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Name of InstitutionAmity Business School
Product Strategy
Strategic vision
where
why
how
Roadmap
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Product Line LengthNumber of Items in the Product Line
Product Line LengthNumber of Items in the Product Line
Stretching
Lengthen beyond current range
Filling
Lengthen within current range
Downward
Upward
(A) Product line decisions
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Name of InstitutionAmity Business School(B) Product-Position Strategies
Our product is unique e.g. Taj Hotels(oldest in 5 star
hotels); Radisson Hotel (pocket friendly 5 star hotel)
Our product is different e.g. Saffola(low in cholesterol) Listerine (kills germs)
Our product is similar e.g. Harpic vs Sani-fresh vs
Lizol Dove vs Pears vs Camay
For [a target segment brand], the [concept from individual product features] is the [primary claim / attributes positioned for customers against competitors] because [it is the single most important factor to keep buying or core benefit]
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By attributes e.g. Singapore Airlines (first class comfort)
By benefits e.g. Citibank Credit Card (24/7 availability)
By price/quality e.g. Tata Photon plus By usage or application e.g.Red Bull (fluid
replenishment in sports) By users e.g. Johnson Baby Shampoo; J&J
Affinity Shampoo & hair conditioner for women)
By product class e.g. Camay soap (with bath oils—not just soap)
By competitors e.g. Dettol against Lifeboy
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Name of InstitutionAmity Business School(C ) Product Repositioning Strategy
• Repositioning among existing customers– Dabur repositioned its Brands from a
traditional therapeutic remedies to one for preventive health maintenance
– Bagpiper repositioned as “Khoob jamega rang…”
• Repositioning among new users
• Repositioning for new uses– Repositioning of Maggi Tomato Ketchup
“It’s different”
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Name of InstitutionAmity Business School(D)Product-Overlap Strategy
Company decides to compete against its own brand by using:
• Competing brands– e.g. Gillette Atra, Sensor, Mach 3
• Private labeling– e.g. Spencer’s Chilli Sauce, Watson
Vitamins• OEM
– e.g. IBM selling magneto-resistance (MR) heads to OEM disk drive developers/manufacturers
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(E) Product-Elimination Strategy
• Or Cannibilization• How?
Harvesting benefits Line-simplification Total-line divestment
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(F) Value-Marketing Strategy
• Delivering real product performance with promises: Quality Customer-service Time
• Example: – Dell cuts the duration from order to
delivery of most of its products to the minimum
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Name of InstitutionAmity Business School(G) ANSOFF STRATEGY
EXISTING
NEW
NEW
EX
ISTIN
G
PRODUCT
MA
RK
ET
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(H) EXTENSION STRATEGIES
1. Product line extension: add an item to the existing product line – FMCG companies introduced various
sizes of the same product e.g. mini-packs for travelers, extra-large size for hospital
2. Product category extension: add a new item or line of items for a company e.g.– P&G have Head & Shoulders, Rejoice,
and Pantene in the same category
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3. Brand extension: Product category extension that uses an existing brand name e.g.
