1. The Google Android Phone's Big Premiere
In the most anticipated mobile-phone launch since the release of Apple's iPhone, the T-Mobile G1 was unveiled Sept. 23 2008.
Like the iPhone, the G1 is the brainchild of one of tech's most innovative companies; it's the first phone boasting the Android software created by a Google-led consortium. Like Apple's music-playing handset, the G1 features a full Web browser and connects to the Internet with Wi-Fi technology. G1 similarly boasts a large touch screen and lets users download games and tools from an online bazaar akin to the Apple App Store.
That's about where the similarities end. The G1 is to follow a different path from the Apple iPhone in some crucial ways, notably volume growth. G1 is expected to do well, though it may not replicate the iPhone's early successes. Sales expectations are lower for Android partly because G1 will be carried by T-Mobile USA with less subscribers and a less extensive high-speed wireless network compared with Apple's iPhone partner, AT&T. Some analysts who have seen versions of G1 also say it's not quite as stylish as the comparable Apple device. Google and other Android supporters surely will try to prove the pessimists wrong. Google, for one, is expected to launch an extensive marketing campaign for the device. G1 sales will also benefit from the flexibility of the Android Marketplace online app store. Unlike Apple's iTunes App Store, Google's marketplace won't vet developers. Google will let anyone post applications to its store. The openness of the Android software also can make it easier for developers to create associated tools more quickly.
Apple's iPhone isn't expected to be the main competitor for G1. The Android-based phone may erode sales of the Sidekick, phones that run Microsoft's Windows Mobile software, and smartphones made by Motorola and Research In Motion, maker of the BlackBerry.
G1 stands to become a more formidable competitor as it's picked up by other manufacturers as well. Motorola, LG and Samsung are expected to launch Android models worldwide in 2009. And their Android-based phones may look vastly different from each other and the G1.
Source: excerpt from ‘The Google Android Phone's Big Premiere‘, by Olga Kharif, Businessweek.com, 09/23/2008
Link: http://www.businessweek.com/technology/content/sep2008/tc20080922_230346.htm
Questions:
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To determine the timing of market entry is a crucial decision within the development of the overall market entry strategy. In general there are two options with respect to the product launch time: the pioneer strategy and the follower strategy. What are the main advantages/disadvantages of these options?
Answer:
Potential pioneer advantages (and thus follower disadvantages respectively): temporary monopoly allowing premium price strategy and building up considerable market share, cost advantages due to experience curve effects, image/preference creation with buyers as well as development of customer loyalty, establishment of barriers to switching on the part of customers (e.g. by setting industry standards), securing of key distribution channels (see page 128)
Potential pioneer disadvantages (and thus follower advantages respectively): extensive resources needed for market development (e.g. for advertising campaign), uncertainty with respect to development of demand, lack of experience with regard to the functionality of the product when used by the customer (see page 128)
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Which strategy did Google choose for the launch of its Android Phone? According to the example, what is probably the main reason for this choice?
Answer:
The follower strategy was chosen by Google as the Google Android Phone was launched after Apple’s iPhone.
Reducing risk/uncertainty with respect to the development of demand and learning from Apple’s mistakes ( designing the marketplace more flexible with the advantage that tools might be provided more quickly), exploring new customer segments not yet addressed by the Apple’s iPhone.
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Compared to competitors’ offerings (e.g. Apple’s iPhone, BlackBerry), what are the main competitive advantages the Google Android Phone G 1 offers and do you expect the new phone to become a market success?
Answer:
Openness of the android software allows developing new and innovative tools more quickly and customers may benefit from that flexibility giving the G1 potentially a competitive advantage over other offerings. Moreover, different manufacturers will offer different versions of the G1 in the future that might be tailored to the individual needs of certain niche segments.
The G1 has the potential to become a market success, due to the extensive marketing campaign that supports the market launch and the fact that the G1 is not only a competitor of the iPhone, but competes with other offers as well to gain market share (e.g. the BlackBerry). One problem may be that the G1 is not really as stylish as the iPhone and that T-Mobile USA has less subscribers and a less extensive high-speed wireless network compared with AT&T.
