A. Product Strategy Product Strategy is perhaps the most important function of a company.

It must take in account the capabilities in terms of engineering, of production, of distribution (sales) existing in the company or of time to acquire them (by hiring or by mergers). It must evaluate the customers expectations at the time of delivery. It must guestimate the competition (including ne entrants) probable moves to enter the same market. It is the element of a firm!s decision"making concerned target market. ith developing the most appropriate products for its

#he product strategy $ development point engagement service is designed for either start up or existing companies in achieving a successful product launch, deployment, support and hen appropriate exit. %or technology companies, our disruptive technology research and analysis is used to support ne product strategy and introduction here finding comparisons to define the business & technology entry point and business value can be difficult. Product Development " improving an existing product or developing ne kinds of products Steps in Product Development Step 1. IDEA GENERATION #he first step of ne product development requires gathering ideas to be evaluated as potential product options. ith contributions from inside and outside the

%or many companies idea generation is an ongoing process organi'ation.

(any market research techniques are used to encourage ideas including) running focus groups ith consumers, channel members, and the company*s sales force+ encouraging customer comments and suggestions via toll" free telephone numbers and ebsite forms+ and gaining insight on competitive product developments through secondary data sources. ,ne important research technique used to generate ideas is brainstorming thinkers from inside and outside the company gather and share ideas. here open"minded, creative

#he dynamic nature of group members floating ideas, here one idea often sparks another idea, can yield a ide range of possible products that can be further pursued. Step . S!REENING In Step - the ideas generated in Step . are critically evaluated by company personnel to isolate the most attractive options. /epending on the number of ideas, screening may be done in rounds ith the first round involving company executives 0udging the feasibility of ideas hile successive rounds may utili'e more advanced research techniques. 1s the ideas are hittled do n to a fe attractive options, rough estimates are made of an idea*s potential in terms of sales, production costs, profit potential, and competitors* response if the product is introduced. 1cceptable ideas move on to the next step. Step ". !ON!EPT DE#E$OP%ENT AND TESTING 2ith a fe ideas in hand the marketer no its o n employees. attempts to obtain initial feedback from customers, distributors and

3enerally, focus groups are convened here the ideas are presented to a group, often in the form of concept board presentations (i.e., storyboards) and not in actual orking form. %or instance, customers may be sho n a concept board displaying dra ings of a product idea or even an advertisement featuring the product. In some cases focus groups are exposed to a mock"up of the ideas, functional version of product idea. hich is a physical but generally non"

/uring focus groups ith customers the marketer seeks information that may include) likes and dislike of the concept+ level of interest in purchasing the product+ frequency of purchase (used to help forecast demand)+ and price points to determine ho much customers are illing to spend to acquire the product. Step &. '(SINESS ANA$)SIS 1t this point in the ne product development process the marketer has reduced a potentially large number of ideas do n to one or t o options.

4o in Step 5 the process becomes very dependent on market research as efforts are made to analy'e the viability of the product ideas. (4ote, in many cases the product has not been produced and still remains only an idea.) #he key ob0ective at this stage is to obtain useful forecasts of market si'e (e.g., overall demand), operational costs (e.g., production costs) and financial pro0ections (e.g., sales and profits). 1dditionally, the organi'ation must determine if the product strategy. ill fit ithin the company*s overall mission and

