PRODUCT MANAGEMENT Product Development/Management
LECTURE/NOTES - Is a set of techniques and principles
BASIC CONCEPTS AND TOOLS OF PRODUCT
DEVELOPMENT/MGT. IS DIVIDED INTO
FOUR PARTS
A. Introduction to product development
B. Conducting product development
C. Organizing for product development
D. Managing product development
WHY IS PRODUCT DEVELOPMENT/MGT
ESSENTIAL?
- The product is the center of the
marketing and production system of an
enterprise
- The business exist because there is a
product to produce and sell.
- Products do not last forever in the
market.
- They have life cycle; they are born, they
mature and they decline.
M - issing (kulang)
A – nnoying (nakakabwisit)
D – isappointing (nakakadismaya)
I – rritating (nakakainis)
Product Development/Management – is
about creating new products and adapting
existing ones to keep the business going.
Market Driven
- Targeting the right market
Market Driving
- Capturing
that will help you avoid market failures
(products that sold very little or did not
sell at all) by helping you design
products to match market needs and
wants of the buyers.
- The right product also means more
sales and income for your company.
Product development techniques are
designed to help you think about:
1. What your customers need and want.
2. What your competitors are doing.
3. Your own mistakes
4. The characteristics of products that the
customers need and want and the ones
you are the most capable and
competent to produce.
Marketing Formula:
M= S(N+W+E)+B+C
Marketing is a continuous process of satisfying
target market needs, wants, and expectations
better than competitors.
Information from product development:
1. Your customers
2. Your competitors
3. You
Proactive thinking means thinking about
buyer needs and wants and a careful analysis of
products.
Product development and strategy design - Product development is expensive but
it should not be viewed as a cost
Strategy design without returns.
- process is often defined in terms of the
study conducted to find a match Product development is the overall process
between what you produce and what of strategy, organization, concept
the market needs. generation, product and marketing plan
creation and evaluation and
- If you are successful in the match in commercialization of a new product.
such a way that you do it better than
your competitors, then you will have an Factors Why Products Do Not Get Enough
advantage. Sales And Do Not Stay In The Market For A
Longer Time
Product development is also about finding
the right strategy that will satisfy the
1. Negative market research findings are
selected market needs and demand.
not considered
2. The idea is good but the market is
Product development and the business
overestimated
functions
3. The product is not well-designed
The business has two functions:
4. The product is not well positioned in the
market or not well advertised
1. Marketing
- The objective of marketing is find 5. Development costs are very high
customers who will buy from you. 6. Competitors introduce a similar product
first, introduce a better product or fight
- By implementing proper product back with other means
development processes, you will be
able to focus on your intended market 8 examples of failure retailers
and would achieve your marketing 1. KODAK
objectives. 2. Sears
3. Bad Wiser
2. Production 4. Forever 21
- The objective of production is to
5. Toys R us
provide what the customers want in
6. Hyatt
terms of quantity, quality, time and
7. Blockbuster
cost or some combination of these.
8. Barnes & Noble
- Product development processes will be
helpful to the achievement of these
objectives because it studies and
designs the process of manufacturing
the required product.
 Market Segment 1. Generic characteristics
The market is a group of people and - are those features that address the
organizations that want the products and needs of the target market that the
means to pay for it. enterprise wants to serve.

