This chapter gives an overview of the dissertation and the importance of the subject matter. The importance of product strategy, the textile industry and a brief introduction on the Diesel Jeans sector will be presented. Problem formulation, research questions, hypotheses formulation, research aim, research objectives, reasons for choosing of the topic, previous studies, and format of the study will be spelt out. The research is focus on the product strategy implemented by Diesel Jeans in Mauritius.
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1.2 Importance of product strategy
The value realised by a firm from selling its products is determined to a large extent by the strategy that is used to bring the products to market (Chesbrough, 2003). Organisations that launched flourishing products such as Apple and Microsoft have been credited with adopting the right product strategy for their products (Wall Street Journal, 2006). Consequently it is imperative for firms to recognize the impact of the product strategies formulated.
A product strategy is the critical vision of the product and affirmed where the product will cease. When a product strategy is developed, it becomes easy for firm to determine the direction of the product efforts. The product strategy forms the basis for executing a product roadmap and consequently product releases. However company is able to concentrate more on a target market specifically and set feature. Bantel (1997) suggests that particular product/market strategies are effective at achieving particular performance goals to the exclusion of others.
The role of product strategy is to make an association between the company’s product development and its business strategy (McGrath, Anthony, & Shapiro, 1996) and according to McGrath (2000) it guarantees that the firm and its products is engaged in the right markets from a strategic viewpoint. Product strategy is referred as the consequence of making important decisions in managing new product development (Krishnan and Ulrich, 2001; Mintzberg, Ahlstrand, and Lampel, 1998). The product strategy process involved the process of decision making within a company.
1.3 Textile Industry in Mauritius
The textile industry is among the most significant pillars of the Mauritian economy. In the early’s 70, the government created the Export Processing Zone (EPZ) in order to fight unemployment. Many changes have occurred almost forty two years of its existence. Mauritius manufactures products of quality like Boss, Ralph Lauren, Next, Gap, Mark and Spencer and others trade mark for export towards the Europe and USA due to the high skilled labour force and efficient management practices.
According to the Mauritius Export Association (MEXA) report 2012, the export sector contributes around Rs 45 billion revenue to the Mauritian economy representing around 14% of GDP and generates approximately 60 000 direct jobs. It has been resilient to the difficult global economic situation and has achieved a modest growth of 7.8% during the year 2011.
Table 1.1 below shows the domestic export of textile products through the year.
Table 1.1: Domestic Export of Mauritius for year 2008 to year 2011
Cotton articles not knitted
Cotton articles knitted
Source: MEXA Report 2012
1.4 Diesel Jeans in Mauritius
Based on a report of the Diesel Heritage web site, Diesel is viewed as an innovative international design company, making a wide-ranging collection of jeans, clothing and accessories. Diesel is a leader in pioneering new styles, fabrics, manufacturing methods and quality control to assure an excellent product. The company is present in over 80 countries with over 5,000 points of sale and more than 300 monobrand stores (200 of which are company-owned and the rest in partnership with local distributors). Diesel operates through franchise in Mauritius since 1994, and now runs three shops on the territory. The company imports its entire ready to wear products from its country of origin, that is, Italy. Diesel expanded its design to bags, watches, footwear, sunglasses, belts, to bring more options to the customers. Lately more diversified designed products have been added to its portfolio for example designer helmets for motorcyclists and earphones.
Competitors of Diesel in Mauritius are Calvin Klein, Guess, Celio, and Levi’s and the target market of these competitors are the same as Diesel. They are still expanding their branches simultaneously with building close relationship with customers.
Figure 1.1 shows the number of products that the Diesel Jeans imported to Mauritius and those products are classified into two seasons, that is, Spring Summer and Fallwinter.
Figure 1.1: The import of Diesel Jeans products from 2008 to 2012.
1.5 Statement of the problem
The rapidly changing culture, politics and economics of modern life deeply influence the industrial environment, particularly consumer industries such as textile and clothing (Lowson, King and Hunter, 1999).The problem is that nowadays the consumers control the marketplace in order to customise the style, fit and colour of the clothes to purchase, and require high quality personalised products at low prices. Therefore many organizations adopt aggressive product strategies to survive and maintain market share and surpass their competitors to satisfy consumers. However, seasonal and highly volatile market industry is always vulnerable to the concept of fading out and sometimes difficult to survive.
