Product Strategies

1
Product Strategies

• Chapter 14

2
Topics Chapter 14

• Product Positioning
• Product Overlap
• Product Scope

3
Topics Chapter 14

• Product Design
• Product Elimination
• New Product
• Diversification
• Value Marketing

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Product Positioning

• Placing a brand in the market where it will have
  a favorable reception compared to competing
  products

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Reasons to Re-Position Product

• Competitive entry positioned next to the brand
• Consumer preferences changed

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Reasons to Re-Position Product

• New customer-preference clusters discovered with
  promising opportunities
• Original position a mistake

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Perceptual Map of Brand Images
Classy distinctive proud
Lincoln
Porsche
Cadillac
BMW
Lexus
Mercedes
Chrysler
Pontiac
Spirited performance young people fun sporty
Oldsmobile
Buick
Conservative older people
Honda
Ford
Chevrolet
Nissan
Toyota
Dodge
Hyundai
VW
Practical fuel efficient affordable
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Product Overlap Strategy

• Company competes with its own brand
• Multiple brands overall sales has higher market
  share than one brand
• Cannibalism can occur

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Product Overlap Strategy

• New brand is improved product
• Old brand dies after new brand is established

10
Product Overlap Strategy Private label

• Product manufactured under another firms brand
  name
• House brands owned by wholesaler or retailer

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Product Overlap Strategy OEM

• Sell to competitors components used in firms
  products
• Allows other firms to compete in market

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Product Overlap Strategy OEM

• Manufacture at capacity
• Increase primary demand

13
Product Scope Strategy

• Perspective of the total product mix
• Number of product lines
• Number of items in each line

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Product Scope Strategy Single product

• Specialization and concentration in one product

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Product Scope Strategy Multiple products

• Diversify the risk across more than one product

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Product Scope Strategy System of products

• Satisfaction emphasis with complementary products

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Product Scope Strategy

• Single product
• Multiple products
• System of products

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Product Scope Single Product

• Specialization and concentration in one product

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Product Scope Multiple Products

• Diversify the risk across more than one product

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Product Scope System of Products

• Satisfaction emphasis with complementary products

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Product Design Strategy

• Firms choice of product design
• Standardized
• Custom-design
• Standard with modifications
• Basis
• Capabilities
• Type of business

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Product Elimination Strategy

• Pull product from market
• Performance is inadequate
• Support not justified

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Product Elimination Strategy

• Poor performance
• Low profitability
• Declining sales
• Technological obsolescence

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Product Elimination Strategy

• Poor performance
• Mature or decline phase of product life cycle
• Poor fit

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Product Elimination Strategy

• Harvesting
• Line Simplification
• Total-Line Divestment

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Total-Line Divestment Strategy Reasons

• No strategic connection
• Excess capacity due to downturn
• Inadequate capital to support growth
• Estate plan Not to keep business in family

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Total-Line Divestment Reasons

• Release assets to use in growth areas of business
• Improve ROI or growth rate
• divest slow growth areas
• invest in faster-growing, higher-return

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New Product

• Essential for growth
• Growth occurs through product
• Improvement or modification
• Imitation
• Innovation

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Diversification

• Objectives can not be met within product/market
  scope defined by expansion
• Retained cash exceeds total expansion needs

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Diversification

• Greater profitability opportunities that through
  expansion

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Value Marketing

• Stresses real product performance and delivering
  on promises

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Value Marketing

• Aspects
• Provide a product that works as claimed
• Provide service
• Deliver on time