Strategic Marketing Strategic Marketing Product Strategy Session II

What Is Product Strategy?  A strategic approach to developing, enhancing, products to fit the needs of the market and;  Going about activities to maximize sustainable sales of the product in the most profitable manner

Product Strategy Involves…  Market Segmentation  Development and differentiation  Taglines and unique selling propositions

Overview: Definition  Market Segmentation  Development & Differentiation  Nine Ways to Build Demand  What Product Development and Differentiation can do

Segmentation  What are “market segments”?  Why do we need to worry about them?

Differentiated Markets/Segments The five criteria are that a segment should be: 1. Measurable; 2. Accessible; 3. Substantial; 4. Unique in its response; and 5. Stable in behaviour.

Differentiated Markets/Segments Market differentiation/segmentation allows an institution to: –View a market from the customer’s point of view; –Exploit its strengths better by selecting compatible market segments; –Develop more sharply focused strategies aimed at market requirements; and –Identify gaps in the market that offer new product opportunities.

Modifying or Developing New Products …  Refining your existing products or developing new ones is a complex and risky under-taking  Use a systematic process to: –Minimize risk –Maximize likelihood of success  Use a market research and product prototype process and then pilot-test carefully

Creating Demand for our Microfinance Loan Product

Creating Demand For Our Microfinance Loan Product  9 Ways to Build Demand  Challenges to Rural Banks  Our Response to the Challenges

Philip Kotler’s 9 Ways to Build Demand Matrix Product ExistingModifiedNew MARKETExisting Sell more of our existing products to our existing types of customers (Market Penetration) Modify our current products and sell more of them to our existing customers (Product Modification) Design new products that will appeal to our existing customers (New Product Development) Geographically Modified Enter and sell our products in other geographic areas (Geographic expansion) Offer and sell modified products to new geographical markets Design new products for prospects in new geographic areas New Sell our existing products to new types of customers (Segment Invasion) Offer and sell modified products to new types of customers Design new products to sell to new customers (Diversification)

STRATEGY 1: EXPANSION THRU MARKET PENETRATION Product Existing Product Modified Product New Product MARKET Existing Market Sell more of our existing products to our existing types of customers (Market Penetration) Modify our current products and sell more of them to our existing customers (Product Modification) Design new products that will appeal to our existing customers (New Product Development) Geographically Modified Market Enter and sell our products in other geographic areas (Geographic expansion) Offer and sell modified products to new geographical markets Design new products for prospects in new geographic areas New Market Sell our existing products to new types of customers (Segment Invasion) Offer and sell modified products to new types of customers Design new products to sell to new customers (Diversification)

STRATEGY 2: GEOGRAPHICAL EXPANSION USING EXISTING PRODUCT TO BE OFFERED TO SIMILAR MARKET IN NEW AREAS Product Existing Product Modified Product New Product MARKET Existing Market Sell more of our existing products to our existing types of customers (Market Penetration) Modify our current products and sell more of them to our existing customers (Product Modification) Design new products that will appeal to our existing customers (New Product Development) Geographically Modified Market Enter and sell our products in other geographic areas (Geographic expansion) Offer and sell modified products to new geographical markets Design new products for prospects in new geographic areas New Market Sell our existing products to new types of customers (Segment Invasion) Offer and sell modified products to new types of customers Design new products to sell to new customers (Diversification)

STRATEGY 3: EXPANSION USING EXISTING PRODUCT TO BE OFFERED TO NEW MARKET/S Product Existing Product Modified Product New Product MARKET Existing Market Sell more of our existing products to our existing types of customers (Market Penetration) Modify our current products and sell more of them to our existing customers (Product Modification) Design new products that will appeal to our existing customers (New Product Development) Geographically Modified Market Enter and sell our products in other geographic areas (Geographic expansion) Offer and sell modified products to new geographical markets Design new products for prospects in new geographic areas New Market Sell our existing products to new types of customers (Segment Invasion) Offer and sell modified products to new types of customers Design new products to sell to new customers (Diversification)

STRATEGY 4: EXPANSION THRU PRODUCT MODIFICATION Product Existing Product Modified Product New Product MARKET Existing Market Sell more of our existing products to our existing types of customers (Market Penetration) Modify our current products and sell more of them to our existing customers (Product Modification) Design new products that will appeal to our existing customers (New Product Development) Geographically Modified Market Enter and sell our products in other geographic areas (Geographic expansion) Offer and sell modified products to new geographical markets Design new products for prospects in new geographic areas New Market Sell our existing products to new types of customers (Segment Invasion) Offer and sell modified products to new types of customers Design new products to sell to new customers (Diversification)

STRATEGY 5: GEOGRAPHICAL EXPANSION USING MODIFIED PRODUCT Product Existing Product Modified Product New Product MARKET Existing Market Sell more of our existing products to our existing types of customers (Market Penetration) Modify our current products and sell more of them to our existing customers (Product Modification) Design new products that will appeal to our existing customers (New Product Development) Geographically Modified Market Enter and sell our products in other geographic areas (Geographic expansion) Offer and sell modified products to new geographical markets Design new products for prospects in new geographic areas New Market Sell our existing products to new types of customers (Segment Invasion) Offer and sell modified products to new types of customers Design new products to sell to new customers (Diversification)

