Product Management
U N IT-IV
O bjectives
Understanding Concept of Product
How do we Classify Products
Understanding different levels of
product.
What are different product policies
Product Concepts:
What is Product?
Product is.
Anything that is offered to the market for
attention, acquisition, use or consumption
that satisfies a want or a need
Good
Service
Anything that is offered to the market
for attention, acquisition, use or
consumption that satisfies a want or a
need
Ideas
And. Persons, Places, events
Properties, organization, information
and..even experiences
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Product Levels:
Core Benefit: that the customer is really buying
In a hotel, customer is buying rest and sleep
Basic Product through which the core benefit is delivered to the
consumer
A room, bed, bathroom, desk, closet
Expected Product :the set of attributes that the consumers
expect as obvious along with the product (otherwise
dissatisfaction)
Clean bed, pillow, fresh towel, soap, lamp, fan etc .
Augmented Product: attributes / features that exceed consumer
expectation which leads to happiness of the consumer
TV with cable, good interior design & dcor, good food etc.
Potential Product all possible augmentation and transformation
that the product may go through in future which leads to
customer delight
Bar inside the room, fruit bowl, computer facilities etc.
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PRODUCTS CLASSIFICATION
Durability and
Tangibility
Products
Consumer goods
Classification
Industrial
Products
D urability and Tangibility:
Non Durable Goods: All FMCG
products
Durable Goods: Refregirators, TVS,
Computer, Clothing etc
Services: Salons, Banking, Insurance,
Education.
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Consum er goods Classifi
cation
Convenience Goods: Minimum effort like Soft
drinks, Shampoos, Soaps or cosmetics. This
includes Impulse goods and Emergency goods.
Shopping Goods: Consumer compares on bases
like sustainability, quality, price, and style. Eg:
Furniture, Electronic Appliances, used cars etc
Specialty goods: Special purchase effort
required, includes: Automobiles, Mens Suits..
Unsought goods: consumers are not aware or
does not think of buying such goods like.. Life
Insurance, Encyclopedias, reference books.
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Consum er Products
Convenience
Staples,
impulse,
emergency
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Consumer Products
Shopping
Homogenous
Heterogeneous
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Consum er Products
Specialty
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Consum er Products
Unsoug
ht
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Business Products
Installations
Accessory Equipment
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Business Products
Raw Materials
Component Parts
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Business Products
Process Materials
Supplies
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Business Products
Business Services
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Product Items, Lines, and Mixes
Product
Product Item
Item
AAspecific
specific version
version of
of aa product
product
that
can
be
designated
that can be designated as
as aa
distinct
distinct offering
offering among
among an
an organizations
organizations products.
products.
Product
Product Line
Line
AAgroup
group of
of closely-related
closely-related
product
product items.
items.
Product
Product Mix
Mix
All
All products
products that
that an
an
organization
organization sells.
sells.
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Product Mix
Width how many product lines a company has
Length how many products are there in a product line
Depth how many variants of each product exist within a
product line
Consistency how closely related the product lines are in
end use
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Gillettes Product Lines & Mix
Width of the product mix
Depth of the product lines
Blades and
Writing
razors
Toiletries instruments
Fusion 5 blade
Mach 3 Turbo
Mach 3
Series
Paper Mate
Sensor
Adorn
Flair
Trac II
Toni
S.T. Dupont
Swivel
Silkience
Double-Edge Soft and Dri
Lady Gillette Foamy
Super Speed Dry Look
Twin Injector Dry Idea
Techmatic
Brush Plus
Lighters
Cricket
S.T. Dupont
Atra
Right Guard
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Product Life Cycle and N ew
Product D evelopm ent
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Learning's:
What is Product Life cycle
What are the different stages in new
product development
Marketing Strategies in different
stages of PLC
Steps In New Product Development.
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W h y a p rod u ct life cycle?
A companys positioning and differentiation
strategy must change as the product, market,
and competitors change over the product life
cycle(PLC)
When we say that a product has a life cycle we
assert four things:
i. Products have a limited life.
ii. Products sales pass through distinct stages,
each posing different challenges,
opportunities and problems to the seller.
iii. Profits rise and fall at different stages of the
product life cycle.
iv. Products require different marketing,
financial, manufacturing, purchasing, and
human resource strategies in each life cycle
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P rod u ct Life C ycle
Product life cycle is the course
of a products sales and profits
over time.
Product life cycle(PLC) deals
with the life of a product in the
market with respect to business or
commercial costs and sales
measures.
