MODULE 1

Introduction To Product

# Competition and Product Strategy:

Competition is the process by which the ‘invisible hand’ of the market seeks to solve the basic economic problem of
maximizing satisfaction from consumption of scarce resources.
Firms create competitive advantage by perceiving or discovering new and better ways to compete in an industry
and bringing them to market, which is ultimately an act of innovation. Innovation is here defined broadly, to include
both improvements in technology and better methods of doing things. It can be manifested in product changes,
process changes, new approaches to marketing, new forms of distribution, and new conceptions of scope.

# Marketing and Competitive Success:

 Factors influencing competitive success:

Environmental change: Every advance in computer hardware and software greatly increases our ability to
innovate in other areas, especially in manufacturing industry on which we depend for physical products and
the greater part of our service infrastructure – buildings, transport, communication. Indeed, the impact of
the microelectronics revolution has prompted the view that we are moving or have moved from an industrial
era into an information era in which the following trends may be discerned:
Standardization  Customization
Centralization  Decentralization
Dependence  Self-help
Transportation  Communication
Autocracy  Participation
Hierarchy  Network
Information Scarcity  Information Overload
 Nature of competition and the basic forces which shape it:

In this model there are 5 basic forces that govern competition in an industry – the threat of new entrants,
the threat of substitution, the bargaining power of suppliers, the bargaining power of customers, and rivalry
between current competitors – and depicts their interactions.

(A) The threat of new entrants: -

Freedom of entry to an industry is widely regarded as a key indicator of an industry's competitiveness
such that, in the case of a monopoly, by definition no other firm can enter, while in the case of 'perfect
competition' there are no barriers to entry. From the firm's viewpoint the greater the barriers to entry
the less the threat from new competitors and the more secure its own position.
Seven major barriers to entry are proposed by Porter:
1. Economies of scale.
2. Product differentiation.
3. Capital requirements.
4. Switching Costs.
5. Access to distribution channels.
6. Cost disadvantages independent of scale.
7. Government Policy.
Simplistically, the reason why this should be so is that if one owns a product which is perceived as
differentiated by users then one has a monopoly and so is not exposed to com- petition for as long as one
can maintain this position of the perceived difference.

(B) Threat of Substitution: -

Identifying substitute products is a matter of searching for other products that can perform the same
function as the product of the industry, a point which underlines our assertion that if your product is
sufficiently differentiated to be perceived as unique by a sufficient number of users to comprise an
economically viable market then the threat of competition is latent rather than active. Given such a
position the danger lies in complacency, for change is inevitable, if only because the act of consumption
will change the consumers and so make them susceptible to improved products.
(C) The bargaining power of Suppliers: -
supplier group is powerful if the following apply:

 It is dominated by a few companies and is more concentrated than the industry it sells to.
 It is not obliged to contend with other substitute products for sale to the industry.
 The industry is not an important customer of the supplier group.
 The supplier's product is an important input to the buyer's business.
 The supplier group's products are differentiated or it has built up switching costs.
 The supplier group poses a credible threat of forward integration.

Porter also makes the important point that 'labour must be recognized as a supplier as well, and one that
exerts great power in many industries’.

(D) The bargaining power of Customers: -

Many of the factors which apply here are corollaries of those cited as applying to the power of suppliers.
Eight specific conditions are proposed by Porter where a buying group will exercise power:

• The buyer group is concentrated or purchases large volumes relative to seller sales, e.g. the multiple
grocery chains like Wal-Mart, Tesco or ASDA.

• The products it purchases from the industry represent a significant fraction of the buyer's costs or
purchases.

• The products it purchases from the industry are standard or undifferentiated, e.g. basic chemicals,
steel, aluminium, etc.

• It faces few switching costs.

• It earns low profits, i.e. it will be active in seeking cost reductions in bought-in supplies.

• Buyers pose a credible threat of backward integration.

• The industry's product is unimportant to the quality of the buyers' products or services, e.g. most
packaging materials.

• The buyer has full information.

