Unit-2 (PBM) - Consolidated

Unit-2 PBM MBA-3 Sem
Product & Brand Management

Unit-2 (Module II: Product Strategy)
LECTURE NO: -8
PRODUCT MIX
Product Mix
Product Mix is the set of all the products that an organization is offering to its customers. For
instance, HUL is offering detergents, shampoos, hair care products, Skin Care Products, Oral Care
products, cosmetics, beverages, health care products, ice creams, etc. A product mix consists of all
the product mix lines and categories.
Product Line
It is a group of related products produced by one manufacturer. For example, products that are
intended to be used for similar purposes or to be sold in similar types of shops. For example, Bajaj
Auto Ltd., in its two-wheeler product line, produces Discover, Boxer, Boss, Pulsar, Cub scooter,
Bajaj Sunny, etc. Product line is a group of product items that may satisfy the same needs and
wants.
Product Items
Product items are various varieties offered within a product line, which are similar in one or other
ways. Such varieties are based on various parameters such as quality, size, colour, capacity, price,
model, performance, and so on.
Product Mix has some certain characteristics features like product width, length, depth and
consistency.
1. Width: -This is the total number of product lines a company carries
2. Length: -The product mix length is the total number of product items in that product mix. In
our example of HUL, it is 46. The average length of a line is calculated by dividing the total length
by the number of lines i.e., 46/10= 4.6
3. Depth: -The product mix depth is the assortment of sizes, colors and variations offered for each
product in the product line, for example, lifeboy active red comes in three sizes: 125 gm, 100
gm and 60 gm cakes.
4. Consistency: -Consistency means closeness exhibited by the product lines in production
requirements, distribution, end usage, etc. For example, most of the HUL product lines are
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Notes By: -Dr. Vikas Mahalawat (Dean-SA and Head-DMS, MITRC, Alwar)
consistent with each other as they are consumer goods, distributed by the same channels of
distribution and are produced in similar manufacturing facilities.
Table: - Product Mix of HUL
PRODUCT MIX DECISIONS

Manufactures and Intermediaries use several strategies to manage their product mix effectively.
• Expansion of Product Mix: -An organization may decide to expand its existing product mix
by increasing its product lines and/or the depth within the line. New product lines may be either
related or unrelated to the existing product lines.
• Concentration of product mix: -It has been noted that companies contract their product
mix during economic slumps, and when the competition is intense. Organizations may contract
their product mix either by eliminating the entire product line or by simplifying the assortments
within the lines. The product mix is contracted to eliminate low profit yielding products and to
receive a better profit margin from fewer products.
• Altering existing products: -Companies should consider altering the existing products
instead of adding new products to product mix. Redesigning or adding new features to the
existing product has been proved less risky and more lucrative. Packaging is an important tool
in altering the look and the usage of the product. Creative packaging has been found to increase
the attractiveness of even mundane products like cheese, paper napkins, eggs etc. for example,
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the tetra packing of milk/juices increases the ease of handling and storage. Colgate toothpaste’s
plastic packaging makes it easy to use and dispense the toothpaste.
PRODUCT SYSTEMS
A product system is basically a group of diverse but related items that function in a compatible
manner. For example, the extensive iPod product system includes headphones and headsets,
cables and docks, armbands, cases, power and car accessories, and speakers.
References
1. https://www.scribd.com/document/189473528/Marketing-Management-Notes
2. https://marketbusinessnews.com/financial-glossary/product-line/
3. Philip Kotler-Kevin Lane Keller, Marketing Management, Publisher: Pearson
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LECTURE NO: -9
PRODUCT LINE STRATEGIES

