Page 335 - Marketing Management

312 PART 4 BUILDING STRONG BRANDS

Trivial Pursuit Since its debut at the International Toy Fair in 1982,Trivial Pursuit
has sold 88 million copies in 17 languages in 26 countries, and it remains one of the best-selling
adult games. Parker Brothers has kept it popular by making a new game with updated questions
every year. It also keeps creating offshoots—travel packs, a children’s version, Trivial Pursuit
Genus IV, and themed versions tapping into niches tied to various sports, movies, and decades—
23 different versions in all.The game is available in a variety of platforms: as
an interactive CD-ROM from Virgin Entertainment Interactive, online at its
own Web site (www.trivialpursuit.com), and in a mobile edition accessible via
cell phone. If you’re having trouble making dinner conversation on a date—
no problem: NTN Entertainment Network has put Trivial Pursuit in about
3,000 restaurants. 44

Marketing Strategies: Introduction
Stage and the Pioneer Advantage

Because it takes time to roll out a new product, work out the technical
problems, fill dealer pipelines, and gain consumer acceptance, sales
45
growth tends to be slow in the introduction stage. Profits are nega-
tive or low, and promotional expenditures are at their highest ratio to
sales because of the need to (1) inform potential consumers, (2) in-
Through countless variations, duce product trial, and (3) secure distribution in retail outlets. 46
Trivial Pursuit has proven to be Firms focus on buyers who are the most ready to buy. Prices tend to be higher because costs are high.
more than a passing fad. Companies that plan to introduce a new product must decide when to enter the market. To be
first can be rewarding, but risky and expensive. To come in later makes sense if the firm can bring
superior technology, quality, or brand strength to create a market advantage.
Speeding up innovation time is essential in an age of shortening product life cycles. Being early
has been shown to pay. One study found that products coming out six months late—but on
budget—earned an average of 33 percent less profit in their first five years; products that came out
on time but 50 percent over budget cut their profits by only 4 percent. 47
48
Most studies indicate the market pioneer gains the greatest advantage. Campbell, Coca-Cola,
Hallmark, and Amazon.com developed sustained market dominance. Nineteen of twenty-five market
49
leaders in 1923 were still the market leaders in 1983, 60 years later. In a sample of industrial-goods
businesses, 66 percent of pioneers survived at least 10 years, versus 48 percent of early followers. 50
What are the sources of the pioneer’s advantage? 51 Early users will recall the pioneer’s brand
name if the product satisfies them. The pioneer’s brand also establishes the attributes the product
class should possess. 52 It normally aims at the middle of the market and so captures more users.
Customer inertia also plays a role; and there are producer advantages: economies of scale, techno-
logical leadership, patents, ownership of scarce assets, and other barriers to entry. Pioneers can
spend marketing dollars more effectively and enjoy higher rates of repeat purchases. An alert pio-
neer can lead indefinitely by pursuing various strategies. 53
But the advantage is not inevitable. 54 Bowmar (hand calculators), Apple’s Newton (personal
digital assistant), Netscape (Web browser), Reynolds (ballpoint pens), and Osborne (portable com-
puters) were market pioneers overtaken by later entrants. First movers also have to watch out for
the “second-mover advantage.”
Steven Schnaars studied 28 industries where imitators surpassed the innovators. 55 He found
several weaknesses among the failing pioneers, including new products that were too crude, were
improperly positioned, or appeared before there was strong demand; product-development costs
that exhausted the innovator’s resources; a lack of resources to compete against entering larger
firms; and managerial incompetence or unhealthy complacency. Successful imitators thrived by of-
fering lower prices, improving the product more continuously, or using brute market power to
overtake the pioneer. None of the companies that now dominate in the manufacture of personal
computers—including Dell, HP, and Acer—were first movers. 56
57
Peter Golder and Gerald Tellis raise further doubts about the pioneer advantage. They distin-
guish between an inventor, first to develop patents in a new-product category, a product pioneer,
first to develop a working model, and a market pioneer, first to sell in the new-product category.