http://vis.sagepub.

com/
Vision: The Journal of Business Perspective
http://vis.sagepub.com/content/8/1/115
The online version of this article can be found at:

DOI: 10.1177/097226290400800110
2004 8: 115 Vision: The Journal of Business Perspective
S. K. Graver
Product Market Competence: The New Paradigm

Published by:
http://www.sagepublications.com
On behalf of:

Management Development Institute

can be found at: Vision: The Journal of Business Perspective Additional services and information for

http://vis.sagepub.com/cgi/alerts Email Alerts:

http://vis.sagepub.com/subscriptions Subscriptions:
http://www.sagepub.com/journalsReprints.nav Reprints:

http://www.sagepub.com/journalsPermissions.nav Permissions:

http://vis.sagepub.com/content/8/1/115.refs.html Citations:

What is This?

- Jan 1, 2004 Version of Record >>

at MGMT DEV INST GURGAON on July 24, 2013 vis.sagepub.com Downloaded from
VISION: The Journal of Business Perspective, January- June, 2004, pp. 115-128
Product Market Competence:
The New Paradigm
S. K. Grover*
Product is at the core of any business activity. Product is a basis for satisfying the customer needs
and wants. However, strategic product decisions extend beyond the customer needs and wants;
they affect the way of competing and help define the business. Most Indian firms are multi-product
firms as a matter of competitive survival. The other two dimensions-the customer needs and wants,
and the business definition - provide useful links to enhance such competitive dimension. The
product life cycle through product rejuvenation or withdrawal might mean continual life to reap
competitive benefits, or might result in demise of products. The present article attempts to determine
competitive options - whether to find new market, new product and new competence, or to improve
products packaging/design/positioning in the existing market, with existing product or existing
competence. The combination of the two extremes brings us closer to a new paradigm for
formulating, evaluating and deploying product strategies.
A product is defined as a bundle of utilities including
product features and accompanying services. The product
definition has dimensions going beyond natural meaning -
the meaning of company's business domain and the
competitors'. Further, product dimensions reflect upon the
firm's competitive advantages and its ability to differentiate
itself from other firms in the market. Thus we see a link
between product (business domain and competitors) and
market (customer needs), which is called the product-
market domain.
Customer needs are the basis for developing the product
offer. Product decisions are important because a strategic
marketer understands customer need-stated, real, unstated,
delight and secret
2
or existing, latent and incipient". Since
the marketer provides appropriate satisfier in the form of a
product to the customer, identifying a product- market in
which a company has an offering defines both its customer-
oriented purpose(s) and the competition that affects the
achievement of marketing goals. The former is achieved
by providing satisfier of the customer needs being served
and the latter by identifying competitors for serving each
need'. It is important that the identified product- market
domain must send its intended customer delivered value.
Customer-felt value becomes the basis for customer-need
satisfaction. Since competitive advantage has basis in the
delivery of superior customer-felt values, the role of product
and value-added services become more important. For
example, a company's software is becoming a critical source
*Reader, SBS (E) College, New Delhi.
of competitive advantaqes, However, there is no common
meaning of the term competitive advantage - "distinctive
competence" or "provision of superior customer value", This
positional and performance superiority could be due to
relative superiority in the skills, resources and knowledge
that a business unit has, how it deploys them and the timing
of such deployment. Resources and competencies of the
organisation make up its strategic capability7.
Thus, the product strategy can be a source of competitive
superiority of a business unit. Therefore, the product-
market should be carefully selected with the specific
competitive superiority and the underlying competence-
capability paradigm.
BASIS FOR STRATEGIC CAPABILITY: THE
COMPETENCE DIMENSION
Capabilities are operational skills, growth-enabling skills
and special relationships", They can be turned into
sustainable competitive advantage by a market-oriented
orqanlsatton". The attainment of competitive advantage
can lead to strategic capability, superior delivery of
customer value, and resultant better performance by
strategic business unit
1.ln
addition, Day11 has referred to
three elements of a market-relating capability-
(relationship) orientation, knowledge and skills, and
integration and alignment of processes. The three elements
at MGMT DEV INST GURGAON on July 24, 2013 vis.sagepub.com Downloaded from
Product Market Competence : The New Paradigm
interact and reinforce each other, and separately constitute
part of sustainable competitive advantage (SeA). The
farther they move along each vector, the closer they are
to the capabilities that are needed for collaborative
partnering and the resultant customer value delivery. This
is important as the move (collaborative partnering),
comparable to competitor, makes the business unit better
than its rivals, resulting into sustainable competitive
advantage, having core capabilities at the base.
The capabilities, through product-competence-market
route, become basis for any competitive edgel superior
performance by the business unit. Kotter and Heskett
12
suggest that core capabilities (distinctive and hard to
imitate capabilities) should be, along with strategic vision,
deciding the scope of strategy. Nevertheless, strategy
should not merely be dependent on portfolio of products
and markets. Thus, product-market dimension is not
enough to decide about SCA, rather competence (including
resources) is a starting point for attaining SeA. Long and
Koch13 suggest the equation for attaining core capabilities
(core competence + strategic processes) and point out
the attending direction as: competence -> core
competence ->strategic process -> core capabilities -
> SCA. Since a business takes presumptionsl
assumptions about core competencies, environment and
mission to see its fit with each of the component, it must
test assumptions constantly and convey the changes
within the orqanisatlon". Further, Long and Koch divide
the capabitities". Threshold and core capabilities'.
Threshold capabilities are necessary to be in business -
services to support internal customers, and skills and
systems that are conditions for doing business in the
specific industry. However, they do not afforddifferentiating
edge that is provided by core capabilities. Core capabilities
are critical core capabilities (providing today's competitive
advantage), and cutting- edge core capabilities that will
providetomorrow's competitive advantage. They help SBU
to createitscompetitivevalue chain. Inaddition,acapability-
based organisation seeks to create maximum customer-
felt value by developing as broad array of products and
services as possible from the core capabilities developed
over time".
Overall, the SBU must ensure that its competitive edge
emanates from its core capabilities (product-market-
competence linkages) and the obtained competitive
advantage must remain sustainable over time.
