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Lesson#38
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Product Planning
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INTERNATIONAL MARKETING MIX – PRODUCT POLICY
Product Planning
International product planning:
Product management is an organizational function within a
company dealing with the product
planning or product marketing of a product or products at all
stages of the product lifecycle.
Product Management is also a collective term used to describe
the broad sum of diverse activities
performed in the interest of delivering a particular product to
market.
From a practical perspective, product management is an
occupational domain which hold two
professional disciplines: product planning and product
marketing. This is because the product's
functionality is created for the user via product planning
efforts, and product value is presented to the
buyer via product marketing activities.
Product planning and product marketing are very different but
due to the collaborative nature of these
two disciplines, some companies erroneously perceive them as
being one discipline, which they call
product management. Done carefully, it is very possible to
functionally divide the product management
domain into product planning and product marketing, yet retain
the required synergy between the two
disciplines.
Product planning typically deals with these activities:
• Defining new
products and gathering market requirements
• Product Life
Cycle considerations
• Product portfolio
management
• Product
differentiation
Product marketing typically deals with these activities:
• Product
positioning and outbound messaging
• Promoting the
product externally with press, customers, and partners
• Bringing new
products to market
Product management typically deals with these closely-related
functions:
• Product planning
• Product marketing
• Program
management
• Project
management
Product planning related decisions:
• which product to
introduce in which countries
• what
modifications to make in the products
• what new
products to add
Page
118
• what brand name
to use
• what guarantees
and warranties to give
• what after-sales
service to offer
• when to enter
the market
International product design strategies – to differentiate:
In marketing,
product differentiation is the modification of a product to make it more
attractive to the
target market. This involves differentiating it from
competitors' products as well as one's own product
offerings. In economics, successful product differentiation
leads to monopolistic competition and is
inconsistent with the conditions for perfect competition, which
include the requirement that the products
of competing firms should be perfect substitutes.
The changes are usually minor; they can be merely a change in
packaging or also include a change in
advertising theme. The physical product need not change, but it
could. The major sources of product
differentiation are as follows.
• Differences in
quality or design among output (product)
• Ignorance of
buyers regarding the essential characteristics and qualities of goods they are
purchasing
• Pervasive sales
promotion activities of sellers and, in particular, advertising
• Possibility of
developing significant product differentiation through advertising is greatly
enhanced for so called “gift goods” or “prestige goods”
• Differentiation
in the locations of sellers of the same good where the product fills no
technical
function but rather can satisfy many different sort of personal
needs or uses (psychological or
physical).
The objective of this strategy is to develop a position that
potential customers will see as unique. If your
target market sees your product as different from the
competitors', you will have more flexibility in
developing your marketing mix. A successful product
differentiation strategy will move your product
from competing based primarily on price to competing on
non-price factors (such as product
characteristics, distribution strategy, or promotional
variables).
Differentiation has been shown to impact firm performance
positively both theoretically and
empirically. Differentiation primarily impacts performance
through two mechanisms:
• Reduced price
sensitivity: Consumers may become willing to pay a premium price for the
differentiating factor/s.
• Reducing
directness of competition: As the product becomes more different, categorization
becomes more difficult and hence draws fewer comparisons with
its competition.
•
Most people would say that the implication of differentiation is
the possibility of charging a price
premium; however, this is a gross simplification. If customers
value the firm's offer, they will be less
sensitive to aspects of competing offers; price may not be one
of these aspects. Differentiation makes
customers in a given segment have a lower sensitivity to other
features (non-price) of the product.
The disadvantage of this repositioning is that it usually
requires large advertising and production
expenditures.
An international firms product design strategies would depend on
the following factors;
• nature of
product
• market
development
• legal
requirements
• cost / benefit
relationship
• competition
• support system
• physical
environment
• market
conditions
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