What may the launch of a new product involve?

The launch of a new product might involve a national, international or global rollout. A well-oiled public

relations machine will have prepared the way for the new product by getting the required media

coverage, where the terms leading edge and state of the art will perhaps appear. Any teething problems will hopefully be ironed out during development rather than after the launch. The ultimate nightmare is when a company has to recall products because of design defects. The coverage this might get is the least welcome imaginable.

4. How is Procter & Gambler better than its competitors in terms of innovation?

According to Lafley, the CEO of P&G, organic growth strengthens a company’s ability to innovate.

Organic growth – meaning growth from core businesses. Lafley has a model for innovating in a big company:

1. One-on-one consumer research – marketers must spend lots of time with consumers in their homes, watching the ways they wear their clothes and asking them about their habits and frustration.

2. Get employees to exchange ideas – employees from nine countries post problems on an internal website. CEO evaluates the ideas of employees and presents the best findings each year.

3. Stop testing so much – One can not but agree with fact that putting out a product can't be without test- marketing. But it’s necessary to reduce product launch time from laboratory to roll-out.

4. Give designers more power – it’s necessary that designers would be involved in all aspects of product development.

5. Know what not to do – according to Lafley, it’s impossible to offer fat bonuses for innovation or to hire stars from outside. Managers who fail to share ideas simply do not get promoted.

U n it 14. Competition

1.  What are the most common competition practices?

2.  What is Michael Porter’s model of competitors’ types?

3.  Why is Nokia no longer the leader in the mobile phone market?

4. Why are some products unsuitable for foreign markets?

What are the most common competition practices?

Competition between companies can be tough, aggressive, even ferocious or cut-throat. Firms may

accuse each other of using unfair methods such as dumping, where a competitor (usually foreign) sells

products for less than what they cost to produce, or at less than the price charged in the home market. Firms dump in order to build market share and recoup their losses later when, having established

20

themselves to benefit from economies of scale (producing in larger quantities so that the cost of each unit goes down), they are able to charge market prices with a healthy profit margin on each unit sold. Competition can also be gentlemanly or even cosy, so cosy that companies may be accused of forming a cartel to agree on prices in a price fixing arrangement. They may then be investigated by a government department that looks into unfair trading practices.

Competitors may also enter into other perfectly legitimate forms of cooperation, such as joint ventures for specific projects. They may even talk about strategic alliances. But like mergers, these can go awry and lead to recrimination between the erstwhile partners.

What is Michael Porter’s model of competitors’ types?

Michael Porter's model containing:

• cost-leaders, who are low-cost producers with a broad scope and cost advantage, appealing to many

industry segments (many groups of buyers with different needs)

• differentiators, who appeal to buyers who are looking for particular product attributes

(characteristics) and position themselves as the most able to meet those needs

• focussers, who concentrate on one particular segment and try to find competitive advantage by

satisfying the needs of buyers in that segment better than anyone else. Focussers are, in effect, nichers. These are the available choices, according to Porter, that a commercial organisation has if it wants to compete effectively, and not get 'stuck in the middle'.

Why is Nokia no longer the leader in the mobile phone market?

Although Nokia's share of the global market for mobile handsets is more than competitor’s share, but

Samsung has momentum. Samsung's camera phones, with twisting flip-up screens that allow users to take, send and display photos quickly and easily, are hot; Nokia's are not. The high end of the market - phones that retail for $300 or more in the US - is no longer Nokia's.  Samsung makes the expensive camera phone that a young consumer wants to have. Design should be Nokia's strength, since it overtook Motorola by turning handsets into handsome and desirable consumer goods, rather than technological objects. But in its recent models, Nokia forgot the first rule of modernist design - that form follows function. Instead, it has placed most emphasis on making its handsets colourful and zappy, with snap-on covers. And of course the main Nokia’s disadvantage is size of handsets. It is rather big in comparison with Samsung.

Samsung has main advantage – it is the fact that it is willing to pay high prices for development new

electronic devices.