DEVELOPING PRODUCT STRATEGIES:
THE FRAMEWORK
Product strategies can be enlisted in a variety of ways.
One such classificationof product strategies was submitted
by Jain - product positioning, product repositioning, product
overlap, product scope, product design, product
elimination, new product and product dlverslfication".
However, this strategic product classification does not hold
much of ground. When matched against the level of
marketing and for their impact on competition, the answer
to the product strategies fall more on existing! new product
sort of classification with SBU and corporate dominance
levels, ignoring explicitly the competence dimension for
formulation of product strategies. Further, of various types
of customer needs, existing need has been mostly
focussed in Jain's framework. Other needs are covered
almost indirectly or stated very rarely in the said
classification.
Thus, the concentration in Jain's classification framework
is on the product strategies for existing or new products
only, although the specific product strategies might not
rest exclusively on one of the business competitive
dimension. For example, a product-design strategy might
result in increased market share. However, the increased
market share could be result of better. competitive
strategies adopted by the business units. Further, the new
product strategy might result in gain of market share with
existing competence in new markets (through product
improvement) or new competence in existing market
(through product rejuvenation),
The Ansoff Matrix
The products offered by a business unit constitute product
portfolio - having different product lines and product items
called the product-mix. Product portfolio of a strategic
business unit is the starting point for understanding product
strategies. The existing products of a business unit can
be subject matter of strategic attention for responding
differently to the existing markets via market penetration
strategy and new market via market development strategy,
as seen in Figure 1.
To understand strategies for existing! new products, the
Ansoff Matrix can be expanded to reflect Jain's
classification, as can be observed in Figure 2. The product
116
VISION: The Journal of Business Perspective, January - June, 2004
at MGMT DEV INST GURGAON on July 24, 2013 vis.sagepub.com Downloaded from
Grover
- Product
Design Strategy
-New
Product Strategy
- Product
Overlap Strategy
Market
Penetration Strategy
Product
Elimination Strategy
- Product
New
Scope Strategy
- Product
Markets-- Diversification
Strategy
Existin
Markets
Existin
Markets
New
Markets
New
Products
Existing
Products
Figure 2 : The Expanded Ansoff Matrix
The new product options (in Figure 3) include 'with new
competencies' and 'beyond current expectations' as
additional dimensions. But for existing products, non-
inclusionof the term 'with newcompetencies' and 'beyond
current expectations' is deliberate on their part - pointing
to the non-relevance of new competence for existing
markets. It is believed that the expressing of 'competence'
as altogether newdimension in the product- market matrix
can mark newthinking for strategic product analysis. For
Consequently, the competitive capability and resultant
competitive advantages are greatly ignored. This
weakness in the product-market matrix is partially
compensated by Johnson and Scholes who expressly
include competence into the product-market matrix, (see
Figure 3).
Market
Development
Strategy
Existing Product
Markets--Development
Strategy
Nevv Diversification
MarketSStrategy
Nevv
Markets
Nevv
Products
Existing
Products
Figure 1 : The Ansoff Matrix
Existlnq__Market
Markets Penetration
Strategy'
The Partial Competence Dimension
There are problems in Jain's classification as the product-
market criterion explaining every aspect of the basis for
capability development. For example, the Figure 2 does
not include competence (which for our purposes includes
resources, skills and know-how) as dimension that can
seriously affect the root to product-market matrix.
positioning, repositioning and value marketing strategies
are not included as they impact the whole gamut of
segmentation and targeting strategies, and not restricted
entirely to the product strategies. It is important to note
that the expanded Ansoff Matrix calls for choosing
appropriate product strategies by moving along existing
(products-markets), and new products-markets, to
diversifying in entirely new products and markets.
VISION: The Journal of Business Perspective, January- June, 2004 117
at MGMT DEV INST GURGAON on July 24, 2013 vis.sagepub.com Downloaded from
Product Market Competence : The New Paradigm
PRODUCT DEVELOPMENT
On existing competencies
With new competencies
Beyond Current Expectations
MARKET DEVELOPMENT
New Segments
New Territories
New Uses
With new competencies
Beyond current Expectations
DIVERSIFICATION
Nevi On existing competencies
MarketS- With new competencies
Beyond Current Expectations
Existing
---I
Markets
Nevv
-
Markets
Nevi
Products
Existing
Products
PROTECTI BUILD
Consolidatin
Markets Market Penetration
Figure 3 : The Directions for Strategic Product Development
example, product improvement strategy relates to a case
where new product is being offered in the new market but
with existing competence. Alternatively, product
rejuvenation strategy in existing product-market requires
new competence (discussed in the text of the article).
There is therefore a case when a business unit might enter
new markets without acquiring new competence, like HLL
going for 'Annapurna' salt with competence being already
acquired from selling soaps. Similarly, the missinq
'competence' dimension might suggest that the existing
product could be withdrawn from a market and rejuvenated
or new product (alternative technologies) could be
launched in the grab of old brand name without
'competence' being the point at centre stage. However,
the reality is different. For example, Maruti 800 had to be
temporarily withdrawn from existing market because of
Supreme Court orders. To continue to offer Euro I
compliant cars, Maruti Udyog Limited did not have the
requiredcompetence like MPFI technology, trained worker
to fit such kits, etc. The existing but modified product
offering requiring new competence continues to be the
winning car even when the company has withdrawn fifth
gear feature.
Thus, a shrewd competitor must keep an eye on the
changing nature of competence requirements (and core
capabilities)to remain in competition. The strategic product
118
VISION : The Journal of Business Perspective, January - June, 2004
at MGMT DEV INST GURGAON on July 24, 2013 vis.sagepub.com Downloaded from
Grover
Existing
Markets (E3)
New
Markets (E2)
Existing
Competence
Nevi
Compe-
tence
Existing
Markets (E1)
Market consolidation strategy requires deeper focus on
competencies. Installation of new capacities along with
sales promotion measures, etc. can be used for gaining
competitive advantage. The only condition is that sales
growth must be more than the industry is able to meet, as
is happening in PC industry. If there is static market
opportunity, it becomes difficult to penetrate into the
existing market with existing products-competencies. To
accomplishthis, strategic marketers have to resort to cost-
cutting measures, for example.
