop the education program for the sales and support staff (two weeks). Testing and training locations are selected, either as a centralized location or a series of decentralized locations (five weeks). Once the locations have been specified for training, education of the sales and support staff begins (13 weeks). Concurrently, distributors are selected based on the channels selected in the Distribution Strategy (10 weeks). Distributors are consulted and training according to the procedures outlined by management (seven weeks). The culmination of events for this section provides the company with a well-educated sales, support, and distribution staff.
CONCLUSIONS With the increasing fear of failure in the marketplace, managers (in general) are taking extra care to ensure that the decisions they make regarding new product introduction are absolutely sound. By nature of the industrial accessory product, failure during the announcement/ introduction phase means substantial loss of both time and money. Furthermore, if a management team is involved with bad decision making and an eventual product failure, it may cost those managers their jobs. The process that is outlined in this paper is a sound base for marketing managers to follow during introduction of new industrial accessory products. Implementation of this technique should result in a decrease in new industrial product failure and a concurrent increase in the success and profitability of the organization involved.
REFERENCES 1. Evans, Richard H., Assessing Introduction Factors for a New Industrial Product, Industrial Marketing Management 7, 128-132 (April 1978). 2. Rogers, Everett M., New Product Adoption and Diffusion, Journal ~[" Consumer Research 2, 290 300 (March 1976). 3. Kraushar, Peter M., New Products and Diversification. Business Books Limited, London, 197(I. 4. Gerlach, John T., and Wainwright, Charles A., Sncces~lid Management ~[' New Products. Hastings House, New York, 1968. 5. Cooper, R. G., The Dimensions of Industrial New Product Success and Failure, Jmtrnal qfMarketing 43, 93-103 (Summer 1979). 6. Moder, Joseph J., and Philips, Cecil R., Project Management with CPM and PERT. Van Nostrand Reinhold Co., New York, 1970. 7. Watton, Harry B., New-Product Planning, A Practical Guide Jor Divers(['ication. Prentice-Hall, Inc., Englewood Cliffs, N J, 1969. 8. Dundas, Glenn R., Introducing New Industrial Products: Internally and Externally, MBA thesis. Colorado State University. Fort Collins. Colorado, 1980, (unpublished).
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INTRODUCTION Introducing new industrial products in today's marketplace is becoming increasingly more risky. Corporate marketing managers must accept the additional burden placed upon their decision making by the uncertainty of economic conditions. Now is the time to reevaluate the new product introduction process in an effort to "get tough" and facilitate greater success during the new product announcement phase. Proven processes that spell out Address correspondence to: Kathleen A. Krentler, Department of Marketing, School of Business Administration, San Diego State University, San Diego, California 92182.
Industrial Marketing Management11, 125-131 (1982) © Elsevier Science Publishing Co., Inc. 1982 52 Vanderbilt Ave., New York, New York 10017
the necessary activities for introducing new industrial products, thus reducing risk, are major considerations of the 1980s for marketing managers. The purpose of this article is to suggest a means of introducing industrial products that overcomes the problems and pitfalls traditionally encountered at this stage of the new product development process.
THE NEED FOR INVESTIGATION Marketing researchers in the United States have conducted very few field experiments concerning the announcement and introduction of new industrial products [ 1]. Much of the research has been specifically geared to consumer products as opposed to industrial products. According to marketing managers operating in these fields today, practical guides to follow when introducing today's technologically advanced new industrial products are almost nonexistent. The present limited role of industrial marketing research in many companies is ample testimony to its underdeveloped state. Despite this dearth of research, industrial marketing managers have long been concerned with how to launch new products more efficiently. One reason for this interest is the high failure rate of new products. Failure rates of industrial products, similar to their consumer goods
125 0019-8501/82/020125-07/$02.75
counterparts, have been estimated at 92% of the approximately 6000 new items introduced each year [2]. Commercial firms manufacturing industrial equipment have long felt the risks of new product introduction. Industrial marketing managers are faced with a series of planning decisions to facilitate proper product introduction to the internal staff as well as the market. These planning decisions become extremely difficult as a result of the lack of material available on problems and techniques in industrial marketing. The new product development process contains a number of steps from the inception of an idea through the actual introduction of the new product, first internally to the organization and ultimately externally to the chosen target markets. Errors at any of these stages are costly and debilitating to the organization. The closer to the "'completed e n d " of the process, however, the greater the risk, as the firm has invested considerable time, dollars, and effort in the new product. Failure at the market introduction point is generally acknowledged to translate to heavy financial loss, tremendous man-hour loss, and possible design/concept loss to competition [3J. Errors directly attributable to the announcement/ introduction stage of the new product development process appear prominent in the literature concerned with major reasons for new product failure. In 1968, Gerlach and Wainwright [4] compiled and reported on the major reasons for new industrial product failure. Table 1 shows the results of their investigation, by order of frequency of mention throughout the literature. The emphasis on announcement/introduction stage errors is apparent, with at least five of the nine problem areas mentioned (poor timing, insufficient marketing effort, inadequate sales
GLENN R. DUNDAS is a marketing representative for the International Business Machines, Office Product Division, in San Diego, California. He received his M.B.A. from Colorado State University and a B.B.A. from Western Michigan University. Prior to working for IBM, Glenn has had experience in production management with Heublein, Inc. He has written a number of papers on the subject of new product rollout, and conducted several marketing studies on the feasibility of new products and services. KATHLEEN A. KRENTLER is Assistant Professor of Marketing at San Diego State University. She received her D.B.A. from the University of Kentucky and her M.B.A. from Wayne State University in Detroit, Michigan Dr. Krentler has presented papers at several professional and academic conferences. Her primary research interests include the new product development process in both the industrial and consumer goods fields.