Meeting multicultural consumer requirements by supplying the right products and services in a global market is an ongoing challenge for marketers, retailers, and suppliers. Now, various clothing industries due to the effect of globalisation, were keen to benefit a larger market, within their country of origin, and also in other markets with high potential. (Kim, Forsythe, Gu & Moon, 2002)
Moreover the Diesel Jeans is a global brand and it should seek to become part of the local culture and difficulties may rise according to the new designs and new collections of clothes that the organization brings to the Mauritian culture. Hence it would be worthwhile to study the product strategy of Diesel Jeans in the context of Mauritian culture.
1.6 Research question
The research question of this project is “Whether the product strategy of Diesel Jeans suits the Mauritian market?”
1.7 Hypotheses formulation
Five hypotheses were formulated to test whether there is any difference between product strategy and customer satisfaction in Chapter five under section 5.5.
1.8 Research aim
To study the product strategy and it dimensions for customer satisfaction.
1.9 Research objectives
The main objectives of the project are as follows:
To review the literature on product strategy dimensions.
To assess the product strategy of Diesel Jeans in Mauritius.
To measure customer satisfaction.
To make recommendation within the context of the study.
1.10 Reasons for choosing the topic
The reason why the topic was chosen was the author’s interest in product strategy adopted by a global branded clothing industry. The author has chosen global industry to show how the brand integrates the lifestyle of people and fashion in Mauritius. In order to be successful a global brand should seek to become part of the local culture, adapting to the unique needs, values and desires of the targeted group.
1.11 Previous research
Table 1.2 Previous studies of the subject matter
Product strategy in response to technological innovation in the semiconductor test industry.
Massachusetts Institute of Technology.
Product strategies under durability, look-in and Assortment Considerations.
University of Texas at Austin.
Enterprise Product strategies and employer Demand for skills in Britain.
National Institute of Economic and Social Research
1.12 Format of the study
This study consists of 6 chapters and it is organized as follows:
Chapter 1: Introduction
This chapter provides a background of the textile industry in Mauritius and the study the importance of product strategy. The research question, problem statement, reason for choosing the topic and previous studies on the topic are cited.
Chapter 2: Literature Review
This chapter reviews theoretical view on product strategy.
Chapter 3: Company Profile
The chapter provides details on the company.
Chapter 4: Research methodology
This section will mainly describe all the methods and tools used in carrying out the entire research.
Chapter 5: Data Presentation and Analysis
It provides presentation of the data collected through charts, tables and graphs for better understanding.
Chapter 6: Recommendation and conclusion
The final chapter will make necessary recommendations and the conclusion of the dissertation related to the findings.
This chapter has given an overview of the business climate in Mauritius. A brief detail is given on the Diesel Jeans Company in Mauritius and on the textile industry which is one of the main pillars in Mauritian economy. Furthermore the problem statement, the research aim, research objectives and the research question are spelt out for the purpose of the project. The next chapter will review the literature about product strategy and its dimensions.
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The aim of this chapter is to provide a detailed explanation of the product strategy concept and how it evolved. Firstly, the marketing concept and product is well defined. Furthermore the review describe the important aspects in the product strategy for the success of a product such as the market segmentation, product development, product differentiation, product attributes, brand strategy and brand awareness , product packaging, product quality, product price product diversification and customer satisfaction. Textbooks and Journals were used for the study and are considered as secondary information sources (Schindler and Cooper, 2001 p.166).
2.2 Marketing concept
According to Kotler, Armstrong, Wong and Saunders (1996) the marketing concept is a philosophy. However the central attentions of all activities of an organization are the consumers, as no organization can continue to exist without the support of its consumers. The marketing concept asserts that the organization should make every effort to satisfy the needs and wants of the customers at the same time meet the company’s goals and objectives set.
The needs, wants, and satisfaction of all customers should constantly be the first concern for every manager and employee. Marketing is not a function of business, but a view of the entire business seen as the economic organ to provide goods and services (Drucker. 1954, p.38-39). In other words, it is important to understand that the marketing concept refers to sell satisfaction rather than to sell a product or a service only.
Kotler (1998) stated that the marketing concept is based on the following pillar, target market, customer needs, integrated marketing, and profit through customer satisfaction. In line with Kotler, Walker, Boyd, and Larreche, (1992, p.22) asserted that the
marketing concept is a useful way of getting a competitive advantage and to achieve company objectives that set off the planning and coordinating all activities for satisfying customers requirements.