Nevv
Markets (E4)
Figure 4 : Alternative Strategies for
EXisting Products
performance, space and economy. The objective of such
strategies is to increase overall market share for the
business unit and thereby increase profitability.
decisions are for the existing products and the new
products, in conjunction with the third dimension -
competence. The following discussion is in the order -
alternative strategies for existing products and new
products.
ALTERNATIVE STRATEGIES FOR EXISTING
PRODUCTS
A strategic business unit might protect and hold its current
market position within the parameters set by existing
competencies. Strategic marketers can penetrate and
consolidate existingmarket by sustaining the product offer,
by holding the quality, features, size, etc., of the current
product by adopting appropriate sales promotion
techniques; and by encouraging brand switching or
advertisement appeals directed at non-users.
The internal analysis of any business unit typically brings
competence dimension to the tore", Core c o m p e t e ~ c e
for balancingwith strategic 3Cs19 in turn, calls for assessing
the capabilities of the business unit
20
to deliver superior
customer-felt value. Moreover, this superior customer-felt
value can be deliveredby developing strategies for existing
productswithcompetence-marketdimension(seeFigure4).
Existing Product-Existing Competence: Existing
Market [EI]
[Market Penetration Strategyl Market Consolidation
Strategy
(Sales promotion, brand switching, targeting
non-customers)
For example, bank customer can be persuaded to use
Internet for their banking needs. Similarly, WagonR (a multi
activity vehicle) advertised its car to encourage brand
switching by challenging the prospective customer to
compare the overall drive performance of WagonR,
Hyundai Santro, and Daewoo Matiz. Matiz has since been
withdrawn from market from August 2002. Further, to
complete the brand switching sequence, Maruti Suzuki
.announced sales promotions - attractive gift hampers for
participants, exciting fun-filled games and free T-shitts
for kids, and a free pollutioncheck-up for their existing
vehicles.
Similarly, Tata Indica competitively targeted existingl
potential customers by encouraging brand SWitching with
slogan like "more car per car" - more because of
In a growing market, market consolidation becomes
difficult if the firm shows complacency. The small
competitors may follow the firms' response to enter the
market and catch-up market share, thereby displacing the
VISION: The Journal of Business Perspective, January- June, 2004 119
at MGMT DEV INST GURGAON on July 24, 2013 vis.sagepub.com Downloaded from
Product Market Competence : The New Paradigm
market leader, as happened for Gits". The firm mistook
the markets' rapid growth (since its inception till 1980s)
as belonging to them (not competitors) and became
complacent. Soon the firm realised that the market was
no longer skewed in their favour - the market for instant
soup mixes had seen regional competitors as Tarla Dalal,
Bambino, EtMi, etc. In the meantime. Nestle established
and invaded Gits' existing but growing market. The
company missed consolidation strategy as the market
situation changed and new entrants showed their
presence. The Gits did almost nothing to scan market
changes and find a fit between competition, customer and
company. The company did not review, build, or dominate
and consolidate its competitive position.
Existing Product-Existing Competence: NewMarket
[E2]
[Market Development Strategy
(segment! geographic! distribution expansion)]
Sometimes existing product-competence could be useful
in new markets through market development efforts -
segment expansion, geographic expansion and distribution
expansion. For example, IBM's manufacturing and sale of
computers to industrial markets could be expanded for home
segment. To sell IBMthrough direct marketing, it appointed
authorised agents and expanded distribution network. A
company can also develop market by increasing the size
of served (geographic) market from four metros - Delhi,
Mumbai, Kolkata and Chennai - to the whole of India and
other Asian countries and continents. Similarly, VSNL issued
advertisements for expanding its market by offering five
plans with extensive price cuts and free access at nights
and on Sundays, while DishnetDSL offered one-hour free
access to women and children, setting the trend for free
Internet access in near future,
The advent of Internet has meant distribution expansion
for package products (where digitalisation is possible) like
banking operations, railway and airline ticketing, software,
music, books, etc. The distribution of digital products could
be by direct channels. This push to direct marketing has
opened-up tremendous opportunities for small-scale
businesses since it is a cost-effective method of
conducting business activity. The Internet helps in placing
the product offer at relevant targets, though profits are not
reportedly earned bye-business companies.
Existing Product-NewCompetence: Existing Market
[E3]
[Product Withdrawal Strategy/Product Rejwenation Strategy
(new brand/ logo/ packaging! new sizes! repositioning)]
The existing competencies through market penetration,
consolidation or development strategies might be stretched
in existing markets to protect or build on the strategic
marketer'scurrent competitiveposition. However, the existing
competencies might not possibly be further stretched, as
there could be barriers - the product scope strategy (product-
mix for existing product lines) might change, as the business
mission does not cover such change in the product scope.
Further,there might be need for newcompetence to continue
wnh the existing product offer.
Under the circumstances, the marketer must consolidate
and rejuvenate the existing market with the new
competencies provided the business unit has! can develop
the new competence that is required for further developing
the existing product. The new competence could be - to
bring out new package, package sizes, new logo, brand
repositioning, brand extension, etc. Overall, existing
capability deployment pattern might be reviewed to decide
about priorities - to acquire newcompetence and rejuvenate
or to withdraw22. For example, Proctor and Gamble, U.S.A.,
slashed the number of items sold to almost half in hair
care (although fewer shapes, sizes, and packages mean
less choice for consumers) - the market share and overall
sales grew by nearty five points to 36.5% over the past
five years
23
The company withdrew products, as the
current choice (competence) was no longer required for
the delivery of superior customer value. In effect, company
was able to redeploy the spared resources and skills in
other strategic business units. Recently, the Indian
counterpart decided to withdraw its operations from the
rural market to the urban market.
Product rejuvenation concerns the existing product with
newbrand/iogol packaging, new sizes and repositioning.
The essence of product rejuvenation is to market the
product without interference from R&D. If R&D is required,
it is product improvement strategy (N2) or new product
development strategy (N3). Rejuvenation is to restore
youthful appearance and is 'product renaissance', a
creative redesign of existing products>.
A variety of environmental and operational reasons - a
change in the consumer preferencethat entails promising
opportunities or a mistake detected in the original
positioning of the product - call for rejuvenating the product.
