If you want to have a successful product, it is necessary to pick a product strategy. Without a strategy, you are simply depending on good fortune to provide success. Picking a strategy allows you to angle your product in a particular way that will create a strategic, competitive advantage. A strategic, competitive advantage is something that you can benefit from in order to have a leg up on your competition. There are a variety of specific product strategies that are used by marketing managers. Generally, however, successful strategies will fall into one of the three generic strategies identified by Harvard professor and strategy guru, Michael Porter.
Using a cost-based strategy involves attempting to keep your production costs as low as possible. Ways of reducing costs can include bulk buying power (buying wholesale lots at a discount) and economies of scale (production becomes cheaper per unit with a greater over all production quantity). In recent years, manufacturers have moved production into low-wage countries in order to further reduce production costs. If you can keep your production costs low enough, you will be able to offer your product at a price that is below your competitors' production costs. This makes it impossible for competitors to compete with you.
The differentiation strategy involves positioning your product in a way that differentiates it from others in the marketplace. Your product needs to have a special feature that is different from others available. A good example of a company that uses a strategy of product differentiation is Apple. Apple differentiates itself by having user-friendly computers and electronics. This gives them an advantage over similar products in the marketplace. It also contributes to profitability because this differentiating factor allows them to ask higher prices than competitors with similar products. This strategy is popular because it provides a unique selling advantage and it creates higher price points.
The third strategy is called the focus strategy. It is called that because it involves focusing on a small customer base that is willing to pay premium prices. An example of this is niche marketing, where a specialty product is developed for a small niche market. Production costs will typically be higher for a smaller, niche market, but selling prices will also be higher. Another example of the focus strategy is customization, where customers can buy a product that is customized to their particular wants and needs. This is common in the automotive industry, where you can buy a basic model car and have it customized with features that you choose.
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