In summary, marketing concept can be viewed as a consumer focus characterized by the capacity to identify basic requirements of targeted customers. And satisfying them by constantly providing and bringing superior value supported by a firm which deeply involved it efforts of all practical areas within the organisation by reaching long-term goals and objectives.
2.3 Dimension of Product
A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need, which comprised physical objects, services, persons, places, organizations, and ideas (Kotler and Armstrong, 1990, p 226). Consequently a product is the main element in an organization and without a product there is no place, no price, no promotion, and no business as it refers to the most important ingredient of the marketing mix. Similary Assael (1993) asserts that a product is the most fundamental component of the marketing mix. Kotler and Keller (2006) define a product as a bundle of attributes and benefits provided to satisfy the customer.
Kotler and Keller (2009, p.358) defined five levels a product.
Figure 1.2 illustrates the five levels of a product.
Figure 2.2: Five levels of a product
The core product is the main benefit, service or need satisafaction, required by the customer. The basic product is the physical product, made up of the core product or service and includes all physical aspects of the product or services that are brand name, packaging, styling, features and quality. The expected product is a common set of attributes and conditions where buyers expect when they purchase a product. The augmented product is the consumer services and benefits added which exceed customer requirement such as installations, warranty, after sale services and delivery and credit services. And the potential product cover all the possible augmentation and changes the product might experience in the furture.
2.4 Definition of product strategy
In order to launch a product in the marketplace firm needs a well-established product strategy. The executed product strategy must include all that is required in planning, manufacturing, advertising, selling and distributing the product from production to customer service. According to Teece, Pisano and Shuen (1997), a strategy is the technique that an organisation used to positions itself, in order to get a competitive advantage on the marketplace. However the achievement of a strategy is to assure the success of the firm by executing specific tasks at a right time and it should acquire the significant purpose of the product.
The term product strategy attempts to capture the decisions made by organisations about product within particular markets. Product strategies are decisions settled to improve products to satisfy market requirements and determine in which way to gain competitive advantage for products (Steinhardt, 2010, p.50). Kotler (1991) asserts that product strategy is the heart of the marketing mix. However product strategy formed part of the product management process.
Thus McGrath (1995) states that product strategy is involved in the decision and management of the different levels of a product, product platforms, product lines and individual products. And according to Lehmann and Winer (1994, p. 205-206) the main function of a product strategy is to supply managers the path to pursue for running a business.
Taggartand, James and McDermott (1993) asserts that product strategies are composed of the categorisation of a differentiated product by the organisation in respect of the needs and wants of the customers and the satisfaction they aim to obtain from the product. For a product strategy to be successful, it should facilitate the classification between different aspects in a way to make a product successful. In addition, within an organization a product strategy aids to depict in what way resources should be allocated and demonstrates how products may reach a high market positioning.
Handscombe (1989, p.234) insists on the point that a product strategy should essentially describes the firm that the set of product represent. Following this further groundwork is required for single product decisions, the plan for product development, marketing strategies and development of manufacturing strategy. However assigning resource for
particular product, and to segment the market and areas, the product strategy should be able to recognize the priorities of the market.
McGrath (2001) broadly describes product strategy and according to him a product strategy is opened to a core strategic vision that demonstrates the directions that an organisation takes. A product strategy is the result of the strategic vision, the platform strategy and the product line strategy and lastly the new product development. However the product platform strategy is obtained from the core strategic vision and the product line strategy referred to the product offering for a specific product platform. And the new product development determines the capabilities for new product offering that is suitable to the product line strategy.
The core strategic vision sets the answers to the strategic questions such as, where are we going? How will we get there? Why will we be successful? The first question requires having a balance between the goals and short term objectives. The main purpose of the goals is to set the general directions of movement, whereas objectives state the specific measures of accomplishment. The goals refer to profit, growth, and market share, which potentially can be conflicting. Therefore, the product strategy normally focuses on only one of the goals respectively (McGrath, 2001).
The second question refers to the core of the product strategy which involves elements like customer targets, competitive targets, and differential advantage. Besides the choice of customer targets depends on the nature of the goals and objectives selected when answering “where an organization wants to go”. However, as Krishnan and Karl (2001) assumed that the aim is to boost up the market growth and therefore the targeted group should be from a new segment of population.
