Chapter 10: Developing, Positioning, and Differentiating Products Through the Lifecycle

New Product Strategy: Why do new products fail?

Inability of the company to up its offerings to the needs of the customers

Challenge in Developing New Products

1. Need to shorten products “time to market”Reduce time between idea generation and product availability

2. Research – need for timely and accurate information: tracking competitors and customers; tracking marketing environment

3. Will customers benefit?

Challenge in Developing New Products

4. Are there manufacturing, marketing, or distribution cost efficiencies with the new product?

5. Does the firm have the needed and _______________ in R&D, manufacturing, and marketing to successfully develop product?Adding wood stains to a line of paint: totally new manufacturing effort, raw materials, technology, etc.

Chapter 10: Developing, Positioning, and Differentiating Products Through the Lifecycle

Positioning: act of designing the company’s offering and image to occupy a distinctive place in the target market’s __________

Positioning according to Ries and Trout

Positioning is what you do to the of the prospect. That is, you position the product in the mind of the prospect (Ries and Trout, 1982)

Hertz: world’s largest auto-rental agency

Coca-Cola: world’s largest soft-drink company

Implications – __________________________________

Competitor strategiesRies and Trout

1. Strengthen its own position in the consumer’s mind:

2. Grab an unoccupied position:

3. Re-position the competition in the customer’s mind:

Competitor strategiesRies and Trout

4. In an over-advertised society, the mind often knows brands in the form of ___________, such as Coke-Pepsi-RC Cola, or Hertz-Avis-NationalThe top firm is remembered best.

Implications: Fight for position; become number one in a new category; Exclusive club strategy - promote the idea that it is one of the Big Three, Top 10, etc. It is in the club with the “best.”

Positioning according to Treacy and Wiersema

Value Disciplines: within its industry, a firm could aspire to be the product leader, the operationally excellent firm, or the customer intimate firm.

Product leader: firm advances on the technological frontier

Operationally excellent firm: highly reliable performance

Customer intimate firm: high responsiveness in meeting individual needs

Positioning: how many ideas to promote?

Promote central benefit• Easier communication to target market• If company hammers away at one

positioning, and delivers on it, it will probably be best known and recalled for this benefit

Positioning: how many ideas to promote?

Promote more than one benefit• What if the market tires of the benefit and believes

that most competitors deliver it?

Today most people believe that most cars are safe and that most have pretty good quality. Therefore, car manufacturers should position their product on ________________________

Positioning: how many ideas to promote?

Challenge: as companies increase the number of claimed benefits for their brand, they risk belief and a loss of clear positioning

1. ______________ – buyers have vague idea of the brand; brand is another entry in a crowded marketplace: when Pepsi introduced Crystal Pepsi in 1993, consumers were unimpressed. They failed to see the benefit of “clarity” in a soft drink

Positioning: how many ideas to promote?

2. – buyers have too narrow an image of a brand;

3. – brands positioning is changed too frequently; NeXT desktop computer was positioned for students, then for engineers, and then for business people

Positioning: how many ideas to promote?

4. – hard to believe brand claims in view of the product’s features, price, or manufacturer:

When GMs Cadillac division introduced the Cimarron, it positioned the car as a luxury competitor with BMW, Mercedes, and Audi. Although it had all the features of a luxury vehicle, customers saw it as a dolled up version of Chevy’s Cavelier

Communicating the Company’s Positioning

Positioning statement: state the product’s membership in category, and then show its point-of-difference from other members of the group

Frozen pizza positioned as delivered pizza: “It’s not delivery, _________________

Communicating the Company’s Positioning

Communicate positioning through all elements of the _________________________

Physical signs and cues: a lawnmower manufacturer claims its lawn mower is “powerful” and has a noisy motor because buyers think noisy lawnmowers are more powerful

Price, packaging, promotion, etc.: a premium beer’s image was hurt when it switched from bottles to cans; a well-known frozen-food brand lost its prestige image by being on sale too often.

Adding Further Differentiation

Differentiation – adding a set of meaningful and differences to distinguish the company’s offering from the competitors’ offerings

Adding Further Differentiation

Meaningful or worthwhile differentiationCriteria:

Important: highly valued

Distinctive: delivered in a distinctive way

Superior: superior to other ways of obtaining the benefit

Preemptive: cannot easily be copied by competitors

Affordable: buyer can afford to pay the difference

Profitable: company will find it profitable to introduce the difference

Differentiation that Failed – Failure to Meet Criteria

Westin Stamford Hotel in Singapore: world’s tallest hotel

Turner Broadcasting System installed TV monitors to beam Cable News Network (CNN) to shoppers in checkout lines

Successful Differentiation on Irrelevant Attributes

Proctor & Gamble differentiates its Folger’s instant coffee by its “flaked coffee crystals” created through a “unique patented process”

Claiming that a brand of coffee is “mountain grown.”

Alberto Natural Silk shampoo: “We put silk in a bottle.”

Product Differentiation Tools (p. 204 –206)

Examples:Features: characteristics that the

product’s basic functionNeed to determine which feature is profitable to add,

given the potential market, cast, and price

Product Differentiation Tools (p. 204 –206)

Examples:Repairability: measures the ease of a

product when it malfunctions or fails

Style: describes the product’s look and feel to the buyer; can create that is difficult to copy; does not always mean high performance

Product Differentiation Tools (p. 204 –206)

Examples:Design: the of features that affect how a

product looks and functions in terms of customer requirements

Services Differentiation

Examples:

Ordering ease: ease with which customer can place an order with a company

Delivery: how well the product or service is delivered to the customer, covering speed accuracy, and customer care.

Personnel Differentiation

Differentiation through better-trained people. Well-trained personnel exhibit competence, courtesy, credibility, reliability, responsiveness, and communication.