Upward Stretch

Companies at the lower end of the market might want to enter the higher end. They may be attracted by faster growth rate or higher margins at the higher end, or they may simply want to position themselves as full-line manufacturers. Sometimes companies stretch upward in order to add prestige to their current products. In stretching its product line upward, Toyota opted to produce two even more expensive models under the Lexus brand, to compete against BMW 5 and 7 series vehicles as equivalent Mercedes models.

Two-way Stretch

Companies in the middle range of the market might decide to stretch their lines in both directions. Sony did this to hold off copycat competitors for its Walkman line of personal cassette player. Sony introduced its first walkman in the middle of the market. As imitative competitors moved in with lower-priced models, Sony stretched downward. At the same time, to add lustre to its lower-priced models and to attract more affluent consumers, Sony stretched the Walkman line upward with new models and technology

Product mix Decision

Product mix is the set of all product lines and items that a particular seller offer.

The Breadth: of Unilever’s product mix refer to the number of different lines the company carries.
The Length: of Unilever’s product mix refers to the number of items the company carries.
The Depth: of Unilever’s product mix refers to the number of versions offered of each product in the line.
The consistency: of the product mix refers to how closely related the various product lines are in the end use

New Product Development Strategy

The development of original products( New ZPTOS anti-dandruff Sunsilk Shampoo)
Product improvements (MacIII- triple blade Razor)
product modifications (Diet Coke)
New brands through the firm’s own R&D efforts (Double Cola)

(PLC) Product Life Cycle & New Product Development Strategy


1.Product development

Product Life cycle Marketing Strategy

Growth Stage
Maturity Stage
Decline Stage
Introduction Stage


1.Steps in setting the Price
2.New product Price strategies
3.Product mix pricing strategies
4.Price adjustment strategies and Price changes

Factors to consider when setting pricing

Internal Factors:
•Marketing objectives; maximum profit, High share, build customer loyalty.
•Mktg-mix strategy
•Org. considerations

External factors:
•The market and demand
•Competitor’s pricing
and offers
•Other external factors;
pure competition,
monopolistic competition,
Oligopolistic competition

New Product Pricing Strategies

Pricing an innovative Product:

Market-Skimming Pricing
Setting a high price for a new product to skim maximum revenue from the segments willing to pay the high price; the company makes fewer but more profitable sales.

Market –Penetration Pricing
Setting a low price for a new product in order to attract a large number of buyers and a large market share.

Product-mix Pricing Strategies

Product/service line pricing
Setting price steps between various products in a product line based on cost differences between the products, customer evaluations of different features and competitors and service line items.
Optional-product pricing
Pricing optimal or accessory products sold with the main product.
Captive-product pricing
Pricing products that must be used with the main product
By-product pricing
Pricing low–value by-products or services to get rid of them
Product-bundle pricing
Pricing bundles of products sold together.

Price Adjustment Strategies

Companies usually adjust their basic prices to account for various customer differences and changing situation.

Discount and allowance Pricing:
1.Cash discounts
2.Functional discount
3.Seasonal discount
Segment Pricing:
1.Customer segmented pricing
2.Product segmented pricing
3.Time segmented pricing
Psychological pricing:
1.Reference pricing
Promotional pricing:
1.Special event pricing
2.Longer warranties
3.Free servicing
Value pricing
Geographic Pricing:
1.FOB-origin pricing
2.Uniform delivered pricing
3.Freight absorption pricing
International Pricing

Price Changes

After developing their price structures and strategies companies may face occasions when they will want either to cut or to raise prices.

