Developing Product Strategy Ch-9

8/3/2019 Developing Product Strategy Ch-9

http://slidepdf.com/reader/full/developing-product-strategy-ch-9 1/31

Developing Product Strategy

Chapter 9

Basharatullah Malik



Basic ProductBasic Benefits for Consumers

Augmented Product

Training, Technical

Assistance,

Spare Parts,

,

F

e a t u r e s

S t y l i n g

E n h a n c e d P r o d u c t

What is an

Industrial

Product?



Product Strategy & Continual

Change

• For continued Business: – Change in Customer Needs leads to

– Change in Product Offering

• Technological Changes can requireproduct modifications – Increase in the number of circuits every year

on a single chip (computers, Mobiles) – Demand of Air conditioned Fork Lift

– Screws with Head suitable for screw drivers




Change

• Change in Laws, Politics or Economics

• New Product Requirement-

– 4 stroke Rickshaw and motor cycle

– Split AC

• Obsolescence-

– 2 stroke Auto

– Window AC• New Product opportunities

• Can Effect/change Customer Expectations




Change

• Sales and Profit Change with Life Cycle

• At Maturity Stage Decisions be made:

– Modify Product to maintain market position

– Withdraw the Product

• Product Strategy issues involve continuous

Evaluation of products/market position to

determine: – Changes required in current product

– New product be added or present products be dropped



• To effectively meet the changing needs of

Industrial Consumers, Managers in

Industrial Firms are required to have more

experience than the Consumer product

Managers

• Dual Management approach over lapping

Market and Product Managers



Industrial Vs Consumer Product

ManagersConsumer ProductManagers

Industrial ProductManagers

Average Years of age

32.90 38.37

Average Years withFirm

6.02 9.15

Average Years asProduct Manager

5.14 4.65

Average Years of Education

17.64 16.46

Average ProductsManaged

6.20 8.61



Role-Market vs Product Manager

Responsiveness of Product to all Markets

Needs

• Protect Pricing Integrity

– Ensuring price of products in one market may not jeopardize the strategy in other markets

• Maintain Product Leadership

– Product Design, cost and Performance are responsive

to customer needs in all Markets

– Not altered to the needs of only one market at the cost

of other markets



Role-Market vs Product Manager

• Production Capacity and Scheduling

• Planned intelligently to meet demand of all

markets:

– Current and Anticipated

– Profitably

• Provide Technical/product Knowledge

– Support Selling Efforts

– On major and Complex applications



Developing Product Strategy



Product Life Cycle



Product Life Cycle

• Focus must on Factors governing Life CycleStage and not the PLC stage itself – PLC analysis helps to find where the product falls in

PLC stage

– Appropriate Marketing Strategies are aimed to thoseGoverning Factors

• PLC of non GSM Paktel was short

• Strategy was on the factors of: – GSM or NO GSM

– Changing customer behavior in favor of small mobilesand not a shoulder hanged



Product Life Cycle

• PLC for rubber changed to decline stage

– With introduction of Plastics

– Strategy must be on entry of Plastics and not

on the decline Stage of Rubber based



Mar

Dev

Ket

lopment

RapidGrowth

Competitive

TurbulenceMaturity Decline

StrategyObjectives

MinimizelearningRequirements

Develop Brand Awareness

Establish StrongMarket Position

Maintain/Strenthen MarketNiche

DefendPositionagainstcompetition

Milking for allpossible profits

Out look for competition

Not expected Expected – AggressiveCompetitors

Reduction inprice to throwoutcompetitors

CompetitionStable nonewcompetition

Same

competitiondrop out

ProductDesignObjectives

LimitedModels-Focus onminimizedLearning's

Facilitatenewsegments,new usesystems

IntensifiedProductImprovement

Costreduction,penetrationpricing

Pruning of non profitproducts

Lo w Learning Produc ts



Price High TradeDiscounts

AggressivePromotionalPricing

DefensivePricing

MaintinancePricing

Phase out

Promotional

Create Awareness/Push for Trial

StrengthenBrandPreference

StrengthenDealersRelationship

MaintailTradeLoyalty

Phase Out

Distribution Exclusive/selective highDistributorsmargin

Intensive/Extensive Rapidresupply todistributors

Dealers Wellsupplied atminInventorycost

Well suppliedat MinInventorycost

Phase out

Mar

Dev

Ket

lopment

RapidGrowth

Competitive

TurbulenceMaturity Decline

Lo w Learning Produc ts



Developing Product Strategies



Developing Product

Strategies

• Deciding on what Products to be?

