Product Management

Assignment
9/26/2011 VVISM Hyderabad Rohan

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Questions
1. Explain levels of a product with a suitable example. 2. What are the various stages of new product development? 3. Define PLC. Bring out significance of each stage. 4. What's product line? Why packaging is called silent salesman? 5. Elaborate on idea generation techniques. 6. What is innovation? Why firms have to innovate? 7. Explain the significance of BCG matrix. 8. Why do new products fail? Justify with suitable example.

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1. Explain levels of a product with a suitable example.

Product levels are classified into three parts: 1. Core Product. The CORE product is NOT the tangible, physical product. You can't touch it. That's because the core product is the BENEFIT of the product that makes it valuable to you. So with the car example, the benefit is convenience i.e. the ease at which you can go where you like, when you want to. Another core benefit is speed since you can travel around relatively quickly. 2. Actual product. The ACTUAL product is the tangible, physical product. You can get some use out of it. Again with the car example, it is the vehicle that you test drive, buy and then collect. 3. Augmented product. The AUGMENTED product is the non-physical part of the product. It usually consists of lots of added value, for which you may or may not pay a premium. So when you buy a car, part of the augmented product would be the warranty, the customer service support offered by the car's manufacture, and any after-sales service.

2. What are the various stages of new product development?

Ans. The complete process of bringing a new product to market. A product is a set of benefits offered for exchange and can be tangible (that is, something physical you can touch) or intangible (like a service, experience, or belief). There are two parallel paths involved in the NPD process: one involves the idea generation, product design and detail engineering; the other involves market research and marketing analysis. Companies typically see new product development as the first stage in generating and commercializing new products within the overall strategic process of product life cycle management used to maintain or grow their market share.

The process 1. Idea Generation

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Ideas for new products can be obtained from basic research using a SWOT analysis (Strengths, Weaknesses, Opportunities & Threats), Market and

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consumer trends, company's R&D department, competitors, focus groups, employees, salespeople, corporate spies, trade shows, or Ethnographic discovery methods (searching for user patterns and habits) may also be used to get an insight into new product lines or product features. 2. Idea Screening
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The object is to eliminate unsound concepts prior to devoting resources to them.

3. Concept Development and Testing

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Develop the marketing and engineering details Testing the Concept by asking a sample of prospective customers what they think of the idea. Usually via Choice Modeling.

4. Business Analysis
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Estimate likely selling price based upon competition and customer feedback.

Beta Testing and Market Testing

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Produce a physical prototype or mock-up Test the product (and its packaging) in typical usage situations

5. Technical Implementation
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New program initiation Finalize Quality management system Resource estimation

6. Commercialization (often considered post-NPD)

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Launch the product Produce and place advertisements and other promotions

7. New Product Pricing

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Impact of new product on the entire product portfolio Value Analysis (internal & external)

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3. Define

PLC. Bring out significance of each stage.

Product life-cycle (PLC) like human beings, products also have a life-cycle. From birth to death, human beings pass through various stages e.g. birth, growth, maturity, decline and death. A similar life-cycle is seen in the case of products. The product life cycle goes through multiple phases, involves many professional disciplines, and requires many skills, tools and processes. Product life cycle (PLC) has to do with the life of a product in the market with respect to business/commercial costs and sales measures. To say that a product has a life cycle is to assert three things:

Products have a limited life, Product sales pass through distinct stages, each posing different challenges, opportunities, and problems to the seller,

Products require different marketing, financing, manufacturing, purchasing, and human resource strategies in each life cycle stage.

The four main stages of a product's life cycle and the accompanying characteristics are: Stage Characteristics 1. Market introduction stage 1. costs are very high 2. slow sales volumes to start 3. little or no competition 4. demand has to be created 5. customers have to be prompted to try the product 6. makes no money at this stage 2. Growth stage 1. costs reduced due to economies of scale 2. sales volume increases significantly 3. profitability begins to rise

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4. public awareness increases 5. competition begins to increase with a few new players in establishing market 6. increased competition leads to price decreases 3. Maturity stage 1. costs are lowered as a result of production volumes increasing and experience curve effects 2. sales volume peaks and market saturation is reached 3. increase in competitors entering the market 4. prices tend to drop due to the proliferation of competing products 5. brand differentiation and feature diversification is emphasized to maintain or increase market share 6. Industrial profits go down 4. Saturation and decline stage 1. costs become counter-optimal 2. sales volume decline 3. prices, profitability diminish 4. Profit becomes more a challenge of production/distribution efficiency than increased sales.

