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Product and the CUEGIS concepts - Coggle Diagram
Product and the CUEGIS concepts
Globalisation
Provides opportunity for multinational businesses
However, product strategy becomes more challenging when operating on an international basis
When products become popular on an international scale, they are referred to as
global brands
, meaning that the same product is sold using the same marketing strategies in overseas markets
E.g. Coca-Cola, Disney, McDonald's
There is consistency in the marketing of these products wherever they are marketed (i.e. image, physical make-up and appearance)
Key driving forces for global branding strategies are brand exposure (1) and cost savings gained from using a single marketing approach (2)
Strategy
When products are successful on the market,
they can foster brand loyalty for the business
This enables the firm to develop and launch new products under the same brand name through a strategy known as
brand extension strategy
Through brand extension strategies, successful businesses can use their brand names to enlarge their product portfolios, thereby strengthening their competitive position
However, in a dynamic environment, complacency can potentially be disastrous for a business
Levitt pointed this out when writing about
marketing myopia
Marketing myopia is when businesses become complacent about their product strategy, thereby ignoring and failing to keep up with market changes
In order to succeed, a product strategy must also integrate other elements of the marketing mix and marketing planning
E.g. To fully gauge and cater to customer needs, a firm might consider implementing market segmentation
Managers may also use position mapping to acquire insight into potential customers' perceptions of a product - understanding perceptions could be helpful in devising better product strategies
SWOT analyses can also be conducted, where managers analyse the strengths to be preserved and developed, and recognise weaknesses that need to be addressed
This could allow managers to identify potential market opportunities and threats and decide on the best strategy to respond to these
For a business to remain competitive, it has to carefully plan its product strategy whilst managing a broad product portfolio
Large companies often benefit from developing a
multi-brand strategy
, which involves a firm developing two or more brands in the same product category
However, this may lead to
product cannibalism
, which occurs when brands from the same business directly compete with each other
The Boston Matrix
suggests four different strategies to
deal with stars, dogs, problem children and cash cows
Build
: This strategy turns question marks into stars by investing necessary resources to gain market share - if nothing is done to increase market share, they will simply drain cash from the business
Low market share, High market growth
Harvest
: This strategy reaps the benefits (profits) of a product, turning stars into cash cows - however, this might require large amounts of advertising to turn the product into a cash cow
High market share, High market growth
Hold
: This strategy involves investing enough resources to keep cash cows in their current position in the BCG matrix, with minimal investment due to market growth for cash cows being low
High market share, Low market growth
Divest
: This strategy requires phasing out dogs, in doing so freeing up resources to be used elsewhere (e,g, investing in certain problem children); some question marks might also face divestment, especially those which are unlikely to turn into stars
Low market share, Low market growth
Within the BCG matrix, problem children are the main users of cash while cash cows are the main generators of cash
The optimal product portfolio strategy would be one that takes advantage of the firm's strengths (i.e. stars and cash cows) and develops other attractive opportunities (i.e. working on problem children and rising stars)
Ethics
Increasing ethical implications have led to firms placing a greater focus on the local needs of overseas customers
Hence, global brands have been
glocalised
to cater for local preferences, in doing so accommodating to consumers in domestic markets
While still retaining the core elements of the global brand
E.g. McDonald's core food menu remains the same throughout the world, but certain products may be added to the menu at different geographical locations to cater for local tastes and preferences
Innovation
Has intensified competition in many industries
Could lead to global competition and rigorous business strategy focusing on continuous innovation in order to stay competitive