The five stages of each product
lifecycle are product development,
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Product Life Cycle
Sales and
Profits
Sales
Profits
Product
Development
Introduction
Growth
Maturity
Time
Decline
Sales and Profits Over the Products
Lifetime
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In trod u ction S tag e of th e P LC
Summary of Characteristics, Objectives, &
Strategies
Sales
Low
Sales
Low
Costs
Costs
High
High cost
cost per
per customer
customer
Profits
Profits
Negative
Negative
Marketing
Marketing Objectives
Objectives
Create
Create product
product awareness
awareness and
and trial
trial
Product
Product
Offer
Offer aa basic
basic product
product
Price
Price
Use
Use cost-plus
cost-plus formula
formula
Distribution
Distribution
Build
Build selective
selective distribution
distribution
Promotion
Promotion
Heavy
Heavy to
to entice
entice product
product trial
trial
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G row th Stage of the P LC
Summary of Characteristics, Objectives, &
Strategies
Sales
Rapidly
Sales
Rapidly rising
rising
Costs
Costs
Average
Average cost
cost per
per customer
customer
Profits
Profits
Rising
Rising
Marketing
Marketing Objectives
Objectives
Maximize
Maximize market
market share
share
Product
Product
Offer
Offer extension,
extension, service,
service, warranty
warranty
Price
Price
Penetration
Penetration strategy
strategy
Distribution
Distribution
Build
Build intensive
intensive distribution
distribution
Promotion
Promotion
Reduce
Reduce to
to take
take advantage
advantage of
of demand
demand
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M aturity Stage of the P LC
Summary of Characteristics, Objectives, &
Strategies
Sales
Peak
Sales
Peak
Costs
Costs
Low
Low cost
cost per
per customer
customer
Profits
Profits
Marketing
Marketing Objectives
Objectives
High
High
Maximize
Maximize profits
profits while
while defending
defending market
market share
share
Product
Product
Diversify
Diversify brand
brand and
and models
models
Price
Price
Match
Match or
or best
best competitors
competitors
Distribution
Distribution
Build
Build more
more intensive
intensive distribution
distribution
Promotion
Promotion
Increase
Increase to
to encourage
encourage brand
brand switching
switching
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D ecline Stage of the P LC
Summary of Characteristics, Objectives, &
Strategies
Sales
Declining
Sales
Declining
Costs
Costs
Low
Low cost
cost per
per customer
customer
Profits
Profits
Declining
Declining
Marketing
Marketing Objectives
Objectives
Reduce
Reduce expenditures
expenditures and
and milk
milk the
the brand
brand
Product
Product
Phase
Phase out
out weak
weak items
items
Price
Price
Cut
Cut price
price
Distribution
Distribution
Selective:
Selective: phase
phase out
out unprofitable
unprofitable outlets
outlets
Promotion
Promotion
Reduce
Reduce to
to minimum
minimum level
level
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Three special categories of
P LC
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C ontinued
A Style is a basic and distinctive mode of
expression appearing in a field of human
endeavor. Styles appear in homes, clothing, art
etc.
A Fashion is a currently accepted or popular style
in a given field. Fashion pass through four
stages: Distinctiveness, emulation, mass fashion,
decline.
Fads are fashions that comes quickly into public
view , are adopted with great zeal, peak early,
and decline very fast.
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M arketing Strategy for
Introduction stage:
Inform Potential consumers.
Induce product trials.
Secure distribution in retail outlets
First or later
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M arketing strategies for
G row th stage
During the growth stage, the firm uses several
strategies to sustain rapid market growth.
Improves product quality and adds new features
and improved styling.
Adds new models and flanker products(i.e.,
products of different sizes, flavors, and so forth
that protect the main product).
It enters new market segments
It increases its distribution coverage and enters
new distribution channels.
It shifts from product- awareness advertising to
product- preference advertising.
It lowers price to attract the next layer of price
sensitive buyers.
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M arketing strategies for
M aturity stage
Three potentially useful ways to change
the course for a brand are market,
product, and marketing program
modification.
Market Modification
Sales volume = no. of brand users *
usage rate per user.
Expand the no. of brand users
Convert nonusers
Enter new market segments
Attract competitors customers
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Continued..
Increase the usage rate among users
Have consumers use the product on
more occasions.
Have consumers use more of the
product on each occasion
Have consumers use the product in new
ways.
Product modification
Trying to stimulate sales by
modifying the products characteristics
through
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Continued..
Quality improvement:
Aims at increasing the products functional
performance.
Eg: Aashirvaad, Annapoorna, Pillsbury,
Naturefresh
Feature improvement
Aims at adding new features, such as size,
weight, materials, additives, and accessories,
that expand the products performance,
versatility, safety, or convenience.
Style improvement
Aims at increasing the products esthetics appeal.
Eg; New car models, New Coke
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D ecline Stage
Increase investment
Resolve uncertainties - stable investment
Selective niches
Harvesting
Divesting
To establish a system for identifying weak
products.
Some firms abandon declining markets earlier
than others.
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N ew Product D evelopm ent
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New Product Development (NPD); is The term used to
describe the complete process of bringing a new product or
service to market.
New product development refers to original products,
product improvements, product modifications, and new
brands developed from the firms own research and
development
Or
We can say that The process of designing and launching the
product into the market. Products that are either original,
improved modified or new brands by means of research and
development activities.
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N ew Product D evelopm ent
Process:
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N ew Product D evelopm ent
Strategy
New Product Development
Process:
Stage 1: Idea Generation
Internal idea sources:
R&D
External idea sources:
Customers, competitors, distributors,
suppliers
10 - 40
N ew Product D evelopm ent
Strategy
New Product Development Process:
Stage 2: Idea Screening
Product development costs increase
substantially in later stages.
Ideas are evaluated against criteria;
most are eliminated.
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N ew Product D evelopm ent
Strategy
New Product Development Process:
Stage 3: Concept Development and
Testing
Product concepts provide detailed
versions of new product ideas.
Concept tests ask target consumers to
evaluate product concepts.
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N ew Product D evelopm ent
Strategy
New Product Development
Process:
Stage 4: Marketing Strategy
Development
Strategy statements describe:
The target market, product positioning, and
sales, share, and profit goals for the first few
years.
Product price, distribution, and marketing
budget for the first year.
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N ew Product D evelopm ent
Strategy
New Product Development Process:
Stage 5: Business Analysis
Sales, cost, and profit projections
Stage 6: Product Development
Prototype development and testing
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N ew Product D evelopm ent
Strategy
New Product Development Process:
Stage 7: Test Marketing
Standard test markets
Controlled test markets
Simulated test markets
Stage 8: Commercialization
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Several factors tend to hinder the new product
development : Social and government constraints.
Shortage of ideas in certain areas.
Fragmented market.
Cost of developments
Capital shortage.
Faster required development time.
Shorter product life cycle.
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It is necessary for growth of enterprises.
It ensures the sales and profit maximization of the
firm.
All products decline with time (life cycle)
The market is dynamic.
Technical innovation is permanent etc.
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Thank You
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