S- segment These are common to all products produced by

T- target different companies.
P- position
2. Physical characteristics
D- differentiate
- are set of components and features
that the product consists of.
Marketing 1.0 Product
2.0 Consumer 3. Extended/Augmented characteristics
3.0 Human Spirit - involve a set of variables that includes
4.0 Offline meets Online price of the product, its quality, before
5.0 Technology for Humanity and after sales service, distribution and
product and enterprise image.
3 Mantras (Marketing Quote)
Positioning
1. Your only limitation is your - the mental picture of a products to
imagination. the minds of the consumer.
2. The bestselling products now are all
improvements. Categories of New Products
3. Necessity is the mother of all 1. New to the world products. Entirely
creation. new products that create a new market
2. New product lines: new products that
8 Ms of Management can allow the company to enter an
1. Man established market for the first time
2. Money 3. Additions to existing product lines: new
products that supplements company’s
3. Machine
current product lines
4. Motivation
4. Improvements to existing products.
5. Market
Existing products that are improved or
6. Method have increased value
7. Material 5. Repositioning: existing products that
8. Manufacturing are targeted to new markets
6. Cost reductions: new products that
Products provide similar performance at a lower
- is a bundle of attributes that consists of cost
generic characteristics, physical
characteristics and extended
characteristics.
Product Life Cycle Other venues are also available
1. Product Development (PD) 1. Attending trade fairs
2. Introduction (I) 2. Researching the Internet
3. Growth (G) 3. Researching specialized publications
and magazines
4. Maturity (M)
4. Receiving help from institutions such as
5. Decline (D)
Chambers of Commerce
6. Possible Abandonment (PA)
IDEA GENERATION
PRODUCT DEVELOPMENT PROCESS
There are several reasons why new
- The product development process
products are identified customer requirement
involves sets of activities that follow a
satisfaction, high cash flow, increased market
particular logic.
share, better company image, among others.
By stating the objective of the product
- The product development process is
development process, the importance of the
cyclical.
process is implied and the amount of resources
can be allocated to the process.
- It needs to be conducted in a systematic
External or Internal? Product ideas for
and focused manner while minimizing
small or medium companies may be generated
the cost of product development.
internally or externally. Ideas can come from
creative and innovative owner/managers, in
house designers and engineers and other
In preparing for the implementation you would
employees. Some workers can have ideas that
need to study your chosen market first. Some
turn out to be good products. Ideas from
questions you need to answer are:
outside the company, on the other hand, can be
1. In which market are you?
obtained from free-lance designers or scientists,
2. What do you know about this market?
competitors and customers. Trade publications,
3. How many individual and company
trade fairs and exhibits and websites also offer
buyers are there in this market? Where
an abundance of ideas that could lead to other
are they located?
good product ideas.
4. How many companies and products are
Some Basic Market Research
there in this market?
5. What are the needs, buying habits and
Techniques
expectations of these buyers? 1. Customer Surveys: A series of questions
may be asked from a random set of
- Market research allows you to know people who represent your target
more about your market and market segment. Some typical
competitors. questions include:
- Proper market research involves a  Degree of satisfaction with product
detailed search of the market potential performance
and a discovery of the strengths of your  Degree of satisfaction with product
competitors. feature variations and options
 Degree of satisfaction with price
 Degree of satisfaction with delivery
time
  Degree of satisfaction with after
sales service
2. Complaints and suggestion letters:
Letters from customers can also be the
source of new ideas as they describe
the problems they encountered
3. Focused Group Discussion (FGD): a
group of randomly selected
representative customers are gathered
to discuss desirable and/or undesirable
features of a product. Questions are
asked to the group, and they elaborate,
explain and argue their opinions about
the product and its features
4. Brainstorming. A group of six to ten people
are asked to generate solutions or ideas
with each participant giving an idea one
after the other and is repeated over and
over again. Ideas start flowing as one ideas
leads to another.
5. Attribute Listing. The major attributes or
features of an existing product are listed
and modifications for each feature are
suggested for an improved product. Typical
questions include:
 Are there other uses?
 Can it be simplified?
 Can it be rearranged?
 Can parts be substituted?
 Can it be combined?
 Can it be adapted?
IDEA SCREENING
The purpose of this step is to reduce
the number of ideas that will be converted into
real products. The goal is to find good ideas
that are expected to bring profits and achieve
the stated goals. Thus, screening is intended to
drop poor ideas as early as possible.
One simple way of screening out poor
products is through a product idea rating
system. The basic procedure is as follows:
PRODUCT IDEA RATING SYSTEM
1. Identify the product success criteria
2. Assign a relative weight from 0 to 100
to each criterion. The higher the weight
the more importance is attached to the
criterion
3. Evaluate each alternative idea
according to each criterion and provide
a score
4. Sum up all criteria rating to get the
product rating
5. As a minimum acceptable product
rating is set all ideas below this
acceptable rating are dropped. Drop
those that do not seem to provide
features and benefits that the customer
needs or wants.
CONCEPT DEVELOPMENT AND TESTING
This step further reduces the number of
