Defining the product strategy and pricing are the most critical activities for every company. These activities include the creation of such a product that meets the needs and desires of specific groups of customers. In order to satisfy customers' needs, it is crucial to identify optimal combination of marketing mix elements. In succeeding that, managers have to find the answer to the questions like: What product's characteristics are relevant for the customers? Is there a need for designing variety of same products? How to differentiate a product? What price the customers are willing to pay for a given product? The answers to these questions are particularly important if we bear in mind that in today's business environment it is necessary to make it attractive to a particular target market, which means to distinguish a product or offering from the similar ones. Product differentiation is the process of distinguishing a product both from the offering of competitors and firm’s own product offering. These differences may lead to competitive advantage if customers perceive the difference and have a preference for the difference. It is therefore necessary to elicit the preferences of customers prior to product differentiation.
In the last few decades, conjoint analysis arises as one of the most widely used techniques for measuring customer preferences for product attributes.
Conjoint analysis is a multivariate technique that can be used to understand how an individual's preferences are developed. Specifically, the technique is used to gain insights into how consumers value various product attributes based on their evaluation of the complete product.
The method has been widely used in several fields of economics as well as in marketing...
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...joint data but also takes into account production costs and possible reactions of competitors. Actually, we upgraded a model proposed in Kuzmanovic and Martic 2012b, in order to obtain better and more realistic results. Namely, to determine the customers' preferences we use a linear additive model of part-worth utilities; than we specify utility function for each of the identified segments. We formulate the product line optimization problem as a nonlinear integer programming problem, employing the Nash equilibrium concept to model competitive reactions. In the proposed model, we assume profit maximizing firms. We tested the performance of our new model and compared it with the performance of the scenario were potential competitive reactions are neglected. Furthermore, we conducted sensitivity analysis and confirmed the model efficiency and applicability in practice.
Peter Dumvoic. & Daniel T.Knowles. (2008). Market Analysis, Marketing Masterclass, Product differentiation for competitive advantage, 8(5-8). Doi:10.1057/palgrave.jmm.5050122.
Nevertheless, it must “defend” its current market share if not increase it, by maintaining premium quality and develop innovative products. The marketing mix strategies will effectively achieve targeted revenue and profitability in the near future.
With this strategy the company wanted to keep a high market share in each segment with a healthy Contribution margin, this with the objective to have the most cumulative profits at the end of the competition. The company executed a Broad Differentiation strategy by offering the best products in every segment along with a focus in accessibility and awareness in order to keep customer survey score in the positives.
Thus new products/line extensions will be based on Allround brand, each one with a unique target market, delivering different value proposition to the respective customer.
Adopting a strategy of differentiation makes firms provide products and services what are distinct in some way valued by customers.
Porter (1997) suggests in order to gain competitive advantages in the changing business environment, it is essential to design a generic strategy for the business: product differentiation or cost leadership. The competitive strategy is determined at round 2, when recognised our rivals held whole product profile which was the product differentiation strategy. To differentiate our strategy from rivals for competitive advantages, Digby designed to imply the cost
Differentiation through marketing strategies, this is a form of innovation driven by the need to create a superior brand (Sadler, 2003).
Depending on the quality and packaging of the product, the company may target the younger generation. The same will dictate that the product is packaged into a diverse range of shapes and sizes, so that the consumers may be in a position to afford the same regardless of their financial constraints. The price strategy therefore opens up the target market since the wide range carters for a bulk of the society. Pricing of products has a place in the perception of the goods created on the minds of the customers and prospective customers.
Predicting Behavior by Attitudes Attitudes can be very complex, a product or service may be composed of many attributes or qualities some of which may be more important than others to certain people. Furthermore, a persons decision to act on his or her attitude is affected by other factors, such as approval by family and friends. For this reason, multiattribute models have been constructed and are extremely popular among marketing research. Many models have been constructed but the most influential model is that of Fishbein 1973. The Fishbein multiattribute model argues that attitudes can predict behaviour.
“Apply the concepts of marginal utility theory, product differentiation, and revenue/profit maximization to some event in your personal, daily lives.” [1]
In the modern world of conducting business, any company that wishes to succeed must differentiate its products or services from others in the industry. Differentiation makes it possible for consumers to point out notable differences between one company’s products as compared to those of competitors. Differentiation helps companies build brand loyalty as the uniqueness keeps customers fixed on a particular product. BMW is one of the most popular automakers in the world today. It definitely uses differentiation as a strategy to beat off competition by building products that are innovative, detailed and incomparable to those of competitors.
The consumer products’ is a universal and developed industry; it is considered highly competitive with an astonishing increasing number of competitors providing distinctive kinds of the identical product while contesting for the prices. The most important aspect in this industry is innovation and the quality of the products that play a main role in the success of the product itself. Moreover, the individual consumer does not have the bargaining power to control the prices of the products in the market, however the retail chains and the supermarkets have the power since the switching cost is low in most of the cases.
When a business aims to be as successful as possible in selling its products and services, it must examine in detail whether or not the products will be attractive and necessary; if the price is optimal; if the product is being distributed in the best locations; and finally, how interest and awareness can be created for the products. In order for a business to target all of these elements at the right people at the right time, it must employ the right type of marketing mix: Product, Price, Place and Promotion.
1. Product mix (or product assortment) is a set of all products and items offered for sale by a company. A product mix consists of multiple product lines and can be characterized by such parameters as width (number of product lines in a product mix), length (total number of items in a product mix), depth (number of variants in the product line), and consistency (closeness of product lines in terms of production, distribution and use) (Kotler & Keller, 2012).
There are many elements affecting to the success of a launching. The basic factor is to develop product that satisfies consumers’ demands and maintain the brand promise. However, consumers are not only looking for the quality of product but also concerning about the price, the promotion and so on.