Please note the slides provided are based on the ... · marketing activities performed by the...

Please note the slides provided are based on the prescribed textbook and

the study guide for MNM2608 and should only be used for revision

purposes. Please note all prescribed material needs to be studied.

Should you wish to reference aspects on the slides, please be sure to

consult the prescribed material:

• Bothma, C. 2017. Product management. 2nd ed. South Africa, Cape Town:

Juta.

• Fourie, L., Mosupyoe, L.S.S.N. & Luizihno, F.L. 2012. Product Management:

Only study guide for MNM2608. University of South Africa.

Please be sure to review tutorial letter 102 under additional resources - The

page reference guide links sections in the study guide with sections in the

prescribed textbook.

SUBJECT FRAMEWORK

TOPIC 1: THE PRODUCT CONCEPT

Study unit 1: The product concept

Study unit 2: Product classification

TOPIC 2: PRODUCT DECISIONS

Study unit 3: Product decisions

Study unit 4: Branding

Study unit 5: Product differentiation and positioning

Study unit 6: New product development (NPD)

Study unit 7: The product life cycle (PLC)

TOPIC 3: PRODUCT MANAGEMENT

Study unit 8: Ethical and legal issues relating to products

Study unit 9: Product management and the product manager

STUDY UNIT 1: THE PRODUCT CONCEPT

“It is essential for marketers to know exactly what their

customers want so that they can provide them with

a product that will satisfy all their needs.”

Cant and van Heerden define marketing as “a combination of management tasks and

decisions aimed at meeting opportunities and threats in a dynamic environment in

such a way that its market offerings lead to the satisfaction of consumer needs and

wants so that the objectives of the enterprise, the consumer and society are achieved”.

The marketing concept: Incorporates the organisation or integration of all the firm’s

resources into the aim of satisfying consumer needs profitably, while not harming

society at large.

Marketing Mix (4Ps): Product, place, price and promotion

Service marketing mix (7Ps): Product, place, price, promotion, people, processes

and physical evidence.


Need: Something a human must have

Want: Not necessary for humans to survive – that is, they are ‘nice-to-haves’, not ‘must haves’.

Albert Maslow (5 levels of consumer needs):

1. Physiological needs – very basic needs that are required in order to sustain life (Example: Air, food, water and sleep; Purchase of bread and milk to satisfy hunger)

2. Need for safety – including personal, financial and health security (Ex: Alarm system for your house/ a retirement annuity/ a security fence around your house)

3. Need to belong or feel loved – such as friendships, family and membership (Ex: Getting married/ being part of a rowing team)

4. Need for self-esteem – such as respect, recognition, confidence and achievement. (Ex: The purchase of a BMW Z4, expensive jewelry, graduating with your BCom degree)

5. Self-actualisation – the pursuit of inner talent, fulfillment and creativity (Ex: Enrolling in an art class, learning to speak a foreign language)


Products not only satisfy needs, but also deliver additional ‘Value’

Value: The usefulness or benefit that a person gets from a product

Customer value (CV): The total of the ‘product value’ plus associated ‘services

value’ plus ‘personnel value’ plus ‘image value’

Customer value proposition: The value delivered to the consumer is the net of

the total customer value gained minus the total customer cost paid or outlaid.


“A product can be defined as “a bundle of physical, service and symboliccharacteristics designed to deliver value to customers to satisfy their wants andneeds”. (Bothma, 2017:10)

Products from the customers point of view: Utilitarian versus non-utilitarian

A product can be tangible as well as intangible.

Tangible product: Something physical that can be touched

Ex: Pair of Levi Jeans

Intangible product: Something that cannot be touched

Ex: A weekend stay at a Protea Hotel (Services).


The product concept (Refer to page 4-8, section 1.4 of the study guide and

page 11-15, section 1.5 of the prescribed textbook to gain full

understanding).

1. The core product

2. The tangible product

3. The augmented product

4. The product image

5. Product potential (Important: In the prescribed textbook)

The total product (Important: In the prescribed textbook)


1. The core product/ core benefit/ generic product

- Basic product that the customer buys (what the consumer actually buys)

- “What is the customer really buying?”

- Key benefit or satisfaction that a consumer expects from a product that he or

she purchases

- Example: You buy a car to get from A to B – transportation.


2. The tangible product (Actual product/ functional product)

- Communicates the fact that the products the company sells will also provide the customer with certain benefits

- The desired benefits the customer sees in the core product

- Benefits communicated through product attributes that add value to the product.

- Product attributes/ features (functions, uses and features):

Product quality

Product features

Design/ styling

Brand name

Packaging

Product benefits: The customer’s perspective of the value of the product to them.

Product attributes: The features a product manager builds into the product they are developing


3. The augmented product

- Further value is added to the product by means of sales support features,

such as support services, delivery, installation, warranties, sales process and

facilities, any product maintenance, product repair and servicing and credit

provision.

- It is the additional features or services the customer receives when buying the

product/service

- Usually non-physical attributes

- May enable the manufacturer to charge a premium for the product because of

the value added services


4. The product image

- Encompasses the tangible product, the augmented product and the

marketing activities performed by the company.

- The way consumers perceive an actual or potential product. It adds further

image or branding elements to the product in order to satisfy the

psychological needs that customers might have.

- In addition to the product’s promotional image, the other elements of the

marketing mix such as price, distribution outlets used, the front-line staff,

systems and processes used all contribute to the product image.


5. Product potential

- This is the outer layer

- Includes all possible or potential future enhancements and/or transformations

to the existing product.

The total product

- All five levels contribute to what is referred to as the total product


STUDY UNIT 2: PRODUCT CLASSIFICATION

Products are generally categorised into two distinct groups namely:

- Consumer goods – Consumed by individuals and families

- Industrial goods – Consumed by businesses, organisations and

governments.

This is based on:

- The type of consumer who will use the product

- The intended use of the product

Products are characterised in terms of tangibility and durability (Refer to page

11 section 2.2 of the study guide and page 11, section 1.42 and pages 15-16,

section 1.6.2 of the prescribed textbook for further understanding).

Durable products/ hard goods: Tangible and last for a period of time. Seen as

investment demand. They do not wear out quickly. Ex: Kettle. Time frame more

than 3 years. Other examples include a car, couch, iPod ect.

Non-durable products/ soft goods/ consumerables: Have a seemingly short

life span, share the primary characteristic of tangibility but are quickly consumed

and worn out. Seen as consumption demand. Ex: Bread and milk. Time frame

less than 3 years.

Semi-durables: Not indestructible, also not consumed instantly. Ex: Clothing,

footwear and preserved foods.


The difference between a product and a service (Refer to page 11, section 2.2

of the study guide for further understanding):

- Intangibility

- Inseparability

- Variability

- Perishability


The definition of consumer goods is based on the following criteria:

• It is a tangible commodity that satisfies a need or want.

• It is produced and sold primarily to individuals.

• It is used for personal, family and/or household consumption.

• It is generally a finished product.

• It has a noncommercial purpose or use.


Consumer goods can be divided into three categories, namely (Refer to page 12, section 2.3.1-2.3.3 of the study guide for further understanding):

Convenience products :

- Staple products

- Impulse products

- Emergency products

Shopping products

Speciality products

* Please note in the prescribed textbook the classifications are: Convenienceproducts, shopping products, speciality products, emergency and unsoughtproducts (Therefore 5 categories, please keep this in mind when studying).(Refer to page 16-18, section 1.6.3 of the prescribed textbook).


