Product Strategy

Presented by: Group 3 | BSP MBA I-1

Bardelas, Mae Ann C.
Santillan, Trina Agnes B.
Veloro, Edward Valens V.
 Topic Outline

Product Strategy in the Marketing Context

Areas of concern:
 Basic Issues in Product Management
 Product Life Cycle
 Product Audit
 Organizing for Product Development
New Product Planning and Development
Process
 Causes of New Product Failure

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Basic Issues in Product Management
Presented by: Trina Agnes B. Santillan
 Product Price Promotion Place

4’Ps

Marketing Mix

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 Product Strategy

Outlines the elements of the product and the company's target market
Defines the direction of your product and what you want to achieve
Critical element of marketing and business strategy
Includes decisions about product mix and lines, brands, packaging and labeling,
and warranties

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 Elements of Product Strategy

Who is the product for and

Market why people would want to
buy and to use it
and
Needs

Product
What the product is and why Strategy
it stands out
How your product is
Key Business going to benefit your
Features or company
Differentiators goals

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Basic Issues in Product
Product Quality,
Management Value, and Safety

Product Planning &

Development Product Mix &
Product Lines

Product
Classification Brand and
Branding Equity

Product
Definition Packaging,
Patents
What is a Product?

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 What is a Product?
Anything that can be offered to a market for attention, acquisition, use, or
consumption that might satisfy a want or need

Marketing Philosophy: The sum of the physical, psychological, and sociological

satisfactions the buyer derives from purchase, ownership, and consumption

Includes services, events, persons, places, organizations, and ideas or a mixture of

these

PRODUCTS are a key element in the overall market offering.

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Product Levels: The Customer Value Hierarchy

5th level ; encompasses all the possible augmentations and

transformations the product or offering might undergo in
the future; Companies search for new ways to satisfy
customers and distinguish their offerings

4th level ; marketer prepares a product that exceeds the

customer expectations; competition

3rd level ; a set of attributes and conditions buyers

normally expect when they purchase this product
i.e. clean bed, fresh towels, working lamps

2nd level; actual product – design, features i.e.

bed, bathroom, towel

1st level; “What is the customer really buying?”

i.e. hotel guest is buying sleep/rest

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 Product Classification (Consumer Goods)
1
Durability and Tangibility

Non-durable Durable Services

• Tangible
• Consumed in one or few uses
• Purchased frequently
• Strategy
• availablity
• small mark-up/low-priced
• heavily advertised
• Survive many uses
• Require more personal
selling/service
• High margins and require seller
guarantees
• Intangible product
• Requires more quality control
and credibility

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 Product Classification (Consumer Goods)
2
Shopping Habits

Convenience Shopping Specialty Unsought Goods

•Purchased frequently and • Purchased less frequently • Special purchase efforts • New innovations
immediately • Requires comparison based on • Few purchase locations • Those that
•Low prices and many purchase suitability, price, and quality • Consumer is prepared to consumer does not
locations • Fewer outlets and deeper sales pay a premium price know about or
•Categories: support knows about but
•Staples • Categories: does not normally
•Impulse consider buying
• Homogenous
•Emergency • Heterogenous

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Product Classification (Consumer Goods)
2 Consumer-Goods or Shopping Habits
Marketing Considerations

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 Product Classification
• Products purchased for further processing or for use in conducting a business (organization goods)
Materials and Parts
• Raw Materials
•Farm (wheat, corn)
•Natural Products (fish, crude)
•Manufactured materials/parts
•Component materials (iron,
cement)
•Component parts (tires, small
motors)
• Major marketing : Prices and
service are more important over
advertising and branding
3
Industrial Goods
Capital Goods
• Installations – buildings,
factories
• Accessory Equipment –
portable factory equipment,
tools, and office equipment
Supplies and Services
• Supplies
• convenience products of the
industrial field - operating
supplies (lubricants, paper,
pencils); R&M items (paint,
nails etc.)
• Business Services
• maintenance and repair
services
• Business advisory services
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 Product Classification
4
Organization, Persons, Places and Ideas