The following are the strategies that a company might follow to attain a profitable product mix
either in the short term or in the long term.
• Limited and Full Line Strategy: -In the full line strategy, manufacture offers a greater
number of product variations so that it addresses all segments of the market. For instance, HUL
follows a full line strategy for their bath soap product line. Dove, Pears operate at the premium
segment, Lifebuoy operates in the popular segment, Liril for the freshness segment and Lux in
the mid-price segment.
In case of limited line strategy, the length of the product line is lesser than that is possible. This
is done to enhance the image of the company by giving it a clear positioning. For example, ‘Ghadi
Detergents’ local player based at Kanpur focuses only on the popular segment without attacking
any of the other segments.
• Line Stretching Strategy: -Product line stretching occurs when a company adds new product
to the product line and the new product types are of a higher or lower quality than existing
products in the product line. If the new product types are cheaper or of a lower quality it is
known as a downward stretch. If the new product types are more expensive or of a higher
quality it is known as an upward stretch. Ambassador Grand is an upward stretching of the old
Ambassador, which comes with 137 additional features.
Two-way stretch: -Companies serving the middle market might decide to stretch their line in
both directions. Texas instruments introduced its first calculators on the medium price and
medium quality end of the market. Gradually it added calculators to the lower end taking market
share away from Bowmar and at the higher end to compete with Hewlett Packard.
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• Line Filling Strategy: - Line filling is a strategy where the company introduces new products
within the same (existing) price range. Product with “Just noticeable difference” are added to
the mix. The reasons for line filling could be to earn extra profits, dealer satisfaction, attain the
market leader position or for keeping the competition away. For instance, ‘Kellogs’ corn flakes
has gone in for line filling strategy with its variants such as ‘Chocos’, ‘Planet & Stars’, ‘Chocos
Pops’, ‘Strawberry’, ‘Honey Crunch’, ‘Fruit Loops’, etc. Maruti Suzuki is also following the
product line strategy of Line Filling.
• Line and Brand Extension Strategies: - A line extension is the use of an established
product’s brand name for a new item in the same product category.
Line Extensions occur when a company introduces additional items in the same product
category under the same brand name such as new flavors, forms, colors, added ingredients,
package sizes. This is as opposed to brand extension which is a new product in a totally different
product category.
Examples include
i) Zen LXI, Zen VXI
ii) Surf, Surf Excel, Surf Excel Blue
iii) Splendour, Splendour Plus
iv) Coke, Diet Coke, Vanilla Coke
v) Clinic All Clear, Clinic Plus
Brand Extension: - Brand extensions are brand names extended to new product categories. In
other words, stretching the use of the parent brand to a new product or service category that
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has its own benefits. It is distinguishable from the parent brand and appeals to a different target
market. Brand extensions can be of 2 types:
❖ Extension into related categories: HUL launched Rin detergent powder while its Rin
detergent soap was a strong brand in the market. Similarly, ‘Vim Powder’ was extended to a
bar form.
❖ Extension into unrelated categories: - Tata steel extended the name Tata to its tea products.
When a company extends a brand name to an altogether different product category it is
called extension into unrelated categories. Tata has its presence from an everyday used item
like salt (Tata Salt) and tea (Tata Tea) to the automobile sector in the form of cars and trucks.
This extension usually involves an umbrella strategy, in which all the products bear the same
brand name.
• Line Modernization Strategy: - A strategy in which items in a product line are modified to
suit modern styling and tastes and re-launched. This is common in products which have a short
product life cycle and constant innovation is one of the key determinants for success. For
example, Windows launched by Microsoft or Pentium Chips launched by Intel.
• Line Featuring Strategy: - A strategy in which certain items in a product line are given special
promotional attention, either to boost interest (at the lower end of the line) or image (at the
upper end).
• Line Pruning Strategy: -Line Pruning is the discontinuation of a product or brand in response
to declining demand or insufficient financial returns. Product line pruning enables the marketer
to dedicate its resources to its best products or brands.
• Product line Concentration Strategy: - The act of reducing the width of a product mix by
decreasing the diversity of items offered across product categories. This is common following
the failure of brand leveraging to launch a brand into a related category.
References
1. https://books.google.com/books?id=tOOD9PQrAJcC
2. https://www.coursehero.com/file/p32j7efo/subgroups-at-the-time-of-writing-this-article-
Samsung-had-7-slider-mobile/
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LECTURE NO: -10
PRODUCT MIX PRICING
• Product Line Pricing: -Product line pricing (PLP) is a pricing strategy which is used to sell
different products in the same product range at different price points based on it features or
benefits. It is used when a primary product is offered with different features or benefits,
essentially creating multiple "different" products or services. For example, a car may be the
primary product. It may come standard, with a sunroof and navigation system or fully stocked
with all the features and add-ons. Each product would then be priced accordingly. The goal
behind setting product line pricing is to maximize profits. The more features offered by
company; the more consumers will pay.
Examples: - A basic car wash may be decided at one price, a super wash with wash and wax
will cost a little more, and a full-service premium wash will be the most expensive.
Apple has different versions of the iPhone and all will have different prices.
• Optional-Product Pricing: -Optional-product pricing is essentially the pricing of optional or

