Product Strategies

chapter 12chapter 12

strategic marketingstrategic marketing(PGDBM 339) BIM Bangalore

ranganath iyengar

SIIPL ERRC

discussion context

• Introduction• Dimensions of product strategies• Product positioning strategy• Product repositioning strategy• Product overlap strategy

P d t t t• Product scope strategy• Product design strategy

Product elimination strategy• Product elimination strategy• Diversification strategy• Value marketing strategy• Value marketing strategy

Introduction – Dimensions of Product Strategies

Product strategy specifies market needs • Product strategy specifies market needs that may be served by different product offerings offerings

• Product strategy <> linked to market strategystrategy

• Deals with number and diversity of d t d t i ti products, product innovations, scope,

design etc.

• Needs proper coordination from other functions – finance, research &

tcorporate

Product positioning strategy

• Positioning – Placing a brand in that part of the market where g g pit will receive a favorable reception compared to competing products

Pointers Examples for discussion

-Ideally, match product to

segment

P d t h ld t d t

-Dr. Batra’s

-Calcium Sandoz-Product should stand apart

-Positioning should

communicate what product

Calcium Sandoz

-Clinic herbal vs. Meera

Ch i K ll 'stands for

-Achieved by using marketing

mix variables

-Champion vs. Kellogg's

Types of positioning-By attributemix variables

-Positioning is more visible in

consumer than industrial goods

y-By price / quality-wrt use / application-wrt product user

-Single vs. multi brand strategy

Beverage vs. Personal care

p-wrt product class-wrt competition

Product re-positioning strategy

• Re-positioning – done owing to competitor entry, consumerp g g p y,preference change, new customer preference clusters, mistake is made in the original positioning

Pointers Examples for discussion

-To prevent market share or

brand erosion

T f h th d t i

-Lux

-Coca Cola vs Pepsi-To freshen the product image

and perception

-Based on consumer perception

Coca Cola vs. Pepsi

-Lacoste

H li k-Horlicks

Types of re-positioning-For existing users

ClassyDistinctiveArrow

Louis PhilippeZodiac g-For new users-For new marketsPerformance

Segment appealConservativeTraditional

Raymond's Color Plus Digjam

Perception mapPracticalAffordable

Peter EnglandVimal

ScullersCambridge

Product overlap strategy

• Overlap – Compete against own brand with each brandp p gbehaving aggressively to outdo others in the market place

Pointers Examples for discussion

-To maximize capacity, products

are created at close price points

l i th l f

-Colgate range of toothpaste

-Marutileveraging the same sales force

-To gain larger market share

especially when market is not

Maruti

-Eureka Forbes water purifiers

Tit t hclearly delineated

-Competing brands work as a

short term phenomenon

-Titan watches

Types of overlap-Competing productsshort term phenomenon

-Each brand has its own SBU

and brand manager

p g p-Private label-OEM products

-Can also be used to create

channel specific products

Product scope strategy

• Scope – Deals with the product mix and number of productp p plines and the number of products or SKUs

Pointers Examples for discussion

-Involves long term

commitment

Sh ld b li d t th

-Printers

-Life Insurance products-Should be aligned to the

business unit mission

-Single product is not conducive

Life Insurance products

-Home Theater systems

Dito market share

-Multi products – value

proposition needs to be clear

-Diapers

-Travel services

proposition needs to be clear

-System of products – range

of products / services that

Types of scope strategies-Single product-Multi product

are linked -System of products

Product design strategy

• Design – Deals with standard vs. custom products, g p ,personalization etc.

Pointers Examples for discussion

-Linked to capability of

organization to deliver

St d d d t

-Dell vs. Connoisseur

-Car / Bike Prokits-Standard products are more

amenable to experience

effect

Car / Bike Prokits

-Car – trim levels

St l B ti-Customization comes with

different price points

Customization is linked to

-Stanley Boutique

-Designer clothes

-Customization is linked to

quality and customer spec

-Mass customization (subway)

Types of design strategies-Standard products-Customized products

-Industrial products – tooling

and fixtures are customized

-Standard products with customization

Product elimination strategy

• Elimination – Deals with sick or unviable products. p

Pointers

-Low profitabilityExamples for discussion

Low profitability

-Continued support is no longer

justifiable

-Chevrolet Aveo

-Fiat Uno-Stagnant or declining sales volume

-Risk of obsolescence

-Declining phase of product

Fiat Uno

-Bata Ambassador shoes

CDMA hDeclining phase of product

life cycle

-Poor fit with business unit

-CDMA phones

-Nilgiri supermarkets

strategy of declared mission

-Harvesting – used in a slow

decline situation

Elimination approaches

-Harvesting

-Line simplification – cutting

down the variants

-Line simplification

-Total line divestment

New product strategy

• New product – For seeking growth. p g g

Pointers

-Sustain competitive presence

-Technology innovation

Examples for discussionTechnology innovation

-Product failures are high especially

when laterally diversifying

-Needs to be led through clear

-Moto Razr

-Walkmaneeds o be ed oug c ea

policies and directions

-New products can be imitations

-They can be entirely new packages

-Dictaphones

-Wagon R > Ritzy y p g

-Performance levels can be different

-Focus on cost reduction during

new product introduction

-Boutique hotels

New product alternativesNew product alternatives

-Product improvement / modify

-Product imitation

Expensive

Inferior

Valueengineer

Price / PromoValue engineer

-Product innovationBetter

Cheaper

Cover it upUpgrade Leave it alone

Product diversification strategy

• Diversification – Seeking unfamiliar products or markets or bothg p

Pointers

-Requires substantially different

k l d thi ki

Examples for discussion

knowledge or thinking

-Risky strategy and is viable only

when other options are closed &

-Blueray disk technology

-Digital SLR

there is adequate cash

-Can be done through M&A or

through integration

-Electric vehicles

-Mopiersg g

-Can take place at corporate or at

business unit level

-3 essential tests – attractiveness

-Tower fans

New product alternatives3 essential tests attractiveness,

cost of entry and better off

(competitive advantage)

C t i d t l d

New product alternatives

-Vertical diversification

-Horizontal diversification -Concentric does not lead company

into an entirely new space-Concentric diversification

Value marketing strategy

• Value marketing – Product performance focusValue marketing Product performance focus

Pointers

-Emphasis on value is part

t h i i d

Examples for discussion

atmospherics, economics and

demographics

-Value is for the customer and

-High end cars

-Lawrence & Mayo / Ziess

the company

-Top-management support,

customer need understanding,

-Bose music systems

-Hayabusag,

business process and short cycle

time is key

-Quality – catching up pulling

-Cradle

New product alternativesQuality catching up, pulling

ahead and leapfrogging

-Service focus creativity

Ti b d t ti t k t

New product alternatives

-Quality strategy

-Customer service strategy -Time based – cut time to market

-Requires radical work practices

and culture

-Time based strategy

Summary – Q&A

Summary

Various types of product

Discussion

Cannibalism amongst

strategies

Product positioning strategy

Ca a s a o gs

competing brands.

Viable position for a brand in Product repositioning strategyProduct overlap strategyProduct scope strategy

Viable position for a brand in

the market

Why is a product eliminated?Product scope strategyProduct design strategyProduct elimination strategyDiversification strategy

Why is a product eliminated?

Diversification strategyValue marketing strategy