Included are conditions when product positioning is next
to competitor's brand and the business unit does not have
competence to withstand the competitive waves (for
example, local brands pitted against HLU P&G or Coke/
Pepsi).
120 VISION: The Journal of Business Perspective, January - June, 2004
at MGMT DEV INST GURGAON on July 24, 2013 vis.sagepub.com Downloaded from
The role of rejuvenation strategy becomes relevant when
the product (firm being without newcompetence required
for marketing) looses its relevance in the present business
unit environment. Thus, rejuvenation is a condition.
Rejuvenation can change the course of product sales with
added vigour. Rejuvenation strategies, compared to product
improvement strategies or new product development
strategies are relatively cheaper, easier and quicker for
creating profits and sustaining market share.
For example, Videocon was in the television and audio-
visual market. With the advent of multimedia (convergence
of image, sound, text, and data), inclusion of computer
technologies into their product scope was obvious. To
overcome the change in product scope for the existing
market, the company is slowly withdrawing from TV
market, and has moved into personal computer market,
introduced its first PC-TVto gain and maintain competitive
position in the original television and audio-visual market.
The company consolidated its position (rejuvenated its
existing product TV to PC-TV) in the existing market by
acquiring new competence and by combining technologies
as well.
Earlier Rasna fruit drink concentrate was targeted at
mothers (being the decision-makers). Later Rasna
advertised to include child (influencer). This meant that
Rasna identified the real targets when children were
included into the appeal. The product was repositioned
accordingly.
Berenson and Mohr-Jackson
25
(1994) have listedfive steps
for knowing the need for product rejuvenation and the
opportunity lying underneath. First, supply chain problem
or limited customer-delivered value could be the reasons
for the product's abandonment or decline. Second, whether
a rejuvenation strategy can be appropriate in the macro
economic environment. Third, examine what the product
name communicates to the customers. Fourth, explore
potential competitive segments to be reached. Finally,
examine the probable value-creation for customers.
Once a firm senses the slow/ declining sales, the dying
product can be rejuvenated by adopting appropriate
rejuvenation strategies. For it to happen, strategic marketer
need to look into characteristics of the product-market,
present market penetration, present channels used and
present demand patterns. Here comes the role of
investigation and market research.
Grover
Strategically, brand revltalisation is an acceptable and
mostly feasible alternative for implementing product
strategies. Abrand is an important dimension of product
strategy. The brand revitalisation means enhanced equity
involving improved recognition, enhanced perceived
quality, changed association and expanded customer ease,
and/ or increased loyalty26. Revitalisation of a brand is
substantially less costly and less risky than introducing a
newbrand. There are several brand revitalisationstrategies;
increasing usage; finding new uses; entering new markets;
repositioning the brand; augmenting the product/service;
obsolete existing products; and extending the brand.
Britannia rejuvenated its brands by revitalising its logo
design, colour scheme and its title 'Eat Healthy, Think
Better'. Similarly, Videocon rejuvenated its brand logo by
adding two 'E's - 'from Electronics to Energy. The other
brandrejuvenationattempts are by Coca-Cola Co. and Pepsi
Co. through change in logo design and colour schemes.
The product strategy through an appropriate rejuvenation
strategy must rest on the sustainable competitive advantage
for the business unit. However, if the industry is unattractive
(stable and mature market but declining in growth, for
example), the strategic business unit must consider a
selective withdrawal and rejuvenation strategy.
Existing Product-NewCompetence: NewMarket [E4]
[(Emerging NewOpportunities (start afresh)]
The selective rejuvenation strategy might backfire as the
customer perceived it to be a new offering from existing
business unit. The product rejuvenation (though required
provision of new competence in the existing market) might
result into failure of product as new packages, sizes and
repositioning might mean change of market segment. For
example, change of package by Gits was a success.
Nevertheless, change of ad appeal (i.e., repositioning) by
Onida (from danger devil to humorous depiction) meant
failure of Onida TV. Similarly, market development through
tapping of the unserved market, expanded geographic or
distribution channels, might mean too much stretching the
role of existing competencies in the new market
conditions. For example, when IBM, a mainframe computer
company extended its operations to cover home segment,
it had to reconsider the home requirements of product
suitability and durability. The standards for home segment
might not be more stringent than for industry segment. To
VISION: The Journal of Business Perspective, January- June, 2004
121
at MGMT DEV INST GURGAON on July 24, 2013 vis.sagepub.com Downloaded from
Product Market Competence : The New Paradigm
start selling the personal computers was not easy. The
customer perceived the a mainframe computer company
not fit for selling personal computers, a perceptual problem
of company- product fit. As a result, the lack of specific
competence required to sell a computer to home segment
pushed the company image too far away. Customer dtd
not respond to such offers. Thus, business unit must have
new competence to respond to new market needs.
The requirement of newcompetence in the new market is
likely to be more complex and challenging than operation
of existing competence in new market (E2) and new
competence in existing market (E3). The complexity and
challenge caused by new market-new competence
requirement leads to emerging new opportunities provided
the strategic business unit is ready to start afresh - re-
evaluate the role of new competence in new market. For
example, customers did not expect Tata (a company known
for selling commercial vehicles and trucks) to sell passenger
cars, and Tata Indica Car could not take-off in the very.
beginning even though Tatawas sellingTata Estate, a saloon
car at that point of time. Similarly, the advent of Internet
and e-business hasopened-upnewopportunities for existing
products as well as created new' opportunities for courierl
transport companies to respond to the new competitive
environment in real time. Here, the marketer needs to
develop new competence - less responding time (skills),
quicker Internet access instruments in place, entered and
computerised transactions (resources), back office and large
fleet of vehicles..
Take another example from banking industry. Banking can
go on-line, and sharetransactions - purchase! sale, transfer
and dividend warrant among others - can take place online.
Moreover, brsmess can commit product delivery more
promptly and counter growing competition on the
marketplace and market space. With the Internet boom,
every business - whether software providers, ISPs, ASPs,
mobile operators, telecom giants or networking companies
- seems to be jumping into the WAP, an emerging standard
for delivery of products (information and services) on
handheld wireless devices like mobilephones, pagers, palm
tops and digital diaries. However; the new but basic
competence for WAP is the wireless communication
network, particularly developing WAP gateways.