accessory products alongside a main product. This pricing method permits companies to
present a low base price that is capable of attracting customers while maintaining the
possibility of generating high customer revenues by selling costly add-ons later.
For example, a car buyer may prefer to order alloy wheels and a CD changer. Refrigerators
come with optional ice makers. And an iPod buyer can also select from array of accessories,
everything from travel chargers and FM transmitters to external speakers and armband
carrying cases.
Optional-product pricing may be method of pricing that has becoming increasingly popular
within the airline industry. Airplane tickets are usually priced fairly low, but then the airlines
charge customers for all other travel needs. Despite an initial $120 flight, an average flyer can
end up paying $30 to check a bag, $5-$10 for snacks, $3 for headphones, and other costs if
they want extra leg room.
• Captive Product Pricing: - Captive products are those products that have to be necessarily
used with an accompanying product. Captive-product pricing is setting a price for products
that must be used along with a main product. Manufacturers of captive products generally set
price of the main product low and then set high markups on the supplies or expendable
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products. Many companies take very low margins on sell of the main products but are able to
take very high margins on the expendable secondary products.
Razors, Video game consoles printers are examples of companies that use captive product
pricing. Printers are generally low cost as compared to the ink cartridges which are expensive
and have to be bought again from time to time.
• Two-Part Pricing: -Two-part Pricing is that price strategy in which the price of
a product or service is composed of two parts - a lump-sum fee and a per-unit charge.
Examples: - Amusement Parks that charge a fixed fee for entrance into the park and a fee per
ride, Credit cards that charge annual fees and per transaction fees, Telephone users pay a
minimum monthly fee plus charges for calls beyond the minimum number.
• By-Product Pricing: - By-product is the product which is produced additionally with the main
product from the raw materials. In every company that produces some sort of product there
must also be the by-product or the raw product. For example, in the extraction of petrol or in
textile industries which produce the main product also produces the by-product like crude oil.
The essential or the main product is expensive while on the other hand the by-product is less
expensive product.
One of the examples of the by-product is the processed meat which is preserved for the future
use while the by-products like the bones are used for the food of the pets like cats and dogs.
In the timber industry, for example, by product include sawdust, small off cuts and bark.
• Product-Bundling Pricing: -
Product bundle pricing is pricing strategy that combine several products and offer the bundle
at a reduced price. This strategy is effective at selling product accessories that customers
would not buy outside the bundle. This can increase the total profit gained from each customer
even if the profit margin on each item sold in the bundle is lower than if they had been sold
separately.
Examples: - Big Mac combo of McDonalds
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It’s obvious that a combo that gives:
▪ A medium coke
▪ Medium fries
▪ The chosen burger
This is more price-effective for the consumers compared to buying each of the items
individually. Obviously, the company would earn more money this way from 3 items than to
earn from 1 item alone.
• Prestige Pricing (Image Pricing): - Pricing strategy where prices are set higher than normal
because lower prices will hurt instead of helping sales, such as for high-end perfumes, jewelry,
clothing, Watches, Cars, etc. It is also called premium Pricing.
• Bait Pricing: -To attract customers, marketers may set a low price on one item in the product
line with the intention to selling a higher-priced item in the line; this strategy is known as bait
pricing. For example, a computer retailer might advertise its low-priced computer model, hoping
that customer will come to the store. But once customer comes to the store, salespeople point
out the disadvantages of the low-priced computer model and try to convince them to trade up
to a better and more expensive model. This strategy can facilitate sales of a line’s higher-priced
products. In general, retailers have no intention of selling the bait product; they use the low
price merely to entice customers into the store to sell them higher-priced products. Bait pricing
is unethical and, in some countries, it is illegal.
References
1. https://the-definition.com/term/optional-product-pricing
2. http://www.nastolatki.dajka.pl/u1nqwfj5/captive-product-pricing-7b643c
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LECTURE NO: -11
PACKAGING & LABELING DECISIONS
Packaging is the process of designing and producing the container or wrapper for a product.
Packaging adds value in the form of easier handling and secured usage. Packaging plays an
important role in the sales of a product since a properly packaged product will result in repeat
purchases by the customers. A secured, transparent and easy-to-use packaging will have better
chances of sales.
According to Philip Kotler, “Packaging involves designing and producing the container or wrapper
for product. Labelling is the printed information appearing on or with the package is also part of
packaging.
a. Primary Packaging: - It holds a single retail unit of a product. For example, a bottle of Coke,
the tube holding Colgate toothpaste, or a ream of printer paper (five hundred sheets) are all
examples of primary packages. Primary packaging is used to protect and promote products and
get the attention of consumers. Primary packaging can also be used to demonstrate the proper
use of an offering, provide instructions on how to assemble the product, or any other needed
information. If warning or nutrition labels are required, they must be on the primary packaging.
b. Secondary Packaging: -It holds a single wholesale unit of a product. Secondary packaging is
designed more for retailers than consumers. It does not have to carry warning or nutrition labels
but is still likely to have brand marks and labels. Secondary packaging further protects the
individual products during shipping.
c. Tertiary Packaging: -It is packaging designed specifically for shipping and efficiently handling
large quantities. When a Coca-Cola bottler ships cases of Cokes to a grocery store, they are
stacked on pallets (wooden platforms) and then wrapped in plastic.
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Growing Significance of Packaging: -there are numbers of factors which are increasing the
significance of packaged products day-by- day, particularly in the category of consumer goods.
• Consumer are becoming health conscious; they do not want to use adulterated products. As a
result, growing preference of consumers is towards packaged products.
• Package keeps the product safe and maintains its propriety.
• Retailers give preference to nicely packaged products in their front shelves. An increasing
number of products are being sold on a self-service basis. In an average supermarket, which
stocks 15,000 items, the typical shopper passes by some 300 items per minute. Given that 53
percent of all purchases are made on impulse, the effective package operates as a “five second
commercial”. The package must perform many of the sales tasks: attract attention, describe the
product’s features, create customer confidence and make a favorable overall impression.
• Packaging is helpful in instant recognition of the company or brand.
Functions of Packaging: -
1.) Product Protection: -Package protects the product. Their journey from manufacturer to
consumer is facilitated. Package prevents breakage, contamination, chemical change, Moisture
gain, insect attack etc.
2.) Product Attractiveness: -The size and shape of the package, its color, printed matter on it
must make the package attractive to look at. The psychological feeling is that a good package
contains good quality product in it.
3.) Product Identification: - Packages differentiate similar products. Packaging and labeling are
inseparable and are closely related to branding. Labeling has more significance, when the
product cannot be seen by the buyer- fruit juice, etc. Buyers depend on the package label in
understanding the product in the package. An attractive label is a means of success in marketing.
4.) Product Convenience: -The purpose of packaging is not merely confined to consumer service.
The design and size of the package must be in accordance with the contents. i.e., product; it
must be convenient to the ultimate customers. Package which can be easily handled, opened,
moved etc. is appreciably favored by customers.
Types of Packaging: -
a. Consumer Package: -It is package which holds the required volume of product for the
household consumption. For example, toothpaste, shoe polish etc.
b. Re-use Package: -It is also known as dual package. A producer sells the contents in such a
package, which can be re-used for other purpose after the product is consumed; the package
has a secondary use after the contents are consumed. For example, the glass jar of Nescafe
Instant Coffee, the Plastic jar of Dabur Chyawanprash and many other products are packed in
such a way that the package can be put into many uses.
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c. Multiple Package: -The practice of placing several units in one-container is known as multiple
packaging. For example, Make-up set Baby’s care set, etc.
Packaging and Marketing Strategies: -

