1

MODULE 1 : UNDERSTANDING PRODUCT &

CATEGORY
DEFINING THE ROLE OF A PRODUCT MANAGER AND PRODUCT CONCEPT

MDI MURSHIDABAD
Lecture Series-No 1

Dr. Vibhas Amawate

10/28/2020
 In the next 90 minutes
2

Course Overview and Detailed Plan for Module 1

What is product management and who is a product

manager

What is a product and demand

Main Product Concepts- Product Levels, Product

Hierarchy and Product Lifecycle concept

Product Classification Schemes - Product Tangibility,

Product Durability and Product Use
 Course Overview
3

Module 1 Key Concepts

MODULE I: Product Manager Concept, Overview of Product
UNDERSTANDING Concept, Category, Competition,
PRODUCT & CATEGORY Uncovering Needs, Buyer Behavior, Consumer
(Session-1-5) Co-creation
MODULE II: Product Life Cycle, Life Cycle Constellations,
UNDERSTANDING Product Portfolio, Product Mix Strategy,
PRODUCT PROTFOLIO Product Life Cycle Management (PLM)
(Session 6-10)
MID-TERM EXAMINATION
MODULE III: New Product Strategy, New Product Ideation,
UNDERSTANDING NEW Concept Development & Product Testing, New
PRODUCT (Session 11-15) Product Pricing, Commercialization, Disruption
and Innovation, Design Thinking
MODULE IV: Managing growth, Understanding mature
NURTURING GROWTH product, Product Rationalization, Product
(Session 16-20) Elimination
 Prescribed Book
4

 Product Strategy and Management, by

Michael Baker & Susan Hart, Pearson, ISBN
9788131724286
 MODULE I: UNDERSTANDING PRODUCT &
CATEGORY
5

Session Details Relevant Sections from the Book

I : Defining the role of a Chapter 2 : The product in theory and practice
product manager and 1. Definition of product-
product concept 2. Types of Demand-Latent, Potent and effective and
influencers of demand– Baker 2006
3. Types of product-Classical definition of AMA, Bucklin
(1973), Objective or Subjective factors used by consumers
to select the product- Baker and Hart 1989, Product
characteristics (Rothwell 1983, Evans & Berman 1982),
Product Concepts (Onion Ring), Kotler framework.
II: Role of Product in Chapter 1 : Competition and product strategy
Competitive Strategy 1. Concept of Product Lifecycle
Formulation 2. Competitive Analysis of Industry- Porter (focus on
substitutes) and Ansoff analysis
3. Porters framework of competitive advantage- Cost
leadership, differentiation and focus
 MODULE I: UNDERSTANDING PRODUCT &
CATEGORY
Session Details
III : Role of Product to gain
sustainable competitive
advantage
IV: Consumer buying
behaviour of consumer and
industrial products
V: New Product
Development and Research
6
Relevant Sections from the Book
Chapter 1 : Competition and product strategy
1. Introduce concept of sustainable differential or
sustainable competitive advantage- Baker and Hart, 1989
2. Competing by Product – Key strategies- Deschamps and
Nayak
Chapter 2 : The product in theory and practice
1. Branding –why is brand required-sustainable (Davis
2002) and advantages
Chapter 3 : Buyer behaviour
1. Models of buyer behaviour- consumer products (Rogers)
and industrial (buy grid framework)
2. Influencers in purchase (Kotler)
Chapter 3 : Buyer behaviour
1. Adoption and Diffusion of new products (Rogers 1962)
2. Researching for Innovation
Chapter 1 : Competition and product strategy,
1. Process of Innovation- First, Second, Third, Fourth and
Fifth- Generation
 Historical Overview of Product Concept
7
• No concept of Product as a reason for competitive advantage
• Homogeneity of products due to mass production, thus price is basis
of competition as lowest price at highest volume determined the
1930s
success of the product

• Development of concept of differential advantage- product differentiation

could be based on patented features, trademarks, packaging (design, color,
1970s-80s style).

• Product made for and with the help of the consumer – Co-creation- The
product concept has seen a perfect harmony between consumer and product.
2000s • Extended role of services in product management
 What is product management
8
 The product management system, although introduced nearly
100 years ago, did not come into general use until the 1970s.
 Product management is a response to the organizational problem
of providing sufficient management attention to
individual products and brands when there are too many
for any one executive to coordinate effectively all of the
aspects of the marketing mix.
 Companies, or divisions of companies, with a limited line of
products normally follow a functional plan of organization
wherein departments such as sales, advertising and sales
promotion, marketing research, product planning, and customer
service report to a common marketing executive. However
companies which have multiple products would follow a product
management approach e.g Unilever
 Need for Product Management and a Manager
9

 Need to focus on individual consumer segments

Products Products now
Earlier
Lifebouy Lifebouy Total, Lifebouy Deofresh, Lifebouy Nature and
Lifebouy Care and now COVID handwash.

