PRODUCT DEVELOPMENT FOR GLOBAL MARKET

INTRODUCTION to PRODUCT STRATEGY

Rahim Jabbar

19 June 2007
1

INTRODUCTION to PRODUCT STRATEGY

Main Discussion (1)
Introduction
Product Strategy as a part of Strategy to Enter the Export Market (SEEM) Choosing Winning Characteristic-Figure and Utilities NTE Buyers Questions about the Product End Consumers Questions at Export Destination Country (EDC) The Requirements to Enter Developed Countries Market

Understanding Product
The Scope of A Product Types of Products Components of a Branded Product Consumer Values Values gained by the Consumer Example of a Product: Rattan Furniture Exercise The Core of Product Strategy

INTRODUCTION

PRODUCT STRATEGY: PART OF THE STRATEGY TO ENTER EXPORT MARKET (SEEM)

Through the SEEM process you should have:
Determined the targeted market segment Attributes of a product that the target segment likes Known the attributes and the appropriate utilities and packaging for your export product aimed at the target segment at the Export Destination Country (EDC) Product strategy is a further breakdown of SEEM
4

PRODUCT STRATEGY: CHOOSING THE CHARACTERISTIC-FIGURE & UTILITIES OF A WINNING PRODUCT!

Product strategy a winning product:

maximizes its competitive advantages and minimizes its competitive disadvantages

these enable it to become the primary choice for consumers at the targeted segment in EDC these also improve its success rate in EDC markets where competition is fierce needs to understand the requirements demanded at EDC and the wants and favorites of the consumers there.

PRODUCT: THE QUESTIONS AND CONSIDERATIONS OF INTERMEDIARY BUYERS AT EDC

Do these imported products (i.e. your export product) meet the following standards: Technical? Health and safety? Environment? How much is the purchase price? Does that price still allows room for me to gain a sufficient profit? How do their prices and quality compare to similar products from other suppliers?
6

PRODUCT: THE QUESTIONS AND CONSIDERATIONS OF END-BUYERS AT EDC

How are their quality and reliability? How much are they priced? Are those prices worth the value that Im getting? How do their prices compare to other similar products? What are the return policies should the products be found defective?
Typically end-buyers place full confidence at the store network that sell imported goods.
7

PRODUCT: SOME REQUIREMENTS TO ENTER EXPORT DESTINATION DEVELOPED COUNTRIES

Consumer safety regulations Health regulations related to food products (e.g. Foods and Drugs Administration in USA) Labeling requirements Requirements to display a products origin information Environmental requirements Biorterrorism Act
8

UNDERSTANDING PRODUCT

SCOPE OF A PRODUCT
Product something that is manufactured/processed from raw materials and supporting materials to fulfill the needs of consumers, whose manufacture requires certain techniques and methods

Kandungan Isi Makalah ini Merupakan Hak Cipta Rahim Jabbar

10

TYPES OF PRODUCTS (1)

CATEGORIZED BASED ON PRIMARY USER Consumer Goods are products that are used to meet human needs through direct use or consumption by individuals. Consumer goods can be categorized into two categories:

non-durable consumer goods or fast moving consumer goods such as food, cosmetics, personal hygiene products, etc.
durable consumer goods such as : car, household wares, stationeries, computers, sports equipment, etc.

Kandungan Isi Makalah ini Merupakan Hak Cipta Rahim Jabbar

11

TYPES OF PRODUCTS (2)

CATEGORIZED BASED ON PRIMARY USER (2)
Industrial goods are raw materials, supporting materials, processing machines, that are used as inputs or processing tools to make other goods. Can be categorized into: capital goods intermediate goods

Kandungan Isi Makalah ini Merupakan Hak Cipta Rahim Jabbar

12

TYPES OF PRODUCTS (3)

BASED ON THE LEVEL OF TECHNOLOGY OF ITS PRODUCTION(1) Products directly processed from nature and biological resources: Processed food, wooden and leather products, rubber products (some products commonly made by small businesses) Products made by simple technologies, such as textile, clothing, footwear, furniture, glassware, porcelain, toys (most of the products commonly made by small businesses)

Kandungan Isi Makalah ini Merupakan Hak Cipta Rahim Jabbar

13

TYPES OF PRODUCTS (4)

BASED ON THE LEVEL OF TECHNOLOGY OF ITS PRODUCTION (2) Products of mid-level technology industries such as : motor vehicles, cars, machines, chemicals, metal goods. Products of high technology industries such as electronics, pharmaceuticals, biotechnology products, high precision tools, airplanes

Kandungan Isi Makalah ini Merupakan Hak Cipta Rahim Jabbar

14

TYPES OF PRODUCTS (3)

FROM MARKETING STANDPOINT PRODUCTS CAN BE DIFFERENTIATED INTO COMMODITIES AND BRANDED PRODUCTS COMMODITIES Products that can not be differentiated from other similar products (e.g.: salt powder , dry ground rice) Can be very easily substituted by similar products from other producers negligible cost of switching to other same products Competition is based on price (cheaper is more attractive) Typically provides only a small profit margin Profit is determined by volume BRANDED PRODUCTS Based on its point of difference

Able to build customer loyalty the cost of switching brands are high enough (customers hesitance on the effectiveness of other brands of the same product) Can be charged a premium price Can provide higher levels of profit Profit is determined by the effectiveness of branding and marketing activities.

