HAWASSA UNIVERSITY

INSTITUTE OF TECHNOLOGY

Faculty of manufacturing engineering

Department of industrial Engineering

Course: Marketing management

Title: Product management

Group Members

1. EYERUSALEM HAILU MeInEnR/0005/10

2. FEVEN LEUL MeInEnR/0006/10
3. MAHLET ZEWDU MeInEnR/0010/10
4. YEABSIRA MEQUANTINT MeInEnR/0016/10

Submitted to: INS. ANTENEH

Submission date: 10/06/2022G.C

1
TABLE OF CONTENT

1 .Meaning of product management……………………………………………... 3

2. Responsibility of product management………………………………………. .5
3. Product concept…………………………………………………………........... 6
4. Product classification and management……………………………………...... 8
5. Product life cycle…………………………………………………………. …..11
6. New product planning and development process………………………. ….....14
7. Buying pattern of industrial goods………………………………………. …...14
8. Product feature …………………………………………………………… …..16

2
 1. PRODUCT MANAGEMENT
INTRODUCTION
What is management?
Management is a process of planning, implementation and control. It is the setting and
achieving of objectives through the use of people and resources.

What is a product?
Product can be defined as anything that is produced whether as the result of generation,
growth, labour, or by the operation of involuntary causes as the products of the season or of
the farm, the products of manufactures and the products of the brain. In manufacturing
products are purchased as raw materials and sold as finished goods. In project management
products are the formal definition of the project deliverables that make up or contribute to
delivering the objectives of the project. In marketing a product is anything that can be offered
to a market that might satisfy a want or need.
Generally product may refer to a single item or unit, a group of equivalent products, a
grouping of goods or services, or an industrial classification for the goods or services.

Meaning of Product management

Product Management is becoming an important function of marketing. With the passage of

time, product management has undergone many changes. It is no more a department of
churning out promotional materials but is has now become the nerve center of the
organization. Effective product management is a practical, purposeful and positive approach
of improving the company results, through the efforts of a competent and committed team,
coordinating manufacturing, marketing and sales.

Product management is defined as the organizational structure within a business that manages
the development, marketing and sale of a product throughout the product life cycle. We can
infer from this definition that it is the responsibility of a product manager to oversee the
conception of a product idea, ensure that the product is available for the market and provide
support activities for the product, namely pre- and sales services.

In product management, it is necessary to coordinate the marketing activities around the

seven Ps. There are key decisions relating to product management regarding the seven Ps
(place, price, promotion, product, process, people and physical evidence). These key decision

3
areas are important in managing a product effectively. The personnel responsible for these
tasks are product managers who should have certain skills and knowledge to perform these
responsibilities. Product management involves more than merely prioritising the product
features it is also a management philosophy and discipline that focuses on consumers.
Product development is performed by a multidisciplinary team whose goal is building,
operating and maintaining the product.

Product management basically means over seeing everything that has to do with a product,
from conception to production to the market and managing all these processes. The personnel
responsible for these tasks are product managers who should have certain skills and
knowledge to perform these responsibilities.

Framework for product management

• Planning aspect of product management is characterised by identifying new product target
markets and conducting marketing research to determine the features to use on the product
and determine whether or not it is feasible from a business perspective.

•Implementation however, involves operationalising the actual production of the product,

working towards achieving the set objectives according to the time frame set for each stage of
development. It is during this stage that the actual product is manufactured.

•Control phase is characterised by evaluating whether the objectives set have been achieved
such as having manufactured the specific package shape for the product to see if there is any
need for changes. For a example redesigning of the packaging.

Aspects of Product Management

Depending on the company size and history, product management has a variety of functions
and roles. Sometimes there is a product manager, and sometimes the role of product manager
is held by others. Frequently there is Profit and Loss responsibility as a key metric for
evaluating product manager performance. In some companies, the product management
function is the hub of many other activities around the product. In others, it is one of many
things that need to happen to bring a product to market.

The goal of product management is to:

 Ensure a market-driven “whole” product offering
 Establish competitive and profitable pricing models

4
  Ensure the existence and support of product distribution
 Create effective marketing promotions that generate revenue

