B9b59 pbm mod

Name of InstitutionAmity Business School

Product Strategy

Strategic vision

where

why

how

Roadmap


Product Line LengthNumber of Items in the Product Line

Product Line LengthNumber of Items in the Product Line

Stretching

Lengthen beyond current range

Filling

Lengthen within current range

Downward

Upward

(A) Product line decisions

Name of InstitutionAmity Business School(B) Product-Position Strategies

Our product is unique e.g. Taj Hotels(oldest in 5 star

hotels); Radisson Hotel (pocket friendly 5 star hotel)

Our product is different e.g. Saffola(low in cholesterol) Listerine (kills germs)

Our product is similar e.g. Harpic vs Sani-fresh vs

Lizol Dove vs Pears vs Camay

For [a target segment brand], the [concept from individual product features] is the [primary claim / attributes positioned for customers against competitors] because [it is the single most important factor to keep buying or core benefit]


By attributes e.g. Singapore Airlines (first class comfort)

By benefits e.g. Citibank Credit Card (24/7 availability)

By price/quality e.g. Tata Photon plus By usage or application e.g.Red Bull (fluid

replenishment in sports) By users e.g. Johnson Baby Shampoo; J&J

Affinity Shampoo & hair conditioner for women)

By product class e.g. Camay soap (with bath oils—not just soap)

By competitors e.g. Dettol against Lifeboy

Name of InstitutionAmity Business School(C ) Product Repositioning Strategy

• Repositioning among existing customers– Dabur repositioned its Brands from a

traditional therapeutic remedies to one for preventive health maintenance

– Bagpiper repositioned as “Khoob jamega rang…”

• Repositioning among new users

• Repositioning for new uses– Repositioning of Maggi Tomato Ketchup

“It’s different”

Name of InstitutionAmity Business School(D)Product-Overlap Strategy

Company decides to compete against its own brand by using:

• Competing brands– e.g. Gillette Atra, Sensor, Mach 3

• Private labeling– e.g. Spencer’s Chilli Sauce, Watson

Vitamins• OEM

– e.g. IBM selling magneto-resistance (MR) heads to OEM disk drive developers/manufacturers


(E) Product-Elimination Strategy

• Or Cannibilization• How?

Harvesting benefits Line-simplification Total-line divestment


(F) Value-Marketing Strategy

• Delivering real product performance with promises: Quality Customer-service Time

• Example: – Dell cuts the duration from order to

delivery of most of its products to the minimum

Name of InstitutionAmity Business School(G) ANSOFF STRATEGY

EXISTING

NEW

NEW

EX

ISTIN

G

PRODUCT

MA

RK

ET


(H) EXTENSION STRATEGIES

1. Product line extension: add an item to the existing product line – FMCG companies introduced various

sizes of the same product e.g. mini-packs for travelers, extra-large size for hospital

2. Product category extension: add a new item or line of items for a company e.g.– P&G have Head & Shoulders, Rejoice,

and Pantene in the same category


3. Brand extension: Product category extension that uses an existing brand name e.g.

– Nestle extended its Bear Brand condensed milk by introducing Bear Brand with Honey


• Downward stretch by introducing lower range of the products e.g. – Shangri-La, a chain of deluxe hotels and resorts in

Asia established the Traders Hotels, a sister brand to deliver high value, mid-range, quality accommodation to the business traveler

– Mercedes introduced the “Baby Merz” to cater to the upper class mid-sized range of the market

• Upward stretch by entering the high end of the market e.g. – Toyota introduced the Lexus and Nissan introduced

the Infiniti


• Two-way stretch by filling the whole line e.g. – Toyota has the Starlet at the lower

end; the Corolla in the executive range; the Camry in the upper-management range and the Lexus in the luxury range


COST

USP

(I) Generic Strategies


Low Cost (price)

Broad

NarrowUniqueness

Source of P&B Advantage

StrategicTarget Segment

Differentiationstrategy

Cost leadershipstrategy

Focus strategy

(I) Generic Strategies


http://www.mbaknol.com/wp-content/uploads/2010/08/generic-strategies-porters-mbaknol.jpg