5. What's product line? Why packaging is called silent salesman?

A product line refers to a number of products that are related and developed by the same manufacturer. Product lines are not to be confused with product bundling, which combines various items into one type of product. Items within a product line generally share the same basic theme, and with the help of a successful marketing plan these products can be entirely effective. Frequently, a product line includes different products that are offered to the public at varying price points. This way, a manufacturer or company can ensure that all products within

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a line will be purchased by all kinds of people. Product line extension refers to any additional products that may be added to a current product line. Packaging acts as a silent Sales person. In today's marketplace a good package design must differentiate a product from the masses on the retail shelf, increase sales volume in flat market categories and provide the consumer with a positive experience. The packaging is the silent salesperson sitting next to the competition. As we know, your packaging must not only get busy consumers attention, but scream buy me' as they pass by. Today's packaging designers and marketers are breaking away from tradition and designing new packaging for a world that is dramatically different from the past. Modern consumers are on the go and think in modern terms. Designers must not remain stuck in the past, but look to the future. Products and packaging that project a forward-looking image and philosophy will be successful.

6. Elaborate on idea generation techniques.

The different techniques of idea generation areModifying Techniques

Three idea-generation techniques that emphasize the Modifying style are Force-field, Attribute listing, and SCAMPER. Use these techniques when you want to generate ideas that build on what is already known and when you want to develop versatility with this style.

Force-field Attribute listing "SCAMPER"

Experimenting Techniques

Three idea-generation techniques that emphasize the Experimenting style are Matrix analysis, Morphological Analysis, and Alternate scenarios. Use these techniques when you want to

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generate ideas that combine different elements in new ways and when you want to develop versatility with this style.

Matrix analysis Morphological Analysis Alternate scenarios

Visioning Techniques

Three idea-generation techniques that emphasize the Visioning style are Alter-ego, History of the future, and Vision circle. Use these techniques when you want to generate ideas by creating a mental picture of an ideal future and when you want to develop versatility with this style.

Alter-ego History of the future Vision circle

Exploring Techniques

Three idea-generation techniques that emphasize the Exploring style are Analogy, Nature symbol, and Dreaming. Use these techniques when you want to generate ideas using metaphors, symbols and analogies and when you want to develop versatility with this style.

Guided imagery Nature symbol Forced association

6. What is innovation? Why firms have to innovate?

The term innovation derives from the Latin word innovatus, which is the noun form of innovare "to renew or change," stemming from in-"into" novus-"new". Although the term is broadly used, innovation

8|Page generally refers to the creation of better or more effective products, processes, technologies, or ideas that are accepted by markets, governments, and society. Innovation differs from invention or renovation in that innovation generally signifies a substantial positive change compared to incremental changes. Firms need to innovate because we in live in a world which is very dynamic and the taste and preferences of the customers are changing fast, people are expecting new product innovations to match their requirements. To remain competitive in the market and earn more profits firms are continuously working on product innovation, they have a dedicated department within them called as Research & development which is working on product innovation night & day.

7. Explain the significance of BCG matrix.

This technique is particularly useful for multi-divisional or multiproduct companies. The divisions or products compromise the organizations business portfolio. The composition of the portfolio can be critical to the growth and success of the company. The BCG matrix considers two variables, namely1. MARKET GROWTH RATE 2. RELATIVE MARKET SHARE

The market growth rate is shown on the vertical (y) axis and is expressed as a %. The range is set somewhat arbitrarily. The overhead shows a range of 0 to 20% with division between low And high growth at 10% (the original work by B Headley Strategy and the business portfolio, Long Range Planning, Feb 1977 used these criteria). Inflation and/or Gross National Product have some impact on the range and thus the vertical axis can be modified to represent an index where the dividing line between low and high growth is at 1.0. Industries expanding faster than inflation or GNP would show above the line and those growing at less than inflation or GNP would be classed as low growth and show below the line. The horizontal (x) axis shows relative market share. The share is calculated by reference to the largest competitor in the market. Again the range and division between high and low shares is arbitrary. The original work used a scale of 0.1, i.e. market leadership occurs when the relative market share exceeds 1.0.The BCG

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growth/share matrix is divided into four cells or quadrants, each of which represent a particular type of business. Divisions or products are represented by circles. The size of the circle reflects the relative significance of the division/product to group sales. A development of the matrix is to reflect the relative profit contribution of each division and this is shown as a pie segment within the circle.

8. Why do new products fail? Justify with suitable example.

The main reasons why new products fail are-

1. Faulty product idea 2. Distribution related problems 3. Poor timing of launch 4. Improper Positioning Other reasons may-be
* Lack of differential advantage * Poor planning * Technical problems in the product * Competitors fighting back harder than expected * Poor market research

Some of the examples of product failure are-

Kelloggs failed miserably in India in the beginning. Mercedes Benz failed to impress Indians with the E-class Sedan in 1997. MTV with its Western music offerings was not impressive in the initial years. Whirlpool had launched the larger sized refrigerators which was not popular amongst Indians.