Product Management

MHM-614 / W-10227

Semester Assessment Plan

Marks

Mid Term Exam 20

Final 40

Assignments 20

Class Assessment 05
Term Project (Report + Presentation) 15

TOTAL 100

Recommended Text / Books

• Course notes from sessions
• Buyology by Martin Lindstrom
• Articles discussed / shared in class

Three Ps of an Organization

 People
 Procedures / Policies
 Products / Services

The Proactive vs. Reactive Approach

Proactive Approach
 Planned & anticipated
 Coordinated working
 Considers the SWOC
 Financially manageable
 It is not good to be 100% proactive
 Seen in well communicated organizations
 Reactive Approach
  Unplanned & reactionary
 Lack of coordination leads to this situation
 Threats from the surroundings are not considered
 Uncontrolled expenditures incurring financial loses
 Common in closed communication organizations

Organizational Culture
• Organizational culture captures the subtle, elusive, and largely unconscious forces that
shape a workplace.
• Remarkably resistant to change, culture can represent a major strength or weakness for
the firm.
• Case study: ”Five monkeys in a cage.”
• Organizational culture significantly affects business decisions and thus a Leader should
always keep a vigilant eye on Organizational Culture.
• An organization’s culture should infuse individuals with enthusiasm for implementing
strategies.
• Remember, a firm is a sociocultural system, where humans (People) interact with
Policies, Procedures, Products and Services.
• Success is often determined by linkages between a firm’s culture and strategies.
• The challenge of management today is to bring about the changes in organizational
culture and individual mind-sets that are needed to support the formulation,
implementation, and evaluation of strategies.

Levels of Competition

• To treat RTI or any other infection, what are your options:

1. Which Drug Group: Antibiotic and / or anti pyretic and / or anti tussive
2. Which Antibiotic Group: Penicillin, Cephalosporin, Quinolone
3. Which Antibiotic Generation: 1 st or 2nd or 3rd Generation
4. Which Molecule in the Generation: Cefixime or Cefpodoxime
5. Which Formulation of Molecule: Capsule or Syrup
6. Which Product: Brand or Generic based on patient affordability and / or
availability and / or formulation and / or Dosage: Cefspan or Cefiget
The SWOT or SWOC Analysis
• SWOT comes from Military war strategy
• Strengths and Weakness are internal
• Opportunities and Threats / Challenges are external
• Ss and Os are positive and contributing
• Ws and Ts / Cs are negative and have to be overcome

History of Product Management

When, Where & How it Started?
• Modern product management started in 1931 when Neil H. McElroy at Procter & Gamble
wrote a memo.
• The memo was a justification to hire more people.
• But it became a cornerstone in modern thinking about brand management and ultimately
product management.
• What he laid out in his 800 word memo was a simple and concise description of “Brand
Men” and their absolute responsibility for a brand – from tracking sales to managing the
product, advertising and promotions.
• Uniquely he outlined that the way to do this was through thorough field testing and client
interaction.
• McElroy got his two hires.
• He also got P&G to restructure into a brand-centric organization and led to the birth of
the product manager in the FMCG field.
• McElroy later became Secretary of Defense and helped found NASA, proving all product
managers are destined for greatness, but he also advised at Stanford where he
influenced two young entrepreneurs called Bill Hewlett and David Packard.
• They interpreted the Brand Man ethos as putting decision making as close as possible to
the customer, and making the product manager the voice of the customer internally.
• In the book The Hewlett-Packard Way this policy is credited with sustaining Hewlett-
Packard’s 50 year record of unbroken 20% year-on-year growth between 1943 and
1993.
• Hewlett-Packard had many other firsts – for example they introduced the division
structure, where each product group became a self-sustaining organization responsible
for developing, manufacturing and marketing its products.
• Meanwhile, in post-war Japan, shortages and cashflow problems forced industries to
develop just-in-time manufacturing.
 • Taiichi Ohno and Eiji Toyoda took this idea and ran with it – developing the Toyota
Production System and the Toyota Way over 30 years of continuous improvement,
focusing not just on eliminating waste in the production process but also on two
important principles any modern product manager will recognize.
• Kaizen – improving the business continuously while always driving for innovation and
evolution.
• Genchi Genbutsu – to go to the source to find the facts to make correct decisions.