In June 2009 the automaker will launch in Europe a 30-mpg hybrid version of its luxury S-Class sedan
German automakers pride themselves on being at the leading edge of new technology, so it has been a bit of an embarrassment that—a decade after Toyota launched the Prius—none of them has a hybrid electric model on the market. But, with fuel economy and environmental impact suddenly a key concern for well-heeled buyers, Daimler's Mercedes unit is finally poised to get into the hybrid game.
In June 2009 the company will begin European sales of a hybrid version of its luxury S-Class. The carmaker hasn't yet established a price for the hybrid land yacht, but Mercedes Sales and Marketing Director Klaus Maier said the premium will be less than €10,000.
Why did it take so long for Mercedes to get into the hybrid market? One reason is that Mercedes, as well as BMW and Volkswagen, have concentrated on optimizing diesel engines.
From an engineering point of view, diesel is the better technology. But the success of Toyota's luxury Lexus hybrid models showed that gasoline-oriented U.S. buyers want hybrids.
The S-Class is not a so-called full hybrid—it can't run solely on battery power. However, Mercedes has included some innovations that it hopes will set the S-Class hybrid apart from Japanese competitors. The main innovation is the lithium-ion battery.
Besides being more efficient than competitors, the battery also helps Mercedes meet its long-term goal of offering better mileage without any sacrifices in performance and comfort. Following the S-Class launch, the company aims to add at least one hybrid model a year. "We have to ensure that people in six years will be able to drive a big car without sacrifices or a bad conscience," says marketing chief Maier.
Source: adapted from ‘A Mercedes Hybrid at Last’ by Jack Ewing, Businessweek.com, 09/11/2008
Link: http://www.businessweek.com/globalbiz/content/sep2008/gb20080911_322465.htm
Questions:
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Often it is difficult to clearly distinguish between product innovation and decisions related to expanding the product mix. Do you think the launch of the hybrid model of the S-class can be classified as being an innovation or is it rather a kind of product differentiation (i.e. the addition of a new product variant to an already established product)?
Answer:
The hybrid car can be classified as being a product differentiation since a new product variant (the hybrid model) is added to an already established product (the Mercedes S-class) and the innovative character/newness of the hybrid is rather low as Toyota introduced its first hybrid model already 10 years ago. The innovative character of the battery can be classified as being a rather minor type of innovation.
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What are the goals behind Daimler’s move into the hybrid market?
Answer:
Tapping into additional market segments (sell to people who are concerned about global warming or gasoline-oriented buyers)
Allowing for changed customer preferences (gasoline-oriented buyers want to have hybrid cars and do not like the diesel technology used by Mercedes before)
Realizing higher prices (the hybrid model will be offered at a premium price and cost up to € 10,000 more than other non-hybrid models of the S-class)
Creating market entry barriers for competitors by means of occupying vacant market niches (big but efficient/environment-friendly cars)
Using the positive image of the Mercedes S-class for the hybrid model (image transfer)
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Why did Daimler decide to launch a hybrid model ten years after Toyota had launched the Prius and what was the driving force behind this decision?
Answer:
Finally, as customers got more and more concerned about environmental issues, such as global warming, and became gasoline-oriented, Daimler had to launch a hybrid model since customer preferences changed towards the hybrid technology (and away from the more efficient diesel technology Daimler first placed its hope on). So the driving force behind the decision was that Daimler had to adapt the current product range to changing customer preferences to remain competitive and probably win new customer segments.
3. Will Persil's fragrance innovation refresh the brand?
That Unilever is extending flagship laundry brand Persil with a fragranced sub-brand highlights the struggle manufacturers face to add meaningful value in a fiercely competitive sector. The move also confirms that it is fragrance-led innovation that leads the way in today's laundry detergent market, rather than format or task-driven development.
