Product Strategy PLC Product Evaluation

Product Mix
Product Mix: The total assortment of products and services marketed by a firm. Product Line: A group of individual products that are closely related in some way.

Individual Product: Any brand or variant of a brand in a product line.

Product Mix Characteristics

Product Mix Width:
The number of product lines in the product mix.

Product Line Length:

The number of products in a product line.

Product Mix Consistency:

The relatedness of the different product lines in a product mix.

What is a product strategy?

A product strategy identifies, in broad terms, how you plan to sell your products to your marketplace. It documents how the people in your marketplace (your clients) think about your products and business. It documents how your business positions its products and services and it contains your strategies for selling. A product strategy can encompass any number of products, depending on the nature of your business. You could have one strategy for each major product or, perhaps, the same strategy for all of them. For example, an organisation that manufactures and sells high quality vacuum cleaners may sell several product lines but they might all be positioned as high quality premium products. A more diverse organisation selling different products such as finance, travel and music into different markets would need several product strategies

A product strategy is a document containing any of the following:

business objectives descriptions of target market(s), usually based on results of market research results of research about your potential clients and their needs how you want your product to be viewed by your clients product features and benefits selling strategies how your product features and pricing compare to your competitors' product changes that might enable better market positioning of your product.

If you were an electrician, your product is the service you offer. Your product strategy helps you determine exactly what services to offer. Do you focus on industrial electrical work or household? Do you offer simple services, more complex services such as re-wiring or both? Are you going to do business with developers of huge multi-residential complexes? Developing a product strategy helps you analyse why clients should use your service instead of your competitors'. You can do this by analysing your competitors and differentiating your service. It might be your experience or prompt service

Product-Line Strategies
Strategic Alternatives:
1. To increase the length of a product line.

2. To decrease the length of a product line.

Decreasing the Product Line

Product Line Contraction:
Firms must consider deleting products when:
They are not successful. They reach the decline stage of PLC. Long product line marketing costs are too high.

Product-Mix Strategies

Strategic Alternatives
Add New Product Lines?

Delete Existing Product Lines?

Ethical Issues in Product and Service Strategies

Is the product safe when used as intended? Is the product safe when misused in a way that is foreseeable? Have any competitors patents or copyrights been violated?

Ethical Issues in Product and Service Strategies

Is the product compatible with the physical environment? Is the product environmentally compatible when disposed of? Do any organizational stakeholders object to the product?

Benefits of having a product strategy

It helps you analyse and, so, know your product - product knowledge. By examining all the features of your product you may be able to identify benefits you hadn't thought of before. It might be that you realise the different colours you offer give the product an appearance that appeals to market segments you hadn't previously identified. It provides client focus - you're not just selling a product, you're helping clients buy. By putting yourself in the client's shoes you can tune into their needs. It gives shape and form to your sales messages.

If you share your product strategy with everyone in the business, it often means everyone in the business gives clients the same message.
It helps you analyse the competition and position your products competitively. It helps you price your products competitvely . It keeps you up-to-date, forward looking and pro-active.

Components of a product strategy

Business objectives Your product strategy needs to fit with the general aims and objectives of your business. Your aim might be to make a difference to the environment or the community. Alternatively, your aim might be to make as much money as possible. It might be a combination of both. Whatever your business objectives are, youll probably want your product strategy to help you achieve them Target market(s) You can describe your target market in several ways, one of which is to identify their: geographic characteristics socioeconomic characteristics demographic characteristics

Client needs People dont spend money unless they have a need to. The needs of the people in your target market are what you sell to. You usually get this information from your marketing research and it helps you develop later components of your product strategy Product positioning Product positioning strategies can be based on any of the following: specific product features e.g. reliability specific benefits, needs, or solutions e.g. peace of mind a reason to choose an offering over the competition e.g. flexibility another product e.g. use of an alternative product as a comparator product class dissociation: No other product looks like it or lasts like it cultural symbols to create a sense of belonging and social meaningfulness e.g. crests

Features and benefits all of your products have several features and lots of benefits. Once youve identified your positioning strategy, youre able to identify which particular features and which particular benefits are the ones that are going to sell your products Selling strategy Youve identified the market youre selling to, what their needs are, how youre going to position your product and the features and benefits that will sell it.

Competitor intelligence How do you know your competitors arent positioning themselves the same way you are? Thats what you document in this section of your product strategy, the intelligence you have about your competitors that relates to your own products in your own target markets. There are several ways you can document your intelligence about your competitors and one of them is by doing a SWOT analysis on them. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. It can be a good way to determine where you stand in relation to your competition. It can also help you hone your product position and your sales presentations. Making product changes Sometimes your market intelligence indicates a need to make changes to your products or services. If so, heres where you document them. You probably want to keep ahead of your competition.

Individual Product Strategies

Product Life Cycle (PLC):
Describes the advancement of products through identifiable stages of their existence.

Introductory Stage

Growth Stage

Maturity Stage

Decline Stage

Total Market Sales Time

The Product Life Cycle

The Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline).
Each product may have a different life cycle PLC determines revenue earned Contributes to strategic marketing planning May help the firm to identify when a product needs support, redesign, reinvigorating, withdrawal, etc. May help in new product development planning May help in forecasting and managing cash flow

The Product Life Cycle Concept is Based on Four Premises

Products have a limited life. Profits from a product vary at different stages in the life cycle.

Product sales pass through distinct stages, each with different marketing implications.

Products require different strategies at different life cycle stages.