Introduction to Product Management

What is Marketing?
• “Marketing is managing profitable customer relationships.”
• “Meeting needs profitably” – one of the shortest good definition of marketing.
• “Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and
society at large.” – definition by The American Marketing Association.
• Marketing has moved from, “Telling and Selling,” to, “Satisfying Customer Needs.”
• “The aim of marketing is to make selling unnecessary.” – Peter Drucker
• Broadly defined, marketing is a social and managerial process by which individuals and
organizations obtain what they need and want through creating and exchanging value
with others.
• Marketing involves building profitable, value-laden exchange relationship with
customers.
• Definition: The process by which companies create value for customers and build
strong customer relationships in order to capture value from customer in return.

The Marketing Process

• Understand the market place and customer needs and wants
• Design a customer-driven marketing strategy
• Construct an integrated market program that delivers superior value
• Build profitable relationships and create customer delight
• Capture value from customers to create profits and customer equity

A Simple Marketing System

Brand / Product Manager Must Have
• Basic knowledge of marketing and general management
• Focus on the success of Product, Organization and His / Her career
• Understanding of his / her role in the organization
• Focus on long term objectives
• Understanding of integrated marketing support for the assigned products
• Understanding of challenges faced by field force and how to support them to achieve
product objectives

The Process in a Nut Shell

• Situation
• Analysis
• Planning
• Organizing Actions
• Implementation of Actions
• Motivating
• Directing
• Monitoring
• Controlling
 • Feedback

JD of a PM
1. Responsible for providing the sales team with the necessary technical expertise to
enable them to sell the product. This involves printed and electronic promotional
material, product training, and relevant clinical papers.
2. Responsible for reviewing product data to ensure that the field force is kept up to date on
new developments.
3. Act as point of first reference for all product related enquiries and work collaboratively
with colleagues in Clinical Research and Regulatory to address any issues that may
arise.
4. Close liaison with the field force to assess the response to and suitability of current
promotional material and to ensure that the printed promotional material is being used
optimally.
5. Design market research projects to assess customer attitudes to the current product
range and new product introductions. Either conduct this research with in-house staff or
manage an outside agency ie initial identification of suitable partner, definition of
responsibilities communication plan, divisions of responsibility, milestones, contract with
company, review transcripts and reports, and recommend action plans from the
research.
6. Assist with the development of the annual marketing plan and for controlling advertising,
promotion and sales aids in accordance with the annual marketing plan

Developing Marketing / Product Strategy

What is Strategic Management?
“Without a strategy, an organization is like a ship without a rudder, going around in circles. It’s
like a tramp; it has no place to go.”
- Joel Ross and Michael Kami

Defining Strategic Management

• “The art and science of formulating, implementing, and evaluating cross - functional
decisions that enable an organization to achieve its objectives.”
• Strategic management focuses on integrating management, marketing, finance
(accounting), operations (production), R&D, and Management Information Systems to
achieve organizational success.
Stages of Strategic Management
• Strategy Formulation
• Strategy Implementation
• Strategy Evaluation

Strategy Formulation
• Vision & Mission
• SWOC Analysis
• Long Term Objectives
• Alternate Strategies
• Choosing a Particular Strategy to Pursue

• Strategy - formulation issues include:

– Deciding what new businesses to enter
– What businesses to abandon
– How to allocate resources
– Whether to expand operations or diversify
– Whether to enter international markets
– Whether to merge or form a joint venture
– How to avoid a hostile takeover

