Product Management & Strategies

Unit 1

Product is core to any business enterprise and forms the most tangible expression offered by the firm in response to customer needs and wants. OR A product is any offering by a company to a market that serves to satisfy customer needs and wants. It can be an object, service, idea etc.

What is Product?

Kotler defined: A Product is anything, tangible or intangible, which can be offered to a market for attention, acquisition, use or consumption that might satisfy a need or want. Thus, the definition of a product includes:

tangible products (cars, houses, toothpastes, shoes...) intangible products (services such as management consulting, teaching, security...) ideas (political, environmental protection...) people (pop stars, politicians, sports celebrities...) places (historical, holiday resorts...) Market for attention, acquisition, use or consumption Satisfy a need or want of the customers.

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Goods Something is considered a good if it is a tangible item. That is, it is something that is felt, tasted, heard, smelled or seen. For example, bicycles, cell phones, and donuts Services Something is considered a service if it is an offering a customer obtains through the work or labour of someone else. Services can result in the creation of tangible goods (e.g., a publisher of business magazines hires a freelance writer to write an article) but the main solution being purchased is the service.
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Product to cover offerings that fall into one of the following categories

Unlike goods, services are not stored, they are only available at the time of use (e.g., hair salon) and the consistency of the benefit offered can vary from one purchaser to another (e.g., not exactly the same hair styling each time). Ideas Something falls into the category of an idea if the marketer attempts to convince the customer to alter their behaviour or their perception in some way.
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Marketing ideas is often a solution put forth by non-profit groups or governments in order to get targeted groups to avoid or change certain behaviour. This is seen with public service announcements directed toward such activity as youth smoking, automobile safety, and illegal drug use.

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In planning its market offering, the marketer needs to address five product levels. Each level adds more customer value than another and these five levels when combined known as customer value hierarchy.

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Level of Product

Fundamental level is core benefit. Ex Hotel guest is buying rest and sleep , marketer should provide first basic need and then extra benefit. Marketer must turn when core benefit to basic product. Ex- a hotel room includes a bed, bathroom, towels, desk, dresser & closet.

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Third level is expected product, as et of attributes and conditions buyers normally expect when they purchase the product. Ex- hotel guests expect a clean bed, fresh towels, working lamps etc.

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Augmented product is fourth level, that exceeds customer expectations, its generally includes brand positioning. Ex- extra services, warranty 24 hrs freshness, car, shopping facility etc.

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Last level is potential product, which offering all the possible benefits, optional features. Company search a new way to satisfy the customer. Ex- bday, new couple, anniversary celebration in same package etc.

All 4 layers contribute to the satisfaction of the customer. The outer 2 layers (tangible & augmented) are dependent on the definition of the core product. The core product may be functional-based on its usage, or could be benefit or promisebased depending on how it makes you feel. Whatever the core product may be, real marketing action takes place in the tangible & augmented layers.

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Marketers have traditionally classified products on the basis of durability, tangibility and use. Each product types has an appropriate marketing strategy. Classification of product define in the following way:

Product Classification

Product Classification

Durability& Tangibility

Use

Durable Goods

Non Durable Good

Services

Consumer Goods

Industrial Goods

Product Classification

Consumer goods

Convenience Goods

Shopping Goods

Specialty Goods

Unsought Goods

Product Classification

Industrial Goods

Machines

Supplies

Packaging

Maintenance & repair Item

Raw Materials

Product Classification

Durable: These products are tangible that remain in use months after months and years after years. They are mostly soled through personal selling with high margin at specialty shops. ex washing machine, vacuum cleaner, etc. Non- Durable goods: These products are tangible goods that are normally consumed with one or few uses. ex. soap, food items, etc.

Product Classification

Services: These are activities or benefits that provide satisfaction to the customers. Ex. Fitness center, club, coaching course, etc. Convenience Products These are products that appeal to a very large market segment. They are generally consumed regularly and purchased frequently. Examples include most household items such as food, cleaning products, and personal care products, tooth paste, news paper etc.

Product Classification

Shopping Products These are products consumers purchase and consume on a less frequent schedule compared to convenience products. Consumers are willing to spend more time locating these products since they are relatively more expensive than convenience products and because these may possess additional psychological, Cont....

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benefits for the purchaser, such as raising their perceived status level within their social group. Examples include many clothing products, personal services, electronic products, and household furnishings.

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Specialty Products These are products that tend to carry a high price tag relative to convenience and shopping products. Consumption may occur at about the same rate as shopping products but consumers are much more selective. In fact, in many cases consumers know in advance which product they prefer and will not shop to compare products. But they may shop at retailers that provide the best value, ex. Fancy, prestige goods, etc.

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Unsought Products These are products whose purchase is unplanned by the consumer but occur as a result of marketers actions. Such purchase decisions are made when the customer is exposed to promotional activity, such as a salespersons persuasion or purchase incentives like special discounts offered to certain online shoppers. These promotional activities often lead customers to engage in Impulse Purchasing. Ex. Insurance , High definition T.V., etc.

