Most Organizations Sell More Than One Product They May Offer

Most organizations sell more than one product. They may offer a portfolio of products. Construct a matrix of an organization’s product portfolio that reflects its width (variety) and depth (assortment). Imagine you are the organization’s Chief Marketing Officer. How would you defend the decision to offer so many options to meet buyer needs? Though goods and services are both types of products, they present different marketing challenges. Using a service with which you are familiar, identify how unique characteristics of services in general are manifested for your service. Develop recommendations for marketing the service that can overcome the marketing challenges related to these service characteristics. There are several strategic options organizations can follow when introducing new products. Estimate the relative risk and return associated with the level of innovation reflected in a new product launch. Though organizations sometimes base pricing decisions on the cost of materials, another option is to base price on perceived customer value. Choose a product and estimate the perceived value of that product as a function of customer benefits and customer costs. Compare your estimate to the actual price charged for the product. What modifications to the price would you recommend? Imagine an organization has asked you to create its pricing strategy. You decide to base your proposed price recommendations on possible pricing objectives. Using the same product you chose in Question 4, examine how price decisions should be adapted for the pricing objective.

Most Organizations Sell More Than One Product They May Offer A Portfo

Most organizations operate with multiple products, forming a comprehensive product portfolio that encompasses a variety of offerings to meet diverse customer needs. As a Chief Marketing Officer (CMO), defending the decision to offer a broad assortment of products involves emphasizing strategic benefits such as market coverage, customer segmentation, and risk diversification. A diverse product portfolio enables the organization to appeal to different market segments, satisfy varying customer preferences, and mitigate risks associated with reliance on a single product. Additionally, offering multiple options fosters customer loyalty and enhances brand positioning by demonstrating the company's capacity to provide comprehensive solutions.

Constructing and Defending a Product Portfolio Matrix

Constructing a product portfolio matrix involves categorizing products along two axes: width (variety) and depth (assortment). The horizontal axis represents the variety of product lines—ranging from a narrow to broad assortment—while the vertical axis reflects the depth within each product line, indicating the number of variants or models available. For example, a company like Apple exhibits broad portfolio width, with multiple product lines such as smartphones, tablets, and laptops, each with varying models serving different customer segments. The depth varies within each line, such as multiple iPhone models catering to budget, mid-tier, and premium markets.

As a CMO, I would justify the extensive product range by focusing on meeting diverse customer needs, enhancing revenue opportunities, and strengthening competitive advantage. Offering options like different product sizes, features, and price points allows tailored solutions for different consumer segments, increasing market penetration and customer satisfaction. Furthermore, a diversified portfolio buffers against market fluctuations affecting individual products, ensuring sustained business stability.

Challenges and Marketing Strategies for Goods vs. Services

While both goods and services are products, they are distinguished by unique characteristics such as intangibility, inseparability, variability, and perishability. Using a familiar service—for example, a healthcare service—I observe how these characteristics manifest and influence marketing strategies.

Healthcare services are intangible; patients cannot see or touch the service in advance, relying instead on reputation and perceived quality. They are inseparable from the provider, meaning service delivery occurs simultaneously with consumption, making consistent quality essential. Variability arises from differing provider performance, patient needs, and situational factors, requiring standardized procedures and staff training. Perishability is evident because unused appointment slots cannot be stored or resold, creating challenges with demand forecasting.

To overcome these challenges, marketing strategies should focus on building trust through credible testimonials and transparent communication, emphasizing service quality and staff professionalism. Implementing effective capacity management, such as appointment scheduling and waitlists, optimizes service utilization. Offering ancillary services or online consultations can extend reach and flexibility, addressing the perishability and variability of healthcare services.

Assessing Risk and Return in New Product Innovation

Introducing a new product involves strategic decisions about the level of innovation and associated risks and returns. Innovations range from incremental improvements to radical breakthroughs. Incremental innovations tend to carry lower risk and offer moderate returns, primarily reinforcing existing markets and leveraging current capabilities. Conversely, radical innovations pose higher risks due to technological uncertainties and market acceptance challenges but also promise higher returns if successful.

Estimating risk and return involves analyzing market potential, competitive landscape, technological feasibility, and resource commitments. A new product with minor modifications introduces minimal disruption, reduces development costs, and enhances revenue streams, making it safer. A breakthrough product disrupts markets but involves significant investment with uncertain customer acceptance. Therefore, organizations must balance innovation levels against their risk appetite, strategic objectives, and capacity for managing uncertainties.

Perceived Customer Value and Pricing Decisions

Pricing based on perceived customer value considers the benefits customers associate with a product relative to its costs. For instance, selecting a smartphone such as the latest flagship model allows estimation of perceived value through consumer benefits—status, features, performance—against perceived costs, including price and potential financial burden.

If the estimated perceived value exceeds the actual price, the product may be undervalued, signaling an opportunity for price increase or enhanced marketing communication emphasizing benefits. Conversely, if perceived value is lower than the price, modifications like bundling, feature enhancements, or promotional discounts should be considered to align customer perceptions with the price.

Developing a Pricing Strategy Aligned with Objectives

When establishing a pricing strategy, it is essential to clarify organizational objectives—whether profit maximization, market penetration, or brand positioning. For example, if the goal is market penetration, setting a lower price to attract customers and increase market share might be appropriate. If aiming for premium positioning, a higher price reflecting added value and exclusivity should be adopted.

For the chosen product, pricing decisions should factor in customer perception, competitive pricing, and cost structures. Price adjustments, such as promotional discounts, value-based pricing, or premium premiums, are necessary to support the overarching strategy. Continuous monitoring of market response and willingness to adapt ensures pricing remains aligned with organizational goals and customer expectations.

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