1-PRODUCT

MANAGEMENT.
ROLE OF PRODUCT MANAGEMENT
IN MARKETING AND ITS
INTERFACE WITH OTHER
CORPORATE FUNCTIONS.

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 PRODUCT LEVELS: THE
CUSTOMER VALUE HIERARCHY.
• Many People think that a Product is a Tangible Offering, but a Product
can be more than that.
• A PRODUCT is anything that can be offered to a Market to satisfy a want
or need.
• Products that are Marketed include Physical Goods, Services,
Experiences, Events, Persons, Places, Properties, Organizations,
Information, and Ideas.
• Product Levels: The Customer Value Hierarchy.
• In planning its Market Offering, the Marketer needs to address Five
Product Levels( See the figure in the next slide). Each Level adds more
Customer Value Hierarchy.
• The fundamental level is the Core Benefit: the service or benefit the
Customer is really buying. A Hotel Guest is buying “Rest and Sleep”.
The Purchaser of a Drill is buying Holes. Marketers must see
themselves as Benefit Providers.

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 Product Levels: The Customer
Value Hierarchy( Cont’d).
• FIVE PRODUCT LEVELS:

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 FIVE PRODUCT LEVELS (Cont’d).
• At the Second Level, the Marketer has to turn the Core Benefit into a Basic Product.
Thus a Hotel Room includes a Bed, Bathroom, Towels, Desk, Dresser, and a Closet.
• At the Third Level, the Marketer prepares an Expected Product, a set of Attributes and
Conditions Buyers normally expect when they purchase this Product. Hotel Guests
expect a clean Bed, Fresh Towels, Working Lamps, and a relative degree of Quiet.
Because most Hotels can meet this minimum expectation, the Traveler normally will
settle for whichever Hotel is Most Convenient or Least Expensive.
• At the Fourth Level, the Marketer prepares an Augmented Product, that exceeds
Customer Expectations. In developed Countries, Brand Positioning and Competition
take place at this Level. In developing Countries and Emerging Markets, Competition
takes place mostly at the Expected Product Level. However, in India, there is a visible
move by some companies to Augment their Products and Services by providing
Superior Customer Experience. Differentiation arises on the basis of Product
Augmentation.
• At the Fifth Level stands the Potential Product, which encompasses all the possible
Augmentations and Transformations the Product or Offering may undergo in Future.
Here is where companies search for new ways to satisfy and Distinguish their offer.
Also consider the Customization Platforms new e-commerce sites are offering, from
which companies can learn by what different customers prefer. Procter & Gamble, for
example, has developed Reflect. COM. Which offers Customized Beauty Products
created interactively on the Web site.

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 RESPONSIBILITIES OF THE
PRODUCT MANAGER.
• Broadly speaking the Product Manager has TWO Responsibilities.
• First, the Product Manager is Responsible for the Planning Activities
related to the Product or Product Line. Thus the Product Manager’s
Job involves Analyzing the Market, including Customers, Competitors
and the External Environment, and turning this Information in to
Marketing Objectives and Strategies for the Product or Product Line.
• Second, the Product Manager must get the Organization to support
the Marketing Programs recommended in the Plan.
• This may involve Coordinating with other Areas of the Firm, such as
Research & Development for Product Line Extensions, Manufacturing,
Marketing Research, Finance etc.
• It also involves Internal Marketing of the Product, to obtain the
Assistance and Support of more Senior Managers in the Firm.
• A Product Manager’s Potential Interactions are shown in the Figure in
the next slide.

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A PRODUCT MANAGER’S POTENTIAL
INTERACTIONS.

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 PRODUCT Vs GENERAL
MARKETING Management.
• What are the differences between a
Focus of the Product Manager and a
more General Marketing Management Product •General
Perspective? The chart below Management. Marketing
indicates what separates the Two. Management.
• One Key Difference is that Marketing 1) Scope of Narrow-Single Broad-
Managers in charge of a Division or Responsi Product or Portfolio of
Strategic Business Unit have more bility. Product Line. Products.
concerns over Managing “Portfolio”
of Products and about the Long Term 2) Nature of Mainly Mainly
Strategic Direction of Business Decision Tactical. Strategic.
Groups. Making.
• Because Product Managers are in
charge of a Single Product or a 3) Time Short Run. Long Run.
Closely Related Product Line, they Horizon
are not concerned on a day to day
basis about health of the General
Business Area in which they operate.