 Easier Targeting as focused manager on each consumer

segments
 Enabling Innovation by identifying emerging needs of
consumers by focused product managers
 Communication through Multi-Channels as each
consumer segment needs a different communication mix
and a different product manager.
 Need for Product Management and a Manager
10

 Managing Product Lifecycle – A dedicated product

manager can do justice to ensure that products health is
maintained through the enter lifecycle. In mass market
products its important to add features in the maturity stage.
E.g. Maruti 800 to Maruti Alto 800
 Importance of Product Management in Modern
Marketing
11

 Seamless view of consumer in an ever changing world :

All departments in the company have a customer centric
attitude.
 Developing Bonds with the consumers : Achieve bonding
by being relevant in consumer lives. This can be done if you
relate with consumers problem. A product manager identifies the
problems with need a solution and controls the marketing
channel and communication so that they donot become very
intrusive in the lives of the consumers.
 Ensuring Customer Satisfaction and Loyalty : Product
Managers role is to translate customer satisfaction into loyalty by
introducing products which have high semblance in his life.
 Importance of Product Management in Modern
Marketing
12

 Global Focus : As each country has different

culture, the product manager needs to adapt the
product to local preferences and at the same time
keeping the global elements of the product.
 What is a product?
13

 The product is the object of the exchange process,

the thing which the producer or supplier offers to a
potential customer in exchange for something else
which the supplier perceives as of equivalent or
greater value.
 Conventionally, this ‘something else’ is money or a
title to money which is freely exchangeable as a
known and understood store of value

Product is a means to satisfy the needs of consumers.

Needs of consumers create market demand.
 What is Demand of a Product?
14

Effective Demand

Need is
Ability to Other Potential
latent
Pay factors Demand
demand

Other Factors relate to

•Satisfaction of self or perceived satisfaction Influencers
• Brand Image •Demographics
•Substitutes •Buying Behavior
•Availability
 Class Discussion
15

 How do you assess Latent Demand, Effective

Demand and Potential Demand using Market
Research???
 Durables
 Non Durables
 Industrial Products
 Defining The Product Concept
16
 The product is the raison d'être of every company. In general, every
economic activity revolves around products. A product can be either
tangible or intangible. In the case of tangible products we refer
to goods, whereas intangible products are usually called
services.
 Every product reflects the efforts of the company to match its resources
with the demands of the market. Although the success or failure is the
result of various factors, matching resources with market
demands is crucial.
 The product is the starting point for the majority of the planned
marketing activities of a company. It is impossible to decide about
pricing, promotion or distribution channels if the nature and the
characteristics of the product are not properly defined. In the long
run, the strategic and tactical marketing decisions revolve
around the product because this is the main source of revenue for the
company.
Product Concept-Product Levels
17

Core benefit – refers to the main benefit

the customer buys (for example, the buyer
of a vehicle purchases ‘transportation’).
Generic or Basic product – refers to the basic
characteristics or attributes of the product,
without which there is no product (for example,
tyres of a car).

Expected product – refers to the

characteristics of the product that the
customer takes for granted (for example,
tyres in a good condition).

Augmented product – refers to the product

characteristics that surpass the customer's
expectations (for example, road assistance).
Potential product – refers to those
characteristics that could be added to the
product in the future and offer customer delight.
 Product Hierarchy
18
 According to Kotler (2003), product hierarchy
comprises the following five categories:
 Need family – the basic need underlying the
existence of a product family (for example, thirst).
 Product family – all the product classes that can
satisfy a basic need effectively (for example, cane
juice, coconut water, carbonated drinks, cold
coffees, lassi etc…)
 Product class or category – a group of products
within a product family (for example, artificial
drinks).
 Product Hierarchy
19
 According to Kotler (2003), product hierarchy
comprises the following five categories:
 Product line – a group of products within a product
class, which are closely related because they are
targeted to the market, through the same
distribution channels or are priced within a specific
range (for example, artificial vs. natural drinks).
 Product type – a group of items within a product
line that function in a similar manner (for example,
cola vs non cola).
 Product Hierarchy
20
 According to Kotler (2003), product hierarchy
comprises the following five categories:
 Product Unit– a unit within a brand or product line
which is distinguished by size, price, or some other
characteristic of element (for example, Coke, Diet
Coke etc.)
 Product hierarchy of Volkswagen
21

Produc • Travel
t need

Produc • Different ways to travel- bus, train, car, airplane, ship

t
family

Produc • Volkswagen – Car and Bus

t class

Produc • Volkswagen cars

t line

Product
type
• Volkswagen Polo and the Vento

Product
• Polo 1.0 MPI Trendline, Polo 1.0 MPI Comfortline, etc.
Unit
 Product Classification
22

 The existence of millions of different products in

the market has led to various classification
schemes, just like biology classifies all living
creatures.
 The classification of products is essential because
of the different categories of products aiming at
different target markets and the fact that the
marketing strategy for each market depends on
how the product is classified.
 Basis for Product classification
23

 If products and services are defined in terms of the buyer’s behavior towards

them, it will be useful here to consider the factors that determine that behavior.

 Most models of buyer behavior implicitly recognize two kinds of factors –

objective and subjective.

 For objective reasons: products differ in their physical characteristics, in

their design, etc.

