Product strategy is like a roadmap, and like a roadmap it’s useful only when you know where you are and where you want to go.The Service Strategy provides guidance on how to design, develop, and implement service management not only as an organizational capability but also as a strategic asset.
2. ”Product strategy begins with a strategic
vision that states where a company
wants to go, how it will get there, and
why it will be successful.”
”Product strategy is like a roadmap,
and like a roadmap it’s useful only
when you know where you are and
where you want to go.”
3. Product Strategies specify market needs
that may be served by different product
offerings.
It is a company’s product strategies ,duly related to market
strategies ,that eventually come to dominate both overall
strategy.
In other words the company’s product strategies dominates the
market strategies.
Product strategy deals with the number & diversity of products,
product innovations, product scope, and product design.
4. Dimensions of Product Strategies
The implementation of Product Strategy involves the
cooperation among different groups viz. Finance, research
& development, the corporate staff and marketing.
This level of integration is not uniform in many
organizations and hence the implementation of Product
strategy becomes bit difficult.
In many companies to achieve proper coordination among
the diverse business units ,the decisions regarding Product
Strategy is taken by the top management only.
In some organization the overall scope of product strategy
is laid out at corporate level ,whereas actual design is left to
Business Units.
6.
PRODUCT STRATEGIES: There are about
Nine(9) types of Product Strategies as mentioned
below:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Product-positioning strategy.
Product-repositioning strategy.
Product-overlap strategy.
Product-scope strategy.
Product-design strategy.
Product-elimination strategy.
New –product strategy.
Diversification strategy.
Value-marketing strategy.
Each strategy will be examined from the
point of view of SBU.
7. PRODUCT-POSITIONING STRATEGY
The term positioning refers to placing a brand in
that part of market where it will receive a favorable
reception compared to competing product.
In an heterogeneous market one brand cannot make an
impact on the entire market.
Strategically, a product should be matched with that
segment of the market in which it is most likely to succeed
In other words the product is to be positioned so that it
stands apart from competing brands.
8. PRODUCT-POSITIONING STRATEGY….contd
Positioning tells us what the product
stands for, what it is ,and how customer
should evaluate it.
Positioning
is achieved by using
marketing mix ,especially design and
communication.
The differentiation in positioning is more
visible in consumer goods as compared
to the industrial goods.
9. The desired position for a product may
determined using the following procedure:
Analyze product characteristic that
are most important to customers
Examine the distribution of these
attributes among different market
segments
Determine the optimal position for the
product in regard to each attribute, taking
into consideration the position occupied by
existing brands
Choose an overall position for the product
(based on the overall match betn. Product
attributes and their distribution in the
population& the positions of existing
brands)
be
10. Approaches to positioning
1.Positining by attribute(associating a product with an
attribute, feature or customer benefit).
2.Positioning by price/quantity (i.e.price /quantity attribute
is so persistent that is can be considered a separate
approach to promotion).
3.Positioning w.r.t. use or application (associating the
product
with
a
use
or
application)
4.Positioning by the product user (assocaiting a product
with user or a class of user)
5.Positioning w.r.t. a product class(positioning pears soap
as an bath oil soap rather than merely a soap)
6.Positioning w.r.t. a competitor (making a reference to
competition)
11. Types of Positioning Strategy
POSITIONING
STRATEGY
SINGLE BRAND
STRATEGY
MULTIPLE BRAND
STRATEGY
12. Single Brand Strategy
A company having one brand that it can be placed in one
or more chosen market segments.
To maximize its benefits with a single brand, a company
must try to associate itself with a core segment in a
market where it can play a dominant role.
In addition to this it may also attract other customers from
other segments outside its core. For example: BMW
positioning its car mainly in a limited segment to high –
income young professionals.
Another example is coca-cola,several years ago this
company followed a strategy that proclaimed that
Coke quenched the thirst of the total market,but it
was short term because now this company has a
number of brands to serve different segments: coke,
Fenta, Sprite,Diet Coke and even orange juice.