Packaging may be a major part while formulating marketing strategies, as the most suitable and
convenient packaging may give the product a competitive advantage. A marketer has to review the
packaging at regular intervals so that he does not miss out on potential packaging options. There
are various reasons for changing the packaging. Packaging can be changed whenever a need arises,
like when the competitor’s packaging is being changed, or when the existing package is no longer
stylish and appealing to the targeted consumers, for example, the packaging of Cadbury’s Éclairs
was changed twice to counter the competition and also to improve the looks of the chocolate.
Packaging is also changed to increase the visibility of the product, and for better shelf utilization.
Another method is developing packaging for reuse. Fox example, Horlicks has traditionally been
packed in glass jars that can be reused for storage of other food stuffs.
Packaging should help in maintaining the consistency of the product type. For example, Ketchups,
jams in glass bottles, body sprays in metal cans, toothpaste in tubes etc.
Innovative packaging is adopted to distinguish a company’s products from those of competitors.

For example, transparent Close-up toothpaste tubes stand out easily as they help the consumers
know how much of the paste is left in the tube.
Labelling: -
Labelling is the process in which manufacturers exhibits important information on the product’s
package. Labelling has become very important and legally essential. Manufactures have to display
the ingredients of the product on the package, with warnings and safety precautions along with
instructions about the best possible utilization of the product.
Mostly packages, whether they are final customer packaging or distribution packaging, are
imprinted with information which is intended to assist the customer. For consumer products,
labelling decisions are very much important for the following reasons.
• Captures Attention - Labels help to capture the attention of shoppers. The use of catchy
words may cause strolling customers to stop and evaluate the product.
• Offers First Impression - The label is generally the first thing a new customer sees and thus
offers their first impression of the product.
• Provides Information - The label provides customers with product information to help their
purchase decision or help improve the customer’s experience when using the product (e.g.,
recipes).
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• Helps in Purchasing - Labels generally include a universal product code (UPC) and, in some
cases, radio frequency identification (RFID) tags, that make it easy for resellers, such as
retailers, to checkout customers and manage inventory.
• Addresses Needs in Global Markets - For companies which are serving in international
markets or diverse cultures within a single country, bilingual or multilingual labels may be
needed.
• Meets Legal Requirements - In some countries many products, including food and
pharmaceuticals, are required by law to contain certain labels such as listing ingredients,
providing nutritional information or including usage warning information.
References
1. https://www.coursehero.com/file/pf1cr61/Primary-packaging-can-be-used-to-protect-and-
promote-products-and-get-the/
2. https://open.lib.umn.edu/principlesmarketing/chapter/6-4-branding-labeling-and-packaging/
3. https://www.academia.edu/23205968/Packaging_at_BULLET_Definition
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LECTURE NO: -12
WARRANTIES & GUARANTEES
Whenever Customer buys a product, He/she has certain expectations of the product. If the
expectations are not met, then customer will be very disappointed. To meet with Customer
expectations, many companies are providing Warranty or Guarantee with the product.
A. Warranty: -
Warranty is a commitment by a manufacturer to its customers that if the product breaks or if

there is any problem in the product, free repair for the product will be provided by the
manufacturer. But the manufacturer does not commit replacement. It commits only repair.
Meaning of warranty is that the customer is protected against sudden breakage or sudden
problems in the product. If any customer bought a costly Refrigerator today, and it stops
working one month down the line, why would he/she pay for the repairs? Minimum time
frame should be there when the company must be responsible for the product to work
properly.
Hence Companies are providing warranties with their product as a sign of assurance that the
company has invested in the well-being of the product. It can be said if a company is not
providing warranty with the product, then the company is not much confident regarding the
quality of the product or the liability lies with the consumer.
Example (Product covered by warranty) – Suppose Your Smartphone suddenly starts behaving
weird. Some icons are not clicking even though you are pointing at them. Since the phone is
covered under warranty of 12 months and it has been only 2 months since the purchase, you
take the phone to the service centre and it is repaired for free. No charges are applicable.
Example (Product not covered under warranty) – Continuing the sample example, after 4
months, the phone slips from customers hand one day and screen is broken. Because this is
not covered under warranty so customer will have to pay for the screen to be replaced. In this
case, owner is liable.
B. Guarantee: -
Guarantee is one step ahead of warranty wherein the company is so much confident of its
product, that they offer repair or replacement of the product. In other words, if there is any
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problem in the product, first of all the company will try to repair it and then if product is not
repaired, free replacement will be given to customer.
For example, Amazon Kindle was launched in the market, it was a completely new concept and
there was a 1-year guarantee on the product. Kindle was known for having a soft screen and
its screen breaking was a major problem. However, Company knew what percentage of their
customers will suffer from this problem. Because of the guarantee in place, many customers
got direct replacement of their Amazon Kindle therefore motivating more people to adopt the
Kindle faster.
Companies like Cross pens or Mont Blanc are providing lifetime guarantee of their products.
They are confident about their products, that if anything happens to the product which is not
resolved by the company, they offer free replacement to the end customer. Off course these
companies have to factor in the margins for the replacement so that they are in profit at the
end. But the cost of guarantee commitment is a different issue altogether.
DIFFERENCE BETWEEN WARRANTY AND GUARANTEE

