1. Traditional Product Launch Strategy Skim the market with premium prices (lead users, technophiles) Establish first-mover advantage Descend learning curve with volume increases Reach broad market later with lower prices

2. What Are First-Mover Advantages? Brand loyalty Preempt capacity Preempt shelf space Head-start on learning Network externalities\ Question: Have first mover advantages disappeared?

3. The Survival Zone Price PointQuality Features

4. Product: Sony Cyber-shot DSC-T1 Specs: 5.0 megapixels, 3X optical zoom Price: $550 list Company Info: Sony Electronics Inc., www.sonystyle.com Ease of use: Power: Performance: Image quality: Editor Rating:

5. Calculating Target Cost Price Point - dealer margin - import costs - margin requirement Target Cost

7. What If Estimated Costs Are Higher Than Target Costs? Reduce features and lower price point Enhance features and raise price point Redesign the product or component Reexamine conditions (launch date, volume) Consider life cycle cost

8. Managing the Product Development Process If you can’t meet the target, don’t launch the product Tip-toe objectives Cost target is a unifying metric