Product strategy (Marketing Management)
In marketing
expressions, a product is any object or service which is made available in a
market to satisfy a want or need of customers. A product can be a physical
object or a service and may refer to a single item or unit, a group of
comparable products or a group of goods or services. Most business marketing
managers devise an understandable and practical product strategy prior to the
launch of a new product into its future market.
Products
have three constituents that include:
Core product: This is
the end benefit for the purchaser.
Formal product: This
is the actual physical or apparent characteristics of product including its
level of quality, special features, styling, branding and packaging.
Augmented Product:
This level is about discovering if there are any added non-tangible benefits
company can offer. Competition at this level is based around after sales
service, warranties, and deliveries and so on.
Philip Kotler in his
book "Principles of Marketing" formulated significant concept of
benefit building with a product.
Figure:
product should be viewed on three levels. 
When product is
created, a company's product strategy is based upon its business strategy.
Product strategy starts with a planned vision of where a company wants to go,
how it will get there, why it will thrive.
Many factors and
decisions have to be taken into consideration when placing a product within a
market.
The whole product: The
whole product link the gap between the marketing promise companies makes to
clients and its product's ability to deliver on that promise. It includes all
the products and services that are necessary to augment or complete the product
so that it becomes a complete solution and lives up to its value proposition.
Common principles of
product strategy:product strategy must
describe the vision of company that try to accomplish. Another principle is
that the product strategy is the bridge between the business strategy and the
product roadmap and coming up with a good product strategy.
The four layers of the whole product:
Generic product: The
product that is shipped after a purchase.
Expected product: The
product the purchaser believes he buys when he orders the generic product.
Augmented product: The
idealized form of the product that gives the greatest chance that the customer
will accomplish his fixed buying purpose.
Potential product: The
noticeable growth path of the benefits demonstrated by the product as it is
improved, and as it is complemented and strengthened by other products and
services. The concept of the whole product represents a functional means for
start-ups. It gives benefits for product development and planning. It assists
the decision-making process for partnering, distribution, and customer service
and buyer motivation.
It is stated that
Business Company who wants to introduce some product into the stream of
commerce must plan and design a product strategy cautiously. Two major product
strategies include price-based product strategy and product differentiation.
When utilizing price-Based Product Strategy, the product is designed according
to factors like cost-plus pricing, value-based pricing, and target-return
pricing. Fundamentally, strategic viewpoint in a price-based strategy is to put
the price in such a way that new product has a competitive advantage over other
similar products. In order to execute a price-based product strategy, it is
necessary to consider price discounts. After choosing a price-based method, and
after formulating strategy, company managers will arrive at a list price.
Discounting the price lowers the list price, but makes purchasing the product
more profitable. Product Differentiation strategy is used when company and
competing firms offer a product that fulfils the same need. In a
product-differentiation strategy, major objective is to put distance between
product and competitor's product. There are two forms of product
differentiation, vertical differentiation and horizontal differentiation. To
execute a vertical product-differentiation strategy, main goal is to improve
quality of product so that the customers observe a difference in quality.
Horizontal differentiation focuses on customers' preferences and should be used
when the features of product cannot differ substantially from the features of
competitors.
When developing new
product development strategy, it is important to consider following factors:
Define your product: A
precise description of the product that are planning will help keep company and
management team focused and avoid product development pitfalls such as
developing too many products at once, or running out of resources to develop
the product.
Identify market needs:
Successful product development requires a systematic knowledge of company's
target market and its needs and wants. A targeted, strategic and purposeful
approach to NPD will ensure products fit targeted market. It is necessary to
consider that nature of the target market for proposing the product, market
need, benefit of proposed new product, and the market's issues of existing
products of its type, how will the product fit into the current market and what
sets this product apart from its competition. It is essential to describe
existing market research. Companies may need to start additional research to
test new product proposal with focused consumers.
Another important
factor in developing new product strategy is to establish time frames.
Organizations need to allocate sufficient time to develop and implement new
products. Company's objectives for developing new products will inform time
frames and deadlines for implementation. Company must aim to attain a specific
launch date that will be influenced by demand for seasonal products and
calendar events. Organizations must aim to be receptive to customers' needs and
demands that will require time for research to ensure it to develop the right
products at the right time.
Identify key issues
and approaches: There are many tasks involved in developing a product that is
appropriate for customers. The nature of business and idea will decide how many
of these steps need to take. Major tasks include generating and screening
ideas, developing and screening concepts, testing concepts, analysing market
and business strategy, developing and market testing products and implementing
and commercialising products.
To summarize, Product
Strategy is the most significant function of a company. Companies that have
good product strategy can perform better over extended periods of time than
companies that implement multiple technologies and/or seek market diversity.
