PRODUCT MANAGEMENT (MARK 30063)
promotion and pricing decisions, and the entire
TOPIC 1: PRODUCT CONCEPT
PRODUCT
• Is a good, a service, or an idea received in an
exchange. It is anything that can be offered to a
market to satisfy the desire or need of a
customer.
• It can be classified as tangible or intangible.
Tangible (Physical; building, gadgets, vehicle,
or clothing) & Intangible (Perceived Indirectly;
insurance policy or services)
PRODUCT ANATOMY
• Is the analysis of a product according to the
different level of benefits it offers.
THREE LEVELS OF A PRODUCT
1. CORE
- Core product is the benefit of the product
that makes it valuable.
E.g., In a car, the benefit is convenience or
the ease at which you can go where you
like, when you want to.
2. ACTUAL
- Actual product is the tangible, physical
product. You can get some use out of it.
You can touch, see and feel it.
E.g., again, with the car example, it is the
vehicle that you test drive, buy and the
collect.
3. AUGMENTED
- Augmented product is the supplemental
features provide added value or attributes
in addition to its core utility or benefit.
- These supplemental attributes are not
required to make the core product function
effectively, but they help differentiate one
product brand from another.
E.g., So, when you buy a car, it is the
warranty, the customer service support
offered by the car’s manufacturer and any
after-sales service. It can also provide
installation, delivery, training and financing.
CLASSIFICATION OF PRODUCTS
• Product classifications are important, because
classes of products are aimed at particular
target markets which affect distribution,
marketing mix.
CONSUMER PRODUCTS
• Products purchased to satisfy personal and
family needs.
I. Convenience goods
- Are relatively inexpensive, frequently
purchased items for which buyers exert
only minimal purchasing effort.
- The buyer spends little time in planning the
purchase or comparing available brands or
sellers, and many consumers buy products
at the closest location to preserve time and
effort normally through retail outlets.
E.g., breads, newspaper, soft drinks.
II. Shopping goods
- Are goods in which the consumer is willing
to invest a great deal of time and effort.
- Buyers spend a lot of time comparing
stores and brands with respect to prices,
product features, qualities, services and
warranty.
E.g., consumers will spend a great deal of
time looking for a new car or a medical
procedure.
III. Specialty goods
- Are those that are of interest only to a
narrow segment of the population.
- Buyers actually plan the purchase of a
specialty product they know exactly what
they want and will not accept a substitute
E.g., the Swatch watch, Michael Jordan
basketball shoes.
IV. Unsought products
- Are products purchased when a sudden
problem must be solved, products of which
consumers are unaware, and products that
people do not necessarily think of
purchasing.
E.g., Emergency medical services and
automotive repairs are examples of
products needed quickly to solve a
problem.
 BUSINESS PRODUCTS
• Products bought to use in a firm’s operations, to
resell, or to make other product, usually
purchased on the basis of an organization’s
goals and objectives.
I. Installations
- Include facilities such as office buildings,
factories and warehouses as well as major
pieces of equipment that are non-portable,
such as production lines and very large
machines.
II. Accessory equipment
- Does not become a part of the final
physical product but is used in production
or office activities.
- Usually cheaper, purchased routinely with
less negotiation, and treated as expense
items because they are not expected to
last long.
E.g., file cabinets, calculators and tools.
III. Raw materials
- Are the basic natural materials that are
used in marketing a physical product.
- Minerals, chemicals, agricultural products,
and materials from forests and oceans.
- They are usually bought and sold
according to grades and specifications and
in relatively large quantities.
E.g., Corn, is a raw material that is found in
many different products, including food.
Beverages (corn syrup) and even fuel
(ethanol).
IV. Components parts
- Become part of the physical product and
are either finished items ready for
assembly or products that need little
processing before assembly.
- Although they become part of a larger
product, component parts often can be
easily identified and distinguished.
E.g., Automobile components, Spark plugs,
tires, clocks, brakes, and headlights.
V. Process materials
- Are used directly in the production of other
products not readily identifiable.
- A salad dressing manufacturer may include
vinegar in its salad dressing; the vinegar is
a process material, because it is included
in the salad dressing but is not identifiable.
VI. MRO supplies
- Are maintenance, repair and operating
items that facilitate production and
operations but do not become part of the
finished product.
E.g., Paper, pencils, oils, cleaning agents,
and paints.
VII. Business services
- Are the intangible products that many
organizations use in their operations.
- They include financial, legal, market
research, information technology and
janitorial services.
- Firms must decide whether to provide their
own services internally or obtain them from
outside the organization.
PRODUCT LINE vs. PRODUCT MIX
• Product Item
- Is a specific version of a product that can
be designated as a distinct offering among
an organization’s products.
• Product Line
- Is a group of closely related product items
that are considered to be a unit because of
marketing, technical or end-use
considerations. It refers to the assortment
of similar things that the firm holds.
• Product Mix
- Describes the combination of different
product lines that the firm holds.
- It is the composite, or total, group of
products that an organization makes
available to customers.
