Week 5 - Product Strategy Flashcards
Strategy Issues for Product
- Defining the product
- Variety, performance, features, design, packaging, sizes, brand name
- Management of existing product range in terms of width and depth
- Development and launch of new products
- Product deletion
- Product-Life-Cyle (PLC) and Product Portfolio
- Quality
Levels of a Product
- Core Product: Benefit
- Actual Product: Colour, quality, trends, style, branding.
- Augmented product: Warranties, customer care, finance, installation, services, delivery.
Product Life Cycle
- Introduction: Researching, developing and then launching the product.
- Growth: Sales are increasing at their fastest rate.
- Maturity: Sales are near their highest, however, the rate of growth is slowing down.
- Decline: The final stage of the cycle, sales begin to fall.
What is a product mix or portfolio?
The total group of products offered by the firm e.g. Suft, Timotei, Vaseline, Vianetta, PG, Pot Noodles (Under Unilever)
Product Mix Structure
Product mix is all the product lines offered and consists of consistency between:
- Width: Number of different product lines.
- Length - Total Number of items within the lines.
- Depth: Number of versions of each product
Ansoff’s Growth Matrix
Existing products + existing markets:
- Market penetration - More usage, competitors’ customers
New products in existing market:
- Product development - Line extensions, modification, quality levels, new product
New markets and existing products
- Market development - New segments, new channels, new areas.
New Markets and new products:
Diversification - Related/unrelated, organic growth, merger, acquisition.
Innovation vs Disruptive Technology
Innovation:
- The introduction of something new- A new idea, method, or device
- Invention: Things new to the world
- Innovation: Subsequent changes and adaptions
Disruptive technology:
- A disruptive technology is one that displaces an established technology and shakes up the industry or ground-breaking product that creates a completely new industry.
Attributes of Disruptive Innovation
- Innovations that drastically alter markets
- Breakthroughs rather than incremental technological developments
- Radical changes that restructure or create entire markets
- Typically from outside a market’s value netowrk but incumbents sometimes disrupt their own markets (e.g. Nestle with Nespresso)
- New products, processes, or business models
Disruptive innovation in action
- e.g. assembly line manufacturing, internal combustion engine, CDs, etc.
- Main difference today is the pace of disruptive innovation (speed and force)
- Some disrupted markets exhibit network effects resulting in rapid growth phase for the disruptor
The New Product Development Process
1- Generation of ideas.
2- Screening/business analysis/ concept
3- Development/test marketing
Types of Responses to Innovation
- Innovators
- Early Adopters
- Early majority
- Late majority
- Laggards
Attributes of Innovators
- Young
- Risk taking
- High social class
- High financial awareness
- Social
Attributes of early adopters
- Young
- Risk taking
- High social class
- High financial awareness
- High social
- Opinion leaders
Attributes of Early Majority
- More averse to risk
- Above average social class
- Less opinionated
Attributes of Late Majority
- Skeptical risk attitude
- Below average social class
- Low financial awareness
- Little opinion
