USC Marshall Center for Global Innovation
Recent Business Publications
When Will it fly? - How to Launch in Europe
Published: August 9, 2003
European countries have surprisingly different take-off rates THE next great consumer-products hit will be DVD recorders. The only question is when. A study by Japan's Panasonic and IDC, a research firm, reckons the take-off point could come this year, with a predicted 16m DVD recorders being sold worldwide - 150% more than in 2002. But don't expect them to fly off the shelves everywhere. According to the latest research, there are surprisingly big national differences in the way new products perform.
DVD recorders have been around for a few years, but as with most new products they have been bought mostly by so-called "early adopters" - people prepared to fiddle to link them to their PCs, or pay high prices for the first stand-alone machines that connect to a TV. Panasonic expects mass adoption to occur as prices fall, PCs become equipped with them as standard (as many now are with DVD players), and stand-alone units become easier to use as a direct replacement for VCRs.
The take-off point for new products comes when slow initial sales suddenly accelerate towards a mass market. This averages six years after launch in America. White goods, such as kitchen and laundry appliances, have generally taken longer, but brown goods, such as TVs and CD players, often took off faster - mostly, it is thought, because families get more immediate satisfaction from them: who wants to watch a tumble dryer? With Europe supposedly a single market, product managers expect much the same to happen there. Indeed, the average new-product take-off time in Europe is also about six years. However, it turns out that national differences within Europe are huge (see table).
Dryers took just four years to take off in Sweden, but 11 years in Britain and 12 years in Portugal. Washing-machine sales began to grow rapidly five years after they went on sale in Germany, but 11 years in France. This presents product managers with a problem. Most believe that the big, lucrative markets of Britain, France and Germany are the best to launch into, says Gerard Tellis of the University of Southern California.
Most European product launches take place in these countries. "But it could mean a manager pulls the plug on a product before it takes off," says Mr Tellis. Far better, he says, to use a so-called "waterfall" strategy in Europe - pouring products first into markets where they are likely to achieve an early result, such as Sweden, then spreading sales further afield as demand picks up elsewhere.
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Center for Global Innovation
Gerard J. Tellis, Director of the Center for Global Innovation, is the Neely Chair in American at USC's Marshall School of Business. Dr. Tellis is an expert in innovation, market entry, new product growth, global diffusion, advertising and pricing.
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