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 Product Vs General Marketing
Management (Cont’d).
• Second Key Contrast is the Nature Of Decision Making.
• Divisional Marketing Managers typically make Strategic Decisions
about which Products to Add or Drop and Manage to meet an overall
Divisional Financial Objective.
• While Product Managers are involved with developing Marketing
Objectives and Strategies for their Products, their Mix: How much to
spend on Advertising, How to react to Competitor’s Coupon
Promotion, which Channels of Distribution are Appropriate and similar
Questions.
• Finally Product Managers and Marketing Managers face different Time
Horizons. Product Managers face substantial pressure to attain and
hence Focus on Short Run Market Share, Volume or Profit Targets.
• Marketing Managers are also concerned with Short Run Targets, but
they more often take a Long Term Perspective of Business.

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 Types of Marketing Organization and
Product Manager.
• The Tasks of Product Manager vary quite widely from Organization to
Organization. The kinds of Tasks Product Managers perform are
highly related to how Marketing is organized.
• Four Organizational Structures have been identified: 1) Organization
by Function. 2) Organization by Product. 3) Organization by Market. 4)
Product-Marketing Management Matrix System.
• Given below is Functional Organization.

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 FUNCTIONAL ORGANIZATION.
• The earliest and the most common form of Marketing Organization has
various Functional Marketing Specialists reporting to a Marketing Vice
President, who is in charge of coordinating all of their activities. The
figure in the earlier slide shows three such Specialists, who bear titles
of Advertising Manager, Sales Manager, and Marketing Research
Manager respectively.
• Additional Functional Specialists might also be present in the
Marketing Department, such as Merchandizing, Sales Promotion, New
Products, Customer Service, Sales Analysis, Market Planning, and
Marketing Administration.
• The main advantage of a Functional Marketing Organization is its
administrative simplicity. The disadvantages are, inadequate detailed
planning for Specific Products and Markets and Development of Sub-
Goals by each Functional Group, which include trying to get more
Budget and Status vis-à-vis the other functions.

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PRODUCT MANAGEMENT ORGANIZATION.

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 PRODUCT MANAGEMENT
ORGANIZATION.
• Companies producing a variety of Products and or Brands often establish a
Product Management System( Also called a Brand Management System).
• The Product Management System does not replace the Functional
Management System, but serves another layer of Management, as shown in
the earlier slide.
• The Functional Managers are essentially Resource Managers, and the Product
Managers are essentially Program Managers.
• This type of Organization is called a Matrix Organization, because each
Resource Manager gets involved with each Program Manager. The
Organization is visualized as a set of Rows representing Marketing Functions
and Columns representing Products.
• The decision to install a Product Management System is influenced by the
extent of Product Heterogeneity and the sheer number of Products. If the
Company Product Lines can benefit from Specialized Marketing Programs, or
if the sheer number of Products is beyond the capacity of a Functional
Marketing Organization to handle, a Product Management Organization is a
natural recourse.

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 Product Management Organization.
(Cont’d)
• Product Management first made its appearance in Procter & Gamble in 1927. A
new company soap, Camay, was not doing well, and one of the young men,
Neil H. Elroy (later President of P&G), was assigned to give his exclusive
attention to developing and promoting this Product. This, he did successfully,
and the company soon afterwards added other Product Managers.
• Since then a large number of Firms, especially in the Food, Soaps, Toiletries,
and Chemical Industries, have established Product Management System.
• The Product Management System creates a Focal Point of Planning and
Responsibility for Individual Products. The Product Managers Role is to create
Product Strategies and Plans, see that they are implemented, monitor the
results, and take corrective actions. The Responsibility breaks down into the
following Six Tasks: 1) Developing a Long Range Growth and Competitive
Strategy for the Product. 2) Preparing an Annual Marketing Plan and Sales
Forecast. 3) Working with Advertising and Merchandizing Agencies to develop
copy, Programs, and Campaigns. 4) Stimulating interest in and support of the
Product among the Sales Force and Distributors. 5) Gathering continuous
intelligence on Product’s Performance, Customer and Dealer Attitudes, and
New Products and Opportunities. 6) Initiating Product Improvements to meet
changing Market Needs. These basic functions are common to both Consumer
and Industrial Product Managers.