– Nestle extended its Bear Brand condensed milk by introducing Bear Brand with Honey
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• Downward stretch by introducing lower range of the products e.g. – Shangri-La, a chain of deluxe hotels and resorts in
Asia established the Traders Hotels, a sister brand to deliver high value, mid-range, quality accommodation to the business traveler
– Mercedes introduced the “Baby Merz” to cater to the upper class mid-sized range of the market
• Upward stretch by entering the high end of the market e.g. – Toyota introduced the Lexus and Nissan introduced
the Infiniti
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• Two-way stretch by filling the whole line e.g. – Toyota has the Starlet at the lower
end; the Corolla in the executive range; the Camry in the upper-management range and the Lexus in the luxury range
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COST
USP
(I) Generic Strategies
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Low Cost (price)
Broad
NarrowUniqueness
Source of P&B Advantage
StrategicTarget Segment
Differentiationstrategy
Cost leadershipstrategy
Focus strategy
(I) Generic Strategies
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Name of InstitutionAmity Business SchoolStrategy - FOCUS
Focus
Careful identification of target market (niche)
Cost leadership emphasis or differentiation emphasis
Constant review of customer demand in
niche
Raymond elite retailing
Polo RL clothing
Rolex watches
Nirma washing powder
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Strategy - Differentiation
Premium Quality
Brand image
Technological leadership
Customer service
Apple - PCs
Gillette – razors
Nike - shoes
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Strategy - Cost leadership
Tight cost controls
Efficient service,
sales force, and advertising
Competitive pricing
Discount Tyres - Tyre replacement
Wal-Mart – retailing
UPS - package delivery
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1 Low price/low added value Likely to be segment specific
2 Low price Risk of price war and low margins/need to be cost
leader3 Hybrid Low cost base and reinvestment in
low price and differentiation
4 Differentiation5 Focused differentiation Perceived added value to a particular segment, price premium
6 Increased price/standardHigher margins if
competitors do not value follow/risk of losing market share7 Increased price/low value
Only feasible in monopoly situation
8 Low value/standard priceLoss of market share
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Product adaptation - communicati
ons extension
Product adaptation - communicat
ions adaptation
Product communicati
ons extension
Extended product -
communications
adaptation
Existing Product
New Product
Existing IMC
New IMC
(K) Communication-Adaptation Based Strategies
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Name of InstitutionAmity Business SchoolProduct communications extension very low costtakes the same product and communication strategy into other markets Extended product - communications adaptation adjustment in marketing communications onlylow cost strategy, but different product functions have to be identified and communications mix developed
Product adaptation - communications extension product adapted to fit usage conditions but the communication stays the same
Product adaptation - communications adaptation Both product and communication strategies need attention to fit the peculiar need of the market
Product invention needs a totally new idea to fit the exclusive conditions of the market. development costs may be high, but the advantages are also very high.
(K) Communication-Adaptation Based Strategies
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Name of InstitutionAmity Business School(L) Price/Quality Based Strategies
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Price skimming: Introductory price set relatively high, thereby attracting buyers at top of product’s demand curve.
Market penetration pricing: Low price is used as an entering wedge.
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(M) Price-Leadership Strategy
• Price-leadership strategy: One or a very few firms initiate price changes, with most or all the other firms in the industry following suit.
• When price leadership prevails, price competition does not exist. The burden of making critical pricing decisions is placed on leading firm(s) and other simply follow the leader.
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(N) Competitive Bidding
Competitive bidding: Buyer sends inquiries (requests for quotations) to firms able to produce in conformity with requested requirements
Requests for proposals (RFPs) involve the same process, but here buyer is signaling that everything is preliminary and that a future RFQ will be sent once specifics are determined from the best proposals.
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(O) BCG SBU Portfolio Strategy
Low
High
High Low
Industry attractiveness,Market share,Cash generation
Nurture to feed cash to?
Use cash to make into star
Defend position
Fix or abandon
Businessstrength,Growth rate,Cash use
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Bottom line:
Product market share and market strength change as market is redefined; also possible that industry attractiveness changes.