Name of InstitutionAmity Business SchoolStrategy - FOCUS

Focus

Careful identification of target market (niche)

Cost leadership emphasis or differentiation emphasis

Constant review of customer demand in

niche

Raymond elite retailing

Polo RL clothing

Rolex watches

Nirma washing powder


Strategy - Differentiation

Premium Quality

Brand image

Technological leadership

Customer service

Apple - PCs

Gillette – razors

Nike - shoes


Strategy - Cost leadership

Tight cost controls

Efficient service,

sales force, and advertising

Competitive pricing

Discount Tyres - Tyre replacement

Wal-Mart – retailing

UPS - package delivery


1 Low price/low added value Likely to be segment specific

2 Low price Risk of price war and low margins/need to be cost

leader3 Hybrid Low cost base and reinvestment in

low price and differentiation

4 Differentiation5 Focused differentiation Perceived added value to a particular segment, price premium

6 Increased price/standardHigher margins if

competitors do not value follow/risk of losing market share7 Increased price/low value

Only feasible in monopoly situation

8 Low value/standard priceLoss of market share


Product adaptation - communicati

ons extension

Product adaptation - communicat

ions adaptation

Product communicati

ons extension

Extended product -

communications

adaptation

Existing Product

New Product

Existing IMC

New IMC

(K) Communication-Adaptation Based Strategies

Name of InstitutionAmity Business SchoolProduct communications extension very low costtakes the same product and communication strategy into other markets Extended product - communications adaptation adjustment in marketing communications onlylow cost strategy, but different product functions have to be identified and communications mix developed

Product adaptation - communications extension product adapted to fit usage conditions but the communication stays the same

Product adaptation - communications adaptation Both product and communication strategies need attention to fit the peculiar need of the market

Product invention needs a totally new idea to fit the exclusive conditions of the market. development costs may be high, but the advantages are also very high.

(K) Communication-Adaptation Based Strategies

Name of InstitutionAmity Business School(L) Price/Quality Based Strategies


Price skimming: Introductory price set relatively high, thereby attracting buyers at top of product’s demand curve.

Market penetration pricing: Low price is used as an entering wedge.


(M) Price-Leadership Strategy

• Price-leadership strategy: One or a very few firms initiate price changes, with most or all the other firms in the industry following suit.

• When price leadership prevails, price competition does not exist. The burden of making critical pricing decisions is placed on leading firm(s) and other simply follow the leader.


(N) Competitive Bidding

Competitive bidding: Buyer sends inquiries (requests for quotations) to firms able to produce in conformity with requested requirements

Requests for proposals (RFPs) involve the same process, but here buyer is signaling that everything is preliminary and that a future RFQ will be sent once specifics are determined from the best proposals.


(O) BCG SBU Portfolio Strategy

Low

High

High Low

Industry attractiveness,Market share,Cash generation

Nurture to feed cash to?

Use cash to make into star

Defend position

Fix or abandon

Businessstrength,Growth rate,Cash use


Bottom line:

Product market share and market strength change as market is redefined; also possible that industry attractiveness changes.

Repositioning by Redefining Axes


(Q) New- Product Development Strategy

• New product strategy• Idea generation• Idea screening• Concept development and

testing• Marketing strategy• Business analysis• Product development• Test Marketing • Commercialisation


New products are critical to survival

New-product development (NPD) is essential for companies seeking growth It should be an on-going, well

organized NPD process having top-management support

What is a new product? From a firm's perspective, a new

product is a product that it is unfamiliar in any way


1. Products new to the world:usually revolutionary products resulting from product innovation

When Creative Technology first introduced the Sound-blaster

When disposable cameras were first introduced

When Seiko introduced the Seiko Kinetic Relay, a watch that can go into suspended animation


2. Products new to the firm • Improvements to existing products

e.g.– Clinic Plus --------Clinic All Clear

• Additions to existing lines e.g.– Clinic all clear hair oil

• Costs reductions and re-positioning


Example--Logitech

“Logitech, the world's biggest maker of computer mouse, has come up with a mouse that allows the user to feel what is seen on the screen. This mouse is called the iFreeMouseMan”