ALTERNATIVE STRATEGIES FOR NEW
PRODUCTS
New product strategies are vital to the continual survival
and growth of a business unit. The competence required
is continuous tracking of customer needs and the
consequent product offer. The new product becomes
important once existing product, if any, becomes unfit in
the customer need-set. Alternatively, existing product is
close to maturity stage in PLC. In such a situation, there
are two options - product withdrawal or product
rejuvenation. In marketing, the term 'new' product includes
not only new-to-the- world products (inventions) but also
those products that might not strictly be inventlon" but
called innovation or improvement. The new-to-the-world
products require good amount of efforts, money and are
risky (affect profits, market share, customer response,
and so on) for the want of tested customer acceptance.
The required competence might be rarely availablefor such
new products. However, the term 'new' includes any
product that customer perceives to be as such.
The new product strategies range from product life-cycle
strategies to product improvement through concentric,
horizontal and conglomerate diversification strategies -
including new product with emphasis on alternative
technologies. Thus, the competence development is a
relative term that may mean usagel stretch of existing
competence or the development of new one. Figure 5
explores the strategic options for new products.
NewProduct-Existing Competence: Existing Marlcet
[N1l
(Product life-cycle strategies)
Portfolio of products of a business unit are classified by
the maturity levels of its industry (business definition),
and by the stage they are in. Further, life-eycle may be of
different types: demand life cycle, demand-technology life
cycles, and brand life cycle28. Apart from the three life
cycles, the fourth is product life cycle. Product life-cycle
is presented as cumulating of sales figures for different
brands, from the new product introduction stage through
growth, maturity and decline stage until the product is
finally withdrawn or rejuvenated
29

A strategic business unit formulates its marketing

strategies by taking into account life cycle of products
they offerl intend to offer. During the life-cycle, a product
can be introduced as newfor the first time, even if it might
havebeen rejuvenated during its lifetime. The newproducts
might be in theformof newproduct lines through aetivitieSI
processes that supplement SBU's existing! established
product lines by change in package sizes, flavours, etc.
or bring additions to the existing product lines.
122
VISION: The Journal of Business Perspective, January - June, 2004
at MGMT DEV INST GURGAON on July 24, 2013 vis.sagepub.com Downloaded from
Grover
Development of new products (N3) mostly requires
separate budgeted provision that considerably overloads
the business - its resources - and put consnamts" in many
ways. However, product improvement, strategy in the first
place does not mean tide over the money and time
constraints, and above all, it is less risky with least
requirements for new competencies. Moreover, the
process of product improvement is quick and easy and
leads to timely bringing out of the new-look products,
ensures ready market and acceptancel adoption of such
new product. In all, existing product line is a foundation
for product improvement strategy. To ensure that the
strategic move is correct, the steps needed are :
Maruti revitalised most of models by fitting catalytic
converter in April 1996. It took next 3-years when .the
Supreme Court compulsorily introduced Euro-I norms. The
company used product improvement strategy. Thus, a
change in the existing product can be through newproduct
development (N3), but also by changing existing product
attributes to reformulate newquality levels/ newflavoursl
new versions to enhance product performance called
product improvement strategy. Nevertheless, its
implementation calls for repositioning of products for
targeting new market! segments, or else it might affect
perceived value of the existing products. Usage of 'a new
or different ingredient' is product improvement like low salt
food for high blood pressure patients. Moreover, after
product improvement, the existing product is often
marketed as 'new'. Thus, product improvement calls for
physically and effectively touching the inner core (soul) of
the product under R&D scanner. Product improvement
might be necessary because of slipping profits, decline in
market share, changing customer needs or absence of a
change in product compared to competitors' offer.
Existing
Markets (N3)
Nevv
Markets (N2)
Nevv
Competence
Existing
Competence
Existing
Markets (N1)
New
Markets (N4)
Figure 5 : Alternative Strategies for New Products
In general, the PLC analysis studies competitive position
- number of competitor might be from none, few, growing
to many, stable number to declining number of competitors;
and competitive position could be dominant, strong,
favourable, tenable, weak or non-viable"
Whenever there is minor change, the newness of products
may violate law of patents, trademarks, etc. Alternatively,
the use of the term 'new' for such products might not be
ethical. Given the orientation, the discussion might become
comprehensive (beyond the scope of the present work) to
study of the Trade and Merchandise Act, 1958, the Patent
Act 1970, the MRTPAct, 1969, orthe Consumer Protection
Act, 1986, etc.
New Product-Existinig Competence: NewMarket [N2]
[Concentric Diversification Strategy/ Product
Improvement Strategy
(Reformulation new quality levels, versions, flavouring)]
1. Finding existing product features, segments served,
and positioning,
2. Tracking specific changes in the environment,
Customers, competition, etc,
3. Causes of sales reversal; existing competencies of
the strategic business unit,
4. Whether it can be 'stretched' for improving the existing
product,
5. New potential targets identified,
6. In addition, in all, the customer value can be enhanced
with the deployment of product improvement strategy.
VISION: The Journal of Business Perspective, January- June, 2004
123
at MGMT DEV INST GURGAON on July 24, 2013 vis.sagepub.com Downloaded from
Product Market Competence : The New Paradigm
Here are some examples where the product improvement
strategy has given new lease of life to the old! dying
products.
1. To reverse almost to its initial levels of the maturity of
the product, soap and detergent manufacturers use
added bleaches and whiteness to their existing
products.
2. Toothpaste manufacturers have changed the
protective compounds and claimed new life to their
old products.
3. Multimedia into the personal computers has made it
mandatory for manufacturers of TV, audio-visual,
communication devices etc., to adopt convergence
technologies - data, text, image and sound. The
outcome is in the form of bigger and better digital
televisions; PC with multimedia as basic equipment;
andcellcam.
4. Lissome Cosmetics rolled out a range of Mattei finish
lipsticks and nail enamels that are reformulated with
ingredients that make themtransfer- resistant and they
contain emollient, which help then retain moisture of
the lips. Further, the nail enamels are enriched with
resins to make them chip- resistant.