(E) Rivalry between Current Competitors: -

‘Jockeying for position' is the phrase which Porter uses to describe the tactical moves employed by firms
to seek an advantage over their competitors. Clearly the greater the degree of skirmishing between the
rivals the more active and volatile is the competitive state. The intensity of this rivalry is a function of
numerous factors, of which Porter distinguishes eight:
1. Numerous or equally balanced competitors (a basic condition for a state of 'perfect' competition).
2. Slow industry growth, e.g. retail food sales.
3. High fixed or storage costs. On this point Porter makes the important observation that 'The significant
characteristic of costs is fixed costs relative to value added [emphasis ours), and not fixed costs as a
proportion of total costs'.
4. Lack of differentiation or switching costs.
5. Capacity augmented in large increments, e.g. steel, shipbuilding.
6. Diverse competitors - particularly international rivals.
7. High strategic stakes.
8. High exit barriers, e.g. specialized assets with low liquidation values, redundancy costs, social
implications, etc.
Porter comments:
When exit barriers are high, excess capacity does not leave the industry, and companies that lose the competitive
battle do not give up. Rather, they grimly hang on and, because of their weakness, have to resort to extreme tactics.
The profitability of the entire industry can be persistently low as a result, of the world automobile and steel
industries.
From this brief summary of the forces which influence competition, it is clear that differentiation is a major source of
competitive advantage. Indeed, for the vast majority of all firms in all industries it is the only basis for survival in the
long run - a point to which we will return later. Before doing so, however, it will be helpful to summarize the basic
alternative strategies open to the firm.

# Product Strategy and Management:

Product diversification is currently the centre of widespread executive interest as a means of market adjustment.
Product development and innovation have always been major facets of competitive rivalry, but the present dynamic
quality of the economy is particularly characterized by an expanding frontier of new products, acquisitions, and
mergers.
Why product strategy and management?
Ans- There are 6 major reasons of product diversification and management which are as follows:
(a) Survival
(b) Stability
(c) Productive utilization of resources
(d) Adaptation to changing customer needs
(e) Growth
(f) Miscellaneous

# Product in Theory and in Practice:

The product is the object of the exchange process, the thing which the producer or supplier offers to a potential
customer in exchange for something else which the supplier perceives as of equivalent or greater value.
Conventionally, this ‘something else’ is money or a title to money which is freely exchangeable as a known and
understood store of value.
 Levels of Product:

1. Core Benefit: - At the base level of utility, the you’re providing with the product, forms the core product or
the core service. The core product of a book is information, it is not the book itself.
The core benefit is the basic need or want that the customer satisfies when they buy the product. For
example, a hotel provides a bed to sleep in when a person is away from home.
 2. Basic Product: - The basic product is a basic version of the product made up of only those features necessary
for it to function. In this example, a hotel would provide not only a bed, but a few additional items such as
sheets, towels and a bathroom.

3. Expected Product: - The expected product includes additional features that the customer might expect. In
the hotel example, the sheets, towels and bathroom would be clean.

4. Augmented Product: - The augmented product refers to any product variations or extra features that might
help differentiate the product from its competitors and make the brand a clearer choice amongst the
competition. This could be additional amenities such as a helpful concierge service or tourist guides available
to hotel guests.

5. Potential Product: - The potential product includes all augmentations and improvements the product might
experience in the future. This means that to continue to surprise and delight customers the product must be
constantly improved. In the hotel example, this could mean gifts, chocolates, or luxury bath products that
will make the customer happy and choose that product over others in the future.

 Product Classification:
Products are classified into 3 categories: Convenience goods, Shopping goods and specialty goods.

(A) Convenience Goods: - Those consumer goods which the customer purchases frequently, immediately,
and with the minimum of effort, e.g. chocolate, pens, shoe repairs.

(B) Shopping goods: Those consumer goods which the customer in the process of selection and purchase
characteristically compares on such bases as suitability, quality, price and style, e.g. cosmetics, TVs, PCs,
hairstyle.

(C) Speciality goods: Those consumer goods on which a significant group of buyers are habitually willing to
make a special purchasing effort, e.g. house, car, holiday.

 Classifying New Products:

There are 6 kinds of new products identifies from by producer’s perspective:
1. New to the world
2. New product lines
3. Additions to existing product lines
4. Improvements and revisions to existing products
5. Repositioning
6. Cost Reductions

# Product Life Cycle:

A product life cycle is the length of time from a product first being introduced to consumers until it is removed from
the market.
(A) Gestation (New Product Development): - Technological change and increased competition have led to firms
introducing new products to gain a competitive edge. However, many survive short periods, reducing the
average product life cycle. This affects marketing management by increasing the 'Time to Market' issue and
requiring first-time product development through Total Quantity Management.
There is need to accelerate the actual time taken to develop the new product – the so called ‘Time to
Market’ issue.