• Organizations do not have unlimited resources

• Strategists must decide which alternative strategies will benefit the most
• Strategy-formulation decisions commit an organization to specific products, markets,
resources, and technologies over an extended period of time
• Strategies determine long-term competitive advantages
• For better or worse, strategic decisions have major multifunctional consequences and
enduring effects on an organization
• Top managers have the best perspective to understand fully the ramifications of
strategy-formulation decisions
• They have the authority to commit the resources necessary for implementation
Strategy Implementation
• Annual objectives
• Devise policies
• Motivate employees
• Allocate resources

• Strategy implementation includes:

– Developing a strategy-supportive culture
– Creating an effective organizational structure
– Redirecting marketing efforts
– Preparing budgets
– Developing and utilizing information systems
– Linking employee compensation to organizational performance
• Often called the “action stage” of strategic management
• Implementing strategy means mobilizing employees and managers to put formulated
strategies into action
• Often considered as the most difficult stage in strategic management
• Requires personal discipline, commitment, and sacrifice
• Successful strategy implementation hinges upon managers’ ability to motivate employees,
which is more an art than a science
• Strategies formulated but not implemented serve no useful purpose
• Interpersonal skills are especially critical for successful strategy implementation
• Strategy-implementation activities affect all employees and managers in an organization
• Every division and department must decide on answers to questions, such as “What must
we do to implement our part of the organization’s strategy?” and “How best can we get the
job done?”
• The challenge of implementation is to stimulate managers and employees throughout an
organization to work with pride and enthusiasm toward achieving stated objectives

Strategy Evaluation

• Strategy evaluation is the final stage in strategic management

• Managers desperately need to know when particular strategies are not working well
 • Strategy evaluation is the primary means for obtaining this information
• All strategies are subject to future modification because external and internal factors are
constantly changing
• Three fundamental strategy-evaluation activities are:
• Reviewing external and internal factors that are the bases for current strategies
• Measuring performance
• Taking corrective actions
• Strategy evaluation is needed because success today is no guarantee of success
tomorrow!
• Success always creates new and different problems
• Remember, complacent organizations experience demise

Stages of Strategic Management

• Strategy formulation, implementation, and evaluation activities occur at three hierarchical
levels in a large organization: Corporate, Divisional or strategic business unit, and
Functional
• By fostering communication and interaction among managers and employees across
hierarchical levels, strategic management helps a firm function as a competitive team
• Most small businesses and some large businesses do not have divisions or strategic
business units; they have only the corporate and functional levels
• Nevertheless, managers and employees at these two levels should be actively involved
in strategic-management activities

What Peter Drucker said?

• The prime task of strategic management is thinking through the overall mission of a
business:
• . . . that is, of asking the question, “What is our business?” This leads to the setting of
objectives, the development of strategies, and the making of today’s decisions for
tomorrow’s results. This clearly must be done by a part of the organization that can see
the entire business; that can balance objectives and the needs of today against the
needs of tomorrow; and that can allocate resources of men and money to key results.

Integration of Intuition and Analysis

“In God we trust. All others bring data.” - Edward Deming
 • Based on past experiences, judgment, and feelings, most people recognize that
intuition is essential to making good strategic decisions
• Intuition is particularly useful for making decisions in situations of great uncertainty or
little precedent
• It is also helpful when highly interrelated variables exist or when it is necessary to
choose from several plausible alternatives

“I believe in intuition and inspiration. At times I feel certain that I am right while not knowing the
reason. Imagination is more important than knowledge, because knowledge is limited, whereas
imagination embraces the entire world.” - Albert Einstein

Adapting to Change
• The only predictable thing about future is, “change”
• Organizations should continually monitor internal and external events and trends so that
timely changes can be made as needed
• The rate and magnitude of changes that affect organizations are increasing dramatically
as evidenced how the global economic recession has caught so many firms by surprise
• Firms, like organisms, must be “adept at adapting” or they will not survive

Key Terms
Competitive Advantage
• Strategic management is all about gaining and maintaining competitive advantage
• Defined as “anything that a firm does especially well compared to rival firms”
• When a firm can do something that rival firms cannot do, or owns something that rival
firms desire, that can represent a competitive advantage