1. Convenience products:

- Products are relatively inexpensive everyday goods

- Require a lower level of consumer involvement

- Generally readily available and frequently purchased

- Generally consumed quickly

- Widely distributed to suppliers and manufacturers at convenient locations

- Do not spend much time reflecting on purchase, as additional shopping effort results in minimal savings

- Products have a low profit margin and therefore sold en masse

- Promotional effort is focused on benefits and price and brand building

• Staple products – purchased for everyday use and routine purchases (eg bread and milk)

• Impulse products – purchased on the whim (eg chocolates, sweets and chewing gum)

• Emergency products – purchased immediately when the need arises, to solve a sudden problem (eg candles, medicine and umbrellas)


2. Shopping products

- Differentiated according to the amount of time spent on the purchasing decision

- Consumers generally shop around, make comparisons and examine merchandise before making a purchasing

decision.

- Purchases done less frequently

- Consumers willing to travel further to find products

- Bit more expensive than convenience products

- Generally durable or semi-durable in nature

- Example: Clothing, furniture

- Marketing efforts directed towards advantages or benefits of the product as well as brand building.

Consider the following important elements of shopping products:

• Product quality and performance are more important buying considerations

• Price sensitivity is higher than for convenience products

• There are substantial increases in marketing communications because different brands compete for the same

share of wallet

• Personal selling is more important and helps create or maintain relationships


2. Shopping products continued….

- Heterogeneous/ non-uniform shopping products – very different from

each other, the consumer will probably focus more on features and attributes

than on price.

- Homogeneous/ uniform shopping products – similar products in terms

features and attributes, customers are most likely to focus on price.


3. Speciality products

- High-value products that aren't purchased frequently

- Considerable research and debate

- High level of consumer involvement and strong brand preference criteria.

- Consumers often influenced by brand image and/or quality and will not often accept substitutes.

- Consumers will also spend a lot of time evaluating various alternatives.

- Price is a factor for many consumers, will compare alternatives, shop around for the best deal, best opportunity at the best price.

- Distribution is usually through exclusive outlets, not manufactured in large quantities.

- May want to own these products as indicators of status and authority.

- Example: Cars, computers, expensive jewelry and designer clothes


Unsought products/ non-sought products

- These are products consumers buy mainly because of the marketers efforts.

- Example: A cosmetics salesperson that convinces you to buy and try their

new product.

The category that a particular product falls into must be seen from the

perspective of the consumer, not the marketer.


Industrial goods classification

• Industrial products are purchased not for direct or personal (consumer) consumption, but to help the organisation produce orsupply the product to the end-user.

• Three categories of industrial goods:

Capital products – The machines required to produce or manufacture products:

- Major equipment eg: Haudralic press

- Accessory equipment eg: Forklifts

Production products – The ‘inputs’ to the production or manufacturing process:

- Raw materials eg: Timber and cotton

- Manufactured or process materials eg: Chemical solvent to harden plastic.

- Component parts eg: Radiator supplied by a radiator manufacturer for a motor vehicle.

Operating products – These are all the other products that industrial firms need in order to function.

- Consumables eg: Paper, paper clips, printer ink

- Other operating products eg: Furniture, promotional materials

*See section 2.4, page 13 and figure 2.1, page 14 of the study guide and section 1.6.4 on pages 18-20 of the prescribed textbook.

Tariff and statistical classifications (Refer to pages 20-21, section 1.6.5 of the prescribed textbook)

- Harmonised system (HS) of customs classification

The standard industrial classification (SIC)


STUDY UNIT 3: PRODUCT DECISIONS

Product decisions:

Product decisions incorporate all of the conscious decisions created by

organisations with regard to their products.

• Individual product decisions and

• Multiple product decisions and strategies

Individual product decisions relate to decisions based on the actual product or

product type, and typically involve the characteristics of a singular product item.

Decisions based on features, branding, labelling and packaging and design are

all characterised as individual product decisions.

Product features: Incorporate all the tangible representations of performance that aconsumer intends using and frequently represent an organisation’s differentiating factor in itscompetitive landscape.

Product quality: Relates to all iterations of quality, ranging from the level of quality in thedesired product’s performance right through to the quality of the service experienced in theproduct’s supportive service.

Product quality is characterised in terms of the following:

• Functionality• Reliability• Usability• Maintainability• Efficiency• Portability


Total quality management - (Refer to section 3.1.3 page 22 of the study guide)

Product design and styling:

“Style” relates specifically to the overall appearance of a product, therebyincorporating elements of aesthetics.

“Design” is multi-faceted. Truly innovative and successful designs target not only the aesthetics of the product but also influence the product’s usability, performance and mobility.

Support services: The augmented product

Product-related services give a product the necessary dimensionality. This isespecially true for products that are more technical, requiring a higher level ofconsumer involvement. These so-called “after-sales” services often provide thedefinitive value that sets a product apart from those of its competitors. (*Refer topage 22-23 and figure 3.1 of the study guide).


The importance of packaging and labelling (Refer to pages 91-121 of theprescribed textbook for further understanding):

“Packing’ simply refers to the way in which the product is physically transported to itsconsumers.

Packaging is a process (such as cleaning, drying, wrapping, bottling, canningsterilising and preserving). Packaging also refers to materials (glass, metal and paper)which are there to contain, handle, protect and/or transport a product. Differentmaterials are also used to combine several related products such as conditioner andshampoo (eg shrink-wrapping).

Packaging performs a number of important functions :

- Contains the product

- Protects the product

- Offers convenience to consumers, resellers and handlers

- Provides information to consumers, resellers and transporters

- Displays the product so as to attract the attention of consumers


Packaging is: An integral part of the manufacturing process that involves the use of materials needed to contain,protect, transport, display the product and provide necessary information about the product as it moves frommanufacturer to consumer along its distribution channel.

Changes that have impacted package design:

- The development of technology and new household appliances

- Quick pace of modern living

- Growing awareness about health issues and a healthy lifestyle

- Growing concern about sterility and spreading of germs

- Growing concern about environmental issues

- Working population is far more mobile

- International immigration and emigration and global mobility

- Varying sizes of families and household units

- Income earned by household units

- Government laws that have been passed

- Legal and consumer requirements for information are met

- Package must tolerate climate conditions when transporting the product.


Waste hierarchy and sustainable packaging

Three R’s :

- Reduce

- Reuse

- Recycle

Environmental goals:

- Prevention

- Minimisation

- Re-use

- Recycling

- Energy recovery

- Disposal


Basic types of packaging

• Consumer packaging/ primary packaging

Reseller packaging (This type of packaging forms part of consumer

packaging).

• Grouped packaging/ secondary packaging

• Distribution channel packaging/ tertiary packaging

*If a question on packaging is asked it is important to look at the mark allocation.


Consumer packaging/ primary packaging

- The products you as the consumer purchase at a retail store are contained in consumer packaging

- Outermost container that directly contains the product

- What you actually see and touch when you purchase something

- Any material that you remove in order to get to the product you actually bought to consume or to use.

- Example: The can your 330mls of Coca-Cola comes in

- Can also be bundled together eg: Pack of 6 Coke cans

- Manufacturer is able to communicate directly to the consumer

- Can provide instructions eg: Cake mix

- Often receives the most attention from marketers.


Consumer packaging/primary packaging continued…

Eight major packaging requirements that dictate the “packaging mix” as identified by Robert D Hisrich:

- Protect the product

- Be adaptable to production-line speeds

- Promote and sell the item

- Increase the product’s density

- Help the consumer use the product

- Provide re-usable value to the user

- Satisfy legal requirements

- Keep packaging –related expenses low


Warantee card: Confirms that the consumer may return the product to the

manufacturer for a refund if the consumer discovers a fault with the product within

a certain period of time

Certificate of authenticity: Verifies the origin or maker of the product


Reseller packaging: Retailers buy products in bulk from manufacturers and

repackage them into smaller packages under their own brand labels.

