Developing product strategy

Elements of a Product Strategy

A more complete statement of marketing strategy for a product consists of seven parts: 1. Statement of the objective(s) the product should attain. 2. Selection of strategic alternative(s). 3. Selection of customer targets. 4. Choice of competitor targets. 5. Statement of the core strategy. 6. Description of supporting marketing mix. 7. Description of supporting functional programs.

Level 0

Company Mission/Vision Corporate objectives

Level I Corporate strategies Divisional objectives Level II Divisional strategies Product/Brand objectives Level III Brand strategies Program objectives Level IV

Hierarchy of Objectives

Tactics

Setting Objectives
The two objectives most commonly set for specific products or services are growth in terms of sales revenues or market share and profitability. However, it is not possible to optimize both simultaneously during the span of an annual marketing plan. The kinds of marketing activities necessary to achieve an ambitious market share objective work against satisfying an ambitious profit objective. Some characteristics of good objectives are the following: 1. They should have quantified standards of performance. 2. They should be ambitious enough to be challenging, but not unrealistic.

Selection of Strategic Alternatives

Increasing Sales/Market Share
Market Development Strategies Market Penetration Strategies

Increasing Profitability
Decreasing Inputs Increasing Outputs

Positioning and Differentiation Strategies

Factors affecting positioning: i. ii. iii. iv. The product itself; The company behind it; The competition; and The consumers

Positioning: Choice of Customer Targets

Three important considerations in selecting customer target: Size/growth of the segment Opportunities for obtaining competitive advantage Resources available The choice of which customer groups to target follows immediately from specification of the strategic alternatives and the segments developed in the customer analysis. For market penetration strategy aimed at the products own customers or market development strategy aimed at nonusers, the customers of the current strategy would be selected. For market penetration strategy aimed at stealing competitors customers, the specific descriptors of those customers would be used. For market development strategy aimed at new segments, the descriptors from the new segments chosen would be specified.

Positioning: Choice of Competitor Targets

Another important factor of positioning is to consider which competitors are the primary targets of the strategy. For penetration strategy, the targeted customers should be identified on the basis of analysis of which competitors customers are both valuable and the most easily pried away. Market leaders often take defensive steps and focus on the strong second competitor and the third one. The followers in the market take different competitor stances depending on their market share relative to the leader. A strong second might focus on offensive warfare and target the leader. Weak followers often try to avoid the major competitors and seek market niches that have either few or weak rivals.

Positioning: Core Strategy

The core strategy defines the differential advantage to be communicated to the target customers, often referred to as product positioning. The advantages fall into two main categories: (1) cost/price (economic) differential advantage and (2) differentiation based on product offering or service features.

Positioning Methods
The nature of the product has a considerable impact on the method of positioning. Thus positioning needs to be different for the different classification of product types. a) b) c) d) e) Impulse purchase items Daily use items Specialty items Consumer durables Industrial products

Positioning techniques can also be classified on the basis of the following key notions: 1. 2. 3. 4. 5. 6. 7. 8. Positioning by specific product features Positioning by distinct benefits to users Positioning by specific usage Positioning for a user category or application Positioning by product class specification Positioning by price/quality Positioning by lifestyle of users Positioning by reference groups