Chap 14 product strategies
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80 CHAPTER 14: Product Strategies
Chapter 14
Product Strategies
A. Product-Positioning Strategy (TM 14-1)
1. Positioning a Single Brand
2. Positioning Multiple Brands
B. Product-Repositioning Strategy (TM 14-2 and TM 14-3)
1. Repositioning among Existing Customers
2. Repositioning among New Users
3. Repositioning for New Uses
C. Product-Overlap Strategy (TM 14-4)
1. Competing Brands
2. Private Labels
3. Dealing with Original Equipment Manufacturers (OEMs)
D. Product-Scope Strategy (TM 13-5)
1. Single Product
2. Multiple Products
3. System of Products
E. Product-Design Strategy (TM 14-6)
1. Standard Products
2. Customized Products
3. Standard Product with Modifications
F. Product-Elimination Strategy (TM 14-7)
1. Harvesting
2. Line Simplification
3. Total-Line Divestment (TM 14-8)
G. New-Product Strategy (TM 14-9)
1. Product Improvement/Modification (TM 14-10)
2. Product Imitation
3. Product Innovation
H. Diversification Strategy (TM 14-11)
1. Concentric Diversification
2. Horizontal Diversification
3. Conglomerate Diversification
I. Value-Marketing Strategy (TM 14-12)
1. Quality Strategy
2. Customer-Service Strategy
3. Time-Based Strategy
81 CHAPTER 14: Product Strategies
14-1
PRODUCT-POSITIONING STRATEGY
Positioning refers to placing a brand in that part of
the market where it will have a favorable reception
compared to competing products.
CHAPTER 14: Product Strategies 82
14-2
PRODUCT-REPOSITIONING STRATEGY
A product may need repositioning if:
• A competitive entry has been positioned next to
the brand.
• Consumer preferences have changed.
• New customer-preference clusters have been
discovered with promising opportunities.
• A mistake has been made in the original
positioning.
83 CHAPTER 14: Product Strategies
14-3
PRODUCT-REPOSITIONING STRATEGY
Perceptual Map of Brand Images
CHAPTER 14: Product Strategies 84
14-4
PRODUCT-OVERLAP STRATEGY
This strategy refers to a situation in which a
company decides to compete against its own
brand.
85 CHAPTER 14: Product Strategies
14-6
PRODUCT-DESIGN STRATEGY
A business unit may offer a standardized or a
custom-designed product. The decision is based
on factors such as:
• What are our capabilities?
• What business are we in?
CHAPTER 14: Product Strategies 86
14-7
PRODUCT-ELIMINATION STRATEGY
When a product reaches the stage where
continued support is no longer justified
because performance is falling short of
expectations, it is desirable to pull the product
out of the marketplace.
Poor performance is characterized by:
• Low profitability.
• Declining sales.
• Technological obsolescence.
• Mature or declining phase of the product life
cycle.
• Poor fit.
87 CHAPTER 14: Product Strategies
14-8
TOTAL-LINE DIVESTMENT
Divestment may occur for several reasons. For
example:
• There is no longer a strategic connection
between the base business and the part to be
divested.
• The business experiences a permanent
downturn, resulting in excess capacity for which
no profitable alternative use can be identified.
• There may be inadequate capital to support the
natural growth and development of the business.
• It may be dictated in the estate planning of the
owner that a business is not to remain in the
family.
• Selling a part of the business may release
assets for use in other parts of the business
where opportunities are growing.
• Divestment can improve the return on
investment and growth rate both by ridding the
company of units growing more slowly than the
basic business and by providing cash for
investment in faster-growing, higher-return
operations.
CHAPTER 14: Product Strategies 88
14-9
NEW-PRODUCT STRATEGY
New-product development is an essential activity
for companies seeking growth.
Growth may occur through:
• Product improvement/modification.
• Product imitation.
• Product innovation.
89 CHAPTER 14: Product Strategies
14-10
PRODUCT IMPROVEMENT/MODIFICATION
Product-Change Options after Competitive Tear-Down
CHAPTER 14: Product Strategies 90
14-11
DIVERSIFICATION STRATEGY
Firms diversify when:
• Their objectives can no longer be met within the
product/market scope defined by expansion.
• Retained cash exceeds the total expansion
needs.
• Diversification opportunities promise greater
profitability than expansion opportunities.
91 CHAPTER 14: Product Strategies
14-12
VALUE-MARKETING STRATEGY
Value-marketing strategy stresses real product
performance and delivering on promises. It has
three aspects:
• providing a product that works as claimed;
• accompanied by decent service;
• delivered on time.