Repositioning by Redefining Axes
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(Q) New- Product Development Strategy
• New product strategy• Idea generation• Idea screening• Concept development and
testing• Marketing strategy• Business analysis• Product development• Test Marketing • Commercialisation
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New products are critical to survival
New-product development (NPD) is essential for companies seeking growth It should be an on-going, well
organized NPD process having top-management support
What is a new product? From a firm's perspective, a new
product is a product that it is unfamiliar in any way
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1. Products new to the world:usually revolutionary products resulting from product innovation
When Creative Technology first introduced 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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2. Products new to the firm • Improvements to existing products
e.g.– Clinic Plus --------Clinic All Clear
• Additions to existing lines e.g.– Clinic all clear hair oil
• Costs reductions and re-positioning
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Example--Logitech
“Logitech, the world's biggest maker of computer mouse, has come up with a mouse that allows the user to feel what is seen on the screen. This mouse is called the iFreeMouseMan”
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Name of InstitutionAmity Business School(S) Strategies for PLC
INTRODUCTION GROWTH MATURITY DECLINE
ProductStrategy
Limited models,frequent changes
More models,frequent changes
Large number of models
Eliminate unprofitable
models
Awareness, stimulate
demand, sales promotion
Aggressive ads,Reduce SP
Advertise, promote heavily
Phase outpromotion
Basic Product
Product Extension, service, warranty
Brand Extensions, USP, Brand switching
Target Laggards
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1.Introduction - 3D TVs2.Growth - Blueray discs/DVR3.Maturity - DVD4.Decline - Video cassette
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INTRODUCTION
GROWTH MATURITY DECLINE
Third generation mobile phones
Portable DVD Players
Personal Computers
Typewriters
E-conferencing
Email FaxesHandwritten letters
All-in-one racing skin-suits
Breathable synthetic fabrics
Cotton t-shirts
Shell Suits
Iris-based personal identity cards
Smart cards Credit cardsCheque books
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1. Product Platform Strategy & Open
Interface
2. Product Line Strategy
3. Leveraged Expansion
4. Sustained Differentiation
5. First-to-Market vs. Fast-Follower
Strategy
(T) Types of Platform Strategies:
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1. Product Platform Strategy
• Platform is an architecture of the common elements implemented across a range of products
• One element in the platform represents a defining technology– Dictates life cycle, capabilities, limitations– The choice of defining technology is the
most critical strategic decision that a hi-tech company makes
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Product Platforms
Product 1
Product 2
Product 3
Product 1A
Product 1B Product 1C
Feature A
Feature B
Feature C
Segment A
Segment B
Segment C
Common PlatformElements
Unique product elements and common channel
elements of product lineProduct 5
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Benefits of Platform Strategy
• Focuses management on key decisions at the right time
• Enables rapid & consistent product development
• Encourages a long-term view on product strategy
• Can leverage operational efficiencies– Manufacturing costs– Design costs– Marketing support easier
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Example of Product Platforms:
• Apple Computer Platform:– Mac OS– Motorola processors– Easy-to-use GUI
Supporting and Defining Technologies?
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Open Interface in Product Platforms
• A product portfolio based on open interface allows other manufacturers to participate
• Gives the company a smaller portion of the entire market, but…
…makes the market significantly bigger
To enlarge a market where you are a rather strong player yourself
A piece of a big cake may well be a lot bigger than the small cake!
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2. Product Line Strategy
A time-phased plan for developing products from a common platform, each product targeting a specific market segment.
• The true potential of a platform strategy is extracted with an effective product line strategy
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Product Line Strategy (contd.)
Covers all targeted market segments Each product offering should be sufficiently
focused Time-phased scheduling / sequencing
All products cannot be released simultaneously
Prioritization Similar product lines are coordinated
To avoid rework and confusion in marketing and among customers
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Product Line Examples
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3. Leveraged Expansion
The success of expansions to new product markets depends highly on ability to leverage:
• Existing market knowledge
• Technical Product skills
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Examples of Leveraged Expansion
• Adobe: Acrobat• Microsoft
– DOS Windows – Windows + Internet Internet Explorer & MSN
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4. Sustained Differentiation
…is achieved with vectors of differentiation that are significant to the customer
• One very prominent unique featureor
• An appealing combination
• Eg- Technolgy
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High-Tech Differentiation 1. Unique features
2. Measurable benefits
3. Ease of use
4. Improved productivity
5. Unique fundamental characteristics
6. Design
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1. Unique features
• Most commonly used• An ”easy” strategy• Endlessly adding new features does not
give sustained differentiation• Can contradict ease of use
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2. Measurable benefits
• Reduced eletricity bill• Longer recording time• Faster Internet access
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3. Ease of use
• A very important vector of differentiation• Sometimes technology advances do not
deliver enhanced productivity, because of usability problems
• A big challenge in an era when everything is integrated in a single device (mobile phone)
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4. Improved Productivity• Longer battery life• Better quality (of voice communications)• More responsive UI• Technology advances complemented with
good usability• Often a crucial factor in buyer’s decision
making process
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5. Unique Fundamental Characteristics
• Example: The imaging method of Polaroid cameras
• Often protected by patents– If based on a special technology
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6. Design• More and more important in maturing
markets… …such as mobile phones!
