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PRODUCT MANAGEMENT

UNIT 1
PRODUCT
In MARKETING, a product is anything that can be offered to a that might satisfy a want or need.
A product is the item offered for sale. A product can be a service or an item. It can be
physical or in virtual or cyber form.

Definition

A product is the item offered for sale. A product can be a service or an item. It can be
physical or in virtual or cyber form. Every product is made at a cost and each is sold at a
price. The price that can be charged depends on the market, the quality, the marketing and the
segment that is targeted.
BASIC PRODUCT CONCEPTS :
Product Classifications
Individual Product Decisions
Brand Decisions
Selecting a Brand Image
Packaging
Labelling
PLC
1. PRODUCT CLASSIFICATIONS
A product can be classified as tangible or intangible. A tangible product is a physical
object that can be perceived by touch such as a building, vehicle, gadget, or clothing. An
intangible product is a product that can only be perceived indirectly such as an insurance
policy.
Durable Goods
Non-Durable Goods consumed during use - soap, food
Consumer Goods - bought for personal use.
Industrial Goods used for production
2. INDIVIDUAL PRODUCT DECISIONS
Decisions about developing & marketing individual products.
Product Quality

Select quality level that supports your position in the target mkt. This is a major factor.
QUALITY is how well the product meets the cons. needs. If you think a pen will last 3
weeks and it lasts 3 months your satisfied; vice versa and you are not.

Product Features

Add or delete features to create diff. models to meet the needs of diff. segments.
Consumer/user research important for deciding to change features that will solve
problems and make sales.

Product Design

Not nearly enough ergonomics or human engineering.
Placement of controls - car, 3.5" eject button and on/off button on computer, labeling
of controls.
Cords - should always be a place to wind them, plus length sufficient, and the right
length to wind properly.
Buttons for setting watches - label
Buttons for setting clocks - forward and backward.
Should watch how people use things.
3. BRAND DECISIONS
Branding adds value.
Branding is a L-term strategy.
Needs consistent Advertising.
Needs consistent quality.
Must deliver on all claims.
Powerful brands have BRAND EQUITY or a consumer franchise - people will seek
these out and pay more.
BRAND = Name + Mark.
Name - vocable
Brand Mark - symbol for product.
Service Mark - symbol for service.
Trademark - Legally protected brand . . .
Copyright - legally protected literary, musdical, or artistic work.
.
4. SELECTING A BRAND NAME (IMAGE)
o Name criteria
o evoke positive mental image
o evoke positive emotional reaction
o suggest product function or benefits
o be easy to pronounce
o simple
o sound appropriate
o be distinctive
o be registrable (unique)
o possibly, translate well
o Eval. names as if they are being presented for the first time forget all the
advertising, product experience, & image
5. PACKAGING
Immediate Container
2ndary Container - holds immediate
Protection
Attract attention
Describe Product
Consider
prestige
convenience
overall message being conveyed
6. LABELLING
ID Product
Maybe grade product - Grade "A"
Describe product
Contents - size, count
Ingredients
UPC
Promote product/Attract attention
Directions, warnings, uses
Co. name and address
BEST - "Take shirt off, machine wash warm with like colors. Tumble dry (in a dryer).
Do not bleach, dry clean, or pound on rocks. If you insist on ironing - be careful. Do
not remove this tag or something bad might happen."
7. PRODUCT LIFE CYCLE
Product life cycle is a business technique that attempts to list the stages in the lifespan of
commercial/consumer products. 'Product Life cycle' (PLC) is used for determining the lifespan these
products
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PRODUCT PLANNING
Product Planning is the ongoing process of identifying and articulating market requirements
that define a products feature set. Product planning serves as the basis for decisions about
price, distribution and promotion. Product planning is the process of creating a product idea
and following through on it until the product is introduced to the market. Additionally, a
small company must have an exit strategy for its product in case the product does not sell.
Product planning entails managing the product throughout its life using various marketing
strategies, including product extensions or improvements, increased distribution, price
changes and promotions.
Production planning means to fix the production goals and to estimate the resources which
are required to achieve these goals. It prepares a detailed plan for achieving the production
goals economically, efficiently and in time. It forecasts each step in the production process. It
forecasts the problems, which may arise in the production process. It tries to remove these
problems. It also tries to remove the causes of wastage.
Definition
According to Ray Wild, "Production Planning is concerned with the determination,
acquisition and arrangement of all facilities necessary for future operations."
Objectives of Production Planning
The need, main functions or objectives of production planning are as follows:
1. Effective utilization of resources.
2. Steady flow of production.
3. Estimate the resources.
4. Ensures optimum inventory.
5. Co-ordinates activities of departments.
6. Minimize wastage of raw materials.
7. Improves the labour productivity.
8. Helps to capture the market.
9. Provides a better work environment.
10. Facilitates quality improvement.
11. Results in consumer satisfaction.
12. Reduces the production costs.
Now let's discuss each objective of production planning one by one.

