Week 5 - Product Strategy

Product strategy is important to a business as it helps keep each product in line. The product strategy forms the basis for executing a product roadmap. It allows the company to focus on a specific target market and feature set. "The Slipper Slope of Brand Expansion" article really caught my attention this week. I am a fan of a couple "luxury" brands although I can not always afford them. For example there are a few clothing companies I prefer like 7 for All Mankind jeans, Polo Ralph Lauren and Under Armour. I only have a couple items from 7 for All Mankind and Polo Ralph Lauren as I can not justify paying $200 for a pair of jeans or $80+ on a shirt. Under Armour may not seem like a luxury brand to everyone but when you are paying $60 for sweat pants, $30 for gym shorts and $70 for a sweat shirt it is luxury. 7 For All Mankind and Under Armour do not have any Brand Extensions. Their strategy is to focus on their current customers in their current market. Ralph Lauren has a different strategy. They are similar to Armani which was explained in the article. Ralph Lauren has different brands like the extremely expensive Purple Label, the Black Label, the most popular Polo, their sports/golf, a line of perfumes and cologne and a home products line. Ralph Lauren uses brand expansions to attract a variety of customers throughout various markets.

Target and Neiman Marcus teamed up last fall/winter to bring luxury brands into Target stores. Target and Neiman Marcus are both department stores but target 2 completely different markets. Target sell less expensive stylish clothing while Neiman Marcus sells expensive clothing. Designers that sell a Neiman Marcus were to have a product line directed toward Target's customers and priced accordingly. The problem is that the companies that sell at Nieman Marcus have expensive clothing and a feel of exclusivity to their brands. If they were to sell the same clothes for less at Target then they might lose out in the luxury clothing market. The companies knew this created off brand items to sell. Some luxury clothing companies sold yoga mats, thermoses, shot glasses and dog bowls. And clothing items that did come out were expensive for Target and not a quality product. The collaboration between Target and Neiman Marcus was a failure.

One of the five deadly sins of Drucker was that seeking high profit margins through premium pricing would cause a company to fail.  Premium pricing the practice of selling a product at a higher price then competitors to give it the appeal of luxury or exclusivity  Drucker explained that high pricing is good when the products are worth it, like Polo Ralph Lauren mentioned before. Their clothing is expensive but it is high quality. The problem occurs when companies do not offer a high quality product and price it high. Drucker used the example of the American auto industry. Some auto companies were making bigger cars and adding more gadgets. They would then use premium pricing. This was not because these cars were a better product but because they had more gadgets. This strategy hurt the American car companies.