OPERATIONS MANAGEMENT

Product
Strategy
Presented by: Arcayera, Biscocho, Cuestas, Garing, Gipa, Lugas, Serrano
Group 4
Product Strategy Provides
Competitive Advantage at Regal
Marine
Twenty-five years after its founding by potato farmer Paul
Kuck, Regal Marine has become a powerful force on the
waters of the world. The world's third-largest boat
manufacturer (by global sales), Regal exports to 30
countries, including Russia and China. Almost one-third of its
sales are overseas.
With changing consumer tastes, compounded by material
changes and ever improving marine engineering, the design
function is under constant pressure. Added to these pressures is
the constant issue of cost competitiveness combined with the
need to provide good value for customers.
Consequently, Regal Marine is a frequent
user of computer-aided design (CAD).

The sophisticated CAD system not only has

reduced product development time but also
has reduced problems with tooling and
production, resulting in a superior product.

Wooden decks, precut in-house by

computer-driven routers, are delivered on a
just-in-time basis for installation at one
station. Engines— one of the few purchased
components—are installed at another.
GOODS AND SERVICES SELECTION
Global firms like Regal Marine know that the basis for an
organization's existence is the good or service it provides
society. Great products are the keys to success.

To maximize the potential for success, top companies focus

on only a few products and then concentrate on those
products.

However, because most products have a limited and even

predictable life cycle, companies must constantly be looking
for new products to design, develop, and take to market.
 The goal of benchmarking is to make continuous
improvements and implement changes in business
products, methods and services. Therefore,
benchmarking practices provide a better understanding
of customer wishes and expectations.

The four competitive strategy in management includes:

Cost Leadership
Differentiation
Focus
Rapid Response
Product Strategy
Product Strategy is critical in achieving competitive
advantage. It refers refers to the overall plan and
approach for developing, marketing, and positioning a
product or product line. It includes the identification of
target markets, the features and benefits of the product,
the pricing strategy, distribution channels, and
promotional activities.
Product Decision
It is said that an effective product strategy links product
decisions with investment, market share, and product
life cycle, and defines the breadth of the product line.
product decision refers to a specific choice made
regarding the design, features, or marketing of a
particular product.
Product Selection
Product Selection is the process of choosing the good or
service to provide customers or clients. It is important for
an organization because it decides the impact and image
of organization on its customers.
Product Strategy Options Support
Competitive Advantage
Product Strategy of Some Organizations:

Shouldice Hospital - its world renowned specialization in hernia

repair service allows patient to return to normal living in 8 days as
opposed to the average of 2 weeks

Taco Bell - developed a low-cost strategy through product design

Toyota - known for its rapid response to changing consumer

demand
Product Life Cycle
4 Phases of Product's Life:
Introduction
Growth
Maturity
Decline

Task of operations manager:

- To design a new system that helps introduce new
products successfully.
Relationship of product sales, cash flow, and
profit over the life cycle of the product
Life Cycle and Strategies
Just as operations managers must be prepared to develop new products,
they must also be prepared to develop strategies for new and existing
products. Successful product strategies require determining the best
strategy for each product based on its position in its life cycle.
Introductory Phase
Because products in the introductory phase are still being "fine-tuned" for
the market, as are their production techniques, they may warrant unusual
expenditures for (1) research, (2) product development, (3) process
modification and enhancement, and (4) supplier development.
Growth Phase
In the growth phase, product design has begun to stabilize casting of
capacity requirements is necessary. Adding capacity or enhancing
existing capacity to accommodate the increase in product demand may
be necessary.
Maturity Phase
By the time a product is mature, competitors are established. So high-
volume, innovative production may be appropriate. Improved cost control,
reduction in options, and a paring down of the product line may be
effective or necessary for profitability and market share.
Decline Phase
Management may need to be ruthless with those products whose life cycle
is at an end. Dying products are typically poor products in which to invest
resources and managerial talent.
Product-By-Value
Analysis
Product-by-value analysis lists products in descending
order of their individual dollar contribution to the firm. It
also lists the total annual dollar contribution of the
product. A product-by-value report allows management
to evaluate possible strategies for each product.
GENERATING NEW
PRODUCTS
Because products die; because products must be
weeded out and replaced; because firms generate most
of their revenue and profit from new products-product
selection, definition, and design take place on a
continuing basis
 EXAMPLE

TV HD-TV
TELEPHONE

SMARTPHONE
NEW PRODUCT
OPPORTUNITIES
1 Understanding the customer is the premier issue in new-product development.

Economic change brings increasing levels of affluence in the long run but
2.
economic cycles and price changes in the short run.

Sociological and demographic change may appear in such factors as decreasing

3.
family size.

Technological change makes possible everything from cell phones to iPods to

4.
artificial hearts

Political/legal change brings about new trade agreements, tariffs, and

5.
government requirements

Other changes may be brought about through market practice, professional

6.
standards, suppliers, and distributors.
Importance of New Product
Growth: New products can be a source of growth for
companies, as they can help to increase sales and revenue.

Competitive Advantage: Introducing new products can also

help companies differentiate themselves from their
competitors.

Customer Retention: New products can help companies retain

existing customers by meeting their evolving needs and
preferences.
Importance of New Product
Attract New Customers: New products can also help companies
attract new customers who may be interested in the innovative
features or benefits that the product offers.

Brand Image: Introducing new products can enhance a company's

brand image by positioning it as innovative and forward-thinking.

Market Share: Successful new product launches can help

companies gain market share, as customers may switch from
competitors to try the new product.
Importance of New Product
Innovation: Developing new products requires innovation,
which can help companies stay ahead of the curve and
remain relevant in a rapidly changing marketplace.

Increased Profitability: Successful new products can lead to

increased profitability for companies, as the costs associated
with product development and marketing can be offset by
increased sales and revenue.
Innovation and New Products Yield Results for Both
Manufacturing and Services
Product Development
System (PDS)
An effective product strategy links product decisions
with cash flow, market dynamics, product life cycle, and
the organization’s capabilities. The product
development system may well determine not only
product success but also the firm’s future.
Figure 5.3 Product Development Stages
Quality Function
Deployment (QFD)
refers to both (1) determining what will satisfy the
customer and (2) translating those customer desires into
the target design. The idea is to capture a rich
understanding of customer wants and to identify
alternative process solutions.
House of Quality
is a graphic technique for defining the relationship
between customer desires and product (or service).
Only by defining this relationship in a rigorous way can
operations managers design products and processes
with features desired by customers.
Seven (7) Basic Steps to
Build House of Quality
Identify customer wants.
Identify how the good/service will satisfy customer
wants.
Relate customer wants to product hows.

Large Storage
Long Battery Life
Capacity

high capacity battery can store internally without

with efficient power the need of external storage
management options

Your paragraph text

Identify relationships between the firm's hows

ENGINE
POWER
FUEL
EFFICIENCY

Your paragraph text

Develop importance ratings.

Your paragraph text

Evaluate competing products.

coca cola your product

Your paragraph text

Determine the desirable technical attributes, your
performance, and the competitor's performance
against these attributes.

Your paragraph text

 Quality Function
Deployment's (QFD)
HOUSE OF QUALITY
End of Report
Thank you for listening. Do you have
any questions?