(B) Introduction (Launch): - As the change is inevitable on the grounds that consumers will continuously search
for new and better ways of satisfying their needs. In turn, this prompts producers to innovate and introduce
new products to the marketplace in order to secure their survival and growth. Promotion and Advertisement
(C) Growth: - The growth phase of a new product marks its successful survival of the trials and tribulations of
infancy and promises of probability. The growth period is one of particular dynamism because it offers the
opportunity for new entrants to take on the established suppliers and win market share. Growing demand,
an increase in production and expansion in its availability.

(D) Maturity: - Maturity occurs when a new product successfully replaces a substitute, and it is most profitable
stage, leading to suppliers switching to it or quitting the market. The product's physical development ceases,
and market segmentation becomes difficult. Suppliers must focus on other differentiation methods to build
and retain market share. In this stage, professional marketers are heavily involved in developing an effective
marketing mix. Competition intensifies as growth slows down, and non-price competition dominates through
promotion, distribution, and service.

(E) Saturation: - Saturation is the advanced stage of market maturity, with three or four major players serving
the mass market and a constellation of small firms meeting the specialist needs of the minority. The 80/20 or
Pareto principle typically applies, with a small number of large firms accounting for 80% of sales and a large
number of small firms accounting for the remaining 20%. Competition intensifies in the mass market, with
profitability doubled for every 15% increase in market share. Major firms avoid direct price competition,
while niche players cater to price-conscious buyers or those with special needs.

(F) Decline: - In this the product sales begin to drop due to market saturation. There are two options available,
either you resist totally the change with the risk of extinction, or you consider voluntary elimination.

(G) Elimination: - In this stage the decision of discontinuing the product has been taken.
# Product Portfolio:
A product portfolio is a collection of products and services that a company offers to its customers. It can include a
variety of products at different stages of their lifecycle, and can be organized into categories. A company can use
product portfolio management (PPM) frameworks to guide their strategic decision-making. These frameworks can
help companies evaluate and manage their portfolios, allocate resources, and make strategic decisions.
A company's product portfolio should be balanced between products with different growth rates and market
shares. For example, high growth products require cash to grow, while low growth products should generate excess
cash.
 BCG Growth Share Matrix:

 Question marks: Products with high market growth but a low market share.
These are the products that have been introduced to the market and are
perceived to have higher growth potential. But, it has yet to perform successfully
and has only a low market share.
 Stars: Products with high market growth and a high market share. There are the
successful products with higher market share and high market growth.
 Dogs: Products with low market growth and a low market share. These are
products in decline phase. There is little or no market growth and the product’s
low share means that it lacks the cost advantage enjoyed by cash cows.
 Cash cows: Products with low market growth but a high market share. These
products are the established players in a mature market. It has survived the
shake-out and is now benefiting from experience effects in a stable and not
particularly aggressive market.
 MODULE 2
New Product Development
# New Product Development Process:
When a company develops a new product, it cannot just hope that the product will be a success in the market. It is
essential for the company to understand its customers, markets, and competitors before developing a product to
deliver superior value to customers. For this, the company must carry out a strong new product development
process.

(A) Company Objective: - Setting a clear strategy for new product development, on the other hand, not only
provides guidelines for resource allocation, but also sets up the key criteria against which all projects can be
managed through to the market launch.

(B) Exploration: - This includes Idea generation and involves brainstorming new product ideas or strategies to
innovate existing ones. Companies use customers, distributors, suppliers, and competitors to generate ideas.
SWOT analysis helps identify strengths, weaknesses, opportunities, and threats. The goal is to generate
feasible and valuable ideas that deliver value to consumers, such as high-quality photography for
smartphones. (Market research, brainstorming, explorations of ideas, surveys, discussions, etc.)

