Product Strategy for High Technology Companies Product Strategy A product strategy is a pivotal function of the company. It resides at the heart of a company’s overall strategy and holds a commanding position. A product strategy is the central function for managing competition (Baker & Michael 22-30). A good product strategy exemplifies the path of success of a company provided the company has the knowledge of its current standings (Mcgrath 1-5). A product like Scottish Fudge belongs to the confectionary industry which includes items like Chocolate, Twinkies, and Wafers among others. Scottish Fudge can be used for various purposes like celebration or as a gifting item.
The brand can be developed by using some strategies that can be illustrated as follows: The company can tie-up with branded candy stores like “sugar sugar”, “blackbird candy Shoppe” or a shop like “Sarah’s pastries & candies” to make their product available on the stores which will in turn amplify the brand value of the product. The company can actively partake in different affairs as sponsors or suppliers of Scottish fudge. The events can be a chat show.
They can go for a strong tagline like “makes a sweet day” which will grab the attention of consumers. The packaging must be colorful as it will add to the visibility of the product. The colors must be charming and attractive. A transparent box with labeling above it can be used for a 500g pack which will add an extra value to the product. Packaging is not obligatory for the 15g product because this product is meant to be served at the Shoppe. The product line of Scottish Fudge must contain diversity, as tastes and wants are different for different individuals.
The product line can be diversified by different types of flavors’ like vanilla, chocolate, strawberry, coffee and an interesting flavor like mixed fruit. And each of the flavors can have 3 types of variants. 15g (this can be used to display in the glass racks of a candy Shoppe) -This variants are targeted to those who just visits the shop without any prior planning. 60g (this product should be packaged)-This variant is targeted for those who will be taking the product along with them for their friends and family. 500g (this product must also be packaged and a dummy pack can be displayed)-This is targeted for those who will use it for celebrating some event. As the wheel starts to roll on it will hold enormous possibilities of global expansion in the future.
The brand holds a good scope of growing in international markets. The next step after the domestic venture would be to step in new international avenues, but all type of analysis should be conducted before entering into a new geographic segment. Pricing Strategy The pricing strategy plays an indispensable role in the acceptance of a product in the market.
Pricing can be stated as the way of influencing the customer to acknowledge the price. (Smith & Smith 8-15). The pricing strategy for Scottish Fudge can be cost plus pricing method. This method takes into account the cost of production and the desired profit margin. The basis for going with the aforesaid strategy is that it represents a fair price by calculating the full cost of production. Another key contributing factor is that, since it’s a new product in the market the demand could not be forecasted precisely, so it will be a risky venture to go with other pricing strategies like skimming or penetration pricing.
As a new player in the market the main objective would be to reach the break-even point. The highest selling candy foodstuffs in US are completely brand focused. It is assumed that the demand of candy products is US is elastic in nature, but that does not mean a young brand like Scottish Fudge will get an elastic demand from the day of its launching.
The elasticity of demand can be shown below with the help of graphs The cost of production of Scottish fudge with cost-plus pricing method can be calculated as follows: Unit Cost= Production Cost / no. of units produced Price= unit Cost + Profit Margin. (Social marketplace, “Cost Plus Pricing”). The ideal pricing for the products can be as follows: Flavors Variants Prices Chocolate, vanilla, strawberry, coffee 15g 60g 500g $1 $3 $25 Mixed Fruit 15g 60g 500g $1.2 $3.5 $27 (Source: Author’s Creation) Since mixed fruit is a premium flavor the cost is slightly on the higher side.
An encouraging factor is that a customer will be ready to pay a few bucks extra for the occasional products. A cost-plus pricing method will be much more appropriate for a new product like Scottish Fudge, as it will aid in achieving simplicity and ethical advantage where an increase in cost price can increase the selling price. It will also help to get more market share in confectionary industry and tap new markets. Distribution Strategy Distribution can be drafted as the way by which a company delivers its goods and services to the customers.
Physical distribution is an integral part of marketing mix and the distribution channels which is chosen also plays a crucial role in making the product available for potential buyers. The distribution channels which should be preferred by the company are appointment of distributors. Each distributor must have a specific assigned territory for carrying out its operation. As the product is a food item maintaining its hygienic features will be important. Other than this they can opt for a different strategy in rural markets, as rural places do not have access of branded candy Shoppes, retailing can be done with the appointment of stockiest.
There can be another unique way of distribution i. e. through the food courts of big shopping arcades like “5th Avenue mall”, “the summit”, or “desert sky mall” which will not only increase revenue and business but also will add to the brand value. The Cost associated with distribution channels includes the cost of logistics, the cost of holding the products which can be done by creating storage houses at distributors point on a 50-50 partnership basis In order to accomplish all these activities the company needs to create a strong logistics department which will be looking after the transportation of products at the right place and right time.
The logistic department needs to work closely with the sales and marketing department for timely delivery of products to the shops and other operating areas. The different challenges which may be faced are: 1. Building and maintaining a strong mutual admiration among the channel members. 2. Timely delivery of product at the right place. 3. One of the biggest distribution challenges is to maintain the product in correct state as it is a food product. 4.
Storage facility has to be of high standard. Promotion Strategy Sales promotion nearly accounts 3/4th of the marketing budget of a company. The purpose behind its high end budget allocation is that, it provides result. The promotional tools which can be undertaken for Scottish Fudge are advertising which includes TV commercials as well as newspaper advertisement and Sponsorships. Television is a strong medium of promotion is USA with its programs having high TRP’s. In Newspaper advertisement if the company not just by giving only advertisement creates an advertisement with discount tag, the interest will increase and can provoke the customers to try the product.
On the other hand a sponsorship can be undertaken of a high T. R.P chat show or some sports like baseball. The reason for going with the aforementioned tools is that the reach of both the medium is quite large and appeals to a mass section as compared to the other existing ones the society. The cost which has to be incurred in both the tools is on the higher side, advertisement and sponsorships both are the higher end of promotion, but there is no getting away from the fact that the return on investment is always much more compared to other tools.
Initially it may seem to be much more investment than needed, but with its mass reach and popularity it will help in the profitability of the product in the long run. The product can be displayed on websites for online selling purposes. Provisions can be made of where a customer makes online payment and gets the product delivered within a stipulated time frame.
But in the 21st century one cannot get away without touching the social media. Yes it’s true that social media do not officially feature in promotional mix but still one cannot refuse its reach and influence. So why not explore the avenue for seeking benefit. Some of the biggest platforms which can be used for promotional aspect are: - Face book Twitter You Tube Badoo Fantage References “Cost Plus Pricing. ” Socialmarketplace. Impact Carbon. , n. d. Web. 4 April. 2012.. Baker, and Baker Michael. Product Strategy and Management.
2nd ed. New Delhi: Pearson Eduction India, 2008. Print. McGrath, Michael. E. Product Strategy for High Technology Companies. New Delhi: McGraw-Hill Professional, 2001. Print. Smith, Tim. J, and Tim Smith. Pricing Strategy. USA: Cengage Learning, 2011. Print.