Included in the concept of Product as an additional market offering

Marketing consists of activities undertaken to create, maintain, or change the attitudes and behavior
of target consumers toward an organization, particular people, place or social idea.
Examples:
a. Organization marketing: corporate image marketing campaigns
b. Person marketing: Use of well-known personalities to help products/causes
c. Place marketing: WOW Philippines
d. Social Idea marketing: social advertising campaign – change.org

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 Product Planning and Development

process of creating a product idea and

following through on it until the product
is introduced to the market
must have an exit strategy for its product
in case the product does not sell
i.e. case studies, market research,
concept development, SWOT, business
analysis

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 Product Quality | Value | Safety

Quality
degree of excellence or superiority that
an organization’s products possess that
creates customers value and satisfaction
In a narrow sense, “no defects”
American Society for Quality: The
characteristics of a product or service that
bear on its ability to satisfy stated or
implied customer needs
VALUE
what the customer gets in exchange for
what the customer gives
Customer’s perception of the value
associated with a product is generally based
on :
a. the degree to which the product meets
his specifications
b. the price that the customer will have to
pay

The usefulness or worth of something The usefulness or worth of something

relative to price

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 Product Quality | Value | Safety
Total Quality Management
organization-wide commitment to satisfying customers by continuously improving every
business process involved in delivering products or services

“There are better way of doing things”

yields higher quality products at lower production costs

Example: BSP’s ISO 9001 -2015

Safety/Environmental Issues
Increasingly important role in product design and manufacturing
Covered by specific laws and safety legislations
Marketing responsibility

i.e. Consumer Act R.A. 7394

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 Product Mix and Product Lines
Product Mix
•A set of products
Product Line
offered for sale by • Group of products that share
seller common characteristics,
distribution channels,
customers or uses

Width
• how many different
product lines the
company carries
Depth
•how many variants
are offered of each
product in the line

Length
• total number of
items in the mix

Consistency
• describes how closely related the various product lines are in end use,
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Product Mix and Product Lines

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Product Mix and Product Lines

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 Major Product Line Strategies

Alteration of Existing Products

•Modify either on size, design, color or raw materials used

•Followed regardless of the width and depth of the product mix

Trading Up and Trading Down

•Trading up: increase in high-priced products

•Trading down: increase in lower-priced products
•Problems: Confusion; sale at the expense of old products

Product Differentiation and Market Segmentation

•Product Differentiation – involves developing and promoting and awareness of

differences between the company’s product and those of competitors
•Market Segmentation Strategy – different products are developed tailor-fit to the smaller
homogenous units of market which has different wants

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Differentiation
Product
•Form
•Features
•Style
•Durability
•Performance
•Conformance
•Reliability
•Reparability

Service
•Ordering Ease
•Delivery
•Installation
•Customer Training
•Customer Consulting
•Maintenance & Repair
•Returns TREY
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 Major Product Line Strategies

Expansion of Product Mix

• Width (mix) or Depth (line) extension
• Advantageous area in which consumers traditionally enjoy a wide variety of brands
to choose from and are accustomed to switching from one to another
• Limitations : financing, time and equipment
Contraction of Product Mix
• Deleting items in the product line due to overextension (cannibalize)

Development of New Uses for Existing Products

• Discover new markets/ways to market products

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Development and Marketing of Products and Services

Product
Product Labeling
Branding Packaging support
Attributes and logos
services

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 What is a Brand?

“Products are created in factories

but Brands are created in the Mind.”
- Walter Landor

A name, term, sign, symbol, or design, or a combination of these, that identifies the products or
services of one seller or group of sellers and differentiates them from those of competitors
Interbrand (a leading brand consultancy): A mixture of tangible and intangible attributes
symbolized in a trademark, which, if properly managed, creates influence and generates values
Valuable assets to the company; “unique identifier”
Represents everything that a product or service means to consumers

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 Brand Classifications
Ownership Some Example/s
1. Manufacturer’s Brand Magnolia chicken
2. Distributor’s /Middlemen’s brand Parisian by SM

Extent of Geographic Coverage

1. National Brand Apple; Coca-Cola
2. Private Brand/Store Brand SM Bonus;

Use of Owner of the Brand

1. Primary Brand Samsung; Lacoste
2. Secondary Brand China beauty products

Number of Products names brands

1. Individual/Separate Brand Procter and Gamble
2. Family/Blanket Brand Sony

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 Branding Decisions & Strategies