(uch effort is directed at both internal research, such as discussions ith production and purchasing personnel, and external marketing research, such as customer and distributor surveys, secondary research, and competitor analysis. Step *. PROD(!T AND %AR+ETING %I, DE#E$OP%ENT Ideas passing through business analysis are given serious consideration for development. 6ompanies direct their research and development teams to construct an initial design or prototype of the idea. (arketers also begin to construct a marketing plan for the product. ,nce the prototype is ready the marketer seeks customer input. 7o ever, unlike the concept testing stage here customers ere only exposed to the idea, in this step the customer gets to experience the real product as ell as other aspects of the marketing mix, such as advertising, pricing, and distribution options (e.g., retail store, direct from company, etc.). %avorable customer reaction helps solidify the marketer*s decision to introduce the product and also provides other valuable information such as estimated purchase rates and understanding ho the product ill be used by the customer. 8eaction that is less favorable may suggest the need for ad0ustments to elements of the marketing mix. ,nce these are made the marketer may again have the customer test the product. In addition to gaining customer feedback, this step is used to gauge the feasibility of large"scale, cost effective production for manufactured products. Step -. %AR+ET TESTING Products surviving to Step 9 are ready to be tested as real products. In some cases the marketer accepts hat as learned from concept testing and skips over market testing to launch the idea as a fully marketed product. :ut other companies may seek more input from a larger group before moving to commerciali'ation. #he most common type of market testing makes the product available to a selective small segment of the target market (e.g., one city), hich is exposed to the full marketing effort as they ould be to any product they could purchase. In some cases, especially ith consumer products sold at retail stores, the marketer must ork hard to get the product into the test market by convincing distributors to agree to purchase and place the product on their store shelves. In more controlled test markets distributors may be paid a fee if they agree to place the product on their shelves to allo for testing. 1nother form of market testing found ith consumer products is even more controlled to a ;laboratory< store here they are given shopping instructions. Product interest can then be measured based on customer*s shopping response. %inally, there are several high"tech approaches to market testing including virtual reality and computer simulations. 2ith virtual reality testing customers are exposed to a computer"pro0ected environment, such as a store, and are asked to locate and select products. 2ith computer simulations customers may not be directly involved at all. Instead certain variables are entered into a sophisticated computer program and estimates of a target market*s response are calculated. Step .. !O%%ER!IA$I/ATION If market testing displays promising results the product is ready to be introduced to a ider market. Some firms introduce or roll"out the product in schedules. aves ith parts of the market receiving the product on different ith customers recruited

#his allo s the company to ramp up production in a more controlled the product is distributed to ne areas. %anaging E0isting Products

ay and to fine tune the marketing mix as

(arketing strategies developed for initial product introduction almost certainly need to be revised as the product settles into the market. 2hile commerciali'ation may be the last step in the ne managing the product.

product development process it is 0ust the beginning of

1d0usting the product*s marketing strategy is required for many reasons including) 6hanging customer tastes /omestic and foreign competitors =conomic conditions #echnological advances

#o stay on top of all possible threats the marketer must monitor all aspects of the marketing mix and make changes as needed. Such efforts require the marketer to develop and refine the product*s marketing plan on a regular basis. In fact, as e ill discuss in a later section of this tutorial, marketing strategies change as a product moves through time leading to the concept called the Product >ife 6ycle (P>6). 2e ill see that marketers make numerous revisions to their strategy as product move through different stage of the P>6. '. Process Strategy and !apacity Planning Types o1 Process Strategies

Process strategies that follo

a continuum

2ithin a given facility, several strategies may be used

#hese strategies are often classified as)

Processed23ocused

Repetitive23ocused

Product23ocused

Process-Focused Strategy

Continuum

%acilities are organi'ed by process

Similar processes are together

=xample) 1ll drill presses are together

>o volume, high variety products ?@umbled* flo

,ther names Intermittent process @ob shop Process 3ocused Strategy 2 Pros 4 !ons Advantages

3reater product flexibility (ore general purpose equipment

Opera 1 Produc t2 A tion Produc tB

>o er initial capital investment

Disadvantages

(ore highly trained personnel (ore difficult production planning $ control >o equipment utili'ation (AB to -AB)

Process23ocused Strategy E0amples

5ospital %ac6ine S6op 'an7

Repetitive Focused Strategy

%acilities often organi'ed by assembly lines

Products A & B

6haracteri'ed by modules Parts $ assemblies made previously (odules combined for many output options ,ther names 1ssembly line Production line

1 Operation

Repetitive23ocused Strategy 2 E0amples

6lothes /ryer %ast %ood #ruck

Product23ocused Strategy

%acilities are organi'ed by product

7igh volume, lo 2here found

variety products

/iscrete unit manufacturing 6ontinuous process manufacturing >ine flo production 6ontinuous production

,ther names

Product23ocused Strategy Pros 4 !ons

Advantages

>o er variable cost per unit >o er but more speciali'ed labor skills =asier production planning and control 7igher equipment utili'ation (CDB to EDB) >o er product flexibility (ore speciali'ed equipment Fsually higher capital investment

Disadvantages