• Hardware Design & User Interface Design
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4. First-to-Market Strategy
• Market share advantage• Earlier market & customer experience• Influence on markets and standards• Possibility to build entry barriers• Image benefits, a glamorous strategy• Big risks!
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5. Fast-Follower Strategy
• Wait until market is clarified• Avoid market education costs• Nearer in time to eventual market, easier to
predict• Ability to use newer technology• Fast means fast!• Advantages of being fast:
Jump ahead and stay ahead
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Name of InstitutionAmity Business School(U) Other Global Strategies
1. A Global Strategy It treats the world as a single marketEg: Matsushita has performed better than GE and Philips in consumer electronics market2. A Multinational StrategyIt treats the world as a portfolio of national opportunitiesEg: In food & cleaning products, Unilever as a better performer than P&G as Unilever grants more decision-making autonomy3. A “Glocal” Strategy It standardizes certain core elements and localizes other elements. Eg: Erricsson (Telecommunications) - each nation requires some adaptation but the company can also standardize some core componentsMost successful “Glocal” – ABB
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BRANDS
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• “A rose by any name smells as sweet.” True or false?
• Would you go vacationing on Disney Island?
• Why are Coca-Cola, McDonald’s and Kentucky Fried Chicken (KFC) successful?
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“Buildings age and become dilapidated. Machines wear out. Cars rust. But what lives on are brands.”
Source: The Economist, 2010
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Name of InstitutionAmity Business SchoolThe Branding Process
• From commodity to product – e.g. air travel
• From product to brand – e.g. Singapore Airlines
• From brand to experience – e.g. Romance in the air
• From experience to the heart – e.g. A Great Way to Fly
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Name of InstitutionAmity Business School
brand hierarchy—from top to bottom—might be as follows:1.Corporate (or company) brand (e.g., General Motors)2.Range brand (e.g., Chevrolet)3.Individual brand (e.g.. Lumina)4.Modifier (designating item or model) (e.g., Ultra)
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Name of InstitutionAmity Business SchoolWhat 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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Name of InstitutionAmity Business SchoolBrand Strategies
1. No brand identity– Small firms with unknown brands
e.g. small tailoring outfits2. Private brands
– Retailers with established brand names e.g. Fairprice
3. Corporate brands– Family name e.g. Tata
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Name of InstitutionAmity Business School
4. Product line extension– Create cost advantage e.g. Jagdish
Store collection of an extensive range of furniture at reasonable price
5. Specific product– Individual brand e.g In addition to the
JS brand, it also carry the Stanlay brand of Italian designed furniture
6. Combination– e.g. JS Collection, JS&S Beach
Collection and the White Collection
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Name of InstitutionAmity Business SchoolOld Brands Strategy
• Old brands survive due to emotional bond with the consumer
• For slow moving brands either revive it with marketing money or kill it
• Growing interest in old brands because brand names carry value that is getting more expensive and risky to create
• When re-promoting old brands, do not ignore younger consumers
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Name of InstitutionAmity Business School
Differentiation Satisfaction Loyalty Perceived Quality Leadership or Popularity Perceived Value Brand Personality Organizational Associations Brand Awareness Market Share Market Price Distribution Coverage
BRAND VALUE
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Name of InstitutionAmity Business SchoolBranding 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 factor
– Conventional branding => image– Online branding => customer experience
• The issue of trust in a brand
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Product Strategy Process ReviewTask 2:
Assess threats
and opportunities
Task 3:
Assess
strengths and
weaknesses
Task 4:Formulatestrategies
Task 1:
Develop mission
and goals
Task 5:
Develop strategic
plan
Task 8:
Repeat planning
process
Task 7:
Control and
assess results
Task 6:
Develop tactical
plans