Brand Brand name Brand Brand

positioning selection sponsorship development

• 3 levels: • Selection • Manufacturer’s

• Line extensions
• Protection brand
• Attributes • Brand
• Private brand
• Benefits extensions
Easy to pronounce • Licensing
• Beliefs and a. • Multibrands
values b. Short, unique, and • Co-branding
• New brands
distinctive
Process of c. Easy to
positioning your recognize/remember
brand in the mind d. Has a positive
of your connotation and is
customers legally protectable
(registered
trademark®)
e. Reinforces the product
image

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 Branding Equity and Brand Value
Brand Equity
A measure of the brand’s ability to capture consumer preference and loyalty
Relates to the importance of a brand to the customer
Brand strength is measured along forur dimensions:
1. Differentiation (what make the brand stand out)
2. Relevance (how consumers feel it meets their needs)
3. Knowledge (how consumers feel it meets their needs)
4. Esteem (how highly consumers regard and respect the brand)

Brand Value
total financial value of a brand
i.e. Interbrand valuation (e.g., net present value of the future earnings)
Vs. brand value: it refers to the financial asset that the company records on its balance sheet

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 Branding Equity
Perceived
Quality
Brand Brand
Association Loyalty

Brand
Propriety
Awareness Equity
Brand Assets
Elements

Customer value (enhanced by) Firm/Seller value (enhanced by)

1. Interpretation/Processing of 1. Efficiency/effectiveness of
information marketing programs
2. Confidence in purchase 2. Brand loyalty
decision 3. Prices/margins
3. Use satisfaction 4. Trade leverage
5. Competitive advantage

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 Packaging
The activities of designing and producing the container or wrapper for a product
Immediate recognition of the brand
Becomes an important part of a brand’s identity
Considerations:
Consumer and costs in packaging decisions (convenient size, informative, attractive)
Product safety (i.e. childproof packaging, tamper-resistant)
Environmental concerns (i.e. eco-bags)

Patent
Grant of protection for an invention
Automatic adds value to product/service
Greater credibility
Vs. Trademarks: Patents prevent others from making or selling an
invention
Intellectual Property Office of the Philippines (IP Philippines)

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 Logos and Product Support Services
Labeling and Logos
Range from simple tags attached to products to complex graphics that are part of
the packaging
Promote the brand and engage the customers
Add personality to the brand
Redesigning keeps companies in sync with the rapidly evolving digital times

Product Support Services

Customer service as part of the overall brand experience
Designed through periodic customer surveys with the aid of various communication
channels

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PRODUCT LIFE CYCLE
Presented by: Edward Valens V. Veloro
PRODUCT LIFE CYCLE
It describes the stages a product goes
through from when it was first thought
of until it finally is removed from the
market. Not all products reach this final
stage. Some continue to grow and
others rise and fall.
STAGES:

INTRODUCTION STAGE
In the Introduction Stage, the company
seeks to build product awareness and
develop a market for the product. This
stage could be the most expensive for a
company.
STAGES:

INTRODUCTION STAGE
In the Introduction Stage, the company
seeks to build product awareness and
develop a market for the product. This
stage could be the most expensive for a
company.
STAGES:

GROWTH STAGE
In the growth stage, the product starts
to sell at a much faster rate. The public is
becoming increasingly aware of the
product and word of mouth is starting to
spread
STAGES:

MATURITY STAGE
At maturity stage, growth in sales
decreases. Competition may appear
with similar products. The primary
objective at this point is to defend
market share while maximizing profit
STAGES:

