5 Product Strategy (1)

7/25/2019 5 Product Strategy (1)

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A Business Strategy

Product-Market

Investment DecisionProduct-market scope

Investment intensity

Resource allocation

over business units

Product-Market

Investment DecisionProduct-market scope

Investment intensity

Resource allocation

over business units

Basis of SCAs

Assets/Competencies

Syneries

Basis of SCAs

Assets/Competencies

Syneries

!unctional Area Strateies

ProductPrice

Distribution

"tc#

!unctional Area Strateies

ProductPrice

Distribution

"tc#

!iure $#$


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%&e !our Ps' %&e %ools%&e !our Ps' %&e %ools

Marketing

Mix

Product

Price Promotion

Place

The Four Cs: The nds

Customer

Solution

CustomerCost Communication

Conven-ience


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The !ther "Cs: The Participants

Company

Consumer Channel

Competitors

The

Participants


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Views on the Marketing Processes

5-C Analysis

Customer

Competitor

Company

Collaborators

Context

S-T-P Marketing

SegmentationTargeting

Positioning

4 Ps Marketing Plan

ProductPricing

Promotion

Place

The Functional View


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Views on the Marketing Processes

Understanding

CustomerValue

Creating

Customer

Value

The Process View

Caturing

CustomerValue

!eli"ering

CustomerValue

Sustaining

CustomerValue


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(nderstandin Customer )alue

#alue is de$ined as the percei%ed &orth inmonetary units o$ the o$ the set o$economic $unctional ' technical andpsychological (ene$its recei%ed (y thecustomer in e)change $or the price paid $or$or a product o$$ering* ta+ing into

consideration the a%aila(le o$$erings andprices.

, Anderson* -ain and Chintagunta/0012


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(nderstandin Customer )alue

Psychological

Functional Economic


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Plea !rom an Anonymous Customer

Don3t Sell me Clothes* Sell me a sharp appearance*style and attracti%eness.

Don3t Sell me a 4ouse* Sell me com$ort* contentment*a good in%estment and a pride o$ o&nership.

Don3t Sell me Toys* Sell my children happy moments.

Don3t Sell me 5nsurance* Sell me peace o$ mind* and agreat $uture $or my $amily and me.

Don3t Sell me Boo+s* Sell me pleasant hours and the

pro$its o$ +no&ledge. Don3t Sell me Computers* Sell me the pleasure and

pro$its o$ the miracles o$ modern technology.


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The Moral is6..

Don3t Sell me %*I+,S* Sell me 5deas*

Feelings* Sel$,respect* 4ome* 7i$e and

4appiness.

P7AS D!83T S77 M

T4589S


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A successful differentiation

stratey s&ould

Provide

Perceived

)alue

Be Difficult

to Copy

,enerate

Customer)alue


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/

)ertical Interation)ertical Interation

9ro&th Strategies

MarketPenetration

MarketPenetration

Product"pansionProduct

"pansion

DiversificationDiversification

Source: 4. 5gor Anso$$* ;Strategic Di%ersi$ication< * 4ar%ardBusiness =e%ie&* Septem(er,!cto(er /0>?* pp.//1,"

Market

"pansion

Market

"pansion

+e.

Markets

+e.

Markets

PresentMarketsPresentMarkets

+e.

Products+e.

Products

Present

ProductsPresent

Products

!iure #0


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hat is a Product

A ProductProduct is anything that can (e o$$ered to a mar+et $orattention* acuisition* use* or consumption and that mightsatis$y a &ant or need.

5ncludes: Physical !(ects

Ser%ices

%ents

Persons

Places !rganiEations

5deas

Com(inations o$ the a(o%e


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Components o$ the

Mar+et !$$ering

)alue-based prices

Services miand 1uality

Product featuresand 1uality

Attractiveness of

t&e market offerin


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Fi%e Product 7e%els

Potential product

Aumented product

"pected productBasic product

Core benefit


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Unsought ProductsUnsought Products

New innovationsProducts consumers dontwant to think about these productsRequire much advertising &personal selling

i.e Life insurance, blood donation

Product Classi$ications

Consumer Products

Specialty ProductsSpecialty Products

pecial purchase e!orts"igh price#nique characteristics$rand identi%cationew purchase locations

Shopping ProductsShopping Products

$u' less frequentl'

"igher priceewer purchase locations(omparison shopi.e (lothing, cars,appliances

Convenience ProductsConvenience Products

$u' frequentl' & immediatel'

Low priced)ass advertising)an' purchase locationsi.e (and', newspapers


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uppliesand

ervices

uppliesand

ervices

)aterialsand

Parts

)aterialsand

Parts

(apital*tems

(apital*tems

Product Classi$ications

5ndustrial Products


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Product +ualit'Product +ualit'

Product eaturesProduct eatures

Product t'le& esign

Product t'le& esign

-bilit' of a Product toPerform *ts unctions

*ncludes Level & (onsistenc'

-bilit' of a Product toPerform *ts unctions

*ncludes Level & (onsistenc'

"elp to i!erentiate the

Product from /hose of the(ompetition

"elp to i!erentiate the

Product from /hose of the(ompetition

Process of esigning aProducts t'le & unction

Process of esigning aProducts t'le & unction

eveloping a Product or ervice *nvolvese%ning the $ene%ts that it 0ill 1!er uch

as2

Product Attri(utes


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Product Classi$ication

Product 2ines and Mies Product 2ine Product Mi

Benefits of offerin a .ide variety anddeep assortment of products' "conomies of Scale Packae (niformity Standardi3ation Sales and Distribution "fficiency "1uivalent 4uality Beliefs


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Product Mi)

5idt&5idt& - number of

different product

lines

5idt&5idt& - number of

different product

lines

2ent&2ent& - total

number of items

.it&in t&e lines

2ent&2ent& - total

number of items

.it&in t&e lines

Dept&Dept& - number of

versions of eac&

product

Dept&Dept& - number of

versions of eac&

product

Product Mi -Product Mi -

all t&e product

lines offered

Product Mi -Product Mi -

all t&e product

lines offered

Co

nsistency


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Product 7ines and

Product Mi)es at 9illette


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Product,7ine 7ength

7ine Stretching

Do&nmar+et

pmar+et

T&o,&ay

7ine Filling

7ine ModerniEation

7ine Featuring G 7ine Pruning


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Product 7i$e Cycle

To say that a product has a li$e cycle asserts$our things/.Products ha%e a limited li$e.

