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PRODUCT STRATEGIES

“New Product Strategy”


THE NEW PRODUCT

 The new product development certainly begins with the idea.

 Most of the work involves the hardy task of building the real business around the
idea. This includes the preparation of;
 the business plan
 market studies
 demand estimation
 marketing strategy
CREATING THE BUSINESS MODEL

Business Model – refers to the mode by which the product concept seeks to make
money so that it can have a sustainable operation.

 In order for it to continue going, it should be generating enough revenues


to cover both its costs of operations, as well as providing a decent return on its
investment. If the business cannot accomplish this, then it will not survive.

 The business model should therefore involve a way of making money that
best fits the nature of the product idea.
ALTERNATIVE FORMS OF REVENUE
GENERATION
 Advertising – you get to consume the product with no cash outlay and with the
costs of providing the product being covered for by a number of third party
advertisers. This has always been the business model for much of print, radio and
television enterprises.
 Sponsorship – Alternately, instead of constantly finding a number of small
advertisers to support ad-based businesses, you may opt to focus on a few big
sponsors instead. This leads to less ”clutter” in the media (as there are fewer
advertisers) and more focused messages from the sponsors.
 Donations – their products are being offered for free, enough people will be
grateful and provide a sufficient pool of funding to keep the services going on.
 Rent or lease – for expensive assets, such as machinery or vehicles, they
sometimes become more attractive for the market to consider through renting
rather than outright ownership.
 Subscription – Instead of consumers buying the product at stores, a subscription
business sends the products regularly to their door in exchange for a fixed
monthly fee.
 The critical part of the business modeling would be at the balancing act between
the target number of consumers, the target number of consumers, the profit
margin goal per unit sold, and the acceptability of the resulting price.

 You will also need the balance sales volume with profit margins.
”If you are selling in low volumes, then you will need high margins. If you are selling
high volumes of your product, then you can afford to have low margins.”
THE BUSINESS PLAN

- Serves as the road map for bringing the product idea to life and it specifies the
details that would help to make the selected business model works.

Business plan would best contain the following at the very least:
 Statement of opportunity – refers to the identified market opportunity that
proposed business seeks to address.
 Environmental analysis – key issues and trends in the environment, both macro
and micro that should be noted when assessing the business proposal.
 Market estimates and market segments – estimated size of the total potential
market along with descriptions of the different possible market segments and
their estimated sizes.
 Competitive analysis - a roundup of the existing competition along with existing
substitutes and potential substitutes together with their strengths and
weaknesses.
 Business strategy – details of the proposed business including the product
concept, the logistics required for its mobilization, the organization structure
needed, and the methods for product distribution among other things.
 Risk analysis – list of things that could go wrong along with a corresponding list
of safeguards and contingency actions to address these.
 Financial forecasts – Estimates of financing required for initial capitalization,
asset acquisition, working capital, overhead, and inventory.
COMPETITIVE STRATEGIES

“How can I compete effectively in the market?”

There are generic competitive strategies that you can consider when developing
your business idea. These are:
1. Least cost – this strategy involves producing goods or services at the least
possible cost, and then passing these to consumers through low-priced,
affordable products.
2. Differentiation – this strategy involves a lot of brand-building with an effort to
get the market to associate the brand with particular benefits that hopefully
will be distinctly associated with the brand.
 Niche – this focuses on the needs of a very specific target market, usually a
market that is small enough or specialized enough that it requires particular
expertise.
SERVICE STRATEGIES
GOODS VS. SERVICES

Goods – refer to tangible products that consumers can actually observe with their
senses.
Services – refer to intangible offerings that are abstract in nature and cannot be
observed with our senses. In fact, a key characteristics of services is that the act of
delivery itself is the product.
Here are some examples of services as products:
 Banking, investments, and insurance
 Hotel accomodations
 Restaurants, bars, and catering
 News and entertainment
 Transport and freight
 Education
 Health care
 Wholesaling and retailing
 Professional consultations
Aside from tangibility, here are some distinctions that differentiate services from
goods:
 While customers get to own goods, they do not gain ownership of a service. This is
because, obviously, there really is not anything to own.
 The customer is typically an active participant in the production of the service.
Legal consultation, for instance, involves heavy interaction between the lawyer
and the client. On the other hand, ordering food at a diner involves the waiters
taking orders from the customer.
 It is typically difficult for customers to evaluate the quality of the service itself.
TYPES OF SERVICE PROCESSES

 Services can be enacted through the use of tangible objects (i.e., the service is
still intangible, but it is served via tangible tools) or it can be purely intangible.

 Services can also either be directed toward the “processing” of people or


services can be applied to the processing of people’s possessions.
TABLE 1
TYPES OF SERVICE PROCESSES

Directed at People Directed at Possessions


Tangible Acts People Processing Possession Processing

Airlines, hospitals, hotels, Freight, repair, cleaning,


restaurants landscaping, retail
Intangible Acts Mental Stimulus Processing Information Processing

Broadcasting, consulting, Accounting, banking, insurance,


education, therapy legal, research
BUILDING UP THE SERVICE EXPERIENCE

 Customers tend to evaluate services based on the quality of their interaction


rather than the merits of the actual service itself.

The following are service elements that should be taken into consideration
in order to build an excellent overall customer experience:
• Personnel Selection and Training
For services that are delivered through personnel, great attention should be given to the
selection and training of sales and front-liners as they serve as the primary conduits
between the business and the clients.
Personnel must be trained to converse confidently with the target market and to speak
their language as best they can.

Personality will also have have to be taken into account. Personnel may in fact to be put
through exercises that evaluate how well they can perform under duress or under
performace-level situations.

