1. Product Strategy

2. Product Strategy Defines what the organization does and why it exists
Involves creating a product offering that is a bundle of physical (tangible), service (intangible), and symbolic (perceptual) attributes designed to satisfy customers’ needs and wants
Due to commoditization, the core product typically becomes incapable of differentiating the product offering.
A product offering’s real value comes from its ability to deliver benefits that solve customers’ problems.
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3. Types of Consumer Products (Exhibit 7.1)
Convenience Products
Shopping Products
Specialty Products
Unsought Products
Consumers may be unaware of these products.
Consumers may not consider purchasing these products until a sudden need or emergency arises.
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4. Types of Consumer Products
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5. Types of Business Products (Exhibit 7.1)
Raw Materials
Component Parts
Process Materials
Maintenance, Repair, and Operating Products
Accessory Equipment
Installations
Business Services
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6. The Product Portfolio Product Line Product Mix or Portfolio
A group of closely related product items
Product Mix or Portfolio
The total group of products offered by the firm
Strategic Decisions
Variety – number of product lines offered
Assortment – depth of each product line
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7. P&G’s Portfolio of House and Home Products (Exhibit 7.2)
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8. Potential Benefits of Offering a Large Product Portfolio
Economies of Scale
Package Uniformity
Standardization
Sales and Distribution Efficiency
Equivalent Quality Beliefs
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9. Unique Characteristics of Service
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10. © 2011 Cengage Learning. All Rights Reserved
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11. Challenges of Service Products
Balancing supply (capacity) with demand
Time and place dependency of demand
Difficulty of evaluating service quality prior to purchase
Inconsistency of service quality
Difficulty in tying offerings to customer needs (i.e., the need is not always apparent to customers)
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12. Branding Strategy
Involves selecting the right combination of name, symbol, term, or design that identifies a product
Brands have two parts
Brand name – words, letters, and numbers that can be spoken
Brand mark – symbols, figures, or a design
Critical to product identification and the key factor in differentiating a product from its competition
Makes it easier for customers to find and buy products
Firms must protect brand names and brand marks from trademark infringement by other firms
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13. Good Brands Answer Questions for Customers
Where can I find information quickly?
Where can I get a quick meal and make my kids happy?
Where can I buy everything I need, all at decent prices?
Where can I get the best deal on car insurance?
How do I find a value-priced hotel in midtown Manhattan?
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14. Strategic Issues in Branding Strategy
Manufacturer vs. Private-Label Brands
Private-label brands are more profitable for the retailer
Manufacturer brands have built-in demand
Brand Loyalty
Positive attitude toward a brand that results in a consistent preference for that brand. Three levels:
Brand recognition  Brand preference  Brand insistence
Brand Equity
The value of a brand associated with its marketplace position
Brand Alliances
Strategies that involve close relationships with other firms (e.g., co-branding, brand licensing)
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15. Advantages of Branding (Exhibit 7.5)
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16. Consider the notion that a truly effective brand is one that succinctly captures the product offering in a way that answers a question in the customer’s mind. Now, consider these brands (or choose your own): Coca-Cola, Disney, Marlboro, American Express, and Ford. What questions do these brands answer? Why are these effective brands?
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17. Packaging and Labeling
Goes hand-in-hand with branding in developing a product, its benefits, its differentiation, and its image
Includes issues such as color, shape, size, convenience
Often used to reposition the product or give it new and improved features
Vital to helping customers make proper product selections
Can have important environmental and legal consequences
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18. Differentiation and Positioning
Product Differentiation
Creating differences in the firm’s offerings that set them apart from competing offerings
Positioning
Creating a mental image of the product offering and its differentiating features
Perceptual Mapping
A visual, spatial display of customer perceptions that allows monitoring of product positioning relative to other products
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19. Hypothetical Perceptual Map of the Automotive Market (Exhibit 7.7)
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20. Differentiation Strategies
Branding is the most important tool of differentiation.
Other important bases for differentiation
Product Descriptors (see Exhibit 7.8)
Product features – factual descriptors of the product and its characteristics
Advantages – performance characteristics of how the product behaves
Benefits – positive outcomes or need satisfaction
Customer Support Services
providing good customer support services—both before and after the sale—may be the only way to differentiate the firm's products and move them away from a price-driven commodity status. Support services include anything the firm can provide in addition to the main product that adds value to that product for the customer.
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21. Image - The image of a product or organization is the overall impression, positive or negative, that customers have of it. Image is everything. In the case of differentiation, reality is often not as important as perception. For example BMW, Louis Vuitton, Disney World
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22. Using Product Descriptors in Differentiation (Exhibit 7.8)
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23. Positioning Strategies
Strengthen the Current Position
Constantly monitor customer perceptions, needs, and wants
Raise the bar of customer expectations
Repositioning
Often requires a fundamental change in one or more marketing program elements
Reposition the Competition
Attempt to put a competitor’s strengths in a less favorable light
Force the competitor to change its positioning strategy
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24. Stages of the Product Life Cycle (Exhibit 7.9)
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25. Strategy During the Product Life Cycle (Exhibit 7.10)
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26. The Product Life Cycle: Development Stage
No sales revenue during this stage
Components of the product concept
An understanding of desired uses and benefits
A description of the product
The potential for creating a complete product line
An analysis of the feasibility of the product concept
Customer needs should be discerned before developing marketing strategy
Test marketing is conducted in this stage.
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27. The Product Life Cycle: Introduction Stage
Begins when development is complete and ends when customers widely accept the product
Marketing strategy goals during this stage
Attract customers by raising awareness and interest
Induce customers to try and buy
Engage in customer education activities
Strengthen or expand channel and supply chain relationships
Build on availability and visibility through trade promotion
Set pricing objectives
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28. The Product Life Cycle: Growth Stage
Be ready for sustained sales increases and the rapid increase in profitability early in the growth stage
Length depends on nature of product and competitive reactions
Two main priorities during growth
Establish a strong, defensible marketing position
Achieve financial objectives that repay investment
Marketing strategy shifts from customer acquisition to customer retention and building brand loyalty.
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29. Marketing Strategy Goals During the Growth Stage
Leverage the product’s perceived differential advantages
Establish a clear product and brand identity
Create unique positioning
Maintain control over product quality
Maximize availability of the product
Maintain or enhance the product’s profitability to partners
Find the ideal balance between price and demand
Keep an eye focused on the competition
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30. The Product Life Cycle: Maturity Stage
Typically, no more firms will enter the market
Still an opportunity for new product features and variations
Typically the longest stage in the product life cycle
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31. Goals and Strategies During the Maturity Stage
Four general goals during the maturity stage
Generate cash flow
Hold market share
Steal market share
Increase share of customer
Four strategic options to achieve these goals
Develop a new product image
Find and attract new users to the product
Discover new applications for the product
Apply new technology to the product
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32. The Product Life Cycle: Decline Stage
Two options during the decline stage
Attempt to postpone the decline
Accept the inevitability of decline
Harvesting
Divesting
Factors to be considered during this stage
Market segment potential
The market position of the product
The firm’s price and cost structure
The rate of market deterioration
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