Product Strategy can be defined as the process of defining how a company will go to market by identifying the need, creating products and services around it.
The product strategy can be divided into 5 different types:
- Product Development Strategy
- Product Portfolio Strategy
- the Product Line Strategy
- Channel or Distribution Strategy
- Product Differentiation Strategy
Product Development Strategy is a guy whose company focuses on creating new products and trying to introduce those products in the market.
The Product Portfolio Strategy is a strategy where the company has various kinds of products based on their customer needs, so they can satisfy customers by different kinds of products. Product Line Strategy is a strategy where the company introduces the same kind of product with different versions or variations. Channel or Distribution Strategy is a group of channels used by organizations to distribute their products to consumers. Product Differentiation is a strategy where companies give full support to the consumer specification level that they need for their own needs.
Product Line Strategy is a strategy where the company introduces the same kind of product with different versions or variations.
When a company is planning to introduce a new product line, they have two options:
- Implement a single product line across customer segments
- Introduce multiple product lines targeted at different customer needs
The main idea behind the Product Line Strategy is that it helps to manage risk by offering similar products to different groups of customers who share common needs and wants. With this strategy, businesses can reduce costs as production can be standardized and distributed. In addition, brand identity is important from the consumer’s perspective as it builds trust between consumers and company. The most common method for creating a product line is an extensive market which will help gain an understanding of customer needs and wants.
Introduce a service as opposed to a product
In order to improve customer satisfaction, businesses use services rather than individual products. In some cases, services promote ongoing relationships with customers by providing support or making suggestions for further purchases. Businesses that provide ongoing services often have more value in the eyes of consumers as they promote a sense of connection between the business and its customers.
The main idea behind the Service Strategy is that it helps to manage risk by offering ongoing support or post-purchase assistance instead of single products. With this strategy, businesses can reduce costs as production can be standardized and distributed. In addition, brand identity is important from the consumer’s perspective as it builds trust between consumers and company. Lastly, consumers are more willing to pay prices that are higher than the actual products as they perceive added values.
One example of Service Strategy is Apple’s Genius Bar. It provides free technical support for customers who purchased its hardware products through an appointment system. Another example is Amazon’s Kindle Store which offers a one-year warranty on electronic books bought from Amazon. This strategy has also been applied to the music industry with companies like Spotify where users can stream music at a low monthly price and Rdio which allows users to access over 25 million songs over the world without any ads interrupting them.
Channel or Distribution Strategy can be defined as the method to deliver products and services to customers. Companies use different channels depending on their industry (e.g., wholesalers in consumer goods, retail outlets in fashion) or region (global online or local brick-and-mortar). A company can choose to sell its products through multiple channels simultaneously. For example, an apparel retailer might sell apparel both in stores and online while another uses just one of these two channels at a time. The decision depends on factors like market share, business objectives, customer preference, etc.
Product Differentiation Strategy is a marketing mix strategy which is use by business firms to separate their products or services from competition. It’s the process of distinguishing a firm’s wares/services from rival offerings.Product differentiation relies on how well consumers perceive quality, features, and uniqueness of new products in relation to existing ones. Differentiation can be physical (e.g., differentiating some attribute like weight), it could be functional (e.g., differentiating some function or performance of product) or psychological (e.g., differentiating some psychological feature associated with product use).
Product customization is an adaptation of a component manufacturer’s production system to specifically address customer requirements for an individualized good along each stage of the supply chain, encompassing design, production and delivery. Customers can choose from a range of features and components to personalize their product in order to make it unique in the market.
Product customization is not new in industry, with examples like custom-made suits or furniture existing for decades already. However, with technological advances brought about by information revolution along with globalization where products are able to move further away from the point of production, this form of product differentiation becomes more appeal today than ever before both for manufacturers and consumers.
Websites that allow customers to design their own products have increasing popularity among online shoppers. Customization appeals especially well among younger generations who are use to being actively engage in all aspects of life, including shopping experience.