1.Initiating price increases
2.Buyer reaction to price changes
3.Responding to price changes (Competitors)


1.Channel design decision
2.Channel management decision

Channel Design Decesion

1.Analyzing consumer service needs
2.Setting channel objectives and constraints
3.Identifying the major alternatives
4.Types of intermediaries
5.Company sales force
6.Manufacturer’s agency
7.Industrial distributors
8.Number of intermediaries
9.Intensive distribution
10.Exclusive distribution
11.Selective distribution

Channel Management Decision

1.Selecting channel member
2.Motivating channel member
3.Evaluating channel member


b.Major decisions
c.Personal selling
d.Personal selling process
e.Sales promotion
f.Public relations (Publicity)

Tools of Promotional-mix

2.Direct Marketing
3.Sales promotion
4.Salesmanship ( Personal Selling)
5.Public relation


Any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor.

Objectives setting
Sales objectives

Budget decision
Affordable approach
Percent of sales
Competitive parity
Objective and task

Message decision
message strategy
Message execution

Media type.

Direct Marketing

Any of a number of promotional activities aimed at gaining a direct sales result, such as direct mail. These activities may or may not supplement advertising and may employ sales promotions.

Personal selling

Personal selling is a personal approach of direct marketing of any product to the customer.

Qualities of a salesman:
1.Curiosity of a cat
2.Tenacity of a bulldog
3.Persistence of a bill collector
4.Affection of a mother
5.Enthusiasm of a chorus girl
6.Diplomacy of a way-word husband

Tools of Sales Promotion

c.Cash refund offers
( Rebates)
d.Free gifts
e.Patronage awards
g.Raffle draw

Public Relation

Building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image and handling or heading of unfavorable rumors, stories and events.


A.Market Competitors
B.Competitive strategies for market leader
C.Market challenger strategies
D.Market-Follower strategies
E.Market Nicher strategies

Market Competitors

Market Leader (40% market share)
Market Challenger (30% M.S)
Market Follower (20% M.S)
Market Nisher (10% M.S)

Competitive Strategies for Market Leaders

Expanding the total market (Example. Caterpillar)
1.New customers
2.More usages

Defending market share
1.Premium performance
2.Extensive and efficient dealership system
3.Superior service
4.Full-line strategy
5.Good financing to customers

Expanding market share

Defense Strategies

Position defense
Position defense involves occupying the most desirable market space in the minds of the consumers, making the brand almost impregnable, like Wheel detergent/bar.

Flank defense
Al though position defense is important, the market leader should also erect outposts to protect a weak front or possibly serve as an invasion base counterattack. For example, Grameen Phone, even at the growth stage, kept the high price of per minute call and invested that additional amount in extensive advertising and building brand equity. Thus, it has made him still market leader by counterattacking the other competitors.

Preemptive defense
A more aggressive maneuver is to attack before enemy starts its offense. A company can launch a preemptive defense by several ways. It can wage guerrilla action across the market- hitting one competitor here, another there and keep every one off balance; or it can try to achieve grand market envelopment.

Counter Offensive Defense
When attacked most market leaders will respond with a counterattack. Counterattacks can take many forms. In a counteroffensive, the leader can meet the attacker frontally or hit its flank or launch a pincer movement. An effective counterattack is to invade the attacker’s main territory so that it will have to pull back to defend the territory.

Mobile Defense
In mobile defense, the leader stretches its domain over new territories that can serve as future centers for defense and offense through market broadening and market diversification. Market broadening involves shifting focus from the current product to underlying generic need.( Example. Petroleum companies get involved into oil, coal, nuclear and hydroelectric industries. Market diversification involves shifting into unrelated industries ( Reynolds, Philips, cigarette companies, moved to produce beer, liquor, soft drinks and frozen industries)

Market Challenger Strategies

A market challenger must first define its strategic objectives:

1.It can attack the market leader
2.It can attack firm of its own size that are not doing the job and are under financed.
3.It can small local and regional firms.

Market Challenger’s Attacking Strategies

1.Frontal attack
In a pure frontal attack, the attacker matches its opponent’s product, advertising, price, and distribution. A modified frontal attack, such as cutting price vis-a-vis convinces the market that it’s product is equal to the leaders product.

2.Flank attack
An enemy’s weak spots are natural targets. A flank attack can be directed along two strategic dimensions-geographic and segmental. In a geographic attack, challenger target the areas the leader’s product is under performing. Other flanking strategy is to serve uncovered market needs, as Japanese automakers did when they developed more fuel-efficient cars.