2. RESPONSIBILITY OF PRODUCT MANAGEMENT

The product manager is responsible for delivering a differentiated product to market that
addresses a market need and represents a viable business opportunity. A key component of
the product manager role is ensuring that the product supports the company’s overall strategy
and goal.
Product management as a discipline is about what the product should be. Product managers
are advocates for the customer’s needs and desires. A large product might have numerous
product managers working towards its success at a variety of levels, all the way from the
junior product manager writing specifications about single feature sets to a product strategy
director who has overall responsibility to executive management for the product direction. A
product manager’s responsibilities include the following:
 Defining and planning product lines and product enhancements
 Managing product contracts and sales. Setting strategic direction based on customer
needs and business goals
 Interpreting strategic goals into operational tasks
 Making proposals to senior management regarding implications of proposed plan
 Serving as a representative to internal and external clients. Taking the leading
establishing tactical plans and objectives
 Developing and implementing administrative and operational matters ensuring
achievement of objectives
 Evaluating risks and trade-offs
 Proposing contingency plans
 Analyzing business processes and creating applications to improve or support those
processes
 Branding
 Working with graphic designers to create look and feel
 Defining navigational flow and user experience

Skills requirement for a product manager:

 Marketing skills

5
  Communication skills
 Time management skills
 Prioritisation skills
 Analytical skills
 Initiative
 Ability to synthesise information

3. THE PRODUCT CONCEPT

“A product can be defined as “a bundle of physical, service and symbolic characteristics

designed to deliver value to customers to satisfy their wants and needs”

Products from the customers point of view: Utilitarian versus non-utilitarian

A product can be tangible as well as intangible.

Tangible product: Something physical that can be touched

Ex: Pair of Levi Jeans

Intangible product: Something that cannot be touched

Ex: A weekend stay at a Protea Hotel (Services).

The product concept:

1. The core product

2. The tangible product

3. The augmented product

4. The product image

5. Product potential

1. The core product/ core benefit/ generic product

- Basic product that the customer buys (what the consumer actually buys)

- “What is the customer really buying?”

- Key benefit or satisfaction that a consumer expects from a product that he or she purchases
Example: You buy a car to get from A to B – transportation.  

6
2. The tangible product (Actual product/ functional product)

- Communicates the fact that the products the company sells will also provide the customer
with certain benefits

- The desired benefits the customer sees in the core product

- Benefits communicated through product attributes that add value to the product.

- Product attributes/ features (functions, uses and features):

Product benefits: The customer’s perspective of the value of the product to them.

Product attributes: The features a product manager builds into the product they are
developing

3. The augmented product

- Further value is added to the product by means of sales support features, such as support
services, delivery, installation, warranties, sales process and facilities, any product
maintenance, product repair and servicing and credit provision.

-It is the additional features or services the customer receives when buying the
product/service

- Usually non-physical attributes

- May enable the manufacturer to charge a premium for the product because of the value
added services

4. The product image

- Encompasses the tangible product, the augmented product and the marketing activities
performed by the company.

- The way consumers perceive an actual or potential product. It adds further image or
branding elements to the product in order to satisfy the psychological needs that customers
might have.

- In addition to the product’s promotional image, the other elements of the marketing mix
such as price, distribution outlets used, the front-line staff, systems and processes used all
contribute to the product image.

7
5. Product potential

- This is the outer layer

- Includes all possible or potential future enhancements and/or transformations to the existing
product.

The total product

All five levels contribute to what is referred to as the total product. Products are generally
categorised into two distinct groups namely:

A. Consumer goods – Consumed by individuals and families

B. Industrial goods – Consumed by businesses, organisations and governments.

This is based on:

-The type of consumer who will use the product

-The intended use of the product

Products are characterised in terms of tangibility and durability

Durable products/ hard goods: Tangible and last for a period of time. Seen as investment
demand. They do not wear out quickly. Ex: Kettle. Time frame more than 3 years. Other
examples include a car, couch, iPod etc.

Non-durable products/ soft goods/ consumerables: Have a seemingly short life span, share
the primary characteristic of tangibility but are quickly consumed and worn out. Seen as
consumption demand. Ex: Bread and milk. Time frame less than 3 years.

Semi-durables: Not indestructible, also not consumed instantly. Ex: Clothing, footwear and
preserved foods

4. PRODUCT CLASSIFICATION AND MANAGEMENT

- Intangibility

- Inseparability

- Variability

- Perishability
8
 The definition of consumer goods is based on the following criteria:

• It is a tangible commodity that satisfies a need or want.

• It is produced and sold primarily to individuals.

Consumer goods can be divided into three categories

Convenience product:

- Staple products

- Impulse products

- Emergency products
Shopping products; Speciality products

1. Convenience products:

- Products are relatively inexpensive everyday goods

- Require a lower level of consumer involvement

- Generally readily available and frequently purchased

- Promotional effort is focused on benefits and price and brand building

• Staple products – purchased for everyday use and routine purchases (eg bread and
milk)

• Impulse products – purchased on the whim (eg chocolates, sweets and chewing
gum)

• Emergency products – purchased immediately when the need arises, to solve a

sudden problem (eg candles, medicine and umbrellas

2.Shopping products

- Differentiated according to the amount of time spent on the purchasing decision

- Consumers generally shop around, make comparisons and examine merchandise

before making a purchasing decision.
9
 - Purchases done less frequently

- Consumers willing to travel further to find products

- Bit more expensive than convenience products

- Generally durable or semi-durable in nature

- Example: Clothing, furniture

- Marketing efforts directed towards advantages or benefits of the product as well as

brand building.

