product management & strategies unit1

8/2/2019 Product Management & Strategies Unit1

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Product Management &

StrategiesUnit 1


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What is Product?

Product is core to any businessenterprise and forms the most

tangible expression offered by thefirm in response to customer needsand wants.

OR

A product is any offering by acompany to a market that serves tosatisfy customer needs and wants.

It can be an object, service, idea etc.


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Cont.

Kotler defined: A Product is anything, tangibleor intangible, which can be offered to a marketfor attention, acquisition, use or consumption

that might satisfy a need or want. Thus, the definition of a product includes:

tangible products (cars, houses, toothpastes, shoes...) intangible products (services such as management

consulting, teaching, security...) ideas (political, environmental protection...) people (pop stars, politicians, sports celebrities...) places (historical, holiday resorts...) Market for attention, acquisition, use or consumption Satisfy a need or want of the customers.


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Product to cover offerings that fallinto one of the followingcategories

Goods Something is considered a good if it is atangible item. That is, it is something that is felt,tasted, heard, smelled or seen. For example,

bicycles, cell phones, and donuts Services Something is considered a service if it

is an offering a customer obtains through thework or labour of someone else. Services canresult in the creation of tangible goods (e.g., a

publisher of business magazines hires a freelancewriter to write an article) but the main solutionbeing purchased is the service.

cont...........


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Unlike goods, services are not stored, theyare only available at the time of use (e.g.,hair salon) and the consistency of the benefitoffered can vary from one purchaser toanother (e.g., not exactly the same hairstyling each time).

Ideas Something falls into the category ofan idea if the marketer attempts to convincethe customer to alter their behaviour or theirperception in some way.

Cont......


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Marketing ideas is often a solution putforth by non-profit groups or governments

in order to get targeted groups to avoid orchange certain behaviour. This is seenwith public service announcementsdirected toward such activity as youthsmoking, automobile safety, and illegaldrug use.


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Level of Product

In planning its market offering, themarketer needs to address five product

levels. Each level adds more customervalue than another and these five levelswhen combined known as customer valuehierarchy.

Cont.


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Fundamental level iscore benefit. Ex Hotel guest is buying

rest and sleep ,marketer shouldprovide first basic needand then extra benefit.

Marketer must turn

when core benefit tobasic product. Ex- ahotel room includes abed, bathroom, towels,desk, dresser & closet.


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Third level isexpected product,

as et of attributesand conditionsbuyers normallyexpect when they

purchase theproduct. Ex- hotelguests expect aclean bed, fresh

towels, workinglamps etc.


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Augmented productis fourth level, that

exceeds customerexpectations, itsgenerally includesbrand positioning.

Ex- extra services,warranty 24 hrsfreshness, car,shopping facility

etc.


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Last level ispotential product,

which offering allthe possiblebenefits, optionalfeatures. Company

search a new wayto satisfy thecustomer. Ex- bday,new couple,

anniversarycelebration in samepackage etc.


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All 4 layers contribute to the satisfaction ofthe customer.

The outer 2 layers (tangible & augmented)are dependent on the definition of the coreproduct.

The core product may be functional-basedon its usage, or could be benefit or promise-based depending on how it makes you feel.

Whatever the core product may be, realmarketing action takes place in the tangible& augmented layers.


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Product Classification

Marketers have traditionally classifiedproducts on the basis of durability,

tangibility and use. Each product typeshas an appropriate marketing strategy.

Classification of product define in thefollowing way:


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ProductClassification


Durability&Tangibility

DurableGoods

Non DurableGood

Services

Use

ConsumerGoods

IndustrialGoods


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Consumergoods

ConvenienceGoods

ShoppingGoods

SpecialtyGoods

UnsoughtGoods


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IndustrialGoods

Machines Supplies Packaging Maintenance& repair Item RawMaterials


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Durable: These products are tangible thatremain in use months after months and

years after years. They are mostly soledthrough personal selling with high marginat specialty shops. ex washing machine,vacuum cleaner, etc.

Non- Durable goods: These products aretangible goods that are normallyconsumed with one or few uses. ex. soap,food items, etc.


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Services: These are activities or benefits thatprovide satisfaction to the customers. Ex.

Fitness center, club, coaching course, etc.

Convenience Products These are productsthat appeal to a very large market segment.They are generally consumed regularly andpurchased frequently. Examples include mosthousehold items such as food, cleaningproducts, and personal care products, toothpaste, news paper etc.


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Shopping Products These are productsconsumers purchase and consume on a

less frequent schedule compared toconvenience products. Consumers arewilling to spend more time locating theseproducts since they are relatively moreexpensive than convenience products andbecause these may possess additionalpsychological,

Cont....


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benefits for the purchaser, such asraising their perceived status level within

their social group. Examples include manyclothing products, personal services,electronic products, and householdfurnishings.


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Specialty Products These are products thattend to carry a high price tag relative to

convenience and shopping products.Consumption may occur at about the samerate as shopping products but consumers aremuch more selective. In fact, in many cases

consumers know in advance which productthey prefer and will not shop to compareproducts. But they may shop at retailers thatprovide the best value, ex. Fancy, prestige

goods, etc.


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Unsought Products These are productswhose purchase is unplanned by the

consumer but occur as a result ofmarketersactions. Such purchase decisions are madewhen the customer is exposed to promotionalactivity, such as a salespersons persuasion

or purchase incentives like special discountsoffered to certain online shoppers. Thesepromotional activities often lead customers toengage in Impulse Purchasing. Ex. Insurance

, High definition T.V., etc.


