Product Management

What is a Product?
Why you need a Product?
Why you need to Manage a Product?
 Product
• Satisfies a Need
• Solves a problem
 Need according to Kotler

• Need:
– It is a state of deprivation of some basic
satisfaction. eg. - food, clothing, safety, shelter.
• Want:
– Desire for specific satisfier of need
• Desire :
– One step ahead of want, will result in maximum
satisfaction.
– May also satisfy higher level of Need
 Need …want…desire
• Need….Basic requirement.
• Want….More specific
• Desire….Even more specific, will result in
extreme satisfaction.
– Desire is Endless
 Demand

• Desire backed by adequate

Purchasing power and
Willingness to buy.
Demand
 Need…Want…Desire…
• In Marketing these terms are used
interchangeably.
• Demand – ultimately the role of Marketing is
to generate and meet the demand in a
profitable manner.
 Classification of Human Wants

• 1] Necessaries
– These are the human wants absolutely essential for living and
surviving
• 2] Comforts
– These are the extra wants of the human after necessaries. They
are not as essential or urgent as necessaries. Comforts are the
wants that make the life of the human comfortable and
satisfying
• 3] Luxuries
– These are goods that give humans pleasure and prestige in
society. They are not needed for existence or comfort but provide
happiness and acceptance in the world.
 Important questions
• Do Necessities, comfort and Luxuries differ
from person to person?
• The classification of human wants is rigid.
True or False?
The classification of human wants is rigid. True or False?

• The statement is False. The classification of

human wants is not a rigid concept. What is
comfort for one person can be a necessity for
another. And what is a luxury for one person
can be a comfort for another. Many such items
that were considered luxuries in the past have
now become comforts or even necessities for
a few.
 Marketing
• What is the Starting point of Marketing?
• What do you deal with?
• What you need to do?
• Why you need to do?
• What is the ultimate objective?
 Product – starts from an Idea

• In April 1975, in a bar in Bonny Doon, Gary

Dahl listened to his friends complain about
their pets.
Describe the problems with Pets
like Dog, Cat……
 Need … Problem…
What could be the solution?
 A Perfect Pet
• Define a Perfect Pet
This gave Gar Dahl the idea for the

Perfect Pet

Rock.
 Pet Rock

• “Pet Rock” is a collectible made in 1975

by advertising executive Gary Dahl.
• Pet Rocks are smooth stones from
Mexico's Rosarito Beach.
 Rock as a Pet!!!!
Solving a Problem – Meeting a Need
 Rock as a Pet!!!!
Solving a Problem – Meeting a Need

• A rock would not need to be fed, walked,

bathed, or groomed, and it would not die,
become sick, or be disobedient.
• Dahl said that they were to be the perfect pets
and joked about it with his friends.
Dahl took his "pet" idea seriously,
and came out with a Perfect
Product.
 Perfect Product – Pet Rock
• You are the product manger - design
a Perfect Pet Rock.
• Define your target audience.
• Price ? [Indian Rs or USD – REMEMBER
IT WAS 1975.]
Design a Product–

