Product strategy development


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Product strategy development

  1. 1. Product Strategy Development
  2. 2. Outline:• Selection Of Product Strategy• Benefits Of Strategy• Elements Of Product Strategy• Positioning• Managing Brand Equity• Product Strategy Over Life Cycle
  3. 3. Selection Of Product Strategy• Where are we headed Growth Vs Profit
  4. 4. Selection Of Product Strategy• How will we get there Existing / New customers - Customer targets - Competitive targets - The proposition (General Offerings)
  5. 5. Selection Of Product Strategy• What will we do How to implement core strategy
  6. 6. Benefits Of Strategy• Co-ordination among functional areas of organization
  7. 7. Benefits Of Strategy• Allocation of resources
  8. 8. Benefits Of Strategy• Superior market position i) Something competitor cant do. ii) Something competitor will not do. iii) Competitor will be at disadvantage if they do it. iv) It causes us to gain if the competition does it.
  9. 9. Hierarchy of objectivesLevel 0- Company Mission/VisionLevel 1- Corporate Objectives Corporate StrategiesLevel 2- Divisional Objectives Divisional StrategiesLevel 3- Product/Brand Objectives Brand StrategiesLevel 4- Program Objective Tactics
  10. 10. Elements Of Product Strategy Setting objectives - SMART objectives
  11. 11. Selection Of StrategicAlternatives Increasing Sales/Market share Increasing Profitability
  12. 12. Selection Of StrategicAlternatives
  13. 13. Increasing Sales/Market ShareMarket Development StrategiesMarket Penetration Strategies
  14. 14. Increasing ProfitabilityDecreasing InputsIncreasing Outputs
  15. 15. PositioningThe place a product occupies in consumers’ minds relative to competing products.
  16. 16. Positioning Example eBay’s positioning: No matter what “it” is, you can find “it” on eBay!
  17. 17. Positioning ExampleTo (target segment and need) our (brand) is a (concept) that (point-of-difference). “To busy mobile professionals who need to always be in the loop, Blackberry is a wireless connectivity solution that allows you to stay connected to people and resources while on the go more easily and reliably than the competing technologies.”
  18. 18. Positioning Maps: Luxury SUVsPrice vs. Orientation Dimensions
  19. 19. Positioning Strategy Competitive advantages Points of Parity Points of Difference => Differentiation Positioning results from differentiation and competitive advantages. Positioning may change over time.
  20. 20. Sources of Differentiation– Product Design– Quality– Additional Services– Image– People (Staff)– Price– Other
  21. 21. Choosing the Right Competitive Advantages  The best competitive advantages are…  Important  Distinctive  Superior  Communicable  Pre-emptive  Affordable (to company and consumer)  Profitable Moral: Avoid meaningless differentiation.
  22. 22. Positioning Errors Under-positioning:  Not positioning strongly enough. Over-positioning:  Giving buyers too narrow a picture of the product. Muddled Positioning:  Leaving buyers with a confused image of the product.
  23. 23. Generic Product Positions & Value Propositions
  24. 24. Managing Brand Equity• Brand name is an asset• It requires to combat lower-priced competitors by reemphasize the brand names• Brand recognition is important• Brands are engaged in global warfare against counterfeiters and “knockoffs”
  25. 25. Brand Equity as described by Aaker• Brand Loyalty• Brand Awareness• Perceived Quality• Brand Association• Other Brand Assets
  26. 26. Measuring Brand ValueIn order to measure brand equity, it is helpful to measure it.These measures focus on the image of brands (i.e. the customer’s view)
  27. 27. Relation to Customer Strategy• Customer Acquisition• Customer retention• Customer Expansion• Customer Deletion
  28. 28. Product Strategy Over the Life Cycle A company’s positioning and differentiation strategy must change as the product, market, and competitors change over the product life cycle(PLC). To say that a product has a life cycle is to assert four things:1. Products have a limited life.2. Product sales pass through distinct stages, each posing different challenges, opportunities, and problems to the seller.
  29. 29. Cont…3. Profits rise and fall at different stages of the product life cycle.4. Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life-cycle stage.
  30. 30. Product Life Cycles• Introduction: A period of slow sales growth as the product is introduced in the market. Profits are nonexistent because of the heavy expenses of the product introduction.• Growth: A period of rapid market acceptance and substantial profit improvement.• Maturity: A slowdown in the sales growth because the product has achieved acceptance by most potential buyers. Profits stabilize or decline because of increased competition• Decline: Sales show a downward drift and profits erode.
  31. 31. Introduction Growth Maturity DeclineCharacteristicsSales Low sales Rapidly rising Peak sales Declining sales salesCosts High cost per Average cost per Low cost per Low cost per customer customer customer customerProfits Negative Rising profits High profits Declining profitsCustomers Innovators Early adopters Middle majority LaggardsCompetitors Few Growing number Stable number Declining beginning to number decline
  32. 32. Introduction Growth Maturity DeclineMarketing Creating product Maximizing Maximizing profit ReduceObjectives awareness and market share while defending expenditure and trial. market share milk the brand.StrategiesProduct Offer a basic Offer product Diversify brands Phase out weak product extensions, and items products service, warranty modelsPrice Charge cost-plus Price to Price to match or Cut price penetrate market best competitors’Distribution Build selective Build intensive Build more Go selective: distribution distribution intensive phase out distribution unprofitable outlets.Advertising Build product Build awareness Stress brand Reduce to level awareness and interest in difference and needed to retain among early the mass market benefits. hard-core loyals adopters and dealers
  33. 33. Cont… Introduction Growth Maturity DeclineStrategiesSales Promotion Use heavy sales Reduce to take Increase to Reduce to promotion to advantage of encourage brand minimal level. attract trial heavy consumer switching demandSources: Chester R. Wasson, Dynamic competitive strategy and product life cycles (Austin, TX: Austin press,1978); John A. Weber, “planning Corporate Growth with Inverted PLCs.” Long Range Planning(0ct. 1976);“The Realities of the PLC”, Quarterly Review of Marketing (summer 1976)
  34. 34. The Product Life Cycle and the Boston Matrix Importance of (3) Cash from ‘C’ (2) ‘A’ is at maturitySales (1) Cash from ‘B’ maintaining a The product used tocash cow. balance support used to of products stage – support portfolio –‘D’ and in throughfour growth of funds for (1) (2) (3) ‘C’the portfolio at Generates growth productsto finance different in the of possibly stages of the development stage and to portfolio Boston the PLC ‘D’.strategy extension ‘A’ now launch – ‘D’ Matrix helps with the for ‘B’? a dog? possibly analysis D B A C Time