.Product sales pass through distance stages* eachposing di$$erent challenges* opportunities* andpro(lems to the seller.

1.Pro$its rise and $all at di$$erent stages o$ theproduct li$e cycle.

".Products reuire di$$erent mar+eting* $inancial*manu$acturing* purchasing* and human resourcestrategies in each li$e,cycle stage.


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Applications o$ the Product 7i$e Cycle

The P7C concept can descri(e a:

Product class &hich has the longest li$e cycles i.e. gas,

po&ered cars2*

Product $orm &hich tend to ha%e the standard P7C

shape i.e. mini%ans2*

Brand &hich can change uic+ly (ecause o$ changing

competiti%e attaches and responses i.e. Ford Taurus2*

Style &hich is a (asic and distincti%e mode o$

e)pression* Fashion &hich is a popular style in a gi%en $ield*

Fad &hich is a $ashion that enters uic+ly* is adopted

uic+ly and declines $ast.


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Stages o$ the Product 7i$e Cycle

#$hi%it &'(


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Mar+eting Strategy During

the Product 7i$e Cycle


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+o sales revenue durin t&is stae

Components of t&e product concept'

An understandin of desired uses and benefits

A description of t&e product %&e potential for creatin a complete product line

An analysis of t&e feasibility of t&e productconcept

Customer needs s&ould be discerned beforedevelopin marketin stratey

De%elopment Stage


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Beins .&en development is complete "nds .&en customers .idely accept t&e

product

Marketin stratey oals durin t&is stae' Attract customers by raisin a.areness and

interest

Induce customers to try and buy

"nae in customer education activities

Strent&en or epand c&annel and supplyrelations&ips

Build on availability and visibility

Set pricin ob6ectives

5ntroduction Stage


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Be ready for sustained sales increases Rapid increase in profitability early in t&e

ro.t& stae t&at decreases at t&e end of

t&is stae 2ent& depends on nature of product and

competitive reactions

%.o strateies' 7$8 "stablis& a stron9 defensible marketin

position

78 Ac&ieve financial ob6ectives

9ro&th Stage7$ of 8


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Marketin stratey oals in t&is stae' 2everae t&e product:s perceived differential

advantaes

"stablis& a clear product and brand identity

Create uni1ue positionin

Maintain control over product 1uality

Maimi3e availability of t&e product

Maintain or en&ance t&e product:s profitability topartners

!ind t&e ideal balance bet.een price and demand

;eep an eye focused on t&e competition

9ro&th Stage7 of 8


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!e.9 if any9 ne. firms .ill enter t&e

market

Still an opportunity for ne. productfeatures and variations

%ypically t&e lonest stae in t&e

product life cycle

Maturity Stage7$ of 8


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!our eneral oals in t&is stae' 7$8 ,enerate Cas& !lo.

78 *old Market S&are

7


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%.o options' 7$8 Attempt to postpone t&e decline

78 Accept its inevitability *arvestin

Divestin

!actors to be considered durin t&isstae'

Market sement potential %&e market position of t&e product

%&e firm:s price and cost structure

%&e rate of market deterioration

Decline Stage


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Pro(lems sing the P7C

/roubleidentif'ing 0hichtage of the PL(

the Product *s *ni3cult to orecastthe ales Level, theLength of 4ach

tage, and hapeof the PL(trateg' is $oth a

(ause and aResult of the

Products Life( cle

/he PL( (oncept(an "elp ineveloping 5ood

)arketing trategiesfor i!erent tagesof the Product Life6('cle, "owever

ome Problems (an-rise2


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C=AT589 8 C!8SM=S

Consumer

creatingpotential

!ld (usiness

=etaining consumers

7o& ris+

8e& (usiness

Creating ne& consumers

4i h ris+

Continuous

inno%ation

=estage

8e& products

in current

categories

8e& to the

company

category

8e& to

the &orldcategories


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8e& Product De%elopment

Si strateic product developmentoptions' 7$8 +e.-to-t&e-.orld products

7discontinuous

innovations8 78 +e. product lines 78 Cost reductions

Customer perceptionof differentiation

is critical


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8e& Product De%elopment Process

IdeaIdea

,eneration,eneration

ConceptConceptDevelopmentDevelopmentand %estinand %estin

MarketinMarketinStrateyStratey

DevelopmentDevelopment

IdeaIdeaScreeninScreenin

BusinessBusinessAnalysisAnalysis

ProductProductDevelopmentDevelopment

MarketMarket%estin%estin

Commerciali3ationCommerciali3ation


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/. Does the o$$ering ha%e a relati%e

ad%antage

". Can the o$$ering (e tested on a limited

(asis prior to actual purchase

. 5s the o$$ering compati(le &ith (uyers3use or consumption (eha%ior

1. 5s the o$$ering simple enough $or (uyers to

understand and use

>. Are there immediate (ene$its $rom the

o$$ering* once it is used or consumed

New-Product Development ProcessNew-Product Development ProcessIdea Generation & ScreeningIdea Generation & Screening


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hy 8e& Products Fail

;!%er Championing

Documents

5 Product Strategy (1)