product strategy in international market

7/29/2019 product strategy in international market

1/27

TMitTI1

Sakari Luukkainen

Technological change

Market change

Standardization Productization MarketingR&D

Technology

Assessment

and

Forecasting

MarketAssessment

and

Forecasting

Innovation process


2/27

TMitTI2

Sakari Luukkainen

Michael E. McGrath:

Product Strategyfor High TechnolgyCompanies

Amazon et al ~35


3/27

TMitTI3

Sakari Luukkainen

Content

Vision and Strategy

Product Platform Strategy

Product Line Strategy

Leveraged Expansion Sustained Differentiation

Product Pricing

First-to-Market vs. Fast-Follower Strategy

Global Product Strategy

Cannibalization

Growth Through Acquisition

Process of Product Strategy


4/27

TMitTI4

Sakari Luukkainen

Strategic Vision

Everything in a company should be done for

purpose, which is to make money, tomakemoney company needs products and/or

services, to know what they are there should bea direction which is defined in a strategicvision

Good strategic vision has focus, clarity,

completeness, feasability

Where does company want to go, how will itget there, why will it be successful?


5/27

TMitTI5

Sakari Luukkainen

How Vision Guides Strategy

Directing technology strategy

Defining core competence

Focusing the efforts of identifying new productopportunities

Setting expectations for customers, employeesand investors

Establishing a framework forproduct platformstrategy


6/27

TMitTI6

Sakari Luukkainen

Product Platform Strategy

Platform is an architecture of the commonelements implemented across a range ofproducts

Key elements in the platform represent defining

technology

Dictates life cycle, capabilities, limitations

Based on core competence

Difficult to copy by competitors

The choice if defining technology is perhapsthe most critical strategic decision that a hightech company makes


7/27

TMitTI7

Sakari Luukkainen

Product Platforms

Product 1

Product 2

Product 3

Product 1A

Product 1B Product 1C

Element A

Element B

Element C

Segment A

Segment B

Segment C

Common platform

Defining andsupportingtechnologyelements

Uniquesegmentingelements,

commonchannelelements

Product 5


8/27

TMitTI8

Sakari Luukkainen

Benefits of Platform Strategy

Focuses management on key decisions at theright time

Enables rapid & consistent product development Encourages a long-term view on product strategy

Dominant design position achievement Resource and channel synergiesparallel cost

and differentiation advantage Can leverage operational efficiencies

R&D costs

reuse Manufacturing costseconomies of scale

Makes marketing and support easiersegmentation and channel reuse

> more value by decreasing unit cost


9/27

TMitTI9

Sakari Luukkainen

Product Line Strategy

A time-phased plan for developing products from a

common platform, each product targeting a specific

market segment The true potential of a platform strategy is extracted

with an effective product line strategy Covers all primary targeted market segments

Each product offering should be sufficiently focused

Time-phased scheduling / sequencing

all products cannot be released simultaneously priorization

Similar products / product lines are coordinated

Toavoid reworkandconfusionin marketingand among customers


10/27

TMitTI10

Sakari Luukkainen

Based on what customers are trying to do with

product or who is customer

Based on differentiation

High-end version first and then low-end by

subtracting value from it

New features first to high-end, then diffuse to low-

end as competitive upgrades

Three versions is a good default choice, most

revenue from the middle version Creation of metrics for continuous evaluation of

product profitability

Segmenting Products


11/27

TMitTI11

Sakari Luukkainen

Leveraged Expansion

Case studies show that:

The success of expansions to new product markets

depends highly on ability to leverage:

Existing market knowledge

Technical skills


12/27

TMitTI12

Sakari Luukkainen

High Low/None

Moderate

Moderate

Low/None

MarketLeverage

Product/Technology Leverage

NewMarket

RelatedMarket

CurrentMarket

ExistingProduct

Platform

CoreTechnology

CurrentSkills

NewSkills

Leveraged Expansion (contd.)