Pet Rock
 Marketing
• They were marketed like live pets, in custom
cardboard boxes, complete with straw and
breathing holes.
 Training Manual
• A 32-page official training manual titled The Care and Training of
Your Pet Rock was included, with instructions on how to properly
raise and care for one's new Pet Rock (notably lacking
instructions for feeding, bathing, and so on).
• The instruction manual was the real product, full of gags, puns
and jokes, and contained several commands that could be
taught to the new pet.
• While "sit" and "stay" were effortless to accomplish, "roll over"
usually required a little extra help from the trainer. "Come,"
"stand" and "shake hands" were found to be near-impossible to
teach; however, "attack" was fairly simple (also with some
additional help from the owner's force).
Do you think the idea paid off???
 Sale - 6 MILLION $ - in one year
• The fad lasted about six months, ending after
a short increase in sales during the Christmas
season of December 1975.
• Although by February 1976 they were
discounted due to lower sales,
• Dahl sold 1.5 million Pet Rocks for $4 each,
and became a millionaire.
Was it Profitable?
 DEVELOPMENT COST
• Dahl's biggest expense was the die-cutting and
manufacture of the boxes.
• The rocks only cost a penny each, and the
straw was nearly free.
• For the initial run of booklets, Dahl had a
printing job for a client, and "tacked" the pet
rock booklet onto the main job. This resulted in
a batch requiring only a cut and trim, at almost
no cost except for some labor.
 Re-launch
• The Pet Rock became available again on
September 3, 2012. Rosebud Entertainment
currently holds the United States trademark
rights to the Pet Rock
 Idea to Product….$ 6 Million
• With his money, Dahl opened a bar named
"Carry Nations" in downtown Los Gatos,
California, a reference to Carrie Nation. Dahl
continued to work in advertising; however, he
avoided interviews for years, because "a
bunch of wackos" harassed him with lawsuits
and threats.
 Dahl said in 1988, "Sometimes I
look back and wonder if my life
would have been simpler if I hadn't
done it."
 A product
• A product according to Kotler and Armstrong
(2010) is “anything that can be offered to a
market for attention, acquisition, use or
consumption that might satisfy a need or
want.”
• They further added that product is more than
just tangible objects, but also include service
(intangible).
 Service ideas
• Surrogate mother.
• Story teller – In Singapore
 Product manager
• A product manager is the person who
identifies the customer need and the larger
business objectives that a product or feature
will fulfill, articulates what success looks like
for a product, and rallies a team to turn that
vision into a reality.
 Marketing
• Philip Kotler holds that: "the organization's
marketing task is to determine the needs,
wants and interests of target markets and to
achieve the desired results more effectively
and efficiently than competitors, in a way that
preserves or enhances the consumer's or
society's well-being."
 4Ps
• These are Promotion, Product, Place and
Price. These 4 Ps play a major role in
delivering the customer needs at the right
time and the right place.
• Philip Kotler says, The most important thing
is to predict where clients are going and stop
right in front of them.
 Customer orientation
• Customer orientation is a business approach
that puts the needs of the customer over the
needs of the business.
• Customer-oriented companies understand
that the business won't thrive unless it
consistently improves customer focus. It's a
way of thinking that aligns your business goals
with your customers' goals.
 Apple
• A great example of customer orientation in
regard to products is Apple. In fact, Apple is
almost always coming out with new products
that solve customers wants and needs before
they even express them.
• Apple has become known for anticipating and
even dictating customer
 Product Features
• Definition: Product features are a product's
traits or attributes that deliver value to end-
users and differentiate a product in the
market.
• The battery life of an electronic device can be
considered a feature. So can the fabric or
other materials a suitcase is made from
 Product Ingredients
• Items that become part of the product.
• Raw materials used to make a product.
– Chemicals, fragrance – Soap /Shampoo
– Auto spare parts, Paint – Cars /Scooter
– Complicated to define in case of a Service.
 Product Ingredients
• Product quality depends on it.
• In some products it is used as a Selling Point.
• Change in ingredients will change the quality.
• Consistency very important.
• Many consumers would check ingredients
before buying.
 What Is a Product Family?

• A product family is a group of related goods produced

by the same company under the same brand.
• A company may create a product family to leverage the
loyalty of existing customers toward its original brand.
• The product family supplies an array of products that are
similar but meet slightly different needs or tastes,
potentially attracting more customers.
• Customers can rely on their positive previous
experiences with a brand when choosing a new product
 Product family
• A product family is a collection of
complementary products marketed under the
same brand name.
• A product family leverages the customer trust
and loyalty earned for the original brand.
• Creating a product family can be a cost-
efficient way for a business to expand its
array of offerings.
 Product Family vs. Product Bundle

• A product family is a collection of related

products sold individually.
• A product bundle is a number of products
packaged together at a special promotional
price.
 Product hierarchy
• Product hierarchy is a method businesses use to
categorize their inventory for easier record-keeping.
• Six levels of product hierarchy?
– Product need.
– Product family.
– Product class.
– Product line.
– Product type.
– Product unit/item.
PRODUCT LEVELS
 PRODUCT LEVELS
• The Five Product Levels model was developed by Philip Kotler in the 1960s. Kotler’s
book, Marketing Management (15th Edition)
• What is a Product?
• For Kotler, the definition of a product goes way beyond being a physical object or a
service. He defines a product as anything that can meet a need or a want. This means
that even a retail store or a customer service representative is considered a product.

