INTRODUCTION TO

PRODUCT
STRATEGY
PRODUCT STRATEGY
 Develop vision for the product development
program aligned to the corporate strategy.

 Discuss why new and established products

fail

 Understand how to manage the process from

concept to creation, testing and successful
launch.
CAUSES OF NEW PRODUCT
FAILURE
 Market/Marketing Failure
 Small size of the market
 No clear product differentiation
 Misunderstanding of customer need
 Financial Failure
 Low ROI
 Timing Failure
 Late or early
 Technical failure
 Design, function
 Organization Failure
 Lack of support, poor fit with the org. Culture
 Environment Failure
 Govt.Regulation
 Macroeconomic factors
THE NEW PRODUCT
DEVELOPMENT DECISION PROCESS
IDEA GENERATION
 Observe how your customer are using your
product
 Ask your customer about their problems with
your products
 Ask your customer about their dream product
 Use a customer advisory board to comment
on your company’s idea
 Use websites to get new ideas
 Form a brand community
IDEA SCREENING
 Avoid
 Drop Error
 Go Error

 Overall probability of success = Probability of

technical completion x Probability of
commercialization (given technical
completion) x Probability of economic
success ( given commercialization)
CONCEPT DEVELOPMENT AND
TESTING
 A product idea can be turned into several
concepts
 Category concept
 Brand concept
 Concept Testing
 Presenting the product concept, symbolically or
physically, to the target consumers and getting
their reactions
CONCEPT DEVELOPMENT
 Product idea
 Product concept
 Category concept
 Brand concept
CONCEPT TESTING
 Communicability and believability
 Need level
 Gap level
 Perceived value
 Purchase intention
 User targets, purchase occasions, purchasing
frequency
CONJOINT ANALYSIS
 A method for deriving the utility values that
consumers attach to varying levels of a
product’s attributes.
 Conjoint analysis has become one of the
most popular concept-development and
testing tools.
UTILITY FUNCTION BASED ON
CONJOINT ANALYSIS
MARKETING STRATEGY
 Target market’s size, structure, and behavior

 Planned price, distribution, and promotion

for year one

 Long-run sales and profit goals and

marketing-mix strategy over time
 Business Analysis
 Estimating Total Sales
 Estimating Costs and Profits
 PRODUCT LIFE CYCLE SALES
FOR THREE PRODUCT TYPES
PRODUCT DEVELOPMENT
 Quality function deployment (QFD)
 Customer attributes
 Engineering attributes
PROTOTYPE TESTING
 Alpha testing
 Testing
the product within the firm to see how it
performs
 Beta testing ( with consumer)
 Rank-order method (ask the consumer to rank
the options)
 Paired-comparison method (present pair of
option and ask which one they prefer)
 Monadic-rating method (ask the consumer to rate
each product on a scale so marketers can derive
the individual’s preference)
 Market testing
COMMERCIALIZATION
 WHEN
 WHERE
 TO WHOM
 HOW
PRODUCT

 A product is anything we can offer to a

market for attention, acquisition, use, or
consumption that might satisfy a need or
want.
PRODUCT –LEVEL OF MEANING
 Core benefit level

 Generic product level

 Expected product level

 Augmented product level

 Potential product level

PRODUCT CLASSIFICATION
 Search goods
 Consumer can evaluate product attributes, e.g
grocery
 Experience goods
 The product attributes cannot be assessed so
easily e.g automobile tires
 Credence goods
 Consumer may rarely learn product attributes
e.g insurance
 https://www.youtube.com/watch?
v=kN0SVBCJqLs

https://www.youtube.com/watch?
v=G3s4aPgcniw

 https://www.youtube.com/watch?
v=nSF_3CPQt6A
BY NEW PRODUCT
AND BRAND
EXTENSION
SOURCE OF GROWTH FOR A FIRM –
ANSOFF’S GROWTH SHARE MATRIX
Current Products New Products

Product
Current Market Penetration
Development
Markets strategy
Strategy

New Market Development Diversification

Markets Strategy Strategy
MARKET PENETRATION
 When companies enter markets with their
existing products or services it is called
market penetration.
 This is done by taking part or all of a
competitor's market share.
 Other ways to penetrate the market could be
by finding new customers for your product or
by getting current customers to use more of
your products.
 Market penetration is considered a low risk
method to grow the business.
PRODUCT DEVELOPMENT.
 Companies develop new products in existing
markets. This is called product
development.

An organization that already has a market for

its products might try and follow a strategy
of developing additional products, aimed at
it's current market.
MARKET DEVELOPMENT.

 When companies develop existing products into

new markets, it is known as market
development.

An organization's current product can be

changed, improved and marketed to the
existing market.
 The product can also be targeted to anther
customer segment. Either way, both strategies
can lead to additional earnings for the
business.
  
PRODUCT DIVERSIFICATION
 An organization that introduces new products into
new markets has chosen a strategy of diversification.

When companies have no previous industry nor

market experience this strategy is called Unrelated
diversification.

Related diversification describes how companies stay

in a market with which they have some familiarity.

Brand new products may also be created in an

attempt to leverage the company's brand name.
ANSOFF’S MATRIX
 Market Penetration- Serving the existing
market better
 Market Development – overseas expansion,
opening new outlets, attracting new market
segments
 Product Development- brand extension, new
category
 Diversification- of product offering in new
markets
MAKE OR BUY
 Acquisition
 Buy other companies
 Acquire patents from other companies
 Buy a license or franchise from another company

 Development
CHALLENGES IN NEW PRODUCT
DEVELOPMENT
 The innovation

 Success of new product

 Incremental
innovation ( Tweaking products for
new customer)
 New-Product Failure
 Low success rate in Indian (36 %)
RESPONSE HIERARCHY MODELS
PORTER’S FIVE FORCES
DIFFIUSION OF INNOVATION
MODEL
THANK YOU !