gmm ppt

PRODUCT STRATEGIES

PRESENTED BY:-

Taranjit Kaur

MBA (IB)

IInd sem

UBS

CONTENTS

Product-scope strategy Single product Multiple products System of products

Product-design strategy Standard products Customized products Standard product with modifications

Value-marketing strategy Quality strategy Customer-service strategy Time-based strategy

4. PRODUCT- SCOPE STRATEGY DEFINITION:

Deals with the perspective of the product mix of a

company

Determined with respect to the business unit mission

Involves long term commitment

Designed carefully

Requires a thorough review of internal and external

factors

4. PRODUCT- SCOPE STRATEGY

An example:

4 (a): Single Product strategy

DEFINITION:

Business unit has

only one product in

its line

Focus on success of

just one product EXAMPLE:

American Family Life

Assurance Company of

Columbus, Georgia


ADVANTAGES:

i) Specialization scale and productivity gains

ii) Efficient management of operations

iii) Stands strong to competition


DISADVANTAGES:

i) Changes in environment

Product becomes obsolete

Company falls in deep trouble

Example: P&G’s Pampers, pushed the cloth diaper business out of market


ii) Not conducive to growth or market share

Margins not met

Better to seek a new posture

Company interested in market share

Single product strategy is of little use

4 (b): Multiple Products Strategy DEFINITION:

Two or more products in offering

ADVANTAGES:

i) Poor performance by

one product can be

balanced out

ii) Essential for growth-

seeking companies

EXAMPLES: Miller Brewing

Company Dean Foods Company Nike

4 (b): Multiple Products Strategy

Products offered

Related products

Unrelated products

Example: Consider a food company

Product lines: vegetable, yogurt,

cheese, and pizza

Items: strawberry, pineapple, apricot,

peach, plain, and blueberry

Consistency among food lines

Sold through grocery stores

Must be refrigerated, and

Meant for the same target market

Although not all products are fast

moving, they must complement each

other in a portfolio of products.

Related Products:

Different product lines and items

4 (b): Multiple Products Strategy ADVANTAGES:

Aimed at

Achieving growth

Market share and

Profitability

NOTE:

Doesn’t ensure success

Growth, market share, and profitability are functions of a

large number of variables, only one of which is having

multiple products.

4 (c): System of Products

Where the product is not just a product but, a system of

products

The complexity of a product calls for the use for the

complementary products and after-sales services

For example,

An airline should not sell just plane tickets, it should sell

an enjoyable vacation. However, vacationers need more

than an airline ticket. They also need hotel

accommodation, ground transportation, and sight-seeing

arrangements


IBM is a single source for: Hardware Operating systems Packaged software Maintenance Emergency repairs and Consulting services

Purpose is same: “To solve data management problems”


ADVANTAGES:

i) Makes customer fully dependent

ii) Allows the company to gain monopolistic control

iii) Blocks way for competition to move in

iv) Extremely useful in meeting growth, profitability, and market share objectives

DISADVANTAGES:

i) Legal problems when stretched beyond limits

Example: Several ears ago, IBM was charged by the Justice

Department with monopolizing the computer market. IBM had

to make changes in its strategy following these charges.

5. PRODUCT- DESIGN STRATEGY DEFINITION:

A standard or a custom-designed product is offered

Between the extremes, standard products with modifications can be offered

Give rise to three strategic alternatives

5 (a): Standard Products

BENEFITS:

More adaptable to experience effect than the customized

products

Yield cost benefits

Can be traded more effectively over a wider region

DRAWBACKS:

Orients management thinking towards per-unit cost savings

to such an extent that even the need for small changes in

product design may be ignored

5 (a): Standard Products

THE MECHANISM: Standard products are usually offered in different grades

and styles with varying prices. Therefore, even though a

product is standard, customers have broader choices.

Similarly, distribution channels get the product in

different price ranges.

RESULT: Standard product strategy helps achieve the

product/ market objectives for growth, market share, and

profitability.

5 (b): Customized Products

Sold on the basis of the

extent to which the

product meets the

customer’s specifications

Price is not a factor

More suitable for small

companies to offer

Sales success depends

on the nature of the

product

EXAMPLES:

A) A small men’s clothing

outlet is in a better

position to offer custom

suits than a larger one

B) GE is better suited to

manufacture a custom-

designed engine for

military air-craft than a

smaller business.