The third question three is the most important question to be answered for a competitive product strategy, as the answer is related to the differential advantage aspect of the product positioning. A solid product strategy is required to provide concrete arguments for the reason of its success in the light of customers’ preferences and competitive targets.
All the definitions demonstrate that product strategy is a set of decisions or processes that aim at making the product flourishing. Hence the product strategy should always take into account the market and current state of the company when making the decisions. A product strategy is a management process, consequently a product strategy cannot be dependent on individual manager, it must become a systematic way of working. Hence, product strategy process must be an integrated process within the organization.
2.4.1 Scope of product strategy
The level of product strategy referred a set of decisions; the product platform determines how to develop the right platform for a global market. Generally different products with attributes are derived from the product platform and they are developed for a product line. Subsequently the product line from the product platform, defines the width, length and depth in every line. And there is also the individual product with its classification and packaging features (Gabrielsson, 2004). According to Meyer and Lehnerd (1997, p.39), “A product platform is a set of subsystems and interfaces that form a common structure from which a stream of derivative products can be efficiently developed and produced”. The function of a platform strategy is always essential for the purpose of a successful implementation and development of product lines.
2.4.2 Product line
“Product line is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlet, or fall within given price ranges” (Kotler, Wang, Saunders and Armstrong (2005). According to McGrath (1995, p.61) product line strategy is describes as a temporary time-scaled plan for the chain of developing products within a product line and the strategy is based on four primary functions.
The first one describes products variations designed to an explicit segment from a market. The following one, attempted to support strategic advantage for a firm compared to its rivals, to be the first one to launch a product at a particular moment within a lifecycle of a product line. The third one brings direction for product development department and made successful productive response to the requirements of particular markets.
Finally, product line strategy facilitates in scheduling the introduction of product development and provides the apparent time and setting up of each product. However because managerial and financial resources are restricted, the number of product lines are limited as well (Gabrielsson, 2004, p.35).
2.5 Market segmentation
Smith (1956) first established the concept of the market segment that turn into an essential part of the modern marketing. Market segmentation means dividing a market into distinct groups of buyer who have different needs, characteristics, or behaviours, and who might require separate products or marketing programs (Amstrong, and Kotler, 2011, p.78). Another definition Kanuk and Schiffman (1994) state that market segmentation is the method of partitioning a promising market into different subsets of individual with familiar needs or behaviours and choosing one or more segment to target with a separate marketing mix. Furthermore market segmentation is a driving force that leads an organisation effort towards the utmost opportunities. The function of market segmentation is to recognise the taxonomy of consumption pattern by dividing a market into several uniformed sub markets. Markets can formulate product strategies, or product positions, tailored specially to the demands of these homogeneous sub-markets (Lin, 2002, p.249). Based on Pollock, Jones, and Brown (1994) point of view, market segmentation should be describes by four primary categories stood on the types of variables applied to define submarket like socio-demographic segmentation, geographic segmentation, product-related segmentation, and psychographic segmentations.
There are a number of different ways for segmentation, and the three conventional approaches employed to segment the market are mass marketing, differentiated marketing, and niche marketing.
Mass marketing is a segmentation strategy for which the market is treated as one segment. Mass marketing is mainly suitable for commodity products but, it is rare that a firm employed this approach (Ferrell, Hartline, and Lucas, 2002). Since mass marketing is built on a single product or services, however it is not a simple task for firm, since markets contain many different consumers.
Differentiated marketing is engaged in partitioning the market into homogeneous submarket which stand on customer requirements and addressing specific marketing plan to the homogeneous submarket. To succeed for a differentiated marketing strategy the behaviors and requirements of consumers for each submarket in particular should be familiar since simultaneously having different needs and characteristics across the different groups. Meanwhile differentiated strategy is the offering of a firm as an original product on the market by evidence that it gives a different advantage over its competitors. Companies that applied this approach must develop an original marketing mix for every subgroup recognised within the market. According to Ferrell, Hartline, and Lucas (2002) both medium and large firms applied differentiated marketing strategy, for the reason that they have the resource needed to provide various products and promoting many marketing mixes that are not common to reach the requirements of several segments. Finally differentiation is viewed as an art to plan a bundle of significant distinction to differentiate the offering of the organisation from those of its rivals.
