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Having
determined the most efficient and effective distribution
strategy, the next element to consider in moving your
product along to the intended target audience is to
assess the position your product will assume in the
marketplace.
Exclusive
products typically demand the highest prices. But
mass-market products may generate higher total revenues
The
concept of “position” speaks of how the product compares
to other items currently on the market and, thus,
how the consumer perceives the new offering in relation
to other products.
For example, is it cutting edge technology or a simple,
everyday device? Is it an educational product, something
designed purely for recreation or a functional tool
intended to serve a practical application?
Do you want your product to be viewed as a high calibre,
prestige, and quality item or would it be better positioned
as a low-key, value-driven product?
Do you foresee your product becoming included in the
line of a major manufacturer, being handled by a small
concern, or will you be handling production yourself
in your own facility?
Should the distribution be directed toward the broadest
possible network of outlets or is the product better
suited to an exclusive distribution approach designed
to reach only a selective segment of the consuming
public?
The product’s promotional thrust should be in sync
with the positioning strategy. If it’s a high tech,
high quality product, the promotional material should
reflect that image. On the other hand, if it’s a budget
line item, the promotional support should reflect
this, too.
Your
promotional approach should not try to convey an inflated
image of your product. That will only lead to confusion,
disappointment and loss of sales.
For manufacturer prospects, the position should emphasize
the potential value of adding this new concept to
the product line. As we discussed previously, most
manufacturers are alert to new devices that can be
incorporated into the product line without investing
large sums of money and a great amount of time in
the research and design phase.
The end user’s motivation is, of course, based on
different criteria than that which motivates a prospective
manufacturer.
While some products are positioned on similar functional
issues such as cost savings or increased work efficiency,
the positioning strategy for most consumer products
is based on “softer” concepts. These are the less
tangible aspects of products—convenience, comfort,
peace of mind, enhanced self-image, a heightened sense
of well-being etc.-but, nevertheless, are often the
ones that ultimately drive the product’s success in
the market place.
The manufacturing industry continues to seek
opportunities for new product introductions.
As we noted previously, a considerable number of new
products appear on the market each year and this number
has been rising steadily. In 1986, there were just
over 12,000 new consumer packaged products introduced
to the market. By 1996 this figure had risen to approximately
26,000 new products, a rise of more than 100% during
this 11-year time span.
With such steadily increasing demand for new products,
marketers must be attuned to every opportunity to
identify a potential new addition to their product
line.
On average, about one out of every five new products
represent a new brand introduced to the marketplace
for the first time.
The remaining 80% are made up of extensions to an
existing brand or line of products. This relates back
to the product life cycle discussed earlier.
As with the example I’m using in this ebook, with
the VHS video cassette. This would be the last kind
of design change for manufacturers to do in order
to boost sale’s before the end of the VHS cassettes
product life cycle, When DVD will phase out VHS cassettes
as CD’s did to vinyl records.
Introducing a totally new product concept to the marketplace
entails a higher level of effort and more risk than
to simply add a new twist to an existing product line.
This is what drives the well-known “new and improved”
process that is typically associated with products
that are well into the maturity phase of the product
life cycle.
There are, essentially, three conventional paths you
can take from here, each with some more specific options
under that general approach, as you move forward with
the development of your product and its introduction
to the marketplace.
• The first is to assume all responsibility
for the project yourself, either performing the manufacturing
in-house or using a contract manufacturing arrangement.
• The second option is to obtain a cash buy-out,
selling all rights to the concept for one lump sum
payment.
• The third choice, and the most common, is
to enter into a licensing agreement. These can take
a few different forms, depending mainly on the degree
of exclusivity.
In the next chapter, we discuss these options in more
detail.