• The model considers that products are a means to an end to meet the various needs of
customers. The model is based on there being three ways in which customers attach
value to a product:

• Customer Need: the lack of a basic requirement.

• Customer Want: a specific requirement for a product or service to meet a need.

• Customer Demand: a set of wants plus the desire and ability to pay to have them
satisfied.
• Customers will choose a product based on their perceived value of it. The customer is
satisfied if the product’s actual value meets or exceeds their expectations. If the
product’s actual value falls below their expectations they will be dissatisfied.
 Product - Value
• The model considers that products are a means to an end to meet the
various needs of customers. The model is based on there being three
ways in which customers attach value to a product:

– Customer Need: the lack of a basic requirement.

– Customer Want: a specific requirement for a product or service to meet a need.

– Customer Demand: a set of wants plus the desire and ability to pay to have them
satisfied.
• Customers will choose a product based on their perceived value of it.
• The customer is satisfied if the product’s actual value meets or exceeds
their expectations. If the product’s actual value falls below their
expectations they will be dissatisfied.
 1. Core Benefit

• The core benefit is the fundamental need or

wants that the customer satisfies when they
buy the product.
• For example, the core benefit of a hotel is to
provide somewhere to rest or sleep when
away from home.
• Car?
• Mobile Phone?
 2. Generic Product

• The generic product is a basic version of the

product made up of only those features
necessary for it to function.
• In our hotel example, this could mean a bed,
towels, a bathroom, a mirror, and a wardrobe.
• In a Car?
 3. Expected Product

• The expected product is the set of features

that the customers expect when they buy the
product.
• In our hotel example, this would include clean
sheets, some clean towels, Wi-fi, and a clean
bathroom.
 4. Augmented Product
• The augmented product refers to any product
variations, extra features, or services that
help differentiate the product from its
competitors.
• In our hotel example, this could be the
inclusion of a concierge service or a free map
of the town in every room.
• In a Car?
 5. Potential Product

• The potential product includes all augmentations and

transformations the product might undergo in the future.
In simple language, this means that to continue to surprise
and delight customers the product must be augmented.
• In our hotel, this could mean a different gift placed in the
room each time a customer stays. For example, it could be
some chocolates on one occasion, and some luxury water on
another. By continuing to augment its product in this way the
hotel will continue to delight and surprise the customer.

• Potential Car?
 Product Levels of Coke
• 1. Core Benefit
– The core benefit of Coca-Cola is to quench a thirst.

• 2. Generic Product
– The generic product is a burnt vanilla smelling, black, carbonated, and sweetened fizzy
drink.
• 3. Expected Product
– The expected product is that the customer’s Coca-Cola is cold. If this isn’t the case then
expectations won’t be met and the drink will not taste its best in the mind of the customer.
• 4. Augmented Product
– Coca-Cola’s augmented product is that it offers Diet-Coke. How does Coca-Cola exceed
customers expectations with this product? By offering all the great taste of Coca-Cola, but
with zero calories.

• 5. Potential Product????????
Levels 1, 2, and 3 (Core Benefit, Basic Product, Expected Product)

• The first three levels of the model identify what your product must
have to at least meet your customers' expectations.
• If you're developing a new product, look at your product from your
customers' perspective to make sure that it meets their basic needs
and wants.
• If it doesn't, you'll need to address these issues before you can move
onto levels 4 and 5 – you can't exceed customer expectations if you
don't actually meet them in the first place.
• If you're developing a marketing strategy, are there any basic features
or benefits that you'll need to highlight to reassure customers? For
example, is a certain safety feature crucial, or do you need to tell
them about something that's particularly important to them?
 Level 4 (Augmented Product)

