Product Decision & Strategies

8/7/2019 Product Decision & Strategies

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Learning Objectives1. Define an Industrial Product.2. Understand Changes in the productstrategy.

3. Know Product Life cycle (PLC) Theoryand its application.4. Develop Product strategies forexisting products.5. Understand new product

development.6. Know impact of technology and high-tech marketing.7. Learn Marketing of industrialservices.



• Definition : Its is a physical thing as well as a Complex set of

economic, technical, legal and personal relationship between a

buyer and a seller.

• Meaning of a Total Product Package : It includes basic

properties (with fundamental benefits), enhanced properties

(with tangible benefits), and augmented properties (with

intangible benefits).

• In a competitive market, business marketers must understand

target customers’ perceptions of a total product package andoffer the same better than competitors.



Business marketers must understand that aproduct strategy is dynamic and flexible.

It changes due to changes in

(i) Customer needs.

(ii) Technology.

(iii) Government Policies / Laws.

(iv) Product Life – Cycle.



R u p e e s

I n d u s t r yS a l e s

I n d u s t r yP r o f i t s

M a t u r i t yD e c l i n e



• Introduction Stage : Marketing Strategy shouldfocus on market development for slowly acceptedproducts. For rapidly accepted products, acompetitive strategy (Competitive pricing or

Superior quality product ) should be evolved.

• Growth Stage : To take advantage of highgrowth of sales and profits, the marketingstrategy should concentrate on (i) Improving

product design or adding product features (ii)Improving distribution and (iii) Reducing price, asincreased sales and production reduce the costs.



• Maturity Stage: As competition increasesand profits decline, marketing strategyshould concentrate on (i) cutting costs, (ii)keeping existing customers satisfied (iii)entering new markets.

• Decline Stage : Since both sales and profitsdecline, marketing strategy should focus on

(i) substantial reduction in costs, (ii) developa substitute product, (iii) withdraw theproduct slowly from the market.



Business marketers should take the followingsteps :

1.Evaluate the performance of existing productsby using “product evaluation matrix”.

2.Examine the relative strengths and weaknessesof the company’s products by using “ perceptualmapping” technique.

3.Decide the product strategies, based on aboveanalysis.



Company SalesDeclin eStable GrowthProfitabilityIndus trySales MarketShare Be lowTa rgetTarget AboveTargetBe lowTa rgetBelo wTarg etTarget TargetAboveTarget AboveTarget

Grow thDomina ntAverageMargina l

Stabl eDecli ne

Domina ntDomina ntAverageAverageMargina lMargina l

P

S

C o m p a n y S a l e sD e c l i n e S t a b l e G r o w t h

P r o f i t a b i l i t yI n d u s t r yS a l e s

M a r k e tS h a r e

B e l o wT a r g e t

T a r g e tA b o v eT a r g e t



T a r g e t T a r g e tA b o v eT a r g e t

A b o vT a r g

G r o w t h

D o m i n a n t

A v e r a g e

M a r g i n a l

S t a b l e

D e c l i n e

D o m i n a n t

D o m i n a n t

A v e r a g e

A v e r a g e

M a r g i n a l

M a r g i n a l

P

S



H i g hQ u a l i t y

H i g h P r i c e

L o w P r i c e

L o wQ u a l i t y

* *AA1

B

C



Firm A’s product quality is perceived to be “average” bycustomers, compared to its competitors B & C. Firm Ashould try to move to a new position of superior quality ata reasonable (average) price to improve its profitability.

DECIDE PRODUCT STRATEGIES

(i) Maintain / Continue the product and its marketingstrategy.(ii) Modify the product & change marketing strategy.(iii) Drop / eliminate the product.

(iv) Add new product.



Classification of new products

(i) Products that are new to the world &innovative.(ii) Products that are new to the company, butnot new to the world.

(iii) Improvements / Revision to the existingproducts.(iv) Addition to the existing products.(v) Repositioning existing products to newmarket segments

(vi) Products with substantial cost reductionswithout reduction in performance.



New product developmentprocess

It consists of 7 Stages :

(i) Idea generation,

(ii) Idea Screening,(iii) Concept development andtesting,(iv) Business analysis,

(v) Product development,(vi) Market testing, &(vii) Commercialization.