Name of InstitutionAmity Business School(S) Strategies for PLC

INTRODUCTION GROWTH MATURITY DECLINE

ProductStrategy

Limited models,frequent changes

More models,frequent changes

Large number of models

Eliminate unprofitable

models

Awareness, stimulate

demand, sales promotion

Aggressive ads,Reduce SP

Advertise, promote heavily

Phase outpromotion

Basic Product

Product Extension, service, warranty

Brand Extensions, USP, Brand switching

Target Laggards


1.Introduction - 3D TVs2.Growth - Blueray discs/DVR3.Maturity - DVD4.Decline - Video cassette


INTRODUCTION

GROWTH MATURITY DECLINE

Third generation mobile phones

Portable DVD Players

Personal Computers

Typewriters

E-conferencing

Email FaxesHandwritten letters

All-in-one racing skin-suits

Breathable synthetic fabrics

Cotton t-shirts

Shell Suits

Iris-based personal identity cards

Smart cards Credit cardsCheque books


1. Product Platform Strategy & Open

Interface

2. Product Line Strategy

3. Leveraged Expansion

4. Sustained Differentiation

5. First-to-Market vs. Fast-Follower

Strategy

(T) Types of Platform Strategies:


1. Product Platform Strategy

• Platform is an architecture of the common elements implemented across a range of products

• One element in the platform represents a defining technology– Dictates life cycle, capabilities, limitations– The choice of defining technology is the

most critical strategic decision that a hi-tech company makes


Product Platforms

Product 1

Product 2

Product 3

Product 1A

Product 1B Product 1C

Feature A

Feature B

Feature C

Segment A

Segment B

Segment C

Common PlatformElements

Unique product elements and common channel

elements of product lineProduct 5


Benefits of Platform Strategy

• Focuses management on key decisions at the right time

• Enables rapid & consistent product development

• Encourages a long-term view on product strategy

• Can leverage operational efficiencies– Manufacturing costs– Design costs– Marketing support easier


Example of Product Platforms:

• Apple Computer Platform:– Mac OS– Motorola processors– Easy-to-use GUI

Supporting and Defining Technologies?


Open Interface in Product Platforms

• A product portfolio based on open interface allows other manufacturers to participate

• Gives the company a smaller portion of the entire market, but…

…makes the market significantly bigger

To enlarge a market where you are a rather strong player yourself

A piece of a big cake may well be a lot bigger than the small cake!


2. 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


Product Line Strategy (contd.)

Covers all targeted market segments Each product offering should be sufficiently

focused Time-phased scheduling / sequencing

All products cannot be released simultaneously

Prioritization Similar product lines are coordinated

To avoid rework and confusion in marketing and among customers


Product Line Examples


3. Leveraged Expansion

The success of expansions to new product markets depends highly on ability to leverage:

• Existing market knowledge

• Technical Product skills


Examples of Leveraged Expansion

• Adobe: Acrobat• Microsoft

– DOS Windows – Windows + Internet Internet Explorer & MSN


4. Sustained Differentiation

…is achieved with vectors of differentiation that are significant to the customer

• One very prominent unique featureor

• An appealing combination

• Eg- Technolgy


High-Tech Differentiation 1. Unique features

2. Measurable benefits

3. Ease of use

4. Improved productivity

5. Unique fundamental characteristics

6. Design


1. Unique features

• Most commonly used• An ”easy” strategy• Endlessly adding new features does not

give sustained differentiation• Can contradict ease of use


2. Measurable benefits

• Reduced eletricity bill• Longer recording time• Faster Internet access


3. Ease of use

• A very important vector of differentiation• Sometimes technology advances do not

deliver enhanced productivity, because of usability problems

• A big challenge in an era when everything is integrated in a single device (mobile phone)


4. Improved Productivity• Longer battery life• Better quality (of voice communications)• More responsive UI• Technology advances complemented with

good usability• Often a crucial factor in buyer’s decision

making process


5. Unique Fundamental Characteristics

• Example: The imaging method of Polaroid cameras

• Often protected by patents– If based on a special technology


6. Design• More and more important in maturing

markets… …such as mobile phones!

