Describe Product Strategy

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Describe Product Strategy
Describe Product Strategy (Image: ocw.mit.edu)

Introducing a product into the marketplace requires a well-planned and -executed strategic plan, or product strategy. This plan must include all that is entailed in designing, developing, manufacturing, marketing, selling and distributing the product--from engineering to customer service. The strategy needs to research, define, respond to and evaluate the customers' needs and their reaction to the product. It must also study the competition to determine if the product can fill a niche in the same market.

According to Michael E. McGrath, author of "Product Strategy for High Technology Companies," product strategy starts with a vision stipulating where the business would like to go, how it plans on getting there, and why it expects to be successful. It's like a map, valuable only when the company knows where it is and where it wants to be.

Different Strategies

Although companies normally follow similar steps in creating a new product development strategy, each will be different. A strategy should include the company's strengths and weaknesses; the competition's strengths and weaknesses; the needs of the market and the target audience; opportunities; desired goals; and financial resources. A company has to realize that it is responding to a specific market, and will not fulfill the needs of everyone. It cannot be all things to all people.

Idea Generation, Screening and Testing

The product development process begins with generating many ideas from everyone in a company, as well as customers and suppliers. At this point, creativity without criticism is the goal. The suggestions do not have to be highly feasible or of great value. When the brainstorming time is over, management screens the list against such factors as the target market and state-of-technology to choose the best idea for the new product. Most of the ideas are eliminated because they do not meet the set criteria or they would be too costly to implement. Although management may believe it has a feasible idea, the potential product needs to be tested with the target audience. Target consumers are asked to evaluate this product concept in their own terms. Is the product beneficial? Is it something they would purchase? What are its strong points and what needs to be reevaluated?

Marketing Strategy

The marketing process starts with measuring present market demand and future opportunities. What are current consumer trends? What will be desirable in the near future? Further, it is necessary to determine how the product will perform against the competition in different markets. Different types of research may be performed. For example, market testing may be conducted with a segment of the target audience. Consumers may be asked to attend a focus group or a product testing and evaluation. Or, a small batch of the product may be sold directly in some stores and consumers may be questioned through surveys, phone calls or both. Market testing may be even more controlled by recruiting customers to a "laboratory" store. The potential buyers receive specific shopping instructions and then are questioned about the products they buy.

Prototype Development

Creating carefully planned prototypes is one of the most critical stages in new product development. The prototype provides specific information on how the product will ultimately be manufactured or assembled. This stage involves testing the prototypes under different situations, choosing and acquiring necessary materials, enhancing engineering design capabilities and reducing the steps or lowering the costs of the manufacturing process.

Product Manufacturing

Final production is the most crucial and expensive phase of product development. Detailed drawings or models are made of all parts. Design optimization keeps costs as low as possible and maximizes product quality. The stages of assembly are defined, along with manpower, equipment and material needs. Suppliers are chosen to provide production help and supplies as needed. Packaging, distribution and marketing are determined.

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