The Product Planning Process
The product planning process is one of the most controversial within any company. Everyone
wants a hand in new product definition and almost everyone will have contributions that will
make a new product successful. With all these interested parties, you are going to need a
system to help you through the product planning process and a way to decide which ideas
have the most merit. This system also needs to incorporate customer feedback, assure that
important new product ideas are approved, and that development of them initiated
immediately. What follows is a product planning system that works well for most companies.

The above diagram outlines the phases in the product planning cycle. In any given company,
these steps may be condensed or combined. For example, some companies may use a single
document to cover both the Market Requirements Document and the Functional
Specification.
The steps are important because they allow you to gather input from all possible resources,
evaluate the potential of each idea and gather input from all involved parties about which
ideas will work and their ease of implementation.
Phases of product planning
Developing the product concept
The first phase of product planning is developing the product concept. Marketing managers
usually create ideas for new products by identifying certain problems that consumers must
solve or various customer needs. For example, if we take a small computer retailer may see
the need to create a computer repair division for the products it sells. After the product idea is
conceived, managers will start planning the dimensions and features of the product. Some
small companies will even develop a product mock-up or model.
Studying the market
The next step in the product planning process is studying the competition. Most small
companies will order secondary research information from vendors such as the NPD Group
and Forrester Research. Secondary research usually provides details on key competitors and
their market share, which is the percent of total sales that they hold in the marketplace. Some
companies may also do a SWOT analysis (strengths, weaknesses, opportunities and threats),
according to NetMBA.com, which will help them compare their strengths and weaknesses
against those of key competitors. The business can then determine places in which it has an
advantage over the competition to identify areas of opportunity. For example, a small
company with a high-quality image may be able to find additional markets for its products.
Market research
A small company should consider doing both qualitative and quantitative marketing research
for its new product. Focus groups are an example of qualitative information. Focus groups
allow companies to ask their consumers about their likes and dislike of a product in small
groups. A focus group allows the company to tweak the product concept before testing it
through phone surveysa more quantitative marketing research function. Phone surveys
enables a company to test its product concept on a larger scale, the results of which are more
predictable across the general population. Qualitative research is a method of inquiry
employed in many different academic disciplines, traditionally in the social sciences, but also
in market research and further contexts.[1] Qualitative researchers aim to gather an in-depth
understanding of human behavior and the reasons that govern such behavior. The qualitative
method investigates the why and how of decision making, not just what, where, when. Hence,
smaller but focused samples are more often used than large samples. quantitative research
refers to the systematic empirical investigation of social phenomena via statistical,
mathematical or numerical data or computational techniques.[1] The objective of quantitative
research is to develop and employ mathematical models, theories and/or hypotheses
pertaining to phenomena.
Product introduction
If the survey results prove favorable, the company may decide to sell the new product on a
small scale or regional basis. During this time, the company will distribute the products in
one or more cities. The company will run advertisements and sales promotions for the
product, tracking sales results to determine the products potential success. If sales figures are
favorable, the company will then expand distribution even further. Eventually, the company
may be able to sell the product on a national basis.
Product life cycle
Product planning must also include managing the product through various stages of its
product life cycle. These stages include the introduction, growth, maturity and decline stages.
Sales are usually strong during the growth phase, while competition is low. However,
continued success of the product will pique the interest of competitors, which will develop
products of their own. The introduction of these competitive products may force a small
company to lower its price. This low pricing strategy may help prevent the small company
from losing market share. The company may also decide to better differentiate its product to
keep its prices steady. For example, a small cell phone company may develop new, useful
features on its cell phones that competitors do not have.