- Pick ‘n Pays “no name” branded products

- These products are often sold for less than the competing brands

- Retailer takes on the responsibility of the manufacturer with regards to

packaging


Grouped packaging/ secondary packaging:

- Any outer wrappings that help to store, transport, identify and protect the

product on its way to the consumer outlet

- Information on packaging relates to origin, destination and handling

instructions

- Designed more for merchants, retailers, wholesalers rather than consumers

- Does not carry warning or nutritional labels

- Protects individual products during shipping, and travel by road and rail

- Used to bundle multiple quantities of any given product for easier handling

- Example: A box full of 100 individual items of deodorant


Distribution channel packaging/ tertiary packaging/ transport packaging:

- Packaging that contains a group of products for storage and transportation

- Comprises of heavy duty and bulky material that is used to contain a massive quantity of products and to transport the products “en masse” from point A to B

- Packaging that will withstand the wear and tear of the particular transportation

- Travel through a variety of climatic conditions

- Example: Crates or containers or pallets

Objectives of distribution channel packaging:

- To easily and safely transport the product in bulk through the supply chain

- Cater for the volume and size of the product to be transported, stored and handled

- Cater for the greater degree of handling that it will be subjected to

- Facilitate storage in large spaces such as containers on ships or warehouses


Packaging design requirements

Functional requirements: (Refer to page 107-109, section 5.5.1 of theprescribed textbook)

• In-home criteria

• In-store or warehouse requirements

• Production demands

• Distribution and safety considerations

• Laws and legislation requirements

Sales requirements: (Refer to page 109, section 5.5.2 of the prescribedtextbook)


Redesigned consumer packaging is prompted by various factors (Refer to page 110-111, section 5.6 of the prescribed textbook for further understanding):

- Breath new life into the product

- Respond to a competitive threat

- Changes in the product

- Economics

- Product line restructuring

- Alterations in the market strategy

- Promote new uses for the product

- Legal or environmental factors that lead to new materials or technology

- Extend the product or brand line

- New products of an established brand


The purpose for the design of the original packaging is similar to the

purpose for the redesign of the packaging (Bothma, 2017:110-111) :

- To protect the product

- To draw customers attention to the product

- To increase its uses and therefore to add value to the product as a whole

- To set the product apart as a premium product

- And to reduce the cost of the product


Packaging and branding:

Role of packaging in market development (Bothma, 2017:111):

- Attract customers and boost sales

- Increase customer satisfaction

- Increase visibility

- Set ones product apart from its competition

- Packaging plays a vital role in the branding process of the product

- Providing customers with what they are seeking when they take the product home.

- Packaging can help customers identify the products or companies to which they are loyal.

- Packaging helps consumers to identify the product quickly while they are out shopping

- Packaging can help to garner the attention of a potential customer.


Packaging and branding cont …

7 guidelines that need to be followed in order to facilitate the branding of the product towhich the packaging relates (Refer to page 111-113, section 5.7.1 in the prescribedtextbook for further understanding):

- Reflects the circumstances to which the product will be sold

- Unique structures and shapes help to differentiate products from competitors

- Should include the brand’s personality with branding and characters

- Needs to highlight compelling and believable claims on product differences

- Direct comparisons with the competitors product can be effective

- Packaging is read from left to right not up and down

- Can target certain market segments


A label: is the text printed on a product package

Labels: Include all written, printed or graphic material on the containers of products that are held for sale.

Informative label: Mandate information about use, care, performance capability, life expectancy, safety precautions, petrol consumption in litres per 100 kilometres, or other factors.

Why are labelling decisions important? (Refer to page 113-114, section 5.8.1 of the prescribed textbook)

Food labels assist consumer decision making (Refer to page 114-116, section 5.8.2 of the prescribed textbook).

The legal side of labelling (Refer to page 116-119, section 5.8.3 of the prescribed textbook).


What is a trademark? (Refer to pages 120-121, section 5.9 of the prescribed textbook for further understanding)

A trademark is a mark which distinguishes goods or services from goods or services ofothers in South Africa or elsewhere.

A trademark can be:

- Brand name – single word or combination of words

- A slogan – short phrase

- A logo – can be an image/picture/symbol

- A specific shape

Why should a trademark be registered? – Cost-effective way of protecting your company’s name and reputation.

Trademark duration – 10 years



A guarantee is a free written statement, typically provided by a manufacturer,whereby the manufacturer undertakes to repair or replace an item within aspecific period of time from the date on which the item was purchased.

Warranties differ somewhat from guarantees, in that they act as “insurancepolicies” that provide a consumer with a certain level of cover after the originalmanufacturer’s guarantee has expired.

The principle of mass production has the combined goal of developing,producing, marketing and delivering goods and services at prices low enoughthat nearly everyone can afford them.

Mass customisation is therefore the amalgamation of customised andpersonalised products and services to consumers at mass production prices.


• According to Kotler (2003), product lines are categories of products in aspecific product class, which are closely related to one another and target thesame market, through the same distribution channels at similar prices.

• Product line depth includes the number of different sizes, brands, symbolsof flavours in a specific line. Increasing the depth of a product line is knownas line filling.

• Product line breadth has to do with the different variations of products in aline. For example, an ice-cream product line could include yoghurt variationsof the various flavours.

• Organisations can lengthen (also known as line stretching) product lines bytrading up or down, or in both directions.

*Refer to page 26 section 3.5, figure 3.2 of the study guide for product linestrategies that product managers and marketers have at their disposal. Also referto page 21-22, section 1.7 of the prescribed textbook for further understanding.


One of the strategies carried out through updating and modernising products is

planned obsolescence. This term defines the process of products becoming

obsolete before they need replacing. This strategy typically relates to the clothing

industry.

Product mix expansion includes adding an entire product line to an

organisation’s market offering.

Product mix contraction typically relates to the elimination of an entire product

line in an organisation’s product mix (or assortment mix).


The BCG growth share matrix:


Problem child/or question mark

• Relatively low market shares

• Exists in a highly competitive industry.

• New products that are yet to establish a competitive industry position

Stars

• Best performing products an organisation has on the market

• High market shares and market growth potential

• Businesses often support product stars by reinvesting in innovation, research and marketing in order to maintain their preferential market position

• Stars are also typically identified by their aggressive marketing status.


Cash cows

• High cash generator

• Generally stable and therefore require less investment than what is required for stars

• Generally exist during the maturity phase of the product life cycle

• Organisations tend to keep this position as much as possible and hence “milk” the positive cash-generating advantage.

Dogs

• Relatively low market share and growth potential

• Typically correlate to the decline phase in a products life cycle

• Often be harvested for as much cash flow as possible until they are ultimately phased out of the market


Pitfalls of the BCG matrix

• The immediate limitation of a BCG matrix is its simplicity.

• The overall quantitative and qualitative analysis of the market is sometimesdifficult to define.

• The matrix also assumes that market share and growth are directly linked.

• Unfortunately growth rate is only one aspect of the attractiveness of anindustry or market and therefore tends to ignore smaller more agilecompetitors.

• Management may often overlook certain product-specific intricacies. Forinstance, when a new product is launched, organisations typically spend a lotof time and resources on promoting the product in its relative market. Iforganisations do not constantly remain balanced in their approach tomanaging their product portfolios, positively performing products may findthemselves struggling in an increasingly competitive expanding market.

STUDY UNIT 4: BRANDING

What is branding?

