Successful Strategies for Product Rollovers
Companies' financial strength and market position depend on successful new product introductions, which, in turn, depend on successful product rollovers. Given the low success rate of product rollovers, companies need a formal process to plan and coordinate product rollovers and to reduce risk. This article presents a framework to help companies manage product rollovers, choose the best rollover strategy, and improve product rollovers.
Companies need to plan their rollovers early, when they are planning the new product's introduction. First, they choose a primary rollover strategy, based in part on assessment of the uncertainties associated with the product's manufacturing, delivery, and market potential. Then they monitor product and market conditions. Finally, as product and market conditions change, they adopt a contingency strategy if necessary.
Companies can consider two primary strategies for product rollovers. Solo-product roll, a high-risk, high-return strategy, aims to have all the old products sold out worldwide at the planned new product introduction date. The less risky dual-product roll plans to sell both old and new products simultaneously for a period of time and can be implemented in a variety of ways. If changed product and market conditions increase the product's risk, companies can choose from among four contingency strategies: making significant price markdowns, postponing the new product's introduction, introducing the new product earlier than planned, or combining two or more dual-product-roll strategies.
Finally, while contingency strategies enable companies to modify their primary strategies if appropriate, companies can improve their product rollovers significantly by exploiting opportunities to reduce the product and market risks of each new product in the first place.