• It's here where you can really add value to your product, and start to
differentiate it from the competition.
• If you're developing a product, identify how you can add extra value to
exceed customer expectations. For instance, could you upgrade your
product to include more features? Or could you bundle your product with
other goods or services – for example, accessories, finance or maintenance?
• You'll have more chance of exceeding customer expectations and beating
the competition if you're able to offer features and benefits that you are
uniquely able to provide.
• Use tools such as USP Analysis and Core Competence Analysis to do this.
• If you're developing a marketing strategy, identify the benefits and features
that exceed customer expectations, and highlight these in your marketing
communications.
 USP (Unique Selling Proposition)
• Your USP (Unique Selling Proposition) is the
unique thing that you can offer that your
competitors can't.
• It's your "Competitive Edge." It's the reason
why customers buy from you, and you alone.
 Features - Cost
• Remember that most, if not all, of these
additional benefits come with a cost. You may
want to conduct a Cost/Benefit Analysis to
make sure that the benefits are worth the
increased price to your organization or to the
customer.
 Level 5 (Potential Product)

• This is where you identify features and benefits that you

could add to your product in the future.
• This is key, because Augmented Products (level 4) can quickly
become Expected Products (level 3) as customer
expectations change. So, you'll need to innovate to stay
ahead of the competition.
• Competitors may copy the features within no time – and you
will lose the competitive edge.
• Conjoint Analysis helps you identify and prioritize the features
that are most important to customers, while Kano Model
Analysis helps you think about features that will delight them.
 Five Product Levels Advantages

• Identify and understand the needs and wants of customers.

• Identify and Understand the competition.
• Match the features they create to what the customer wants – Develop
a Perfect Product
• Effect Product Modifications – add new features.
• Make efficient use of marketing resources.
• Match operational processes to what customers want. In our hotel
example, this would mean strict processes around cleaning each
room.
• Match marketing efforts to appeal to customers wants.
• The model ultimately helps organizations differentiate themselves
from their competitors in a way that aligns with the wants and needs
of their customers.
• Be future ready.
 Summary
• To come up with a right or most effective
Product Strategy and Marketing Strategy so as
to maximize the sales revenue and Profits.
 Value Proposition
• Value Proposition–highlight the value that
you offer to your target customers, and
explain why they will buy from you and not
your competitors.
 PRODUCT MIX
PRODUCT PORTFOLIO
 Product Mix
• A product mix is the total number of product
lines and individual products or services
offered by a company.
• Additionally referred to as product
assortment or product portfolio.
• Product mixes vary from company to
company. Some have multiple product lines
with lots of products in each line.
 4 components of the product mix

• The product mix incorporates four normal

components:
– Length,
– depth,
– Breadth or width
– consistency
 Width

• The total number of product lines that a

company suggests refers to as the width of the
product mix.
• For example, if a clothing company sells only
ties and belts, then it has two product lines. If
it starts selling shirts, then it has three product
lines.
 Length

• The total number of products in a product

mix is the length of the product mix. You can
determine the length by adding all the
products together. For example, if a company
has three product lines with five products in
each line, then the length of the product mix
is 15.
 Depth

• The total number of variations or types of

product in a product line is the depth of the
product mix.
• The variations may depend on the shape, size,
flavour or any other features that the company
provides.
• For example, a company may sell potato chips
of different flavours that fall into the same
product line.
 Consistency

• The relationship between different products of

product mix is called consistency.
• This relationship can be about the production
process and the distribution criteria of the products.
• It could also be based on basic raw material.
• Focusing more on consistency can help companies in
reducing the production cost of the products.
• If there is more product variation, then there is less
product consistency.
 BUSINESSES - ITC

• Cigarrettes
• FMCG. ITC's rich mix of FMCG portfolio is designed and
customised to delight consumers in myriad ways. ...
• HOTELS. Launched in 1975, ITC Hotels, India's premier chain of
luxury hotels, has become synonymous with Indian hospitality. ...
• AGRI BUSINESSES. ...
• PAPERBOARDS & SPECIALTY PAPERS. ...
• INFORMATION TECHNOLOGY. ...
• PACKAGING.
3 Most Important Components of
Product Mix

