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 During

the 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 customers

2. Reposition among new users
3. 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 Innovation
Development Process:
Idea Generation
Idea Screening
Project Planning
Product Development
Test Marketing
Commercialization

Diversification Strategy
1.
2.
3.

Concentric Diversification
Horizontal Diversification
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 companys 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 firm
that 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 MarutiSuzuki 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.