Successful Strategies for Product Rollovers
In a dynamic marketplace, shortening the new product development process can be a competitive weapon.1 Xerox, for example, reduced its product development time from seven to two years and recaptured its lead in the copier market. GE shortened the product development time for its circuit breaker line and regained its market share.2 Fast product introduction helps companies be first to market, acquire additional market share, and establish industry leadership.
We are currently witnessing shorter and shorter product life cycles. The life cycles of most electronics, for example, are now well under one year.3 As new products appear on the market, old products may become obsolete and need to be phased out. Short product life cycles increase the frequency of “product rollovers,” the introduction of new and the eventual displacement of old products. The displacement of an old product by a new one does not have to happen instantaneously, however, and the product life cycles of old and new products often overlap, with both products coexisting in the marketplace.
In an ideal product rollover, the old product is sold out at the planned introduction date of the new product, and the new product is readily available. Whatever the pattern with a product, a successful product rollover requires careful planning and coordination. Apple’s Mac Classic replacing the Mac Plus and Mac SE4 and Kodak’s Royal Gold replacing Ektar film5 are good examples.
Unfortunately, most companies experience less than successful product rollovers. Consider these failures:
- Technical problems can delay a new product’s introduction. In 1987, Ashton-Tate announced its new product, dBase IV. The product was intended to replace its leading database software, dBase III. Due to technical problems, however, dBase IV was introduced in late 1988, but the early version had many technical problems and customers were disappointed with it. The sales of dBase IV plunged, the stock price of the company fell, and Ashton-Tate was eventually acquired by Borland in 1991.6 In a similar example of delay due to technical problems, Microsoft encountered difficulties developing Windows 95 as the replacement for Windows 3.11. Consequently, Windows 95 was introduced one year late, leading to some market confusion and customer dissatisfaction.
- Excess product inventory can hold up a new product as well. In 1983, Ford Europe introduced Cortina to replace the older model Sierra.
References (31)
1. R.M. Kanter, “How to Compete,” Harvard Business Review, volume 90, January–February 1990, pp. 1–8.
2. B. Dumaine, “How Managers Can Succeed through Speed,” Fortune, 13 February 1989, pp. 5–59.