DECLINE STAGE
Eventually, the market for a product will
start to shrink, and this is what’s known
as the decline stage. This shrinkage
could be due to the market becoming
saturated (i.e. all the customers who will
buy the product have already purchased
it), or because the consumers are
switching to a different type of product.
PRODUCT AUDIT
A Product Audit is an audit that focuses
on a product to determine if it meets
specifications or whether each product
should be continued as is, improved,
modified, or deleted. The audit is a task
that should be carried out at regular
interval
DELETIONS
One of the main purposes of the
product audit is to detect sick products
and then bury them. Rather than let the
retailer or distributor decide which
products should remain, organizations
themselves should take the lead in
developing criteria for deciding which
products should stay and which should
be deleted.
PRODUCT IMPROVEMENT
One of the other important objectives of
the audit is to ascertain whether to alter
the product in some way or to leave
things as they are. Altering the product
means changing one or more of its
attributes refer mainly to product
features, design, package etc.
PRODUCT MANAGEMENT
Product management is an
organizational lifecycle function within a
company dealing with the planning,
forecasting, and production, or
marketing of a product or products at all
stages of the product lifecycle it consists
of product planning and product
marketing
PRODUCT MARKETING
is a process of promoting and selling a
product to a customer. Aimed at
generating product awareness
PRODUCT PLANNING
is the on-going process of identifying
and articulating market requirements
that define a product’s feature set.
Product planning serves as the basis for
decisions about price, distribution and
promotion.
NEW PRODUCT
DEVELOPMENT
Covers the complete process of bringing
a new product to the market. A central
aspect of NPD is product design, along
with various marketing considerations it
can be tangible or intangible
STAGES:

IDEA GENERATION
An idea to produce a product or services
not currently available
STAGES:

IDEA SCREENING
the process of evaluating ideas to drop
as many ideas as possible from
consideration

3 RISK CATEGORIES:
Strategic Risk if it does not meet with the role or
purpose of the product Is it necessary to introduce a
new product?
Market Risk if it does not meet the market need

Internal Risk if development does not meet within the

desired time and budget
STAGES:

CONCEPT TESTING
the process of evaluating ideas to drop
as many ideas as possible from
consideration
STAGES:

BUSINESS ANALYSIS
the process of evaluating ideas to drop
as many ideas as possible from
consideration
STAGES:

PROJECT PLANNING
It is here that the new product is
analysed in terms of production,
marketing, financial and competitive
factor. Marketing and technical research
is undertaken
STAGES:

PRODUCT DEVELOPMENT
In this stage the prototype is created and
for further research and testing in order
to come up with a product that
consumers will want to buy
STAGES:

TEST MARKETING
is a controlled experiment in a limited
geographical area to test the new
product feedback from the consumer
testing enables the manufacturer to
make any necessary changes to the
product, and decide how they are going
to lunch it to the market and what price
to sell at and how the product will be
marketed
STAGES:

COMMERCIALIZATION
This is the launching step where the
product is introduced into the
marketplace
NEW PRODUCT PLANNING
AND DEVELOPMENT PROCESS
REPORTED BY: MAE ANNE C. BARDELAS
LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1. Explain how companies find and develop new-product ideas
2. List and define the steps in the new-product development process and the major
considerations in managing this process
3. Causes of new product failures
NEW-PRODUCT DEVELOPMENT STRATEGY

A firm can obtain new products through:

• Acquisition refers to the buying of a whole company, a patent, or a license to produce
someone else’s product.
• New product development refers to original products, product improvements,
product modifications, and new brands developed from the firm’s own research and
development.
NEW-PRODUCT DEVELOPMENT PROCESS

Idea Generation Idea Screening Project Planning

Product
Test Marketing Commercialization
Development
 NEW-PRODUCT DEVELOPMENT PROCESS
(1ST: IDEA GENERATION)

Idea Generation
• New idea generation is the systematic search for new product ideas.
• To create a large number of ideas
• Sources of new-product ideas
o Internal sources refer to the company’s own formal research and development,
management and staff, and intrapreneurial programs.
o External sources refer to sources outside the company such as customers, competitors,
distributors, suppliers, and outside design firms.
INTERNAL IDEA SOURCES
EXTERNAL IDEA SOURCES
 NEW-PRODUCT DEVELOPMENT PROCESS
(2ND: IDEA SCREENING)

Idea Screening
• refers to reviewing new-product ideas in order to drop poor ones as soon as possible
R-W-W (“real, win, worth doing”) new product screening framework
[1st] Is it real?
[2nd] Can we win ?
[3rd] Is it worth doing?
 NEW-PRODUCT DEVELOPMENT PROCESS
(3RD: PROJECT PLANNING)

Project planning stage involves several steps.

