Alfred Sloan is the one who actually made General Motors a strong brand and a market dominant for decades. One of the strategies he implemented was a simple multi-brand strategy. He reduced the number of GM cars to five and categories them by price. As Jack Trout stated at Big Brands Big Troubles, "The policy was to mass-produce a full line of different cars that were graded upwards in quality and price. The concept was to get people into GM family and move them up. It was one of the earliest examples of market segmentation"
Chevrolet $450 - $600
Pontiac $600 - $900
Buick $900 - $1,700
Oldsmobile $1,700 - $ 2,700
Cadilac $2,700 - $3,500
More than a half century past from those glorious days of GM, and companies who do not learn from history continue to have irrational product lines and they all ask why do we loose market share. They look into their marketing budget, sales force, technology and many areas but not the root cause of their failure. However, there are companies like Apple, with huge potential of falling into downward spiral of irrational product line manufacturing. But, what Apple type of companies do is simple: Clear product line, clear segmentation and do what they can do best.
Amazon is another example of a company with clear product line. They recently introduced several new Kindles at different price tag and totally different features, designed for specific market segments. You may join Amazon Kindle family at a price of $69 and move up to $500, every Kindle is different and meets certain market needs.
Kindle $69
Kindle Paperwhite $119
Kindle Keyword $139
Kindle Fire $159
Kindle Fire HD $199 - $499
Although there are two Kindle products that do not fit into this category and therefore have and will have minimum sales and eventually Amazon will stop producing them: Kindle PaperWhite 3G $179 and Kindle DX 3G $300-$400.
There are many lessons here, but one simple lesson is "Do Not Make Your Costumers Confuse!"
Your customers leave you when they are confuse about your products or brands. When you make it difficult for them to make purchase decision.
Chevrolet $450 - $600
Pontiac $600 - $900
Buick $900 - $1,700
Oldsmobile $1,700 - $ 2,700
Cadilac $2,700 - $3,500
More than a half century past from those glorious days of GM, and companies who do not learn from history continue to have irrational product lines and they all ask why do we loose market share. They look into their marketing budget, sales force, technology and many areas but not the root cause of their failure. However, there are companies like Apple, with huge potential of falling into downward spiral of irrational product line manufacturing. But, what Apple type of companies do is simple: Clear product line, clear segmentation and do what they can do best.
Amazon is another example of a company with clear product line. They recently introduced several new Kindles at different price tag and totally different features, designed for specific market segments. You may join Amazon Kindle family at a price of $69 and move up to $500, every Kindle is different and meets certain market needs.
Kindle $69
Kindle Paperwhite $119
Kindle Keyword $139
Kindle Fire $159
Kindle Fire HD $199 - $499
Although there are two Kindle products that do not fit into this category and therefore have and will have minimum sales and eventually Amazon will stop producing them: Kindle PaperWhite 3G $179 and Kindle DX 3G $300-$400.
There are many lessons here, but one simple lesson is "Do Not Make Your Costumers Confuse!"
Your customers leave you when they are confuse about your products or brands. When you make it difficult for them to make purchase decision.
Comments