STRATEGY 6: EXPANSION THRU A MODIFIED PRODUCT TO BE OFFERED TO NEW MARKET/S Product Existing Product Modified Product New Product MARKET Existing Market Sell more of our existing products to our existing types of customers (Market Penetration) Modify our current products and sell more of them to our existing customers (Product Modification) Design new products that will appeal to our existing customers (New Product Development) Geographically Modified Market Enter and sell our products in other geographic areas (Geographic expansion) Offer and sell modified products to new geographical markets Design new products for prospects in new geographic areas New Market Sell our existing products to new types of customers (Segment Invasion) Offer and sell modified products to new types of customers Design new products to sell to new customers (Diversification)

STRATEGY 7: EXPANSION THRU A NEWLY DESIGNED PRODUCT TO BE OFFERED TO EXISTING MARKET Product Existing Product Modified Product New Product MARKET Existing Market Sell more of our existing products to our existing types of customers (Market Penetration) Modify our current products and sell more of them to our existing customers (Product Modification) Design new products that will appeal to our existing customers (New Product Development) Geographically Modified Market Enter and sell our products in other geographic areas (Geographic expansion) Offer and sell modified products to new geographical markets Design new products for prospects in new geographic areas New Market Sell our existing products to new types of customers (Segment Invasion) Offer and sell modified products to new types of customers Design new products to sell to new customers (Diversification)

STRATEGY 8: GEOGRAPHICAL EXPANSION UTILIZING A NEWLY DESIGNED PRODUCT Product Existing Product Modified Product New Product MARKET Existing Market Sell more of our existing products to our existing types of customers (Market Penetration) Modify our current products and sell more of them to our existing customers (Product Modification) Design new products that will appeal to our existing customers (New Product Development) Geographically Modified Market Enter and sell our products in other geographic areas (Geographic expansion) Offer and sell modified products to new geographical markets Design new products for prospects in new geographic areas New Market Sell our existing products to new types of customers (Segment Invasion) Offer and sell modified products to new types of customers Design new products to sell to new customers (Diversification)

STRATEGY 9: EXPANSION THRU PRODUCT DIVERSIFICATION Product Existing Product Modified Product New Product MARKET Existing Market Sell more of our existing products to our existing types of customers (Market Penetration) Modify our current products and sell more of them to our existing customers (Product Modification) Design new products that will appeal to our existing customers (New Product Development) Geographically Modified Market Enter and sell our products in other geographic areas (Geographic expansion) Offer and sell modified products to new geographical markets Design new products for prospects in new geographic areas New Market Sell our existing products to new types of customers (Segment Invasion) Offer and sell modified products to new types of customers Design new products to sell to new customers (Diversification)

Response to Challenges  Develop a marketing-oriented institution.  Develop a sales culture within the organization.  Continuing Market Research and Product Development Activities  Sales Skills Training Program

Product Strategy Brands, Taglines, USP’s, Brands, Taglines, USP’s, Benefit Statements Benefit Statements Session II Session II

Overview: Brands, Taglines, USPs and Benefit Statements  What do Customers Want?  Product Branding  Taglines  Unique Selling Propositions  Benefit Statements

 In most professional services, you are not really selling expertise __ your expertise is assumed, and because your prospect cannot intelligently evaluate your expertise anyway.  Instead, you are selling a relationship. And in most cases, that is where you need the most work. If you’re selling a service, you’re selling a relationship. If you’re selling a service, you’re selling a relationship. What Is Your Bank Really Selling?

Check Again … What Do Customers Want? What then is ‘VALUE’ and how would you specify it? What then is ‘VALUE’ and how would you specify it?

What Do Customers Want?(2)  Value is extremely subjective, but it can still be calculated with some exactness.  Value is a balance between: – A fair price, –A quality product and –A convenient, service oriented environment  The right combination of those factors triggers the mutually beneficial exchange between buyer and seller.

Where Do Our Products Lie? Where Do Our Products Lie? Quality product Convenient, service- oriented environment Price … and is this in alignment with our brand?

Brand Name: The product’s warranty. Tagline –A short phrase that’s connected to the product; –A positioning “nugget” that describes the way you want customers to see the product Ex: “ Dagdag Kapital- Tulong sa Kinabukasan” “ Pang Asenco sa Buhay” “ Pang Asenco sa Buhay” Core Strategy Components

Unique Selling Proposition –The difference that makes the difference. –Deliver a benefit that is of high value to the target market –Differentiates your product from the market competition Ex: “ May Loan ka na, may Promo pa” “ Guaranteed release in 3 days” “ Guaranteed release in 3 days”

Its Not the Product – It’s the Benefit Remember, customers don’t buy products and services; they buy benefits or value they expect to drive from those items. Remember, customers don’t buy products and services; they buy benefits or value they expect to drive from those items.

Writing Benefit Statements: A Step-by-Step Guide For each product:  Start with the market research findings.  Develop a list of every feature of the the product.  Translate, one by one, each feature into a very short benefit statement. Some may not translate.  If one isn’t “benefitable” after reasonable effort cross it off. Experience shows that 90% of product features deliver benefits to some market.  Are the benefits the same for each market?

What are the Key Benefits of Your Product? What are the Key Benefits of Your Product?  The list of the benefits for the market by the product, is the most powerful tool your sales force can carry.  In every customer contact, they should deliver the full key benefit message.  Each carefully crafted benefit will appeal to various clients unequally.  Price may mean everything to one customer, while availability might be the big problem to another.