Introductory Stage
Sales Costs
Low sales

High cost per customer

Negative Create product awareness and trial Offer a basic product Use cost-plus Build selective distribution Build product awareness among early adopters and dealers

Profits
Marketing Objectives

Product Price Distribution

Advertising

Growth Stage
Sales Costs Profits
Marketing Objectives

Rapidly rising sales Average cost per customer Rising profits Maximize market share Offer product extensions, service, warranty Price to penetrate market Build intensive distribution

Product Price
Distribution Advertising

Build awareness and interest in the mass market

Maturity Stage
Sales Costs Profits
Marketing Objectives

Peak sales Low cost per customer High profits

Product Price
Distribution Advertising

Maximize profit while defending market share Diversify brand and models Price to match or best competitors Build more intensive distribution
Stress brand differences and benefits

Decline Stage
Sales Costs
Declining sales Low cost per customer Declining profits Reduce expenditure and milk the brand Phase out weak items Cut price Go selective: phase out unprofitable outlets Reduce to level needed to retain hard-core loyal customers

Profits
Marketing Objectives

Product Price Distribution

Advertising

PLC Stages and Characteristics

PLC Length and Shape

Fashion Sales Sales Fad

Time

Time

PLC Marketing Strategies

Stage
Introduction Growth

Objective

Marketing Strategy

Awareness & trial Communicate benefits Usage of firms brand Specific brand communication, lower prices, expand distribution

Maturity

Maintain market share Sales promotion, drop price, Extend life cycle expand distribution, new uses & new versions of product Decide what to do with product Maintain, harvest, or divest

Decline

Stages of the Expanded Product Life Cycle

1. Research and development

2. Product introduction 3. Development of the market 4. Exploitation 5. Market maturation

6. Market saturation
7. Market decline

Example: New Flavor of Pepsi

Stage 1: Market Introduction Pepsi bottles the new flavored product and places it on the market for consumers. Pepsi also spends a lot of money advertising the new flavor creating awareness. Stage 2: Market Growth Customers like the flavor and begin to make routine purchases. Coke introduces their competing flavor.

 Stage 3: Market Maturity More competitors enter the market taking some of Pepsis profits.
Stage 4: Sales Decline Customers have moved on to the next new flavor. Some loyal fans stay behind.

Limitations of the PLC

1. The life cycle concept applies best to product forms rather than to classes of products or specific brands. 2. The life cycle concept may lead marketers to think that a product has a predetermined life, which may produce problems in interpreting sales and profits. 3. It is only a descriptive way of looking at the behavior of a product and the life cycle can not predict the behavior of a product.

What is product evaluation?

A product is a term for any item that has been manufactured and is useful to you. You are a consumer when you buy it or use it. Evaluation of the product means that its suitability and safety for use by consumers are checked out. All products made are required by law to be safe to use. This is not a requirement that they are absolutely safe - that is not possible. Nor must they be safe at unbearable costs to industry - that would put innovation at risk. But they are required to be as safe as it is reasonable to expect This allows designers and manufacturers to be more creative in their product design, but it makes it more difficult for them to ensure that they have complied with the appropriate regulations. Even where there is specific legislation, manufacturers may not know if they have done enough to show due care, which is their main defence if a product supplied by them is subsequently judged to be unsafe.

Types of evaluation
To prove that the product complies with relevant standards To investigate accidents to discover whether a product design fault caused the accident To compare a product with others of a similar design

tests can include mechanical, physical, electrical, chemical and inflammability tests. These can evaluate product energy efficiency, reliability and durability, that is, the product should continue to work as intended over an appropriately long period of time. Finally, and most importantly, these tests can help to assess safety, but a fuller evaluation can be provided by using ergonomics because it looks at issues from the user's point of view.

 Designers and manufacturers make products based on how they think people will use them. To create a product that is safe and easy to use, you need to find out information about the users and their behaviour with the product. This information might be about: The product user If the product is intended for elderly people or children, it will need to be designed to deal with a limited range of reach or movement. Elderly people often have stiff joints that make it difficult for them to get up from seats which are too low, or to hold awkward objects properly. Gaps and clearances should suit the user. For example, bars on cots and playpens should be close enough to each other so that a child cannot get their head caught between them. Designing a product using male body dimensions might mean that is it not suitable for use by females (and vice versa). Ideally a product should be suitable for use by small (5th percentile) women as well as by large (95th percentile) men (the smallest to the largest user).

 The product should not involve users in excessive physical effort, which might, for example, raise their heart rate, breathing rate, body temperature. Children are not good at understanding safety issues. They tend to be involved in many more than their share of accidents in the home, ranging from swallowing household chemicals and medicines (often pleasantly scented and coloured, and not always in child-resistant containers) to scalding caused pulling on the lead of a boiling kettle. Suitable precautions for safer design are needed even if the product is not directly intended to be used by children. The product environment The product should be evaluated under the same conditions as it will be used in. Some products, such as gardening tools are obviously intended for use out of doors and so must allow for users wearing gloves when it is cold, or for being used in the wet. Other products, such as bleach, may be used in a steamy atmosphere like a bathroom, and users may have trouble reading instructions and warnings if they are too small, as they may not be able to wear their glasses. The product itself The product should be comfortable and easy to use. This can be checked during trials by asking users what they think about products through a structured experiment or questionnaire. Checklists can be used to ensure that all aspects of design and use are assessed.

Use and misuse

You may have created a safe product in 'normal' use but products are not always used as intended. There are likely to be unreasonable, careless and 'odd' consumers who use products for strange things! If you are making a product, you must try to imagine how it might be misused and design it so that it will still be safe. Obviously, this is not easy! To help with this, you can do a number of things. Review specific standards Look at accident statistic Investigate complaints Carry out user trials

Reference.
Decisionanalyst.com Ehow.com Wikipedia.com Philip Kotler