15

COMPONENTS OF A BRANDED PRODUCT

A PRODUCT or SERVICE as a basis NAME/LOGO as a marker / hook PACKAGING as a display tool PRICE as a representation of value

ADVERTISEMENT/MESSAGE as story
teller
16
Copyright Rahim Jabbar/1999

COMPONENTS OF A PRODUCT
Product is a term used describe goods, services and knowledge that are made to be sold. A product possesses a certain attribute a certain utility, and for a certain use (may be tangible or intangible or some combination of both). All of which characteristics provide a utility for the consumer, which makes it valuable in the eyes of the consumer.
17
Kandungan Isi Makalah ini Merupakan Hak Cipta Rahim Jabbar

CONSUMER VALUES
Value is the basic/core general principles of behavior in a society that are very highly valued by the society. Value is related to whether something is viewed as good or bad.

Pragmatically, a product is seen as valuable to the consumer if the product (be it goods or service) helps him/her (the consumer) to achieve his/her goals, fulfill his/her needs and satisfy his/her wants.

Kandungan Isi Makalah ini Merupakan Hak Cipta Rahim Jabbar

18

EXAMPLE OF A PRODUCT: RATTAN FURNITURE Rattan furniture is made of pieces of cut rattan and
some parts of rattan skin that are meshed and shaped into chairs, tables, beds, etc. Their shapes are

based on certain designs that fulfill consumer

requirements of seating or sleeping comfort, etc. They are also padded and varnished to make them look attractive and liked by the consumers.

Kandungan Isi Makalah ini Merupakan Hak Cipta Rahim Jabbar

19

EXAMPLE OF A PRODUCT: RATTAN FURNITURE

What the consumer really purchases is comfort and convenience utilities for their everyday life. I.e. to avoid from being forced to eat sitting on the floor or standing, or sleeping on the floor. In this way, the furniture maker provides values to consumers in the form of comfort utility (physical need) and convenience utility (psychological need). The furniture producer provides these utilities through the properties of certain raw materials (in this case rattan) and certain design that gives attributes that will support the intended utilities.

Kandungan Isi Makalah ini Merupakan Hak Cipta Rahim Jabbar

20

EXERCISE : RELATIONSHIP BETWEEN A PRODUCTS ATTRIBUTES & UTILITIES AND ITS VALUE TO THE CONSUMER Product (Attributes) Utility Value

Corn-based cooking oil

Muslim Clothing (Mens) Spicy crackers Bandrek Drink

21

THE PREREQUISITES OF A COMPETITIVE PRODUCT BE THE PRIMARY CHOICE OF CUSTOMERS

Ratio of Quality vs. Price > Competitors Better quality (if at the same price) or better price (if at the same quality). Differentiating superiority: *utility attributes (most decisive) *physical attributes *process attributes

KEY TO SUCCESS

SUFFICIENT PREREQUISITE

QUALITY THAT IS IN GENERAL COMPARABLE TO COMPETITORS

BASIC PREREQUISITE

FULFILL CUSTOMERS/CONSUMERS NEEDS Technical performance Quality level

Kandungan Isi Makalah ini Merupakan Hak Cipta Rahim Jabbar

22

PRODUCT STRATEGY

23

QUESTIONS TO GUIDE PRODUCT STRATEGY DEVELOPMENT

Product Strategy: choosing attributes and utilities of a competitive and winning product. The final judge are the consumers in EDC Questions to answer: Who are the primary target customers/consumers? What kind of values do they look for in a product? What are the profiles of attributes, utilities and values of products currently in the market? How can we differentiate our product from competitors to create a certain uniqueness?

24

PRODUCT STRATEGY: BASED ON THE NEEDS OF THE TARGET SEGMENT AND THE DIFFERENTIATION FROM COMPETITORS
Consumer Insights
TARGET MARKET SEGMENT: WHAT ARE THEIR SPECIFIC NEEDS OF THE PRODUCT

Vision of The Product

COMPETING THROUGH DIFFERENTIATION

(to be developed) The strengths and weaknesses of your current product

YOUR PRODUCT DESIGN

COMPARISON: ATRIBUTES, UTILITIES, USES, BENEFITS

COMPETITORS PRODUCTS (current)

25

THE CORE OF PRODUCT STRATEGY

TO DEVELOP A WINNING PRODUCT, ONE NEEDS UNDERSTANDING OF: ATTRIBUTES, UTILITIES AND VALUES WANTED BY EDC CONSUMERS, AND
ATTRIBUTES, UTILITIES AND VALUES PROVIDED BY COMPETITORS IN EDC

A HIGHLY COMPETITIVE PRODUCT IS DESIGNED THROUGH UNIQUE DIFFERENTIATION

26