Developing product strategy
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The document discusses developing product strategy. It outlines that a successful strategy helps achieve coordination, defines resource allocation, and leads to a superior market position. A good product strategy includes: the objectives, strategic alternatives, customer and competitor targets, core strategy, and supporting marketing mix and programs. Strategic alternatives center around long-term profits, growth, new segments, efficiency, and existing customers. Brand equity provides value to customers and the firm through enhanced interpretation, confidence, satisfaction, loyalty, and competitive advantage. Strong brands have a clear identity, value proposition, position, consistency, and system that is tracked and invested in over time.
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Developing product strategy
- 1. 8-1
- 2. McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved. 8 Developing Product Strategy
- 3. 8-3 A Successful Strategy: • Helps achieve coordination among functional areas of the organization. • Defines how resources are to be allocated. • Leads to a superior market position.
- 4. 8-4 Elements of a Product Strategy 1. Statement of the objective(s) the product should attain 2. Selection of strategic alternative(s) 3. Selection of customer targets 4. Choice of competitor targets 5. Statement of the core strategy 6. Description of supporting marketing mix. 7. Description of supporting functional programs
- 5. 8-5 Hierarchy of Objectives Company Mission/Vision Corporate objectives Corporate strategies Divisional objectives Divisional strategies Product/brand objectives Brand strategies Program objectives Tactics Level I Level 0 Level III Level II Level IV
- 6. 8-6 Strategic Alternatives Long-term profits Growth in sales or market share New segments Market development Convert nonusers New product development Competitors’ customers Efficiency, short-run profits Reduce costs Decrease inputs Improve asset utilization Increase price Increase outputs Improve sales mix Existing customers Market penetration
- 7. 8-7 Criteria for Evaluating Strategic Alternative Options • Size/growth of the segment • Opportunities for obtaining competitive advantage • Resources available to penetrate the segment
- 8. 8-8 Five Areas for Differentiation 1. Quality 2. Status and Image 3. Branding 4. Convenience and Service 5. Distribution
- 9. 8-9 Brand Equity Reduced marketing costs Attracting new customers • Create awareness • Reassurance Time to respond to competitive threats associations can be attached Familiarity-liking commitment Brand to be considered Provides value to customer by enhancing customer’s: • Interpretation/ processing of information • Confidence in the purchase decision • Use satisfaction Brand loyalty Brand loyalty Brand loyalty Brand awareness Brand loyalty Brand equity
- 10. 8-10 Brand Equity cont. Reason-to-buy Differentiate/ position Price Channel member interest Extensions Help process/ retrieve information Reason-to-buy Create positive attitude/feelings Extensions Provides value to firm by enhancing: • Efficiency and effectiveness of marketing programs • Brand loyalty • Prices/margins • Brand extensions • Trade leverage • Competitive advantage Brand loyalty Perceived quality Brand loyalty Brand associations Brand loyalty Brand equity Competitive advantage Brand loyalty Other
- 11. 8-11 Some Brand Attribute and Image Dimensions Attributes •Flavor/taste •Price •Packaging •Size •Calories •Brand name •Warranty •Durability •Convenience •Color •Style •Comfort •Freshness •Availability Image Dimensions Reliable—unreliable Old—young Technical—nontechnical Sensible—rash Interesting—boring Creative—noncreative Sentimental—nonsentimental Trust—untrust Daring—cautious Sociable-unsociable
- 12. 8-12 Ten Guidelines for Building Strong Brands 1. Brand Identity • Each brand should have an identity, a personality. It can be modified for different segments. 2. Value Proposition • Each brand should have a unique value proposition. 3. Brand Position • The brand’s position should provide clear guidance to those implementing a communications program. 4. Execution • The communications program needs to implement the identity and position. 5. Consistency over Time • Product managers should have a goal of maintaining identity, position, and execution over time. Changes should be resisted.
- 13. 8-13 Ten Guidelines for Building Strong Brands (cont.) 6. Brand System • The brands in the should be consistent & synergistic. 7. Brand Leverage • Extend brands and develop co-branding opportunities only if the brand identity will be both used and new 8. Tracking • The brand’s equity should be tracked over time, including awareness, perceived quality, brand loyalty, and brand associations. 9. Brand Responsibility • Someone should be in charge of the brand who will create the identity and positions and coordinate the execution. 10. Invest • Continue investing in brands even when the financial goals are not being met.
- 14. 8-14 Basic Customer Strategies 1. Customer acquisition 2. Customer retention 3. Customer expansion 4. Customer deletion
- 15. 8-15 Strategy Over the Life Cycle