ideas. In this step, the product ideas suggested
in the previous steps are translated into the
product concept. For example, a basket
weaver is considering making a three-foot high
basket made of local grass. This idea can be
made more specific by specifying its function –
as a laundry basket, an umbrella holder or a
planter. Product concept gives the physical and
extended characteristics given the product idea.
Your product should have characteristics that
are different from existing products. You need
to identify a unique selling point/proposition
(USP). If you cannot find your USP in this
product, stop nd find another product idea.
Concept testing involves presenting the
product concept to randomly selected
customers within you target market segment.
The product concept may be symbolic – such as
a description or physical such as a drawing.
Some questions that may be asked:
 Are the benefits clearly identified?
 Is the product solving a problem or
satisfying a need?
 Do other products currently meet
this need and satisfy you now?
  Is the price reasonable in relation to
its value?
 Would you buy the product?
 Would you use this product?
MARKET STRATEGY DEVELOPMENT
After concept testing, a preliminary
marketing plan to introduce the product needs
to be prepared. This initial plan will be refined
later. It first involves describing the target
market segment and the planned product
positioning. The product positioning shows
where your product is in relation toother similar
and competing products. It indicates
similarities and differences of your product and
other products. In this first part, sales, market
share and profit goals for the first few years are
set.
The second part of the market strategy,
other extended features of the product such as
promotion and distribution strategy and
marketing budget are determined. The final
part describes long-term sales and profit goals.
BUSINESS ANALYSIS
The objective of the business analysis is
to establish the attractiveness and soundness of
each product concept from a financial
perspective. This sub step involves preparing
sales, cost and profit projections. Estimating
future sales is usually based on the product life
cycle of a product. The product is introduced
and has relatively low sales (birth), sales picks
up (growth), peaks (maturity) and goes down
(decline and later death). Different products
will have different slopes and lengths of lives
but all of them follow an S-curve.
Some of the possible measures of soundness of
the investments are:
 Maximum investment exposure
 Payback period
 Break-even figures
CREATE THE TECHNICAL SPECIFICATIONS
If the product concept has been proven
to be financially viable and desirable, the next
major step in the product development process
is the turning of the concept into a real product.
This step involves a cycle of technical work and
market evaluation until the final product is
created.
PRODUCT DEVELOPMENT
In bigger companies, the product
concept is sent to the company’s research and
development (R&D) and/or engineering group
to be developed in a physical product. In SMEs,
the product concept is sent to a group of
workers that are pulled out of the production
line to work on product concepts to develop
prototypes. The attributes and features
included in the product concept are now
integrated into a usable prototype or sample.
This involves the following steps:
1. Technical capabilities of the product are
developed and refined
2. Design the product and integrate all its
features and functions
3. Test the feasibility of the technical
concepts
4. Prototypes or samples of the product
are made
5. Prototypes are tested and modifications
are made
6. Design is documented and finalized
Finally, after correcting all problems,
revising the specifications, testing of ideas,
a new prototype is made. The tests are
repeated. If problems do occur, revisions
continue until a satisfactory prototype is
made. When the prototype passes all the
tests, it is ready for market testing.
MARKET TESTING
 When management is satisfied with the
tests, the product is ready for branding,
packaging and a preliminary marketing program
to test it in a more realistic consumer setting.
The objective of this step is to see how buyers
and dealers react to the product in terms of
handling, usage and purchase of the product.
The consumer goods market testing can
involve one of the following:
 Sales-wave research. Consumers
are offered to try the new product
at no cost. They are offered the
product. The number of customers
who select the product again and
their satisfaction levels are noted.
 Simulated market testing. Qualified
shoppers are asked about brand
familiarity of similar products
including the new product. Later
they are given some money (or an
opportunity) to shop for these
products and the number of buyers
of the new product is compared
with those who bought
competitors’ products
 Controlled test marketing. A
number of stores in selected
locations are asked to display the
new product following shelf-
position specifications, point of
purchase promotions and pricing.
Sales are tracked at check-out
counters.
 Test markets. A sales force will
advertise and promote the new
product in selected locations.
Actual sales are tracked down in
these locations.
Another way of testing the acceptability of the
new product in the market is through
participation and display in trade fairs or shows.
The numbers of people who show interest with
the product, their reactions and comments
about the product features and functions and
purchase intentions are noted.
PRODUCT IMPROVEMENT
The results of the market tests provide
input to the final evaluation of the new product.
The observer or reported weaknesses of the
product can be used for revisions of the product
specifications. These changes will help you
reach the final specifications – the generic
characteristics, the physical characteristics and
extended characteristics of the new product.
However, it will be necessary to test these
changes until the physical and functional
performances are satisfied.
SELLING THE PRODUCT
After the finalization of the
specifications, the product is promoted and is