Is the activity of trying to differentiate your product from those of your competitors

by providing your product with a distinct and recognisable identity; and then

building the right associations with that brand so that it is relevant

and distinct from competitive products in the mind of the consumer. (Bothma,

2017:148)

Brand definition

“A brand is a name, term, sign, symbol or design or a combination of them,

intended to identify the goods and services of one seller or group of sellers and to

differentiate them from those of competition”. (Bothma, 2017:149).


Components of a brand:

• Brand name: If it can be read or spoken because it is a type of word. The brandname can include letters, other words and numbers. For example: The fast foodrestaurant KFC and the home décor company @Home.

• Brand mark: This is the part of the brand that cannot be read and spoken, so thisincludes any signs or symbols used in the brand. For example: The AdidasOriginals Trefoil logo, Nike “Swoosh” and McDonald’s Golden arches.

• Brand slogan: In some instances a brand slogan is included as one of thecomponents. A brand slogan is simple, short phrase or group of words thatcompanies use to make it’s products or mission memorable. An example isMcDonald's slogan “I am loving it”

• Trademark: Trademark has to do with the registration and protection of theowner’s exclusive right to use the mark and it’s parts cannot be used bycompetitors.

*Refer to page 148-151, section 7.3 and see the examples of different aspects ofbranding.


Brand Equity:

According to Bothma (2017:164-165) brand equity is “therefore seen as the

added value that a brand name brings to the product beyond the product’s

functional value, and leads to the intangible assets of major brands as listed on

their balance sheets”

*Refer to page 37, section 4.3 of the study guide and pages 164-166, section

7.10 of the prescribed textbook.


Advantages of brands accrued to marketers as a result of good product branding (Refer to page 151-154, section 7.4 of the prescribed textbook for further understanding):

• Improved perceptions of product performance

• Greater loyalty

• Less vulnerable to competition

• Less vulnerable to crises

• Larger margins

• Inelastic consumer response to price increase

• Elastic consumer response to price decreases

• Greater trade cooperation

• Increase in effectiveness of marketing communications

• Licensing opportunities

• Branding extension opportunities

Disadvantages of brands include:

- Quality maintenance

- Creation of demand

- Legal responsibilities


Importance of branding to

the consumer

Importance of branding to

the retailer

The importance of branding

to manufacturer

Easier product identification Assists in attracting customers Assists in creating loyalty

Communicates features and benefits Benefits from brand-marketing

support and activities

Defend market share against

competition

Assists with the facilitation of product

evaluation

Creates differentiation

Helps establish a products position

in the market

It allows different pricing policies

Reduces the risk of making wrong

purchase decisions.

Assists with targeting and

positioning.

Create interest for the product

Bothma (2017:153-154)


Three types of brands (Bothma, 2017):

• Producer/manufacturer/national brand – This is a brand where the

producer or manufacturer put its name on the brand, and owns the brand

name and protects it. Examples – Toyota, Samsung and Coca-Cola.

• The dealer brand / Store brand/ private brand– The producer of the dealer

brand is not known, and so the identification, ownership and control of the

brand rests with retailer or wholesaler. Examples of this are Woolworths, Mr

Price and Pick n Pay “no name” brand.

• A generic brand – This is an unbranded product. It is usually packed in plain

white packaging and labelled only in terms of the product type and category.

You’ll find examples of generic brands in categories such as toilet paper,

washing powder, bread, sugar, etc.


Choices for a national brand:

• Individual product – Each own brand, example: SAB Miller’s: Pilsner,

Grolsh, Black Label etc.

• Family product – Used for an entire range of products, example: Coca Cola

with its Coke Light, Coke Zero beverages. Another example would be

SABMillers Castle Lager, Castle Milk Stout, Castle Light ect.

• Company name used with individual product – Kellogg's Cornflakes,

Kellogg’s Rice Crispies.

* See the mind map on page 41 of the study guide and pages 158-160, section

7.7 for further understanding.

Branding extensions (Refer to page 39, section 4.6 of the study guide).

The brand loyalty phases (Refer to pages 154-155, section 7.5 of the prescribed textbook):

- Brand recognition

- Brand preference

- Brand insistence

Branding pyramid (Refer to pages 155-157, section 7.6 of the prescribed textbook):

- Step 1: Awareness

- Step 2: Meaning

- Step 3: Response

- Step 4: Resonance


The branding process (Refer to pages 160-163, section 7.8 of the prescribed

textbook):

- Step 1: Identify and establish the brand position and values

- Step 2: Plan and implement brand marketing programmes

- Step 3: Measure and interpret brand performance

- Step 4: Grow and sustain brand equity


STUDY UNIT 5: PRODUCT DIFFERENTIATION AND

POSITIONING The need for market segmentation (Refer to pages 28-29, section 2.2 of the

prescribed textbook).

A product gap is “that part of the market from which a particular organisation isexcluded because its offerings do not have the product or servicecharacteristics required by that part of the market; a gap thus exists betweenwhat the organisation offers and what is required by the market.” (Bothma,2017:29).

A customer analysis “includes examining customer motivation for purchaseactually made, as well as the unmet needs of those samecustomers.”(Bothma, 2017:30).

Reasons for why to buy must look at:

• Customer motivation

• Unmet needs

Segmentation and segmenting markets according to product:

Behavioural and product related variables (Bothma, 2017:31):

- Benefits sought

- User status

- Usage rate

- Price sensitivity

- Occasions

- Loyalty status: Hard-core loyals, soft-core loyals, shifting loyals and

switchers.

(Refer to pages 31-33, section 2.4 of the prescribed textbook to gain a full

understanding as to the different behavioural and product related variables).


POSITIONING

Targeting specific segments with products

Evaluation criteria (Bothma, 2017:33):

- Target market size and growth possibilities

- The resources and skills of the organisation

- The compatibility with the organisation’s objectives

- The cost of reaching the target market.

Approaches to target marketing (Bothma, 2017:34-35):

- Undifferentiated marketing

- Differentiated targeting

- Concentrated targeting


POSITIONING


POSITIONING

Product differentiation (Refer to page 37-40, section 2.7 of the prescribed textbook for further understanding):

“Differentiation is the process whereby the firm’s product and market offering isadapted, physically or psychologically, to distinguish it from competing products.This must be done in such a way that customers regard it as a totally differentproduct, and are prepared to pay a premium for it”.(Bothma, 2017:38)

Differentiation should (Bothma, 2017):

• Generate customer value

• Provide perceived value

• Difficult to copy


POSITIONING

Approaches/dimensions of differentiation (Refer to pages 39-40, section 2.7.1 ofthe prescribed textbook):

• Differentiation by product quality

• Differentiation by brand

• Differentiation by loyal customers

• Differentiation by unique product characteristics

• Differentiation by distribution

• Differentiation based on consumer orientation

* Review the discussion on approaches/dimensions of differentiation within yourprescribed textbook, it is very important that you are able to discuss these and provideexamples thereof.


POSITIONING

Product Positioning

The positioning of a product refers to the place a product has in the mind of theconsumer in relation to other similar products in the market.

“Positioning involves the creation, in the minds of the targeted buyers, of adistinctive position with regard to the organisation’s product relative to theproducts of competing organisations.” (Bothma, 2017:35)

*Refer to page 35-37, section 2.6 of the prescribed textbook for furtherunderstanding. Please make sure you can discuss positioning methods and giverelevant examples.