• Examples include:
– Trained, devoted and motivated staff e.g. SCBPL
– Being cash rich in economic recessions e.g. Pfizer,
– Less fixed assets e.g. Alibaba.com, Ebay.com, Amazon.com
– High R&D output / New Products e.g. Genentech (Roche), Khaadi, Samsung
– Offering products / services which competition cannot offer e.g. Ikea, Agha’s
Supermarket
 • Competitive advantage cannot be of long term, e.g. Zinger burger
• Organizations should strive for sustained competitive advantage by
– Continually adapting to changes in external trends and events and internal
capabilities, competencies, and resources
– Effectively formulating, implementing, and evaluating strategies that capitalize
upon those factors

Strategists
• Strategists are the individuals who are most responsible for the success or failure of an
organization
• Strategists have various job titles, such as chief executive officer, president, owner, chair
of the board, executive director, chancellor, dean, or entrepreneur

“All strategists have to be chief learning officers. We are in an extended period of change. If our
leaders aren’t highly adaptive and great models during this period, then our companies won’t
adapt either, because ultimately leadership is about being a role model”
-- Jay Conger
Professor of Organizational Behavior at London Business School
and author of “Building Leaders.”

Vision and Mission Statements

Vision Statement
• Many organizations today develop a vision statement that answers the question “What
do we want to become?”
• Developing a vision statement is often considered the first step in strategic planning,
preceding even development of a mission statement
• Many vision statements are a single sentence

Mission Statement
• Mission statements are enduring statements of purpose that distinguish one business
from other similar firms
• A mission statement identifies the scope of a firm’s operations in product and market
terms
• It addresses the basic question that faces all strategists: “What is our business?”
 • A clear mission statement describes the values and priorities of an organization
• Developing a mission statement compels strategists to think about the nature and scope
of present operations and to assess the potential attractiveness of future markets and
activities
• A mission statement broadly charts the future direction of an organization
• A mission statement is a constant reminder to its employees of why the organization
exists and what the founders envisioned when they put their fame and fortune at risk to
breathe life into their dreams

Long-Term Objectives
• Objectives are specific results that an organization seeks to achieve in pursuing its basic
mission
• Long-term means more than one year
• In a multidimensional firm, objectives should be established for the overall organization,
for each division and for each individual product

Objectives Should Be:

• Challenging
• Measurable
• Consistent
• Reasonable
• Clear

Long-Term Objectives
• Objectives are essential for organizational success because:
– They state direction
– Aid in evaluation
– Create synergy
– Reveal priorities
– Focus coordination
– Provide a basis for effective planning, organizing, motivating, and controlling
activities
Strategies
Strategies are the means by which long-term objectives are achieved, includes:
• Geographic expansion
• Diversification
• Acquisition
• Product development
• Market penetration
• Retrenchment
• Divestiture
• Liquidation
• Joint ventures

• Strategies are potential actions that require top management decisions and large
amounts of the firm’s resources
• In addition, strategies affect an organization’s long-term prosperity, typically for at least
five years, and thus are future-oriented
• Strategies have multifunctional or multidivisional consequences and require
consideration of both the external and internal factors facing the firm

Annual Objectives
• Annual objectives are short-term milestones that organizations must achieve to reach
long term objectives
• Like long-term objectives, annual objectives should be measurable, quantitative,
challenging, realistic, consistent, and prioritized
• They should be established at the corporate, divisional, and functional levels in a large
organization

Policies
• Policies are the means by which annual objectives will be achieved
• Policies include guidelines, rules, and procedures established to support efforts to
achieve stated objectives
• Policies are guides to decision making and address repetitive or recurring situations
 • Policies can be established at the corporate level and apply to an entire organization, at
the divisional level and apply to a single division, or at the functional level and apply to
particular operational activities or departments

Brand / Pharma Product Strategies

• Successful Strategies:
– Triaminic pack change in Pakistan
– Pricing of Norvasc (Pfizer)
– Myteka (Montelukast) by Hilton
– Exforge (Novartis)
• Failure Strategies:
– Caduet launch
– Ezetimibe / Ezita (Getz)
– Tarka in Pakistan

Developing Marketing Strategies and Plans

Key Message
• Developing the right marketing strategies over time requires a blend of discipline and
flexibility. Firms must stick to a strategy but also constantly improve it. In today’s fast-
changing marketing world, identifying the best long term strategies is crucial – but
challenging.