Existing Platform Management

New Segments

Leveraged Expansion Strategies

Diversification


13/27

TMitTI13

Sakari Luukkainen

Sustained Differentiation

ICT products cost of production is dominated by the first-

copy R&D costs, and cost of distribution is falling

This cost structure leads to substantial economies of scale

without capacity constraints

Competitive forces tend to move the price towardmarginal cost

A vector of differentiation enables sustained competitive

product differentiation by continuous incremental innovationalong as specific path with distinct benefit or value proposition

Positions, segments, evolves through life cycle

Differentiation as vector not point, product roadmap


14/27

TMitTI14

Sakari Luukkainen

Relative positioning


15/27

TMitTI15

Sakari Luukkainen

High-Tech Differentiation

Unique features Measurable benefits Ease of use Improved productivity

Protecting the customers investment Lower cost of product failure Higher-performance products Unique fundamental capabilities Design Standards

Total solutions Total cost of ownership Brand Convenience


16/27

TMitTI16

Sakari Luukkainen

Risks of differentiation

Not sustained

Insufficient proximity to price

Customer preferences misunderstood

High cost

Unfocus

Subsegmenting the market

Emerging technology

Perception of differentiation


17/27

TMitTI17

Sakari Luukkainen

Product Pricing

Offensive

Establish price leadership as the basis for competing Penetration pricing to increase the market Experience-curve pricing to discourage competition

Compete of price/performance Promotional discounting

Defensive

Adapt to maintain highest competitive price Use price to segment the market Skim pricing Value-based pricing Redirect product line sales by bait-and-switch pricing


18/27

TMitTI18

Sakari Luukkainen

Product Pricing

Risks of offensive pricing

price leadership not sustainable

price war

no supporting cost advantage

Sources of cost advantage

design

economies of scale

supply chain

superior techology

R&D process

global scale


19/27

TMitTI19

Sakari Luukkainen

Advantages of Being First to Market

Market share advantage

Earlier experience

Influence to standards


20/27

TMitTI20

Sakari Luukkainen

Advantages of Being the Fastest

Nearer in time to the market

Get ahead and stay ahead

Can user newer technology


21/27

TMitTI21

Sakari Luukkainen

First-to-Market Strategies

Be the first to upgrade products with new

technology

Respond rapidly to market changes

Introduce continual product innovation

Be the first to create a new market

Fast-Follower Strategies

Wait until a new market is clarifiedReverse-engineer successful competitiveproduct


22/27

TMitTI22

Sakari Luukkainen

Entering the market prematurely

Compressing product lifecycles

Relying on an inferior product developmentprocess

Risks of Timing Strategies


23/27

TMitTI23

Sakari Luukkainen

Global Product Strategies

Develop products uniquely for country markets

Leverage country-specific product

Customize global product platform

Develop universal global product


24/27

TMitTI24

Sakari Luukkainen

Cannibalization

Causes of Unfavorable Cannibalization

New product creates less profits

New product requires siginificant retooling

Greater technical risks

Offensive Strategies

Attack market leader

Introduce new technology first

Defensive Strategies

Cannibalize yourself before competitors Continue as technology leader

Pricing

Specific market segments


25/27

TMitTI25

Sakari Luukkainen

Growth through Acquisition

Acquire product platform to expand into newmarket

Acquire technology and technical skills to develop

new product platform

Acquire market and channel expertise to enternew market

Acquire a competitor to strengthen a currentmarket position

Acquire a company with the capability to diversifyinto new market


26/27

TMitTI26

Sakari Luukkainen

Strategic Balance Trade-offs

Focus vs. diversification

Short vs. long term

Current vs. new platform

One business unit vs. another

Research vs. development

High vs. low risk

Financial return


27/27

TMitTI27

S k i L kk i

Process of Product Strategy

product strategy in international market

Documents

Transcript of product strategy in international market