Product Strategy and

New Product Development

Prof.Krairit Boonyakiat
Product Strategy vs. Business
Strategy
• Business Strategy helps decide which markets
to be in :
• Predicts industry structure
• Predicts profitability of the market
• Well studied by academics
• Good theoretical frameworks available
• Product Strategy is your plan for winning your
market :
• Find product and product portfolio level competitive
advantages
• Anticipate how competitors will respond
• Not well studied by academics
Components of Product
Strategy
• How will our competitors respond?
• What prevent competitors from imitating us?
• Who are the target customers?
• How will we meet their needs better than the
alternatives?
• What are they actually trying to accomplish?
• How are they underserved today?
• What are our unit economics?
Porter’s Generic Strategies: Cost Leadership,
Differentiation and Focus
Differentiation:
Broad Scope vs Niche
• How much of the’ market to go after is one of the
most fundamental product strategy decisions
• Whole Market Example: Salesforce
• There many vertically focused CRM solutions that compete
effectively with Salesforce in a market niche
• Vertical focus doesn’t strategically make sense for Salesforce

• The temptation is to go broader because the TAM

(total addressable market) is bigger
• The broader the market you try serve, the less well
you will serve any particular segment
Customer Segmentation
6

• A segment is a group of customers who share

common needs
• Many ways segment
• B2B: Business Size, Vertical, Geography
• B2C: Demographics, Geography
• Goal is segments that have meaningful differences in
needs
• For product strategy, we are trying to figure out
a which segments we can create a sustainable
competitive advantage with
• In some markets, you’ll need a portfolio of multiple
products to serve multiple segments
Jobs to be Done
• What “job” does your customer hire your
product to do?
• Often not what the vendor thinks they are
selling
• First approximation: people don’t buy drills,
they buy holes in their walls
• Contextual factors are important and products
often have multiple jobs
• Why are “job” important for strategy?
• Solving the customer’s job better than the
competition is how to create competitive
advantage
 Think About Your
Entire Offering
• Product Managers often focus “the
product” vs. the entire offering
• Customers think about the entire
offering include buying experience,
post-sales support
• The entire offering addresses the
customer’s job, not just the “product”
Jobs To Be Done & Product Strategy
• Solving the customer’s job is often organizationally
difficult
• The customer’s job almost always crosses organizational
boundaries
• Solving the whole job well often requires rethinking your
organization and your processes
• Your organizational structure and internal processes
are much hard to imitate than product features
• The most difficult problems to solve are the ones that lie
at organizational boundaries
• Your competitors all have product development
organizations are setup to crank out new features
Good Product Strategy Examples
• Product Strategy: Cutting edge electric car at almost a
mass market price
• Price: $45+, $399/month lease – aggressive for an high-
range electric car
• Key Product Attributes: Electric Drive, High Range,
Self-Driving, Luxury Features
• Customer Segmentation: Higher income, urban
• Core Customer Needs, Transportation, Style
• Competitive Response: Automakers are all building
electric vehicles, luxury brands are at higher price Tesla Model 3
points than Tesla
• Results: 145k sold in 2018
• However, Tesla not profitable, This is good
example of why unit economics matter
New Product
• A product is anything that can be offered to a market to
satisfy needs and wants.
• A New product is any product which is perceived by the
customer as being new.
New product categories…..
1: New to the world.
2: New to the product lines.
3. Additions to the existing product line.
4. Improvements & revisions of existing products.
5. Repositioning.
6. Cost reductions.
Factors That Limit New Product
Development
• Shortage of ideas
• Fragmented markets
• Social and governmental constraints
• Cost of development
• Capital shortages
• Faster required development time
• Shorter product life cycles
New Product Development
Process
• New Product Development is the development of original
product, product improvements, product modifications, and
new brands through the firm’s own R & D efforts. This
process consist of following steps.
• 1. Idea Generation.
• 2. Idea Screening.
• 3. Concept Development & Testing.
• 4. Marketing Strategy Development.
• 5. Business Analysis.
• 6. Product Development.
• 7. Market Testing.
• 8. Commercialization.
 1. Idea Generation
• Idea generation is continuous, systematic
search for new product opportunities.
• Idea form using creativity generating
techniques and generated through firm’s
Internal Sources & external Sources.
External
Internal - Customers
- Competitors
- R&D
- Supplies
- Employee - Distributors
- Online opinion
 2. Idea Screening
• Filtering the ideas to pick out fast ones & dropping the
poor ones.
• It involves a preliminary elimination process in which a
large number of product ideas are screened in terms
of the organization’s objectives, policies, technical
feasibility, and financial viability.
• Total ideas are categories into three group. They are,
promising ideas, marginal ideas and rejected ideas.
• In screening ideas, the companies normally face 2
serious errors & they must try to avoid these
mistakes.
1. Drop error 2. Go error
3. Concept Development &
Testing
• Here, the Product Idea is converted into product concept.
• Product Ideas means Possible product that company may
offer to the market.
• A product concept is a detailed version of the idea stated
in meaningful consumer terms
• When developing product concept following criteria should
be consider.
– Who will use the product.
– What primary benefit should this product provide.
– When will this product be consumed.
4. Marketing Strategy Development
• After concept testing, for concepts that
qualify a preliminary marketing strategy is
created to introduce new product into market.
5.Business Analysis
• This stage will decide whether from
financial as well as marketing point of view,
the project is beneficial or not.
In Business Analysis
- Estimate likely setting price based upon
competition and customer feedback.
- Estimate sales volume based upon size
of market.
- Estimate profitability and break-even point.
• If above are match with the company’s
objectives, then the new product concept
moves to product development stage.
6. Product Development
• Up to now, the product has existed only as a
word description, a drawing.
• The company will now determine whether
the product idea can translate into a
technically and commercially feasible
product.

Produce a Test the Conduct focus Make

Physical prototype Product Group customer adjustment
7. Market Testing
• Now the product is ready to be branded with a
name, logo, and packaging and go into a preliminary
market testing.
• Market Testing involves placing a product for sale in
one or more selected areas and observing its actual
performance under the proposed marketing plan.
• Methods for market testing:
1. Sales wave research.
2. Simulated test marketing.
3. Controlled testing marketing.
4. Test market.
 8. Commercialization
• After successful market testing, new product comes
to commercialization stage.
• During this stage, production of new product on a
commercial basis is rapidly built up and implementing
a total marketing plan.
• For formally launching a New Product, the following
decisions to be taken:
a) When to launch (Timing)
b) Where to launch (Geographic Strategy)
c) To Whom (Target-Market Prospects)
d) How to launch (Introductory Market Strategy)
Generalized Product Life Cycle