3.Encirclement attack
The encirclement maneuver is an attempt to capture a wide slice of the enemy’s territory through a “blitz”. It involves launching a grand offensive on several fronts. Encirclement makes a sense when the challenger commands superior resources and believes a swift encirclement will break the opponent’s will. In making a stand against rival Microsoft, Sun Microsystems licensed its JAVA software to hundreds pf companies and millions of software developers for all sorts of consumer devices. As consumer electric products began to go digital, Java started appearing in a wide range of gadgets.

4.Bypass attack
The most indirect assault strategy is the bypass. It means bypassing enemy and attacking easer markets to broaden one’s resource based. This strategy offers three lines approach: diversifying into unrelated product, diversifying into new geographic markets, leapfrogging into new technologies to supplant existing products.

5.Guerrilla warfare
Guerrilla challenger uses both conventional and unconventional means of attack. These include selective price cuts, intense promotional blitzes, and occasional legal action. Normally Guerrilla warfare is practiced by smaller firm against larger one.

Choosing a Specific Attack Strategy

1.Price discount, but not compromising with value.
2.Lower price goods
3.Value-priced goods and services
4.Prestige goods
5.Product proliferation (variety products)
6.Product innovation
7.Improved services
8.Distribution innovations
9.Manufacturing cost reduction
10.Intensive advertising promotion

Market Follower Strategies

1.Some years ago, Theodore Levitt wrote an article entitled" Innovation Imitation”, in which he argued that a strategy of product imitation might be as profitable as a strategy of product innovation. The innovator bears the expenses of developing the new product, getting it into distribution, and informing and educating the market. The reward for all this work and is normally of market leader. However, another firm can come along and copy or improve on the new product. Although it probably will not overtake the leader, the follower can achieve profits because it did not bear any of the innovation expense.

2.A market follower must know how to hold current customers and win a fair share of new customers. Each follower tries to bring distinctive advantage to its target market-location, services, financing. Because the follower is often a major target of attack by challengers, it must keep its manufacturing costs low and its product quality and services high. It must also enter new markets as they open up.

Four Strategies of Follower

1.Counterfeiter- The counterfeiter duplicates the leader’s product package and sells it on the black market or through disreputable dealers. Music records firm, Apple Computer and Rolex have been plagued with the counterfeiter problem, especially in Asia.

2.Cloner- The cloner emulates the leader’s product, name, and packaging, with slight variations.

3.Imitator- The imitator copies some things from the leader but maintains differentiation in terms of packaging, advertising, pricing, or location. The leader does not mind the imitator as long as the imitator attacks the leader.

4.Adapter- The adapter takes the leader’s products and adapts or improves them. The adapter may choose to sell to different markets, but often the adapter grows into the future challenger, as many Japanese firms have done after adapting and improving products developed elsewhere.

Market-Nicher Strategies

An alternative to being a follower in large market is to be a leader in a small market, or niche.

Nicher has three tasks:
1.Creating niches
2.Expanding niches
3.Protecting niches

Niche Specialist Roles

1.End-user specialist (value added reseller-Software for specific customer)
2.Vertical-level specialist (Distribution value chain-A copper firm may concentrate on producing copper, copper components)
3.Customer size specialist (Small, medium or large size of customers)
4.Specific customer specialist(B2B)
5.Geographic Specialist
6.Product or Product-line specialist (A firm may produce only lenses for microscope)
7.Product feature specialist (A firm specializes in producing a certain type of product feature)
8.Job-shop specialist (The firm customizes its product for individual customer
9.Quality Price specialist (The firm operates at the low or high-quality ends of the market)
10.Service specialist (a Bank that takes loan request over phone and hand deliver money to the customer)
11.Channel Specialist (The firm specialises in serving only one channel of distribution- exmp. A soft-drink company decides to make a very large-sized soft drink available only for gas station)