WARRANTY GUARANTEE
Warranty means repair but no commitment on Guarantee means repair or if repair is not possible
replacement of the product then replacement
Warranty is generally given for products which Guarantees are given for products which are sturdy
are known to have frequent breakdowns and and robust and are unlikely to break down easily.
are mechanical in nature - Example washing Although guarantees are also given for mechanical
machines product, the mechanical product should be high value
or highly engineered. Examples - Heavy engineering
products, Premium Pens.
Refunds are not provided in Warranty. Refunds may be provided in guarantee or a
replacement is made
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Warranty is covered for certain parts but there Guarantee is completely free of cost. Guarantee may
may be parts out of warranty for which cover only certain parts. Other parts of a product
payments need to be made. might be under warranty.
After warranty, the warranty may After guarantee period, additional guarantee cover is
be extended with additional payment, if very rare to see. Additional warranty might be given.
customer wishes
It is basically in written and warranty cards are Guarantee is a written document and generally
provided to confirm date of purchase. Guarantee cards are used for the contract. Validation
of Guarantee is from the date of purchase to the last
date of guarantee.
Generally, lasts for long term, e.g., 2 years, 5 Depends on the product, and is different for every
years, 10 years, lifetime, etc. product e.g., 100% guarantee, premium quality
guaranteed, etc.
References
1. https://www.marketing91.com/difference-between-warranty-and-guarantee/
2. http://newfederer.com/p4rtt/9h2t6my.php?bqsqm=amazon-kindle-warranty
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LECTURE NO: -13
PRODUCT MANAGER’S ROLE IN ORGANIZATION
The tile product manager indicates a manager who is in-charge of a particular product or product
line. This situation arises when a company makes a fairly large number of products and it is
practically impossible for one executive to handle the wide variety. In that case the company gives
the charge of one product or product line to as many product managers as there are lines. All the
product managers report to one marketing boss.
Product managers are responsible for their products; their concern is more tactical basis and about
only their product line’s marketing mix, advertising and promotional expenses as well as the right
channel of promotion etc.
Marketing bosses decide about which product to add or drop to meet an overall financial objective.
Finally, marketing managers and product managers operate on different time horizons. Product
managers have more time pressure and focus on short term market share or profits. Marketing
managers being captains of a number of product managers are responsible in seeing which way
the business is going. They have to take a long-term perspective of business.
Some of the roles and responsibilities of product manager in organization (Marketing Department)
are
• Preparation of a plan for the product at annual level

• Implementation of the plan after approval by Vice-President (VP) Marketing and CEO.
• Controlling the attainment of plan in terms of volume and quality and appraising the VP
marketing just in case there is any problem.
• Training of subordinates and helping them in attainment of marketing goals. Supervising and
monitoring the work of assistants.
• Maintaining and protecting the brand equity of the product.
• Keeping a close watch on the marketing budget and seeing to it that it is not overrun.
• Record keeping of all marketing activities through agile gathering of information and market
research.
• Achieving product improvements without excessive research and development expenditure.
Due care is taken in packaging, sizing and pricing for effective brand value maintenance.
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Relationship with the Sales Department
The sales manager is not a subordinate of the product manager. He has to sell the products of
other product managers as well in addition to the product manager under consideration.
Usually, the product manager is expected to achieve the following
• The product manager has to keep the sales manager and the sales force informed about his
strategy and tactics about his product.
• To keep the sales manager informed about selling prices, trade and other discounts permissible
within his budget.
• To ascertain that sales forecasts are met and if not met he should advise the sales manager on
the line of action to achieve the target.
• To negotiate and pursue the sales manager to put his product on priority.
• It is essential to keep the sales force motivated and enthusiastic about the product.
Relationship with the Production Department
• Keep the production people aware of the quantity and delivery dates of the product.
• Keep the production department informed about any changes in demand which results in
increase or decrease in volume.
• Taking advice from production department regarding managing the change in volume of
production.
• Arriving at the correct economic batch quantity for the specific product.
Relationship with the Finance Department
• The brand performs within it agreed budget and that any deviations are pointed out on time so
that can still be controlled.
• Suggest changes in the initial budget due to changed situation such as increased prices of raw
materials, rise in media costs etc.
Relationship with Senior Management
Product manager will look forward to senior management i.e. VP Marketing and the CEO to fulfill
total support to his vision in regard to the product entrusted to him. The product manager will like
to see that:
• The marketing plan for his product synchronizes and meshes with the company’s overall
marketing plan. There should be no conflict between plans for various products.
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• Development of innovative projects, new selling techniques and to open up new markets.
The product manager is not a final decision maker. His role is just confined to making
recommendations.
In a nutshell the product manager’s job is
• It is a job in the marketing department

• It gives him the right to recommend and consider virtually anything that affects product
marketing. However, he has no right to implement anything on his own.
• It focuses on one product per manager and makes it possible for him to achieve the vision
due to enthusiasm and single mindedness instead of a power position. Others with more
power will have more distractions and less focus.
References
1. https://books.google.com/books?id=jIkCcgHh6UYC
2. https://www.aha.io/roadmapping/guide/product-management
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LECTURE NO: -14
NEW PRODUCT DEVELOPMENT
MEANING AND DEFINITION
New products are goods and services that differ significantly in their characteristics or intended
uses from products previously produced by the firm.
According to Musselman and Jackson, “A product is said to be a new product when it serves an
entirely new function or makes a major improvement in a present function.
According to Kolter, “A new product mean original products, improved products, modified
products and new brands which are developed by the firm through its own research and
development efforts and includes those products which the consumers see as new.
NEW PRODUCT DEVELOPMENT STRATEGY

