10. product strategies, & new prod dev

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product strategies, & new prod dev

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10. product strategies, & new prod dev

  1. 1. Product Strategies Product Strategies Product Life Cycle New Product Development
  2. 2. Product Strategies • Product Positioning and Repositioning • Product Overlap • Product Elimination • New Product Development • Diversification
  3. 3. Product Strategy as a Strategic Element It is the product strategies, duly related to market strategies, that eventually comes to dominate both the overall strategy and the spirit of the Company.
  4. 4. Dimensions of Product Strategy Portfolio Analysis Product Life Cycle Product Positioning New Product Development The starting point should be an assessment of the organization's current portfolio
  5. 5. Current portfolio – An analysis • Should we continue to market the product • Should the strategy remain unchanged or any minor changes are required • Should there be a major change, for example re- launch, change in product / style/ packaging or repositioning. • Is there a need for a new product
  6. 6. Elements of Product Strategy • Direction of Strategy – Objectives that the product should attain – Selection of strategic alternatives • Positioning – Selection of target markets – Choice of competitors to market – Statement of core strategy • Implementation – Supporting marketing exchanges
  7. 7. Selection of strategic alternatives • Growth in Sales or Market share a) Market development • New segments • Converting non-users b) Market Penetration • Existing customers • Competitors’ customers • Efficiency/ Short-run Profits a) Decrease inputs • Reduce costs • Improve asset utilization b) Increase output • Increase Prices • Improve sales mix
  8. 8. Total Product Concept Generic Product Expected Product Augmented Product Potential Product - Theodore Levitt
  9. 9. Strategic Choices • Extend PLC - Reposition existing product (Aim at new uses/ segments) - Market development (New users, increase usage) - Extend Product lines / Modify (New users / segments) • New Products - Need gap analysis - Perceptual mapping
  10. 10. Developing new products • Development and introduction of new products traditionally seen to be a costly and risky activity • Alternatives to developing a new product are: – Buy other firms – Buy a license or franchise – Buy a patent What is characterised as a New Product?
  11. 11. New Product • New to the world – identifies an entirely new market eg. Sony walkman • New Product line – entering a market for the first time eg. Mobile phones in India • Additions to existing product lines – catering to existing customers eg. Getz from Hyundai • Improvements to existing products – enlarge reach / retain existing customers • Repositioning – retarget in order to appeal to new market segments / uses eg. Milkmaid Why do we need new products?
  12. 12. Why we need new products • So that the organization can respond to the changes in the environment and avoid product obsolescence Eg: Fiat • Enables an organization to enter new and emerging segments • Reduces dependence on a product and segment • To match and counter competition • To fill excess capacity • For long-term growth and profits 80% of all new products are known to fail…Why?
  13. 13. Why new products fail • Size of the market is overestimated • Product fails to live up to customer expectations • Competitors too firmly entrenched • Poor / incorrect positioning • Improper marketing mix – incorrect pricing / distribution • Product obsession – driven by a person in position of authority How may we ensure product success?
  14. 14. How can we make new products succeed • Commitment of top management • Clear identification and understanding of market needs • Potential use of the new product – short-term vs long- term • Intra-organization commitment – new product teams • Availability of resources • Timing of the introduction • Time from concept to commercialization

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