Geographic Strategy

A company must decide whether to launch the new product in a single locality, a region, several regions, the national market, or the international market. Most will develop a planned market rollout over time. Coca-Cola launched its new soda, Citra, caffeine free grapefruit-flavored drink in about half the United States. The multi-staged rollout was launched following test marketing in Phoenix, southern Texas, and southern Florida, Dallas, Denver, and Cincinnati.

Company size is an important factor here. Small companies will select an attractive city and put on a blitz campaign. They will enter other cities one at a time. Large companies will introduce their product into a whole region and then move to the next region. Companies with national distribution networks, such as auto companies, will launch their new models in the national market.

Most companies design new products to sell primarily in the domestic market. If the product does well, the company considers exporting to neighboring countries or the world market, redesigning if necessary. A study of industrial products revealed that domestic products designed solely for the domestic market tend to show a high failure rate, low market share, and low growth. In contrast, products designed for the world market — or at least to include neighboring countries – achieve significantly more profits, both at home and aboard. Yet only 17% of the products studied were designed with an international orientation. The implication is that companies should adopt an international focus in designing and developing new products.

Companies will increasingly add the Web as another advertising medium to launch and describe each important new product.

Philips, the Dutch electronics company, recently launched Pronto an “Intelligent Remote Control” to replace all other devices that receive infrared signals. Its Web address,, contains several features About Pronto, A Virtual Tour, Where to Buy, Pronto News, Pronto Communities, and FAQs and Contacts. This is much richer information than any ad could offer.

How (introductory market strategy) the company must develop an action plan for introducing the new product into the rollout markets. In 1998, Apple Computer staged a massive marketing blitz to launch the iMac, its reentry into the computer PC business after a hiatus of 14 years. Five years later, Apple struck gold again with the launch of the iPod.

As with virtually all its products, Apple design for its iPod MP3 player is striking. Sleek and cool, the product also offers much functionality. Apple paired iPod with the legitimate download song service iTunes through catchy TV commercials featuring black silhouettes of people listening to music with N E R D’s remix of “Rock Star” in the background. To target Gen Y, Apple created the Web site, It touts the iPod as a gift for the holidays and offers suggestions to convince parents to buy one. Apple also initiated marketing collaborations with corporate icons America Online and Volkswagen. Apple sold more than 2 million iPods and its iTunes support in less than a year and captured more than 50% of the new market. It then broadened the market further by pushing the iPod mini – a 3.6 ounce player capable of holding 1,000 CD quality songs.

In choosing rollout markets, the major criteria are market potential, the company’s local reputation, the cost of filling the pipeline, the cost of communication media, the influence of the area on other areas, and competitive penetration. The presence of strong competitors will influence rollout strategy. Suppose McDonald’s wants to launch a new chain of fast food pizza parlors. Pizza Hut, a formidable competitor, is strongly entrenched on the East Coast. Another pizza chain is entrenched on the west Coast but is weak. The Midwest is the battleground between two other chains. The South is open, but Shakey’s is planning to move in. McDonald’s faces a complex decision in choosing a geographic rollout strategy.

With the Web connecting far flung parts of the globe, competition is more likely to cross national borders. Companies are increasingly rolling out new products simultaneously across the globe, rather than nationally or even regionally. However masterminding a global launch poses challenges.