New product development (NPD) is the term used to describe the complete process of bringing a
new product or service to market.
According to Booz, Allen and Hamilton, a new product can be categorized as
• New to the world Products: -They are new products and have not been introduced earlier
and are expected to create a new market. For example, Polaroid’s Instant Camera was a
revolution in the market.
• New Product Lines: -New Product lines help companies enter with a new product in an
established market.
• Additions to the existing product lines: -New products that contribute to the existing
products lines of the company. Products that are introduced in the market with slight variations
like size, flavor, color, packaging, etc. Fox example, new improved lifeboy, chhota (small) Coke.
NECESSITY FOR DEVELOPMENT OF NEW PRODUCT

1. Meeting Changes in Consumer Demand: - In the technological era, change is the only
success. Because consumer demands are changing at a rapid rate (Change in food habits, change
in comforts and conveniences of life, change in social customs and habits, change in
expectations and requirements). People always see better thing- better products and services,
more convenience in products, more fashion and more value for money. A business firms has
50
to respond to these dynamic requirements and these responses take the shape of new products
and new services.
2. Making New Profits: -New products become necessary from the profit angle too. Profits from
ongoing products decline as they reach the maturity stage of their lifecycle and how the profits
vanish as they glide into the stage of decline. It thus becomes essential for business firms to
bring in new products to replace old, declining and losing product.
3. Combating Environmental Threats: -A business firm faces many threats from the
environment. It needs new products to combat these threats.
Threats are from different aspects of the environment such as changes in the economic, social
political conditions and technology changed. In addition, there is the ever-present competition
acting as another source of threats.
4. New products are the source of competitive advantage.
5. They enhance corporate image.
6. They capitalize on research and development.
STAGES OF NEW PRODUCT DEVELOPMENT (PROCESS OF NEW PRODUCT

DEVELOPMENT)
Idea Generation Screening of ideas Concept development and

Business analysis
Test Marketing Product Development

Market Research
Commercialization
1. Idea Generation: -The development of a new product starts with an idea. Ideas can be
termed as the seeds of action. The act of searching for new ideas is called Idea generation.
Excellent ideas about the new product may come from various sources. These sources are:
51
a. consumers
b. Members of Channels of distribution
c. Sales force
d. Competitors
e. Research and development wing of the company
f. Independent Research company
g. Executives of the company
h. Governmental Agencies
i. Trade Associations
j. Universities etc.
Creative techniques like brainstorming and incentives or reward system are used for generating
new product ideas.
2. Idea Screening: - The main purpose of idea generation is to collect a large number of ideas.
However, not all ideas can be commercially viable. Therefore, companies filter the less viable
ideas with the help of a systematic process. Companies can use various parameters to screen
the ideas such as market size, technical capabilities, potential competition, compatibility with
the known customer needs, etc. Addressing the following issues will also help companies
analyze the attractiveness of ideas.
• Whether the product idea matches the existing products of the company.
• The degree to which the new product can cannibalize the sales of the existing products.
• Company’s capability to produce and market the product thus developed
• Buyer behavior and the probable changes in the environment.
On the basis of attractiveness, ideas can be divided into prospective ideas, marginal ideas and
rejects. The prospective or promising ideas are reviewed thoroughly. And if they are found
worth implementing, the process moves on to the next stage. While screening the ideas,
organization might commit 2 types of errors.
I Drop error: This type of error occurs when a company rejects a good idea.
II. GO error: This type of error occurs when a company selects a poor idea.
3. Concept Testing and Analysis: -
After passing the initial screening stage, the product idea proceeds to the next stage i.e. concept
testing. Concept testing is one of the crucial stages of product development.
At this stage the idea is submitted for an external evaluation to get a feedback from the market.
Concept testing is a low-cost procedure. It helps the firm gather important information,
customers’ initial reaction towards the product, before it invests further in product
development.
52
Concept testing helps the company in:
a. Selecting the strongest concept from the available alternatives.

