Introduction to Prod. Mgt.

Product Management System. Product Manager.

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Product Management System
Started By P&G in 1920 for CAMAY Common Across All Industries Portfolio of products

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General Org. Chart
Head of company /.division / country Manufacturing Marketing New Business Development Finance Head Marketing

Marketing research

Category 1 Group Product Manager

Product mgr 1

Product Mgr 2

Product mgr 3
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Category 2 Group Product Manager

PMS v/s General Marketing management Product management Scope of Responsibility General Marketing Management Narrow : Single Broad : Portfolio Of Product or a product Products Line Mainly Tactical Mainly strategic Nature Of decision making Time Horizon Short run ( Quarter on quarter or maximum annual ) Long Run ( Keeping Vision & Mission In Focus) 4 .

The PMS system can be successfull 1) If the system is adapted to the situation 2) Assign appropriate role for the PM 3) Appropriately Qualified 4) Support from top management 5) Realistic Expectations 5 .

THE PRODUCT MANAGER All this while the pm was only seen as a facilitator or a coordinator or perhaps doing work of an assistant or a secretary But the modern PM is much more««. 6 .

The Effective Product Manager 7 .

Responsibilities / KRA Product Strategy Product Planning Product development & Monitoring Marketing & Promotion Financial Returns 8 .

Top Management : Objectives & Guidance Design & Engineering : Prod.Development Production : Mfging & Forecasting Targets Sales & Mktg : Mktg plans / strategies / Promotions Legal Dept : Contracts / Packing Slips / Pack Details Finance : ROI & Budgets. 9 .Product Manager Interface. Budgets.

Critical Skill Set Team work Communication Skills Analytical Abilities. 10 .

2 NEW PRODUCT PLAN 11 .L.

Product width . 12 . Synergy. Spare capacity. Diversification. Beat Competition.Reasons to develop new products Market Share.

13 . Test Marketing.Product Feasibility. Product Development. Commercial Launch.

Developing The Product Plan . Market Research a) category attractiveness b) Customer c) Competition 14 .

Marketing Style. a) b) c) d) e) Mass Marketing Segment marketing Niche Marketing Local Marketing Individual Marketing 15 .

Factors of Attractiveness Category Size Market Growth Product Life Cycle Seasonality Profitability 16 .

Product Life Cycle 17 .

Growth of category & sale is small Expenditure is high. Growth Phase Category size is moderate Consistent growth in sale & size of category Expense curve is on decline or constant. 18 .PLC Introduction Phase Category could be small.

may vary Decline Category size is moderate Growth of category is negative Sales are lowering and attractiveness of of category is low 19 .Maturity Category size is now large Growth is slow sales figures not constant .

High Promo. Ltd Mkt. 1) Rapid Skimming ± High Price . mkt unaware 2) Slow Skimming -.Marketing Strategies Through PLC Introduction Stage. 20 . Low Promo.High Price . Build Brand. Large mkt. Low Promo. some competition. 4) Slow Penetration ± Low Price. price sensitive economies of large scale. Mkt aware. mkt awareness. 3) Rapid Penetration ± Low Price. High Promo.

Growth Stage. 1) New Products 2) Enter New Segments 3) Improve distribution 21 .

1) Convert non users 2) New market Segments 3) More frequent use 4) New uses.Maturity stage. 22 .

Decline Stage 1) 2) 3) 4) Strong & Fit will last Harvesting Increase Investment Divesting 23 .

Threat of new Entrants Economies of scale --.Reliance Prod.Microsoft network to oracle network HOME LOANS Distribution Network. Differentiation --.Infyosis Switching Costs --.Kellogs Capital Requirements --. 24 .

Threat OF Substitutes Petrol Cars v/s Electric Cars Trains v/s Low Cost Airlines Cell Phones v/s Landlines 25 .

Environment Analysis Economical Factors Technological Factors Political Factors Regulatory Factors Social Factors 26 .

Customer Analysis Who Buys & Who uses the Product 1) Initiator 2) Influencer 3) Decider 4) Purchaser 5) User 27 .

Adoption process. Early adopters Majority Laggards 28 .

What does the customer buy & How they use it? 1) Consumer buying not the product but the benefit. 2) R F M concept helps to create data. 29 .

