Strategy and

Products
How do we get there:
Creating Functional Level
Strategies

Issues and Focus

Strategy for developing new products for
existing market
Strategy for developing new products for
new markets
Product strategy for gaining competitive
advantage
Relationship between Quality and Price
Diffusion of innovation
Product portfolio management

Why new products ?

Products

experience PLC and become obsolete

Consumer taste and preferences change
BCG matrix which products to keep and kill
Brand image and expectations
Enhancing profitability for the future
New versions to retain old customers
To create differentiation but core products same
To create and sustain competitive edge
Balancing risk versus return

Newness of
the market to
the firm
Newness of
LOW
the product for
the firm

HIGH

HIGH

New products for

the firm. Present
customer new
product line

New products for

the firm. New
customers ,
Diversification

LOW

Reformulated
products. Present
customers Next
Generation
Improved
products

Extension of
existing products
New customers
.Addition to
existing product
lines

Key Lessons in new product success

Unique superior differentiated products

A strong market orientation
International orientation in product design
Efficient pre-development work
Sharp, Clear and early product definition
A well conceived and properly executed launch
The organizational structure
Top management support
Products aimed at attractive markets
Sharper project selection decisions
Speed and multi stage approach

New Product Planning

This

is the strategic stage during

which the firm examines is current
portfolio, SWOT and determines the
type of product which would be best fit
with the corporate strategy

Idea Generation & Screening

Specific

ideas for the product are put

forward collected from different
internal as well as external sources
In screening and evaluation ideas are
checked for technical feasibility,
functional viability and marketability

Technical development
Engineering

and production issues are

resolved and prototype built and
tested in house and with selected
panel of users and design approved

Market Appraisal and Launch

MARKET

POTENTIAL formal market

research with potential customers is
carried out to access the products
market potential
LAUNCH provided all the other factors
are in place the product goes into
production and the marketing plan for
it is developed and implemented

NPD Routes
Product

Champion
New Product Think Tanks
Venture Teams
Outside Consultancy
+ve/-ve

Aspects

Diffusion of innovation
New

products are not immediately adopted by

all consumers
Innovation takes time to filter through population
The process of filtration is called diffusion
It is partly determined by the nature of the
customers and partly by nature of innovation
itself
Awareness > Trial > Adoption
Relative Advantage, Compatibility, Complexity
trial ability will determine speed of ADOPTION

ATA MODEL
AWARENESS

created as a result of
promotional activities by the firm
TRIAL for low price products customers
are encouraged to purchase for major
purchase customers seek trials
ADOPTION this is the stage at which the
consumer decides to buy the product or
make it part of the regular shopping list

How consumer perceive

innovation?
Relative

advantage
Compatibility
Complexity
Trial ability
Observe ability

ASSESS FINANCIAL RISK

Break

even point
Ability to reach break even point
Capital acquisition potential
Financial performance vary with PLC
Financial risk assessment should be unbiased and to be carried out but outsider

PRICE & QUALITY

Quality

is the relationship between what

customers expect and what they get
What customer perceive as value for money
Quality is not domain of production
TQM
Benchmarking
Quality and Price is subjective and relative
Quality perceived products fetch premium
price

Price/Quality Strategic
approaches