MARKETING STRATEGY
Marketing strategy is the goal of increasing sales and achieving a sustainable competitive
advantage.
[1]
Marketing strategy includes all basic and long-term activities in the field of
marketing that deal with the analysis of the strategic initial situation of a company and the
formulation, evaluation and selection of market-oriented strategies and therefore contribute to
the goals of the company and its marketing objectives.
[2]

Developing a marketing strategy
Marketing strategies serve as the fundamental underpinning of marketing plans designed to
fill market needs and reach marketing objectives.
[3]
Plans and objectives are generally tested
for measurable results
Marketing strategy involves careful and precise scanning of the internal and external
environments.
[5]
Internal environmental factors include the marketing mix and marketing
mix modeling, plus performance analysis and strategic constraints.
[6]
External
environmental factors include customer analysis, competitor analysis, target market analysis,
as well as evaluation of any elements of the technological, economic, cultural or
political/legal environment likely to impact success.
[4]
A key component of marketing
strategy is often to keep marketing in line with a company's overarching mission statement.
[7]



Types of strategies
Marketing strategies may differ depending on the unique situation of the individual business.
However there are a number of ways of categorizing some generic strategies. A brief
description of the most common categorizing schemes is presented below:
Strategies based on market dominance - In this scheme, firms are classified based on their
market share or dominance of an industry. Typically there are four types of market
dominance strategies:
Leader
Challenger
Follower
Nicher
Market introduction strategies: At introduction, the marketing strategist has two principle
strategies to choose from: penetration or niche" (47).
Market growth strategies: In the early growth stage, the marketing manager may choose
from two additional strategic alternatives: segment expansion (Smith, Ansoff) or brand
expansion (Borden, Ansoff, Kerin and Peterson, 1978)" (48).
Market maturity strategies: In maturity, sales growth slows, stabilizes and starts to decline.
In early maturity, it is common to employ a maintenance strategy (BCG), where the firm
maintains or holds a stable marketing mix" (48).
Market decline strategies: At some point the decline in sales approaches and then begins to
exceed costs. And not just accounting costs, there are hidden costs as well; as Kotler (1965,
p. 109) observed: 'No financial accounting can adequately convey all the hidden costs.' At
some point, with declining sales and rising costs, a harvesting strategy becomes unprofitable
and a divesting strategy necessary" (49).
Early marketing strategy concepts were:
Borden's "marketing mix": In his classic Harvard Business Review (HBR) article of the
marketing mix, Borden (1964) credits James Culliton in 1948 with describing the marketing
executive as a 'decider' and a 'mixer of ingredients.' This led Borden, in the early 1950s, to
the insight that what this mixer of ingredients was deciding upon was a 'marketing mix'"
(34).
Smith's "differentiation and segmentation strategies": In product differentiation, according
to Smith (1956, p. 5), a firm tries 'bending the will of demand to the will of supply.' That is,
distinguishing or differentiating some aspect(s) of its marketing mix from those of
competitors, in a mass market or large segment, where customer preferences are relatively
homogeneous (or heterogeneity is ignored, Hunt, 2011, p. 80), in an attempt to shift its
aggregate demand curve to the left (greater quantity sold for a given price) and make it
more inelastic (less amenable to substitutes). With segmentation, a firm recognizes that it
faces multiple demand curves, because customer preferences are heterogeneous, and
focuses on serving one or more specific target segments within the overall market" (35).
Dean's "skimming and penetration strategies": With skimming, a firm introduces a product
with a high price and after milking the least price sensitive segment, gradually reduces price,
in a stepwise fashion, tapping effective demand at each price level. With penetration pricing
a firm continues its initial low price from introduction to rapidly capture sales and market
share, but with lower profit margins than skimming" (37).
Forrester's "product life cycle (PLC)": The PLC does not offer marketing strategies, per se;
rather it provides an overarching framework from which to choose among various strategic
alternatives" (38).
There are also corporate strategy concepts like:
Andrews' "SWOT analysis": Although widely used in marketing strategy, SWOT (also known
as TOWS) Analysis originated in corporate strategy. The SWOT concept, if not the acronym,
is the work of Kenneth R. Andrews who is credited with writing the text portion of the
classic: Business Policy: Text and Cases (Learned et al., 1965)" (41).
Ansoff's "growth strategies": The most well-known, and least often attributed, aspect of
Igor Ansoff's Growth Strategies in the marketing literature is the term 'product-market.' The
product-market concept results from Ansoff juxtaposing new and existing products with new
and existing markets in a two by two matrix" (41-42).