When new product bears ~ close relationship with the
existing competencies (marketing or technology) and
creates synergestic effect, it is a case of concentric
diversification. The diversification must add to customer
value. The new group of customers are the basis for
deploying firm's existing competencies, Hindustan Levers
Limited's move into salt (Annapurna) is this type of
diversification - salt has process linkages with soaps as
one of the important ingredient. Moreover, the marketing
of salt is synergestic as salt is like soaps, an FMCG
category product and can be distributed through same
channels.
NewProduct-NewCompetence: Existing Marlcet [N3]
[{Horizontal Diversification Strategyl New Product
Development Strategy (alternative technologies)]
Generally, new product is offered in new markets.
Nevertheless, new product can also serve the existing
market provided it related to the served market. Existing
customers can be targeted with new product through new
product development (NPD) (with alternative technology)
or through horizontal diversification(unrelatedtechnology).
It is important to capture distinction between product
improvement and new product development (alternative
technologies) strategies. Under both strategies, R&D
scanner is required. However, major distinction is whether
the competence required is already present or new
competencies are necessary. The former is better known
as product improvement strategy while the later can be
labelled as new product development strategy (alternative
technologies) .
If a new product is launched in new market with new
competencies, the product-market for such new products
has to be searched afresh. The new product (alternative
technology) tag ensures that the product is not entirely
new to the market. The existing market becomes the
launching pad for the new product Thus, the new product
(alternative technology) ensures same! better level of
profitability and market share.
Largely, new product development (NPD)' requires
deployment of new competencies. Hence, NPD with
alternative technologies, in terms of cost and risk, is third
besFstrategy after brand! product rejuvenation strategy
and product improvement strategy. For example, Maruti
800 was not Bharat-I (equivalent ofEuro-l) compliant car.
Today, Maruti 800 has car engine with MPFI technology,
12-valves, and 5-gears compared to old engine that was
carburettor-mounted, with 8-valves and 4-gears. The MPFI
technology had to be learned to acquire the new
competence. Thus, the company launched new product
to retain and maintain the market share, brand positioning,
etc. In all, the brand' name and current customer loyalty is
retained, and the competitor is not made proactive.
Incidentally, the new technology car has not been claimed
as much. It is referred for as an improved version of Maruti
800 for meeting legal requirements. Thus, the newproduct
can sustain in the old existing market when alternative
technology (new competence) is the basis. Similarly, book,
industry is aligning with the .electronic technology and
providing compact discs as an alternativel supplementary
form of presentation.
While new product (alternative technologies) must appeal
its existing customer, the new product offered might be
technologically unrelated to the existing product. The
horizontal diversification strategy is useful when there is
evidence of existence of unexploited scale economies in
the areaof promotion and distributionsothat the acquisitive
new competence can be offset by better utilisation of
available inter-relationships with marketing. For example,
Maruti Udyog Limited not only produces passenger and
commercial cars, it has started Seconds Cars service and
124 VISION: The Journal of Business Perspective, January - June, 2004
at MGMT DEV INST GURGAON on July 24, 2013 vis.sagepub.com Downloaded from
car finance company. Similarly, some of the IndianOil petrol
pumps offeringdiesel and petrol, have been sellingproducts
not seenearlier- checkingpollutionlevelsandtyrepressures;
vehicle repairs and maintenance; phone and convenience
facilities; and offering grocery and food items.
Horizontal diversification strategy is highly useful in
competitive situations where existing synergies in the
various businesses are not properly established and
axploited'". This can be done by reduction in cost to
enhance competitive advantages. The independence of
businesses is moulded for interdependence to share
corporate resources (tangible and intangible) and enhance
the delivered value to the customer. The superior
competitive advantages of interdependence are
34
like lower
advertising and promotion costs; cross selling of products;
shared channels with higher bargaining and lower
infrastructure costs; and common geographic markets.
New Product-NewCompetence: NewMarket [N4]
[Conglomerate Diversification Strategy]
The corporate decision to move into entirely new area of
business operations means requirement of new product-
competence-market - to move into uncharted territories.
To crystallise the idea of new and unrelated product, a lot
of spade work needs to be in place. Since related
diversification utilises existing markets or competencies,
the competitive advantages are obvious to note and relate.
However, several factors that might force the business
unit to go for conglomerate (unrelated) diversification
strateqy>. These are industry unattractiveness; lack of
capabilities and skills, etc.
Reliance Industries, known in textiles and chemicals,
moved into info-com technologies and Sahara India into
housing, airline and news channels are examples of
conglomerate (unrelated) diversification. In fact, most of
Indian firms are into unrelated diversification. It is important
to note that company credentials have to do a lot with the
main line of business. Use of unusual strategies into the
new and unrelated areas should be cautiously followed.
Reliance inthe info-com sector has started with -
pricing (low) strategy while it is used to follow premium
price strategy. The move might mean special care for
marketing of such products or else failure might set in.
SUMMARYAND STRATEGIC IMPLICATIONS
The product-market-competence analysis provides a basis
for developing business/ corporate strategies that call 1
continual analysis and responses to environmer
competitors, industry, customers and market selectic
(segmentation, targeting and positioning). The produr
market analysis provides insufficient reference
imbedded strategic dimensions of product and mark
relation. The additional competence dimension brings
the not-so-covered SBU and corporate level insights. Tt
competence dimension can change the course of
strategies, for example. The question to withdraw c
rejuvenate a product can be easily guided. Produ
rejuvenation has been divided into two parts - no R&
scanner or R&D required. The first is a case of rejuvenatin
existing product while second option takes us to the ne'
product development related issues. Sirnllartj
diversificationis not a question of mere new product-marks
domain. It has three sub-options - in the new marks
(concentric diversification), with the new competenc
(horizontal diversification), and with new marke1
competence (conglomerate diversification). Thus, thl
product-market- competence linkages have strateqt
underpinnings, which guide appropriate strategies to b.
deployed.
The Strategies for Existing Products
The existing competencies can help marketers tc
penetrate into existing market by sustaining the produc
offer. It can be achieved by keeping the quality, features;
size, etc., of the current product through appropriate sales
promotion techniques, encouraging brand switching or
advertisement appeals directed for non-users. Strategic
marketers might find their existing product useful in new
markets. Market could be developed through market
development strategies by expanding distribution channels
or potential user groups with in the served market, or by
expanding the served market geographically.
