product startegy

8/11/2019 Product Startegy

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Product Strategies for

the Asia PacificAsia-Pacific Marketing Federation

Certified Professional MarketerCopyright

Marketing Institute of Singapore


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Outline

Product Hierarchy

Product-Mix Decisions

Product-Line Strategies

New product development in ASPAC

Positioning & Repositioning

Brand decisions


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Introduction

Product (or service) is the mainelement of the marketing mix

Therefore, need to determine theProduct Strategiesbefore deciding onthe remaining marketing mix


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7-Levels of Product

Hierarchy

Product needto satisfy a need e.g. feet protection

Product classa family of products having similarfunction e.g. all shoes

Product linea group of products with closely relatedfunctions e.g. sports shoes

Product typeproducts within a line having similarform e.g. basket-ball shoes

Branda name representing a product or line e.g.Nike

Item (Stock Keeping Unit)a unit item e.g. one pairof Nike basket-ball shoe


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Product-Mix Decisions

Decisions on the product mix (the number ofproduct lines and items in each line) that thecompany may offer

A single product Most firms started off as a single-product company

Multiple products

e.g. Creative Technology markets sound cards aswell as MP3 players

A systems of products e.g. Nikon sells camera, lenses, filters & other

options


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Product-Line strategy

How many product lines should wehave?

Example:Delft Sensor Systemsoffer acomprehensive range of products, includingportable and platform mounted night visionsystems and thermal imaging systems,

head- and helmet mounted displays, laserrangefinders and fire control systems(Source: http://www.oip.be/press/brazil.htm)


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Product-Line strategy

(contd)

How many product items in each line?

Example:Both Gardeniaand Bonjour

launched new flavors in January 1999 tonibble away at each others marketshare of a loaf estimated to be worth

about $80 million(Source: ST, Home, Jan29/99)


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Expanding the Product Line

1.Product line extension: add an item tothe existing product line

Many FMCG companies introduced varioussizes of the same product e.g.mini-packsfor travelers, extra-large size for hospital

2.Product category extension: add a newitem or line of items for a companye.g. P&G have Vidal Sassoon, Head &

Shoulders, Rejoice, and Panthene in thesame category


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Expanding the Product Line

(contd)

3. Brand extension: Product categoryextension that uses an existing brand

name e.g. Cerebos introduced Brands Essence of

Chicken with TangKwei targeting women

Nestle extended its Bear Brandcondensed milk in Thailand byintroducing Bear Brand with Honey


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More on Product Line Extension

Downward stretch by introducing lower range ofthe products e.g. In 1989 the Shangri-La, a chain of deluxe hotels and

resorts in Asia established the Traders Hotels, a sisterbrand to deliver high value, mid-range, qualityaccommodation to the business traveler

Mercedes introduced the baby Merz to cater to theupper class mid-sized range of the market

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

Infiniti


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Product Line Extension (contd)

Two-way stretch by filling the wholeline e.g.

Toyota has the Starlet at the lower end;the Corolla in the executive range; theCamry in the upper-management rangeand the Lexus in the luxury range


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New Product Strategy

New products are critical to survival

New-product development (NPD) is

essential for companies seeking growthIt should be an on-going, well organized

NPD process having top-managementsupport

What is a new product? (see next slide)From a firm's perspective, a new product is

a product that it is unfamiliar in any way


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Definition of

Product Newness

1. Products new to the world; usuallyrevolutionary products resulting fromproduct innovation e.g

When Creative Technology firstintroduced the Sound-blaster

When disposable cameras were first

introduced When Seiko introduced the Seiko

Kinetic Relay, a watch that can go into

suspended animation


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Definition of Product

Newness (contd)

2. Products new to the firm Improvements to existing products e.g.

In 1960 Kaointroduced shampoo liquid and in1970 introduced KaoMeritshampoo (anti-dandruff)

Additions to existing lines e.g.

In 1965 Kao introduced theKao Tenderhairconditioner

Costs reductions and re-positionings


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Example of NPD--Logitech

Logitech, the world's biggest maker ofcomputer mice, has come up with a

mouse that allows the user to feelwhat is seen on thescreen. This mouse [is] called the

iFreeMouseManAP (August 22, 2000)


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Product Convergence

First coined by Creatives Sim W H who

was referring to the marriage betweenthe PC and home entertainment

Creative Multi-Speaker Surround

(CMSS) uses seven audio channels

Source: Computer Times, 1997


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Positioning

Positioning refers to placing a brand inthat part of the market where it will

have a favorable reception comparedto competing brands Subash Jain

A products position is the place theposition occupies in consumers mindsrelative to competing products.