Where customers buy from? a) Road side b) Kinnara store c) On phone d) Departmental Store / Malls e) Catalogue Shopping 30 .

When do customers buy? How do customers choose the product 31 .

Will they buy it again? 32 .Why customers prefer one prod over the other? a) Functionality b) Affordability c) Ego / Affluence.

33 . Targeting ± Choose the Segment & the Product.Segmentation-TargetingSegmentation-Targeting-Positioning Segmentation ± Identify & Profile the market you want to cater to & The Products you want to offer.

2) Analyze the Data collected. 1) Conduct a Survey across the Market. 3) Profile the groups.Procedure for segmentation. 34 .

Segmentation ± Customer based 1) Geographic location 2) Demographic 3) Psychographic Segmentation 4) Behavioral Segmentation 35 .

One product for all 36 .Market Targeting. Multi segment strategy. Evaluate the segments One segment strategy.

Competitive Analysis L.3 37 .

Slow Growth of Markets Short PLC Low Sales Growth Pressure on Margins 38 .

Imp Qs Such As : Who are the major competitors? How do the competing products / services stack up against each other? What are the main objectives of the competitor? What is the current strategy? Who has the competitive edge? What are they likely to do in the future? 39 .

Oligopoly :: few cos in the market Same product / service theme .high price. concentration on differentiation . price sensitive to competition Eg. Maruti & Huyundai 40 . service not priority . little advtg.Types of Competition Monopoly :: one co.

Restaurants : italian udipi chinese Difference on basis of segmentation. Pure Competition :: Many players . / distribution . same product . same service . emphasis on low cost of production . 41 .Types of competition Monopolistic Competition :: Many players each offering something unique eg.

Objectives of competition Based on things like :: size history current management financial situation place in large organization & in product portfolio 42 .

Market Share :: various promo schemes. Discounts Reducing Price Piggy Back Offers Profit Motive : : Consistent Pricing Consistent Promotional Expense Rational Behaviour 43 .

Sources of Information Secondary: Secondary: Local News papers Annual reports General business publication Trade Journals Promotional Literature Trade Associations Internet 44 .

45 .Sources Of Information Primary: Sales Force Customers Employees Suppliers Employee Pinching Reverse engineering Monitoring the test markets.

46 .Assessing Competitor µs Current Strategy Marketing Strategy Value Chain Analysis Marketing Mix.

47 .S.P ± differential matrix Service Packaging and delivery terms 3variable tests:: share of market share of mind share of heart.Marketing Strategy Different Segments That the competition is catering to. Brand Extensions / Product extensions Which segment is the most profitable and easiest to enter U.

Comparing Value Chains
Strategic Cost Analysis : Focus On cost of a) Raw Material Cost b) Cost of Production c) Cost of Promotion d) Cost paid by ultimate customer
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Comparative value chain analysis::

1)

Breakdown activities/Business Process
eg. Designing , manufacturing, marketing , Distributing, After sales service.

2) Primary Activity: a) Inbound logistics : raw material flow , ware housing and material handling. b) Operations : Turning inputs into final product. c) Outbond Logistics : order processing & Distribution. d) Commercial Pricing & channel Mgt along with brand bldg activity. e) Service :Delivery in time , Installation , complaint Handling , repairs and parts :Delivery

Eg: A/c & Electric Chimney : separate charges for installation & demo : Installation and demo for washing machine and tv is included in the MRP
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Secondary & Support Activities

a)

Procurement :

Procedure for procurement collecting Data , analysing data for decision making. eg: Hll packnet , ERP softwares , cross category meets. b) Technology Development : Designing and implementing procedures Improving design and utility , Reducing time To produce there by saving on cost or Improving margins. c) HRM :: Hiring , trainning , compensation , incentives Gen infrastructure , general management , govt. relations , finance.
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processes followed. Down Stream : cost and margin of distribution & strategic partners and channel allies 51 . balance of qlty and cost.Value chain Analysis Upstream : cost and margin of suppliers .

Differential Advantage Matrix & SWOT ANALYIS 52 .

PORTER 5 FORCE MODEL 53 .

54 .Competing Sellers Most Powerful Force Check Rivalry Status Price / Quality/Features/ Service Dealer network Warranty / Guarantee Innovation.