13.
There are 2 fundamentals to manage a single brand
successfully:
1.
A single brand must be so positioned that it can stand
competition from the toughest rival.
2.
And its unique position should be maintained by
creating an aura of a distinctive product.
Generally, Single brand strategy is a choice in short
run particularly when the task of managing multiple
brands is beyond the managerial & financial capability
of a company.
Single brand permits better control of operations that
do multiple brands
14. Multiple Brands Strategy
Multiple brands are introduced
to seek growth by
offering varied products in different segments of the
market and to avoid competitive threats to a single
brand.
Example: General Motors is having cars to sell in all
the segments of market, Coca-Cola, IBM/Lenovo sells
computers for different computer needs,P&G
To realize desired growth, multiple brands should be
carefully positioned in the market so that they do not
compete with each other and create cannibalism.
Thus, it is necessary to be careful in segmenting the
market and to position the product ,through design and
promotion ,as uniquely suited to a particular segment.
15. Cannibalism
is unavoidable, but here the
question is how much cannibalism is
acceptable when introducing another brand is
to be carefully done before introducing a new
brand.
Multiple brands can be positioned in the market
either by head-on with the leading brand or
with an idea.
In head-on positioning the relative strength of
new brand compete with the established brand.
For example: IBM’s Personal Computer was
positioned in head-on competition with Apple’s.
Head-on positioning is highly risky as it is
directly having the competition with the
established brands.
16. Positioning with ides ,however can prove
better alternative, especially when leading
brand is well established.
Positioning with an idea is just like positioning
several brands as complements rather than
their competitors. Example is Garnier shampoo
having its compliment Garnier conditioner
As a strategy positioning of multiple brands ,if
properly implemented can lead to increase in
growth ,market share and profitability
17. 2.Product-Repositioning Strategy
The product may require repositioning if:
A competitor positioned its brand, creating
an adverse effect on the market share of
the product.
Change in consumer preferences
When expectations of consumers is very
high as per the present status of product.
Mistake is made in the original positioning.
For example Coca-Cola’s position has shifted
to keep up with the changing mood of the
market.
18. Product-Repositioning Strategy
Basically there are three ways to reposition
a product:
Repositioning among Existing Users
Can be accomplished by providing alternative
uses for it.
For example: Various scheme launched by
Mobile service providers for their existing
customers.
19.
Repositioning among New Users
Repositioning among new users requires
that the product be presented with different
twist to the people who have not previously
inclined toward it.
For example: Introduction of “Diet Coke” by
Coca-Cola and “Amul Light” by Amul.
Repositioning for New Users.
Repositioning for new users requires
searching for latent or hidden uses of the
product in the users.
For Example: Sugar Free
20. 3.Product-Overlap Strategy
When a company decides to compete
against its own brand it is called as
Product –Overlap Strategy.
It is done in three alternative ways:
1.
Competing Brands
2.
Private labeling
3.
Dealing with OEMs
21. Competing Brands:
In order to gain larger share of the total
market, many companies introduce
competing products to the market.
A single brand of product may not be
able to make an adequate impact and
due to this a second brand is introduced
into the market.
In other words two competing brands
provide more aggressive front against
competitors
Examples are: Consumer durables
goods from company LG,Samsung etc.
22. Private Labeling
It refers to manufacturing the product under another
company's brand name.
Example: Companies like Samsung,LG Etc manufacture
mobile phones for TATA & RCOM CDMA phones.
Another view is that a retailer’s interest in selling goods
under its own brand name is also motivated by economic
considerations. The retailers buy goods with its brand
name at low cost ,then offers the goods to customers at a
slightly lower price than the price of manufacturer’s
brand.
Example: In the MOBILE STORE, Nokia, Samsung and
others, supplies their mobiles phones to Mobile Store.
23. Dealing with OEMs
A
company may sell to competitors the
components used in its own product.