Philip Kotler


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Generic Positioning Strategies

Our product is unique

e.g. Raffles Hotel(oldest hotel); Westin Hotel(tallest hotel)

Our product is different e.g. Seng Chooneggs (low in cholesterol)

Listerine(kills germs)

Amex Blue credit card (6-month rate of15.9% vs the market rate of 24%)

Our product is similar

e.g. Thai fragrant rice


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Approaches to Positioning

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

By benefits

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

By price/quality e.g. Proton

By usage or application e.g.100Plus (fluidreplenishment in sports)

By users e.g. Johnson Baby Shampoo; J&JAffinity Shampoo (hair conditioner for women)

By product class e.g. Camay soap (with bath oilsnot just soap)

B com etitors e.g. Avis against Hertz


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Product Positioning Using

Perceptual & Preference Maps

Marketing managersuse a Mappingtechnique to help them visualize the

competitive structure of the marketbefore they develop differentiationand positioning strategies


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Positioning Statement

For [a target segment], the [concept] is [theprimary claim] because [it is the single most

important factor].

Example:

For Seng Choon eggs, the low cholesterollevelis the only healthy alternative because it issafe for frequent consumption


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Example of a 2D Perceptual Map

for LaptopBrand A

Brand B

Appearance

Performance


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Repositioning

Why reposition?

Competitors position next to you

Consumer preferences changed

New consumer preference cluster

Original mistake


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Repositioning (contd)

Repositioning among existing customers e.g. Cerebos repositioned BRANDS from a

traditional therapeutic and recuperative tonic to

one for preventative health maintenanceAPB repositioned Tiger Beer as a beer for all time

Repositioning among new users BRANDS essence of chicken for students

Repositioning for new uses Repositioning BRANDS as a base for double-boil

cooking


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Product-Overlap Strategy

This strategy refers to a situation in whicha company decides to compete against

its own brand by using:Competing brands

e.g. Gillette Atra, Sensor, Mach 3

Private labeling e.g. Sin Sin Chilli Sauce, Watson Vitamins

OEM e.g. IBM selling magneto-resistance (MR) heads to

OEM disk drive developers/manufacturers


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Product-Elimination

Strategy

When a products performance is fallingshort of expectations and continued

support is no longer justified, its timeto pull it out of the marketplace

How?

Harvesting, line-simplification, total-linedivestment


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Value-Marketing Strategy

Value-marketing strategy means delivering realproduct performance based on the following

promises Quality strategy

Customer-service

Time-based

Example: Dell cuts the duration from order to delivery of most

of its products to the minimum


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Brands

A rose by any name smells as sweet. Trueor false?

Would you go vacationing on Hog Island?

Why are Coca-Cola, McDonalds andKentucky Fried Chicken (KFC) successful?

Do you think Maikenji would be half assuccessful? Maikenji restaurant in Badaling, north of Beijing

combines the Chinese Characters used in thenames for McDonalds and KFC and offers a menusimilar to KFC located 100 metres away (AP11,Jul2001)


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Brands (continued)

Buildings age and become dilapidated.Machines wear out. Cars rust. But what

lives on are brands.

Sir Hector Laing

United Biscuits, U.K.Source: The economist, Dec 24, 1988


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What 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


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Alternative Brand

Strategies

1.No brand identity Small firms with unknown brands e.g.

small tailoring outfits

2.Private brands Retailers with established brand

names e.g. NTUC Fairprice

3.Corporate brands Family name e.g. This Fashion


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Alternative Brand Strategies

(contd)

4. Product line extension Create cost advantage e.g. Novenas collection of

an extensive range of furniture at reasonable price

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

brand, Novena Holdings also carry the Castillabrand of Italian designed furniture

6. Combination e.g. Novena Holdings Novena Collection, Dickson

Beech Collection and the White Collection;

Seikos Alba and Pulsar


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The Branding Process

From commodity to producte.g. air travel

From product to brande.g. Singapore Airlines

From brand to experience

e.g. Romance in the airFrom experience to the hearte.g. A Great Way to Fly


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Branding 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 factorConventional branding => image

Online branding => customer experience

The issue of trust in a brand

(Source: Hi-Tech, Hi-Touch Branding by Temporal and Lee)


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Old Brands Strategy

Old brands survive due to emotional bondwith the consumer

For slow moving brands either revive it withmarketing money or kill it

Growing interest in old brands becausebrand names carry value that is getting

more expensive and risky to create When re-promoting old brands, do not

ignore younger consumers

S S lli F t A il 28 1986

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