10. product strategies, & new prod dev
DESCRIPTION
product strategies, & new prod devTRANSCRIPT
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Product Strategies
Product Strategies
Product Life Cycle
New Product Development
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Product Strategies
• Product Positioning and Repositioning• Product Overlap• Product Elimination• New Product Development• Diversification
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Product Strategy as a Strategic Element
It is the product strategies, duly related to market strategies, that eventually comes to dominate both the overall strategy and the spirit of the Company.
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Dimensions of Product Strategy
Portfolio Analysis
Product Life Cycle
Product Positioning
New Product Development
The starting point should be an assessment of the organization's current portfolio
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Current portfolio – An analysis
• Should we continue to market the product• Should the strategy remain unchanged or any minor
changes are required• Should there be a major change, for example re-
launch, change in product / style/ packaging or repositioning.
• Is there a need for a new product
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Elements of Product Strategy
• Direction of Strategy– Objectives that the product should attain– Selection of strategic alternatives
• Positioning– Selection of target markets– Choice of competitors to market– Statement of core strategy
• Implementation– Supporting marketing exchanges
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Selection of strategic alternatives
• Growth in Sales or Market sharea) Market development
• New segments• Converting non-users
b) Market Penetration• Existing customers• Competitors’ customers
• Efficiency/ Short-run Profits a) Decrease inputs
• Reduce costs• Improve asset utilization
b) Increase output• Increase Prices• Improve sales mix
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Total Product Concept
GenericProduct
ExpectedProduct
Augmented Product
PotentialProduct - Theodore Levitt
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Strategic Choices
• Extend PLC - Reposition existing product(Aim at new uses/ segments)
- Market development (New users, increase usage)- Extend Product lines / Modify(New users / segments)
• New Products - Need gap analysis
- Perceptual mapping
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Developing new products
• Development and introduction of new products traditionally seen to be a costly and risky activity
• Alternatives to developing a new product are:– Buy other firms– Buy a license or franchise– Buy a patent
What is characterised as a New Product?
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New Product
• New to the world – identifies an entirely new marketeg. Sony walkman
• New Product line – entering a market for the first time eg. Mobile phones in India
• Additions to existing product lines – catering to existing customerseg. Getz from Hyundai
• Improvements to existing products – enlarge reach / retain existing customers
• Repositioning – retarget in order to appeal to new market segments / uses eg. Milkmaid
Why do we need new products?
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Why we need new products
• So that the organization can respond to the changes in the environment and avoid product obsolescence
Eg: Fiat• Enables an organization to enter new and emerging
segments• Reduces dependence on a product and segment• To match and counter competition• To fill excess capacity• For long-term growth and profits
80% of all new products are known to fail…Why?
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Why new products fail
• Size of the market is overestimated• Product fails to live up to customer expectations• Competitors too firmly entrenched• Poor / incorrect positioning• Improper marketing mix – incorrect pricing / distribution• Product obsession – driven by a person in position of authority
How may we ensure product success?
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How can we make new products succeed
• Commitment of top management• Clear identification and understanding of market
needs• Potential use of the new product – short-term vs long-
term• Intra-organization commitment – new product teams• Availability of resources• Timing of the introduction• Time from concept to commercialization