offered for sale. It may be offered to current
customers who could be interested with this
new product as part of their loyalty to the
company’s brand or the product can be offered
to new prospects as part of a promotional
campaign.
DEVELOP THE MANUFACTURING PROCESS
In many cases, the product
development process ends up with the
production of the prototype or sample. Setting
up the detailed manufacturing process is usually
neglected and taken for granted. Process
design is an important as the product design.
What is not realized is that the process
through which the prototype was manufactured
may not be exactly the same when the product
is manufactured in large numbers. The
production equipment and tools, the skills of
production workers may not be suitable. The
value of developing the manufacturing process
lies in its benefits. The manufacturing process
design determines the:
 Quality of the product
  Uniformity and consistency of the production process for the new product. During
products the first production run, technical problems
 Manufacturing process time may occur as a result of unfamiliarity of
 Production cost manufacturing workers and managers.
Regardless of how much planning is
These cannot be left to chance. The process done, there are issues in manufacturing a new
needs to be deliberately designed to allow for product that will continue to occupy production
efficiency and effectiveness of the entire managers daily. They include among others:
process.  Forecasting (how many will be sold,
how much to produce, raw
IDENTIFY THE PARTS OF THE PROCESS materials, etc)
In the garments industry, this step is  Inventory control and management
known as the operations breakdown. The steps (when to buy, how much to buy,
in assembling or fabricating the new product how much finished goods to keep,
are listed, with each step being as simple as etc.)
possible so that it can assigned even to an  Production planning and control
unskilled worker. Each step is t be as simple as (allocating machine and labor time,
possible so that it can learned in as little time as materials movement, etc.)
possible. If each step is simple and assigned to  Scheduling (sequencing and routing
a worker, it can involve automated motions and of operations, moving semi-finished
efficiency can be achieved in a shorter period of parts, etc.)
time.  Maintenance management
(maintenance of machines, tools,
IDENTIFY TECHNOLOGY REQUIREMENTS etc.)
By studying the detail of each step of
manufacturing, technological needs are also be FUNCTIONS OF THE PRODUCT
identified to allow for more reliable DEVELOPMENT GROUP
manufacturing processes. Opportunities to  Gathering and tracking customer
mechanize or automate can be identified as the needs and preferences
steps are assessed for further improvement in  Gathering information on
efficiency and consistency. performance and satisfaction with
current products
TRAIN THE WORKERS  Coordinating customer requests
To obtain uniform and consistent and requirements
output and manufacturing time, all workers  Identifying possible new products
should follow a standard process for doing each or product adaptations
task. Otherwise, each worker will follow  Developing and testing product
different ways of doing the tasks. This leads to concepts
less coordination between the steps, not to  Managing new materials testing
mention, possible non-standard output.  Coordinating and supervising
prototyping
MANUFACTURE THE NEW PRODUCT  Coordinating process design
The last step in the development
process is to implement the designed GROUP STRUCTURE
 The product development group, which
may also be known as R&D, will have a head
and assisted or supported by at least one other
person. This other person shall be a designer or
engineer or someone with enough experience
in manufacturing. He will be in charge of:
 Translating the product ideas in
ADDITIONAL INFO
product concept
 Supervising the prototyping of
designs and products Book Definition:
 See to it that the designed Insight- customer truth that affects attitude
processes for the production lines and behavior towards a brand.
will uniformly produce the accepted
and approved design or product 3 types of Insight
 Updating himself with current
trends and needs of the market 1. Product Insight
through readings, Internet research - About a gap that a product/service seek
or even customer contact
to answer.
e.g. Selecta
BUDGET
A major decision in product
2. Communication Insight
development is the amount of budget that will
- To capture brand essence in a
be allocated. The budget varies from company,
but this is usually measured in terms of the relevant impactful manner.
number of employees dedicated to developing e.g. Rc Cola
and designing products and the time spent.
3. Predictive/ Strategic Insight
CONSTANTLY REVIEW THE PROCESS - Innovation is the only way to go for
Finally, the new product is mass the 21st Century.
produced. Even as the product and process
specifications have been established, sooner or
later, some problems will arise with respect to ZMOT- Zero Moment of Truth
any of the inputs of production. However, once
SMOT- Second Moment of Truth
the new product is in the production line, it will
FMOT- First Moment of Truth
be considered as any of the current and old
products. It will have to face the same
problems as other products in the line. ROS- Red Ocean Strategy
The possible improvements to address (Complication)
the possible issues are those any typical BOS- Blue Ocean Strategy (Innovation)
production management principles like Just-In- GOS- Green Ocean Strategy
Time (JIT), Material Requirement Planning (Combination)
(MRP), Total Quality Management,
Benchmarking and others. Law of Nemesis (Book)
 - Every success bears the seed of its
own reversal

Marketing is about creating value

2 Interacting of Marketing
- Customer
- Competition

3C of Marketing
1. Customer
2. Company
3. Competitions

Types of New Product

1. Innovative product
- New to the world, company, and
customer.
2. Replacement products
- Improvement of an existing product
3. Imitative Product
- New to the company, but not new
to the market.