Product Family Positioning

Paul Malard, Arthur Nayroles, Ricardo Diaz Gutierrez, Theodore Zirkle

Introduction
• Pizza Shop 1 • Pizza Shop 2
• Only cheese • Tons of toppings
• Customer: no product variety • Customer: lots of product variety
• Shop: cheap to produce/maintain • Shop: not cheap to produce/maintain

• Product family positioning seeks to optimize customer valued variety

and associated costs
Observations and Challenges
• Increased product line variety:
• Pros:
• Increased sales
• More market share
• Higher customer satisfaction
• Cons:
• Increased costs
• Too many variants overwhelm customers
• Some variants not preferred by customers
Product Family Positioning Goal
• Optimize needs of two communities/dilemmas:
• Engineering community: Quality dilemma • Customer community: Variety dilemma
• Goal: Minimize cost • Goal: maximize customer satisfactions
• High quality vs. increased costs • Customer requirements vs. product variants
Previous Work
• Two broad fields:
• Customer Value Analysis (CVA)
• Attempts to predict purchase behavior
• Tries to capture subjective response of
customer community
• Provides an objective measure to
represent “customer-perceived” quality
• Neither field gives full picture regarding product family positioning
• Product Line Design (PLD)
• Extends product lines to increase:
• Profits
• Market share
• Relies heavily on a good understanding of
product variants and associated
increased costs
Product Family Positioning Strategy
• Product family positioning seeks to leverage:
• CVA to quantify product variants customers prefer
• Variety dilemma
• PLD to quantify increased engineering costs
• Quality dilemma

CVA: PLD: Product Family Positioning:

Understand Market Understand increased costs Optimize competing interest

• Application of this strategy requires formulations for the CVA and PLD
analysis in the context of the specific market, product, and company
objective.