➢ Width of Product Mix
- Is measured by the number of product
lines a company offers. Some firms have
one very focused or narrow product line
while others maintain numerous lines that
hopefully all have some common theme
➢ Depth of product Mix
- Refers to the average number of different
products offered in each product line.
 - It is the variety that is offered within each
product line.
TOPIC 2: PRODUCT DECISION
PRODUCT LIFE CYCLE (PLC)
• Refers to the different stages a product goes
through from introduction to withdrawal.
• It refers to a likely pathway a product may take.
• As a product moves its life cycle, the strategies
that relate to competition, promotion,
distribution, pricing, and market information
must be periodically evaluated and possibly
changed.
• It has implications for the marketing strategy of
a firm as it seeks to introduce, grow and
maintain market share.
FOUR STAGES OF PRODUCT
1. INTRODUCTION
- Begins at a product’s first appearance in the
market, when sales start at zero and profits
are negative.
- Profits are below zero because initial
revenues are low, and the company
generally must cover when the product is
introduced and struggles to gain brand
recognition.
Two difficulties may arise at this point:
1) Sellers may lack the resources,
technological knowledge, and marketing
know-how to launch the product
successfully.
2) The initial product price may have to be
high to recoup expensive marketing
research or development costs.
2. GROWTH
- Sales rise rapidly, profits reach a peak, and
then they start to decline.
- This stage is critical to a product’s survival,
because competitive reactions to a
product’s success during this period will
affect the product’s life expectancy.
- Profit begins to decline late in the growth
stage as more competitors enter the market,
driving prices down and creating the need
for heavy promotional expenses.
- As sales increase, management must
support the momentum by adjusting the
marketing strategy. The goal is to establish
and fortify the product’s market position by
encouraging brand loyalty.
- Gaps in geographic market coverage should
be filled during the growth period.
3. MATURITY
- When the product reaches peak market
penetration.
- This stage is characterized by intense
competition because many brands are now
in the market.
- Competitors emphasize improvements and
differences in their versions of the product.
As a result, during the maturity stage,
stronger companies tend to squeeze out
their weaker competitors or consumers
begin to lose interest in the product.
- During maturity phase, the producers who
remain in the market are likely to change
their promotional and distribution efforts.
Three general objectives can be pursued
during the maturity stage:
1) Generate cash flow
2) Maintain share of market
3) Increase share of customer
- A greater mixture of pricing strategies is
used during the maturity stage. Strong price
competition is likely and may ignite price
wars. Firms also compete in ways other
than price, such as through product quality
or service.
4. DECLINE
- Sales fall rapidly
- When this happens, the marketers consider
pruning items from the product line to
eliminate those that are no longer earning a
profit.
 - The marketer may also cut promotion
efforts, eliminate marginal distributors, and
finally plan to phase out the product.
- An organization can justify maintaining a
product only as long as the product or try to
reposition it to extend its life.
- A declining product has lost its
distinctiveness because similar competing
or superior products have been introduced.
- During a product’s decline, outlets with
strong sales volumes are maintained and
unprofitable outlets are eliminated.
5 STAGES OF CONSUMER ADOPTION
PROCESS
1. PRODUCT AWARENESS
- Consumer becomes aware of the product.
Awareness leads to interest and the
customer seeks information about the new
product.
2. PRODUCT INTEREST
- Consumer seeks information and is
receptive to learning about the product.
3. PRODUCT EVALUATION
- Consumer considers the product’s benefits
and decides whether to try it, considering its
value versus the competition.
4. PRODUCT TRIAL
- Consumer examines, tests, or tries the
product to determine if it meets his or her
needs.
5. PRODUCT ADOPTION
- Consumer purchases the products and
decides to make full and regular use of it.
FIVE MAJOR ADOPTER CATEGORIES
• Depending on the length of time it takes them to
adopt a new product:
1. Innovators
- Are the first to adopt a new product; they
enjoy trying new products and tend to be
venturesome.
2. Early adopters
- Choose new products carefully and are
viewed as “the people to check with”.
3. Early majority
- Adopt a new product just prior to the
average person; they are deliberate and
cautious in trying new products.
4. Late majority
- Are quite skeptical of new products but
eventually adopt them because of economic
necessity or social pressure.
5. Laggards
- Are the last to adopt a new product, are
oriented toward the past. They are
suspicious of new products, and when they
finally adopt the innovation, it may already
have been replaced by a new product.
• A new product may fail for many reasons:
- Companies fail to offer a unique benefit or
underestimate the competition.
- Sometimes the idea is good but the
company has design problems – or the
product cost much more to produce than
was expected.
- Some companies rush to get a product on
the market without developing a complete
marketing plan.
- Some companies move too slow. With the
fast pace of change for many products,
speedy entry into the market can be a key
to competitive advantage.
- To move quickly and avoid expensive new
product failures, companies should follow
an organized new-product development
process.
• New-product development process
- Continued evaluation of a new idea’s likely
profitability and return on investment.
- The hypothesis tested is that the new idea
will not be profitable. Requires much
analysis of the idea before the company
spend money to develop and market a
product/service.