Potential Entrants # Seriousness Of Threat Depends On Barriers to entry Capital Investment Economies of scale Specialized Technology Customer Loyalty Distribution Channels Regulatory Policies Political network to change 55 RELIANCE RELIANCE RELIANCE Almost monopolised .

/ Electronic Vehicles 56 .Substitute Products You can say this force is strong when These products have better features Profits Are Increasing Newer capacities are being added Attractively priced. Eg« Petrol / Lpg / Cng.

Few in no. Few substitutes Not an imp. Customer High switching cost Threat to forward integration 57 . The stronger they are the more often prices fluctuate delivery times are erratic.Suppliers.

58 .Buyers Buyers are anyways important to satisfy but they are particularly strong when They are large and consume in bulk Have multiple suppliers No cost or effort in switching over to substitute Have capacity to integrate backward.

Strategic Implication of five force model # Competitive environment is unattractive when Rivalry is strong Entry barriers are low Substitutes are strong Suppliers & Customers have good bargaining power #Competitive environment is attractive when Rivalry is moderate & all the above factors are reverse 59 .

L4 Product Strategy 60 .

Where are we going to go? How will we get there? What will we do? 61 .

alternate channels to sell / distribute.Strategy needs to be in place before starting a) b) c) d) Achieve Co ordination Allocation Of Resources Should lead to a superior market position Do everything that competition is not doing : untouched segment . e) Choose something that competition can not do: Patents in technology and pharma. f) If competition should get into your business it should be of advantage to you : Increase in consumption Increase in category« 62 .

. Selection of strategic Alternative: Mfg :* Reduce input * milk existing infrastructure * Increase output by adding one more shift * long run of one prod assembly Mktg : * Convert non users * Enter new markets . * Offer premium product at a premium price. * Increase Portfolio size with allied products.international * Appeal to different segments ± toyota qualis 63 .Steps to Product Strategy Vision & Mission of strategy * largest player in category by «.

Targetting & Positioning * Choice of customers: a) Identify the customer base. 64 . b) Identify the segment / base of customers that would help in growth. c) For faster and higher profits it would make sense to take advantage of the existing customer / existing segment .non user.

attacks Counter offensive defense: React with equal or stronger attack. increase consumption demmandDefend market share Increase market share Continuous innovation Hold on to dealer shelf space Packs in all sizes and varieties Develop a super market intelligence / PR. new uses . Do not under estimate the COMPETITION 65 . nicher  ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Leader Strategies: Expand total market demmand-find new users . challenger .* Choice of Competition Are u a leader .network Preemptive defense: attack before comp.

Aggressiveness . status . functionality with equal or lower price.utility . Features . conviniance . fashion . Frontal Attack : Attack the strength of the leader« competes with ad. Flank attack: Attack the enemy on the weak points --attack: weak segment weak territory uncovered markets Jap cars ± more fuel efficient than american guzzlers Encirclement Attack: Attack from all sides ±strengths . price . prod.b) Strategies for Challenger: ‡ ‡ Challenger has the opportunity to attack upward or under. Attack: weakness -. availability ‡ ‡ 66 .

pricing .c) Strategies for Market Follower: Product imitation rather than innovation ‡ Cloning : Exact replicate ‡ Immitator : Same type like the leaders product . ‡ Adaptor : Copies the leader but improves on certain areas 67 .design. appeal . but slight difference in packaging . color .

d) Srategies for Nichers: ‡ Catch a particular niche and grow in it ---ENFIELD ‡ Specialist in end use ‡ Geographic speacilist ‡ Product / product line specialist ‡ Quality and price Specialist ‡ Made to order specialist. 68 .

Based on the strategy .. ‡ Low cost airline : comfortable & cheap . on time arrival & departure.the product has to convince the customer of the value that it is offering«. ‡ Laptops : Reliable computing and Quality at a cost advantage LENNOVO : un Successful 69 .Un successful. DECCAN AIRLINES --.SUCCESSFUL ‡ 5 star hotel : luxury & prestige CENTAUR HOTELS --. Non price Sensitive.T & P ± the core Strategy Price sensitive.