Persil, the market leader, is facing increasing competition from Procter & Gamble mid-market brand Bold - which has leveraged its own fragranced range resulting in strong growth and has seen its brand share drop by 2% since 2005, from 24% to 22%.
The new Persil sub-brand, Persil Naturals, is set to launch in early 2009 and echoes the just-launched Naturals variants added to Unilever's market-leading fabric conditioner Comfort. The Comfort Naturals line has been developed for sensitive skin and is available in three variants: olive blossom with cotton extract; jojobaoil and white orchid; and a fragrance blended with aloe vera.
The move to introduce fragrances to Persil is proof that premium detergent brands are having to develop new ways to simply maintain market share, say experts.
Leo Burnett account director Chris Jackson says: “Brands need to offer some meaningful product innovation to the consumer, so that they are willing to pay a premium.” Extensions into fragrances have been the main factor affecting growth in laundry detergents for the past two years. Jackson points out that P&G brand Bold's growth “kick-started” when it introduced its Camomile variant in 2004. With further launches of aspirational-sounding fragrances, such as Black Diamond and Lotus Flower, the brand grew 3% between 2005 and 2007.
Euromonitor household care analyst Adrian Atterby says he is surprised Unilever has not introduced fragrances to Persil sooner. “Bold has been leading the way, gaining share hand over fist for three or four years,” he says. “Consumers must wonder why it is that Bold is a 'standard' product, and yet has all these fragrance options, but 'premium' Persil has none.” Atterby feels that, while Persil Naturals is aimed at an older consumer, probably with children, it is “clearly in response” to Bold. “Fragrances are easier to update. They give the consumer something fresh and interesting, rather than dull advertising about format types,” he says.
Source: adapted from ‘Will Persil's fragrance innovation refresh the brand?’, by Louise Jack, Marketing Week 09/04/2008
Links: http://www.marketingweek.co.uk/cgi-bin/item.cgi?id=62269&u=pg_dtl_art_news&m=pg_hdr_art
Questions:
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To further develop their brand architecture companies have four strategic options at hand: line extension, brand extension, multibranding, or developing new brands and product lines. What are the main differences of these options?
Answer:
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Line extension refers to expanding the existing brand by assigning it to a new product or product variant of a product line already established in the market (see page 147).
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Brand extension refers to extending an existing brand to products of a different product line (see page 148).
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Multibranding refers to the option to introduce additional brands into an existing product line that already carries a brand (see page 149).
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Developing new brands/product lines refers to the decision to develop new products and build completely new brands.
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Which kind of strategic option does Unilever pursue with the launch of a new fragrance range under the sub-brand Persil Naturals and what is the objective of this launch? What are possible risks of pursuing such a strategy?
Answer:
With the launch of Persil Naturals Unilever pursues the following strategy:
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Line extension: the existing brand Persil is assigned to new product variants of the product line ‘Persil Naturals’, a product line already established in the market.
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Objective: increase sales through more intensive product use by the current customers and by exploring new customer segments to maintain market share and the position as a market leader
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Risks: introducing too many variants and extending the product line too far can lead to customer confusion and cannibalization effects
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With the launch of the fragrance variants, Unilever responds to Procter & Gamble brand Bold that already offers different fragrances. Do you think the decision will help Persil to defend its market share? Can you think of other options to defend the position as market leader?
Answer:
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The decision to offer different fragrances probably can prevent customers from switching to other brands, such as P&G owned Bold. The different fragrances also satisfy customers’ preference for something new or fresh (variety seeking behavior) and thus can encourage a more intensive product use and higher sales. All in all, the launch of the fragrance line might prevent Persil’s market share from eroding and help the company to maintain its position as market leader for the moment.
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Another option to defend the position as market leader would be to introduce product innovations to differentiate the own brand from competitors’ offerings and generate something of value for customers. Eventually, the company could also try to engage in brand extension and extend the Persil brand to similar product categories not yet offered under the brand name.
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