Unit 1

INTRODUCTION TO PRODUCT
MANAGEMENT
Outline
Introduction
What is a Product?
What is product management?
The role of the product manager
The different approach of product
management via the organizational
structure
The skills needed in managing a product
Challenges facing product management
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 What is a Product?
 Product is anything that can be offered to a market to satisfy a
want or need, including physical goods, services, experiences,
events, person, places, properties, organizations, information, and
ideas.
 At the heart of a great brand is a great product. Product is a
key element in the market offering.
 products and services of superior quality that provide unsurpassed
customer value.
 Marketing planning begins with formulating an offering to
meet target customers’ needs or wants. The customer will judge
the offering by three basic elements:
 product features and quality,
 services mix and quality, and
 price

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How do product managers define a product?
While developing product plans, managers
should address five elements of a product

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What are the different classifications of products? Why
product and service differentiation is so critical?

Product classification
Durability and Tangibility
Consumer and Industrial Goods
Product and services differentiation
To be branded, products must be
differentiated.
When the physical product cannot easily be
differentiated, the key to competitive success
may lie in adding valued services and
improving their quality.

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Product Hierarchy
 Eachproduct can be related to other
products to ensure that a firm is offering
and marketing the optimal set of products.
The relationships can be explained using
product hierarchy framework.
The product hierarchy stretches from basic
needs to particular items that satisfy those
needs.
There are six levels in the hierarchy

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The Product Hierarchy

Item

Product type

Product line
Product class
Product family
Need family
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Product System and Product Mix
A product system is a group of diverse but
related items that function in a compatible
manner. For example, the extensive iPod
product system includes headphones and
headsets, cables and docks, armbands, cases,
power and car accessories, and speakers.
A product mix (also called a product
assortment) is the set of all products and items
a particular seller offers for sale.
A product mix consists of various product lines.
Product mix consists of width, length, depth, and
consistency.

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What is product management?
Product management is the process of
conceiving, planning, developing, testing,
launching, delivering, and withdrawing
products in the market.
Product management is the organizational
structure within a business that manages the
development, marketing and sales of a product
or set of products throughout the product life
cycle.
It encompasses the broad set of activities required
to get the product to market and support it
thereafter.
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What are the key roles of a product
manager?
Collect and Analyze product & category
data
Conduct analysis to develop marketing
strategies
Coordinating with other areas of the
corporation to execute programs (i.e,
R&D, Graphics & Promotion, etc)
Keeping Senior Management informed
and provide support.
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What should product managers know about a product
line?

 Throughproduct line analysis, product

managers should know about
◦ the sales and profits of each item in their line
to determine which items to build, maintain,
harvest, or divest.
◦ product line’s market profile
how the line is positioned against competitors’
lines.
The product map

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Sales and Profits

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Product map- market profile of company X

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Questions
Describe the nature of offerings in
Company X.
Identify and define the competitors of
Company X.
Is there any possibility to add or delete a
product line?

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Product map (cont…)
company X’s low-weight, medium-quality
paper competes against competitor D’s and
B’s papers
its high-weight, medium-quality paper has
no direct competitor
The map also reveals possible locations for
new items.
No manufacturer offers a high-weight, low-
quality paper. If company X estimates a strong
unmet demand and can produce and price this
paper at low cost, it could consider adding this
item to its line.

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How do managers use product line analysis information?

Product line analysis provides information for

two key decision areas—product line length
and product mix pricing.
(a) Product-line length
◦ Line Stretching- lengthening a company’s product
line beyond its current range.
 Down market Stretch
 Up market Stretch
 Two-Way Stretch
Line filling a firm can also lengthen its
product line by adding more items within the
present range.
Line modernization, featuring and pruning

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(b)Product Mix Pricing
 Product Line Pricing: the prices within the product line is
kept variant
 Optional-feature Pricing: charges extra for an added feature
 Captive-product Pricing: lower margin for main product and
higher margin for supporting products
 Two-part Pricing: basic amount on monthly basis and then
the extra charges are based on your total usage.
 By-product Pricing:
 Product-bundling Pricing: the combination of multiple
products.

Read- Kotler and Keller (2012), Marketing Management, pp

325-349.

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A Product Manager’s Potential Interaction

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Product Vs. General Marketing Management

Product Management General Marketing

Management

Scope of Responsibility Narrow: Single product or Broad: Portfolio of

product line products

Nature of Decision Mainly tactical Mainly strategic

Making

Time Horizon Short-run (often annual or Long run

shorter)

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Marketing Organization: Product- Focused Organizations

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Marketing Organization: Product- Focused Organizations

Advantages
Locus of responsibility is clear
Develop the ability to work with other areas in
the organization.
Advocate for the product

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Marketing Organization: Product- Focused Organizations

Weaknesses
Focus on one product
Removed from “where the action is”
Too myopic
In-bred competition (product cannibalization)

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Marketing Organization: Market- Focused Organizations

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Marketing Organization: Market- Focused Organizations

Advantages
Focus on customer
Resource & knowledge sharing
Work well for “system” or bundle sale

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Marketing Organization: Market- Focused Organizations
Weaknesses
Potential conflict within the product
management structure
Locus of responsibility is ambiguous

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Marketing Organization: Functionally Focused Organizations

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Marketing Organization: Functionally Focused
Organizations

Advantages
Administratively simple
Specialization
Well-coordinated

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Marketing Organization: Functionally Focused
Organizations

Weaknesses
Who is ultimately responsible for the
product?
Focused only on functional development

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Question
Think of Ethiopian businesses from each
industry sector and describe the position
of product management in the
organizational structure of the company
considered.

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CRITICAL SKILLS IN PRODUCT MANAGEMENT

Negotiation
Teamwork
Communication skills
Analytical ability

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Changes Affecting Product Management

Internet
Data explosion
Increased emphasis on brand equity
Changes in the balance of market power
Increased importance of customer
retention programs
Global competition

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