‡ Value Chain Analysis : ‡ HR. long run production. Critical activities analysis .Price Strategy Low cost advantage :::: ‡ Economies of scale : One Product . cut corners.incentives . Function : Cut no.properties /office 70 . of positions that space are not core / staff perks.

Non Price Strategy. Expected Product Augmented Product Potential Product. 71 . Working on the concept of customer Delight. Convenience & Service Distribution Channel.

Differentiation on the basis of : ‡ Quality :kingfisher v/s Jet v/s Air India ‡ Status & Image : Evian v/s Bisleri ‡ Creating Brand Equity : cadburrys Mc. Donalds BMW Nestle 72 .

promotion . recruitment. 73 . Price : competitive . right man for the right job .reliability . retention . utility . justify value . credit terms cost of advertising / selling Promotion : Advtg . transport . brand bldg Place : territory . People : Team building . inventory . cost. protection .Marketing Mix: Product : design . Functionality . warranty. sales promotion . motivation. utility . coverage Packaging :design . training . location .

BCG Analysis. 74 .

L 5. BRANDING PROMOTION AND PR

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Branding.
Brand is a promise to the customer from the manufacturer for delivering a specific set of features, quality, benefits,& services.

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WHY DO BRANDING WHEN THERE IS A HUGE COST INVOLVED?

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Differentiation Segment Markets Corporate Image Legal Protection of prod Features Attract & Retain customers. 78 .

Brand Parity Price Sensitive Equally Good Quality competitor Products Reduced Advtg. 79 . Expenditure Brand & Line Extension In store Brands.

Brand Extension ± Same Brand ± new prod. category Multi Brands ± Same Prod. Co.Brand Strategy Line Extension ± Same Product Category New Variants. Category ± multiple brands. Branding -80 .

BRAND ASSOCIATION 81 .BRAND REPOSITIONING.

Advertising . Different Types of Promotion Tools such as Personal Selling . Sales Promotion . 82 . Public Relations can be used.PROMOTION & ADVERTISING. Taking the product from the factory to the hand of the consumer.

Identifying the Audience. 83 . Demographic & Psychographic Profile * Literacy / Education * Life Style * Geographic Location Awareness of Product / Brand / Company.

.Media Preference * Electronic Media ...News Papers Magazines / Trade Journals * Display Media .Satellite Television Cable Television Radio Internet. * Print Media .Bill boards / Signs / posters 84 .

Objective Of Communication A. Concept Awareness Interest Desire Action 85 .D.I.A.

Humor / Fear (Amul / insurance) Ethical / Moral ± Less Used in every day Products.Plain Fact .Ultimately the Message.Industrial Products EmotionalEmotional. Message Content Rational . 86 .

Tanishq) Self Actualization Needs. Saffola) Esteem Needs ( Digjam . ( Nakshatra . Cigarettes ) 87 . Onida .BUYING MOTIVES Maslows Theory Psychological Needs coper T. Polio . thermal ware) Needs( Safety Needs ( Bajaj Allianz . Alcohol .

Marketer has more control over advertising Not always paid form May be negative result Planned Effort to initiate & maintain relation between organization & environment Marketers has lesser control over publicity. 88 .ADVERTISNG / PUBLICITY Paid Form of Promotion Always Positive Result Planned effort to initiate or maintain relation between product / brand customer / consumer.

Advertising / Personal Selling
Communication with many customer / consumer in one shot Non personal form of promotion Use of mass media to appeal to target audience Used for products with mass consumer base HP printers. Communication on a one on one basis Extreme personal form of promotion Used for products made to fit for a particular need ( Machine / soft ware ) HP plotters

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Advertising / Sales Promotion
In the present no extra benefit apart from communicating the message & giving information to consumer Advertising is recurring Long Term Approach waiting for benefits occur. Immediate extra benefit to consumer by way of free gifts or discounts. Non recurring in nature Short term approach and immediate response in terms of a sale 90

Advertising / Public Relations.
Object is to persuade in order to sell Promotes relationship with brand / product through consumption Aimed at distributors & consumers / customers Used only for Promotion Object is to inform / educate Promotes relationship through human element Aimed at every link in the chain right from the employees / production unit / suppliers / distributors / customers & share holders Used for creating mutual understanding ( take care of faulty product / bad logistics / depressed share value.
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Budgeting Methods Affordability method Percentage of sales method Competitive method Objective & task method 92 .

