Product Strategy

MARK 4210 Professor Eugene R. Raitt Spring 2021

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 Course Roadmap
Fundamentals Elements of Marketing Strategy Application

Situation Analysis
(Customer, Competitor, Company)

Market Selection
- Quantitative Analysis Simulation Game
(Segmentation, Targeting, Positioning)
- Consumer Behavior PharmaSim

Marketing Mix Formulation

(Product, Pricing, Distribution, Promotion)

MARK 4210 Professor Eugene R. Raitt Spring 2021

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 Refresher

 What is a product?
 Anything that can be offered to a market to satisfy a consumer need
and create value for consumers
 Three levels of product

MARK 4210 Professor Eugene R. Raitt Spring 2021

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 Product Category Membership
 Product category defines a set of similar products designed
to serve a specific common set of customer needs
 How to establish a product category membership?:
Product design
Channel
Marketing communication
Pricing
Product categories can evolve incrementally, or transform
dramatically

MARK 4210 Professor Eugene R. Raitt Spring 2021

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 Product Strategy
 Product differentiation
 Horizontal differentiation?
- Benefits do not imply a universal preference order
 Vertical differentiation?
- Benefits can be ordered in terms of attractiveness

MARK 4210 Professor Eugene R. Raitt Spring 2021

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 Product Mix Strategy
Product mix
 All the products and items that a company offers

 Benefits of having a large product mix??

 Target multiple segments (sub-segments)
 Counter encroachment by alternative products
 Control shelf space

 Downside of having a large product mix??

 Increase decision difficulty
 Encourage consumers’ variety seeking
 Increase cost
 Cannibalization
MARK 4210 Professor Eugene R. Raitt Spring 2021
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 Food for Thought
“Our research shows that in certain categories shoppers feel
they have more choices after category options are reduced
because there is less clutter and confusion; they can more easily
find the product that meets their specific need...

Product simplification is a big opportunity. We are investing in

new tools and using deep shopper insight to simplify product
lines and increase consumer and shopper satisfaction.”

-- Robert A. McDonald, P&G Chairman & CEO

MARK 4210 Professor Eugene R. Raitt Spring 2021

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 Managing Product Portfolio:
BCG Matrix
Relative Market Share
High Market Share Low Market Share
Market Growth Rate

High
Market
Growth

Where should you invest the

most $$$?
Low
Market
Growth

MARK 4210 Professor Eugene R. Raitt Spring 2021

Source: Boston Consulting Group 10
 Managing Product Portfolio:
BCG Matrix Strategy Recommendation
Relative Market Share
High Low

• Selectively increase market

• Grow further; maintain
share and develop into
market position
‘Stars’
High • Self-fund own growth;
Market Growth Rate

• Funding from ‘Cash Cows’

funding from ‘Cash Cows’
• Potential unrealized future
• Grow into ‘Cash Cows’
opportunities

• Maintain market share

• Candidates for divestment
• Requires little investment
and withdrawal to free-up
Low • Positive cash flow supports resources
‘Stars’ & “?’s”
• No real growth opportunities
• No potential for growth

MARK 4210 Professor Eugene R. Raitt Spring 2021

Source: Boston Consulting Group 11
 BCG Matrix: Pros/Cons
PROS CONS
Oversimplifies complex
Relatively quick & simple decisions
Good measurability of Only 2 factors considered 
creates risk
market share and growth
Uncertainty in market and
Strong basis for decision- SBU definition
making Only considers current
businesses  not dynamic
Provides guidance on
Does not recognize possible
efficiently allocating synergies between SBUs
resources within the Susceptible to “ GI-GO”
organization syndrome
Generates strategic options

MARK 4210 Professor Eugene R. Raitt Spring 2021

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 Product Life Cycle

MARK 4210 Professor Eugene R. Raitt Spring 2021

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 Product Life Cycle
Introduction Growth Maturity Decline

Characteristics

Sales Low sales Rapidly rising Peak sales Declining

Costs High cost per Average Low Low

customer

Profits Negative Rising profits High Declining

Customers Innovators Early adopters Majority Laggards

Competitors Few Growing number Stable number Declining number

Marketing Create awareness Maximize market Maximize profit Reduce

Objectives and trial share while defending expenditure/exit
market share

MARK 4210 Professor Eugene R. Raitt Spring 2021

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 Managing Mature Products

How to increase the demand of mature products?

MARK 4210 Professor Eugene R. Raitt Spring 2021

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MARK 4210 Professor Eugene R. Raitt Spring 2021
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 Antiseptic

Anticavity

Whitening

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MARK 4210 Professor Eugene R. Raitt Spring 2021
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 Managing Mature Products

How to increase the demand of mature products?

Introduce product extensions/variants
Increase users
Increase usage occasions

MARK 4210 Professor Eugene R. Raitt Spring 2021

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 Product Strategy

Product orientation vs. consumer orientation

 Product orientation focuses on the production process and the
product itself. More emphasis on technology and quality, but less
focus on meeting consumer needs in the market.
 Consumer orientation places the needs or requirements of
consumers at the center of the decision-making process.

MARK 4210 Professor Eugene R. Raitt Spring 2021

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 Food for Thought
“In the factory, we make cosmetics; in the store, we sell
hope.”
-- Charles Revson, founder of Revlon

MARK 4210 Professor Eugene R. Raitt Spring 2021

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 Product Strategy

Product orientation vs. consumer orientation

 Product orientation focuses on the production process and the
product itself. More emphasis on technology and quality, but less
focus on meeting consumer needs in the market.
 Consumer orientation places the needs or requirements of
consumers at the center of the decision-making process.
A successful product does not necessarily come from
adding new features, but satisfying existing needs that yet
to be fulfilled.

MARK 4210 Professor Eugene R. Raitt Spring 2021

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 Key Takeaways

Consumers’ need for a product are not inherent

Need to find and satisfy their inherent psychological needs

Increase category demand through creative ways of

identifying new usages, new users, new buyers

The key to a successful product is not about objective

features, but subjective perceptions

MARK 4210 Professor Eugene R. Raitt Spring 2021

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 Looking Ahead: Product Strategy
Case Preparation: Swatch
1. Prior to Swatch, what was the watch industry like in various
historical stages (prior to 1950s, between 1950s-1970s, 1970s-
1980s)? Consider the various aspects of the watch category (e.g.,
category usage, marketing mix, consumer behavior).
2. Why did Swatch become a success, what are the key elements of
their marketing plan (e.g., positioning, marketing mix) that
contributed to their success?
3. How has Swatch influenced/impacted the watch industry in
terms of how people view the category and consumer behavior?

MARK 4210 Professor Eugene R. Raitt Spring 2021

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