126
TABLE 1 Major Reasons for New Product Failure 1. 2. 3. 4. 5. 6. 7. 8. 9.
Poor timing. Insufl'icient marketing effort. Inadequate sales force+ Competition reaction. Inadequate market analysis. Weakness in distribution. Higher costs than anticipated. Product defects. Lack of proper support staff.
force, weakness in distribution, and lack of proper support staff) being cited specifically as announcement/ introduction activities by a convenience sample of marketing managers in the industrial goods accessory products field. More recently Cooper [5] investigated the dimensions of new industrial product success and failure. Of twentyone variables that have been studied for their possible impact on success or failure of new ventures, at least seven (33%) can be seen to be primarily related to the announcement/introduction phase of the new product development process. Another two are also associated with activities at this stage in a more minor way. Table 2 lists the variables Cooper reported as having been investigated throughout the literature. Those related to the announcement/introduction stage are noted. The emphasis on reasons directly or indirectly related to decisions at the introduction stage is further supported by information from a convenience sample survey of marketing managers in the industrial goods office products field. The results of eight extended interviews produces agreement that failures were not caused by defective design, workmanship, or product features. Poor timing and generally improper product announcement both internally and externally were the most frequently cited reasons for new product failure in the industrial field. Consensus of the sources contacted, in fact, was that at least fifty percent of all new industrial accessory products fail during the announcement/introduction phase. Strong evidence thus appears to suggest that this stage of the new product development process is particularly troublesome for the industrial marketing manager. It seems appropriate, then, to focus on potential means of minimizing the problems encountered at this stage. Poor timing of the actual introduction as well as of the activities associated with the introduction received primary focus both in the literature and from industrial marketing managers contacted. This emphasis suggests that a method aimed at ensuring proper timing of activities
TABLE 2 Variables Affecting Success or Failure of New Industrial Products Understanding user needs Fewer after sales problems" Extensive customer-producer interfacing ~' Strong promotional, user education effort" Efficient performance of development process/' No initial marketing difficulties" Sales forecasting carried out Market pull (idea derived from market) Strong selling (and marketing) effort" Technology push (tbr major successes) Product and/or price advantages" Good fit with company potentials, resources Close to current market (familiarity with market) Better internal and external communication" Better coordination of R&D, Marketing, Production" Product champion or top management support Better planning and systematic approach to innovation Industry maturity (affects nature of venture) Business cycle (influenced efforts) Government role (induced efforts) Government support insignificant (except for major innovations) " Variables primarily related to the announcement/introduction phase. ~'Variables secondarily related to the announcement/introduction phase. (Variable list adapted from 15].)
could improve the likelihood of a successful product introduction and ultimately a successful new product.
A CRITICAL PATH METHOD APPROACH The critical path method (CPM) is a planning tool that is suited for the announcement/introduction phase planning requirements of new industrial products. The critical path method utilizes a detailed flowchart describing the introduction of the new product. It identifies the sequence in which activities must be completed and, by totaling time allotments for each activity, identifies the critical (or longest) path to completion of the task. The critical path method has been applied to the development and marketing of new products of all types including automobiles and computer programs [6]. Since the technique requires establishment of project objectives and specifications, it is advantageous to planning. It requires that the marketing manager clearly identify what is important and what must be accomplished. To demonstrate the use of CPM at the announcement/ introduction phase of the new product development process for industrial goods a CPM network was designed in relation to a specific industrial office product. An electric typewriter is a good example for the CPM network to reflect the introduction process.