• Hardware Design & User Interface Design


4. First-to-Market Strategy

• Market share advantage• Earlier market & customer experience• Influence on markets and standards• Possibility to build entry barriers• Image benefits, a glamorous strategy• Big risks!


5. Fast-Follower Strategy

• Wait until market is clarified• Avoid market education costs• Nearer in time to eventual market, easier to

predict• Ability to use newer technology• Fast means fast!• Advantages of being fast:

Jump ahead and stay ahead

Name of InstitutionAmity Business School(U) Other Global Strategies

1. A Global Strategy It treats the world as a single marketEg: Matsushita has performed better than GE and Philips in consumer electronics market2. A Multinational StrategyIt treats the world as a portfolio of national opportunitiesEg: In food & cleaning products, Unilever as a better performer than P&G as Unilever grants more decision-making autonomy3. A “Glocal” Strategy It standardizes certain core elements and localizes other elements. Eg: Erricsson (Telecommunications) - each nation requires some adaptation but the company can also standardize some core componentsMost successful “Glocal” – ABB



BRANDS


• “A rose by any name smells as sweet.” True or false?

• Would you go vacationing on Disney Island?

• Why are Coca-Cola, McDonald’s and Kentucky Fried Chicken (KFC) successful?


“Buildings age and become dilapidated. Machines wear out. Cars rust. But what lives on are brands.”

Source: The Economist, 2010

Name of InstitutionAmity Business SchoolThe Branding Process

• From commodity to product – e.g. air travel

• From product to brand – e.g. Singapore Airlines

• From brand to experience – e.g. Romance in the air

• From experience to the heart – e.g. A Great Way to Fly


brand hierarchy—from top to bottom—might be as follows:1.Corporate (or company) brand (e.g., General Motors)2.Range brand (e.g., Chevrolet)3.Individual brand (e.g.. Lumina)4.Modifier (designating item or model) (e.g., Ultra)


Name of InstitutionAmity Business SchoolWhat is a brand?

Six levels of meaning:• Attributes e.g. High resale value• Benefits e.g. Safety • Values e.g. Brand loyalty• Culture e.g. Organized and Efficient• Personality e.g. Serious• Type of users e.g. by occupation

Name of InstitutionAmity Business SchoolBrand Strategies

1. No brand identity– Small firms with unknown brands

e.g. small tailoring outfits2. Private brands

– Retailers with established brand names e.g. Fairprice

3. Corporate brands– Family name e.g. Tata


4. Product line extension– Create cost advantage e.g. Jagdish

Store collection of an extensive range of furniture at reasonable price

5. Specific product– Individual brand e.g In addition to the

JS brand, it also carry the Stanlay brand of Italian designed furniture

6. Combination– e.g. JS Collection, JS&S Beach

Collection and the White Collection

Name of InstitutionAmity Business SchoolOld Brands Strategy

• Old brands survive due to emotional bond with the consumer

• For slow moving brands either revive it with marketing money or kill it

• Growing interest in old brands because brand names carry value that is getting more expensive and risky to create

• When re-promoting old brands, do not ignore younger consumers


Differentiation Satisfaction Loyalty Perceived Quality Leadership or Popularity Perceived Value Brand Personality Organizational Associations Brand Awareness Market Share Market Price Distribution Coverage

BRAND VALUE

Name of InstitutionAmity Business SchoolBranding on the Web

• Profile of “Gen-N”• How to harness the Internet for brand-

building?– By rewarding brand loyalty and updating

your site etc.• Decision-influence factor

– Conventional branding => image– Online branding => customer experience

• The issue of trust in a brand


Product Strategy Process ReviewTask 2:

Assess threats

and opportunities

Task 3:

Assess

strengths and

weaknesses

Task 4:Formulatestrategies

Task 1:

Develop mission

and goals

Task 5:

Develop strategic

plan

Task 8:

Repeat planning

process

Task 7:

Control and

assess results

Task 6:

Develop tactical

plans