developing product strategy
TRANSCRIPT
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McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
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Developing Product Strategy
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A Successful Strategy:
• Helps achieve coordination among functional areas of the organization.
• Defines how resources are to be allocated.
• Leads to a superior market position.
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Elements of a Product Strategy1. Statement of the objective(s) the product
should attain
2. Selection of strategic alternative(s)
3. Selection of customer targets
4. Choice of competitor targets
5. Statement of the core strategy
6. Description of supporting marketing mix.
7. Description of supporting functional programs
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Hierarchy of ObjectivesCompany Mission/Vision
Corporate objectives
Corporate strategies
Divisional objectives
Divisional strategies
Product/brand objectives
Brand strategies
Program objectives
Tactics
Level I
Level 0
Level III
Level II
Level IV
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Strategic AlternativesLong-term
profits
Growth in sales or
market share
New segments
Market development
Convert nonusers
New product development
Competitors’ customers
Efficiency, short-run
profits
Reduce costs
Decrease inputs
Improve asset
utilization
Increase price
Increase outputs
Improve sales mix
Existing customers
Market penetration
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Criteria for Evaluating Strategic Alternative Options
• Size/growth of the segment• Opportunities for obtaining competitive
advantage• Resources available to penetrate the
segment
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Five Areas for Differentiation
1. Quality
2. Status and Image
3. Branding
4. Convenience and Service
5. Distribution
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Brand EquityReduced marketing costs
Attracting new customers• Create awareness• Reassurance
Time to respond to competitive threats
associations can be attached
Familiarity-liking
commitment
Brand to be considered
Provides value to customer by enhancing customer’s:• Interpretation/
processing of information
• Confidence in the purchase decision
• Use satisfaction
Brand loyalty
Brand loyalty
Brand loyalty
Brand awareness
Brand loyalty
Brand equity
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Brand Equity cont.
Reason-to-buy
Differentiate/position
Price
Channel member interest
Extensions
Help process/ retrieve information
Reason-to-buy
Create positive attitude/feelings
Extensions
Provides value to firm by enhancing:• Efficiency and
effectiveness of marketing programs
• Brand loyalty
• Prices/margins
• Brand extensions
• Trade leverage
• Competitive advantage
Brand loyalty
Perceived quality
Brand loyalty
Brand associations
Brand loyalty
Brand equity
Competitive advantage
Brand loyalty
Other
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Some Brand Attribute and Image Dimensions
Attributes•Flavor/taste•Price•Packaging•Size•Calories•Brand name•Warranty•Durability•Convenience•Color•Style•Comfort•Freshness•Availability
Image Dimensions
Reliable—unreliableOld—youngTechnical—nontechnicalSensible—rashInteresting—boringCreative—noncreativeSentimental—nonsentimental
Trust—untrustDaring—cautiousSociable-unsociable
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Ten Guidelines for Building Strong Brands1. Brand Identity
• Each brand should have an identity, a personality. It can be modified for different segments.
2. Value Proposition• Each brand should have a unique value proposition.
3. Brand Position• The brand’s position should provide clear guidance to those
implementing a communications program.4. Execution
• The communications program needs to implement the identity and position.
5. Consistency over Time• Product managers should have a goal of maintaining identity,
position, and execution over time. Changes should be resisted.
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Ten Guidelines for Building Strong Brands (cont.)
6. Brand System• The brands in the should be consistent & synergistic.
7. Brand Leverage• Extend brands and develop co-branding opportunities only if
the brand identity will be both used and new8. Tracking
• The brand’s equity should be tracked over time, including awareness, perceived quality, brand loyalty, and brand associations.
9. Brand Responsibility• Someone should be in charge of the brand who will create
the identity and positions and coordinate the execution.10. Invest
• Continue investing in brands even when the financial goals are not being met.
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Basic Customer Strategies
1. Customer acquisition
2. Customer retention
3. Customer expansion
4. Customer deletion
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Strategy Over the Life Cycle