(C) Screening: - Idea screening is the second stage of a company's innovation process, where ideas are evaluated
for success based on factors like consumer benefits, product innovations, technical viability, and marketing
feasibility. This stage is best performed within the company, with experts from various teams assisting in
resource assessment and technology need assessment. (Sorting and filtering of ideas)

(D) Business Analysis: - It is important to assess the worth of the product from a business point of view. An
assessment of the sales projections, estimated expenses, and anticipated profits are included in the business
analysis. And, If, they meet the goals of the company, the product can proceed to the product development
stage. For instance, a food company would assess the profitability of a new snack by looking at the expenses
associated with ingredient sourcing, production, packaging, and distribution. (Analysis based of CVP (cost,
volume and profit), discussion of idea in terms of finance or no numerical basis, fund calculation.)

(E) Development: - Product Development involves the R&D department converting a product concept into a
physical product, requiring significant investment. The goal is to design a prototype that meets customer
needs, is produced quickly, and is within budget. This stage can take time and can be done independently or
outsourced. For example, a tech business might create test versions of a smartwatch. (Final product decision
taken in this stage, creating samples, prototype of the product, creation of product, etc.)
 (F) Testing: - Testing is the process of evaluating a product and marketing program in real market settings before
launching it. It allows organizations to test targeting, positioning, distribution, advertising, branding, pricing,
packaging, and budget levels. The cost of testing can be high, and the level of testing depends on the
product's cost, risk, and management confidence. For example, a cosmetics company may conduct extensive
testing to gauge consumer reactions and sales. (Performance test, decide duration of testing, durability test,
audience, loyal customers and employees)

(G) Commercialization: - At the final stage, companies are now prepared to launch the new product onto the
market. For a successful launch, a company must ensure that the product, marketing, sales, and support
teams are well-placed and should keep good track of its performance. Companies must frequently monitor
and evaluate the success of the product launch and make modifications if it fails to accomplish the expected
goals. For instance, a software provider might monitor sales, client feedback, and user satisfaction polls to
assess the effectiveness of a recently introduced productivity tool. (After all the process is done and all the
work is done the launch is done it means our product is available to success.)

If you follow all the process carefully there are high chances that the product will be successful.

# Factors Affecting Success and Failure of New Product Development:

Q. Why the process and people involved are crucial?

Ans: (1) The need for interdisciplinary inputs: In order to combine technical & marketing expertise, a number of
company functions have to be involved: - R&D, manufacturing, engineering, marketing & sales, etc. As the
development of a new product may be the only purpose for which these people meet professionally, it is important
that the NPD process adopted ensures that they work well and effectively together.
(2) The need to develop product advantage: Technical and marketing information, which are building blocks of NPD,
have to be both accurate and timely, and must be constantly reworked in the light of changing circumstances during
the course of the development to ensure that the product under development does have competitive advantage.
Therefore, the people must deliver the appropriate expert information to inform the process.
(3) The need for speed in the process: The NPD process has to be managed in such a way as to be quick enough to
capitalize on the new product opportunity, before competitors do. The extent to which people work together
enhances the speed of the process.
Q. How as new product strategy is developed?
Ans: A new product strategy is developed using Product Innovation Charter (PIC). It consists of the guidelines for
New Product Development.
It consists of: -
(1) The target business arenas (New product business definition, nature of new technologies, type of new
market customers)
(2) Objectives set for the product development project (including profit and/or growth objectives, desired
competitive or market position, and non-financial objectives such as establishing a foothold in a new market)
(3) The additional product advantage which might be attained through the level of product newness and/or the
timing of the new product launch.
(4) The characteristics of the market for which the new product is being developed and a view of the target
market.

# Product Systems and Mixes:

A product system is a group of diverse but related items that functions in a compatible manner. For example: Car
accessories & Car speakers.
A product mix (also called a product assortment) is the set of all products & items a particular seller offers for sale.

Product Width: It indicates the number of product lines that a firm has. For example: Product lines of Kellogg
include- Cereals, Cookies, Pastries, other breakfast snacks, organic goods. Product lines of BMW include- Cars, SUVs,
Bikes, Buses. Colgate primarily makes toothpastes and toothbrushes.
Product Length: It indicates the total number of products that a firm has across all product lines (across its product
mix).
Product Depth: It indicates the number of variations that exists for a product (based on distinguishing characteristic
such as colour, flavour, size, and more). For example, if Colgate sells three toothpaste flavours in three sizes, the
depth of that that particular line will be nine.
Product Consistency: It indicates how closely the product lines are related, considering production and distribution
of the products. If the consistency of the product mix is high, it is likely to have similar requirements for production
and can also be sold in similar ways.