Sometimes, the existing competencies might not be
possible to be stretched because the SBU mission does
not cover such change in the existing product scope, or
there might be need for developing new competence to
continue with the product offer. If the SBU has! can develop
the new competence that is required for the existing
product, the marketer must consolidate/ rejuvenate the
existing market while stretching the existing product with
the new competencies. However, the capability
deployment needs to be reviewed to decide about priorities
- to acquire newcompetence and rejuvenate or towithdraw.
The new competencies might be in the form of bringing
VISION: The Journal of Business Perspective, January- June, 2004 125
at MGMT DEV INST GURGAON on July 24, 2013 vis.sagepub.com Downloaded from
Product Market Competence : The New Paradigm
out new package, package sizes, new logo, brand
repositioning, brandextension, etc. Rejuvenation strategies
are relatively cheaper, easier, and quicker for creating
profits and sustainingmarket share. In revitalisinga brand,
the goal is not only to generate sales levels but also to
have them based upon enhanced e.quity, a move which
often involves improvedrecognition, enhanced perceived
quality, changed association, and expanded customer
ease, andl or increased loyalty.
When the business is preparing itself for market
development by covering the unserved market,
expanded geographic or distribution channels, the
business needs to reconsider the role of its existing
competencies in the new market conditions to grab new
marketing opportunities. The lack of specific
competence required to sell for example, a computer
to home segment might require development of new
competence (like marketing skills) because customer
might not respond to such offers.
The Strategies for New Products
Strategic marketers must carry product development
to cater to the changing needs of the customers. New
product development is vital to the continual survival
and growth of the strategic business unit. Competence
required is continuous tracking of customer needs and
product development to satisfy those needs. When the
existing product becomes unfit in the customer need-
set or is close to maturity stage in PLC, there are two
options - eliminatel withdraw the product or revitalise it
by appropriate improvements! modifications. Then there
could be new product - called 'new' in marketing sense
or 'new' as invention. The products that are entirely
new-to-the-world require good amount of efforts, money
and are risky for want of tested customer acceptance.
Thus, the competence development is a relative term
that may mean usage/ stretch of existing competence
or the development of new one. The PLC analysis calls
for studying competitive position at relevant point on
the product life-cycle stage as the number of competitor
might vary. Each of the situations calls for deployment
of appropriate marketing strategies with specific
objectives.
A change in the existing product can be not only by
new product development process. It could also be by
using existing product attributes and then reformulating
them so that new quality levels/ flavours/ versions
could be attained. Though the chances of new product
success are slim, the process of product improvement
is quick and easy by timely bringing out of new-look
products. It is important to note that product
improvement mean redesigning of the existing product
through R&D channels. Since, the basic requirement
for all such functions is that the existing product is
tempered with the existing competencies, after it works
through the R&D department, the new formulation leads
to re-introduction of the existing product.
The newproduct can also be served in the existing market
providedthe newproduct is relatedto the existing (served)
market. This is possible by carrying out new product
development (altemativetechnology) or through horizontal
diversification (unrelated technology). SBUcan search for
new products that adapt alternative technologies; it can
also search for new products and appeal its existing
customer even when the newproduct offered has nothing
to dowiththe existingproduct i.e.,technologicallyunrelated
to the existing product. The strategic purpose of serving
existing markets with new and alternative technology is
that the brand name has been retained, the current
customer loyalty is retained and the competitor is not
threatenedwith newproduct. The horizontal diversification
strategy is desirable when competition is tough and entry
of newproducts withthe newtechnologies(competencies)
would mean entirely new product being marketed. From
SBU point of view, the horizontal diversification strategy
is more useful when there are unexploited scale
economies in the area of promotion and distribution.
The all-newproduct-market-eompetenceparadigmresults
fromthe corporate decision to move into entirely newarea
of business operations. Since related diversification (to
new markets or with new competencies) utilises existing
markets or competencies by getting support from the
existingSBUvalue-chain, the competitiveadvantages are
obviousto note and relate. However, several factors might
force the SBU and corporate decision makers to follow
conglomerate (unrelated) diversification strategy: the
present industry is unattractive; the firm lacks capabilities
and skills; and the corporationl SBU is interested in
consideration of risk reductionl diffusion from existing
industry.
126
VISION: The Journal of Business Perspective, January - June, 2004
at MGMT DEV INST GURGAON on July 24, 2013 vis.sagepub.com Downloaded from
Grover
2
5
6
4
NOTES
Sidhu, et aI., (2000), p. 376.
2 Kotler (2003), p.21.
3 Jain (2000), p. 77.
4 Sudharshan (1995), p. 86.
5 Prahlad and Krishnan (1999), pp. 109-118.
6 Day and Wensley (1988). pp. 1-20.
7 Johnson and Schoks (2002), p. 18.
8 Baghai, et at. (1999), pp. 100-109.
9 Jaworski et al" (2000}, pp. 45-54.
10 According to Jain (2000), business unit is a unit comprising one
or more products having a common maiket base whose manager
has complete responsibility for integrating all functions into a
strategy against an identifiable competitor, (p. 17). And strategic
business unit must look and act as a freestanding business,
satisfying the following conditions: Have a unique and
independent business mission; Have a clearly defined set of
competitors; Be able to cany out independent integrative
planning; Be able to manage resources in other areas; and Be
large enough to justify senior management attention but small
enough to serve as a useful focus for resource allocation,
(p. 19).
11 Day (2000), pp. 27-29.
12 Kotter and Hasken (1992).
21 Ohmae, Kenichi (1989), The Strategic Triangle' in Cook, at el.
(eds.) (1989), p. 53.
22 Porter, Michael E. (1987), 'From Competitive Advantage to
Corporate Strategy', Harvard Business Review, pp. 43-59.
23 Prahalad, C. K. and Gary Hamel (1990), 'The Core of the
Corporation', Harvard Business Review, May-June, pp. 79-91.
24 Prahlad, C. K. and M.S. Krishnan (1999), liThe New Meaning of
Quality in the Information Age", Harvard Business Review,
Sept.-Oct., pp. 109-118.
25 Schewig, Ehos E. (1974), New Product Development (Illinois:
The Dryden Press).
