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product test 2

Terms in this set (67)

Strategy
a plan of action or policy designed to achieve a major or overall aim
Product strategy
the primary purpose of a strategy is to provide the product manager with the direction to follow in managing a business over the planning period
To be successful, a strategy must:
-Help to achieve coordination between various functional areas of the organization
-Clearly define how resources are to be allocated
-Show how it can lead to a superior market position
A marketing strategy can be competitively sensible when:
-A competitor cannot do it
-A competitor will choose not to do it
-A competitor would be at a disadvantage if they choose to do it
-We would gain if a competitor chose to do it
Elements of product strategy
General Direction
Positioning
Implementation
General Direction
-A statement of the objectives that the product should attain
-Selection of strategic alternatives
Positioning
-Selection of customer targets
-Choice of competitor targets
-Statement of the core strategy
Implementation
-Description of the supporting marketing mix
-Description of the supporting functional programs
Good objectives
-Measurable (a metric)
-Challenging
-Time frame
Two directions
-Growth (sales revenue or share)
-Profitability
Strategic Alternatives:
Long-term profits can be achieved through:
-Growth in sales or market share
-Effciency, short-run profits
Growth in sales or market share
-Market development
new segments
convert nonusers
-Market penetration
existing customers
competitors customers
-New product development
Effciency, short-run profits
-Decrease inputs
reduce costs
improve asset utilization
-Increase outputs
increase price
improve sales mix
Customer Targets
-Size/growth of the segment
-Opportunities for obtaining competitive advantage
-Resources available
Competitor Targets
-Can involve both direct and indirect competitors
-Strengths/weakness
-Capabilities
-Strategic intent
Core strategy
-Cost/price
-Differentiation
1. higher quality
2. higher status and image
3. branding
4. convenience
5. changing distribution channels
The supporting marketing mix
-Price
-Product
-Promotion
-Place
The supporting functional mix
-Production
-Research
-Sales
-Distribution
-Purchasing
Brand strategy
-Brand building
-Brand leveraging
-Brand equity
Brand Building Five A's
-Awareness (familiarity)
-Associations
-Attitude
-Attachment (loyalty)
-Advocacy (ultimate loyality)
Guidelines for building strong brands (Aaker)
-Brand identity
-Value proposition
-Brand position
-Execution
-Consistency over time
-Brand system
-Brand leverage
-Tracking
-Brand responsibility
-Invest
Brand leveraging
-Within category (line extension)
-Beyond category (brand extension)
Brand Equity
Interbrand
-Top brand values
-Methodology
-Ten brand strength principles
Customer strategy
As opposed to making the product the centerpiece of strategy, one can make the customer the centerpiece through Aquisition, Retention, Expansion, Deletion
Product strategy life cycle: Introduction phase
characteristics:
1. Few competitors
2. Sales volume increases slowly
3. Focus is on product form benefits
4. Distributors are powerful (product is unproven)
Introduction phase strategies
Skimming
Penetration

First mover advantage
Product strategy life cycle: Growth phase
characteristics:
1. the number of competitors increase
2. focus is on brand and not form
3. increasing price pressure
Growth phase strategies
Leader
-Fight (maintain or enhance)
-Flight
Follower
-Exit for fast returns
-Settle for second place/fortify position
-Try for leadership (imitate or leapfrog)
Product strategy life cycle: Maturity phase
characteristics
1. Fierce battles for share and distribution channels
2. Large amounts of money spent on trade and consumer promotions
3. Competitive pricing
Maturity phase strategies
Leader
-cashing out
-harvesting
Follower
-try for leadership (if leader is harvesting)
-settle for second place/fortify position
-exit
Product strategy life cycle: Decline phase
characteristics
1. sales of the category are dropping
2. number of competitors is dropping
Decline phase strategies
last in the market
Forecasts
The amount of sales expected to be achieved under a set of conditions within a specified period of time
A forecast is a
post strategy
Forecasts are used in several ways
-To answer "what if" questions
-To help set budgets
-To provide a basis for a monitoring system
-To aid in production planning
-By financial analysts to value a company
Trade-offs in forecasting
costs of lost sales versus inventory costs
Diffusion of innovation
How a new idea, a good, or a service is assimilated into a social system over time
Diffusion of innovation proposition 1
Individual consumers go through a series of stages in adopting a new product
Proposition 1 stages:
Awareness
Interest
Evaluation
Trial
Adoption
Diffusion of innovation proposition 2
people differ in their likelihood to try new products
Proposition 2 groups
Innovators (2.5%)
Early adopters (13.5%)
Early majority (34%)
Late majority (34%)
Laggards (16%)