# New Product Strategy:

A new product strategy, also known as a product development strategy, is a high-level plan that outlines how to
develop and market a new product. It's a critical foundation that connects user needs with organizational goals. A
product strategy should be flexible enough to adapt to changing market conditions and user needs.
 The components of new product strategy: Technologies and Markets:
In making choices about which technologies and markets are implicated by product development, it is the
level of newness which essentially forms the decision to be made on each dimension. New product strategies
may be focused on existing markets, new markets, existing technologies and new technologies, or varying
degrees of newness withing these two dimensions.
1. Technological Newness:
Invention and innovation are the two basic and major concepts of technology. An invention is a technical
phenomenon involving the discovery of some new principle; unlike an innovation which is an economic
phenomenon involving the commercial use of new products or processes. It follows that, for an invention
to become innovation, it must have some market value, i.e. the value that someone is willing to pay for.
The conceptual difference between invention and innovation is that “An Invention is merely one element,
albeit an essential one, in the realization of an innovation.”
An invention or technological change which may be major in its host industry may lead to major or minor
innovations in other unrelated industries. Similarly, minor technological changes in one industry equally
change the rules of engagement in another.
The key roles for managing technology are technological forecasting and R&D.
(a) Technological Forecasting: The methods by which the techniques of technology forecasting seek to
achieve their objectives are often based on the extrapolation of past or present trends.
The difficulties in technology forecasting relate to:
 The difficulty in predicting a breakthrough.
 The time lag between invention and innovation.
 The interrelationships among technologies which activate development.
 The uncertainties regarding the diffusion of new technologies.

Suggested here are 3 core questions for technology scanning:

 What are the technologies used by our competitor?
 What technologies used in other business could be transferred to our business?
 What are the innovations likely to have applications in the business we operate in?

(b) Managing R&D: The way in which a firm manages its research and development touches and is
touched by a myriad of process and structures: its strategic planning, organizational structure,
resource allocation and development of human resources to mention a few. The management of R&D
also impinges upon a company’s relationship with numerous external forces: Suppliers, competitors,
customers, govt. bodies and universities.
It is important the way in which a firm manages its R&D will have a serious impact on its competitive
advantage and positioning.
Outlined below are 7 directions which the technology strategy might take:
 Offensive: High risk, high pay-off, develop entirely new technology.
 Defensive: develop low-cost base to respond to competitor innovation.
 Licence: buy-in technological know-how.
 Intersection: seek the weak spot in competitors’ armoury.
 Create a market: increase the awareness of a new way to satisfy a need or want.
 Maverick: capitalize on competitors’ committed resources.
 Acquisition: buy companies, their technologies or their technologists.

2. Market Newness: W.R.T newness market can be viewed in 2 ways: in relation to technologies and needs,
and in relation to the firm. Although the first of these may sound similar in direction to the preceding
paragraphs, it is not. It is itself linked to one of the fundamental principles of marketing, that companies
should not manufacture products (a bundle of technologies) but satisfy needs.
This idea is based on the idea that although particular technology bundles may evolve, the needs they
meet stay the same. By adopting this viewpoint, we can see technologies as potential new means of
meeting needs. A technology must meet needs either more efficiently than its predecessor or just as
efficiently but at a lower cost in order to be adopted. This idea is crucial because it enables businesses to
evaluate the potential results of different R&D initiatives.
In other words, does the technology's ability to meet needs lead to the creation of a "new" market?
Consider the microwave oven, a relatively "new market" in consumer durables. Was this a newly
established market? Alternatively, it was the necessity, or more precisely, a component of the necessity
(speed). Another point to make regarding the novelty of markets is that when a new technology develops
a "new market" by more efficiently or affordably meeting a need, the initial growth rates start to rise,
which in turn causes the market to adopt the new technology more widely.
 The categorization of new product development, which serves as the foundation for new product
strategies discussed later in this chapter, includes the problem of new market growth. The degree of
experience a firm has with a specific market is referred to as market newness in relation to the firm.
Many products are used in a variety of market sectors, some of which a company may be familiar with.
This idea is based on the idea that although particular technology bundles may evolve, the needs they
meet stay the same.
By adopting this viewpoint, we can see technologies as potential new means of meeting needs. A
technology must meet needs either more efficiently than its predecessor or just as efficiently but at a
lower cost in order to be adopted. This idea is crucial because it enables businesses to evaluate the
potential results of different R&D initiatives.
In other words, does the technology's ability to meet needs lead to the creation of a "new" market?
Consider the microwave oven, a relatively "new market" in consumer durables. Was this a newly
established market? Alternatively, it was the necessity, or more precisely, a component of the necessity
(speed).