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Emergency Products These are products a customer seeks due to sudden events and for which pre-purchase planning is not considered. Often the decision is one of convenience (e.g., whatever works to fix a problem) or personal fulfilment (e.g., perceived to improve purchasers image).

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Raw Materials These are products obtained through mining, harvesting, fishing, etc., that are key ingredients in the production of higher-order products. Processed Materials These are products created through the processing of basic raw materials. Electrical wire is an example.

Industrial Goods

Advanced Components These are products that use basic components to produce products that offer a significant function needed within a larger product. Yet by itself an advanced component does not stand alone as a final product. In computers the motherboard would be an example since it contains many basic components but without the inclusion of other products (e.g., memory chips, microprocessor, etc.) would have little value.

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Product Component These are products used in the assembly of a final product though these could also function as stand alone products. Dice included as part of a childrens board game would be an example. MRO (Maintenance, Repair and Operating) Products These are products used to assist with the operation of the organization but are not directly used in producing goods or services. Office supplies, parts for a truck fleet and natural gas to heat a factory would fall into this category.

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Product Management is an organizational function within a company dealing with the planning or marketing of a product or products at all stages of the product life cycle. It has a variety of functions and roles depending on the company size and history . Like sometimes role depended to the product manager or sometimes is held by other still.

What is Product Management

Product Management

Product Planning

Product Marketing

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Product Planning 1. Defining new products 2. Gathering market requirement 3. Building product road maps 4. PLC 5. Product Planning Product Marketing: 1. Product positioning 2. Promoting the product 3. NPD 4. Monitoring the competition

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The product manager is responsible for all product related actions. Design specification, feature availability, branding, package, promotion etc. along with launches and discontinuations of products or product lines.

A product has a life cycle of its own. It starts out with its launch. It grows, stabilizes and sometimes dies or may be re-incarnated through a re-launch program, revised design or total renewal under the same name. The PLC is usually seen as the inverse bathtub curve.

Why Do We Need Product Management?

Every decision related to the product lifecycle is critically important for the organization because, the product is at the heart of the supplier-buyer relationship. Product management, therefore requires clear lines of authority, and an effective and efficient organization.

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Of all the tools involved in turning a core product into a tangible one, branding is the most critical that decides if a product is a winner or a loser. Branding is important for all parties involved in the exchange process:
Consumers Manufacturers Retailers

Branding is important because it sets a particular product apart from others in the marketplace.

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The product management (PM) team is in the marketing department. There may be several PMs reporting directly to the marketing manager or to line (or group) managers who report to the marketing manager. The PM team must always keep close contact with the engineering or design team. The PM team is the eye and ear of the design group. They listen to the customer and determine what the product will be like.

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How a product is managed depends on the stage of the life-cycle it is in and its main competitors. Early stages require heavy fixed marketing spending to establish brand awareness. During maturity, both variable and fixed marketing are used. Their weights may change depending on the industry. The variable marketing support is expected to increase as the product ages to keep its position against newer entries.

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A company usually has more than one product to sell. Product lines are groups of products that are closely related:
Coca Cola, Diet Coke Colgate Classic, Sensation White, Total, Baking Soda...

Actions taken to broaden a products range to expand the products customer base can be regarded as extensions. Actions taken to broaden a companys market can be seen as stretching. After careful evaluation of costs, benefits and market status, a product or a whole range can be deleted. This is called pruning.

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Through a bio-marketing perspective the brand or product is a living thing which either evolves to stay alive or dies. Extensions are the mutations of the product. They are adaptations to the changing environment in the market as the customers needs change. Or they are responses to the needs of different segments within an industry. The best extension is the one that creates a new market. Such extensions are called flankers. Extensions are usually based on price, product attributes and distribution channels.

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Forecasting Do work with high efficiency Business Focus Practical Nature Trapping ( focus solely on organizational dimensions) Relative importance to each variable in the total number of factors Confined limited industry Defined less/ high/ medium successful companies and their strong and less successful points. Relationship Between

competition, Marketing and Product Management

Generating, analyzing, organizing, planning, implementing and controlling the organizations existing and new product efforts so as to satisfy the needs and wants of chosen customer segments, while satisfying organizational objectives is called product management process. This definition summaries in the following ways: The management process of generation, analysis, organization, planning, implementing and control The focus on both existing and new products Objectives, efforts and marketing concepts should be plan and manage to satisfy the needs and wants of selected market segment.

Product Management Process

Marketing concepts also do work simultaneous to firms own objectives. The product management process has following steps: Specifying the relevant decision. Ex: a packaging plan would involve decision about package , type of material in the package, size , label etc. and also define bundle of physical services.

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Indentify and quantify the criteria for evaluating product decisions or brand or product performance . Ex: profitability, sales growth, market share etc. Identifying the factors that affect the decisions. Like: consumer( need and want their surrounding atmosphere), the competitors( strength weaknesses), the environmental factors and firms own objective and resources. The effect of the decision on the other marketing variables

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The effect of the decision on the other management functions. Ex: price, current product responsibilities, policy, distribution, product positioning, product market. The effect of the decision on the marketing system. Ex: finance, accounting, personnel, top management, production etc.

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