Is a quality of strong and good relationship. Its. Function of PR. Full form of PR.PR. PR. Meaning & Importance. is to educate. ------Public Relations ------Public Advertising creates intent to purchase and generate sale . 93 .

Discover the current image of the company. How good is the after market service? Creditable Advertising Industrial Relations Trade relations Packaging Almn foil carton with perforation for cutting to size Premises How does the stock market treat you? How you deal with correspondence? Nestle every day whitener 94 .

Situations in which PR is Important 1) Prejudice eg. chinese prod.worli sea ink ± koli fishing community 3) Hostiltity eg.Vibgyor school v/s parents 95 . Hindu/ muslim vendors . 2) Ignorance eg.

It is time consuming and expensive to design a corporate identity scheme and then consistently implement it in all physical representation« 96 .Corporate identity Is different from image. Consistent and focused approach for establishing an identity.

Common approaches to establish identity.BMW: ultimate driving machine 97 . Ford . Bata Kodak Film box Fuji Film Box prancing horse lion head charging bull 3) Charecterisation --- 4) Slogan --. 1) Logo Type ± 2) Colour --Cadburrys .

& Marketing Company Name / Brand Name. Short term) Advertising Sales Promotion 98 ..PR. volks wagon ) ( Long term .( Axis . porche . Canara) Packaging Pricing ( Recognition / Retail display ) ( 99 syndrome ) ( hertz .

Customer Relation After Sales Service Maintaining Customer Interest ( Scorpio . Minawala Jewellers . ) Loyalty Programmes / memberships / Brochure Translations / culture research / Trade commission.PR. Satguru Art Gallery. 99 . Tata Indigo Events .

100 .Pr & Crisis Identify Potential risks Supplement H. R. Practise Lateral & Vertical Communication Product Recall.

L.6 PRICING 101 .

Dupont) Prod.Quality Leadership(MercLeadership(MercToyota.Price Objectives Survival Maximize Sales ( Hll / P&G) Maximize Profits Market Skimming ( Cell phone .siemens) Non Profit Pricing 102 .

Elasticity of Demand. UNLESS No Substitutes Slow Change Justified Rise ( Quality . Demmand Inversely Proportionate to Price. inflation) ILL Informed Unique Effect Shared Costs Inventory 103 .

Mktg. Mix -----. Budget and good availability === HIGH PRICE Good Quality with large Advtg Budget Big / known brand Price === High 104 .Price Average Quality Product with large advtg.

Pricing Uniform Price Discriminatory price Market Based Price Cost Based Dumping ****** GRAY MARKET ******* 105 .

Different Pricing Techniques 106 .

helps to determine cost Fair to buyer & seller All firms using same costing thus no war.ve. Side . Cost per Unit = Variable cost + Fixed Cost ----------------------------estimated demand of units Mark up price = unit cost ------------------( 1 ± desired return of sales ) --.1) Cost Plus / Mark Up.If Demand analysis wrong If Price point set is wrong +ve. --. Side 107 .

Variable Cost 108 .2) Target Return Pricing Return On investment Unit Cost + ( Desired rate of return x Invested Capital ) ----------------------------------------------Unit Sales Break Even Volume = FIXED COSTS -----------------------------Price ---.

3) Perceived Value ± (Heart Surgeon designer clothes) 4) Going rate in Market 5) Value for Money ( Air deccan Indigo /Esteem) 6) Going Rate Pricing 109 .

110 .Price Discounts.Discount Seasonal Discount Cash Rebates Low interest Financing Longer Warranty and Service Contracts Psychological Discounting. Cash Discount Qty.

Price Changes Price Cuts : Price Increase Customer reaction Competitor Reaction 111 .

112 .L. 7 Mrkt Potential / Sales Fore cast.

Quota : What is expected by a certain dept or sales person to be achieved 113 .Potential : Maximum sales that are attainable under given set of conditions with in a specified period of time. Forecast : Sales expected to be achieved under a set of conditions with in a specified period of time.

