MS – 63 Product Management

UNIT – 1 Product Management Introduction (familiarizes you with the term product and its related concepts)

Product Management – Basic Concepts

Product ManagementProduct Management is an integral part of marketing function and includes a whole range of activities pertaining to product planning and development and extend itself to brand building and management

Project Management – An Overview

What is a Product?

Augmented Product

Tangible Specifications

Core Benefits

Anatomy of a Product

TOTAL PRODUCT CONCEPT / LEVELS OF PRODUCT

AUGMENTED PRODUCT

Tangible Specification

Core Benefit functions

features

qualitypackaging

benefits

pre sale

warranty

brand equity

After sales service financing

relationships

delivery

Types of Product Tangible Products Intangible Products

Product Classification Based on tangibility durability, intangibility in to durable, non-durable and services respectively Based on ultimate users and their buying behaviour, attitudes, we come across

Consumer Products Convenient Product Shopping Product Specialty Product

Product Line and Product Mix Product Line Product Mix and Line Decisions Product Mix Metrics of Product Mix

o Helps in defining firms product portfolio based on width, depth and consistency o Appeals to diverse consumer needs across various segments, thus helps in maximizing shelf space and sustain dealer support

Line Stretching e.g. maruti Suzuki, esteem, baleno Line filling e.g. Hyundai – i10, i20

o aiming for incremental profitso optimal utilization of excess and under utilized capacitieso an attempt to offer a full line of the producto in response to dealer complain about lost sales because of missing items on the line

Major Responsibilities of Product Management Functions

Product Management – Conceptual Issues Product Line Decisions Product Life Cycle Segmenting, Targeting and Positioning Strategies Branding New Product Development Test Marketing Product Launch Business environment Competition Trade, Industry and other Market Forces etc.

Unit 2 The Product Management ProcessThe Product Management Function

The Product Management Function

The Product Management Function

Product Management Decisions Product Mix Decisions Product innovation/Modernization Decisions Product Line Pruning/Product Elimination/Product Phasing Decisions New Product Decisions/Diversification Decisions Branding and Packaging Decisions

Product Manager’s Management System – Scope A little general manager or entrepreneur Coordinator of activities performed by others An assistant for the product real managers – top

management

Responsibility Authority Management task Marketing Decisions Budget and Marketing Plans

The need for a Product Management SystemChanging Role of the Product Manager

Flexibility in the task assigned to product manager is required under developments

Unit 3 The Product Planning SystemThe traditional Approaches to Product PlanningA Matrix Approach to Product PlanningPhase A

The definition of product The strategic market The relevant measurement instruments

Phase B Examination of sales position

Phase C The market share of the company

Suggested Marketing Strategy on the basis of the Product Evaluation Matrix

Inferences

Product Evaluation Matrix Product’s Current PositionCompany sales Industry sales Market-share of the product Profitability

A Model to Add Clarity and System to the Judgment Involved in Product Planning

Marketability Durability Productive ability Growth Potential

Unit 4 Product Line DecisionsEvaluation of Product LineBases for Product Line Extensions

Customer Segmentations Consumer Desire Pricing Breadth Excess Capacity Short-term Gain Competitive Strategy Trade Pressure

The Disadvantages of Line Extension Weaker Line Logic Lower Brand loyalty Underexploited Idea Stagnant Category Demand Poorer Trade Relations More Competitor Opportunities Increased Costs

Factors Influencing Product Line Decisions Category Size Market Growth Product Life cycle Sales Capacity Seasonality Profits

Category Factors Influencing Product Line Decisions Threat of New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers Current Category Rivalry Pressure from Substitute Category Capacity

Unit 5 Product Life Cycle

Levels of PLC

Different levels of Product Product category A product form a product and a brand

Shapes of PLC Classical bell

shaped curve Growth-slump

maturity pattern Style Fashion Fad

The Product Life Cycle Concept Introductory stage Growth stage Maturity stage Decline stage

PLC – An Aid to Product Planning

Operationalising the Product Life Cycle Deciding upon the unit of analysis Definition of relevant market Identification of the product stage in the PLC Defining the unit of measurement Determining the time unit

Identification of the product stage in the PLC

PLC – As a tool to plan market share strategies Framework suggested

PLC as a Guidelines for Marketing Strategy Advertising Product Changes Pricing Distribution

Unit 6 Product PortfolioThe portfolio Concept

Levels of business unit Served market Timeframe for analysis

The Logic for Portfolio Approach The opportunities for the product/market differ Product inherits different competitive strengths and exploiting opportunities In resource allocation decision for products, the

major considerations are opportunity for product growth and profitability

The corporate objectives would be decided based on the cumulative opportunities for all the products and competitive strength of these products Based on the corporate and individual product

objectives, resources are allocated. However, it is not straightforward process, it involves several interactions based on much involved analysis of sources and uses of resources.

