Product Obsolescence Planning and Competitive Advantage

Posted on Sep 26, 2024 in Economy

Planning for Product Obsolescence

Criteria for New Products

  • Consumers shape key attributes described in the product concept.
  • Prototypes function safely under normal use.
  • Prototypes are producible at budgeted costs.

Test Market

Products requiring high investment and posing market risks necessitate testing. Test market costs represent a minimum percentage of total project costs.

High-Risk Products

Products creating new categories or having many features justify further market testing.

Identifying Competitive Advantages

Companies develop activities to design, produce, distribute, deliver, and support their products. The value chain is analyzed to understand cost behavior and sources of differentiation.

Industry Type and Competitive Advantage

  • Volume Industry: Small but significant benefits.
  • Stale Industry: Few, small advantages.
  • Fragmented Industry: Many small differentiation opportunities.
  • Specialized Industry: Many lucrative differentiation opportunities.

Product Differentiation

Features

  • Competitive product presentation
  • Introduction of valuable new items

Functionality Levels

  1. Low
  2. Average
  3. High
  4. Superior

Product quality has a significant positive relationship with return on investment.

Product Quality Strategies

  • Continuous product improvement leads to higher returns and market share.
  • Maintain initial quality unless significant defects or unique opportunities arise.
  • Reduce quality only as a last resort, hoping buyers won’t notice.

Quality Aspects

  • Compliance with Specifications: Adherence to design and operating standards.
  • Durability: Expected operational lifespan.
  • Safety: Probability of malfunction or failure.

Service Differentiation

  1. Delivery: Speed, care, and attention in product delivery.
  2. Installation: Ensuring proper product function in specific locations.
  3. Customer Training: Educating clients on proper product use.
  4. Consulting: Providing data, information, and advertising.
  5. Repair: Quality of repair services offered.

Staff Differentiation

Hiring and training competent staff provides a competitive edge.

Well-Trained Staff Features

  1. Competence: Possessing necessary skills and knowledge.
  2. Courtesy: Being polite, respectful, and considerate.
  3. Credibility: Providing reliable service and care.
  4. Friendliness: Addressing customer requests and problems.
  5. Good Communication: Understanding and communicating clearly with customers.

Image Differentiation

Buyers perceive differences in company or brand image. A clear and unified message conveys the main brand characteristic.

Image Components

  • Symbols: Logos and brand designs for instant identification.
  • Environment: Physical spaces where products are manufactured or distributed.
  • Activities: Company activities that shape brand image.

Positioning Strategy Development

Companies should position their offerings as differentiated products or concepts.

Differentiation Criteria

  1. Significance: Valuable benefit for many customers.
  2. Distinction: Unique offering.
  3. Superiority: Better than alternatives.
  4. Communicability: Easily understood by buyers.
  5. Profitability: Beneficial for the company.

Differentiation involves highlighting meaningful differences from competitors.

Positioning

Positioning shapes the company’s offerings for clear perception by consumers.

Positioning Approaches

  1. Competitor-Based: Directly comparing the product to competitors.
  2. Product Class/Attribute-Based: Associating or disassociating the product with a class or attribute.
  3. Price/Quality-Based: Emphasizing high quality and premium pricing.