Core Marketing Strategy #169 Product Strategy

Marketing can be defined as creating a mechanism that allows products to sell naturally.
When formulating a marketing strategy, the order of [① What] → [② Who] → [③ How] is essential.

First, regarding [① What], it is necessary to concretize the company's unique value (core competence).
Next, you must set a hypothesis, even if it is just a guess, as to [② Who] this value should be proposed to.
Finally, you concretize [③ How] you will propose it.

A representative framework for this is the optimization of the marketing mix, which is the final phase of the marketing process.
The marketing mix is also called the 4Ps, taking the initials of each strategy.

1. Product Strategy
Functions, design, quality, variety, features, brand, size, weight, packaging, etc.
2. Price Strategy
Selling price, discount/sale price, payment terms, transaction conditions, rebate prices, price conditions, etc.
3. Place Strategy
Sales channel format, inventory, shipping, agency systems, location, store format, etc.
4. Promotion Strategy
Sales promotion, public relations, advertising, etc.

What is important to note is that these strategies should not be promoted individually, but rather as a mix.

When formulating a marketing strategy, the product strategy is often used as the foundation.
Product strategy is not limited to the development of the product itself; it is formulated based on the following three-layer structure while considering environmental analysis (3C analysis, STP, SWOT) and consistency with other 4P elements.

① Core of the product
A product requires a core benefit, which is the effect or profit that the customer can obtain.
Conversely, customers will not purchase a product that lacks benefits.
As a company, it is necessary to incorporate unique values that other companies do not have, known as core competence, into products and services.
By developing products with benefits that leverage core competence, differentiation from competitors becomes possible.

② Actual product
The actual product consists of elements that embody the core benefits.
The approach differs depending on whether it is an existing product or a launch where you are developing a product from the core. – Brand: Promise to the customer, product personality – Packaging: Not just protective function, but communication of brand image – Features: Differentiation elements, Unique Selling Proposition (USP) – Design: Fusion of functionality and aesthetic elements – Quality level: Durability, reliability, performance

③ Augmented product
In product strategy, augmented features are elements that complement the parts that are insufficient with just the core and actual product to increase customer satisfaction.
I believe that extending and developing this part leads to price strategy, place strategy, and promotion strategy.
– Installation/Instruction manual
– Delivery method/Inventory system
– Payment method
– Warranty
– After-sales service

Since it is a marketing mix, once the outline of the product strategy is solidified, it is coordinated with the other 4P elements: price strategy, place strategy, and promotion strategy.
In that situation, optimization is performed, including a review of the product strategy.
Also, for the optimization of the marketing mix, it may become necessary to redo the target market selection and environmental analysis that were conducted in advance.

In this way, by going back and forth through the process many times, the marketing mix is optimized and the marketing strategy is established.

Also, products have a product life cycle.
(1) Introduction stage: A state where neither sales nor profits are earned
(2) Growth stage: A state where sales and profits have begun to rise
(3) Maturity stage: A state where sales and profits have stabilized
(4) Decline stage: A state where sales and profits are sluggish

There is no guarantee that a new product will progress from the introduction stage to the growth stage.
In fact, it may be more common to be forced to withdraw during the introduction stage.
Also, even if it passes through the growth stage and enters the maturity stage, one must be prepared for the fact that it will eventually enter the decline stage.
Therefore, in order for a company to maintain and expand its business scale, it is necessary to have multiple products.

However, management resources such as funds invested in each product are limited.
For that reason, Product Portfolio Management classifies products into four categories based on market growth rate and market share to understand which phase of the product life cycle each product is in and what kind of investment should be made.

As with everything, theories are derived from past trends and are by no means omnipotent.
This product life cycle is the same; depending on the product, some last 10 years, while others last 50 or 100 years.
Also, the length of each period varies depending on the product.
I believe what is important is how to use this past theory to implement the best and most optimal marketing mix strategy in response to actual environmental changes.