b. Eliminating the concepts that are not approved/favoured by the target market.
c. Identifying consumer criteria of evaluating the product.
d. Determining the desired features of the product.
e. Finally, deciding upon the product positioning.
Marketers use various tools to explain the product attributes, like drawings, sample designs,
computer aided designs and virtual reality programs, etc.
Business Analysis: -After testing the product concept, the firm makes a plan for developing,
producing, and marketing the new product. This requires research on market size, competitive
structure and preliminary technical analysis for providing the basis for the design and
production approach, and also the appropriate legal and patent search.
Business analysis is the first in-depth financial evaluation of the new-product to be developed
Total sales estimation: - total estimated sales are a sum of the estimated first-time sales,
replacement sales and repeat sales.
Estimating costs and profits: - The R&D, manufacturing, marketing and finance departments
estimate the cost. The profitability of the new product is estimated through various financial
tools. Break-even analysis is the simplest technique which estimates the number of units of a
product a company would have to sell to break even with the given price and cost structure.
4. Market Research: -When business analysis clears the project of prospective of product, it
becomes necessary to conduct market research in order to identify the real needs, wants,
likings, desires and expectations of the consumers or industrial users of target market.
Hindustan Unilever limited, before planning to introduce beauty cream in the Indian market
hired the services of a marketing research company. Survey revealed the majority of Indian
want, “Fairness” from the beauty cream. Taking important clue from the survey, the company
has successfully introduced “Fair and Lovely” which is market leader in its category.
5. Product Development: -This stage involves the actual product development. In this stage,
detailed technical analysis is conducted to know whether the product can be produced at costs
low enough to make the final price attractive to the customers. In this stage, the idea is
converted into physical product. A working model or a prototype is developed which reveals all
the tangible and intangible attributes of the product. These prototypes are developed in limited
numbers for customer testing purpose.
53
The design, color, size, quality, packaging and labelling of the prospective product should be
taken into account seriously at the time of the preparation of product specification.
6. Test Marketing: -Test marketing is the stage where the product is introduced in a few select
cities. According to Philip Kotler, “Test Marketing is the stage where the entire product and
marketing programme is tried out for the first time in a smaller number of well-chosen and
authentic sales environments.” Test marketing comes with its own cost. The company bears the
following expenses:
• High advertising costs considering the low volume.
• High manufacturing costs because of lack of economies of scale
• High distribution costs, because of low volumes
• Other costs like cost of distributing samples, coupons etc.
For testing the product, the marketer needs to take decision on the following issues:
• The number of cities in which the product is to be tested.

• Name and geographic location of the cities.
• Time to carry out the test marketing.
7. Commercialization: -
In this stage the company starts full scale production of the product. The results of test
marketing help marketers decide the changes that are needed in the marketing mix before
entering the market. It also helps the marketers decide the amount of production, the
distribution strategy, selling effort and other issues like providing guarantees, warranties, post
purchase repair and replacement services etc.
The product enters the market during the commercialization stage. The speed with which the
product is commercialized depends on various factors like the advantage of new product over
alternative products, the benefits that the users expect, complexity of the product, user’s life
cycle etc. Effective “Event Management”, is also an important element in commercialization or
positioning of the product.
References
1. https://stats.oecd.org/glossary/detail.asp?ID=6869
2. https://ecestudy.files.wordpress.com/2015/05/entrepreneurialnotes.pdf https://pdfcoffee
.com/marketing-management-notes--pdf-free.html
54

LECTURE NO: -15
CHALLENGES TO NEW PRODUCT DEVELOPMENT
1. GLOBAL COMPETITION
A company can invest heavily in a new product, yet be unaware that an overseas
competitor is set to release a same product imminently. As a result, shepherding a new
product from concept to market is often done under intense time pressure, as product
developers attempt to bring the product to market ahead of their competition.
2. TIME
Introducing the new product at the right time eliminates the ambiguity about the failure of the
product. Giving the market a product at a time when there the need for such a product/service
is not required is surely a planned way to head for the edge.
3. MARKET POTENTIAL
A company is required to know its current and future competitors. In today’s economic
environment only two products may be successful in any given market. Unless Company product
is far superior to its competition, it will not be able to enter a market successfully or retain its
leadership in the market. While it is initially fine to get to know competition from searching
online, it cannot replace feedback from customers who use the product. Knowing future
competitors will help company to develop a strategy to retain your competitive advantage.
4. TECNOLOGICAL CHANGE
Rapid advancement of technology is being considered by most companies to be among the top
challenges of new product development. Product developers are not able to know what the
next development might be. If a firm selects a pathway to create functionality using a form
of technology that may be soon obsolete, the company’s investors could lose a sizable
investment.
5. DISTRIBUTION
Who's going to sell the product? Can company use the same distribution channels it’s currently
use? Can company use the same independent representatives or sales force? Is there enough
sales potential in the new product to convince a distributor, retailer, or agent to take on the
new line? There are significant up-front selling costs involved during introducing new
products. All channel members want some assurance that the investment of time and money
55
will be recovered.
6. NEW FEATURES
Competitive advantage needs to be articulated to customers: how does the product (or
attributes of the product) meet customers’ unmet need that no other product can. This is the
reason why customers will use company product over any other product.
Adding new features can increase overall product value and consequently, increase company
market share.
7. CRITICAL UNMET NEEDS

Statistics on the success rates of new products indicates that for every four new products that
enter development, only one becomes a commercial success.
There are three key elements to meeting a customer’s need when developing new products
or services.
• Desirability: the new product or service must be desirable by customer, i.e., a person
wants to use it
• Purpose: the new product or service must have a useful purpose, i.e., a person will use it
• User Experience: the new product or service must provide satisfaction to the customer,
i.e., a person is happy using it.
When a new product or service is being created and designed it is important to consider the use
of the product (what does the product do), the level of usability of the product (how does it
work, can it be used comfortably) and the meaning that the product conveys.
8. MARKET SIZE
It is very important to keep an eye on the market size as well as the market potential for the
product in meeting the business goals of the company.
9. PRICE
Setting the right price of the product before introducing it in the market is also very
challenging for the organization.
10.PROMOTION
Promoting a new product in the new market or in the current market is the job of every
marketer and the utmost requirement for the longevity of the product in the market. Firms
who hardly promote their product are rarely recognized by the market and thus remain a
mystery product for the consumers. Promotion techniques adopted by the firms from print
media to social websites is all a one step of the staircase approach of NPD. Thus, promotion is
must process for the success of new product.
56
11. RESISTANCE TO CHANGE

