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8/9/2019 Develop Product Strategy
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Developing a Product strategy
All that u needed
8/9/2019 Develop Product Strategy
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Product- riskiest of the marketing mix
Effect of increased pace of technology
Become obsolete before you recover money
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We cover
Need to understand Product
Product strategies over PLC
Managing the industrial product line
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Augmented
properties
Core & Augmented Product
Enhancedproperties
Core
Product
Compt
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Product strategies involve continual change:
Any change in the consumer need
Change in technology
Change in law
Change in economics
Changes in culture
Changes in PLC any modification atmaturity
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Product strategy also involves
Whether changes are required in existing
product?
Whether products should be added / dropped?
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INDUSTRIAL PRODUCT MANAGEMENT
Industrial product manager is very vital in this: Forecasts
Does market sensing
Does customer linking
Product and marketing managers
When?
Series of product & one market
One product line several markets What is hybrid
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Sales & Profit Life Cycles
IntroductionIntroductionvisionariesvisionaries
GrowthGrowthPragmatistPragmatist
MaturityMaturityConservativesConservatives
DeclineDeclinelaggardslaggards
TimeTimeSales
Sales
&&
profits
profits
($)
($)
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The Product Life Cycle
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Offering Development
Stage-TECHNOPHILES
No sales volume offering still being
developed.Product is not yet completely defined.Profits do not exist.Development at whose insistence?Promotion may be oriented towardspublicity about technological developments.Heavy investment to prepare the offering
to satisfy customer needs.
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Offering Introduction
Stage-visionaries
Low Product sales volume.
is somewhat basic little need for competitivedifferentiation.Profits are typically negative.Supplier experiments growing pain and customer pains
of uncertaintyLow learning- OK (electronic calculator)New offering a logical extension of existing- it mustbe OK with the customer (Int Mktg)High learning- takes time (Elec typewriter)
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Offering Growth
Stage- pragmatist
Good news- Product is accepted
Bad news- likely to attract competitionImprove designMarket penetration pricing may be appropriate as competitorsbring pressure on high margins.Profits increase - new adopters accept product.Accordingly, product differentiation becomes important todistinguish the offering from competitors (and to help protectmargins.)Promotion serves to remind/reinforce decisions.Distribution is often important in the training and education ofcustomers.
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Offering MaturityStage-Conservatives
Profits have peaked, competition fights over market
share.Promotion reinforces buyer decisions and focuses onsupplier reputation and value.Distribution strives to serve all market sub-segments.
Time to think of new product offeringsPrice is a major component of the marketing mix.New customers do not replace sales volumes as oldcustomers move to newer products- value migrations
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Offering DeclineStage
laggards
Consolidation usually occurs among suppliers
Product line is reduced to minimize productvariation efforts are made by remainingcompetitors to operate at productive rates.Promotion reduced to minimal levels toaccommodate existing customers.Price, particularly associate with a long-termcontracts, is a major part of the marketing
mix.
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How Can You Determine Wherean Offering Is in the PLC?
Develop and review trend information for the pastcycles. Profit / sales ratio Examine changes in the number and nature of
competitors.-
South Korea into LA why not I as well Review short-term competitive tactics are
competitors pricing to utilize new capacity or improveshort term sales volume?
Are new product introductions aimed at segmentscurrently served by existing offerings?
Will a competitor innovate your product out ofbusiness? It is better to obsolete yourself instead ofgetting it done by competitors
Do unto yourself what you would have done to others
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Perceptual Map
0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.60.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6-1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2-1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2
1.01.0
0.80.8
0.60.6
0.40.4
0.20.2
-0.2-0.2
-0.4-0.4
-0.6-0.6
-0.8-0.8
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IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline
Sales Low Rapid Growth rate rednPeak sales Declining
Profit Loss
Investment inprodn & mktg
Reaches peak Increased competition
reduces profits andcuts into total profits
Pushes cost up
Competitors
Nil Growing Many fight for samepie
Few . Shakeout ofweak
CustomersInnovative
2.5%Visionaries
Early adopter13.5%
Pragmatists
Mass Mkt 68 %Conservatives
Laggards 16%
Overall strategy Product Price Distribution Promotion
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Overall strategy Product Price Distribution Promotion
I Mkt acceptance.Foster productawareness and trial
Basic Designlow learningproducts
Skim
Pen
Cost+
Cmp
Selective Informative.Perhapspublicity
G Mkt Penetration.Persuade mass Mktto prefer your brand
Product /designImprovement.Expand line
High Intensive Persuasive.Loyalties
M Defend brand. Stopcompetitors fromentry
Differentiate.Full line
Find new userskeep currentsatisfied
Marketprices. Avoidwar
Intensive More user/usage.Loyalties
D Redn of expenses.Prepare for removalof prod. Squeeze allbenefits of theproduct
Minimalchanges toproduct. Linereduces to bestservers
Low enoughto permitliquidationof inventory
selective Minimal tonone. Perhapsnegative
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Strategies for existing products
Do nothing
If you have a huge customer base, but is in
the process of being replaced, lower OH
and cost of production
Change the product?
If things wont work, drop the product. Why
not?
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Product elimination decisions
Customers have no alternatives despitechanges in environment- CRDI- do not
eliminate Will relationship gets jeopardized
Will it hurt the profitability of other
products Corporate image-raise doubts on thereliability of the firm