How to Reduce Market Penetration Cycle Times

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Academics, executives, and consultants are virtually unanimous on the importance of speed as a competitive advantage and the need to achieve more rapid strategic decision making:

Strategy making has changed. . . . The premium now is on moving fast and keeping pace. . . . The best strategies are irrelevant if they take too long to formulate.1

— Kathleen M. Eisenhardt Stanford University

Speed kills the competition.2

— Richard D. Stewart Chief Executive Officer Computer Corporation of America

As a strategic weapon, time is the equivalent of money, productivity, quality, even innovation.3

— George Stalk, Jr. Boston Consulting Group

Perhaps the most prevalent focus on speed has been in new product development. Japanese companies have been heralded as models of how to achieve time-based advantages in reaching the market. Honda, Sony, Canon, and Toshiba, among others, have been cited for their abilities to reduce product development cycle times and to introduce a constant stream of new products or product improvements responsive to evolving customer needs. Recently, many leading U.S. and European firms also have adopted a time-based philosophy and are substantially reducing product development cycles.

Benetton is a well-known example. Management has recognized the extreme difficulties of forecasting demand for style and fashion and has built the firm’s competitive advantage on a production and logistics system that is enormously responsive to initial seasonal sales data. Hewlett-Packard is also cited as a leading example of reduced time to market. The advantages, according to former Chief Executive Officer (CEO) John Young, are not only faster market access but also higher quality and lower costs: “Doing it fast forces you to do it right the first time.”4 Other firms capturing competitors’ attention for reducing development times include Motorola, General Electric, and Boeing. These firms have substantially reduced their time-to-market objectives — sometimes slashing them in half.

Product Development vs. Market Penetration Cycle Times

Executives interested in reducing their firms’ product development cycle times have a rich set of guidelines and experiences from which to draw. Some excellent books and review articles are available, and a reasonably coherent set of recommendations can be made.5

Much less attention has been given to market penetration cycle time, that is, the amount of time it takes to reach maximum sales potential for a new product. A major source of competitive advantage thus remains: to achieve reductions in the time-to-market acceptance.

References

1. K.M. Eisenhardt, “Speed and Strategic Choice: How Managers Accelerate Decision Making,” California Management Review, Fall 1990, pp. 1–16.

2. R.D. Stewart, “Speed Kills the Competition,” Chief Executive, November-December 1989, pp. 46–49.

3. G. Stalk, Jr., “Time: The Next Source of Competitive Advantage,” Harvard Business Review, July-August 1988, pp. 41–51.

4. B. Dumaine, “How Managers Can Succeed through Speed,” Fortune, 13 February 1989, pp. 54–59.

5. See, for example:

P.G. Smith and D.G. Reinertsen, Developing Products in Half the Time (New York: Van Nostrand Reinhold, 1991); and

M.R. Millson, S.P. Raj, and D. Wilemon, “A Survey of Major Approaches for Accelerating New Product Development,” Journal of Product Innovation Management 9 (1992): 53–69.

6. C.F. von Braun, “The Acceleration Trap,” Sloan Management Review, Fall 1990, pp. 49–58.

7. D.F. Abell, “Strategic Windows,” Journal of Marketing, July 1978, pp. 21–26.

8. G.L. Urban, T. Carter, S. Gaskin, and Z. Mucha, “Marketing Share Rewards to Pioneering Brands: An Empirical Analysis and Strategic Implications,” Management Science 32 (1986): 645–659.

9. W.T. Robinson, “Sources of Market Pioneer Advantages: The Case of Industrial Goods Industries,” Journal of Marketing Research 25 (1988): 87–94.

10. E. von Hippel, The Sources of Innovation (New York: Oxford University Press, 1988).

11. J. Eliashberg and T.S. Robertson, “New Product Preannouncing Behavior: A Market Signaling Study,” Journal of Marketing Research 25 (1988): 282–292.

12. NPA New Product Announcement Database, “Alcan Produces First Castable Duralcan Aluminum Composite Using Industrial Process,” Document 4 (Cleveland, Ohio: Predicasts Online Services, 6 June 1990).

13. NPA New Product Announcement Database, “Glaxo Institute Opened,” Document 70 (Cleveland, Ohio: Predicasts Online Services, 12 February 1988).

14. G. Hamel and C.K. Prahalad, “Corporate Imagination and Expeditionary Marketing,” Harvard Business Review, July-August 1991, pp. 81–92.

15. V.J. Cook and R.R. Rothberg, “The Harvesting of USAUTO?,” Journal of Product Innovation Management 7 (1990): 310–322.

16. “Computer Price Wars: Cut to the Quick,” The Economist, 21 March 1992, pp. 105.

17. A Parasuraman, L.L. Berry, and V.A. Zeithaml, “Understanding Customer Expectations of Service,” Sloan Management Review, Spring 1991, pp. 39–48.

Reprint #:

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