Product strategy – positioning and differentiation
In order for your product or service to be successful against the competition in the marketplace and attract customers, it is important to make sure your product or service stands out. You should consider what makes your product or service different from others that exist and how this can be displayed through an identity or marketing campaign. Read more about how to understand your competitors.
Needs-based product marketing
You can use needs-based product marketing to improve on your existing products. To help position your product or service, you should focus on your existing products or services, even if you have limited cash, skills or technological resources. To do this, you should:
define your target market
identify the main attributes of your product or service
collect information from customers and potential customers about how they perceive the product or service – eg how popular it is, and how valuable, useful or cost-effective it is, especially compared to similar products or services
Read more about market research and market reports and see understand your customers.
Tailor your product to meet customer demands
You should continually look for ways to adapt and promote your products and services to match your customers’ requirements. Product or service development can focus on features, design and quality and so can the customer service you provide. These will help further your position and differentiate you from your competitors.
By specifically focussing on different customer segments, you can identify ways to develop your product or service to exploit new areas and increase your profitability. For example, by offering holiday insurance to those on sport-based holidays – in addition to your standard holiday insurance schemes – you can create a new market for your service and retain your existing segments.
Product portfolio – product life cycle
Product life cycle management is an essential part of all effective marketing strategies. If you are aware of where your product is in its life cycle, you can market it in a way that will maximise its sales.
Your marketing strategy should be tailored to each of your business’ products or services, but should also take into account what stage your product is at in its life cycle. For example:
mature products or services often suffer from increased competition as similar products and services enter the market
as the market matures for your products or services, prices may drop or stabilise
It is a good idea to have new products or services to introduce as others decline. That way, there’s always one part of your range showing a sales peak. Alternatively, you can make changes to the current product to create a new version. Read more about how to research and develop your business ideas, new products and services.
Effective research into your markets and competitors will also help you manage your product’s lifecycle.
If you’re a smaller business with few resources, you don’t have to necessarily be the first to market. In fact, being second can result in lowered costs and risks. However, rather than concentrating on innovation, you should focus on what makes you different to – and better than – your competitors.
How make your marketing strategy a success
Before looking at new markets, think about how you can get the most out of your existing customers – it’s usually more economical and quicker than finding new customers.
Perhaps you could sell more to your existing customers, or look at better ways to retain key customers.
Focus on the market
Take steps to find your most profitable customers:
Analyse the different needs of different groups of customers.
Focus on a market niche where you can be the best.
Aim to put most of your efforts into the 20 per cent of customers who provide 80 per cent of profits.
Don’t forget the follow-up
Monitoring, evaluation and review are key to success:
Approach a third party for feedback about your strategy – they may be able to spot any gaps or weaknesses that you can’t see.
Put your marketing strategy into effect with a marketing plan that sets out the aims, actions, dates, costs, resources and effective selling programmes.
Measure the effectiveness of what you do and be prepared to change things that aren’t working.
Pitfalls to avoid
Watch out for these common mistakes:
Making assumptions about what customers want.
Ignoring the competition.
Trying to compete on price alone.
Relying on too few customers.
Trying to grow too quickly.
Becoming complacent about what you offer and failing to innovate.
Be sure to follow up all of your marketing and promotional strategies with a marketing plan. This sets out clear objectives and lists the actions you will take to achieve them.