 For subjective reasons: even when physical differences are hard to see
for consumers, branding may well make two products appear differently in
the consumers’ eyes
Basis for Product classification
24
 Basis for Product classification
25

 Ministry of Statistics and Program Implementation

has classified all product industries as per the NIC
(National Industry Code)
 http://mospi.nic.in/sites/default/files/main_menu/
national_industrial_classification/nic_2008_17apr
09.pdf
 Basis of Product Classification
26

 Degree of Tangibility (tangible vs. Intangible)

 Degree of Durability (durable vs. non-durable)
 Use or Application of Product (consumers vs.
industrial).
 Product Tangibility
27
1. Inseparability of service: production and consumption. For example, the
‘production’ of a trip on the train which cannot be separated from its
‘consumption’ by the customer.
2. Heterogeneity of service: for example, room service in a hotel is offered
somewhat differently depending on the person providing service.
3. Perishability of service: for example, a free seat on a flight from
Amsterdam to Glasgow cannot be added to the seats available on the next
flight to the same destination. It is lost forever.
 Product Use
28

 One of the most common and widely used classification of

products is between consumer (B2C) and industrial (B2B).
 Consumer products are bought from individuals in order to
satisfy personal and family needs
 Industrial products are bought from companies or
organizations in order to be used as an input for the
production of other products (for example, raw materials),
for company use or sale to other companies.
 Product Durability
29

 Depending on their durability, products can be

classified as durables and non-durables.
 Durables are products that satisfy a certain need for
a long period of time (for example, refrigerators,
machine tools).
 Non-durables or fast moving consumer goods
(FMCG) are products that satisfy a need once (for
example, refreshments, pasta).
 Types of Consumer Products
30

 Convenience goods are those for which the consumers will not spend
much money or time in purchasing them nor does the customer
perceive significant levels of risk in making a selection.
 Examples of consumer goods that fall into the convenience category include
fresh produce and grocery staples, umbrellas, chewing-gum and
batteries.
 Supplies and raw materials, which are commodities could be classified as
convenience items for industrial buyers.
 Shopping goods as the name implies are those for which the buyers are
willing to spend a significant amount of time and money in searching
for and evaluating these products. Increased levels of risk are also
perceived for these high involvement products.
 Example of shopping goods include vehicles, clothing and furniture for
end consumers
 Equipment and component parts for industrial users.
 Types of Consumer Products
31
 Specialty goods are ‘unique’ in some regard and
require special effort in terms of both money and
time for their acquisition. Comments such as ‘[I
would] wait for weeks’ ‘not settle for anything else’ are good
indicators of the time and effort that distinguishes specialty
products.
 Examples of specialty products include rare vintage imported
wines, expensive sports cars and paintings by well-
known artists.
 In the industrial sector, installations (buildings) would be specialty
products because their location, cost and furnishings require great
organizational effort and risk.
 Preference goods, which involve low shopping effort and
low ego involvement, but high brand preference.
Marketing Strategy to adopt in different types of products
32
 Types of Industrial Products
33

• Raw Materials (Farm Products & Natural

Entering Goods : they comprise raw Products)
materials and manufactured materials
and parts that enter the • Manufactured Materials and Parts (Component
manufacturer's product completely Materials, Component Parts)

• Installations (Building, Fixed Equipments)

Foundation goods: they refer to capital
items that are long-term investments • Accessories (Light Factory, Office Equipment)
facilitating the development and
management of finished products

• Supplies (Operating Suppliers and

Facilitating Goods : they consist of
supplies and business services, which Maintenance & Repair Items)
are necessary for the smooth operation • Business Advisory Services (legal, advertising,
of every company management consulting)
 From Product to Category Management
34

 Category management is considered to have two

main strategic objectives.
 Firstly, to define business units as product
categories rather than individual brands
or product lines, which is a shift from the
brand management approach. Product decisions
are based on category-level goals.
 Secondly, to customize the marketing effort very
closely to the shopping patterns of a locality
From Product to Category Management
35
 Category Management at LGEIL (Ideal)
36

LGEIL

Home
Entertainment Home Appliances

Cleaning and Cooking

Viewing Listening Washing Air Cooling Health

Washing
TVs Speakers Machines MWO ACs Water Purifiers

Modular Kitchen
Home Theaters Dishwashers accessories- Hubs Air Purifiers
and Knobs

Vacuum Cleaners
 Reading List : Module 1 : CONDUCT A COMPETITIVE ANALYSIS OF INDUSTRY
AND IDENTIFY THE PRODUCT STRATEGY FOR SUSTAINABLE COMPETITIVE
ADVANTAGE

37

Group Roll nos Reading

1 Perpule to Tap South East Market

2 Milk, Juice Competition Grows in India

3 Marico set to take on Men’s Grooming Segment

4 Panasonic Gears up to Tap Smart Fridge Market

5 New Tata Entry to tap FMCG, Global Markets

6 Danone adopts urban face to India

7 Lenevo adopts a dual brand strategy

8 Renault-Nissan adapts in India

9 How One Plus won 40% of India’s premium phone market

Copy protected with Online-PDF-No-Copy.com