1. Branding
2. Packaging
3. Labelling
 1. Branding:

• A brand is the identification of a product. It can be in the form

of a name, symbol, or design etc. The branding is not only
done to identify the seller or producer but also to make your
product superior [differentiation] than competitor’s product.
• Branding is much more than an identification mark. It is a
seller’s promise to deliver quality and satisfaction of buyer’s
expectations. With brand we can easily identify which all
products belong to a particular company. When firms develop
good reputations about quality then brand helps them enjoy
greater control over the customers and develop brand loyalty.
 Definition - Brand
• The American Marketing Association defines
a brand as “A name, term, design, symbol, or
any other feature that identifies one seller’s
good or service as distinct from those of
other sellers. The legal term for brand is
trademark. A brand may identify one item, a
family of items, or all items of that seller. If
used for the firm as a whole, the preferred
term is trade name.”
 Brand -Ogilvy
• David Ogilvy described as “the intangible sum of a
product’s attributes.”
• Marketers realized that they could create a specific
perception in customers’ minds concerning the
qualities and attributes of each non-generic product
or service. They took to calling this perception “the
brand.”
 Nike Advantage
• Accuracy, comfort, reliability, perfect fit,
performance, better than others,
• Used by Top Sportsmen
– Sharapova, Tiger Woods, Nadal, Serena
Williams………….
• If you wish to realize your dreams….Nike
 BRAND V/S PRODUCT
• A Product is anything we can offer to market for attention,
acquisition, use, or consumption that might satisfy a need
or a want.
• Product Levels
– Core – basic need or want satisfied by the product.
– Generic – basic version of the products without any ad ons.
– Expected – expectation of buyers from the product.
– Augmented – additional product attributes, benefits, or
services that differentiates the product from the competitors.
– Potential – augmentations and transformations that the
product might undergo in the future.
 Companies Make Products and
Consumers Make Brands

• A product is made by a company and can be

purchased by a consumer in exchange for money
while brands are built through consumer
perceptions, expectations, and experiences with all
products or services under a brand umbrella.
• For example, Toyota’s product is cars. Its umbrella
brand is Toyota and each product has its own more
specific brand name to distinguish the various
Toyota-manufactured product lines from one another.
Without a product, there is no need for a brand.
Products Can Be Copied and Replaced but Brands Are Unique

• A product can be copied by competitors at

anytime.
 Substitution
• Similarly, a product can be replaced with a
competitor’s product if consumers believe the two
products offer the same features and benefits.
Products with low emotional involvement are
typically easily replaced.
• For example, do you really care what brand of milk
you buy or do you primarily just care that the milk
you buy is fresh and includes the fat percentage that
you want?
• ......now a days you do. Why?
 Products Can Become Obsolete but
Brands Can Be Timeless

• Remember VHS players? With the introduction

of DVD players and more recently DVR devices
and streaming video services, VHS players have
become obsolete. The same thing happened to
8-track tapes, vinyl records, cassettes, and CDs.
Today, most people buy their music in digital
format and listen to it on their iPods. The Elvis
Presley brand is timeless, but no one buys Elvis
music on cassettes anymore.
 Products Are Instantly Meaningful but
Brands Become Meaningful over Time.

• When you launch a new product, it’s easy to make

that product instantly meaningful and useful to
consumers because it serves a specific function for
them. However, a brand is meaningless until
consumers have a chance to experience it, build trust
with it, and believe in it.
• That’s why the 3 steps to brand building include
consistency, persistence, and restraint. It takes time
and effort to convince consumers to believe in your
brand.
 Difference between Product - Brand

• A Brand is therefore more than a Product

because it can have dimensions that
differentiate it in some way from other
Products designed to satisfy the same needs.
• These difference may be –
– Rational and tangible – related to the product
performance or
– Symbolic, emotional and intangible – related to
what Brand represents
 Product v/s Brand
• The Fundamental Difference is "Emotions"
• Brand building is a long process.
• Products and Brands have Different Life
Cycles
• Brands own a distinguished Identity, but
products are common
• Companies build Products and Consumers
build Brands
 Benefits of a Strong Brand

• Increases Brand Recognition.

