1 Product Management

8/8/2019 1 Product Management

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1-PRODUCT

MANAGEMENT.

ROLE OF PRODUCT MANAGEMENTIN MARKETING AND ITS

INTERFACE WITH OTHERCORPORATE 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( Contd). FIVE PRODUCT LEVELS:


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FIVE PRODUCT LEVELS (Contd). 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 ofAttributes and Conditions Buyers normally expect when they purchase thisProduct. Hotel Guests expect a clean Bed, Fresh Towels, Working Lamps, anda relative degree of Quiet. Because most Hotels can meet this minimumexpectation, 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 Positioningand Competition take place at this Level. In developing Countries andEmerging Markets, Competition takes place mostly at the Expected ProductLevel. However, in India, there is a visible move by some companies toAugment 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 mayundergo in Future. Here is where companies search for new ways to satisfyand Distinguish their offer. Also consider the Customization Platforms new e-commerce sites are offering, from which companies can learn by what differentcustomers 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 Managers

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 Managers Potential Interactions are shown in the Figure in

the next slide.


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A PRODUCT MANAGERS POTENTIAL

INTERACTIONS.


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PRODUCT Vs GENERAL

MARKETING Management. What are the differences between aFocus of the Product Manager and a

more General Marketing

Management Perspective? The

chart below indicates what

separates the Two.

One Key Difference is that

Marketing Managers in charge of a

Division or Strategic Business Unit

have more concerns over Managing

Portfolio of Products and about

the Long Term Strategic Direction

of Business Groups. Because Product Managers are in

charge of a Single Product or a

Closely Related Product Line, they

are not concerned on a day to day

basis about health of the General

Business Area in which they

operate.

Product

Management.

General

Marketing

Management.

1) Scope of

Responsibility.

2) Nature of

Decision

Making.

3) TimeHorizon

Narrow-Single

Product orProduct Line.

Mainly

Tactical.

Short Run.

Broad-

Portfolio ofProducts.

Mainly

Strategic.

Long Run.


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Product Vs General Marketing

Management (Contd). 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 MarketingObjectives and Strategies for their Products, their Mix: How much to

spend on Advertising, How to react to Competitors 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 andhence 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 arehighly 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--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 theProduct 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.

(Contd) Product Management first made its appearance in Procter & Gamble in

1927. A new company soap, Camay, was not doing well, and one of theyoung men, Neil H. Elroy (later President of P&G), was assigned togive his exclusive attention to developing and promoting this Product.This, he did successfully, and the company soon afterwards addedother 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 Planningand Responsibility for Individual Products. The Product ManagersRole is to create Product Strategies and Plans, see that they areimplemented, monitor the results, and take corrective actions. TheResponsibility breaks down into the following Six Tasks: 1)Developing a Long Range Growth and Competitive Strategy for theProduct. 2) Preparing an Annual Marketing Plan and Sales Forecast. 3)

Working with Advertising and Merchandizing Agencies to developcopy, Programs, and Campaigns. 4) Stimulating interest in andsupport of the Product among the Sales Force and Distributors. 5)Gathering continuous intelligence on Products 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 ofCustomers. 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 usergroups having Different Buying Practices or Product Preferences,some kind of Market Specialization is desirable as shown in the earlierslide.( Ex: Crompton Greaves Limited- Manufacturers of Electrical

Machinery.) Product Management/Market Management Organization.

Companies that produce multiple Products for multiple Markets createa combination of Product Cum Marketing Management type of anOrganization to ensure efficient satisfaction of varied Needs andWants of Customers in different Markets as shown in the earlier slide.(Ex: Dupont Textile Division).

This System combines the advantages of both Product Managementand 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 Managers 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 stiflesInnovation, 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 Bachelors 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 MBAdegree.

4) Team Work: Ability to work in Teams and Lead Teams of Individuals from allparts of Organization.

Product Managers Role involves Coordination, Organization and toFacilitate workers from many Groups both inside and outside.

He should not only develop New Products, but also develop Junior ProductStaff.

5) Communication Skills: Should Communicate effectively with TopManagement and Colleagues (Internal Marketing) and also with Outsiderslike Customers, Suppliers, Ad Agencies, Dealers/Distributors, Government,Press etc.

6) Analytical Ability: Requires both Quantitative and Qualitative Analysis ofMarket, Products, Competitors Activities. Should be well versed with

preparing overall plans and a 4 Ps Analysis, New Product Planning etc.7) Preparing and Implementing Efficient Marketing Plans. Marketing Plans

contain definitions, features, target markets, timelines, and resourcesneeded to develop a Marketing Strategy for the Product or Service.

Product Managers should write Marketing Plans with input from otherfunctions such as Finance, Operations, and Marketing Communications.

Documents

1 Product Management