Types of Display Matrix Boston Consulting Group’s Growth-Share matrix McKinsey Matrix Strategic Planning Institute’s Matrix Arthur D. Little Company’s Matrix Hofer’s Product/Matrix Evaluation Matrix

Boston Consulting Group’s Growth-Share matrix

Boston Consulting Group’s Growth-Share matrix

BCG Matrix-Building Procedure Classify various activities of the company into

different business segments or strategic business units For each business segment determine the growth rate of the market Compile the assets employed for each business segment and determine the relative size of the business within the company Estimate the relative market shares for the different segments Plot the position of each business segment on a matrix of business growth rate and relative market share

BCG Matrix-Strategic ImplicationsThe general strategy of a company with diverse portfolio is:

To maintain its competitive position in the cash cows, but avoid over-investing The surplus cash generated by Cash Cows should be invested first in Star businesses, if they are not self- sufficient, to maintain their competitive position Any surplus cash left with the company may be used for selected Question Mark businesses to gain market share for them Those businesses with low market share, and which can not adequately be funded may be considered for disinvestment The Dogs are generally considered as the weak

segments of the company with limited or no new investments allocated to them

BCG Matrix-Strategic Implications

BCG Matrix-Portfolio Balancing StrategyTime Dependence

BCG Matrix-Portfolio Balancing StrategyTime Dependence

BCG Matrix-Portfolio Balancing StrategyTime Dependence

Limitation of BCG Matrix Predicting profitability from growth and market share Problems in determining market share Effect of experience ignored Disregard for human aspect Modifications in BCG approach

GE’s Strategic Business Planning Grid

S.No. Factors Typical Weightage

1 Rate of growth of sales and cyclic nature of business

10%

2 Nature of competition including vulnerability to foreign competition

15%

3 Susceptibility to technological obsolescence and new products

15%

4 Entry conditions and social factors

10%

5 Size of market 10%6 Profitability 40%

Total weightage 100%

Factors Determining Competitive Position of the Company as with Market attractiveness

S.No. Factor Weightage Rating Score

(1-10)

1 Market share and capacity

20% 7 0.7

2 Growth rate 10% 7 0.53 Location and Distribution 15% 5 0.94 Management skill 20% 6 1.45 Workforce Harmony 20% 7 1.66 Technical excellence

including product and process engineering

5% 8 0.4

7 Company image 10% 81.4 6.9Total 100%

Factors Determining Competitive Position of the Company as with Market attractiveness

Shell’s Directional Policy Matrix

Directional Policy Matrix

Attractive Leader Try Harder Double or quit

Average Leader Growth Custodial Phased

withdrawal

Unattractive Cash Generation

Phased withdrawal Disinvest

Strong Average Weak

SectoralProspect

Unit’s / product competitive Position

PIMS Model (Profit Impact of Market Strategy)

Arthur D. Little Company's Matrix

Dominant Hold

Strong Hold

Favoured Hold Unacceptable (ROI)

Tenable Unacceptable (ROI)

Weak Unacceptable (ROI)

Embryonic Growth Mature Decline

Industry Product Life Cycle

BusinessStrength

Embryonic and Growth - Build strategy

Mature stage – HOLD strategy

Decline stage – Harvest strategy

Maturity / decline stage - unacceptable ROI

Hofer’s Product/Market Evaluation Matrix

Utility of Display Matrices

In one form or another most portfolio approaches try to correlate industry growth of profitability with market share, either as a direct single variables of as an index based on multiple variables.

In coming years the relevance of portfolio analysis will be much more than in the past.

Unit 7 Product PricingRelationship of Pricing to the Marketing Mix

Product Price Promotion Place / Distribution Packaging

Factors Influencing the Pricing Decisions Objective Other components of marketing mix Product life cycle

o Skimming pricingo Penetration pricing

Costso How the cost vary with production

Factors Influencing the Pricing DecisionsEconomies of Scale

Factors Influencing the Pricing DecisionsCompetition

Pure competition Monopolistic competition Oligopolistic competition, and Pure monopoly

Price Demand Relationships

Other Factors

Types of Pricing Cost-plus pricing Target profit pricing Perceived value pricing Going rate pricing Bid pricing

Discounts Cash discounts Quantity bulk discounts Seasonal discounts Trade-in discounts

Discriminatory Pricing Customer-based Product-based Place-based Time-based

Strategic Significance of Pricing Competitive edge Optimizing profits Increasing captive consumption

Unit 8 Branding Decisions

Brandingo a processo a toolo a strategyo an orientation

Strategic relevance of brandingo serves as a tool to segment the marketo starts with an ideao has an enduring valueo helps protects innovationo sustains though the product may dieo is a living memory