Mass customization

An innovative aspect of

customized product

strategy

Making goods to each

customer’s requirements

Example: Makes shoes as per

individual taste and size On a mass-production

basis Results in lower prices

than may premium brands


BENEFITS

Price flexibility

Provide experience to deal in customized products in future

Provide opportunities to meet other specific needs

5 (c): Standard Products withModifications

A customer gets an option to specify a limited number of desired modifications to a standard product

EXAMPLE:

“AUTO INDUSTRY”

The buyer of a new car can choose type of shift (standard or automatic), air conditioning, power brakes, power steering, size of engine, type of tires, and color.


THE MECHANISM: Directed towards realizing the benefits of both a

standard and a customized product

By manufacturing a standard product, the business

unit seeks economies of scale

By offering modifications, the product is individualized

to meet the specific requirements of the customer


ADVANTAGES: Permits the business unit to keep in close contact with

market needs that may be satisfied through product

improvements and modifications

Enhances the organization’s reputation for flexibility in

meeting customer requirements

Encourages new uses of existing products

Useful in achieving growth, market share, and profitability.

6. VALUE- MARKETING STRATEGY Value- marketing strategy is a new strategic focus

Stresses real product performance and delivering on

promises

It does not mean high quality, high price, or prestige

Is not about positioning and brand image

Simply means providing a product that

Works as claimed

Accompanied by decent service, and

Is delivered on time

6 (a): Quality Strategy

DEFINITION:

Quality perspectives should be based on customer

preferences, not on internal evaluation

The ultimate objective of quality should be to delight

the customer in every possible way

Achieving total quality objectives requires teamwork

and cooperation


KEYS TO SUCCESS IN ACHIEVING TOTAL QUALITY: Management support Understanding customer needs To fix any delays and gaps in business process To condense the cycle time To avoid bureaucratic hassles and delays Empowering people (employees) Measurement and reward system TQM program should be a constant concern Elimination of waste and inefficiency


ADVANTAGE:

Organizationally, the single most important aspect of implementing a quality strategy is to maintain a close liaison with the customer.


“MAN MAXIMUM, MAHCINE MINIMUM” (1986)

“AN ADULT SENSE OF RELIABILITY” (1990) Open minded Friendly communication Tough spirit Stress-free Love forever

EXAMPLE:

“Honda Accord”

6 (a): Quality Strategy Three generic approaches to improving quality performance:

APPROACH What it is?

Catching up Restoring those aspects about which the firm has been unable to meet standards. A defensive strategy; emphasis is either to be as good as the competitor or to barely meet market requirements

Pulling ahead Going further than what the customer asks; or achieving superiority over the competition

Leapfrogging Involves creating a sustainable competitive advantage through differentiation i.e., coming from behind and getting ahead of the competition

6 (b): Customer-Service Strategy DEFINITION AND FEATURES:

Focus on better services to the customers Improved customer service can play a major role in

customer perceptions about a product and its value Directly affects a company’s success and

profitability Largely depends on employees

6 (b): Customer-Service Strategy

Example:

Xerox requires that its executives spend one day a

Month taking complaints from customers about

machines, bills and service.

6 (c): Time-Based Strategy

It states that a company must respond quickly to the market

changes, if it wants to preserve its position.

EXAMPLES:

In the past, AT& T needed 2years to design a new phone;

now it needs only one

Motorola used to take three weeks to turn out electronic

pagers after the factory received the order, now it takes

only 2 hours

6 (c): Time-Based Strategy

ADVANTAGES:

Brings about important competitive benefits

Market share grows because love getting their orders “now”

Inventories of finished goods are shrinking

Employees are satisfied because they are working for a

more responsive, more successful company and because

speeding operations require giving them more flexibility and

responsibility.

Quality also improves.

6 (c): Time-Based Strategy Steps involved in implementation of time-based strategy:

Start from scratch: set a goal; orient all operations towards

achieving that goal

Wipe out approvals: cut down bureaucratic layers of control and

let people make decisions on the spot

Emphasize teamwork: establish multi- department teams to

handle the work better

Worship the schedule: let there be no excuses for delays

Develop time- effective distribution: lags in distribution must be

worked out

Put speed in the culture: train people in the company to

understand the importance of speed and efficiency

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