PRODUCT LIFE CYCLE

Product life cycle is a business technique that attempts to list the stages in the lifespan of
commercial/consumer products. 'Product Life cycle' (PLC) is used for determining the lifespan these
products

As consumers, we buy millions of products every year. And just like us, these products have
a life cycle. Older, long-established products eventually become less popular, while in
contrast, the demand for new, more modern goods usually increases quite rapidly after they
are launched.
Because most companies understand the different product life cycle stages, and that the
products they sell all have a limited lifespan, the majority of them will invest heavily in new
product development in order to make sure that their businesses continue to grow.
Product Life Cycle Stages
The product life cycle has 4 very clearly defined stages, each with its own characteristics that
mean different things for business that are trying to manage the life cycle of their particular
products.
Introduction Stage This stage of the cycle could be the most expensive for a
company launching a new product. The size of the market for the product is small,
which means sales are low, although they will be increasing. On the other hand, the
cost of things like research and development, consumer testing, and the marketing
needed to launch the product can be very high, especially if its a competitive sector.
Growth Stage The growth stage is typically characterized by a strong growth in
sales and profits, and because the company can start to benefit from economies of
scale in production, the profit margins, as well as the overall amount of profit, will
increase. This makes it possible for businesses to invest more money in the
promotional activity to maximize the potential of this growth stage.
Maturity Stage During the maturity stage, the product is established and the aim
for the manufacturer is now to maintain the market share they have built up. This is
probably the most competitive time for most products and businesses need to invest
wisely in any marketing they undertake. They also need to consider any product
modifications or improvements to the production process which might give them a
competitive advantage.
Decline Stage Eventually, the market for a product will start to shrink, and this is
whats known as the decline stage. This shrinkage could be due to the market
becoming saturated (i.e. all the customers who will buy the product have already
purchased it), or because the consumers are switching to a different type of product.
While this decline may be inevitable, it may still be possible for companies to make
some profit by switching to less-expensive production methods and cheaper markets.
Product Life Cycle Examples
Its possible to provide examples of various products to illustrate the different stages of the
product life cycle more clearly. Here is the example of watching recorded television and the
various stages of each method:
1. Introduction - 3D TVs
2. Growth - Blueray discs/DVR
3. Maturity - DVD
4. Decline - Video cassette
The idea of the product life cycle has been around for some time, and it is an
important principle manufacturers need to understand in order to make a profit and stay in
business.
However, the key to successful manufacturing is not just understanding this life cycle, but
also proactively managing products throughout their lifetime, applying the appropriate
resources and sales and marketing strategies, depending on what stage products are at in the
cycle.
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PRODUCT DIFFERENTIATION
A companys offer has to be distinct from those of its competitors and should fulfill the
requirements of the customers of its target markets.

Image Courtesy : garyasanchez.com/wp-content/uploads/2011/01/different-3.jpg
A companys positioning is the result of whatever the company does. Marketing mix is the
most tangible and the most flexible tool to create the desired positioning. Companies use their
marketing mix to create something specific and special for their customers.