POSITIONING Positioning/ perceptual maps :

• Are often used to portray market positions visually

• Multi-dimensional graphic image

• Depicts consumers perceptions

• Assists marketers in developing focused marketing strategies

• Help managers to access possible advantages

• Can indicate gaps/ ideal marketing opportunities


POSITIONING

Positioning process :

In order to position a product successfully, the positioning process needs

to be followed. The positioning process consists of the following six steps:

1. Identifying a relevant set of competitive brands

2. Identifying relevant differentiation dimensions

3. Determining consumer perceptions

4. Analysing the intensity of the brand’s current position

5. Analysing the brand’s current position

6. Determining the customers’ most preferred combination of attributes


POSITIONING

Positioning methods (Please note it is important to have full understanding of

these methods and be able to provide a practical example of each):

• Attribute positioning

• Benefit positioning

• Use/application positioning

• User positioning

• Competitor positioning

• Product category positioning

• Quality/price positioning

Attribute positioning – This is when a product is positioned in such a way that theconsumer is encouraged to select it over all other competitors’ products and it isachieved by using certain attributes/features which represent the product’scompetitive advantage (Shimp & Andrews, 2013:141).

Example: The new Land Rover Discovery 4 offers great features such as keylessentry, tow assist and gradient release control to name a few of its attributes onwhich the company will position the new product (Ehlers in Klopper & North,2011:114).

Benefit positioning – This is positioning according to a benefit the product presents. Abenefit is not tangible like features but is rather perceived by a customer as thevalue associated with the use of the product (Cooper, 2011:321).

Example: Kleenex introduced an anti-viral tissue whereby the product breaks downthe virus in 30 seconds – this aspect of the product will stop the virus in its tracks.Consumers that are germ conscious will see this as a benefit of purchasing theKleenex product over other competing products (Ehlers in Klopper & North,2011:114).


POSITIONING

Use/application positioning – This is when the usage of a product is linked to aspecific occasion or time (Sengupta, 2005:91).

Example: The use of Vicks. When a child is sick, Vicks VapoRub is applied to thechild’s chest (Sengupta, 2005:91).

User positioning – This is positioning that aims to create a clear connection betweenthe users of the product and the product itself (Verma, 2008:146).

Example: When the Apple products were first created, they were positioned foreducators and students who were the users of their products (Clow & Baack,2009). Another example could be Johnson & Johnson’s baby shampoo, baby oiland baby powder which are directly aimed at babies and infants (Verma,2008:146).

Competitor positioning – This is a positioning method whereby a product claims tobe better or superior to another competitor’s product (Chandrasekar, 2010:72).

Example: Pepsodent toothpaste used this positioning method when it positioned itselfas being able to better reduce the germs on the teeth of their consumers than theircompetitors’ products could (Chandrasekar, 2010:72).


POSITIONING

Product category positioning – This product positioning method is when the

product is positioned in another product category that is not traditionally

associated with it. It is a positioning method often used when the existing

category is overcrowded with competitors – it will thereby create new

business opportunities (Kazmi, 2007:222; Cant et al, 2013:112).

Example: A museum such as the Louvre in Paris is traditionally regarded as an

educational institution, but management has also have decided to position it

as a tourist attraction (Cant et al, 2013:112).

Quality/price positioning – According to Lamb, Hair and McDaniel (2011:281),

quality and price positioning place heavy emphasis on quality being

associated with a high price and a low price indicating value.

Example: Woolworths is known for quality products while Pep is known for

unbeatable prices for the people (Cant et al, 2013:112).


POSITIONING

STUDY UNIT 6: NEW PRODUCT DEVELOPMENT

Types of new products:

• Organisational classification of new products (Please refer to page 60-61,

section 3.4.2 of the prescribed textbook and page 50, section 6.1.1 of the

study guide).

• Consumer classification of new products (Refer to page 50, section 6.1.2

of the study guide).

* Ensure you are able to discuss these classifications of new products and are

able to provide examples of each.


Organisational classification of new products :

• New to the world - These would be inventions such as 3D computer monitors, mobile fuel cells and electric nanomotors.

• New category - Product mix expansion can create new categories for the organisation. Eg Apple tv, iTunes, iPod.

• Additions to product lines - Adding a product to the existing product line. Eg Coke Light, Vanilla milk and herbal toothpaste.

• Product improvement. - This involves improving product attributes, such as new and improved cleaning detergents.

• Repositioning - Products are repositioned for a new use or application. Jik, for example, can be used as a bleach and to keep flowers fresher for longer.

• Cost reductions – This refers to making a new product in a more cost effective way.


Consumers classification of new products :

Products classified according to a consumer’s (or end-user’s) classificationsystem generally relate to the level of behavioural change or new learningrequired to enable the consumer to adopt the product. These classificationsinvolve the following:

• Continuous innovations - This classification includes most forms of newproducts such as new cell phones, motor cars and laptops. Consumers in thiscategory experience low levels of learning.

• Dynamically continuous innovations. Technology is used to improve newproducts and a higher level of new learning is demanded of consumers.

• Discontinuous innovations - These innovations include completely “new-to-the world products that have been developed to perform a function that noproduct has previously been able to perform. This type of innovation requiressignificantly higher consumer education levels.


Reasons why product succeed:

• Ability to identify with consumer needs

• Use of existing company expertise and resources

• Emphasis on product testing

• Coordination between research, development and marketing

• Entrepreneurial culture in the organisation

• Linking new product development to corporate goals


Reasons why products fail :

• Shortage of new and innovative ideas

• Insufficient marketing capabilities

• Social and governmental pressures

• Shorter life span of products owing to improved technology

• Cost of new product development

• Product not unique enough

• Product pricing is too high relative to market alternatives

• Insufficient market research conducted

• No top-performing product already in the market from which to leverage

There are 5 main categories of product failure namely:

• Timing

• Hype

• Prohibitively strong branding

• Satisfaction

• Co-branding

• Please refer to page 78-82, sections 4.2 and 4.3 of the prescribed textbook, know what these categories entail and be able to provide examples thereof.

Controlling and managing product failure (Refer to page 83, section 4.4 of the prescribed textbook).

Customer support (Refer to pages 85-88, section 4.6 of the prescribed textbook).



Organisational structures for NPD:

• New product department. This centralised decision-making unit incorporates staff intoan NPD, instead of in a line function. This type of undertaking is generally conducted bylarger companies because a significant number of resources are spared andredistributed for the NPD process. New product departments are generally responsiblefor the complete NPD process.

• New product committee. This organisational structure involves bringing togethervarious staff members from different teams and synergising them into a working unit.Product committees will therefore coordinate the various levels of the NPD process, andare generally characterised by the pooling of resources for effective NPD execution.

• Venture teams. Venture teams are separate from an organisation and are generallyassimilated from different departments in the organisation. These teams are recruited ona task basis and therefore only resume normal employment duties once the objective hasbeen achieved.

• Consultants. Consultants are externally recruited individuals (or companies) that bringvarious specialised skills into established NPD teams. These skills usually includedesign, branding, advertising and so on.

• Product manager. Product managers are the typical custodians of the NPD process andare therefore specialists in their respective product markets.

Invention: the “creation or discovery of a new, unique or novel idea, product, process,composition, material, method or device, or any radical or significantly newimprovements or extensions to any of these.” (Bothma, 2017:49).

Innovation: “The introduction of something completely new, or the significant or radialchange to something that already exists, or the new application of an existing product orservice in the marketplace by an organisation, the introduction of which adds new oradditional value to customers.” (Bothma, 2017:50).

Four types of innovation (Bothma, 2017:50):

- Product innovation

- Process innovation

- Marketing innovation

- Organisational innovation

- There is also production input which is a possible source of innovation and strategic innovation.


Innovation versus R&D (Refer to page 51, section 3.2.2 of the prescribed

textbook).