Most customers are intrinsically conservative and resist innovation. Apart from t h e l i m i t e d
e a r l y a d op te r s , w h o s e e n t h u s i a s m f o r n e w products knows no bounds, the broad
mass of customers sees innovation as risky and finds new unproven products less attractive
than tried and tested alternatives. Consequently, any innovative product, particularly if it has a
high technological component, will receive resistance and its sales will be slow until it is
perceived as safe by potential customers.
References
1. https://www.wise-geek.com/what-are-the-challenges-of-new-product-development.htm
2. https://www.coursehero.com/file/p2pisbn/But-with-these-product-mix-pricing-strategies-
you-are-on-the-right-track-Brand/
57

LECTURE NO: -16
CONSUMER ADOPTION PROCESS
The consumer-adoption process emphases on the mental process through which an individual
passes from first hearing about an innovation to final adoption. Consumer adoption process is
called as the product adoption process. When company produces a product or service and it is
announced in the market then the consumer adoption process begins.
The consumer adoption process is a 5 Stage process that consumers use to evaluate new products.
By this process, consumers will choose whether to reject or adopt the new product offering. A new
product that does not meet a consumer's demand can be rejected by the customer at any of the 5
stages:
1. Awareness (Introduction Stage): - In this stage, consumers first learn about the new
product but don't yet have all the information. In this stage marketers try to put a lot of effort
and money. If consumers are not aware that the product or service exists, how can the company
expect the consumers to buy it? Advertising the product to consumers is hard work to make
sure the correct image is developed and the product is desired. Examples of advertising may
include electronic media, social media or print ads.
2. Interest (Information Gathering Stage): -In this stage, consumers seek information about
the new product. This stage starts when the consumer becomes aware of the product and
searches out information. A popular method of searching out information is the world wide web
58
(Internet). A company’s website informs a potential customer what it looks like, its
specifications, its price, ways to purchase and much more. Technology has played a very
important role in today’s website advertising, guaranteeing interactive information and data
collection.
3. Evaluation (Consideration Stage): -At this stage, the consumer has gathered enough
information to determine if he wants to try this product or not. During the evaluation process,
the consumer chooses if the benefits are worth the cost. In this stage the consumer thinks if this
product or service is good, and more importantly, how this product can be beneficial to them.
When consumers think the product is good and it can benefit them by buying it, they are more
likely to purchase.
4. Trial (Sampling Stage): -To entice consumers, marketers provide samples or trials of their
product. This provides consumers a “taste” of what the product really is, how it works and shows
them its benefits. Also, coupons or introductory sale prices are given as motivational tools to
try the product out for a reduced price.
5. Adoption/Rejection (Buy or not Buy stage): -At this stage of the adoption process, the
consumer decides if the product has value or not. If the consumer does not find any value in the
product, he or she will not buy it again. If the product provides the consumer value or solves a
problem, they will likely become a repeat customer.
References
2. https://study.com/academy/lesson/how-a-new-product-is-adopted-by-consumers.html
3. https://customerlifecycle.wordpress.com/2012/03/19/consumer-adoption-process/
59

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Unit-2 PBM MBA-3 Sem

Product & Brand Management

1. Width: -This is the total number of product lines a company carries

Table: - Product Mix of HUL

PRODUCT MIX DECISIONS

Product & Brand Management

PRODUCT LINE STRATEGIES

i) Zen LXI, Zen VXI

ii) Surf, Surf Excel, Surf Excel Blue

iii) Splendour, Splendour Plus

iv) Coke, Diet Coke, Vanilla Coke

v) Clinic All Clear, Clinic Plus

Product & Brand Management

• Optional-Product Pricing: -Optional-product pricing is essentially the pricing of optional or

Examples: - Big Mac combo of McDonalds

It’s obvious that a combo that gives:

Product & Brand Management

Packaging and Marketing Strategies: -

Innovative packaging is adopted to distinguish a company’s products from those of competitors.

Product & Brand Management

Warranty is a commitment by a manufacturer to its customers that if the product breaks or if

DIFFERENCE BETWEEN WARRANTY AND GUARANTEE

replacement of the product then replacement

machines product, the mechanical product should be high value

or highly engineered. Examples - Heavy engineering

products, Premium Pens.

Refunds are not provided in Warranty. Refunds may be provided in guarantee or a

payments need to be made. might be under warranty.

of Guarantee is from the date of purchase to the last

Product & Brand Management

• Preparation of a plan for the product at annual level

Relationship with the Sales Department

Usually, the product manager is expected to achieve the following

Relationship with the Production Department

Relationship with the Finance Department

Relationship with Senior Management

In a nutshell the product manager’s job is

• It is a job in the marketing department

Product & Brand Management

NEW PRODUCT DEVELOPMENT STRATEGY

According to Booz, Allen and Hamilton, a new product can be categorized as

NECESSITY FOR DEVELOPMENT OF NEW PRODUCT

STAGES OF NEW PRODUCT DEVELOPMENT (PROCESS OF NEW PRODUCT

Idea Generation Screening of ideas Concept development and

Test Marketing Product Development

3. Concept Testing and Analysis: -

Concept testing helps the company in:

a. Selecting the strongest concept from the available alternatives.

• The number of cities in which the product is to be tested.

Product & Brand Management

7. CRITICAL UNMET NEEDS

11. RESISTANCE TO CHANGE

Product & Brand Management

CONSUMER ADOPTION PROCESS

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