The Activities The purpose of the introduction stage is to enable a product to 1. reach potential, 2. take its place beside the other products in the product mix, and 3. allow the transition from new product to established product to take place smoothly, efficiently, and as quickly as possible. To achieve these objectives, the industrial firm must use a phased approach involving all concerned parties. To begin implementation of the CPM approach, therefore, all planners involved in the process must be called on to identify activities important to completion of the task. Based on the data received from the various operating departments, such as production and finance, and once it appears that the new product may turn out to be successful, marketing management should initiate the process plan by making a master schedule for the product [7]. This schedule would include operating requirements and plans furnished by each department, capital expenditures and lead times, and the remaining steps of the new product process with their estimated completion dates. Such a schedule should include variables found in both the internal introduction and the external introduction of the new product. The activities to be included in the overall introduction process for a new typewriter might include those listed in Table 3. ~
The Critical Path Having identified the elements that make up the critical path network, a flowchart (Fig. 1) is designed, with the time-sequencing element on the upper horizontal axis. For ease of display, the time axis begins with January 1, and is numbered by week, spanning a duration of six months. This is not to imply that all announcements begin at the first of the year, and that it always takes six months for this process. The six-month time duration is accurate for introduction of an electric typewriter based on the number of activities shown in the CPM design. The vertical axis of Fig. 1 lists headings that comprise the major concentration areas within the announcement/
~This list of variables was derived from information provided in the extended interviews of marketing managers that were conducted in this research. A more complete description of each variable can be found in Ref. 8.
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TABLE 3 Announcement/Introduction Activities Internal Introduction Elements I. Product Overview" A. Product description--identify 1. features and functions 2. unique characteristics B. Identify product fit in relation to existing product mix C. Product expectations D, Re-check estimates and forecasts 1. sales-volume forecast 2. profit computation and forecast 11. Announcement Plan (internal) A. Announcement strategy 1. description of pre-announcement activities and schedules a. regional upper level managers' meeting b. national management meeting 2. Arrange for external announcement a. press conference planning b. publicity/press arrangements c. customer/prospect announcement meeting invitations Ill. Environmental Factors" A. Industry, application, and customer benefits areas 1. by customer type 2. by customer benefits B. Review of competition 1. are they announcing also'? 2. similar products already on market IV. Marketing Objectives" A. Review of objectives for new product I. position in marketplace 2. net sales revenue goal B. Increase marketing productivity V. Sales Force and Distribution Strategy" A. Utilizing available resources I. sales fi.~rce a. existing b. alternate 2. distribution channels a. existing b. alternate 3. sales approach/techniques 4. sales tools/aids Vl. Sales Plan" A. Sales potential and incentive 1. develop quotas 2. new account bonus 3. special product bonus 4. quota and compensation plan 5. support/field organization VII. Primary Education and Communication Plan (internal) A. Internal education I. sales training program 2. support staff training 3. managerial training a. centralized training b. decentralized training VIII. Supplemental Education and Communications Plan (internal) A, Communications strategy I. customer brochures and publications 2. sales aids a. video/visual
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TABLE 3
(Continued) b. direct mail 3. sales force sales manuals a. technical writing b. edit and distribute
External Introduction Elements IX. Announcement Plan (external) A, Announcement activities and support material I. customer/prospect announcement meeting agenda 2. press conference/press release plan 3, content of announcement kit a. brochures b. slides c, video d. charts c. marketing guide f. technical publications 4. demonstration support 5. executive buyer announcements a. meetings b. tape/video c. telephone d. publicity 6. advertising support/mailing to media X. Market Announcement A. Select channels and announce I. press conference 2. meetings--geographically a. meetings with prospective clients in house h. demonstration of product 3. direct mail brochures 4. advertising blitz XI. Advertising Campaign A. Media Selection 1. newspapers 2. magazines 3. television 4. radio 5. direct mail B. Copy layout C. Scheduling Xll. Sales Promotional Campaign A, Distribution of support materials in final form 1. select literature 2. introduce at trade shows 3. distribute literature through sales force XIII. Release Follow-up A. Feedback on internal events 1. from sales staff 2. support staff B. Feedback on external events 1. review of publicity 2. review of press conference 3. customer/prospect reactions C. Success measurements 1. achieve goals'? a. profit b. sales "These functional sections have been completed during the Product Development and Marketing Analysis Process which occurs prior to the Introduction Process.