This will enable a competitor to compete with
the company in the market.
Example: Carl Zeises make lenses for Sony,
Nikon cameras.
24. 4.Product-Scope Strategy
It is basically done in view of the product mix of
a company.
It is determined by making reference to the
business unit mission. Presumably, the mission
defines what sort of business it is going to be,
which helps in selecting the products and
services that are to become a part of product
mix.
Example : Kodak Vs Polaroid-initially
Polaroid purchase its negative films from
Kodak.
25. 5.Product- Design Strategy
Providing standard or custom-designed product
to each individual customer.
Product-design Strategy is of two types:
1.
Customized Products
2.
Standard products with modifications
26. 6.Product- Elimination Strategy
The sick products are eliminated from the
market due to low profitability, stagnant or
declining sales, poor fit in the business unit.
There are three alternatives in Productelimination Strategy and they are:
1.
2.
3.
Harvesting.
Line Simplification.
Total-line divestment.
27. Harvesting
It refers to getting the most from a
product while it last. It is a controlled
form of divestment whereby the business
unit seeks to get more cash flow from
the product.
In harvesting strategy we curtail new
investments.
28. Line Simplification
This strategy refers to a situation when a
product line is trimmed to a manageable
size by reducing the number and variety
of products or services offered.
This is a defensive strategy.
This strategy is adopted during the times
of rising costs and resource shortages.
29. Total line Divestment
Divestment is a situation of reverse
acquisition.
The objective of divestment is to sell or
liquidate the business because the
resources can be used elsewhere.
30. 7.New-Product Strategy
New
product development is an essential
activity for companies seeking growth.
By adopting new product strategy companies
are better able to sustain competitive pressures
on their existing products and make headway.
New Product strategy is of three( types):
Product improvement Modification
Product Imitation
Product innovation
31. 8.Diversification Strategy
Diversification refers to seeking unfamiliar products or
markets or both in pursuit of growth.
This strategy is done on following factors:
Concentric* Diversification: The company seeks new
products that have technological/marketing synergies
with the existing product lines.
Horizontal Diversification: The company might search
for new products that could appeal to its current
customers even though the new products are
technologically unrelated to its current product line.
Conglomerate Diversification: The company might
seek new business that have no relationship to the
company current technology, product & market.
* Having common centre
32. 9.Value-Marketing Strategy
Today the customers are demanding
something different then they did in past.
They want the right combination of
product quality, good service and timely
delivery .
Value marketing strategy stresses real
product performance and delivering on
promises.
33. Types of Value Marketing Stg
Quality Strategy
Customer Service Strategy
Time based strategy
Example is Dominos Pizza
35. SERVICES DEFINED
• “activities, benefits or satisfactions which are
offered for sale or provided in connection with the
sale of goods”…AMA
• “any activity or benefit that one party can offer to
another that is successfully intangible and does
not result in the ownership of anything, its
production may or may not be tied to a physical
product.” ….Kotler
36. SERVICES STRATEGY
A strategy is an integrated and coordinated
set of commitments and actions designed to
exploit core competencies
and gain
competitive advantage(Michael A. Hitt et. al).
The Service Strategy provides guidance on how
to design, develop, and implement service
management not only as an organizational
capability but also as a strategic asset.
37. The Characteristics of a service
(1) Lack of ownership
(2) Intangibility
(3) Inseparability
(4) Perishability
(5) Heterogeneity
38. Service Marketing Mix / Extended
Marketing Mix
• The service marketing mix comprises of the 7’p’s.
These include:
1.Product
2.Price
3.Place
4.Promotion
5. People
6. Process
7. Physical evidence
39. People
• An essential ingredient to any service provision
is the use of appropriate staff and people.
Recruiting the right staff and training them
appropriately in the delivery of their service
is essential if the organization wants to
obtain a form of competitive advantage.
• Consumers make judgments and deliver
perceptions of the service based on the
employees they interact with.