Branding Policy Decisions Manufacturer brand policy Family branding Independent branding Distributors brand policy Mixed brand policy

Brand Name a word with meaning not necessarily related to the product it represent. Amritanjan, Ortem the name of the manufacturers of the product. Nilkamal, Bata a combination of numerical and alphabets. Elle 18, CBZ 150 a word whose meaning suggests some function or quality of the product. Surya, Sleepwel

Brand Name Selection Process Step -1 Preparing checkpoints for the different values to be contained in the name

o memorization valueo descriptional valueo motivational valueo repurchase value

Step – 2 Making a search for name Step -3 Assigning differential ratings to the

names formulated Step – 4 Quadrivalent analysis for separating names from desirable ones and measuring the marketing potency of the different names Step – 5 The final choice

How to Build a BrandInput

Identification of key customer groups or segments Understanding customer expectations needs and aspirations Assessing competitive offering including substitutes Building customer confidence by Total brand management – both hardware and software

aspects

Outcome Market share New customer attracted Customer loyalty index Increased profitability Brand knowledge

Assessment Continuous feedback from customers as well as trade

channels Scientific enquiry into customer satisfaction Brand strength score

Brand ImageDimensions of Brand Image

Appeal to reason Appeal to senses Appeal to emotions

Branding of Commodities Challenges in Branding commodities Customer’s benefits Special consideration in branding of a commodity

Unit 9 Product Positioning

Positioning Strategies Market segmentation considerations Product line considerations Alternative bases for positioning

o Positioning on benefits, problem solution or needso Positioning for specific usage occasionso Positioning for user categoryo Positioning against another producto Product class dissociationo Hybrid bases

Tools for Positioning Decision Making Attribute Rating Method Overall-similarity bases method

How to Use Perpetual Maps for Decision Making

Positioning of a Brand An over communicated society Human mind function Media options multiplying Media product and advertising explosion Over simplify your message English man – use simple words Don’t hide your idea in words – be clear about it. You have just a few seconds – accepted or

rejected? Choose the message which has best chance to get into your prospects mind We need to touch the base with realism about what is already there in the mind of the prospect

What to Do When You Are First

The Mind Eliminates VS. The Mind Ranks

The point that we are trying to drive home is – that once your mind is set it is very difficult to change it

Positioning – Product Differentiation: Market Segmentation

Positioning creates product differentiation“New Godrej Fridge”Five side cooling – the creative people have added immense creativity to the position idea to make the commercial

Product differentiation helps positioningPositioning relies on one or two perceptions, the

strong perceptions

When you talk to a group – it becomes a segmentEvery communication/ advertising has to address a segment

Positioning – Product Differentiation: Market Segmentation

Intensity increases with narrow targets – segmentation and fragmentationdistinct position – separate position

Same product can be positioned differently for different segment

“Rich and Creamy” makes the tasty difference MILKMAID Rematching product to position You need a new position – when you invade into another product category to expand your market – “New winter care lotion” Matching position to segment

“The Horseless Carriage – The Car”

Ingredients of a Leadership Position Fastest with the modest The instability of equality How do you maintain your leadership Do not disturb the enormous mental space already occupied Enhance your product category Change can dethrone the leader Strength of a brand – size of market share

Position of a Follower Do you copy the leader? Can you afford t copy a leader? Size High Price Low price Sex Age Class or segment

Repositioning the competition

Brand Equity Product attributes Product benefits Values Culture Personality User

The Concept of Brand Equity Brand awareness Perceived quality Brand loyalty Brand association

Brand Equity Measurement Price premium Customer satisfaction / Brand loyalty Perceived quality Popularity and leadership position Brand value Brand personality Organizational association Brand awareness Market share Market price distribution coverage

Composite Measure of Brand EquityCustomer Based Brand Equity

How Brand Equity is Created Strength of Brand Association Favourable brand AssociationBuilding Brand Equity Choice of brand element that makeup the brand Developing and implementing marketing support programs Leveraging secondary association by linking the brand to other entities

UNIT 11 Packaging DecisionsPackaging

Importance of Packaging in Marketing Creating customer satisfaction Protecting the contents inside Communicating the product attributes Helping in product handling Identifying brand name and seller Promoting the product with attractive design and colours Keeping cost down Information on the ingredients of the product Offering customer convenience

Packaging as an Art

Packaging Concept

Packaging and Product Differentiation

Science and Technology of Packaging Wooden boxes Corruguated Fibreboard boxes Sacks

Labeling – Importance and Mechanism General requirement Storage precaution Label change control

Functions of Packaging Protection Differentiation / positioning Packaging for promotion Packaging for pricing Packaging for convenience

Packaging Strategies Changing the package Packaging the product line Reuse packaging Multiple packaging Legal aspect of packaging Cost effectiveness of packaging Social aspect of packaging – pollution