lesson 4 managing products, npsd, plc and positioning

8/11/2019 Lesson 4 Managing Products, Npsd, Plc and Positioning

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LESSON 4


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THE OFFERING PORTFOLIO

Offeringbenefits or satisfaction provided to target markets by an

organization.

Tangible offering

A physical entity

Intangible offering Services delivery. Brand name, warranties, guarantees, packaging etc


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THE OFFERING PORTFOLIO (CONT.)

Offering mixthe totality of an organizations offerings

Normally consist of distinct offering lines:

Offerings similar to usage

Buyers marketed to

Technical characteristics


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THE OFFERING PORTFOLIO (CONT.)

Bundlingthe marketing of two or more product or service items in a

single package that creates a new offering.

Based on the idea that consumers value the package more than the

individual items.


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MODIFYING THE OFFERING MIX

Additions to the offering mix

Consistency Resources

Market


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CONSISTENCY

Demand interrelationshipsoffering substitutes or complementsmust be

considered when evaluating the consistency of the new offerings.

To avoid cannibalism

Will the new offering satisfy the target markets currently being served by

the existing offering mix?


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RESOURCES

Evaluate the financial strength of the organization

New offerings normally require large cash outlays for all marketingactivities


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MARKET

Determine whether a market exists for the new offering

Does the new offering have a relative advantage over competitive offeringsat a price buyers are willing and able to pay?

Is there a distinct buyer group or segment for which no present offering is

satisfactory?


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NEW-OFFERING DEVELOPMENT - THE PROCESS

The process

The idea normally came from employees, suppliers, buyers and

competitors.

Formalmarketing research

Informal means

Success of new offerings rely on A fit with market needs

A fit with the organizational strengths and resources


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BUSINESS ANALYSIS AND MARKET TESTING

Sales and profit analysis

Profitability analysisrelated to investment requirements, break-evenprocedures, payback periods.

Break-even procedures is to determine the estimates of the number of units

that must be sold to cover the fixed and variable costs.

Payback periodrefers to the number of years required for an organization

to recapture its initial offering investment.


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The shorter the payback period, the sooner an offering will prove profitable.

Calculation of Return on investment (ROI)does not always distinguishamong offering alternatives according to their riskiness.


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MARKET TESTING

Test marketing is a major consideration in the development and testing

stage.A scaled down implementation of one or more alternative marketing

strategies for introducing the new offerings.


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BENEFITS OF TEST MARKETING

Generate benchmark data for assessing sales volume when the product is

introduced over a wider areaIf alternative strategies are tested, the relative impacts of the two programs

can be examined under the actual market conditions.

Allow the manager to assess the incidence of offering trial by potential

buyers, repeat-purchasing behavior and quantity purchased.


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LIFE-CYCLE CONCEPT

A life-cycle plots sales of an offering or a product class over a period of

time.Four stages : introduction, growth, maturity and decline.

Sales volume(number of triers X average purchase amount X price) +

(number of repeaters X average purchase amount X price).


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Introduction stage

Simulating trial through advertising, free samples, adequate distributionGrowth stage

Majority of sales volumes come from trial purchases.

An increased of sales volume that follows the life cycle comes from repeat

purchases from satisfied customers


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Maturity stage

Increase of repeat purchases Increase in the standardization of production operations and product-service

offerings

Increase of aggressive pricing by competitors

Focus on finding new buyers

Improves the offering

Increase the usage rate


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Declining stage

Modify, harvest and eliminate offerings


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MODIFYING, HARVESTING AND ELIMINATING

OFFERINGS

Trading upa conscious decision to improve an offering

By adding new features and higher-quality materials By augmenting the offering with attendant services

By raising the price

Trading downthe process of reducing the number of features or quality of

an offering and lowering the price


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HARVESTING

Reducing the investment in a business entity in the hope of cutting the

costs and improving the cash flow.

Should be considered:

The market for the offering is stable

The offering is not producing good profits

The offering has a small or respectable market share that is becomingly difficult

or costly


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ELIMINATION

The offering is dropped from the mix of organizational offerings either

outright or through sale to another organization.

What is the sales potential of the offering?

How much is the offering contributing to the offering mix profitability?

How much is the offering contributing to the sale of other offerings in the mix?

How much could be gained by modifying the offering?


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POSITIONING

Positioning is the act of designing an organizations offering and image so

that it occupies a distinct and valued place I the target customers mind

relative to competitive offerings.


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POSITIONING APPROACHES

Positioning by attributes

Use or application

Product or brand user

Product or service class

Price and quality


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POSITIONING BY ATTRIBUTES

Most frequently used

Requires determining which attributes are important to target markets

Determining which attributes are being emphasized by competitors

How the offering can be fitted into this target market environment

Requires developing attribute matrix that will be offered to the target

market


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REPOSITIONING

When the initial positioning of a product, service, brand or organization is

no longer competitively sustainable or profitable or when better

positioning opportunities arise.

Involve costs, time and efforts.


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MAKING THE POSITIONING DECISION

What position do we want to own?

What competitors must be outperformed if we are to establish the position?Do we have the marketing resources to occupy and hold the position?

lesson 4 managing products, npsd, plc and positioning

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