MS – 63

Product Management
UNIT – 1 Product Management Introduction (familiarizes
you with the term product and its related concepts)

Product Management – Basic Concepts

Product Management
Product Management is an integral part of marketing
function and includes a whole range of activities
pertaining to product planning and development and
extend itself to brand building and management

Project Management – An Overview

What is a Product?
Anatomy of a Product
Augmented Product

Tangible Specifications

Core Benefits
 TOTAL PRODUCT CONCEPT / LEVELS OF PRODUCT

AUGMENTED PRODUCT

pre sale Tangible Specification

features
warranty
Core Benefit
functions
benefits
quality
brand equity packaging
delivery

relationships

After sales service financing

Types of Product
 Tangible Products
 Intangible Products

Product Classification
 Based on tangibility durability, intangibility in to
durable, non-durable and services respectively
 Based on ultimate users and their buying
behaviour, attitudes, we come across

Consumer Products
 Convenient Product
 Shopping Product
 Specialty Product
Product Line and Product Mix
 Product Line
 Product Mix and Line Decisions
 Product Mix
 Metrics of Product Mix
o Helps in defining firms product portfolio based on
width, depth and consistency
o Appeals to diverse consumer needs across various
segments, thus helps in maximizing shelf space
and sustain dealer support
 Line Stretching e.g. maruti Suzuki, esteem, baleno
 Line filling e.g. Hyundai – i10, i20
o aiming for incremental profits
o optimal utilization of excess and under utilized
capacities
o an attempt to offer a full line of the product
o in response to dealer complain about lost sales
because of missing items on the line
Major Responsibilities of Product Management
Functions
Product Management – Conceptual Issues
 Product Line Decisions
 Product Life Cycle
 Segmenting, Targeting and Positioning Strategies
 Branding
 New Product Development
 Test Marketing
 Product Launch
 Business environment
 Competition
 Trade, Industry and other Market Forces etc.
Unit 2 The Product Management Process
The Product Management Function
The Product Management Function
The Product Management Function
Product Management Decisions
 Product Mix Decisions
 Product innovation/Modernization Decisions
 Product Line Pruning/Product Elimination/Product
Phasing Decisions
 New Product Decisions/Diversification Decisions
 Branding and Packaging Decisions
Product Manager’s Management System – Scope
 A little general manager or entrepreneur
 Coordinator of activities performed by others
 An assistant for the product real managers – top
management

Responsibility Authority
 Management task
 Marketing Decisions
 Budget and Marketing Plans

The need for a Product Management System

Changing Role of the Product Manager
Flexibility in the task assigned to product manager
is required under developments
Unit 3 The Product Planning System
The traditional Approaches to Product Planning
A Matrix Approach to Product Planning
Phase A
 The definition of product
 The strategic market
 The relevant measurement instruments
Phase B
 Examination of sales position
Phase C
 The market share of the company
Suggested Marketing Strategy on the basis of the
Product Evaluation Matrix
 Inferences

Product Evaluation Matrix

Product’s Current Position
Company sales
 Industry sales
 Market-share of the product
 Profitability
A Model to Add Clarity and System to the Judgment
Involved in Product Planning
 Marketability
 Durability
 Productive ability
 Growth Potential
Unit 4 Product Line Decisions
Evaluation of Product Line
Bases for Product Line Extensions
 Customer Segmentations
 Consumer Desire
 Pricing Breadth
 Excess Capacity
 Short-term Gain
 Competitive Strategy
 Trade Pressure
The Disadvantages of Line Extension
 Weaker Line Logic
 Lower Brand loyalty
 Underexploited Idea
 Stagnant Category Demand
 Poorer Trade Relations
 More Competitor Opportunities
 Increased Costs
Factors Influencing Product Line Decisions
 Category Size
 Market Growth
 Product Life cycle
 Sales Capacity
 Seasonality
 Profits
Category Factors Influencing Product Line Decisions
 Threat of New Entrants
 Bargaining Power of Buyers
 Bargaining Power of Suppliers
 Current Category Rivalry
 Pressure from Substitute
 Category Capacity
Unit 5 Product Life Cycle
Levels of PLC

