Product Strategy Three Requirements: Achieve coordination among various functional organizations of the company (recognize conflicting interests) 2. Blueprint for allocation of resources 3. Demonstrate its efficacy to achieve a superior market position Competitor cannot imitate it Competitor will not choose to imitate it Competitor would be at a disadvantage if it chose to imitate it Company would gain if the competitors choose to imitate it

Seven Elements Of A Product Strategy Selection of the objectives the product should attain Selection of the strategic alternatives Selection of customers targets Choice of competitors’ targets Statement of the core strategy Description of the supporting marketing mix Description of the supporting functional programs

Strategic Alternatives: Profit Growth In Sales / Market Share --- Long Run Profit A. Market development New segments New channels Convert Nonusers B. Market penetration Existing customers Competitor’s customers C. New product development Extension Augmentation 2. Greater Efficiency: Short Run Profit A. Decrease input Reduce costs Improve asset utilization B. Increase outputs C. Increase price D. Improve sales mix

Positioning: Systematic Approach Step 1: Identity alternative themes Consult adv. And product teams and past marketing plans Step 2: Evaluate alternatives in terms of: Meaningfulness to customers and their perceptions Feasible with company resources Competitive advantage (distinctive competency) Advances product (brand) objectives Step 3: Select position that best satisfies above criteria Step 4: Implement programs (E.G. Advertising) that are consistent with product positioning selected

Total Product Concept Generic Product Expected Product Augmented Product Potential Product

Five Areas For Differentiation Quality Improved performances – Intel Superior design – Lexus Customers service – Caterpillar Reliability and durability – Maytag Status and Image – Evian, Perrier, Rolex, Polo Branding – IBM, McDonald’s, Coca Cola, “Intel Inside” Convenience – Lexus + Infiniti offer loaner cars and pick-up service 5. Distribution Channels – Federal Express Powership Terminals