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introduction process. Sub-activities are listed (in order) across the page from left to right. Many of the activities listed on the CPM design have already been carried out (prior to the start of the design) in the Product Development and Marketing Analysis Process. The starting point for the process can be considered the decision to introduce the product. Activities listed within the network are universal to new industrial accessory product announcements. The final outcome can be conceived as the point where the product has been announced, both internally and externally. Time durations were assigned to fit the example product--an electric typewriter. Estimates are based on the literature and information provided in the extended interviews described earlier. The critical path as well as slack time (free time) in the design are denoted as indicated in the legend in Fig. 1.
Description of the CPM Design The activities that comprise the critical path network in Fig. 1 have been assigned a time duration and sequential order based on the introduction process for the example product--an electric typewriter. For ease of explanation, each of the major headings listed on the left axis of the CPM network will be outlined describing the importance of the major activities within the heading, and what is actually accomplished in each heading. SALES PROMOTION. The sales promotion campaign reflects the activities outlined in Table 3 under the Sales Promotion Campaign heading. This section is important because it deals with taking the specifications from the data sheets supplied from the engineering staff and creating support materials to be used later at trade shows. The process starts with selecting the literature that will corn-
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prise the trade show support material (two weeks). Creative artists must be hired to formulate the rough art and copy layout (six weeks). The rough art and copy layout is revised (one week), final layout is then developed and approved (three weeks). These materials are printed and packaged (four weeks) and are then ready to introduce at trade shows through the sales staff. COMMUNICATIONS PLANS. The communications plan reflects the activities outlined in Table 3 under the Supplemental Education and Communications Plan (internal) heading. In this section the crucial activities include the development of sales aids, customer brochures, and sales force sales manuals. In developing sales aids, professionals must be contacted to develop high quality video/ visual films and brochures that salespeople can show to their customers ( 12 weeks). Also, direct-mail advertising literature should be developed so that it is ready to be distributed to the market when the product is announced (four weeks). When these sales aids are complete, they should be approved (one week) and distributed to the sales staff. Sales force sales manuals are technical manuals that salespeople can reference for specific application areas according to customer needs. The writing and editing of the sales force sales manuals should take ten weeks to complete and the distribution to the sales staff should comprise three weeks and be available just prior to market announcement. Without these support materials, the task of selling complex industrial accessory equipment becomes very difficult. ADVERTISING STRATEGY. The activities of the advertising strategy reflect the activities outlined in Table 3 under Advertising Campaign. The important factors in this section include the selection and scheduling of all media as well as the copy layout of the print media. Using the objectives of the industrial accessory product, the types of advertising media can be selected (about two weeks). If print media are selected, the copy of the ad and its rough layout can be developed in four weeks. Final approval of media and their finished art design should be complete in approximately six weeks. It is important to schedule the advertisements so that maximum coverage of the desired market is obtained. Scheduling of the ads should take three weeks for the example product. Finally, when the advertisements have been completed and scheduled with the media, they must be placed with the media and reprints distributed to the sales staff (tour weeks). MARKETING STRATEGY. The marketing strategy reflects the activities outlined in Table 3 under the Sales
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Promotion and Distribution Strategy as well as activities found in the Sales Plan heading, It is extremely important to identify your sales force, a strategy for the sales force to follow, approach techniques that facilitate more successful sales calls, and an equitable way to compensate the sales staff that provides incentive. The sales force is a critical segment of a new product's success formula. If the sales force has a hard time selling the product, and/or if they are not compensated fairly for the product's sales--they will not make an effort to sell the new equipment. Lack of sales force effort often results in product failure. This section should entail selecting the existing sales staff or an alternative staff (five weeks). A sales strategy including approach techniques should be developed (eight weeks) and revised (three weeks) before a compensation/incentive plan is developed. This allows managers to identify the degree of difficulty involved with the new equipment sale. Next, the compensation plan providing incentive and outlining quotas and bonuses is developed (four weeks). MARKET TEST. Market testing is not a specific element involved in the introduction process of new industrial accessory equipment. This section was included in the CPM design for clarity purposes only. The important message here is that market testing does take place at some specific time. In the electric typewriter example, it is illustrated that test marketing has not been fully completed before the decision to introduce has been made. Instead, test marketing