PRODUCT MANAGEMENT

UNIT - 1

CONCEPT OF A PRODUCT:

Acc. to PHILIP KOTLER “A product is anything that can be offered to a market for attention, acquisition, use or consumption. It includes physical objects, services, personalities, places, organizations and ideas.

Product occupies a dominant position in marketing mix {one of the 4 p’s}

Key element of the marketing programme.Before making decisions about pricing,

promotion, distribution firm has to decide about the product.

Product have two aims: 1. Profit maximization

2. Wealth maximization [customer satisfaction]

Product policies decision from an important basis for the firms competitive advantages in the market place.

Consumers perceives the product from different angels. This perception are to be combined in the form of product image.

Consumer point of view

Company point of view

Product image

Product

Price

Promotion

Place

NeedsWants

Personality

PrestigeIncome

Education

VARIOUS USE OF A PRODUCT:

I general view, product is defined as everything the purchaser gets in exchange of money is a product.

TECHNICAL / MANUFACTURING POINT OF VIEW: A product consists of various of raw materials put

together so, that the end result serves a useful purpose of consumption.

ECONOMIC POINT OF VIEW: A product consists of a bundle of utilities [value]

involve in various product features and accompanying services.

FROM THE CONSUMERS POINT OF VIEW: What a desire are not the product but satisfying the experiences.

DEFINITION: “ A product is a complex of tangible, intangible and external attributes including functional, social and psychological utilities or benefits”.

A product has as bundle of physical services and a symbolic attributes expected to yield satisfaction or benefits to the buyers. This concept has actually led to defining the product as the total product.

PRODUCT PLANNING:

Product planning has been defined by American Marketing Association as “ The act of marketing out & supervising thesearch, screening, development and communication of newProducts, the modification of existing lines and the Discontinuous of marginal or unprofitable items.”

STEPS/ PROCESS:

1) Evaluation of the idea, market & the product2) Evaluation of company resources3) Finding out customer specifications4) Developing the product5) Testing the product6) Marketing the product7) Evaluating the result {feedback}

SIGNIFICANCE OF PRODUCT PLANNING {IMPORTANCE}

“IF YOU FAIL TO PLAN, YOU’RE PLANNING TO FAIL”

1) Basis of marketing programme2) For survival3) To face competition4) To minimize risk5) Instrument of growth6) To discharge social responsibilities

PRODUCT OBJECTIVES & STRATEGIES:

1) Product policy Product mix Product item Product line

2) Elements of product policy Product planning & development Product line Product standardization Product identification {branding} Product style Product packaging

PRODUCT MIX

Product mix

Product Product ProductBreadth depth consistency

FACTORS INFLUENCING PRODUCT MIX:

1) Population increase2) Changes in level of the income of the buyers3) Changes in consumer behaviour4) Other reasons Marketing influences {competition, place, media} Product influences Financial influences

NEW PRODUCT – DEVELOPMENT: {V.V.IMP}

Product planning deals with changes in:1) The kinds of goods or services offered2) The number/kinds of products or different

lines that the company offers3) The width of assortment within each product

line offered4) The quality levels/ levels acceptable to

various classes of customers5) The degree of distinctiveness [different]

The following are the basic changes that may be required in product planning:

1)Improving the existing products2)Weeding [unprofitable items] out

profitable of the product line3)Expansion of the current product line

[diversification]s4)New product development for the

present customers5)New product for new customers

NEW PRODUCT DEVELOPMENT STAGES:

1) EXPLORATION OF IDEAS / IDEA GENERATION: R&D Distributors Competitors Customers Employees Professional investment/ marketing agencies

2) SCREENING OF IDEAS: Expanding each idea into full product concept Collecting facts & opinion to decide whether the

product idea could be converted into a business proposition

Technology Assessing each idea for its potential value for its

company

3) BUSINESS ANALYSIS: Future study on each idea in detail Determining the desirable market features for the

product & its feasibility Developing specification & establishing a definate

programme for the product

4) DEVELOPING THE PRODUCT: Idea on the paper is turned into product on a hand.

5) TESTING: Concept testing Product testing Test marketing

a) CONCEPT TESTING:

To evaluate the relative merits of several new product proposals

To determine whether the product idea is to be abounded or modified

To determine the size of potential market To guide the management to adopt suitable policies

b) PRODUCT TESTING:

To assess proper product performance To minimise the risk attached to full scale launching

of a new product To identify the most productive market segments To collect necessary data of responsiveness from the

customers

c) TEST MARKETING:

To evaluate a complete marketing plan including advertisement, distribution, sales, pricing etc…

To determine media mix, channels e.t.c To forecast sales volume

6) COMMERCIALISATION:

Completing final plans for production & marketing Initiating, co-ordinated production & selling

programmes Checking results at regular intervals

WHY NEW PRODUCTS FAIL IN THE MARKET ???REASONS:

Inadequate market analysis Product defect Higher cost Poor timing [proper] Competition Insufficient marketing effort Inadequate sales force Weakness in distribution

*** v.imp PRODUCT LIFE CYCLE [PLC]:

There are 4 stages of product life cycle.I. IntroductionII. GrowthIII. MaturityIV. Decline

Introduction Growth Maturity Decline

bep TIME

Sales /Profit volume

Products have a limited lifeProducts sales pass through different stages each

posing different challenges, opportunities & problems to the seller

Profits rise & fall at different stages of PLCProducts require different marketing, financial,

manufacturing, purchasing, human resources strategies in each stage of the PLC

DEFINITION:

Acc. To PHILIP KOTLER “ The product life cycle is an attempt to recognise distinct stages in sales history of the product.” PLC concerns with the study of degree of product acceptance by the market overtime. It includes major raises & falls of sales during its life.