Market Potential Hard to estimate accurately the upper or lower limit Still important because: 1) 2) 3) 4) 5) Entry exit decisions Resource level decisions Location decisions Set objectives and evaluate decisions As an input ± benchmark for FORECAST 114 .

sources Trade Associations Private companies Financial & Industrial Analysts Press Internet 115 .Sources of information Past sales data Govt.

Estimate market & sales Potential 1) Analysis based : Determine potential buyers / users a) Determine Requirment b) Determine need c) Determine ability 116 .

Estimate the purchasing / Usage rate **** Potential users x Potential Usage Rate 117 .

30 x % of retail sales of area of india + 0.50 x % of disp.Area Potential a) Population b) Retail sales c) Disposable Income Attach weights to get accurate answer. 0. income of area of total india 118 .20 x % of population of area compared to whole india + 0.

sales based on a chosen mrktg. Env«« Done to estimate: 1) 2) 3) 4) 5) Revenue for the year Help set the budgets Provide basis for monitoring the system Production planning To value a company 119 .Sales Forecasts Expected level of co. Plan & assumed mrktg.

political .4 variables that are important: a) Customer behaviour b) Competitor reaction / action c) Product strategies d) Environment ( legal . economical ) 120 .

Techniques of Sales Forecast
Judgement based methods: a) Naïve exploration b) Sales force composite c) Jury of expert oppnion d) Delphi Method
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Customer Based Methods: a) Market Survey b) Market Testing and display

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Sales Extra Polation Method: a) Moving Average: is a popular approach. St = st-1 + st + st+1 ---------------------3

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Regression analysis a) Plot sales data over time b) Consider Variables relevant for predicting sale 124 .

L8 Logistics & Channel Management 125 .

from points of origin to points of use to meet a customers requirement «««. controlling . the physical flow of material & final goods .Market logistics involves planning . implementing. AT A PROFIT. It requires a detailed study of target market requirements and then designing the supply chain backward. 126 .

material handling equipment ) 127 .Logistic Decisions WareHousing ‡ Stocking Locations ‡ Own / leased warehouses ‡ Automation ( softwares .

Transportation: ‡ Speed ‡ Frequency ‡ Dependability ‡ Capability ‡ Availability ‡ Traceability ‡ COST 128 .

Piggy back Fishy back Train ship Air truck Private Carrier Contract Carrier 129 .

order point ‡ Order processing cost v/s Inventory carrying cost 130 .INVENTORY ‡ Customer Service level ‡ Re.

131 .ABC analysis JIT style.

Channel Management Channel Selection ‡ Direct Channel ‡ Indirect Channel 132 .

Direct Channel Better than indirect when:  Information needs are high  Product Customization is needed  Quality Assurance Matters  Purchase orders are large  Transportation / storage are complex 133 .

Internet.Own Store Sales Force Mail / catalogue Phone Trade Shows. 134 .

Indirect Channels Better Than Direct when  One stop shopping for prod is imp  Availability is important  After sales service is important 135 .

Wholesaler / Distributor Retailer / Dealer Agent / Representative 136 .

Services that channel can provide Physical Distribution Promotion Matching customers to specific needs Feed back 137 .

Channel Management Contractual Obligations Self Interest Human Contact 138 .

139 .Power Management Volume of sales Brand Equity Low Switching cost Backward Integration Invest in technology Cut costs Support small reatailers.

L. of a service Company 140 .10 Product Mgr.

141 .A service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. its production may or may not be tied to a physical product.

5 offerings to the customer Pure tangible goods Tangible goods with accompanying services Hybrid Majority service along with minor tangibles Pure Sevices ( fully Intangible ) 142 .

Characteristics of services Intangibility In seperability Variability Perishability 143 .

Differential Pricing Non peak Demmand Complimentary services Reservation Services 144 .

Services to succeed need: 1) External Marketing 2) Internal Marketing 3) Interactive marketing 145 .

Essentials for a Service company: Competitive Differentiation 1) Offer 2) Delivery 3) Image 146 .

3) Gap between service delivery and external communication. 147 .Managing Service Quality 1) Gap between Consumer expectation & Management Perception. 2) Gap between service quality specifications & service delivery.

Satisfying Employees.System Oriented Monitoring Service performance Satisfying Customer Complaint. 148 .

Post Sale Strategy. 149 .

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