• User Interface
For services that are delivered through automated means, such as ATMs and online
services, the quality of the service will be assessed based on the ease of use of the service.
• Points of Contacts – all points of contract or avenues for interacting with customers
should be managed and controlled. This includes the atmosphere of the service venue,
the quality of the seating in waiting areas, the type of music played, and perhaps even
the scent in the air.

• Tangible Mementos – this can help to stimulate recollection among consumers and
better yet, remind them about coming back for more. Mementos can be in the form of
thank you cards, small giveaways, gift bags with the branding of the service, or even
complementary low-cost items.
BRANDING

Brand – is a mark of distinction that can be sensed usually in the form of names or
terms, signs or symbols, design elements, or even a combination of these, and is
utilized for the purpose of identifying and distinguishing the goods or services of
one provider from another.
A brand represents a concise and imputed contract between the producer
and the consumer. It consists of everything that comes to the customer or potential
customer’s mind when they see or hear the name or logo. (Drew 2013)
Here is how it works: a consumer has a need that has to be addressed. The
consumer searches for possible solutions (competing products) and tries your
product. The consumer really likes your product. The consumer then remembers
your product’s brand so that in the future, the consumer will know to just pick your
product.
This scenario has two implications:
• First, it implies that a key purpose of a brand is to serve as a mnemonic device that
facilitates the reconnection of a customer with particular experience that has
proven to be satisfying.
• Second, it also implies that there will be consistency in the experience – that if the
customer buys the product again, there is implied assurance from the producer
that the experience will still be the same.
Consistency is a significant factor in brand management. It is what makes
the imputed contract between producer and consumer possible.
Functions of a brand:
• It identifies the product or service, enabling consumers to accept, reject, or
communicate their opinions about it to others.
• It communicates messages to the markets and to the public at large, whether
the messages are intentionally or unintentionally generated.
• It functions as a legal property, allowing it owners to invest in building up the
value of the brand.
ORIGINS OF BRANDING

During the medieval period, it was a common practice to claim ownership


to cattle and other chattel by branding or marking them with a hot iron (brand =
burn in German).

Visual signifiers were also eventually used to distinguish the products od


specific artisans, such as on tools by blacksmiths and metalworkers. Visual signifiers
also made it easy for people to identify specific commercial establishments, such as
market stalls, butchers, and taverns.
ELEMENTS OF THE BRAND

• Trade name: the trademarked name by which the product is to be known as, such as
Coca-Cola, Google, and Jollibee. Trade names are registered through the Intellectual
Property Office.

• Generic category: the category in which the brand would fall under, such as beverage,
search engine, or quick service restaurant. The Intellectual Property Office requires that
brands explicitly specify the categories that they would fall under.

• Logo: the visual ;symbol or image that will identify the product, such as the distinctive
partially bitten apple image for Apple, the stylized script letters of Coca-Cola, or the
three-point star of Mercedes-Benz. Logos are also registered alongside the trade name.

• Tagline: an optional catchphrase, such as BDO’s “We find ways.”


• Visual Causes: aside from the actual logo, brands can also be represented with
distinctive visual identifiers, such as the red and green bands that wrap around the
outside of a Seven-Eleven store.
• Shapes: the actual shape or form of the product or packaging, such as the
pinched contour of a bottle of Yakult.

• Colors: a Yellow Cab is quickly distinguishable from afar thaks to its bold yellow
signs with black letterings.

• Sounds: such as advertising jingles, or even very short intro sounds such as those
heard upon starting up a computer.
• Scents: establishments such as Rustan’s and the Shangri-La Hotel have signatures
fragrances made that help to create distinctive atmospherics in their premises.

• Taste: this includes special recipes or secret ingredients, such as Max’s distinctive
fried chicken formulations.
Studies shows that when people were unaware of the brands of the
products that they were sampling, their preference levels and neurological
responses to the these items tended to be similar. But once they were made aware
of the brand of the product that they were about to sample, they suddenly had a
greater preference for it (Praet 2014)
ELEMENTS OF LOGO DESIGN

 Keep it simple. Simplicity gives the logo design versatility, allowing it to be used
in a wide range of media from business cards to billboards.
 Make it relevant. The design should be appropriate to the business it is
identifying to the industry, to the market, and to the audience it is addressing.
 Incorporate tradition. Logos should not strive to be trendy but rather contain
the symbolic elements that are timeless as far as the nature of the business is
concerned.
 Aim for distinction. The logo should easily stand out versus the competition.
Prioritize shape and form over color. A tip is to work first in just black and white so
that distinct form is emphasized over anything else.
 Commit to memory. Great logos should be memorable even after just one quick
glance. This is useful given the rapidly moving nature of the world that we live in –
with people flipping through magazines, clicking through web pages, and driving
past billboards at high speed.
 Think small. Logos may look great on a billboard but they should also be
recognizable in small executions, which will be useful when placing the logo on
small items such as zippers and coffee stirrers. A tip is that the design should still
be easily recognizable even at a minimum size of just one inch, which means the
simplicity is key.
 Focus on one thing. The most iconic logos have just one feature that helps them
to stand out. Incorporating more than one key element will only clutter the mark
and make it less memorable.
LEVELS OF MEANING

• Attributes. Characteristics of the product itself such as softness, engine power,


physical size, friendliness (for services), locations, design, and colors.
• Benefits. What consumers stand to gain from patronizing the brand, such as
shinier hair, peace of mind, comfort , time savings, and happiness.
• Values. The core values that the brand is identified with, such as family ties,
independence, creativity, innovation, and risk-taking.
• Culture. The culture or sub-culture that a brand is identified with. Culture and
values have a lot of interdependencies but culture can refer to regional identities,
such as Bacolod Chicken Inasal being expressly associated with its titular province.