Chap 14 product strategies

80 CHAPTER 14: Product Strategies Chapter 14 Product Strategies A Product-Positioning Strategy (TM 14-1) Positioning a Single Brand Positioning Multiple Brands B Product-Repositioning Strategy (TM 14-2 and TM 14-3) Repositioning among Existing Customers Repositioning among New Users Repositioning for New Uses C Product-Overlap Strategy (TM 14-4) Competing Brands Private Labels Dealing with Original Equipment Manufacturers (OEMs) D Product-Scope Strategy (TM 13-5) Single Product Multiple Products System of Products E Product-Design Strategy (TM 14-6) Standard Products Customized Products Standard Product with Modifications F Product-Elimination Strategy (TM 14-7) Harvesting Line Simplification Total-Line Divestment (TM 14-8) G New-Product Strategy (TM 14-9) Product Improvement/Modification (TM 14-10) Product Imitation Product Innovation H Diversification Strategy (TM 14-11) Concentric Diversification Horizontal Diversification Conglomerate Diversification I Value-Marketing Strategy (TM 14-12) Quality Strategy Customer-Service Strategy Time-Based Strategy 81 CHAPTER 14: Product Strategies 14-1 PRODUCT-POSITIONING STRATEGY Positioning refers to placing a brand in that part of the market where it will have a favorable reception compared to competing products CHAPTER 14: Product Strategies 82 14-2 PRODUCT-REPOSITIONING STRATEGY A product may need repositioning if: • A competitive entry has been positioned next to the brand • Consumer preferences have changed • New customer-preference clusters have been discovered with promising opportunities • A mistake has been made in the original positioning 83 CHAPTER 14: Product Strategies 14-3 PRODUCT-REPOSITIONING STRATEGY Perceptual Map of Brand Images CHAPTER 14: Product Strategies 84 14-4 PRODUCT-OVERLAP STRATEGY This strategy refers to a situation in which a company decides to compete against its own brand 85 CHAPTER 14: Product Strategies 14-6 PRODUCT-DESIGN STRATEGY A business unit may offer a standardized or a custom-designed product The decision is based on factors such as: • What are our capabilities? • What business are we in? CHAPTER 14: Product Strategies 86 14-7 PRODUCT-ELIMINATION STRATEGY When a product reaches the stage where continued support is no longer justified because performance is falling short of expectations, it is desirable to pull the product out of the marketplace Poor performance is characterized by: • Low profitability • Declining sales • Technological obsolescence • Mature or declining phase of the product life cycle • Poor fit 87 CHAPTER 14: Product Strategies 14-8 TOTAL-LINE DIVESTMENT Divestment may occur for several reasons For example: • There is no longer a strategic connection between the base business and the part to be divested • The business experiences a permanent downturn, resulting in excess capacity for which no profitable alternative use can be identified • There may be inadequate capital to support the natural growth and development of the business • It may be dictated in the estate planning of the owner that a business is not to remain in the family • Selling a part of the business may release assets for use in other parts of the business where opportunities are growing • Divestment can improve the return on investment and growth rate both by ridding the company of units growing more slowly than the basic business and by providing cash for investment in faster-growing, higher-return operations CHAPTER 14: Product Strategies 88 14-9 NEW-PRODUCT STRATEGY New-product development is an essential activity for companies seeking growth Growth may occur through: • Product improvement/modification • Product imitation • Product innovation 89 CHAPTER 14: Product Strategies 14-10 PRODUCT IMPROVEMENT/MODIFICATION Product-Change Options after Competitive Tear-Down CHAPTER 14: Product Strategies 90 14-11 DIVERSIFICATION STRATEGY Firms diversify when: • Their objectives can no longer be met within the product/market scope defined by expansion • Retained cash exceeds the total expansion needs • Diversification opportunities promise greater profitability than expansion opportunities 91 CHAPTER 14: Product Strategies 14-12 VALUE-MARKETING STRATEGY Value-marketing strategy stresses real product performance and delivering on promises It has three aspects: • providing a product that works as claimed; • accompanied by decent service; • delivered on time [...]...CHAPTER 14: Product Strategies 90 14- 11 DIVERSIFICATION STRATEGY Firms diversify when: • Their objectives can no longer be met within the product/ market scope defined by expansion • Retained cash exceeds the total expansion needs • Diversification opportunities promise greater profitability than expansion opportunities 91 CHAPTER 14: Product Strategies 14- 12 VALUE-MARKETING STRATEGY... promise greater profitability than expansion opportunities 91 CHAPTER 14: Product Strategies 14- 12 VALUE-MARKETING STRATEGY Value-marketing strategy stresses real product performance and delivering on promises It has three aspects: • providing a product that works as claimed; • accompanied by decent service; • delivered on time ... improvement/modification • Product imitation • Product innovation 89 CHAPTER 14: Product Strategies 14- 10 PRODUCT IMPROVEMENT/MODIFICATION Product- Change Options after Competitive Tear-Down CHAPTER 14: Product Strategies. .. the original positioning 83 CHAPTER 14: Product Strategies 14- 3 PRODUCT- REPOSITIONING STRATEGY Perceptual Map of Brand Images CHAPTER 14: Product Strategies 84 14- 4 PRODUCT- OVERLAP STRATEGY This... operations CHAPTER 14: Product Strategies 88 14- 9 NEW -PRODUCT STRATEGY New -product development is an essential activity for companies seeking growth Growth may occur through: • Product improvement/modification