Different levels of Product

 Product category
 A product form
 a product and
 a brand
Shapes of PLC
 Classical bell
shaped curve
 Growth-slump
maturity pattern
 Style
 Fashion
 Fad
The Product Life Cycle Concept
 Introductory stage
 Growth stage
 Maturity stage
 Decline stage

PLC – An Aid to Product Planning

Operationalising the Product Life Cycle

 Deciding upon the unit of analysis
 Definition of relevant market
 Identification of the product stage in the PLC
 Defining the unit of measurement
 Determining the time unit
Identification of the product stage in the PLC
PLC – As a tool to plan market share strategies
 Framework suggested

PLC as a Guidelines for Marketing Strategy

 Advertising
 Product Changes
 Pricing
 Distribution
Unit 6 Product Portfolio
The portfolio Concept
 Levels of business unit
 Served market
 Timeframe for analysis
The Logic for Portfolio Approach
 The opportunities for the product/market differ
 Product inherits different competitive strengths and
exploiting opportunities
 In resource allocation decision for products, the
major considerations are opportunity for product
growth and profitability
 The corporate objectives would be decided based on
the cumulative opportunities for all the products and
competitive strength of these products
 Based on the corporate and individual product
objectives, resources are allocated. However, it is not
straightforward process, it involves several
interactions based on much involved analysis of
sources and uses of resources.
Types of Display Matrix
 Boston Consulting Group’s Growth-Share matrix
 McKinsey Matrix
 Strategic Planning Institute’s Matrix
 Arthur D. Little Company’s Matrix
 Hofer’s Product/Matrix Evaluation Matrix
Boston Consulting Group’s Growth-Share matrix
Boston Consulting Group’s Growth-Share matrix
BCG Matrix-Building Procedure
 Classify various activities of the company into
different business segments or strategic business
units
 For each business segment determine the growth
rate of the market
 Compile the assets employed for each business
segment and determine the relative size of the
business within the company
 Estimate the relative market shares for the
different segments
 Plot the position of each business segment on a
matrix of business growth rate and relative market
share
BCG Matrix-Strategic Implications
The general strategy of a company with diverse portfolio is:
 To maintain its competitive position in the cash cows,
but avoid over-investing
 The surplus cash generated by Cash Cows should be
invested first in Star businesses, if they are not self-
sufficient, to maintain their competitive position
 Any surplus cash left with the company may be used
for selected Question Mark businesses to gain market
share for them
 Those businesses with low market share, and which
can not adequately be funded may be considered for
disinvestment
 The Dogs are generally considered as the weak
segments of the company with limited or no new
investments allocated to them
BCG Matrix-Strategic Implications
BCG Matrix-Portfolio Balancing Strategy
Time Dependence
BCG Matrix-Portfolio Balancing Strategy
Time Dependence
BCG Matrix-Portfolio Balancing Strategy
Time Dependence
Limitation of BCG Matrix
 Predicting profitability from growth and market
share
 Problems in determining market share
 Effect of experience ignored
 Disregard for human aspect
 Modifications in BCG approach
GE’s Strategic Business Planning Grid
S.No. Factors Typical
Weightage
1 Rate of growth of sales and cyclic 10%
nature of business
2 Nature of competition including 15%
vulnerability to foreign
competition
3 Susceptibility to technological 15%
obsolescence and new products
4 Entry conditions and social 10%
factors
5 Size of market 10%
6 Profitability 40%
Total weightage 100%
Factors Determining Competitive Position of the Company
as with Market attractiveness

S.No. Factor Weightage Rating (1-10)

Score
1 Market share and 20% 7 0.7
capacity
2 Growth rate 10% 7 0.5
3 Location and Distribution 15% 5 0.9
4 Management skill 20% 6 1.4
5 Workforce Harmony 20% 7 1.6
6 Technical excellence 5% 8 0.4
including product and
process engineering
7 Company image 10% 81.4 6.9
Total 100%
Factors Determining Competitive Position of the
Company as with Market attractiveness
 Shell’s Directional Policy Matrix