These groups are normally distributed
Diffusion of innovation proposition 3
The character of the product affects the rate of adoption
Proposition 3 innovations diffuse quickly when:
1. It has strong relative advantage
2. It has a high degree of compatibility
3. It fulfills felt needs
4. It is not complex
5. It is divisible
6. It is communicable
7. It is available
8. It pays an immediate or short-term benefit
Diffusion of innovation proposition 4
- Personal influence plays a large role in diffusion
- The role of personal influence varies across individuals and decision situations
- It is more important in the evaluation stage than in other stages
-It is more important for late adopters than for early adopters
- It is more important in risky situations than in safe situations
Test market =
ultimate way to test the diffusion of a new product
An example of a diffusion non-durable model is
Assessor model
An example of a diffusion durable model is
Bass model`
Somewhat new products
-Modifications
-Product variants (line extensions)
-Brand extensions
Modifications common terms include:
1. continuous quality improvement
2. redesign
3. updates
Modifications can be of three types:
1. clearly better (upgrade)
2. different (styling/ingredient change likely to appeal more to some and less to others)
3. Inferior (less expensive ingredients or aspects)
In assessing the desirability of a change, the reactions of three groups are critical:
-Loyal customers
-Occasional users
-Current non-customers

Decisions involve assessing the changes in preference in different groups and then based on demand and cost considerations, making a decision
Product Variants (Line Extensions)

The reasons for using multiple versions is simple:
They can appeal to multiple segments, either increasing potential sales (the customer base), or allowing for price discrimination among users with slightly different needs and preferences
Product Variants (Line Extensions)

The reasons for not using multiple versions is straightforward:
efficiency of operation is enhanced when fewer versions are developed, and the overuse of a brand may dilute and weaken brand equity
Adding a product variant
-Customer-oriented concerns
1. cannibalization of existing products (either beneficial or detrimental)
2. consumer confusion
3. dilution of brand equity

-Operations-oriented concerns
1. loss of economics of scale
2. distribution concerns (increased inventory, shelf-space issues)
Dropping a product variant
-Customer-oriented issues
1. how customers will react

-Operations-oriented issues
1. Gain economics of scale but have less products over which to spread overhead
Getting ideas for product modifications and extensions
-Customer analysis
-Competitor analysis
-Active search
-Category analysis
-Brainstorming
-Others
Product stages
-Idea generation
-Concept development
-Feasibility screening
-Concept testing
-Product development
-Product testing
-Marketing testing
-Go-no go decision
Slightly new products concept testing
-Surveys
-Focus groups
-Demonstrations
Slightly new products product testing
-Product tests
-Discrimination and preference testing
Slightly new products quasi market tests
example assessor
In forecasting, four factors to be looked at:
Awareness
Trial rates
Repeat rates
Usage rates(penetration)
Brand extension value depends on:
- The value of the original brand
- The "fit" in the new category
Brand extension has come to mean
extending brands beyond their original category, these decision are more risky than variants
Really new products
-Create or expand a category
-Are new to customers (learning is required)
-Raise broad issues (appropriate channels, responsibility)
-Create a need for infrastructure
Getting ideas for really new products
- asking (listening) to dissatisfied customers
- asking nonrepresentative customers
- using open-ended qualitative procedures
- involving customers as co-developers
- listening to scientists and newcomers
- scanning the literature
Evaluating really new products
- relative advantage
- compatibility
- risk (multiple dimensions)
- complexity
- observability / communicability
- trialability / divisibility
Forecasting really new products
is a challenge.. example bass
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