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Large colnpanies use regional rollouts, introducing the product sequen- tially into geographical areas of the United States, to allow production levels and markbting activities to build up gradually to minimize the risk of new- product failure. Grocery product manufacturers and telephone service pro- viders use this strategy.
Burger King's French Fries: The Complexities of Commereialization Burger King's "improved french fries" are an example
of what can go wrong at the commercialization stage. McDonald's french fries are the gold standard against which all other fries in the fast-food industry are measured. In 1997,Btrger King decided to take on McDonald's fries and spent millions of R&D dol- lars developing a whey/starch-coated fry designed to retain heat longer and add crispi- ness. The launch, backed with a $70 million marketing campaign, tumed into a disaster. The reason: Except under ideal conditions, the new fry proved too complicated to get right day after day in Burger King restaurants, and changes had to be made to get the "production" process correct to ensure consistent results.
Fast-forward to today. Over the past couple of years, Wendy's has introduced new fries in the fast-food war. Launched in late 2010, Wendy's Natural Cut Fries with Sea Salt have become a huge hit.
Burger King, now the number three fast-food marketer after McDonalds and Wendy's, responded with its new Thick Cut fries in late 2011. In development and testing for over two years, the new fries are "fluffier" on the inside for a more "potatoey" taste, have less sodium, and have a new "coating" on the outside. This was done to create a "crispy, golden brown deliciousness" while retaining the heat longer-for at least 10 minutes because 75 percent of customers eat their fries "on the go" in their cars, offices, or homes.
A taste test conducted by an independent market research firm stated that the new Burger King fries were preferred over McDonald's fries by a 57 to 35 percent margin. Burger King also launched the largest TV advertising campaign in its history-featuring "spokespud" Mr. Potato Head-to promote the new fries.a3
The Special Risks in,Commercializing Orocery Products New grocery products pose special commercialization problems. Because shelf space is so limited, many supermarkets require a slotting fee for new products, a payment a manufacturer makes to place a new item on a retailer's shelf. This can run to several million dollars for a single product. But there's even another potential expense. If a new grocery product does not achieve a predetermined sales target, some retailers require afailure fee, a penalty payment a manufacturer makes to compensate a retailer for devoting valuable shelf space to a product that failed to sell. These costly slotting fees and failure fees are further examples of why large grocery product manufacturers use regional rollouts.
Speed as a Factor in New-Product Success Companies have discovered that speed or time to market (TtM) is often vital in introducing a new product. Recent studies have shown that high-tech products coming to market on time are far more profitable than those arriving late. So companies like Sony, BMW, 3M, and Hewlett-Packard often overlap the sequence of stages described in this chapter.
With this approach, termed parallel development, cross-functional team members who conduct the simultaneous development of both the product and the production pro- cess stay with the product from conception to production. This enabled Hewlett-Packard to reduce the development time for notebook computers from 12 to 7 months. In soft- ware development, fast prototyping uses a "do it, try it, fix it" approach--encouraging continuing improvement even after the initial design. To speed up time to market, many firms insulate their new-product teams from routine administrative tasks to keep them from bogging down in red tape.a