is an ongoing concern comprising eighteen weeks within the twenty four week introduction process. It is not uncommon in today's competitive markets to have test marketing going on during the introduction process. This could be due to a timing constraint in the marketplace. PUBLIC ANNOUNCEMENT. The public announcement reflects the activities outlined in Table 3 under the Market Announcement heading. Announcement channels are reviewed, selected, and scheduled in an effort to disseminate the message of the new product to the targeted market. It is important to schedule prospect meetings (two weeks) well in advance of the market announcement so that prospect and customer invitations can be distributed (three weeks). This gives the prospects and customers enough advance notice so they can plan to attend the market announcement meetings. ADMINISTRATIVE FUNCTIONS, The announcement plan reflects the activities outlined in Table 3 under the An-
nouncement Plan (internal) and Announcement Plan (external) headings. One of the most important factors here is to get managers to recognize the need for an announcement strategy. Once the need has been identified, the current market environment should be reviewed (one week) in an attempt to collect current information that would affect the timing and scheduling of the release date (three weeks). A series of concurrent activities begins after the market release date has been selected. There should be regional upper level management meetings as well as national management meetings to discuss press conference planning (two weeks), and to develop the content of the market announcement kit (five weeks). The content of the market announcement kit should include all of the support materials needed on the market announcement day. If films, slides, or charts are to be used during market announcement meetings with customers, they must be developed prior to the market announcement date. Executive buyer meetings are to be scheduled (one week) and support materials for these meetings should be developed (two weeks). The administrative functions reflect the activities outlined in Table 3 under the headings Product Overview, Environmental Factors, and Marketing Objectives. It is important for marketing managers to fully understand the new product by identifying its features, functions, unique characteristics, and fit in relation to the existing product mix (three weeks). If management does not understand the product itself, and the way it is to be introduced, the product is sure to fail. Sales estimates and forecasted volume should be rechecked (three weeks) while considering environmental and existing competition factors. Any modifications in forecasts should be done now, because these estimates will become the benchmarks for measuring later success. Finally, a brief review of marketing objectives (four weeks) as they pertain to the new product should take place. All information in the Administrative heading is then sent as input into the announcement plan activity section. TRAINING AND EDUCATION. The training and education section reflects the activities outlined in Table 3 under the headings Primary Education and Communication Plan (internal) and Sales Force and Distribution Strategy. Internal education is imperative at all levels for the introduction process to operate smoothly and efficiently. Internal training begins on a limited overview basis with the training managers (two weeks). The training mana-
gers must learn enough to develop the education program for the sales and support staff (two weeks). Testing and training locations are selected, either as a centralized location or a series of decentralized locations (five weeks). Once the locations have been specified for training, education of the sales and support staff begins (13 weeks). Concurrently, distributors are selected based on the channels selected in the Distribution Strategy (10 weeks). Distributors are consulted and training according to the procedures outlined by management (seven weeks). The culmination of events for this section provides the company with a well-educated sales, support, and distribution staff.
CONCLUSIONS With the increasing fear of failure in the marketplace, managers (in general) are taking extra care to ensure that the decisions they make regarding new product introduction are absolutely sound. By nature of the industrial accessory product, failure during the announcement/ introduction phase means substantial loss of both time and money. Furthermore, if a management team is involved with bad decision making and an eventual product failure, it may cost those managers their jobs. The process that is outlined in this paper is a sound base for marketing managers to follow during introduction of new industrial accessory products. Implementation of this technique should result in a decrease in new industrial product failure and a concurrent increase in the success and profitability of the organization involved.
REFERENCES 1. Evans, Richard H., Assessing Introduction Factors for a New Industrial Product, Industrial Marketing Management 7, 128-132 (April 1978). 2. Rogers, Everett M., New Product Adoption and Diffusion, Journal ~[" Consumer Research 2, 290 300 (March 1976). 3. Kraushar, Peter M., New Products and Diversification. Business Books Limited, London, 197(I. 4. Gerlach, John T., and Wainwright, Charles A., Sncces~lid Management ~[' New Products. Hastings House, New York, 1968. 5. Cooper, R. G., The Dimensions of Industrial New Product Success and Failure, Jmtrnal qfMarketing 43, 93-103 (Summer 1979). 6. Moder, Joseph J., and Philips, Cecil R., Project Management with CPM and PERT. Van Nostrand Reinhold Co., New York, 1970. 7. Watton, Harry B., New-Product Planning, A Practical Guide Jor Divers(['ication. Prentice-Hall, Inc., Englewood Cliffs, N J, 1969. 8. Dundas, Glenn R., Introducing New Industrial Products: Internally and Externally, MBA thesis. Colorado State University. Fort Collins. Colorado, 1980, (unpublished).
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