PLC STAGES:I. INTRODUCTION STAGE:

• Huge selling & promotion cost are required to increase awareness of the customers.

• Price is kept high to recover high development, production & marketing cost

• Marketer has to tackle technical and production problems

• Sales are low and increasing at a lower rate.• There is loss or negligible profit• There is no competition.

II. GROWTH STAGE:

• Sales increase rapidly as a result of consumer acceptance of the products.

• Company can earn maximum profits.• Competitors enter the market due to attractive

profits• Price is reduced to attract more customers• Distribution network is widened and improved• Necessary primary changes are made in products

to remove defects• Company enters the new segments and channels

are selected.

III. MATURITY STAGE:

a) Growth maturityb) Stable maturityc) Decline maturity

• Sales increase at decreasing rate• Profits starts declining• Marginal competitors leave the market• Customer retention is given more emphasis• Product, market & marketing mix modifications are

undertaken.

IV. DECLINE STAGE :

• Sales fall rapidly

• Profits fall more rapidly than sales

• Product modification is adopted

• Gradually, company prefers to shift resources to new products.

• Most of the sellers withdraw from the market

• Promotional expenses are reduced to realise a little profit.

BRANDING, PACKAGING, LABELLING [BPL] STRATEGIES:

I. BRANDING:

A brand is a name, term, symbol or design or a combination of them which is intended to identify the goods or services of one seller or a group of sellers and to differentiate them from those of competitors

• Brand name• Brand mark• Trade mark• Branding• Trade name• Patents• Copy rights

FUNCTIONS OF BRANDING:

• Branding helps in product identification & distinctiveness to a product

• Indirectly it denotes the quality or a standard of a product.

• It eliminates imitation products.• It ensures legal rights on the product.• It helps in advertising and packaging

activities.• It helps to create and sustain brand loyalty to

particular products.• It helps in price differentiation of products.

CLASSIFICATION OF BRANDS:

I. Manufacturer’s brands :• National• Regional• Advertising brands• Single brands• Multiple brands• Individual brands

II. DISTRIBUTER’S BRANDS:• Private brand• Store brand• Dealer brand• House brand

KINDS OF BRANDS:

1. Coined name – e.g: parker pen2. Arbitrary name { not related to product }3. Suggestive name – e.g : boost4. Descriptive name – e.g : glucose – D

CHARECTERISTICS OF A BRAND NAME:

• Easy• Read and understand• Remember• Appropriate• It should be descriptive name

II. PACKAGING:

FUNCTIONS OF PACKAGING:

• Two assemble and arrange the products in the desired form

• To identify the contents the brand and the maker [ product differentiation is perfected to the function]

• To protect the contents from product line through final use/ consumption

• To provide a suitable product mix [ size, weight, grade, package]

• To facilitate retailer’s functions• To facilitate transportation, storing, warehouse,

handling• To enable the display of contents• To encourage repurchase• To help in complying with legal requirements • To provide opportunity and space for advertising.

KINDS OF PACKAGING:

1. Family packaging – same for all products

2. Reuse packaging – e.g: soap case, hand wash

3. Multi packaging: More than 1 product is packed e.g: tooth paste & brush, natraj pencil with sharpener and eraser.

PROBLEMS IN PACKAGING:

1. High cost of production/packaging

2. Appearance

3. Kinds of designs

4. Convenience

5. Reuse purpose

6. AIDA [ Attention, Interest, Desire, Action]

III. LABELLING:

Label is a small slip placed on or near anything [product] to denote its nature, contents, ownership, destination etc….

FUNCTIONS:

1. It gives definiteness to a product & therefore the identification of a product is easy.

2. It stresses the standard & other special features of the product

3. It enables the manufacturer to give clear instructions to the consumer about use of the product

4. By mentioning prices undue price variations caused by the intermediaries are avoided

5. It encourages to produce only standardized & quality products

6. It provides a method for manufactures by which a contact with the customer is established.s

KINDS OF LABELS:

1. Brand labels – e. g: cosmetics, sweets, chocolates etc…

2. Grade labels – e. g: clothes [silk]

3. Descriptive labels [ uses of product] – e. g: milk food

4. Informative labels – e. g: medicines

ADVANTAGES OF LABELLING :

1. Social service2. Avoids price variations3. Helps advertising4. It helps to assess the superiority of a product5. It is a guarantee for the standard of a product

DISADVANTAGES :

6. No use for illiterate people7. Increase cost of a product8. It is effective only where standardization is

compulsory9. Comparison ultimately ends in discarding one

product in favour of other.

IMPORTANT QUESTIONS : [ESSAYS]

1. Explain the new product development process with suitable examples ? [pg. 561 in Philip Kotler (13 e)]

2. Define PLC ? Explain the stages and strategies to be taken in PLC ? [ Pg. 291 in Philip Kotler (13e)]

3. Define product ? Explain product level classification & substitute your answer with suitable examples ? [ pg. 310 in philip kotler (13e)]

4. Explain PLC & its implications for marketers ?a) Mobile phones/ cell phonesb) Colour t. v