Product Management
# Managing Growth:
The speed with which a new product penetrates a market will be depended very much upon the following factors:
(A) Relative advantage
(B) Compatibility
(C) Complexity
(D) Divisibility
(E) Complexity (lack of)
The more highly the new product scores on these attributes, the more quickly it is likely to be adopted, with the
obvious thing that if it is too similar to the existing product means of satisfying a need, users may not be bothered to
switch.
Let’s understand each of these factors in a little detail:
(A) Relative advantage: It seeks to measure the economic benefit conferred upon or available to the adopter of
an innovation adjust to take cognizance of the adopter’s present situation.
For example: If a manufacture has brought out 3 models of a machine, the 1 st with a rate output of 1000
units / hr, the 2nd with 1200 units/hr and 3rd with 1500 units/hr, then the introduction of model 3 offers a
50% improvement to owners of model 1 but only a 25% to owners of model 2. Clearly, the absolute
performance is the same, but a 25% improvement may not offer a sufficient relative advantage for model 2
owner to trade in or scrap his machine in favor of new one, whereas a 50% advantage is sufficient to owner 1
to do so.

(B) Compatibility: The more compatible a new product is with the existing production system or way of doing
things, the more likely it is to be readily accepted. Of course, beyond a certain point the new product may so
resemble the existing product it seeks to replace that is insufficiently distinguishable to prompt users to
change.

(C) Complexity: It is defined as the degree of difficulty associated with full understanding of the application of an
innovation, does not automatically increase novelty, this is often the case. It certainly is true that the less
compatible an innovation is with the existing way of doing things, the more complex it is likely to seem to be.

(D) Divisibility: It is a measure of the extent to which it is possible to try an innovation before coming to a final
adoption/rejection decision. It can have a significant influence upon attitudes towards a new product. Where
 there is a high degree of uncertainty about an innovation, and trail is possible only by firms or individuals for
whom the economic risks are small, most potential users will prefer to wait and see. In other words, for them
trial is vicarious and based upon the reaction of the early adopters. Two points are worth noting in this
content.

(E) Communicability: It is heavily influenced by the preceding 4 factors, for it reflects the degree of difficulty
associated with communicating the benefits of an innovation to prospective users, which, in turn, is a
function of its relative advantage, its compatibility, complexity and divisibility. Communication is a vital
activity throughout the new product purchase decision process, with impersonal or media communications
being most important in creating initial, both impersonal and personal sources influencing interest, personal
sources becoming dominant as the buyer moves towards a decision, and impersonal sources assuming the
primary role of reassurance after the decision has been made.

 Topology of Innovation:
Eric Von Hippel of MIT offers a useful typology of innovation when he suggests 3 broad categories:
(A) Known need
(B) Customer active or need pull
(C) Supplier active or technology push
Let’s understand these points in more detail:
(A) Known need: Known need innovations are instantly recognizable as ‘just what I’ve always wanted’.
Undoubtedly, it’s very rapid market acceptance also owed much to careful pre-identification of the best
target markets and imaginative marketing, but, fundamentally, its success may be ascribed to the best advice
of all to an innovator - build a better product at an equivalent price, or an equivalent product at a lower
price.
(B) Need Pull: This innovation also encounters relatively little resistance for, by definition, such innovations
are the direct result of an approach by a user to a prospective supplier and are the direct result of an
approach by a user to a prospective supplier and are the outcome of joint development work. (In this
innovation we attract the customer through various techniques like offers, sale etc., here we pull the
customer towards the product.)
(C) Technology Push: This is the category where most difficulties are encountered, for in this case prospective
customers have evinced no open or explicit interest in a new product. Such an approach is usually
characterized as ‘production oriented’ and confirms with the stereotype of the lone inventor single-mindedly
pursuing his goal obvious of the world outside. (In this innovation we push our product towards the
customer for ex. We ask the retailers and shop owners to put our product in the front and give the
customers our product, so here we push our product to the customers.)