• Staff should have the appropriate interpersonal
skills, attitude, and service knowledge to
provide the service that consumers are paying
for.
40. Process
• Refers
to the systems used to assist the
organization in delivering the service.
• Imagine you walk into Domino’s Pizza and you
order a Combo Pizza and you get it delivered
within 2 minutes. What was the process that
allowed you to obtain an efficient service
delivery?
• Banks that send out Credit Cards automatically
when their customers old one has expired
again require an efficient process to identify
expiry dates and renewal. An efficient service
that replaces old credit cards will foster consumer
loyalty and confidence in the company.
41. Physical Evidence
•
Where is the service being delivered?
•
Physical Evidence is the element of the service mix
which allows the consumer again to make
judgments on the organization.
•
If you walk into a restaurant your expectations are of a
clean, friendly environment.
•
On an Airlines if you are travelling in first class you
expect enough room to be able to lay down.
•
Physical evidence is an essential ingredient of the
service mix, consumers will make perceptions
based on their sight of the service provision which
will have an impact on the organizations perceptual
plan of the service.
43. Service Strategy formulation
In the formulation of strategy ,it is necessary to
take
considerable
and
full
sets
of
commitments,
decisions
and
actions
required for a firm to achieve strategic
competitiveness.
The
SWOT analysis provides necessary
STRATEGIC INPUTS for effective strategy
formulation and implementation.
44. Porter's Competitive strategies for
service organizations
1.
cost Leadership strategy(Low cost , best value.
eg: wall mart, MacD)
2.
Differentiation strategy- Eg. Xerox, Citybank, Rolex,
Dell
3.
Focused (market niche) strategy (Low cost , best
value eg. Titan jewelry watches)
45. MARKET ORIENTED SERVICE
STRATEGY
A service firm need to differentiate itself
from a manufacturing Companies .
The conventional managerial thinking
provide
three thumb rules for
strengthening the competitive edge of a
firm.
46. The three rules are:
1.
Decrease
the cost of
production
Three
thumb
rules
2.
3.
Enhancement
Development
of
Promotion
of new
product
47. The manufacturing firms believes and
also achieve positive results by
adopting
the
three
distinctive
strategies on the marketing front.
However if these three strategies are
implemented into services it is more
likely the service organization get into
further trouble.
48. This condition is called as “Strategic
Management Trap”
Service
firms need to watch the
conditions
that leads to strategic
management trap and develop abilities
to avoid the use of traditional approach
and design service oriented marketing
strategy.
49. Deteriorating
Corporate Image
Financial problems or
increasing competition
Unsatisfied
Customers
More Traditional
Marketing Efforts
(occasionally)
Strategic Management Trap
Deteriorating
service quality
Deteriorating
Service Quality
Deteriorating
Internal Atmosphere
Decisions
concerning internal
efficiency (often
influencing
personnel)
Unsatisfied
Customers
Marginal cost
savings
50. Financial problems or
increasing competition
Increasing sales
volume
mproving Corporate A Service oriented approach
image
Improving buyer
seller interactions
(external efficiency)
with cost control
Improved
service quality
Improving Internal
Atmosphere
More satisfied
Customers
51. The Service Triangle (Service
Marketing model)
COMPANY
(TOP MANAGEMENT)
INTERNAL
MARKETING
EXTERNAL
MARKETING
EMPLOYEES
CUSTOMERS
INTERACTIVE MARKETING
52. There are 3 groups that play critical roles in
successfully
goals.
accomplishing
organizational
Company (Top management)
Employees
Customers
According to the Service marketing model there
are three marketing plans designed as an
integral part of service marketing plan.
53. Internal Marketing Plan: it is a special
marketing plan designed
for
company and its employees.
External
Marketing
Plan:
marketing plan is in between
customers and the company.
Interactive
marketing Plan:
marketing plan is in between
employees and customers.
the
This
the
This
the