Innovation and competitiveness (Refer to page 51, section 3.2.3 of the

prescribed textbook).

*You should be able to discuss other drivers of competitiveness (Page 52, section

3.2.3 of the prescribed textbook).

Drivers of innovation

- Macro drivers of innovation (Refer to page 54, section 3.2.4 of the prescribed

textbook).

- Micro-drivers of innovation (Refer to page 55, section 3.2.4 of the prescribed

textbook).


Barriers of innovation (Micro-level) (Bothma, 2017:55):

- Size of the firm

- Lack resources

- The lack of entrepreneurial spirit

- Staff that work directly or indirectly against innovation

- A lack of production capacity to handle a new product.

Barriers of innovation (Macro-level) (Bothma, 2017:55):

- Too many regulations in the marketplace

- Lack of external funding to support innovation

- A small local marketplace to absorb innovations

- Customers that are not ready for innovations


The innovation process (Refer to page 56, section 3.2.5 of the prescribed

textbook).

Product innovation: “The introduction to the market of a new product; or a

product that has been significantly adapted in some way; or a new application

for an existing product.” (Bothma, 2017:56).


The benefits of product innovation (Bothma, 2017:57):

- Reduced costs

- Improved quality

- More responsive customer service

- Greater flexibility to respond to changing customer demands

- Faster turnaround times

- Reduced levels of waste and downtime

- More attractive and appealing products

- More functional products

- Better quality products

- A wider range of products

- Streamlined relationships with suppliers and customers

- Better brand building and more.


Drawbacks for innovation (Bothma, 2017:57):

- Loss of jobs if work is outsourced

- Less workers need to do the same job


New product ideas (Bothma, 2017:57-60):

- One’s self

- Customers

- Dissatisfied customers

- Employees

- Marketing research

- Suppliers and vendors

- Competitors

- Universities academic research

- Foreign sources

- Exhibitions and trade shows

*It is important that you are not only able to identify and discuss sources of new product ideas but that you are able to relate it to a scenario or case that has been provided.



The six step NPD process :

Step 1: Creating and developing new product ideas

Step 2: Ideas and concepts for new products

Step 3: Physical product development and testing

Step 4: Forecasting sales potential

Step 5: Branding and packaging

Step 6: Commercialisation

* Please refer to pages 52-54, section 6.4 in your study guide for further

discussion involving the NPD process.

The 12 step NPD process (Study pages 61-68, section 3.5)

- Step 1 Initiation

- Step 2 Need analysis

- Step 3 Idea generation

- Step 4 Idea screening and evaluation

- Step 5 Business analysis and planning

- Step 6 Design and prototyping

- Step 7 Retesting

- Step 8 Retooling

- Step 9 Production

- Step 10 Marketing and commercialization

- Step 11 Maintenance and after-sales support

- Step 12 Evaluation and reconsideration

*NB: It is important that you know both the six step NPD process and the 12 step process as either could be asked in the examination.


The product design and prototyping process (Bothma, 2017:66):

- Step 1 Design specifications and requirements document

- Step 2 Basic concept design alternatives (4-5)

- Step 3 Concept design evaluations

- Step 4 Preferred design selections

- Step 5 High-level designs (1 or 2)

- Step 6 High-level design evaluations with consumer input

- Step 7 Interim final design

- Step 8 Design prototyping

- Step 9 Prototype testing with consumers in marketplace

- Step 10 Final design



Things to consider during the NDP process:

• Market concentration and segmentation

• Entry market positioning (market leader or market follower?)

• Market penetration techniques and strategies

• Market development – identifying new markets

• Product modernisation or upgrade schedules

• Strategic integration – allowing new products to pave the way for other

organisational offerings


Diffusion of innovation

Diffusion of innovation is defined as the spread of a new product (innovation)

throughout society, and how society either adopts or rejects the process.

• Innovators

• Early adopters

• Early majority

• Late majority

• Late adopters, laggards or non-adopters

* Please refer to the prescribed textbook, pages 141-142, section 6.6 and section

6.5, page 54-55 of the study guide.


The consumer adoption process

Stage 1: Awareness (Consumer sees the product in a magazine or at a friendshouse).

Stage 2: Interest (The consumer will look on Google for more information about theproduct).

Stage 3: Evaluation (Here the consumer evaluates the product, what this productoffers versus product X, weighs the pro’s and cons).

Stage 4: Trial (Here the consumer decides to purchase a small bottle of product Xwhereby they test it to see if it satisfies their needs or they could receive a bottle ofproduct X as a sample in Woolworths to test).

Stage 5: Decision (The consumer decides to purchase product X from Woolworths asthrough having tested the sample, it satisfies their needs).

Stage 6: Confirmation (The consumer might ask friends and family if they see adifference in the look of their hair after using product X, the consumer needs to confirmthat product X has indeed made a difference).

* Please note that in the prescribed textbook there are five stages in the consumeradoption process these include: Awareness, interest, evaluation, trial and adoption.Should a question be asked please provide the amount of steps as requested. (Referto page 140, section 6.6 of the prescribed textbook).

STUDY UNIT 7: THE PRODUCT LIFE CYCLE (PLC)

According to Jooste et al (2005:96) - The product lifecycle can be defined as aplanning tool that describes the stages a product will pass through from its introductionuntil its decline.

Bothma (2017:130) define the PLC as “… a marketing theory which outlines the periodof time associated with all products over which a product is developed, brought tomarket and ultimately removed from the market.”

*Please review page 131, section 6.3 of the prescribed textbook for the keyconsiderations about the PLC.

* Please note that it is important to know both the 4 stage PLC and the extended 7stage PLC. Please refer to pages: 131-138, section 6.4 of the prescribed textbook andpage 63-64, section 7.2 of the study guide.

STUDY UNIT 7: THE PRODUCT LIFE CYCLE (PLC)

Characteristics of the Introduction phase of the PLC

• The sales rate is slow because the product is new in the market.

• Customers tend to resist new products

• High marketing costs are involved in making consumers aware of a new product

• Few distribution channels carry the manufacturer’s new product

• Production problems are possible because the product is dependent on the technology used by the manufacturer.

• Few competitors in the marketplace carry the new product and few retailers and wholesalers had it on offer

• The price charged for the product depends on the nature thereof.

• A skimming pricing strategy or penetration price strategy can be adopted.

• The sales of new products yield low profits.

STUDY UNIT 7: THE PRODUCT LIFE CYCLE

Characteristics of the Growth phase

• During this phase of the PLC, there is an increase in the number of competitors.

• Product improvements occur to meet consumer needs.

• The number of intermediaries increases as the product proves to be profitable.

• The prices of products are then lowered because they were introduced at a higher price (skimming price strategy). This depends on pricing strategy employed in the introductory phase.

• Proactive approach by distributors to the manufacturer to stock the product.

• Selling task becomes easier and quicker.

• Sales growth, growing market acceptance.

• There is an increase in profits because of the high demand for the product.


Characteristics of the Maturity phase

• Owing to the introduction of new products, sales growth levels off for products in this phase.

• The management are faced with challenges of providing accessories for the product and the level of accessories to manufacture.

• Competition level increases and is intense

• Reduction in profit margins for intermediaries

• There is a reduction in the overall level of profits.

• Growth maturity – product grows but at a much slower rate

• Stable maturity – sales flatten out completely, market is saturated with competitors.

• Decline maturity – sales growth it eaten away.


Characteristics of the Decline phase

• This phase is characterised by a permanent decline in sales

• The withdrawal of the product,

• Cuts in advertising,

• A decline in the size of the market, consumers switch to new products.

