Product Strategies

Product Defined

The sum of the physical, psychological, and sociological satisfactions the buyer derives from purchase, ownership and consumption

Product Life Cycle

Forces management to take a long-range view of marketing planning.

Alter marketing mix to meet changing conditions.

Stages of the Product Life Cycle

Marketing Strategy Duringthe Product Life Cycle

Product Positioning Strategy

1. Techniques

2. Single vs. Multiple Brand Strategy – Businesses that have been successful with their initial product offering often

look to expand their product line either by adopting a multi-brand strategy or a multi-product branding strategy to gain more market share to grow their business.

Multi-product branding involves releasing multiple products with the same brand name - for example Revlon. They have Revlon lipstick ranges, eye shadow ranges, foundation ranges etc.  These are different products, but all branded as Revlon.

  Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Global Beverages, Tata Teleservices, Titan Industries, Tata Communications and Taj Hotels.

Product-Repositioning Strategy

Sometimes the original positioning of a product doesn't spur the interest of consumers. Other times, the original positioning was successful, but the target market of that position has become saturated and companies need to find new ways to feed growth. In those instances, repositioning may be the solution. Repositioning is the deliberate, strategic decision to change the way goods and services are viewed by consumers.

1. Reposition among existing customers2. Reposition among new users3. Reposition for new uses

Product-Overlap Strategy

1. Competing brands

2. Private Labeling - Brand owned not by a manufacturer or producer but by a retailer or supplier who gets its goods made by a contract manufacturer under its own label. Also called private brand.

The Spanish clothing chain Zara is a very successful copycat company that sells private labels only, producing fashion clothing at very low prices that imitates famous designers and well-known brands. They employ talented and unknown young designers to pick up on key trends and translate them into clothing for the Zara chain. The Marks & Spencer chain in the UK can charge premium prices for many of its own label food products as it has successfully marketed its food lines as gourmet, high-quality food.

3. OEM strategy - Original Equipment Manufacturer

Product-Scope Strategy

1. Single product

2. Multiple products

3. System of products

Product-Design Strategy

1. Standard products

2. Customized products

3. Standard product with modifications

Product-Elimination Strategy

1. Harvesting - Planned discontinuation of a product at the end of its life cycle, while extracting maximum profit from its sales. In this strategy, all marketing expenditure is gradually eliminated and the product is allowed to sell on its goodwill until sales revenue falls below a cutoff point. See also exit strategy.

2. Line-Simplification

3. Total-Line Divestment

New-Product Strategy

1. Product Improvement/Modification

2. Product Imitation

3. Product InnovationDevelopment Process:Idea GenerationIdea ScreeningProject PlanningProduct DevelopmentTest MarketingCommercialization

Diversification Strategy

1. Concentric Diversification2. Horizontal Diversification3. Conglomerate Diversification

Concentric Diversification --Concentric diversification is one of several different diversification strategies used by companies to increase their appeal to consumers. With this particular approach, the business will attempt to increase market share by introducing a range of new products that are likely to not only attract the attention of existing clients but also draw in new customers. Sometimes referred to as convergent diversification, the goal is to motivate current customers to keep purchasing the company’s older products while also choosing to purchase the newer products. At the same time, the effort also brings in new clients who have no relationship with the older products, based on the appeal of the recently launched product line.

For example, a company that has established a steady clientele for its paper plates may choose to add other product lines that can be used along with the plates. This may include a line of color-coordinated disposable drinking cups, napkins, and even plastic cutlery and disposable tablecloths. The idea is to entice customers who already buy the plates to purchase the other goods to use at the same time. This approach may also appeal to new customers who want to create a coordinated look when enjoying a casual dining experience, such as an outdoor picnic.

Horizontal Diversification-- Adding new, related or unrelated products or services for present costumer is called horizontal diversification strategy. This strategy is not as risky as conglomerate diversification strategy, because a firm should already be familiar with its present customers.Park Avenue – into garments (Traditionally) Park Avenue - into cosmetics (Recently)

Conglomerate Diversification (Lateral Diversification)---Adding new, unrelated products or services is called conglomerate diversification strategy.General Electric is an example of a firmthat is highly diversified. GE makes locomotives, light bulbs, and refrigerators. GE manages more credit cards than American Express. GE owns more aircraft that American Airlines.

Value Marketing Strategy

1. Quality Strategy

2. Customer Service Strategy

Some Causes of New Product Failure

Poor up-front intelligence

Failure to stick close to what the company does best

Lack of competitive advantage

Failure to satisfy a need or want

Product Mix Decisions

Product mix or product assortment refers to the number of product lines that an organization offers to its customers. Product line is a group of related products manufactured or marketed by a single company. Such products function in similar manner, sold to the same customer group, sold through the same type of outlets, and fall within a same price range .

Product mix consists of various product lines that an organization offers,  an organization may have just one product line in its product mix and it may also have multiple product lines. These product lines may be fairly similar or totally different, for example - Dish washing detergent liquid and Powder are two similar product lines, both are used for cleaning and based on same technology; whereas Deodorants and Laundry are totally different product lines.

An organization's product mix has following four dimensions :-

Width, Length, Depth, and Consistency.

Width

The width of an organization's product mix pertains to the number of product lines that the organization is offering. For example, Hindustan Uni Lever offers wide width of its home care, personal care and beverage products. Width of HUL product mix includes Personal wash, Laundry, Skin care, Hair care, Oral care, Deodorants, Tea, and Coffee.

Length

The length of an organisation's product mix pertains to the total number of products or items in the product mix. As in the given diagram of Hindustan Uni Lever product mix, there are 23 products, hence, the length of product mix is 23. 

Depth

The depth of an organization's product mix pertains to the total number of variants of each product offered in the line. Variants includes size, colour, flavors, and other distinguishing characteristics. For example, Close-up, brand of HUL is available in three formations and in three sizes. Hence, the depth of Close-up brand is 3*3 = 9.

Consistency

The consistency of an organization's product mix refers to how closely related the various product lines are in use, production, distribution, or in any other manner.

Product Mix Decision

Product mix decision refers to the decisions regarding adding a new or eliminating any existing product from the product mix, adding a new product line, lengthening any existing line, or bringing new variants of a brand to expand the business and to increase the profitability.

Product Line Decision

Product Line Decision - Product line managers takes product line decisions considering the sales and profit of each items in the line and comparing their product line with the competitors' product lines in the same markets. Marketing managers have to decide the optimal length of the product line by adding new items or dropping existing items from the line.

Line Stretching Decision - Line stretching means lengthening a product line beyond its current range. An organisation can stretch its product line downward, upward, or both way.

Downward Stretching means adding low-end items in the product line, for example in Indian car market, watching the success of Maruti-Suzuki in small car segment, Toyota and Honda also entered the segment.

Upward Stretching means adding high-end items in the product line, for example Maruti-Suzuki initially entered small car segment, but later entered higher end segment.

Two-way Stretching means stretching the line in both directions if an organisation is in the middle range of the market.

Line Filling Decision - It means adding more items within the present range of the product line. Line filling can be done to reach for incremental profits, or to utilise excess capacity.