• Improves Customer Loyalty to Your Brand.
• Positive Word of Mouth Marketing.
• Higher Advertising Effectiveness on Customers.
• Lower Price Sensitivity.
• Block competition.
• Brand extension…easy to introduce new products
• Higher profits.
• More Applicants That Want to Work for Your Brand.
• Engaged Employees Who Are Proud to Work at Your Company.
 Benefits of branding for the buyer:

• It is a sign of quality and makes the selection

easier for the buyer.
• Trust - Those who buy the same brand each time can
expect to have the same quality every time they buy.
• It makes shopping easier for the buyer.. It takes you
a few minutes only to find your preferred brands in a
large supermarket. So, shopping has been made
convenient and easier by branding.
• Buyer knows what to expect from the Brand.
Companies make Products
consumers buy Brand.
 2. Packaging:

• The companies always supply the products in

packaged form for example, Coke comes in
bottle, biscuits in wrapper, oil in jar, etc.

• Packaging is the basic activity of every company.

It can be defined as “A set of tasks or activities
which are concerned with the designing,
production of an appropriate wrapper,
container or bag for the product”.
 There are three levels of Packaging:

• 1. Primary Package:

• It refers the immediate packing of product. It remains with product till it is used for example,
tube of paste, match box, etc.

• 2. Secondary Package:

• These are additional packing which give more protection. Generally consumers throw that
when they start using the product for example, card board box used to keep tooth paste.
People throw box when they start using paste.

• 3. Transportation Packaging:

• These are packaging’s used for storing or transporting the goods. This packing gives
protection to goods, for example, corrugated boxes used to shift Ruffle Lays, Kurkure, etc.
 Importance of Packaging:

• 1. Rising Standard of Health and Sanitation:

• Packing has become essential because of rising standard of health and

sanitation. In a packed good there are less chances of contamination of
products. People prefer packed products over loose as there are less
chances of adulteration in packed product.

• 2. Self Service Outlets:

• The self services outlets are becoming very popular. In these stores generally
products with attractive packing are picked by buyers more quickly.
• 3. Product Differentiation:

• Packing help the customers to differentiate between goods on the basis

of quality as with the type of packing customer can guess about the
quality of goods.

• 4. Innovation Opportunities:

• Recent developments in packaging have completely changed the

marketing. For example new packing in soft drinks, chips, biscuits keep
them fresh for a longer period. Even milk can be stored for 4-5 days
without refrigeration. Scope of marketing is increasing with new
innovations in packaging.
 Functions of Packaging:
1. Protection:

• The fundamental function of packaging is that it

protects the product from damage. Appropriate
packaging protects the product from sun, rains,
moisture, breakage; insects etc. for example, airtight
containers and packets are used for chips, biscuits,
jams, and cola etc. which need protection from
atmospheric contacts.
• Products like television or other appliances need to
be protected from damage in transit so they are
packed in big board cartons etc.
• 2. Identification:
• With the help of packaging the product can be easily identified
for example, with the yellow and black packing and alphabet К
we can recognise from far off that it is a Kodak product, of red
colour and unique shape of coke bottle we can identify it from
distances also.
• 3. Convenience:
• The handling of the product becomes more convenient with
appropriate packing. It makes it convenient to store and
convenient to shift from one place to other for example, new pet
bottles of cold drink has made it very convenient for middle men
to transport it, supply it and store it.
• 4. Promotion:
• Packaging plays a role of silent salesman
because it promotes or enhances the sale of
the product. The attractive colorful and
innovative packing attracts the customers
specially if the product is children’s product.
Attractive packing always induces the
customers to buy the product
 3. Labelling

• Labelling means putting identification marks on the package. Label is the carrier of
information. It provides information like—name of the product, name of
manufacturer, contents of products, expiry and manufacturing date, general
instruction for use, weight, price, etc.
• Labels are attached on the product to provide some information to customer.
Product labels can be
• (a) In simple tag form as in case of local products like rice, pulses, etc.
• (b) Elaborate labels—as used by reputed companies. These are very attractive and
give complete information about product to customer.
• Apart firm details of product some statutory warnings which are essential for some
products must be printed on label. For example, on Tobacco, Liquor it is compulsory
to mention that its consumption is injurious to health.

• Govt regulations are important

• IMPORTANCE IN FOOD PRODUCTS, SNACKS