Marketing & Customer Value

The Value Delivery Process
• The task of any business is to deliver customer value at a profit.
• Target Markets: different types of people have individual wants, perceptions,
preferences, and buying criteria.
• Value Creation & Delivery:
– Choosing the value
– Providing the value
– Communicating the value
The Value Chain
 • Harvard’s Michael Porter proposed the Value Chain as a tool for identifying ways to
create more customer value.
• Five primary and Four support activities create value in a product / business

The Value Chain

Primary Activities
• Inbound Logistics
• Operations
• Outbound Logistics
• Marketing and Sales
• Services
Support Activities
• Procurement
• Technology Development
• HR Management
• Organizational Infrastructure

The Organizations’ task is to examine its cost and performance in each of these activities,
benchmarking against competition, and look for ways to improve itself.

The Central Role of Strategic Planning

• Managing Business as an investment portfolio.
• Assessing the market’s growth rate and the organization’s position in that market.
• Establishing a Strategy
The Marketing Plan is the central instrument of directing and coordinating the marketing
effort. It comprises of:
1. Strategic Marketing Plan
2. Tactical Marketing Plan

Marketing Plan
Nature of Marketing Plan
 • Plan for individual product / services, lines, brands, channels and customer groups.
• Marketing Plan is a written document which summarizes learnings about products,
markets, customers and how to reach the organizations’ objectives. It contains the
tactical guidelines to do so.

Contents of Marketing Plan

• Executive Summary & Table of Contents

• Situation Analysis
• Marketing Strategy
• Marketing Tactics
• Financial Projections
• Implementation Controls

Marketing Innovation
• Innovation in marketing is critical.
• Senior management must identify and encourage fresh ideas, from three
underrepresented groups:
• Employees with youthful or diverse perspective.
• Employees far away from company Head Office.
• Employees new to the industry.

Key Message
• Increased customer capabilities pose challenges. Regardless, marketers must connect
with customers – informing, engaging, and even energizing them in the process.
Customer centered companies are adept at building customer relationships, not just
products.
• Successful marketers are those who carefully cultivate satisfaction and loyalty.

Traditional Organization vs Customer – Oriented Organization

Some Concepts
• Customer Perceived Value: is the difference between the prospective customer’s
evaluation of all the benefits and costs of an offering and the perceived alternatives.
• Loyalty: a deeply held commitment to rebuy / patronize a preferred product / service in
future despite situational influences and marketing efforts having the potential to cause
switching behavior.
• Value Proposition: consists of the whole cluster of benefits the company promises to
deliver; it is more than the core positioning of the offering.
• Quality is the totality of features and characteristics of a product or service that bear on
its ability to satisfy stated or implied needs. – American Society for Quality
• Total Quality Management: a system of management based on the principle that every
member of staff must be committed to maintaining high standards of work in every
aspect of a company's operations.
• The Pareto Principle (Vilfredo Pareto - economist), specifies an unequal relationship
between inputs and outputs. 20% of the invested input is responsible for 80% of the
results obtained.

Crafting The Brand Positioning

Key Message
• No company can win if its products and services resemble every other product and
offering. As part of the strategic brand management process, each offering must
represent their right kinds of things in the minds of the target market.
• A company can reap the benefits of carving out a unique position in the marketplace.
Creating a compelling, well-differentiated brand position requires a keen understanding
 of consumer needs and wants, company capacities , competitive actions. It also requires
discipline but creative thinking.

