Lehmann/Winer

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C H A P T E R
Developing A Product Strategy - Setting
Objectives - Choosing a Marketing Strategy
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Quick Review

• Ch.2 Boundary of your business domain
• Chs. 3-5 Analysis of Major Stakeholders
• Ch. 6 Your prediction about future
• ? Potential and Forecasting
• Ch. 7 Strategy (to achieve your objectives)
• ? Target (Competitive Customer)
• ? Positioning (Value Proposition)

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Action Plan

• Where are we headed? ?
• How will we get there? ?
• What will we do? ?

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A Successful Strategy

• Helps achieve coordination among functional areas
  of the organization.
• Defines how resources are to be allocated.
• Leads to a superior market position.

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Elements of a Product Strategy

• Statement of the objective(s) the product should
  attain
• Selection Consideration of strategic
  alternative(s)
• Selection of customer targets
• Choice of competitor targets
• Statement of the core strategy
• Description of supporting marketing mix.
• Description of supporting functional programs

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Hierarchy of Objectives
Company mission/vision
Level 0
Corporate objectives
Level I
Corporate strategies
Divisional objectives
Level II
Divisional strategies
Product/brand objectives
Level III
Brand strategies
Program objectives
Level IV
Tactics
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1. Setting Objectives

1. Characteristics of Good Objectives
2. Quantified standards
3. Challenging
4. Milestone
5. Two Major Decisions
6. Which Objective to Pursue?
7. How High it should be?

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2. Consideration of Strategic Alternatives

• Corporate Objectives
• Two Major Paths
• Increasing Sales/Market Share
• Market Development Strategy
• Market Penetration Strategy
• Increasing Profitability
• Decreasing Inputs
• Increasing Outputs

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Strategic Alternatives
Long-term profits
Efficiency, short-run profits
Growth in sales or market share
Market development
Market penetration
New segments
Existing customers
Convert nonusers
Competitors customers
New product development
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Criteria for Evaluating Strategic Alternatives

• Size/growth of the segment
• Opportunities for obtaining competitive
  advantage ? Know Yourself
• Resources available to penetrate the segment

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3. Targeting and Positioning

• Choice of Customer Targets
• Choice of Competitor Targets
• Statement of the Core Strategy Value Proposition
• Economic (cost/price) Advantage
• Functional Advantage
• Psychological Advantage

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Target Segments for Handspring
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3. Targeting and Positioning (contd)

• Five Areas of Differentiation
• Quality
• Convenience and Service
• Status and Image
• Branding
• Distribution Channels

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Joint Space for Colas
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Total Product Concept
Potential product
Generic product
Expected product
Augmented product
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Managing Brand Equity
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Brand Equity (contd).
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3. Targeting and Positioning (contd)

• Values Being Sought by Customers (Rackham)
• Transactional Sales Intrinsic Value
• Consultative Sales Extrinsic Value
• Enterprise Sales Strategic Value
• Relationship Life Cycle and Strategy
• Customer Acquisition
• Customer Retention
• Customer Expansion
• Customer Deletion

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Making Sense of A Strategy Jungle

• Strategy at different levels
• Corporate or Business Level Porters Generic
  Strategy
• Functional Level Strategies
• Cost Leadership Fixed Cost and Variable Cost
• Differentiation Supply side and Demand side
• Focus Segmentation
• Relationship Life Cycle-based Strategy
• Product Life Cycle-based Strategy
• First mover advantage

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Strategy Over the Life Cycle
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4. Supporting Marketing Mix Programs

• Product and Brand
• Pricing
• Marketing Channels
• Communication ex) Advertising and Sales
  Promotion

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Illustration Handspring
Objective
To capture 15 percent of the PDA market by the
end of year 2
Customer Targets
Price-conscious professionals Nonbusiness
professionals Nonprofessionals
Competitive Targets
Palm Sharp
Core Strategy
Simplicity/convenience Low price Expandability
(via expansion slot)