• Suppliers and marginal distributors might be dropped

• A decline in the number of competitors

• A reduction in profits.


Strategies to use during the introductory phase

• The strategies to adopt in this phase are skimming or penetration pricing.

• When marketers adopt a skimming strategy they may use rapid or slow

skimming.

• Rapid skimming involves introducing a product at a high price and

promoting it intensively. Slow skimming, however, entails introducing

products at a high price and not investing in intensive promotion

• Rapid penetration involves introducing a product at a low price and

promoting it intensively. A slow penetration strategy is implemented by

introducing products at a low price and using promotion


Strategies to use during the growth phase

• The objective of these strategies is to maximise market share.

• The first strategy is to add new features.

• The second strategy is quality improvement of the product.

• The third strategy, adding distribution channels, basically means covering

the market by adding more retailers and wholesalers.

• The last strategy added, namely new segments.


Strategies to use during the maturity phase

• The three main strategies in this phase of the life cycle are market, product

and marketing mix modifications.

• Market modification suggests new ways of using a product (eg using red

wine when cooking lamb).

• Product modification entails improving the product by adding features.

• Marketing mix modification involves changing the seven Ps.


Strategies to use during the decline phase

• The objectives on this phase are to reduce expenses and take advantage ofthe brand.

• The strategies in this phase are maintenance, harvesting and withdrawal.

• Maintenance strategy is applied to keep the products in process (egcomputer monitors).

• When applying the harvesting strategy, products are offered without anyinvestments in them (eg the black and white television which still exists but israre in the market).

*Please be sure to review section 6.7, page 143 of the prescribed textbook fortypical marketing activities during the product lifecycle.


Uses of the PLC

• Changes in sales levels.

• Managing the components of the marketing mix. These components should

be adapted according to the stage a product is in its life cycle. When

promoting a new product, the marketing manager advertises the product

intensively.

• New product decisions and the product mix. Bear in mind that new products

include upgrades of the product in the decline stage.


Types of PLC: there are different types of PLC, which help the marketing manager toclassify products. The rationale behind this is that products that are grouped accordingto a certain type tend to have similar characteristics.

Types of product life cycles (PLC): (Refer to table 6.1, page 138-140 of theprescribed textbook).

• Traditional

• Classic

• Fashion/fad

• Extended fashion fad

• Seasonal or fashion

• Revival

• Fiasco

* You should be able to discuss each type of PLC and give an example for each. Alsorefer to pages 138-140, section 6.5 of the prescribed textbook.


Criticism of the PLC:

• The rationale for criticising PLC is that it is misleading because one cannot

prove the theory and it is thus impractical for marketers to use as a planning

tool.

• The other criticism is that marketers cannot determine in advance the shape

or form of a particular product’s PLC.

• There are also concerns that the marketing manager may prematurely

manage the product to the decline phase.

• Also, the length of each phase cannot be accurately determined because

different products such as consumer and industrial products may be offered to

different market segments.


Planned obsolescence :

Planned obsolescence is defined as a manufacturing decision by a company tomake consumer products in such a way that they become out-of-date or uselesswithin a known time period.

The reason for the decision is to ensure that consumers purchase the productmany times instead of once. The decision is normally taken for industrial productssuch as building materials, steel and light bulbs. Perceived obsolescence,however, entails making products that go out of fashion or are not in style, socustomers buy more, slightly different ones (eg products in the fashion industry).

*Refer to pages 84-85, section 4.5 of the prescribed textbook for furtherunderstanding.

STUDY UNIT 8: ETHICAL AND LEGAL ISSUES RELATING

TO PRODUCTS

• The issues of ethical and legal matters pertaining to products are important because they

can have far- reaching implications for a company’s reputation”. Organisations should

know their responsibilities towards their customers, who in turn should know their rights

and responsibilities.

• Ethical issues are a major concern, especially where humans are involved, because

organisations have a moral obligation to treat their customers fairly.

• Ethical issues may have implications for humans’ psychological and emotional wellbeing.

• Legal issues concern the protection that laws and regulations should provide


TO PRODUCTS

These are some of questions that can be considered by organisations when manufacturing

and offering their products to consumers:

• How do legal and ethical issues influence companies and customers?

• What are the consumer protection acts?

• What issues should be considered with regards to patents, designs, brand protection and

product safety?

• What are legal issues pertaining to producing and commercialising products?

THE CONSUMER PROTECTION ACT :

• The Consumer Protection Act provides for better protection of consumers in order to

compensate consumers by awarding them relief and compensation where appropriate.

• The purpose of this act is to protect consumers from unfair and deceptive trade practices

such as fraud and false advertising. It also aims to promote and advance the social and

economic welfare of South African consumers.

• The act has an impact on every business in South Africa because they all have to adhere

to certain rules and regulations when conducting business transactions with consumers.

• The act also aims to protect the poor and vulnerable, and ensuring that the language used

in agreements is plain and understandable.


TO PRODUCTS

PATENTS, COPYRIGHTS AND TRADEMARKS

• A patent is defined as exclusive right granted for an invention, which is a product or a

process that provides a new way of doing something, or offers a new technical solution to

a problem.

• Patents are part of intellectual property

• It protects an invention for the owner for a limited period, generally 20 years.

• The most common patents include: biological patents, business method patents, chemical

patents, software patents.

*Refer to page 68-69, section 3.7 of the prescribed textbook for more information regarding

patents.


TO PRODUCTS

PATENTS, COPYRIGHTS AND TRADEMARKS CONTINUED…

• Benefits of patents :

i. Reduce the number of competitors in the market

ii. Generate the value from licensing

iii. Increase the value of a company

iv. Sell patents in cases of liquidation

• A copyright © is an exclusive right granted by law for a term of years to an author or

designer for his/her original work.

• Every copyright has a lifespan of 50 years.


TO PRODUCTS

PATENTS, COPYRIGHTS AND TRADEMARKS CONTINUED…

• A trademark ® is a brand name, a slogan or a logo that identifies the services or goods of

a company and distinguishes them from the goods and services of competitors.

• Companies have to register their trademark so that they can be offered protection under

the Act governing them. A registered trademark can be protected forever, on condition that

it is renewed after every 10 years.

* The concept of trademarks and copyrights have been discussed in multiple sections within

the prescribed material, it is important to be able to discuss what they are and provide an

example thereof.


TO PRODUCTS

BRAND PROTECTION

The main point emphasised in this section, is that a brand should be protected because there

may be other businesses that illegally use a particular brand name, logo or image to scam

customers. This will have a negative impact on the brand.

Benefits of brand protection :

• Safeguard the value of marketing investments

• Protect revenue and profits

• Help protect brand reputation

• Identify abuse of a brand

• Protect against counterfeiting

Unique bar codes and serial numbers are some technologies that can be used to protect

brands.


TO PRODUCTS

PRODUCT SAFETY

• Because product safety is such a vital issue, commissions have been established to protect consumers from unreasonable injuries or death. When products do not conform to the safety standards, the commission has the right to recall the products.

• In product safety there are different standards for the different industry sectors such as chemicals, food and health, transportation and electro- technical.

• It is important for organisations to meet safety standards because of the legal implications for failure to comply with product safety standards.

• If a company fails to meet product safety standards, they may be liable for litigation, or payable penalties stipulated by the Safety Commission.

*Please review the minimum safety requirements for consumer products (Section 8.4, page 78 of the study guide.


TO PRODUCTS

PRODUCT DESIGNS

A product design is defined as the idea generation, concept development, testing and

manufacturing or implementation of a physical object or service.

Important questions to consider:

• Is technology a key factor in product design?

• How important are product designs?