Kotler et al, (2005) state that niche marketing’s focal point is to find subgroups of customers. The niche marketing strategy is based on merely a single segment and builds up a marketing plan that matched for the specific subgroup. The niche marketing strategy necessitates an absolute consideration of the requirements of the segment matter because the possibility for the market share to increase in this market gap can surpass the small size of the market.
2.6 Product development
Littler (1984, p.20) states that product development is ascertaining the attributes that target customers seek in products and developing products to meet the market requirements. However product development leads to modify an existing product or its presentation, or formulation of an entire new product that satisfies customer or market niche. Product development is critical for the performance of many companies. The success of product development efforts can determine the viability of companies and economies (Ulrich and Eppinger, 2000).
“Product development consists of three critical elements, namely strategic processes to specifically address the effective management of product development assets, the selection of a target market and a structured product development process.” (Bean and Radford 2000, p.3) According to the above definition there are different levels at which the product development process takes place. The purpose of the process is essentially to identify the market needs and the development of the products in order to suit potential customers.
The product development process includes a set of activities required for the formation and design of a product, from the detection of a market opportunity to its delivery to the final client. The main focus of the product development process is to convert customer requirements and needs into a design solution. The purpose of the product development process is to make a recipe to produce the product (Reinertsen, 1999). The recipe includes the product, manufacturing process, supply, distribution, and the support systems. (Browning, Deyst, and Eppinger, 2002)
The success of product development is vital to the performance of any organisation. And Ulrich and Eppinger (2004) points out that fast and novel product development may be a critical competitive advantages to firms. In addition a successful product development process requires the effective control of the work developed by the persons involved.
There are a variety of methodologies for understanding and improving the effectiveness of the product development process. Smith and Morrow (1999) defines product development as a method to transform any objective and market requirements into the information needed to how a product can be manufactured. Even that each product development process is distinctive there are still familiar characteristics that are administered among different tasks.
2.7 Product differentiation
Lancaster (1990) asserts that product differentiation study has drawn significant interest in economics and marketing. Product differentiation is concerned to alter the marketing mix of a product so as to differentiate it from what the competitors is offering. Scheuing (1974) defines differentiation by, “adding variations of one product which will compete with it within the same market”. According to Kotler (1998) “differentiation is the introduction of differential features, quality, style or image of brands as a basis for commanding a premium”.
A product becomes different at the consumer’s eye when it has some features, which make it different from others products and services offered by competitors, of course the product should be unique and difficult to imitate (Murphy, 2007). Firms that employed product differentiation strategy form a perception between some target groups of the product or services offered by the company. And therefore assured that the products or services are somehow different with the value added that is not available from competitors. “Consumers may perceive the product sold by an incumbent firm to be superior to that offered by prospective rivals. Based on this perception consumer is willing to pay more for the incumbent firm’s product” (Browning and Zupan, 2003, p.314).
Product differentiation is classified into three categories such as, vertical differentiation, horizontal differentiation, and mixed differentiation. Vertical differentiation arises in a market where various goods which are present can be ordered according to their purpose quality from the highest to the lowest. And horizontal product differentiation is termed as products that have different features which cannot be ordered in an objective way. Features for horizontally differentiated products are often based on colours, styles, and tastes (Piana, 2003).
Mixed differentiation is described by vertical and horizontal differentiation. Consequently, mixed differentiation includes products that have distinct quality dimension which is similar to the vertical one and are included diverse characteristics like colour, taste, shapes as well as styles which relate to the horizontal differentiation. And customers pay attention to these prominent aspects when buying a product.
Product differentiation is particularly important to undertake any kind of business, because of the economic principles that have been demonstrated time to time again in nearly every market place. If the public perceives no difference between two competing products, then the only possible means of competition is through pricing.
2.8 Brand strategy and Brand awareness
The American Marketing Association (AMA) definition of a brand is “a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors”(Keller 2004, p.3). Within this view the author asserts that a brand refers to a product and that each new feature or benefit added in order to differentiate the brand somehow from others products designed to satisfy the same need. According to the definition a brand can be seen, as simple and clear function identifiers.
Supporting Keller’s view of a brand linking it to the tangibles of the brand, Doyle (2002) states that brand is a particular name, symbol or design or generally an amalgamation of these that is utilized to differentiate a specific p
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