Concept Development and Testing
• Product concept is a detailed version of the new product idea stated in meaningful
consumer terms
• Concept testing calls for testing new product concepts with a group of target consumers to
find out if the concepts have strong consumer appeal.

Marketing Strategy Development

• refers to the initial marketing strategy for introducing the product to the market.
NEW-PRODUCT DEVELOPMENT PROCESS
(3RD: PROJECT PLANNING)

Marketing strategy statement

Part 1: Part 2:

• Description of the target market • Price distribution and budget

• The planning product positioning; Part 3:

sales, market share, and profit goals • Long-term sales, profit goals, and
marketing mix strategy

Business Analysis
• involves a review of the sales, costs, and profit projections to find
out whether they satisfy the company’s objectives
 NEW-PRODUCT DEVELOPMENT
STRATEGIES
(4TH: PRODUCT DEVELOPMENT)
• involves the creation and testing of one or more physical versions by the R&D or
engineering departments
• requires an increase in investment
• The job of translating target customer requirements into a working prototype is
helped by a set of methods known as quality function deployment (QFD)
o The methodology takes the list of desired customer attributes (CAs) generated by
market research and turns them into a list of engineering attributes (EAs) that
engineers can use
 NEW-PRODUCT DEVELOPMENT
STRATEGIES
(4TH: PRODUCT DEVELOPMENT)
• PHYSICAL PROTOTYPES
• The goal of the R&D department is to find a prototype that embodies the key attributes in the
product-concept statement, performs safely under normal use and conditions, and can be produced
within budgeted manufacturing costs.
• Developing a successful prototype can take days, weeks, months, or even years depending on the
product and prototype methods.

• CUSTOMER TESTS
• Alpha testing tests the product within the firm to see how it performs in different applications.
• After refining the prototype further, the company moves to beta testing with customers.
 NEW-PRODUCT DEVELOPMENT PROCESS
(5TH: TEST MARKETING)

Test Marketing
• the stage at which the product and marketing program are introduced into more realistic
marketing settings
• provides the marketer with experience in testing the product and entire marketing program
before full introduction
• When firms test market: New product with large investment; Uncertainty about product or
marketing program
• When firms may not test market: Simple line extension; Copy of competitor product; Low costs;
Management confidence
APPROACHES TO TEST MARKETING

1. Standard test markets

2. Controlled test markets
3. Simulated test markets
(1) STANDARD TEST MARKETS
• Small representative markets where
the firm conducts a full marketing
campaign
• Uses store audits, consumer and
distributor surveys, and other
measures to gauge product
performance
• Results are used to
o Forecast national sales and profits
o Discover product problems
o Fine-tune the marketing program
• Challenges of standard test markets
o Cost
o Time
o Competitors can monitor the test
as well
o Competitor interference
o Competitors gain access to the new
product before introduction
(2) CONTROLLED TEST MARKETS

• Panels of stores that have agreed to carry new products for a fee
• Less expensive than standard test markets
• Faster than standard test markets
• Competitors gain access to the new product
(3) SIMULATED TEST MARKETS

• Events where the firm will create a shopping environment and note how
many consumers buy the new product and competing products
• Provides measure of trial and the effectiveness of promotion
• Researchers can interview consumers
(3) SIMULATED TEST MARKETS

• Advantages of simulated test markets

o Less expensive than other test methods
o Faster
o Restricts access by competitors
• Disadvantages of simulated test markets
o Not considered as reliable and accurate due to the controlled setting
NEW-PRODUCT DEVELOPMENT PROCESS
(6TH: COMMERCIALIZATION)

Commercialization
• the introduction of the new product into the market
o When to launch
o Where to launch
o Planned market rollout (the widespread public introduction of a new
product )
 REASONS FOR NEW PRODUCT FAILURE

• no competitive point of difference, unexpected • faulty estimates of market potential and other
reaction from competitors, or both market research mistakes
• poor positioning • faulty estimates of production and marketing
costs
• poor quality of product
• improper channels of distribution selected
• nondelivery of promised benefits of product
• rapid change in the market (economy) after
• poor price/quality (value) relationship
product intro
• too little marketing support
ThankYou!

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