Directional Policy Matrix

Double or
Attractive Leader Try Harder
quit

Sectoral Leader Phased

Prospect Average Custodial
Growth withdrawal

Cash Phased
Unattractive Disinvest
Generation withdrawal

Strong Average Weak

Unit’s / product competitive Position

 PIMS Model (Profit Impact of Market Strategy)

Arthur D. Little Company's Matrix

Dominant Hold

Strong Hold

Business Unacceptable
Strength Favoured Hold
(ROI)
Unacceptable
Tenable
(ROI)
Unacceptable
Weak
(ROI)

Embryonic Growth Mature Decline

Industry Product Life Cycle

Embryonic and Growth - Build strategy

Mature stage – HOLD strategy

Decline stage – Harvest strategy

Maturity / decline stage - unacceptable ROI

Hofer’s Product/Market Evaluation Matrix
 Utility of Display Matrices

In one form or another most portfolio approaches try

to correlate industry growth of profitability with market
share, either as a direct single variables of as an
index based on multiple variables.

In coming years the relevance of portfolio analysis will

be much more than in the past.
Unit 7 Product Pricing
Relationship of Pricing to the Marketing Mix
 Product
 Price
 Promotion
 Place / Distribution
 Packaging
Factors Influencing the Pricing Decisions
 Objective
 Other components of marketing mix
 Product life cycle
o Skimming pricing
o Penetration pricing
 Costs
o How the cost vary with production
Factors Influencing the Pricing Decisions
Economies of Scale
Factors Influencing the Pricing Decisions
Competition
 Pure competition
 Monopolistic competition
 Oligopolistic competition, and
 Pure monopoly
 Price Demand Relationships

 Other Factors
Types of Pricing
 Cost-plus pricing
 Target profit pricing
 Perceived value pricing
 Going rate pricing
 Bid pricing

Discounts
 Cash discounts
 Quantity bulk discounts
 Seasonal discounts
 Trade-in discounts
Discriminatory Pricing
 Customer-based
 Product-based
 Place-based
 Time-based

Strategic Significance of Pricing

 Competitive edge
 Optimizing profits
 Increasing captive consumption
 Unit 8 Branding Decisions

 Branding
o a process
o a tool
o a strategy
o an orientation
 Strategic relevance of branding
o serves as a tool to segment the market
o starts with an idea
o has an enduring value
o helps protects innovation
o sustains though the product may die
o is a living memory
Branding Policy Decisions
 Manufacturer brand policy
 Family branding
 Independent branding
 Distributors brand policy
 Mixed brand policy
Brand Name
 a word with meaning not necessarily related to the
product it represent. Amritanjan, Ortem
 the name of the manufacturers of the product.
Nilkamal, Bata
 a combination of numerical and alphabets. Elle 18,
CBZ 150
 a word whose meaning suggests some function or
quality of the product. Surya, Sleepwel
Brand Name Selection Process
 Step -1 Preparing checkpoints for the different
values to be contained in the name
o memorization value
o descriptional value
o motivational value
o repurchase value
 Step – 2 Making a search for name
 Step -3 Assigning differential ratings to the
names formulated
 Step – 4 Quadrivalent analysis for separating
names from desirable ones and measuring
the marketing potency of the different names
 Step – 5 The final choice
How to Build a Brand
Input
 Identification of key customer groups or segments
 Understanding customer expectations needs and aspirations
 Assessing competitive offering including substitutes
 Building customer confidence by
 Total brand management – both hardware and software
aspects

Outcome
 Market share
 New customer attracted
 Customer loyalty index
 Increased profitability
 Brand knowledge

Assessment
 Continuous feedback from customers as well as trade
channels
 Scientific enquiry into customer satisfaction
 Brand strength score
Brand Image
Dimensions of Brand Image
 Appeal to reason
 Appeal to senses
 Appeal to emotions