26 Sidhu, Jatinder S" Edwin J. Nijssen and Harry Ro Commandeur
(2000), 'Business Domain Definition Practice: Does it Affect
Organisational Performance', Long Range Planning, Vol. 33,
pp. 376-401.
27 Smallwood, John E. (1977), 'The Product Life-cycle: A Key to
Strategic Marketing', in Spitz (ed.) (1977), pp. 249-256.
28 Spitz, A. Edward (ed.) (1977), Product Planning (New York:
Petrocelli/Charter).
29 Sudharshan, Do (1995), Marketing Strategy: Relationships,
Offerings and Timing &Resource Allocation (Englewood Cliffs,
New Jersey: Prentice Hall).
30 Various issues of The Economic Times.
Aaker, David A. (1991), Managing Brand Equity: Capitalizing on
the Value of a Brand Name (New York: The Free Press).
Ansott, Igor H. (1957), 'Strategies for Diversification', Harvard
Business Review, Sept, - Oct., p. 114.
Berenson, Conrad and Iris Mohr-Jackson (1994), ' P r o ~ u c t
Rejuvenation: A Less Risky Alternative to Product Innovation',
Business Horizons' Nov.-Dec., pp. 51-56.
Booz, Alien and Harmilton (1982), New Products for the 1980s
(New York: Booz, Alien & Harmilton).
Boutboul, Alain c. ( 1986), , A Framework for Analysing
Acquisition and Divestitures Decisions', unpublished master's
thesis, Sloan School of Management, MIT, quoted in Hax and
Majluf (1996), p.230.
Cook, Victor J" Jean-Claude Larreche and Edward C. Strong
(eds.) (1989), Readings in Marketing Strategy (C.A., U.S.A.:
The Scientific Press).
7 Day, George S. (1994), 'The Capabilities of Market-Driven
Organisations', Journal of Marketing, Vol. 58, October, pp. 40-42.
8 Day, George S. (2000), 'Managing Market Relationships',
Journal of the Academy of Marketing Science, special issue on
"Serving Customers and Consumers Effectively in the
21 S' Century: emerging Issues and Solutions", Vol. 28(1),
pp. 27-29.
9 Day, George S. and Robin Wensley (1988), 'Assessing
Advantage: A Framework for Diagnosing Competitive
Superiority', Journal of'Marketing, Vol. 52, pp. 1-20.
10 Drucker, Peter F. (1994), 'The Theory of Business" Harvard
Business Review, September-October, pp. 100-101.
11 Dyck, Kenneth Van (1965), "New Products from Old: A Short-
cut to Profits', in Spitz (ed.) (1977), pp. 267-270.
12 Hax, Arnold C. and Nicolas S. Majluf (1996), The Strategy
Concept and Process: A Pragmatic Approach (New Jersey:
Prentice Hall), p. 306.
13 Jain, Subhash C. (\993), Marketing Planning and Strategy
(Cincinnati: South-Western Publishing Company).
14 Jain, Subhash C. (2000), Marketing Planning and. Strategy
(Cincinnati: South-Western College Publishing).
15 Johnson, Gerry and Kevan Scholes (2002), Exploring Corporate
Strategy: Text and Cases (New Delhi: Prentice Hall of India).
16 Kotler, Philip (1994), Marketing Management: Analysis, Planning,
Implementation, and Control (New Delhi; Prentice Hall of India).
17 Kotler, Philip (1997), Marketing Management: Analysis, Planning,
Implementation and Control (New Delhi: Prentice Hall of India).
18 Kotler, Philip (2003), MarketingManagement (New Delhi:
Prentice Hall of India).
19 Kotter, John and James Heskett (1992), Corporate Culture and
Performance (New York: The Free Press).
20 Long, Carl and Mary Vickers-Koch (1995), "Using Core Capabilities
to Create Competitive Advantage', Organisational Dynamics,
Summer, pp. 7-22.
3
REFERENCES :
VISION: The Journal of Business Perspective, January- June, 2004
127
at MGMT DEV INST GURGAON on July 24, 2013 vis.sagepub.com Downloaded from
Product Market Competence : The New Paradigm
13 Long and Vickers-Koch (1995), p. 12.
14 Drucker (1994), pp. 100-101.
15 Long and Vickers-Koch (1995), p. 13-15.
16 Day (1994), pp. 37-52.
17 Jain (2000) pp 358-408
18 See Prahalad and Hamel (1990), pp. 79-91.
19 Ohmae (1989), p. 53.
20 Johnson and Scholes (1997), p. 139
21 For further details see The Economic Times dated 27 -11-1996
22 Johnson and Scholes (1997), pp. 282-283
23 The Economic Times dated 1q10.1996.
24 Dyck (1965), p. 267.
25 Bereoson and Mohr-Jackson ( 1994), pp. 51-56. See also Kotler
(1997), p. 361.
26 Aaker (1991), p. 242.
27 Booz, Allen and Harmilton (1982)
28 Kotler (1997), pp. 344-345.
29 Products can be rejuvenated at any stage ofPLC and is affected
by relative competitive position of the SBU.
30 Hax and Majluf (1996), p. 306.
31 Constraints like time and money limit.
32 The next alternative (conglomerate diversification - N4) is still-
more risky and costly.
33 See Ope Cit .. Jain (1993). p. 415: andOp. Cit .. Hax and Mailuf
(1996). p. 225.
34 Boutboul (1986) quoted in Ibid. Hax and Majluf (1996), p.230.
35 It is important to understand that unrelateness of new prodact-
market-competence in its definition does not go to extreme (i.e.,
any business). It is a question and degree of relatedness where
it turns out that the new business is unrelated (because corporatel
SBU think them as such).
ACKNOWLEDGEMENT
The author is greatly indebted to Dr. Sanjay K. Jain, Professor of Commerce,
Department of Commerce, University of Delhi for his untiring capacity to propagate,
expose and deliberate ideas and help bring them into desirable practical shape. The
author is especially thankful to him for his initial observations on earlier drafts including
the final one. No less is the contribution of the blind referees who helped in bringing
about the article in the present form.
128
VISION : The Journal or Business Perspective, January - June, 2004
at MGMT DEV INST GURGAON on July 24, 2013 vis.sagepub.com Downloaded from