2. Shopping products continued….

- Heterogeneous/ non-uniform shopping products – very different from each other,

the consumer will probably focus more on features and attributes than on price.

- Homogeneous/ uniform shopping products – similar products in terms features and

attributes, customers are most likely to focus on price

3. Speciality products

- High-value products that aren't purchased frequently

- Considerable research and debate

- High level of consumer involvement and strong brand preference criteria.

- Consumers often influenced by brand image and/or quality and will not often accept
substitutes.

- Consumers will also spend a lot of time evaluating various alternatives.

- Price is a factor for many consumers, will compare alternatives, shop around for the
best deal, best opportunity at the best price.

- Distribution is usually through exclusive outlets, not manufactured in large quantities.

- May want to own these products as indicators of status and authority.

Example: Cars, computers, expensive jewelry and designer clothes

10
5. PRODUCT LIFE CYCLE

The product lifecycle can be defined as a planning tool that describes the stages a product
will pass through from its introduction until its decline. It is marketing theory which outlines
the period of time associated with all products over which a product is developed, brought to
market and ultimately removed from the market. The product life cycle are used by
management and marketing professional to help determine advertising schedule price point
expansion to new product markets, packaging redesigns, and more. These strategic methods
of supporting a product are known as product life cycle management.

The product life cycle can be divided into four phases namely:

 Introduction
 Growth
 maturity
 decline
On the basis of these stages, a product planning is done. As mentioned above there are four
life cycle stages but before this stages a product needs to go through design, research and
development. Once the product is found to be a feasible and potentially profitable it can be
produced, promoted and sent out to the market. It is at this point the product life cycle begins.

11
 Fig; product life cycle stage

Introduction Stage

When a product is launched on a market, its sells will begin to grow slowly and profit, if any,
will be rather small. At this stage the product is new and untested, which implicate that
potential customers may be unwilling or reluctant to purchase it. There are various marketing
strategies and two pricing strategies (price skimming and price penetration) that can be used
for introducing new product to the market. The choice between the two strategies depend on
the nature of the product and the level of competition.

Characteristics of the Introduction:

 The sales rate is slow because the product is new in the market.
 Customers tend to resist new products.
 High marketing costs are involved in making consumers aware of a new product.
 Few distribution channels carry the manufacturer’s new product
 Production problems are possible because the product is dependent on the technology
used by the manufacturer.
 Few competitors in the marketplace carry the new product and few retailers and
wholesalers had it on offer.
 The price charged for the product depends on the nature thereof.
 A skimming pricing strategy or penetration price strategy can be adopted.
 The sales of new products yield low profits.
Growth Phase

If the product meet existing market needs or stimulate previously untapped needs, it will
enter the growth stage. In this phase, sales will usually lift off. This point it is called the take
–off point. Profits are generated as sales revenue increase faster than cost.

Characteristics of the growth phase:

 An increase in the number of competitors.

 Product improvement occur to meet consumer needs.
 The number of intermediaries increase as the product proves to be profitable.

12
  The prices of products are then lowered because they were introduced at a higher price
(skimming price strategy). This depends on pricing strategy employed in the
introductory phase.
 Proactive approach by distributors to the manufacturer to stock the product.
 Selling task becomes easier and quicker.
 Sales growth, growing market acceptance.
 There is an increase in profits because of the high demand for the product.
Maturity phase

When the sale growth of the product slows down, the maturity stage is reached. A firm will
have tried to keep the product as long as possible in this stage.

Characteristics of the maturity phase:

 Owing to the introduction of new products, sales growth levels off for products in this
phase.
 The management are faced with challenges of providing accessories for the product
and the level of accessories to manufacture.
 Competition level increases and is intense
 Reduction in profit margins for intermediaries
 There is a reduction in the overall level of profits.
 Growth maturity – product grows but at a much slower rate
 Stable maturity – sales flatten out completely, market is saturated with competitors.
 Decline maturity – sales growth it eaten away.
Decline phase

When the sales of the product start to fall or profitability can no further be maintained, the
decline stage is reached. This does often happened as a result of the market entry of substitute
products which satisfy customer needs better than the previous product.

Characteristics of the decline phase:

 A permanent decline in sales

 The withdrawal of the product
 Cuts in advertising
 A decline in the size of the market, consumers switch to new products.

13
  Suppliers and marginal distributors might be dropped
 A decline in the number of competitors
 A reduction in profits.