Product differentiation:
Product differentiation results from added features which give customers benefits that rivals
cannot match. Before adding features, a company should thoroughly research the need for the
particular feature among customers in the intended target market.
Companies keep on adding new features just because their competitors are offering them.
Sometimes deletion of features and benefits from a product may be a very effective
differentiation because customers never really wanted these benefits.
Adding the same features as competitors may make the products of a company more
acceptable among customers, though it may end up introducing similar products that does not
result in any differential advantage.
Such a strategy of matching features and benefits will result in product parity, with no
company providing any compel ling reasons to the customer for buying its product. In such
industries, customers will buy on the basis of price, and competitors will be forced to cut
prices to grab customers from each other.
The profit of every company will go down. Companies will not have the ability to
differentiate their product as they will not have enough resources due to their dwindling profit
margins. The only way out of this mess is that companies should pick up courage, arrange
resources and start differentiating their products from each other. Price based competition
should be avoided.
Most of the time, in most categories of goods, consumers get products with features that they
could do without and are needlessly paying for them. Most products can be made more
suitable for their target markets by deletion of certain features.
Nokia has introduced a stripped down version of the cellular phone for the entry level
customer in India. The phone is a contrast to the ones that offer Internet usage, m-commerce,
camera, etc. It serves the basic purpose of mobile connectivity.
Many customers are realizing that they do not need what they have bought and are switching
over to these simpler phones. This phenomenon is likely to be repeated in many categories of
goods once simpler options are available at lesser prices.
Promotional differentiation:
Promotional differentiation arises from unique, valued images created by advertising or
superior services provided by salespeople. People in different target markets are likely to
react differently to certain stimuli like emotions, images, storylines, celebrities, etc.
It is important to identity the stimuli which will evoke the desired response in members of the
target market. It may be an extremely intricate task but it is imperative to find out whether the
members prefer emotional or rational messages, whether they like humourous or sedate
messages, whether they like narratives or musicals, etc.
Unless the company has determined the choice of the consumers on all the variables that
affect an advertisement, it cannot create an advertisement which is suitable for members of
the target market but is unsuitable for any other target market. Sadly most advertisements
look and sound similar and are not suitable for any particular target market and do not elicit
the desired response.
Similarly different target markets will require different types of sales presentations,
persuasions and relationships with the seller.
Distribution differentiation:
Distribution differentiation arises by making the buy situation more convenient for
customers. Different target markets will require different activities to make the buying
situation more convenient for them. Customers hard pressed for time have welcomed
introduction of automated teller machines.
But some customers would still prefer to visit the bank to conduct transactions which can
easily be carried out through the ATMs. Cans of carbonated soft drinks from vending
machines are finding favour with youngsters from the upper strata in India who believe that
this is the original Coke or Pepsi.
Different distribution channels like telemarketing, direct mails, Internet marketing and
personal selling are being used to lure customers of the same target market resulting in
irritability among customers, duplication of efforts and high costs.
Price differentiation:
Price differentiation involves estimating the price sensitivity of the target market and offering
relevant values on the basis of such an estimation. A target market can be totally price
insensitive and may value of the highest order.
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PRODUCT DELETION
This is the process of eliminating a product that does not perform at a level considered
adequate according to certain criteria. Product deletions fall into two categories: product
replacement refers to the phasing out of an extant product and replacing it with something
new, whereas product elimination means the removal of a product without providing a
substitute (Vyas, 1993). Most companies base their decisions to delete weak products on poor
sales and profit potential, low compatibility with the firm's business strategies, and
unfavorable market outlook
Importance of Product Deletion and Strategies
The process of deleting a product is the most difficult decision that a company needs to take
when a particular product is not performing in a way it was desired to be. There is also many
advantages that the company gets as a result of product deletion and hence the process of
product deletion becomes important for the company. Some reasons why product deletion is
important are :
A drain on financial resources of the firm : If a product is not running properly in the market
and is not generating enough revenue though it is been provided with all the financial
resources of the company, the resources that are invested would be wasted if it is used for
weak product, those resources can be used to produce a new product that might do better
than the existing product.

Product Deletion Strategies
Marketing problems:
Sometimes there is a situation that a company creates a large number of products in a
single line. This leads to the overpopulation of the products and the marketing resources are
used too thinly. Also there are chances of excess competition among the companys own set
of products and creates confusion in the minds of the customers. In these cases the
companies go for deletion of the product.
Managerial problems:
When a product is weak it acts as a burden on the company and the management attention.
A weak product may require an intense managerial efforts with respect to its price,
distribution, sales etc. A weak product may also lead to weakening the image of the
company and dissatisfaction among the intermediaries


PRODUCT PORTFOLIO MANAGEMENT
The collection of different items a company sells. Within the product portfolio, each item
typically makes different contributions to the companys bottom line. Some products cost more to
produce, some are increasing their market share (or losing market share) at a faster rate, some
bring in more revenue and some have greater marketing expenses.