Product management and product demand management go hand in hand. Consumer purchasing decisions are driven by specific needs and expectations. Therefore, the knowledge of the foregoing constitutes an integral part of product strategy. Proper management of knowledge about customers is often a key to obtain competitive advantage. Possession and use of customer knowledge for product strategy development are a necessity in this day and age. This necessity can also be attributed to a constant intensification of competitors’ activities as well as ever-growing customer expectations (the product needs to be constantly better, nicer, more tasty, etc.).
Product strategy development
Product management is a complex system which guarantees a comprehensive marketing control over the brand and product assortment.
Product strategy, in turn, is the process of adapting a given product to current and future needs of recipients.
Product strategy development involves therefore such actions as:
- shaping of product assortment structure,
- shaping of product features and functionality,
- selection of product-related actions and their implementation (e.g. production, promotion, sale),
- launching a new product on the market,
- product life-cycle management,
- product withdrawal from the market.
Not only the product
Neither the product nor its strategy exists in a vacuum. All actions related to the product are directly or indirectly associated with other elements of the whole strategy of a given enterprise. Failure to consider various aspects and factors makes the product a mere prototype.
Most commonly, product strategy should be aligned with other elements of marketing-mix, which means that apart from the product itself one should also consider promotion, price and place of purchase. However, as strategic concepts develop within marketing, the product needs to fit also with other aspects.
One of the most important approaches is the so called 4C concept comprising: value for the customer, costs, convenience and communication. In line with that approach, customers do not only consider price or product functionality in their purchasing decisions. What should also be taken into account is the individually determined value that a purchase of a given product will bring for a particular customer.
Building product strategy must include one more important element – adaptation of actions to a relevant product development stage.
In this context what is usually quoted is the product life-cycle theory which distinguishes the following, consecutive stages: (1) introduction, (2) sales growth, (3) maturity, (4) decline. Product life-cycle management should therefore be a solution that gives direction to information flow about the product and related processes. Additionally, it should put relevant information in the right context, depending on the product development stage.
At various stages of business development, an enterprise sets new strategic goals, determines success criteria and new research needs. The same relates to the management of knowledge about customers and consumer research. This is a specific example:
- Sales growth
Isotonic drinks have been available in Poland for a relatively short period. Therefore numerous actions undertaken by companies are aimed at educating customers and identifying new sales markets.
- Market maturity
Such products as beer or mineral water have reached maturity and saturation level in Poland that is comparable to other European markets. In their case one should not expect neither dramatic decreases nor increases in consumption in the upcoming years. Therefore, companies are rather focused on maintaining their position, diversifying their offer and optimizing their processes.
- Sales decline
An example of the product for which the growth curve exhibits a downtrend and in case of which new products serving analogical needs appear on the market are cigarettes. They are currently pushed out of the market by e-cigarettes, other tobacco products and other stimulants. Therefore, actions of product managers operating on this market are focused on retaining the few loyal customers and searching for new product solutions.