Branding of Commodities
 Challenges in Branding commodities
 Customer’s benefits
 Special consideration in branding of a
commodity
 Unit 9 Product Positioning

Positioning Strategies
 Market segmentation considerations
 Product line considerations
 Alternative bases for positioning
o Positioning on benefits, problem solution
or needs
o Positioning for specific usage occasions
o Positioning for user category
o Positioning against another product
o Product class dissociation
o Hybrid bases
Tools for Positioning Decision Making
 Attribute Rating Method
 Overall-similarity bases method
How to Use Perpetual Maps for Decision Making
Positioning of a Brand
 An over communicated society
 Human mind function
 Media options multiplying
 Media product and advertising explosion
 Over simplify your message
 English man – use simple words
 Don’t hide your idea in words – be clear about it.
 You have just a few seconds – accepted or
rejected?
 Choose the message which has best chance to
get into your prospects mind
 We need to touch the base with realism about
what is already there in the mind of the prospect
What to Do When You Are First
 The Mind Eliminates VS. The Mind Ranks

The point that we are trying to drive home is – that

once your mind is set it is very difficult to change it
Positioning – Product Differentiation: Market
Segmentation
 Positioning creates product differentiation
“New Godrej Fridge”
Five side cooling – the creative people have added
immense creativity to the position idea to make the
commercial

 Product differentiation helps positioning

Positioning relies on one or two perceptions, the strong
perceptions

 When you talk to a group – it becomes a

segment
Every communication/ advertising has to address a
segment
Positioning – Product Differentiation: Market
Segmentation
 Intensity increases with narrow targets –
segmentation and fragmentation
distinct position – separate position
 Same product can be positioned differently for
different segment
“Rich and Creamy” makes the tasty difference
MILKMAID
 Rematching product to position
 You need a new position – when you invade
into another product category to expand your
market – “New winter care lotion”
 Matching position to segment
“The Horseless Carriage – The Car”
Ingredients of a Leadership Position
 Fastest with the modest
 The instability of equality
 How do you maintain your leadership
 Do not disturb the enormous mental space
already occupied
 Enhance your product category
 Change can dethrone the leader
 Strength of a brand – size of market share
Position of a Follower
 Do you copy the leader?
 Can you afford t copy a leader?
 Size
 High Price
 Low price
 Sex
 Age
 Class or segment

Repositioning the competition

Brand Equity
 Product attributes
 Product benefits
 Values
 Culture
 Personality
 User

The Concept of Brand Equity

 Brand awareness
 Perceived quality
 Brand loyalty
 Brand association
Brand Equity Measurement
 Price premium
 Customer satisfaction / Brand loyalty
 Perceived quality
 Popularity and leadership position
 Brand value
 Brand personality
 Organizational association
 Brand awareness
 Market share
 Market price distribution coverage
Composite Measure of Brand Equity
Customer Based Brand Equity
How Brand Equity is Created
 Strength of Brand Association
 Favourable brand Association
Building Brand Equity
 Choice of brand element that makeup the brand
 Developing and implementing marketing support
programs
 Leveraging secondary association by linking the
brand to other entities
 UNIT 11 Packaging Decisions
Packaging
Importance of Packaging in Marketing
 Creating customer satisfaction
 Protecting the contents inside
 Communicating the product attributes
 Helping in product handling
 Identifying brand name and seller
 Promoting the product with attractive design
and colours
 Keeping cost down
 Information on the ingredients of the product
 Offering customer convenience
Packaging as an Art
Packaging Concept

Packaging and Product Differentiation

Science and Technology of Packaging
 Wooden boxes
 Corruguated Fibreboard boxes
 Sacks

Labeling – Importance and Mechanism

 General requirement
 Storage precaution
 Label change control
Functions of Packaging
 Protection
 Differentiation / positioning
 Packaging for promotion
 Packaging for pricing
 Packaging for convenience
Packaging Strategies
 Changing the package
 Packaging the product line
 Reuse packaging
 Multiple packaging
 Legal aspect of packaging
 Cost effectiveness of packaging
 Social aspect of packaging – pollution