6. NEW PRODUCT PLANNING AND DEVELOPMENT PROCESS

New product development (NPD) is a process of taking a product or service from conception
to market. It brings a new product to the market place. Product development is one of the step
of product planning process. Product planning process is the function of most top
management personnel and experts from the field of sells and marketing. It allows product
professionals to make informed and internally focused decision throughout the development
of new product.

Things to consider during the NDP process:

 Market concentration and segmentation
 Entry market positioning (market leader or market follower?)
 Market penetration techniques and strategies
 Market development – identifying new markets
 Strategic integration – allowing new products to pave the way for other structural
offerings.
New product planning and development process

The process includes the following steps

Stage-1: Idea generation

Stage-2: Idea Screening

Stage-3: Concept Development and Test

Stage-4: Market strategy/Business Analysis

Stage-5: Product Development

Stage-6: Deployment

Stage-7: Market Entry/Commercialization

14
7. BUYING PATERNS OF INDUSTRIAL GOODS

Industrial goods are materials used in the production of other goods. They are bought and
used for industrial business use. They are made up of machinery, manufacturing plants, raw
materials, and any other good or component used by industries or firms.

Some of the characteristics of industrial goods include rational buying power, complex
product lines, higher purchase value and the need for high level of investment.

Rational buying power; the decision and drive to buy industrial goods is rational compared
to consumer goods.

Complex product lines; they are highly technical. Those who use them must be highly
skilled.

Higher purchase value; they come with higher price tag because of their complex nature and
limited target market.

High level of investment; those who need to buy industrial goods often invest a lot money
to purchase industrial goods.

According to Robinson, Faris, and Wind (1967) three factors determine the buy class for a
certain purchase; the newness of the problem ,the information requirement, and the
consideration of new alternatives . the three buy classes defined in the following way.

New task

 A requirement or a problem that has not arisen before.

 Little or no relevant past buying experience to draw upon.
 A great deal of information is needed.
 Must seek out alternatives ways of solving the problem and alternative suppliers.
 Occurs infrequently – but very important to marketers because it set the patterns for
the more routine purchases that will follow.
 May be anticipated and developed by creative marketing.

Straight rebuy

 Continuing or recurring requirement , handled on a routine basis

 Usually the decision on each separate transaction is made in the purchasing
department.

15
  Formally or informally, a “list “of acceptable suppliers exists.
 Buyers have much relevant buying experience, and hence little new information is
needed.
 Appears to represent the bulk of the individual purchases within companies.
 Item purchased, price paid, delivery time, e.t.c. may vary from transaction to
transaction, so long as these variations do not cause a new source of supply to be
considered.

Modified rebuy

 May develop from either new task or straight rebuy situation.

 The requirement is continuing or recurring or it may be expanded to a significantly
larger level of operations.
 The buying alternatives are known but they are changed.
 Some additional information is needed before decision are made.
 May arise because of outside events, such as an emergency or by the actions of
marketer,
 May arise internally because of new buying influences, or for potential cost
reductions, potential quality improvements of potential service benefits.
 Marketers who are not active suppliers try to convert the customer’s straight rebuys in
to modified rebuys.

8. PRODUCT FEATURES
Product features are discrete areas of new and upgraded functionality that deliver value to
your customers. Features are characteristics that set a product or service apart from other
similar items.

The difference between feature and a benefit is a product feature is specific piece of
functionality that has a corresponding benefits or sets of benefits for the user. Benefits are the
value that the users gain from using that functionality. More generally “what’s in it for
customers”.

For example, a feature for a pair of sunglasses may be the biodegradable plastic that is made
of. what it sets out from other sunglasses is that it is environmentally friendly.
Environmentally friendliness is a feature.

16
The benefit of sunglasses is being able to drive without glare, protecting your eye from
damage, and looking cool. So companies should make emphasis on more what the customer
wants or benefits to the customer as it gives the company more profit and market share while
taking in to consideration enhancing the product feature.

Skilled production managers can articulate benefits why the feature ultimately matters to
customer. To offer maximum value, product features must be prioritized effectively. Features
should be evaluated based on quantifiable ways that add value for the products end user.
Product features should also be prioritized based on how well they achieve business
objectives.

Efficient feature management takes skill even in single product or single-target-market

companies. But in real organization, it takes real expertise.

A product manager may work on developing and launching new product features or
improving the existing product features in both scenarios a product manager should ask the
following questions.

 What is primary goal or function of product?

 Does the new feature idea help the company’s product to achieve the goal more
effectively?
 What is the product feature that is rarely used by customer how can we improve by
taking in to account the business goals?
 What are the customers wants to be improved from the product features?

17
18