# Managing the Mature:

"Managing a mature product" refers to the strategies a company employs when a product reaches its peak sales
stage in the product life cycle, where the focus shifts from rapid growth to maintaining market share by optimizing
existing features, exploring subtle innovations, and potentially expanding into new market segments to prolong its
lifespan and profitability.
There are two basic strategies appropriate to the management of mature products:
(1) Offensive Strategy
(2) Defensive Strategy
Businesses and companies use offensive strategies to earn a competitive advantage by providing some counter
offer.
On the other hand, the purpose of defensive strategies is to retain and protect the competitive advantage in the
market i.e. from the competitors. It means that you protect your market share to keep your customers loyalty and
profits stable.
Companies pursuing offensive strategies directly target competitors from which they want to capture market share.
In contrast, defensive strategies are used to discourage or turn back an offensive strategy on the part of the
competitor.
Let’s see these strategies in detail:
(A) Offensive Strategies:
An offensive strategy is a type of corporate strategy that consists of actively trying to pursue changes within
the industry. Companies that go on the offensive generally invest heavily in research and development (R&D)
and technology in an effort to stay ahead of the competition. Offensive strategies directly target competitors
from which they want to capture market share. Some of the offensive strategies are as follows:

(1) Frontal Attack: - (Attack on competitors’ strength) A frontal attack is attacking a competitor ahead on by
producing similar products with similar quality and price; it is highly risky unless the attacker has a clear
advantage. The most prominent example is war between Pepsi & Coca Cola. Both are cash rich. Since
ages they use frontal attack strategy against each other. Both are market leaders in beverage market.
When Pepsi introduced diet Pepsi, Coke introduced diet Coke.

(2) Flank Attack: - (Attack on competitors’ weakness) The Flank attack is the marketing strategy adopted by
the challenger firm and is intended to attack the weak points or blind spots of the competitor, especially
when competitor enjoys leadership position in market. LG outflanked the other coloured TV producers in
India, by launching a rural-specific colour TV “Sampoorna”.

(3) Encirclement Attack: - (Attack on both strength & weakness) This form of market challenger strategy is
used when the competitor attacks another on the basis of strengths as well as weaknesses and does not
leave any stone unturned to overthrow the competition. The current e-commerce scenario is the best
example of the encirclement attack where the E-commerce companies are ready to go negative in their
margins to beat a competitor on turnover basis. They want to come on top and gain maximum customers
by hook or crook.

(4) Bypass Attack: - (Create a new product line) This type of strategy is found in a firm which has the brains to
innovate. And when it innovates, it bypasses the complete competition and creates a segment of its own.
Off course, other competitors soon follow. But the attack is very useful in the long term to create brand
reputation and gain customers.

(B) Defensive Strategies:

Defensive strategy is defined as a marketing tool that helps companies to retain valuable customers that can
be taken away by competitors. When rivalry exists, each company must protect its brand, growth
expectations, and profitability to maintain a competitive advantage and adequate reputation among other
brands. To reduce the risk of financial loss, firms strive to take their competition away from the industry.
Following are some regularly used defensive strategies by firms:

(1) Retrenchment: - (Getting product back from the market) It consists of the reduction of the expenses by
employees’ layoffs to increase profitability. This forces employees to manufacture the company’s
products with limited resources or with cheaper raw material. For example, Starbucks had closed down
600 units in the United States and 61 in Australia

(2) Divest: - (Start selling your assets) When the company sells some of its assets to accomplish a certain
objective, such as higher returns or reduces debts. Usually, companies that implement this strategy want
to invest that capital to create higher future revenue. This strategy has helped some organizations to get
more focused on their core business and improve their performance in the market. It is common that
enterprises sell their poor assets or divisions.
(3) Liquidation: - (Liquidate the company and stop the production, bankruptcy) Liquidation is the hardest
strategy to perform by a company because it means that it went into bankruptcy. This can be caused
because the operation and administration of the firm was not appropriate or the managers were not
trained enough to control the activities of the firm. In this case, the unique solution is to sell all the
company’s assets in small parts to shareholders, stakeholders or other companies that are economically
solvent. Although this is a tough decision, it is better to stop the operational chaos instead of continuing
losing more money.