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Emergency Products These are productsa customer seeks due to sudden events

and for which pre-purchase planning isnot considered. Often the decision is oneof convenience (e.g., whatever works tofix a problem) or personal fulfilment (e.g.,perceived to improve purchasers image).


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Industrial Goods

Raw Materials These are productsobtained through mining, harvesting,

fishing, etc., that are key ingredients inthe production of higher-order products.

Processed Materials These are productscreated through the processing of basicraw materials. Electrical wire is anexample.


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Advanced Components These are productsthat use basic components to produce

products that offer a significant functionneeded within a larger product. Yet by itselfan advanced component does not standalone as a final product. In computers the

motherboard would be an example since itcontains many basic components but withoutthe inclusion of other products (e.g., memorychips, microprocessor, etc.) would have little

value.


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Product Component These are productsused in the assembly of a final product

though these could also function as standalone products. Dice included as part of achildrens board game would be an example.

MRO (Maintenance, Repair and Operating)Products These are products used to assist

with the operation of the organization but arenot directly used in producing goods orservices. Office supplies, parts for a truckfleet and natural gas to heat a factory would

fall into this category.


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What is Product Management

Product Management is an organizationalfunction within a company dealing with

the planning or marketing of a product orproducts at all stages of the product lifecycle.

It has a variety of functions and rolesdepending on the company size andhistory . Like sometimes role depended tothe product manager or sometimes is held

by other still.


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Product

Management

ProductPlanning

ProductMarketing


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Product Planning1. Defining new products2. Gathering market requirement

3. Building product road maps4. PLC5. Product Planning Product Marketing:1. Product positioning2. Promoting the product3. NPD4. Monitoring the competition


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Why Do We Need ProductManagement?

A product has a life cycle of its own.

It starts out with its launch. It grows, stabilizes and sometimes dies or may be

re-incarnated through a re-launch program, reviseddesign or total renewal under the same name.

The PLC is usually seen as the inverse bathtubcurve.

The product manager is responsible for allproduct related actions. Design specification,feature availability, branding, package,promotion etc. along with launches anddiscontinuations of products or product lines.


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Every decision related to the product life-cycle is critically important for the

organization because, the product is atthe heart of the supplier-buyerrelationship.

Product management, therefore requiresclear lines of authority, and an effectiveand efficient organization.


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Of all the tools involved in turning a coreproduct into a tangible one, branding is the

most critical that decides if a product is awinner or a loser. Branding is important for all parties involved

in the exchange process: Consumers

Manufacturers Retailers

Branding is important because it sets aparticular product apart from others in the

marketplace.


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The product management (PM) team is in themarketing department.

There may be several PMs reporting directlyto the marketing manager or to line (orgroup) managers who report to themarketing manager.

The PM team must always keep close contactwith the engineering or design team.

The PM team is the eye and ear of thedesign group. They listen to the customerand determine what the product will be like.


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How a product is managed depends on thestage of the life-cycle it is in and its main

competitors. Early stages require heavy fixed marketing

spending to establish brand awareness.

During maturity, both variable and fixed

marketing are used. Their weights maychange depending on the industry. Thevariable marketing support is expected toincrease as the product ages to keep its

position against newer entries.


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A company usually has more than one product to sell. Product lines are groups of products that are closely

related:

Coca Cola, Diet Coke Colgate Classic, Sensation White, Total, Baking Soda...

Actions taken to broaden a products range toexpand the products customer base can be regardedas extensions.

Actions taken to broaden a companys market can be

seen as stretching. After careful evaluation of costs, benefits and market

status, a product or a whole range can be deleted.This is called pruning.


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Through a bio-marketing perspective the brandor product is a living thing which either evolvesto stay alive or dies.

Extensions are the mutations of the product.They are adaptations to the changingenvironment in the market as the customersneeds change.

Or they are responses to the needs of different

segments within an industry. The best extension is the one that creates a new

market. Such extensions are called flankers. Extensions are usually based on price, product

attributes and distribution channels.


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Relationship Betweencompetition, Marketing andProduct Management

Forecasting Do work with high efficiency

Business Focus Practical Nature Trapping ( focus solely on organizational

dimensions) Relative importance to each variable in the total

number of factors Confined limited industry Defined less/ high/ medium successful

companies and their strong and less successfulpoints.


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Product Management Process

Generating, analyzing, organizing, planning,implementing and controlling the organizationsexisting and new product efforts so as to satisfy

the needs and wants of chosen customersegments, while satisfying organizationalobjectives is called product managementprocess.

This definition summaries in the following ways:

The management process of generation,analysis, organization, planning, implementingand control

The focus on both existing and new products Objectives, efforts and marketing concepts

should be plan and manage to satisfy the needsand wants of selected market segment.


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Marketing concepts also do worksimultaneous to firms own objectives.

The product management process hasfollowing steps:

Specifying the relevant decision. Ex: apackaging plan would involve decisionabout package , type of material in thepackage, size , label etc. and also definebundle of physical services.


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Indentify and quantify the criteria forevaluating product decisions or brand or

product performance . Ex: profitability, salesgrowth, market share etc. Identifying the factors that affect the

decisions. Like: consumer( need and wanttheir surrounding atmosphere), the

competitors( strength weaknesses), theenvironmental factors and firms ownobjective and resources.

The effect of the decision on the other

marketing variables


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The effect of the decision on the othermanagement functions. Ex: price, current

product responsibilities, policy,distribution, product positioning, productmarket.

The effect of the decision on themarketing system. Ex: finance,accounting, personnel, top management,production etc.

product management & strategies unit1

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