Yeah, we all know office 2010 is coming up. Is there someone out there just waiting for 2010 and not using the current version?
The answer obviously is no. The reasons:
1. Office has become a ubiquity - It’s like your soap or bodywash. You just can’t do without it.
2. Affordability-It’s not a luxury good. Piracy sadly adds to the affordability.
3. Monopoly - Till date, there is no proper solid substitute for Office.
4. Sales Volume – Very high.
5. Easy upgrades from existing platform.
(While reading, you can find how the bolded out factors play an important role in deciding when to announce an upgrade).
Given these aspects, an early heads up for a forthcoming product creates a positive buzz and increased mindshare. In general the product will be well off than had it not given the early heads up.
Just contrast this with another product – Royal Enfield Bullet. Obviously Bullet is a luxury good and the price tag is monstrous compared to other motorcycles available in India. And Bullet sales are not volume based. A few thousands of every model sells each year. It caters to a niche market.
Now there is official news that Bullet is coming up with 2 new models in early 2010. This news came during the end of 2008. So there is completely a one-year headsup for the new product. Yes this does help in creating the buzz in the market for a while, puts the company in a far more comfortable position in skimming the market when the product is actually launched. But, remember – there is an entire set of customers who are considering the purchase of RE motorcycles in the year 2009. Those who have made the decision to purchase in early 2009 have the following options -
a) Purchase from the existing product lines
b) Wait for the new product
When the fact that the new product is technically superior to the existing versions is also advertised in the heads up, the consumer is now pushed into a dilemma. And once a buyer has decided to purchase a motorcycle, he would want to do it ASAP. There are no easy upgrades for this kind of a product. Add to the fact the technology obsolescence the new product will create to existing product lines. All these will make a rational buyer wait for the new product to become available or go for alternative products which might more or less satisfy the consumer and in this case comes at a reduced price. And one year is not a short wait. Thus the waiting group (consider they are new motorcycle buyers) might get really impatient and they might be forced to buy other available products coming from different brand houses. Thus sales for the waiting year thus might actually go down for the company – at least the product lines where new models are being rolled out. Or rather, the opportunity of making sales for the waiting group would have been lost.
(Two points to note -
1)Enfield wants to create future with the new Unit Combustion Engine and Twinspark technology.
2) But I’ve read somewhere 60% of Enfield sales comes from the Cast Iron engine segment).
I feel company might have been better off not giving the heads up this much earlier.
Few thoughts -
1. In the motorcycle example, we might want to understand if the person already owns a bike. In this case, in general, I think he can wait.
2. In case the rider already owns an bullet, he will wait in all probability
2. Alternatively, if he owns a normal bike and looking for ‘big’ ones he might look at other options.
An analogy could be purchasing a mobile phone.
1. If you have a basic mobile and want to upgrade and if no product in market caters to your need (at a given price point) you can wait.
2. If you own a blackberry and are looking to upgrade, you’ll wait.
3. Alternatively, if you own a basic mobile and want to upgrade to a business phone, you’ll look at other options in Nokia/ Samsung