• What are the risks of not investing in product design?


TO PRODUCTS

PRODUCT DESIGNS CONTINUED…

Advantages of product designs

• lower production costs which improve profit margins

• better communication with customers through effective design

• attracting customers by making the product appeal to them in terms of usability

• user-friendly products

**Packaging is also a part of product design.


TO PRODUCTS

LEGAL PROTECTION ISSUES

• Legal production issues vary from industry to industry.

• For instance, there are legal production issues relating to products and film production.

• There are regulatory bodies such as SABS that oversee that the technology used in a

product design is not harmful to humans.

• In film production, for instance, there are standards that specify age restrictions and also

state if there are violent or offensive scenes in the film. These standards are set by the

Broadcasting Commission.


TO PRODUCTS

LEGAL COMMERCIALISATION ISSUES

• When commercialising a product, marketing managers need to take into consideration the legalissues concerning the products. It is vital for manufacturers, irrespective of the industry theytrade in or the media used, to provide product specific information when advertising theirproduct.

• In South Africa, the Independent Communications Authority of South Africa (ICASA), which fallsunder the Department of Communication, is the regulating authority that oversees broadcastingand telecommunications in the public’s interest and also handles complaints.

According to the Advertising Standards Authority of South Africa’s (ASASA’s) commercialisationstandards, comparative advertising is forbidden. The general principle of ASASA is that advertisingshould be honest and unoffensive. The Authority regulates commercials under consumer,advertising and sponsorship codes.


TO PRODUCTS

COMPETITIVE LEGAL ISSUES

• Competition is advantageous for both consumers and companies. The advantages for

consumers are that the market offers a variety of products and has a bargaining power

advantage in that they may negotiate prices. The advantage for companies is high market

share, especially in industries where there are entry barriers.

• Cartels relate to competitive issues which are legally unacceptable. Such issues occur

when competitors form an alliance when bidding for tenders or setting prices for products.


TO PRODUCTS

Strategy and management:

Strategy: “a pattern or plan that integrates an organisation’s values, major goals, policies andaction sequences into a cohesive whole. A well-formulated strategy helps to marshal andallocate an organisation’s resources into a unique and viable posture based on itsrelative internal competencies and shortcomings, anticipated changes in the environmentand contingent moves by the intelligent opponents.” (Chandler, Andrew, Ansoff,Mintzberg, Porter, Hamel, Quinn and Prahlad).

The strategy process/ strategic management process (Bothma, 2017:172):

Step 1: Mission, goals and objective

Step 2: Environmental scan

Step 3: Strategy formulation

Step 4: Strategy implementation

Step 5: Strategy evaluation

STUDY UNIT 9: PRODUCT MANAGEMENT AND THE

PRODUCT MANAGER

Management: Planning, implementation and control. It is the “setting and

achieving of objectives through the use of people and resources”. (Bothma,

2017:172).

The management process (Bothma, 2017:173):

- Planning

- Implementing

- Controlling


PRODUCT MANAGER

Product strategy– You should be able to discuss the benefits of having a clearly articulated product strategy (Refer to pages 174-175, section 8.3).

Generic product strategies to consider (Refer to pages 175-181, section 8.3.1 of the prescribed textbook).

- New product strategies: Blue ocean strategy and the Emulative new product strategy. (Refer to pages 175-176 of the prescribed textbook).

- Strategies to consider in the different stages of the PLC (Refer to page 176-178)

- Linking the diffusion process with the PLC (Refer to page 178)

- Making changes to the PLC (Refer to page 178)

- Product range strategies – Trading up, trading down, complementary, product overlap, diversification, product elimination (Refer to page 179)

- Product portfolio strategies – sustaining growth, achieving a higher rate of return on investment, increasing sales volume, and growing market share (Refer to page 180)

- Other strategic decisions (Refer to page 180)

NB: It is important that you are able to explain the various strategies and are able to provide examples thereof.


PRODUCT MANAGER

Product management involves more than merely prioritising the product features it is also a

management philosophy and discipline that focuses on consumers. Product development is

performed by a multidisciplinary team whose goal is building, operating and maintaining the

product.

Product management basically means overseeing everything that has to do with a product,

from conception to production to the market and managing all these processes. The

personnel responsible for these tasks are product managers who should have certain skills

and knowledge to perform these responsibilities.


PRODUCT MANAGER

PRODUCT MANAGEMENT

• Product management is defined as the organisational structure within a business that

manages the development, marketing and sale of a product throughout the product life

cycle.

• We can infer from this definition that it is the responsibility of a product manager to

oversee the conception of a product idea, ensure that the product is available for the

market and provide support activities for the product, namely pre- and post sales services.

• In product management, it is necessary to coordinate the marketing activities around the

seven Ps. There are key decisions relating to product management regarding the seven

Ps (place, price, promotion, product, process, people and physical evidence). These key

decision areas are important in managing a product effectively.

* Please refer to page 83, section 9.1 of the study guide and page 181-186, section 8.4 of the

prescribed textbook for further understanding


PRODUCT MANAGER

FRAMEWORK FOR PRODUCT MANAGEMENT

• The product planning aspect of product management is characterised by identifying new

product target markets and conducting marketing research to determine the features to

use on the product and determine whether or not it is feasible from a business

perspective.

• Implementation, however, involves operationalising the actual production of the product,

working towards achieving the set objectives according to the timeframe set for each

stage of development. It is during this stage that the actual product is manufactured.

• The control phase is characterised by evaluating whether the objectives set have been

achieved such as having manufactured the specific package shape for the product to see

if there is any need for changes (eg redesigning the packaging).


PRODUCT MANAGER

THE ROLE OF A PRODUCT MANAGER:

• Defining and planning product lines and product enhancements

• Managing product contracts and sales

• Setting strategic direction on the basis of customer needs and business goals

• Translating strategic goals into operational tasks

• Making proposals to senior management about implications of proposed plans

• Proposing contingency plans

• Serving as a representative to internal and external clients

• Branding the product and defining its features

• Working with graphic designers to create product aesthetics

• Developing and implementing administrative and operational matter to ensure the achievement of objectives and proposing contingency plans

* Please refer to page 185-186, section 8.4.5 of the prescribed textbook for further understanding.


PRODUCT MANAGER

SKILLS REQUIREMENT FOR A PRODUCT MANAGER:

• Marketing skills

• Communication skills

• Time management skills

• Prioritisation skills

• Analytical skills

• Initiative

• Ability to synthesise information


PRODUCT MANAGER

IMPORTANCE OF A PRODUCT MANAGER:

• The responsibility of a product manager in an organisation is to manage a team and also

be part of it.

• A product manager establishes appropriate goals which he or she plans and manages

the team towards achieving the goals.

• The product manager also anticipates problems and issues and proactively drives the

process of resolving them.

• The product manager is initiator of and driving force behind the success of a product

launch.


PRODUCT MANAGER

DEVELOPMENT IN THE EVOLUTION OF PRODUCT MANAGEMENT

Product management is rapidly evolving because of advancements in technology. These

technological changes warrant continual improvement in the management of products. This

means that the product manager can use some of the technologies that already exist such as

bar coding, which makes it easier to monitor the quantity of products supplied to

intermediaries. Technological advancement also has implications for the management of the

various phases of a product’s life span.


PRODUCT MANAGER

TRENDS IN PRODUCT MANAGEMENT

In the last decade, product life cycle management (PLM) has become one of the key

technological and organisational approaches and enablers for the effective management of

product development and product creation processes. The trend in product management is to

develop quality and better products that meet consumer needs, including improvements in

the quality of their lifestyle.


PRODUCT MANAGER

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