Adjustments to Products
As more brands enter the marketplace, winning and holding buyers becomes more difficult. This is a result of:
- changes in consumer tastes; in particular, the size and characteristics of particular market segments
- changes in availability or cost of raw materials and other production or marketing components
- the proliferation of small-share brands that reduce efficiencies in production, marketing, and servicing for existing brands
Because of factors such as these, a decision is made either to identify ways of adjusting the product in order to further distinguish it from others, or to design a strategy that will eliminate the product and make way for new products. The specific strategy to accomplish these aims may be in several general categories, described below.
Product Adjustment/Modification
It is normal for products to be changed several times during their lives. If a change can provide superior satisfaction and win more initial buyers and switchers from other brands, then a change is probably warranted. Yet there are definite risks involved: a dramatic increase in product quality might price the existing target consumer out of the market. Similarly, the removal of a particular product feature might be the one characteristic of the product considered most important by a market segment.
The VW Beetle
The VW Beetle has been modified countless times since its original production in 1930s, in order to keep it competitive and attractive to consumers. Today, the car is marketed towards a very different type of customer.
A key question the marketer must answer before modifying the product is: "What particular attributes of the product and competing products are perceived as most important by the consumer? " Factors such as quality, function, price, service, design, packaging, and warranty may all be determinants. This evaluative process requires marketing research studies to learn of improvements buyers might want, evaluate the market reception given to the competitors's improvements, and evaluate improvements that have been developed within the company.
Also required is a relationship with the product research and development (R&D) department. Ideally, R&D should be able to respond quickly to the marketing department's requests for product upgrades and should maintain ongoing programs of product improvement and cost reduction.
Product Positioning and Repositioning
Product positioning is a strategic management decision that determines the place a product should occupy in a given market – its market niche. Given this context, the word "positioning" includes several common meanings of position:
- place (what place does the product occupy in its market? )
- rank (how does the product fare against its competitors in various evaluative dimensions? )
- mental attitude (what are consumer attitudes? )
- strategic process (what activities must be attempted in order to create the optimal product position? )
Thus, positioning is both a concept and a process. The positioning process produces a position for the product, just as the segmentation process produces alternative market segments. Positioning can be applied to any type of product at any stage of the lifecycle. Approaches to positioning range from gathering sophisticated market research information on consumers's preferences and perceptions, to the intuition of the product manager or a member of his or her staff.
Product repositioning involves changing the market's perceptions of a product or brand so that it can compete more effectively in its present market or in other market segments. Changing market perceptions may require changes in the tangible product or in its selling price. Often, however, the new differentiation is accomplished through a change in the promotional message. To evaluate the position and to generate information about the future positioning strategies, it is necessary to monitor the position over time. A product position may change readily; keeping track and making necessary adjustments is very important.
Product Line Extensions
A product line extension is the use of an established product's brand name for a new item in the same product category. Line extensions occur when a company introduces additional items in the same product category under the same brand name, such as new flavors, forms, colors, added ingredients, or package sizes. The company can extend its product line down-market, up-market, or in both directions.
Down-Market Stretch: a company positioned in the middle market may want to introduce a lower-priced line for any of three reasons: (a) the company may notice strong growth opportunities as mass retailers such as Wal-Mart attract a growing number of value-seeking shoppers; (b) the company may wish to tie up lower-end competitors who might otherwise try to move up-market; or (c) the company may find that the middle market is stagnating or declining.
Up-Market Stretch: companies may wish to enter the high end of the market for more growth, higher margins, or simply to position themselves as full-line manufacturers. Many markets have spawned surprising upscale segments: Starbucks in coffee, Haagen-Dazs in ice cream, and Evian in bottled water. Leading Japanese auto companies have each introduced an upscale automobile: Toyota's Lexus, Nissan's Infiniti, and Honda's Acura.