– Continued

– Phased out

– Number of products to offer

– Diversity in product range

– Innovation to introduce

Product

Evaluation

Matrices



Developing Product

Strategies

• Developing Product Evaluation Matrix – Collect Data to determine position in PLC (where the

product falls in its life cycle)

– Use data for appropriate Strategies

• Look at Historical & Projected figures: – Industry Sales

– Company Sales

–Market share – Profits

• Combine into Product Evaluation Matrix (fig 9-3)

Product

Evaluation

Matrices



Developing Product

Strategies

• Strategic Alternatives for a Product or Product

Line, might include:

– Maintaining Product and Marketing Strategy as it is

– Maintaining Product Form and changing MarketingStrategy

– Changing Product and Altering Marketing Strategy

– Dropping Product or entire Product Line

– Adding item in the line or introducing new product lines

Product

Evaluation

Matrices



Developing Product

Strategies

• Perceptual Mapping

• A technique used to examine relative

strengths and weaknesses of a product

compared to competitors

• Helps in Mapping and comparing the

perception of different groups of Buying

influencers like Top Management,

Engineers, Researchers and Customers

Perceptual

Mapping in

Product

Evaluation



Developing Product

Strategies

• Important Information Generated through

Perceptual Mapping useful in developing

Marketing strategy

– Position of Competing Brands-Relative

– Position of Brands with respect to Attributes

– Position of product Attributes compared to

each other

Perceptual

Mapping in

Product

Evaluation



Developing Product

Strategies

• When Profit margin, Sales Volume or MarketShare falls below expectations – Revitalize or

– Eliminate

• But Cause of unsatisfactory performance must be identified

• Product Re vitalization process involves

– Identifying Weak Products – Searching for Alternative Actions for Restoration

– Determining Consequences of Eliminating the Product

Product

Revitalization

Decisions



Developing Product

Strategies

• Identifying Weak Products

• Profitability main determinant

• Accountants and Engineers asked to work for

feasibility of reduction in cost etc

• Sales people talk in terms of Market situation;

– Competitive Activities

– Customer requirements• Weak Product Performance- seldom caused by

single Factor

Product

Revitalization

Decisions



Developing Product

Strategies

• Unsatisfactory Performance of Specific ProductsStudied (George J Avlonitis)

• Uncompetitive Price 7

• Production Problem 6

• No Economy of Scale 6

• Too Costly to produce and Market 5

• High Cost of Manufacturing 5

• Over Engineered 4

• Competition holds the Market 4

• Not as per customer expectation 2

• Low Selling Price 2

Product

Revitalization

Decisions



Developing Product

Strategies

• Identifying Alternative Corrective Actions – 1- Cost Reduction

– 2- Product modification

– 3- Price Change Considerations – 4- Channel Change Considerations

• Popular Corrective Actions

– Reduce cost – Eliminating Waste – Improve product Quality-Customer

Requirement

Product

Revitalization

Decisions



Developing Product

Strategies

• Product Elimination Decisions depends

upon (Study George J Avlonitis)

– Contribution to overhead

– Effect on Profitability

– Sales of other Products (Connector for Pipes)

– Effect on Consumer Relationship (Jadit H)

(Esperson)

Product

Revitalization

Decisions



Developing Product

Strategies

• Determine the Effects of product

Elimination over:

– Production Capacity

– Need for appropriate substitute

– Likelihood of replacement to Effectively

replace the eliminated product

– Product Importance to Company activities

Product

Revitalization

Decisions



• Product Elimination Decisions Center Upon: – 1- New product Potential

– 2-Customer Relationships

– 3-Impact on Profit

– 4-Sales of Other Products

– 5-Crporate Image

– 6- Employee Relationships

– 7-Competitors Reaction (moves)

• Importance of above Factors vary with Typeof Industry, number of Products being Manufactured & Nature of Competition

Product

Revitalization

Decisions

Developing Product Strategy Ch-9

Documents

Transcript of Developing Product Strategy Ch-9