PRODUCT DEVELOPMENT, POSITIONING AND DIFFERENTIATION


By
Paresh M. Karia
B.E.(mech.), MMM, MIE, FIV, CE, MIIE, PGDBA
Visiting Faculty at Various MBA College of Pune & Rajkot
E-mail:
pkaria89@vsnl.net
 


PRODUCT DEVELOPMENT

Competitive advantage in the market can only be sustained overtime by creating a continuous stream of innovative products and services.  The accelerating pace of change has hastened the process of product obsolescence and increase the pressure on new product development. 

The increasing specialized demands of customers have led to the market being segmented into smaller and smaller segments.  To gain market share companies are tailoring products for diverse segments to gain market share. Alvin Toffler' (1970) wrote." Manufactures produce for mini markets".  This has started the drive towards mass customization.  The proliferation of new products has seen a rapidly rising ration of new existing products. Manufacturing companies, especially those in the Engineering, Automobile industry etc. is investing heavily in the product development capabilities and competencies. The product development cycle, from concept to market, has come down from years to months.

New products create value for the customer in terms of providing new features.  For the manufacturing company it provides competitive advantage by exploring new markets and the opportunity to capitalize old investments.  It also sets up entry barriers for competitors by crating new industry standards, which the competitors find it difficult to emulate. 

Inside the company, new products build new functional and technical skills, foster inter functional integration and give the employees a sense of pride and confidence.  Nothing could exemplify this better than the success of Telco in the launching of Indica and Victor by TVS   Indica has transformed Telco from a manufacturer of diesel trucks and bus chassis to a car manufacturer.  It has also brought new competencies in petrol engines and capabilities in design, manufacturing and service.  Victor has created the confidence and ability in Indian manufactures to indigenously design a world-class motorcycle from scratch in record time.

PRODUCT POSITIONING AND DIFFERENTIATION

Today's economies are afflicted with surpluses, and not the shortages.  In a super market, there are not only one brand of toothpaste but also one brand- Close-up, offers a dozens of varieties i.e. is Close-Up with Gel, Close-Up with Lemon Flavour. Etc.  Let us consider money market, now investors can choose among thousands of mutual funds.  Students can choose among hundred's of good B-Schools.  For the seller, this is hyper competition and for the buyer this is over choice.

No company can win if its product and offerings resemble every other product and offerings.  Today, most companies fail in market front because of the undifferentiated strategies.  Companies must have strong, meaningful and relevant position and differentiation strategies. Each company and its offerings must represent a distinctive big idea in the mind of the target audience and each company must dream up new features, services and guarantees, special rewards for loyal users, and new conveniences and new enjoyments.

Positioning

Positioning is the act of designing the company's offerings and image to occupy a distinctive place in the mind of the target audience. The end result of positioning is successful creation of customer focused value proposition, a cogent reason why target customers should buy a product. For e.g. Surf has occupied a distinctive place in the mind of the consumers which is outcome of its strong positioning strategy.

Company positions the product in the minds of the prospect.

The mind often knows brands in the form of product ladders e.g. Coke-Pepsi or Surf –Ariel- Tide detergent powder. The top firm is remembered first.  This is why companies fight for the number one position. The "largest firm" position can be held by only one brand.  The second brand should invent and lead in a new category.

Product Differentiation:

The task of positioning is to deliver a central idea about a company or an offering to the target market. Differentiation goes beyond positioning to spin a complex web of differences characterizing that entity. I.e. one brand should be differentiated from another brand available in the market of the similar nature.  Differentiation can be defined as " The process of adding a set of meaningful and valued difference to distinguish the company's offerings from the competitor's offering.

Product development, Product Differentiation and Product positioning are the central theses in the marketing strategy of a firm & are closely interlinked.

The major attraction and the major benefit of differentiation is that it takes the firm away from a total price-route competition.  In other words, it helps the firm to fight on non-price front with all benefits associated with it.  So, differentiation is a crucial decision for a firm and it forms an integral part of its marketing strategy.

The companies can achieve differentiation using the product development or distribution method or promotional aspects. Actually, right from the plant location to the after sales services that company offers, anything can be used to differentiate an offer and make it "Different"

Through differentiation in product, service or packaging, firm moves to a position wherein it can claim a premium in the market.

Though the differentiation can be achieved in many ways, the maximum scope for exploiting differentiation remains with the product.  The product forms a core part in the differentiation strategy amongst the other P's of the Marketing Mix.

Product Differentiation is of vital importance in product management and has potential in forging successful marketing strategies.

Example:

Procter & Gamble's Head & shoulders is considered among the top brands in Indian Anti-Dandruff Shampoos, H & S differentiates itself from its close competitor Clinic All Clear Anti-Dandruff Shampoo in the sense that it is available in different varieties like Menthol, Lemon & Strawberry as well as having a ZPTO factor in it which makes a USP of H & S and positioning it as one of the best brands in the Anti Dandruff Shampoo market.

Nestle Milk is available in Tetra Pak which des not require any preservation and it can be stored for a longer time without any refrigeration and boiling which is not the case with other milks.

Ultimately, the company wants it's customers to say "it's different."

References:

1. Toffler, A. (1970), Future Shock, NY Bantam, pg. 272

2. Hayes, R.H. Wheelwright, S.C. & Clark, K.B. (1988) Dynamic Manufacturing: Creating The Learning Organization, NY the free Press, pp 273-95

3. Wheelwright, S.C. & Sasser, W.E. (1989), New Product Development Map, Harvard Business Review May-June 1989.

4.   Philip Kotler, Marketing management.
 


Paresh M. Karia
B.E.(Mech), MMM (Pune Uni.), F.I.V., M.I.E., MIIMM,C.E., PGDBA
Visiting Faculty at Various MBA College of Pune & Rajkot
E-mail:
pkaria89@vsnl.net
 

Source : E-mail March 14, 2005

 

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