Setting Product Strategy
At the heart of a great brand is a great product. Product is a key element in the market offering. To achieve market leadership, firms must offer products and services of superior quality that provide unsurpassed customer value
Ford Motor
Company endured some tough times at the beginning of the 21st century. A safety
controversy about its best-selling Ford Explorer and high gas prices that hurt
sales of its trucks and SUVs put the company in deep financial straits. Perhaps
the biggest concern was public perception that Ford products were not high
quality. A new CEO, Alan Mulally, arrived in 2006 determined to set Ford on a different
path. Rejecting government bailouts during the subsequent recession created
some goodwill, but Mulally knew reliable, stylish, and affordable vehicles that
performed well would make or break the company’s fortunes. A redesigned
high-mileage Ford Fusion with innovative Sync hands-free
phone-and-entertainment system and an environmentally friendly hybrid option caught
customers’ attention, as did the hip, urban-looking seven-seat Ford Flex SUV
with a center console mini-refrigerator.
Mulally felt it was critical to use Ford’s vast infrastructure and scale to create vehicles that, with small adjustments, could easily be sold all over the world. The result of extensive global research, the Ford Fiesta hatchback was a striking example of this world-car concept. The rear of the car resembled a popular small sport-utility, its giant headlights were typical of more expensive cars, and dashboard instruments were modeled after a cell phone keypad. The company knew it had a winner when the Fiesta won a uniformly positive response in Chinese, European, and U.S. showrooms. Ford also relied on experiential and social media in marketing. Before its U.S. launch, 150 Fiestas toured the country for test drives and 100 were given to bloggers for six months to allow them to share their experiences. Ford’s product and marketing innovations paid off. While the rest of the U.S. auto industry continued to tank, the Fiesta garnered thousands of preorders and Ford actually turned a profit in the first quarter of 2010.
Product
Characteristics and Classifications
Many people think a product is tangible, but a product is anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.
Product Levels:
The Customer-Value Hierarchy In planning its market offering, the marketer
needs to address five product levels Each level adds more customer value, and
the five constitute a customer-value
hierarchy
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The
fundamental level is the core benefit:
the service or benefit the customer is really buying. A hotel guest is buying
rest and sleep. The purchaser of a drill is buying holes.Marketers must see
themselves as benefit providers.
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At the second
level, the marketer must turn the core benefit into a basic product. Thus a hotel room includes a bed, bathroom,
towels, desk, dresser, and closet
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At the third
level, the marketer prepares an expected
product, a set of attributes and conditions buyers normally expect
when they purchase this product. Hotel guests minimally expect a clean bed,
fresh towels, working lamps, and a relative degree of quiet
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At the fourth
level, the marketer prepares an augmented
product that exceeds customer expectations. In developed countries,
brand positioning and competition take place at this level. In developing and
emerging markets such as India and Brazil, however, competition takes place
mostly at the expected product level.
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At the fifth
level stands the potential product,
which encompasses all the possible augmentations and transformations the
product or offering might undergo in the future. Here is where companies
search for new ways to satisfy customers and distinguish their offering.
