Product Strategy

AGBU 430
Approaches to Developing
New Products
 Innovation
 New product lines
 Product line extensions
 Repositioning
 Cost reductions
 Improvements or changes in existing
products
Elements to Consider in
Developing Marketing Strategies
 Must consider mission, goals, & objectives in
light of the firm’s strengths, weaknesses,
opportunities & threats
 The best marketing strategy should be:
differentially advantageous, sustainable (not easily
copied), timely (strategic window), feasible (skills,
experience & resources) & affordable
– one of the primary reasons marketing plans fail…
not enough financial resources devoted in
implementation
Life Cycle Considerations
 Development Stage:
– usually begins with a product concept
– no sales revenue during product development
– innovations require financial resources & time
as well as the assumption of risk
– there is no guarantee of success & many new
products fail
Product Concept Stage

 Requires an understanding of target market

needs & benefits sought
 Involves consideration of product line
extensions to provide synergies in sales &
income
 Produces feasibility studies including
anticipated sales, return on investment, time
of introduction, length of time to repay
investment
Introduction Stage
 Marketing strategy should be fully implemented
 Attract customers through advertising, public
relations, & publicity promoting features &
benefits
– where to find the product & its uses
 Encourage trial and repurchase
 Induce trial through price concessions & sales
tools
 Strengthen channel relationships
Growth Stage
 Must establish a strong market position &
defend it from competitors
 Must achieve financial objectives & repay
investment
– make a long term product commitment
Marketing Strategy Considerations
in the Growth Stage
 Use perceived differential advantage (price,
quality, value) to secure market position
 Clarify product/brand identity through image-
oriented advertising & personal selling
 Maximize availability through trade
promotions
 Find the ideal balance between price &
demand
 Maintain control over product quality
Other Growth Stage
Considerations
 Generate repeat purchases & build brand
loyalty
 Keep in mind, the growth stage is the most
expensive (marketing expenditures)
 Increased competition is to be expected in this
stage as your success invites competitor’s
product entries
Maturity Stage
 Longest stage
 Few new competitors entering market
 Best way to gain market share: ‘steal it from
the competition’
 Key goals: generate cash flow & hold market
share
– develop a new product image
– find & attract new users to the product
– discover new product uses
– apply new technology
Other Maturity Stage
Considerations

 Requires
heavy spending on advertising
& promotion
Decline Stage
 Popular brands can delay this stage longer
than weak brands
 Ends with product termination
 Two key options:
– harvesting-gradual reduction in marketing
expenditures
– divesting-total withdrawl of marketing support
 Marketing Strategies for
Services

 Mustconsider the unique aspects of

services
– intangibility
– inseparability of production & consumption
– customer contact
– perishability
– heterogeneity
– client-based relationships
Product Considerations for
Services

 Provide satisfaction guarantees to

customers
 Standardization & service quality are difficult
to control
 Services can be customized to meet
consumers specific needs
 Customized services tend to be very
expensive
Pricing Considerations for
Services

 Pricing conveys quality to many consumers

 Determining the cost of productivity &
delivering a service is difficult
 Pricing tactics can help a firm balance peak
& off peak demand
Promotion Considerations for
Services

 Services are difficult to explain to customers

 Service advertising typically focuses on
tangible cues that symbolize the service
 Endorsements from satisfied customers are
often used
 Distribution Considerations
for Services
 Consumers cannot take physical possession of
services
 Services must be provided in a convenient manner
– often requires multiple outlets to increase
convenience
 Production & consumption may need to be
separated by creating a tangible representation of
the service
– i.e.-a credit card represents a line of credit
offered by a bank
Branding Strategy
 Branding: identification a product maintains through name,
symbol or design
– differentiates one manufacturer’s products from another
 Brand name: spoken part of the brand
 Brand mark: symbol or design
 Trade mark: legal description indicating that owner has
exclusive use of the brand or part of the brand & that others are
prohibited from using it
 Trade name: full & legal name of the organization
Other Elements of Brands
 Brand loyalty
 Brand recognition
 Brand preference
 Brand insistence
 Brand equity
 Co-branding
 Brand licensing
Advantages of Branding
 Helps buyers identify the brands they support
 Speeds up the buying process
 Provides status & psycho social identification
 Assists in evaluating product quality & price
 Reduces the risk in purchasing
 Makes repeat purchases easier
 Allows for greater acceptance of new products
under that brand name
 Generates consumer loyalty
The World’s Most Valuable Brands
 Coca-Cola
 Microsoft Windows
 IBM
 Intel
 Nokia
 General Electric
 Ford
 Disney
 McDonald’s
 AT&T