Product Strategy

a) Types of Product
The differentiated product The differentiated product enjoys a
distinction from other similar products/brands in the market. The differential
claimed may be real, with a real distinction on ingredient, quality, utility, or
service, or it may be psychological brought about through subtle sales
appeals.
The customized product Customer specific requirements are taken
into account while developing the product. Commonly practised in the
industrial product marketing, where the manufacturer and the user are in
direct contact and the product gets customised to the requirements of the
customer.
The augmented product The augmented product is the result of
voluntary improvements brought about by the manufacturer in order to
enhance the value of the product, which are neither suggested by the
customer nor expected by them. The marketer on his own augments the
product, by adding an extra facility or an extra feature to the product.
The potential product The potential product is tomorrows product
carrying with it all the improvements and finesse possible under the given
technological, economic and competitive condition. There are no limits to the
potential product. Only the technological and economic resources of the
firm set the limit.
b) Product Levels
Core Product- refer to the use, benefit or problem-solving service
that the consumer is really buying when purchasing the product.
Actual Product - tangible, physical product and what the average
person would think of under the generic banner of product.
Augmented Product - a commodity that has both the primary
physical attributes and the non-physical attributes that are added to increase
the products value.

c) Product Strategy

is the foundation of a product life-cycle and the execution plan for

further development.
it allows the business to zero in on specific target audiences and draw
focus on the product and consumer attributes.
c.1 Product Attributes

Quality
the major tool in positioning your product. It encompasses two key
elements:
1. quality level -how it made or perceived.
2. quality consistency - how it performs over its life.
Features
the physical or intrinsic characteristics of your product that contribute
to the benefits it offers.
Design
a combination of how the product looks and hot it performs

c.2 Branding

consist of name, term, sign, symbol or design, or a combination of

these elements that identifies that maker or seller of a product or
service.
it is an important part of a product and contributes to its personality
and perceived value
c.3 Labeling

incorporates all the written information about your product and usually
takes the form of an adhesive sticker, a tie-on tag or a printed piece of
packaging.
Product Positioning

is the way a product or service is seen by consumers and how they

view its important attributes in relation to competitors products.

d) Product Life Cycle

-

Used to identify and analyze the current stage of competitors

products and then adjust and manage the promotion, pricing and

distribution strategies of their new modified product (Byrd &Meggison,

2006)
-

Helps entrepreneurs to maximize profits and control losses at each

stage of the products life cycle

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MERGEFORMATINET
Introduction Stage
-

Sales will be low until customers become aware of the product and its
benefits

Advertising costs are high in order to rapidly increase customer

awareness of the product and to target the early adopters

The firm is likely to incur additional costs associated with the initial
distribution of the product

Growth Stage
-

a period of rapid growth revenue

Sales increase as more customers become aware of the product and

its benefits and additional market segments are targeted

When competitors enter the market, often during the later part of the
growth stage, there may be price competition and/or increased
promotional cost in order to convince the consumers that the firms
product is better than that of the competition

Maturity Stage
-

the product is mass-produced and sales are at their peak

production costs are extremely low with minimal advertising costs due
to brand recognition and brand loyalty

Demand is high during this stage but needs nurturing

Decline Stage
-

sales begin to decline as the market becomes saturated, the product

becomes technologically obsolete, or customer tastes change

Unit costs may increase with the declining production volumes and
eventually no more profit can be made.

e) New Product Development

The new-product development process for finding and growing new
products consists of nine main steps.

New Product Strategy

Idea generation
Idea screening
Concept development and testing
Marketing Strategy
Business analysis
Product development
Test marketing
Commercialization

NEW PRODUCT STRATEGY

4 Main Goals
1. It gives direction to the new-product team
2. It helps to integrate functional or departmental efforts
3. Where understood by the new-product team, it allows tasks to be
delegated to team members, who can be left to operate independently
4. The very act of producing and getting managers to agree on a strategy
requires proactive, not reactive, management, which increases the
likelihood of a more thorough search for innovation opportunities.
IDEA GENERATION
>Idea generation should be systematic rather than haphazard (lack of
plan).

To obtain a flow of new-product ideas, the company can tap

many sources. Chief sources of new-product ideas includes internal
sources, customers, competitors, distributors and suppliers.
Internal Sources - ex R&D Department, from company
executives, from companys front-liner (sales exec, customer service
rep, etc)
Customers - conducting surveys on the consumer needs,
watching and listening to customers
Competitors - 30% of new-product ideas come from analyzing
competitors products. Watch competitors ads and other
communications to get clues about their new products.
Distributors, Suppliers and Others - resellers are close to the
market and can pass along information about consumer problems and
new-product possibilities.
IDEA SCREENING

spot good ideas and drop poor ones as soon as possible.

it is important for the company to go ahead only with those product
ideas that will turn into profitable products.

CONCEPT DEVELOPMENT AND TESTING

Concept Development - a detailed version of the new-product idea
stated in meaningful consumer terms.
Concept Testing - calls for testing new-product concepts with a group
of target consumers
MARKETING STRATEGY DEVELOPMENT
The 1st part describes the target market, the planned product
positioning, and the sales, market share and profit goals for the 1st few
years
The 2nd part of the marketing strategy statement outlines the
products planned price, distribution and marketing budget for the first year.

The 3rd part of the marketing strategy statement describes the

planned long-run sales, profit goals and marketing mix strategy
BUSINESS ANALYSIS
Review of the sales, costs and profit projections for a new product to
find out whether they satisfy the companys objectives.
PRODUCT DEVELOPMENT
Developing the product concept into a physical product in order to
ensure that the product idea can be turned into a workable product
TEST MARKETING
The stage of new product development where the product and
marketing programme are tested in more realistic market settings.
STANDARD TEST MARKETS
> using Standards Test Markets, the company finds a small
number of representative test cities, conducts a full marketing
campaign in these cities and uses store audits, consumer and
distributor surveys, and other measures to gauge product
performance.
> The results of the forecast national sales and profits will be
use to discover potential product problems and to fine-tune the
marketing programme.
CONTROLLED TEST MARKETS
> The research firms delivers the product to the participating
stores and controls shelf location, amount of shelf space, displays and
point-of-purchase promotions, and pricing according to specified plans.
Sales results are tracked to determine the impact of these factors on
demand.
SIMULATED TEST MARKETS
> The company or research firm shows, to a sample of
consumers, ads and promotions for a variety of products, including the
new product being tested.

> Simulated test markets overcome some of the disadvantages

of standard and controlled test markets. They usually cost much lews,
can be run in eight weeks and keep the new product out of
competitors view.
Test Marketing New Product
1.
2.
3.
4.

Product-use Tests
Trade Shows
Distributor and Dealer Display Rooms
Standard OK Controlled Test Markets

COMMERCIALIZATION
> introducing the new product into the market.