R&D projects may be used as soon as they are completed to launch new products or new models of existing ones. They may also be shelved for future use. Product portfolio decisions are summarized below and are detailed in section V.1.
A new product is introduced on the market by entering a product name which has not been used in the past. This product name is completely independent of the code used for the R&D project. A new model of an existing product is modified by keeping its current name with the model number (2,3,4…) and using the physical characteristics corresponding to a new completed project. Using a new product name will facilitate the product’s positioning, but its product awareness will have to be completely built from scratch. Using an existing product name makes its repositioning more difficult, since consumers are familiar with the product at its previous position. However, as the awareness level is maintained, the product’s purchase intentions are likely to be higher than with a new product.
The same product can be marketed under different names. The presence of multiple products targeted at the same segment is a good strategy to build barriers to entry of new products by competitors. A company may also market multiple products based on the same project to different segments which are willing to pay different prices while having similar technical needs.
When a product is withdrawn, obsolete inventories are sold by the Production department to a trading company at a fixed percentage of their value, usually 80%. This company will then export the old products outside the Simulation world. Consequently, a loss of x% (the given percentage) of the inventory value is charged to the marketing department.