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Three Types of Product Teams.

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 Three Types Of Product Teams.
• There are three types of Product Team Structures in Product
Management. The standard one is called the Vertical Product Team
and consists of a Product Manager, Assistant Product Manager and a
Product Assistant as shown in the earlier slide.
• The Product Manager is the Leader and primarily interacts with other
Executives to gain their Cooperation. The Assistant Product Manager
helps in these tasks and also does some paper work. The Product
Assistant largely does the paper work and runs various errands.
• Some Companies have moved to a Triangular Product Team
consisting of a Product Manager and two Specialized Product
Assistants, one who takes care of Marketing Research and the other ,
Marketing Communications.
• Some Companies have moved to a Horizontal Product Team
consisting of a Product Manager and several Specialists from within
and outside of Marketing as shown in the earlier slide.

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Market (Customer) Oriented Organization
Example: Crompton Greaves Ltd.

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Product-Marketing Management Matrix System.

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 Market Management Organization And Product
Management/Market Management Organization.
• Many Companies will sell a Product Line to a highly diverse set of
Customers. For example, a Paint Firm will sell to the Consumer,
Dealer/Distributor, Industrial and Government Market.
• Where the Company sells to Customers who fall into distinct user
groups having Different Buying Practices or Product Preferences,
some kind of Market Specialization is desirable as shown in the earlier
slide.( Ex: Crompton Greaves Limited- Manufacturers of Electrical
Machinery.)
• Product Management/Market Management Organization.
• Companies that produce multiple Products for multiple Markets create
a combination of Product Cum Marketing Management type of an
Organization to ensure efficient satisfaction of varied Needs and
Wants of Customers in different Markets as shown in the earlier slide.
(Ex: Dupont Textile Division).
• This System combines the advantages of both Product Management
and Market Management Organizations. This System is called Product-
Marketing Management Matrix System.

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 Advantages And Disadvantages Of
Product Management System.
Advantages.
• Locus of Responsibility is very clear.
•Product Manager is fully Responsible for
Success or Failure of a Product and no one else.
•Product Manager’s Training and Experience are
Invaluable.
•They develop the Ability to work with other
Functional Areas of the Firm.
•They develop the Art Of Persuasion and
Communication Skills necessary to be an
advocate for a Product.
•Hospitals with Product Management
Organization have outperformed those without it.
•Major Automobile Manufacturers like GM have
benefited by Product Management.
Disadvantages.
• Narrow Focus on one Product may lead to
neglect of Customer Need.
•Centralized Structure may not effectively cater to
different Regional Tastes
•Some Product Managers tend to orient
themselves for Short Term Sales and Market
Share.
•Several Sales People from same Firm,
representing different Products may call on the
same Customer at the same time, creating
confusion in the minds of the Customer.
•“Burn Out” of certain Senior Product Managers,
who have a Short Term Focus, that stifles
Innovation, an Explosion of Market Data leading
to Information Overload, Corporate Downsizing,
and more Responsibility and Pressure with less
Autonomy.
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 Requirements To Be A
Successful Product Manager.
1) Minimum Qualifications: A Bachelor’s degree, preferably with a MBA degree.
2) Work Experience as a Successful Manager.
3) In a High Tech Product Company: An Engineering Degree with an MBA degree.
4) Team Work: Ability to work in Teams and Lead Teams of Individuals from all
parts of Organization.
• Product Manager’s Role involves Coordination, Organization and to Facilitate
workers from many Groups both inside and outside.
• He should not only develop New Products, but also develop Junior Product
Staff.
5) Communication Skills: Should Communicate effectively with Top Management
and Colleagues (Internal Marketing) and also with Outsiders like Customers,
Suppliers, Ad Agencies, Dealers/Distributors, Government, Press etc.
6) Analytical Ability: Requires both Quantitative and Qualitative Analysis of
Market, Products, Competitors’ Activities. Should be well versed with preparing
overall plans and a 4 P’s Analysis, New Product Planning etc.
7) Preparing and Implementing Efficient Marketing Plans. Marketing Plans contain
definitions, features, target markets, timelines, and resources needed to
develop a Marketing Strategy for the Product or Service.
• Product Managers should write Marketing Plans with input from other functions
such as Finance, Operations, and Marketing Communications.

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