Developing A Brand Positioning

• All marketing strategy is based on Segmentation, Targeting, and Positioning (STP).
• Positioning is the act of designing a company’s offering and image to occupy a
distinctive place in the minds of the target markets.
• The goal is to locate the brand in the minds of consumers to maximize the potential
benefit to the firm.
• A good positioning has one foot in the present and one in the future.
• Positioning requires that marketers define and communicate similarities and differences
between their brand and its competitors.

Positioning
• Positioning is the development of a service and a marketing mix to occupy a specific
place in the minds of customers within target markets.
• Creating distinct and valued physical and perceptual differences between one’s product
and its competitors, as perceived by the target customer.
• The act of designing the firm’s market offering so that it occupies a distinct and valued
place in the minds of its target customers.

Increased Importance of Positioning

1. Perceptual processes of customers: They screen out most information
2. Greater competition: More organizations competing for share of mind
3. Growing volume of commercial messages: Advertising and promotion clutter

Steps in the Positioning Process

• 1. Identify relevant set of competitive products serving a target market.
• 2. Identify the set of determinant attributes that define the “product space” in which
positions of current offerings are located.
• 3. Collect info from a sample of customers and potential customers about perceptions of
each product on the determinant attributes.
• 4. Determine product’s current location (positioning) in the product space and intensity
thereof.
 • 5. Determine customers’ most preferred combination of determinant attributes.
• 6. Examine the fit between preferences of market segments and current position of
product (market positioning).
• 7. Write positioning statement or value proposition to guide development and
implementation of marketing strategy.

Steps for Effective Positioning (5 Ds)

• Documenting: What benefits are the most important to your current and potential
customers?
• Deciding: What image do you want your current and potential customers to have of your
organization?
• Differentiation: Which competitors do you want to appear different from, & what are the
factors that you will use to make your organization different from them?
• Designing: How will you develop and communicate these differences?
• Delivering: How will you make good on what you’ve promised, and how do you make
sure that you have “delivered?”

Levers To Establish Positioning

• Simple physically based attributes
– Single physical dimension such as quality, power or size
• Complex Physically based attributes
– Concepts like “roominess” and “User friendly”
• Essentially abstract attributes
– Not directly related to the physical attributes, sexiness of perfume, prestige
• Price
– Low priced, high priced

Positioning Approaches: Six Alternatives

• Specific product features: Volvo for safety
• Benefits, problem solution, or needs: Harpic for cleaning, Safeguard for germs protection
• Specific usage occasions: BBQ Masala and Sawaiyan on Eid
• User category: iPhone, CAT Shoes
 • Against another “product”: Arial vs Surf
• “Product class” dissociation: Body Shop

Comparison of Physical and Perceptual Positioning Analysis

Physical Positioning
• Technical orientation
• Physical characteristics
• Objective measures
• Data readily available
• Physical brand properties
• Large number of dimensions
• Represents impact of product specs and price
• Direct R&D implications
Perceptual Positioning
• Consumer orientation
• Perceptual attributes
• Perceptual measures
• Need for marketing research
• Perceptual brand positions and positioning intensities
• Limited number of dimensions
• Represents impact of product specs and communication
• R&D implications need to be interpreted

Choosing A Competitive Frame Of Reference

• The competitive frame of reference defines which other brands a brand competes with
and which should thus be the focus of competitive analysis.
• Identifying competitors:
– Category membership; The products or sets of products with which a brand
competes and that function as close substitute.
– Pepsi vs. Coke, Surf Excel vs. Arial, Domino vs. Pizza Hut, Habitt vs. Interwood.
• Analyzing competitors:
 – SWOC analysis
– A company needs to gather information about each competitor’s real and
perceived strengths and weaknesses.
• Potential Points of Difference and Points of Parity

Value Proposition for Volvo in North America

• For upscale American families, Volvo is the family automobile that offers maximum
safety.
• Target market: Upscale American families
• Benefits offered: Safety
• Relative price: 20% premium to domestic family cars

Some Key Questions Concerning Positioning Decisions

• For whom are they written?
• In what sort of language?
• Should they focus on features or benefits?
• How many differentiating attributes should anchor them?