Technological innovations create new products /services that are new to the world.Examples of these innovations, called breakthrough technology are :(i) Technological inventions of 1940s of vacuum tube and amplifier circuit created new

products / services like radio, wirelesstelegraphy, and telephone service.(ii) Technological inventions of 1950s & 70s of transistor, integrated circuit (IC), microprocessorshave applications in new products like TV sets,movie Cameras, Computers, Calculators, Mobilephones, Printers etc.,(iii) Digital revolution of informationtechnology and the internet have improvedcompany and consumer



B e t t e r M o u s e t r a pM a r k e t i n g

H i g h - t e c hM a r k e t i n g

H i g h - f a s h i o nM a r k e t i n g

L o w - t e c hM a r k e t i n g

H i g h

L o w

L o wM a r k e t

H i g hU n c e r t a i n t y

T e c h n o l o g i c a l

U n c e r t a i n t y



D e e p G a p

I n n o v a t o r s

2 ½ %

1 3 ½ %

E a r l yA d o p t e r s

3 4 %3 4 %

1 6 %

L a g g a r d

T i m e o f A d o p t i o n o f I n



1. Target a niche market.

2. Plan whole product properties.

3. Develop partnerships.

4. Unique positioning strategy.

5. Effective Communication Strategy

6. Multi – Channel distribution strategy.

7. Skimming pricing strategy.



M a t e r i a l sC o m p o n e n t s

( S t e e l , B a l l B e a r i n g s )

P e r s o n a lC o m p u t e r s

H o t e l sf o r

C o n f e r e n c e s

G o o dT r a n s p o r t a t i

P u r eT a n g i b l eP r o d u c t

M a j o r

P r o d u c t ,M i n o r

S e r v i c e

E q u a l

P r o d u c t&

S e r v i c e

M a j o r

S e r v i c e ,M i n o r

P r o d u c t

P u r ei n t a n

s e r v



Ch aracteristic sMarke tingImplica tionsEx amples1.Inta ngibility(can notbeseen /felt ,beforebuyi ng)

B uyersseeev idenceofse rvicequalityS ellerstangib ilisetheintan gibleMana gementConsu ltancy&ED Ps.2.Inse parability(Pro duction&con sumptionat thesam etime)E ffectiveinter actiondepen donservicep roviders.R equireseffec tiverecruitin gandtrainin go fservicepro viders.Repa irstomachin es&Cou rierservice.3.Var iability(Se rvicequalityvari es)

U niformqualit yisdifficultF ocusonqua lity&automa tionMana gementeducat ion&market ingresearc h.4.Per ishability(Ca nnotbestore d)D emandfluctu ates.U semethods tomatchdem and&ca pacity.Airline sseats&Wareh ousespace.

5.Non -ownership(Bu yerusesaser vice,butcan notow nit)A dvantageso fnon-owners hip:re ductioninco sts&flexibi lityHotel andcarrent alservic es.

C h a r a c t e r i s t i c s M a r k e t i n g I m p l i c a t i o n sE x a m p l e s

1 . I n t a n g i b i l i t y( c a n n o t b e s e e n /

f e l t , b e f o r e b u y i n g )

B u y e r s s e e e v i d e n c e o f s e r v i c e q u a l i t y

S e l l e r s t a n g i b i l i s e t h e i n t a n g i b l e

M a n a g e m e n t

C o n s u l t a n c y &

2 . I n s e p a r a b i l i t y( P r o d u c t i o n &

c o n s u m p t i o n a t t h es a m e t i m e )

E f f e c t i v e i n t e r a c t i o n d e p e n d o n s e r v i c e

p r o v i d e r s .

R e q u i r e s e f f e c t i v e r e c r u i t i n g a n d t r a i n i n

o f s e r v i c e p r o v i d e r s .

R e p a i r s t o m a c

& C o u r i e r s e r v

3 . V a r i a b i l i t y( S e r v i c e q u a l i t yv a r i e s )

U n i f o r m q u a l i t y i s d i f f i c u l t

F o c u s o n q u a l i t y & a u t o m a t i o n

M a n a g e m e n t

e d u c a t i o n & m a

r e s e a r c h .

4 . P e r i s h a b i l i t y( C a n n o t b e s t o r e d )

D e m a n d f l u c t u a t e s .

U s e m e t h o d s t o m a t c h d e m a n d &

c a p a c i t y .

A i r l i n e s s e a t s &

W a r e h o u s e s p a

5 . N o n - o w n e r s h i p( B u y e r u s e s a

s e r v i c e , b u t c a n n o to w n i t )

A d v a n t a g e s o f n o n - o w n e r s h i p :

r e d u c t i o n i n c o s t s & f l e x i b i l i t y

H o t e l a n d c a r r

s e r v i c e s .

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Product Decision & Strategies