PRODUCT MANAGEMENT

Sonu Chowdhury
Faculty- Sangam University

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 Learning Objectives

This section has two fold objectives, First understanding the subject
product management, second focuses on the Concept of Product

To understand how Product Management evolved.

What a product manager has to do.

Linkages of product management with other functions of

department.
Learning the concept of product.

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 Product Management

Product Management is a function within a company that deals

with the planning or marketing or forecasting of a product or
products at all stages of the product lifecycle.
Product management and product marketing are different yet
complementary efforts with the objective of maximizing sales
revenues, market share, and profit margins. Product
Management has several roles
Product management can be a separate function or a part of
marketing or engineering functions.

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 Historical Background
In the early 1900s, new products were created by gifted
inventors. Men like Edison, Watt, and Marconi created products
like the electric bulb, steam engine and the telegraph.
Once these basic inventions were developed, new products
evolved.
By the end of World War I, complex and rapid technological
advancement, companies started organized development of
products.
World War II gave a further impetus to the development and
refinement of products. However, most of these were based on
Research and Development (R&D) in a given manufacturing
company and were not driven by customer needs. The R&D
product planning programs were expensive and slow, and they
often were unproductive.

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 Managements then concluded that a new approach was needed
to make product development more productive.
They realised that to be successful they needed to identify
products that could satisfy the customers needs and desires
and which could, at the same time, match the company's
manufacturing capabilities keeping in mind the constantly
changing market conditions.
Thus, it was no longer a case of merely reacting to market
conditions. A company needed to stay ahead by creating new
markets while continuing to dominate existing ones. Hence,
what was needed was a formal approach to Product Planning
and Management.
The formal process of Product Planning & Its Management is
led by a Product Manager.

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 Product Management & its Interface with other
Organizational Functions
Product Management interfaces with other functions in the
following manner:
It identifies a market problem/ customer needs
It quantifies the opportunity (ROI / BEP)
It communicates the market opportunity to the top management
It communicates with the Product Development team
It communicates to Advertising/ Promotion team (giving them
the positioning of the product. )
It empowers the sales team (to define the sales process and
identify the necessary sales tools to sell to the customer. )

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PRODUCT LEVELS, PRODUCT
HIERARCHY, PRODUCT
CLASSIFICATION

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 Product Concept

The product concept assumes that consumers will buy the

product that offers them the highest quality, the best
performance, and the most features.

Organizations that are devoted to the product concept of

marketing, believe that consumers would automatically favour
for products of high quality.

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 Definition of Product
Product is the bundle of utilities by which it can satisfy the needs
of the users.

Product is anything that can be offered to a market to satisfy a

want or need.

Product is a set of tangible and intangible attributes, including

packing, colour, price, manufacturers prestige, retailers
prestige, manufacturer and retailers services, which the buyer
may accept as offering satisfaction of wants, or needs.

Product is anything, which can be marketed in terms of physical

goods, services, experiences, events, persons, places, parties,
organizations, information, and ideas.

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 Product levels

In planning its market offering, the marketer needs to think

through five levels of product.
Each level adds more customer value

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five product levels
core benefit of the product
generic product
expected product
augmented product
potential product

source: Kotler, marketing management

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Five product levels

PRODUCT LEVELS DESCRIPTION

The fundamental service or benefit that the customer is really

core benefits buying

Marketer has to turn the core benefit into a basic product. A

generic product version of the product containing only those attributes or
characteristics absolutely necessary for it to function.
The set of attributes or characteristics that buyers normally
expected product expect when they purchase a product.

Inclusion of additional features, benefits, attributes or related

services that serve to differentiate the product from its
augmented product competitors. the marketer prepares an augmented product that
exceeds customer expectations.
All the augmentations and transformations a product might
potential product undergo in the future. Companies search for new ways to
satisfy customers and distinguish their offer.
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A hotel guest is buying rest and sleep. Hotel room
includes a bed, bathroom, towels, desk, etc. clean
bed, fresh towels, working lamps, and a relative
degree of quiet. Remote-control television set, fresh
flowers, rapid check-in, express checkout, and fine
dining and room services.

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KEY POINTS:
Todays competition essentially takes place at the product-
augmentation level.

Each augmentation adds cost.

Augmented benefits soon become expected benefits.

As companies raise the price of their augmented product, some

competitors offer a stripped-down version at a much lower price.

Successful companies add benefits to their offering that not only

satisfy customers but also surprise and delight them. Delighting

customers is a matter of exceeding expectations .

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 According to Levitt, the new competition is not between
what companies produce in their factories, but between
what they add to their factory output in the form of
packaging, services, advertising, customer advice,
financing, delivery arrangements, warehousing, and other
things that people value.

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 Product hierarchy
Each product is related to certain other products. The
product hierarchy stretches from basic needs to particular
items that satisfy those needs.
Need family

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Need family The core need that underlies the existence of a product
family. Example: security.
Product family All the product classes that can satisfy a core need with
reasonable effectiveness. Example: savings and income.
Product class: A group of products within the product family recognized as
having a certain functional coherence. Example: financial
instruments.
Product line A group of products within a product class that are closely
related because they perform a similar function, are sold to
the same customer groups, are marketed through the same
channels, or fall within given price ranges. Example: life
insurance.
Product type A group of items within a product line that share one of
several possible forms of the product. Example: term life.
Item A distinct unit within a brand or product line distinguishable
by size, price, appearance, or some other attribute. Example:
Prudential renewable term life insurance.

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Need family The core need - personal care

Productfamily Cosmetics,skincreams,shampoos

Productclass: Haircleaningagents

Productline Shampoos

Producttype Dandruffcontrolshampoos

Item AsachetofClinicAllClear

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 Product classifications

A product has many intangible as well as tangible attributes.

It is appropriate to consider products in identifiable groups. This
can be done formally using a classification system, which aids
product and market planning.
Producers and marketers have traditionally classified products
on the basis of characteristics such as durability, tangibility, and
use (consumer or industrial). Each product type has an
appropriate marketing-mix strategy.

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