Product and Services Strategy
1. What is a Product?
- Anything offered to a market for attention, acquisition, use, or consumption.
- Satisfies a want or a need.
- Includes:
- Physical Products
- Services
- Persons
- Places
- Organizations
- Ideas
- Combinations of the above
Marketing Mix
| Product | Price | Place | Promotion |
|---|---|---|---|
| Features | Price strategy | Channels | Advertising |
| Quality | Discount strategy | Locations | Promotional channels |
| Branding | Inventory | PR | |
| Packaging | Distribution | ||
| Customer service | Geographic coverage |
2. Levels of Product
- Core Product: The fundamental benefit/service.
- Actual Product: Brand Name, Quality Level, Packaging, Design, Features.
- Augmented Product: Delivery & Credit, Installation, Warranty, After-Sale Service.
| Level | Focus | Questions |
|---|---|---|
| Potential Product | Future improvements | What significant improvements might the product experience include in the future? |
| Augmented Product | Extra features | What variations or features differentiate the product from competitors? |
| Expected Product | Customer expectations | What features do customers expect? |
| Generic Product | Basic functionality | What is the basic version of the product? |
| Core Product Benefit(s) | Basic needs | What needs does the product satisfy? |
3. Product Classifications
a. Consumer Products
- Convenience Products – Frequent, low-priced, widely available (e.g., groceries).
- Shopping Products – Less frequent, compared on suitability, quality, price (e.g., electronics).
- Specialty Products – High brand loyalty, unique characteristics (e.g., luxury cars).
- Unsought Products – New or undesirable, require marketing efforts (e.g., life insurance).
b. Industrial Products
- Materials & Parts – Raw materials, component parts.
- Capital Items – Equipment, buildings.
- Supplies & Services – Maintenance, repairs, consulting.
c. Other Marketable Entities
- Organizations – Profit (businesses) & nonprofit (schools, churches).
- Person Marketing – Celebrities, political figures.
- Place Marketing – Tourism, real estate.
- Social Marketing – Public awareness campaigns.
4. Product Life Cycle (PLC)
- Introduction: High cost, low demand (e.g., self-driving cars).
- Growth: Increasing demand, more competition (e.g., electric cars).
- Maturity: Market saturation, price competition (e.g., diesel cars).
- Decline: Reduced demand, phasing out (e.g., typewriters).
Strategies to Extend Product Life Cycle
- Modify the product (improvements, new features).
- Market expansion (targeting new segments).
- Price adjustments and promotions.
5. Categories of New Products
- New-to-the-world products – Innovations (e.g., iPod, laser printer).
- New-to-the-firm products – New product lines (e.g., P&G’s first shampoo).
- Additions to existing lines – Extensions (e.g., Tide Liquid detergent).
- Improvements/Revisions – Modified versions (e.g., Ivory Soap reformulation).
- Repositioning – Changing product perception (e.g., baking soda as a deodorizer).
6. New Product Development Process
- Idea Generation – Brainstorming potential innovations.
- Idea Screening – Selecting viable concepts.
- Concept Development & Testing – Refining ideas and testing with customers.
- Marketing Strategy & Business Analysis – Evaluating profitability and demand.
- Product Development – Designing and prototyping.
- Test Marketing – Alpha & Beta testing before launch.
- Commercialization – Full-scale market introduction.
Reasons for Launching New Products
- Changing consumer preferences
- Increasing competition
- Technological advancements
- Risk diversification
- Brand reputation enhancement
Reasons for New Product Failures
- Lack of new ideas
- High development cost
- Long development time
- Market constraints
- Poor marketing strategy
7. Ansoft’s Matrix (Growth Strategies)
- Market Penetration – Selling existing products to the same market (e.g., 24/7 fast food).
- Product Development – New products for the same market (e.g., hybrid cars).
- Market Development – Expanding to new markets (e.g., Amazon’s physical stores).
- Diversification – Entering new markets with new products (e.g., a food brand entering textiles).
8. Product Mix
- Product Mix: Total number of product lines and individual products a company offers.
- Product Line: Group of related products with similar functions and customer bases.
Product Mix Dimensions
- Width – Number of product lines.
- Length – Number of products in a mix.
- Depth – Variations within a product line.
- Consistency – How closely related different lines are.
Product Mix Strategies
- Expansion – Adding new product lines.
- Contraction – Removing weak products.
- Deepening – Expanding existing product lines.
- Alteration – Improving existing products.
- Developing new uses – Repurposing products.
- Trading up/down – Adjusting product quality or price.
- Product Differentiation – Highlighting uniqueness.
9. 7 P’s of Marketing
- Product
- Price
- Place
- Promotion
- People
- Process – Steps involved in delivering a service.
- Physical Evidence – Branding, packaging, store layout.
10. Competitive Strategies
a. Competitive Dynamics
- Examines competitor actions and responses.
b. Competitive Strategies
- Cost Leadership – Low-cost advantage.
- Differentiation – Unique product features.
- Cost Focus – Targeting a niche market with cost-effective solutions.
- Differentiation Focus – Niche marketing with unique features.
11. Market Challenger Strategies
- Frontal Attack – Competing directly (e.g., Pepsi vs. Coke).
- Flank Attack – Targeting weak areas of competitors (e.g., rural market strategy).
- Bypass Attack – Avoiding direct competition through innovation (e.g., mobile phones replacing landlines).
- Encirclement Attack – Attacking on multiple fronts.
- Guerrilla Attack – Small-scale, unconventional tactics.
12. Market Follower Strategies
- Counterfeiter – Copying a product illegally.
- Cloner – Creating close imitations with minor variations.
- Imitator – Adopting some elements of a competitor’s product.
- Adaptor – Improving upon an existing competitor product.
13. Service Delivery Process
- Service Definition – Intangible offering for economic value.
- Competitive Strategies in Services – Focus on process efficiency, customer experience, and brand trust.
Service Process Flow
-
Initialization
- Contextualization
- Converting
- Controlling
- Costing
-
Pre-process
- Contextualization
- Initialization
- Connection
-
Provider
- Stop condition
- Stop
- Do-coupling
-
Post-process
- Closing
- Post-process
- Closing
-
Consumer